Cowser-Griffin v. Griffin

289 Va. 189

771 S.E.2d 660 (Mem)

Kimberley COWSER–GRIFFIN, Executrix of the Estate of David Griffin, Appellant

v.Sandra D.T. GRIFFIN, Appellee.

Record No. 140350.

Supreme Court of Virginia.

Feb. 26, 2015.

Opinion

Upon consideration of the record, briefs, and argument of counsel, the Court is of opinion that the Court of Appeals of Virginia did not err.

For the reasons stated in the majority opinion of the Court of Appeals in Griffin v. Griffin, 62 Va.App. 736, 753 S.E.2d 574 (2014), the judgment of the Court of Appeals is affirmed. The appellant shall pay to the appellee two hundred and fifty dollars damages.

This order shall be certified to the Court of Appeals of Virginia and to the Circuit Court of Sussex County, and shall be published in the Virginia Reports.

Justice KELSEY took no part in the consideration of this case.

Justice MILLETTE, with whom Chief Justice LEMONS and Senior Justice KOONTZ join, dissenting.

Because I conclude that ERISA-governed death benefits successfully vested in his surviving spouse at David Griffin's death, and are therefore not subject to limitation by a posthumously entered Qualified Domestic Relations Order (QDRO), I must respectfully dissent.

In 1996, in the course of their original divorce action, David and Sandra Griffin entered into a Property Settlement Agreement (PSA) in which they agreed to name their children as beneficiaries in “401(k) plans and other such plans which would be distributed upon the death of either party.” This PSA was incorporated into their 1998 final divorce decree.

David Griffin died on May 26, 2012. At the time, he was actively employed at Dominion Power with an ERISA-governed Dominion Salaried Savings Plan (the Plan), which provides retirement and death benefits payable pursuant to ERISA. In this instance, upon the death of a Plan participant, the Plan documents provide for a lump sum payment to the surviving spouse unless the spouse explicitly consents to another beneficiary or unless a QDRO has been entered providing for an alternate beneficiary.

It is undisputed that Mr. Griffin's surviving spouse, Kimberly Cowser–Griffin, did not consent to the naming of other beneficiaries. It is likewise undisputed that neither the PSA or divorce decree met the statutory requirements for a QDRO. For this reason, Sandra Griffin now seeks entry of a posthumous QDRO to award the Griffin children Plan benefits.

I.

The majority concludes that nothing prevents posthumous QDROs. I agree that posthumous QDROs are at times permissible. Indeed, the regulations concerning timing of QDROs promulgated by the Labor Relations Board appear to permit posthumous QDROs, stating that a QDRO does not fail “solely because of the time at which it is issued,” and illustrating this rule with an example involving the death of a participant. 29 C.F.R. § 2530.206(c)(1); see also 29 C.F.R. § 2530.206(c)(2) (ex. 1). If Mr. Griffin was unmarried at the time of his death with no designated beneficiaries, for example, I would agree that a posthumous QDRO would be permissible. However, those facts are not before the Court today.

Mr. Griffin did remarry, and at the time of his death his Plan reflected Mrs. Cowser–Griffin as both the named beneficiary and the default beneficiary under the Plan. The Plan, for ERISA purposes, had no record of anyone other than Mrs. Cowser–Griffin having an interest in his benefits. Thus, Mrs. Cowser–Griffin submits that at her husband's death she acquired a vested interest in the benefits under the Plan as his surviving spouse. At that point, the issue before this Court became distinguishable from an issue “solely” related to “timing” as set forth in 29 C.F.R. § 2530.206(c). The issue was no longer merely a matter of timing, but also one of vested interest.

It is undisputed that neither Sandra Griffin nor her children filed a QDRO with the Plan in the fourteen years between the 1998 final divorce decree and Mr. Griffin's death. The PSA and final divorce decree provided them with rights under state law, but not rights that were enforceable under ERISA. For the purposes of Virginia law, rights vest at the entry of a divorce decree that includes a domestic relations order (DRO). See Himes v. Himes, 12 Va.App. 966, 970, 407 S.E.2d 694, 697 (1991). For the purposes of ERISA, however, benefits may only be alienated in the presence of a QDRO meeting the provisions set forth in 29 U.S.C. § 1056(d).¹ See 29 U.S.C. § 1144(a) (setting forth ERISA's express preemption clause, providing that it “shall supersede any and all State laws insofar as they ... refer to any [covered] employee benefit plan”); Hopkins v. AT & T Global Info. Solutions Co., 105 F.3d 153, 155–57 (4th Cir.1997) (holding that a QDRO must be entered before interests have vested in a subsequent surviving spouse).

Certainly, the PSA and divorce decree in this case provided an interest that could have formed the basis of a subsequent QDRO to enforce these rights under ERISA at any time until the death of Mr. Griffin. If, at death, the benefits did not vest in Mrs. Cowser–Griffin, Sandra Griffin could still obtain a QDRO and enforce these rights. If, on the other hand, the benefits have vested in Mrs. Cowser–Griffin, the right to enforce the state domestic relations order was cut off at the time of vesting.²

Thus, the issue today is whether the funds vested in Mrs. Cowser–Griffin as beneficiary at Mr. Griffin's death.

II.

An inquiry to determine the time of vesting must begin with the Plan documents:

ERISA's principal function [is] to protect contractually defined benefits. The statutory scheme, we have often noted, is built around reliance on the face of written plan documents. “Every employee benefit plan shall be established and maintained pursuant to a written instrument,” [29 U.S.C.] § 1102(a)(1), and an administrator must act “in accordance with the documents and instruments governing the plan” insofar as they accord with the statute, [29 U.S.C.] § 1104(a)(1)(D). The plan, in short, is at the center of ERISA.

US Airways v. McCutchen, 569 U.S. ––––, –––, 133 S.Ct. 1537, 1548, 185 L.Ed.2d 654 (2013) (some internal quotation marks and citations omitted).

Under the heading “Death Benefits,” David Griffin's Plan states that:

If you die while employed by Dominion, the entire value of your account is distributed to your beneficiary, including the value of all Company Matching contributions that automatically become vested upon your death.

Federal law requires that, if you are married when you die, your spouse must receive the distribution unless she or he approves your choice of another (or an additional) beneficiary before your death. Your spouse must agree to your choice of that beneficiary by signing the spousal consent portion of a Beneficiary Authorization Form obtained from ACS. The form must have been completed, signed, notarized, and returned to ACS before your death.^{3 , 4}

Based upon the amount in David Griffin's account at the time of his death, the Plan also dictated that a payment to a surviving spouse would be made in a lump sum payment.

The Plan documents, in combination with relevant statutes, afford the basis for this Court to conclude that the benefits at issue became vested in Mrs. Cowser–Griffin at the time of Mr. Griffin's death. This result is consistent with the majority of ERISA case law, which treats the retirement or death of a participant as a vesting event for the surviving spouse beneficiary.⁵

In Hopkins, 105 F.3d at 154–55, the United States Court of Appeals for the Fourth Circuit considered the case of a former spouse attempting to garnish her ex-husband's ERISA benefits to collect unpaid alimony by means of a QDRO. The ex-husband had retired but was still living, and at the time of his retirement had been remarried. The first wife sought a QDRO to garnish two kinds of ERISA benefits: pension benefits to the participant and surviving spouse benefits.

The Fourth Circuit was the first to examine the issue of when vesting occurs for an ERISA beneficiary of surviving spouse benefits. The court concluded that vesting of surviving spouse benefits occurs at retirement, and for this reason the surviving spouse benefits could not be subject to a QDRO. Id. at 156 ; accord Samaroo v. Samaroo, 193 F.3d 185, 190 (3d Cir.1999).

The Fourth Circuit relied on the general finality of surviving spouse benefits in ERISA at the time of retirement to conclude that the benefit vests at retirement in the spouse to whom the participant is married at retirement. Hopkins, 105 F.3d at 156–57. After retirement, under 29 U.S.C. § 1055, the court stated, such benefits cannot be changed even by the participant. Id. at 157. In essence, those benefits therefore irrevocably belong to the spouse to whom the participant is married at retirement.

Unlike the instant case, the court in Hopkins evaluated an annuity subject to 29 U.S.C. § 1055. However, the distinction between the participant's and the beneficiary's benefits that drove the court's reasoning is also true for Mr. Griffin and his surviving spouse. The determinative factor, that the form of the benefit becomes fixed at the vesting event, is just as true in this instance in which the Plan mandates a lump sum payment to the surviving spouse.

Additionally, the Fourth Circuit explicitly noted that the need for expedient administration or calculation of annuities, while not inconsistent with the holding, was not the basis for its decision. Hopkins, 105 F.3d at 157, n. 7 (“Although ERISA and the terms of the plan, and not matters of administrative convenience, determine a person's pension rights, it is worth noting that our holding does not burden the efficient management of the plan.”) In short, ERISA's protections of the rights of surviving spouse are equally applicable to non-annuitized benefits.

The United States Court of Appeals for the Ninth Circuit similarly held in Carmona v. Carmona, 603 F.3d 1041, 1057–58 (9th Cir.2010), that “a state [domestic relations order] may not create an...