Gelschus v. Hogen

47 F.4th 679

Robert Francis GELSCHUS, Personal Representative of Estate of Sally Aileen Hogen, Plaintiff - Appellant

v.Clifford Charles HOGEN, an individual; Honeywell International Inc., a Delaware Corporation, Defendants - Appellees

No. 21-3453

United States Court of Appeals, Eighth Circuit.

Submitted: June 14, 2022

Filed: August 29, 2022

Counsel who presented argument on behalf of the appellant was Christopher Paul Renz, of Minneapolis, MN. The following attorneys appeared on the appellant brief; Elizabeth C. Henry, of Minneapolis, MN., and Francis James Rondoni, of Minneapolis, MN.

Counsel who presented argument on behalf of the appellee Honeywell International and appeared on the brief was Melissa D. Hill, of New York, NY. The following attorneys also appeared on the appellee brief of Honeywell International: Kristin Berger Parker, of Minneapolis, MN., and Tyler James Hill, of Princeton, NJ. Counsel who presented argument on behalf of the appellee Clifford Charles Hogan and appeared on the brief was Lauren M. Weber, of Minneapolis, MN. The following attorney also appeared on the brief of appellee Clifford Charles Hogan: Scott David Blake, of Minneapolis, MN.

Before GRUENDER, BENTON, and GRASZ, Circuit Judges.

BENTON, Circuit Judge.

Sally A. Hogen made contributions to a 401(k) plan during her employment at Honeywell International Inc. She originally designated her husband, Clifford C. Hogen, as the sole beneficiary in the event of her death. Sally and Clifford divorced in 2002. In the marital termination agreement (MTA), they agreed that "[Sally] will be awarded, free and clear of any claim on the part of [Clifford], all of the parties’ right, title, and interest in and to the Honeywell 401(k) Savings and Ownership Plan."

In 2008, Sally submitted a change-of-beneficiary form to Honeywell. She, however, did not comply with a requirement. She allocated "33 1/3%" of the 401(k) benefits to each of her siblings.¹ The instructions said, "The Allocation % must be whole percentages ." Because she did not use whole percentages, Honeywell did not change her designation. Honeywell called Sally and left a message notifying her of the rejection. Honeywell also sent eleven annual statements showing Clifford as the sole beneficiary. She took no further action.

Sally died in 2019, with nearly $600,000 in her 401(k) plan. Honeywell paid the benefits to Clifford. Robert F. Gelschus, as personal representative of Sally's estate, sued Honeywell for breach of fiduciary duty, and Clifford for breach of contract, unjust enrichment, conversion, and civil theft.² The district court granted summary judgment to both defendants. It ruled that Honeywell did not breach a fiduciary duty because it complied with ERISA's "plan documents rule." As for Clifford, the district court determined that Gelschus did not have standing and, even if he did, his claims failed on the merits because there was no genuine dispute of fact whether Clifford breached the MTA.

Gelschus appeals. Having jurisdiction under 28 U.S.C. § 1291, this court affirms summary judgment for Honeywell and reverses summary judgment for Clifford on the breach of contract and unjust enrichment claims.

I.

Gelschus claims that Honeywell breached its fiduciary duties under ERISA by failing to remove Clifford as beneficiary and by distributing benefits to him. The district court, finding Honeywell complied with the "plan documents rule," granted summary judgment. This court reviews de novo a grant of summary judgment. Torgerson v. City of Rochester , 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc).

Discretion is the "benchmark for fiduciary status" under ERISA. Skelton v. Radisson Hotel Bloomington , 33 F.4th 968, 973 (8th Cir. 2022), citing 29 U.S.C. § 1002(21)(A) . Where an ERISA plan gives an administrator discretionary authority to determine eligibility for benefits, a district court will ordinarily review the administrator's decision for abuse of discretion. Kecso v. Meredith Corp. , 480 F.3d 849, 851-52 (8th Cir. 2007), citing Firestone Tire & Rubber Co. v. Bruch , 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989).

The parties dispute whether the Honeywell 401(k) Plan gives the plan administrator discretion over eligibility for benefits. Gelschus emphasizes the Plan's statement: "The Plan Administrator has full discretionary authority and power to control and manage all aspects of the Plan, determine eligibility for Plan benefits, interpret and construe the terms and provisions of the Plan, to determine questions of fact and law, direct distributions, and adopt rules for the administration of the Plan as it may deem appropriate ...."

Honeywell counters that, while there is discretion to create beneficiary designation forms, the Plan does not give the administrator discretion to accept designations that fail to comply with the forms. Honeywell emphasizes the Plan Summary: "[A] designation or change of Beneficiary may be made by properly completing and submitting, prior to your death, a Beneficiary/Consent Designation Form through the Savings Programs Website or by calling HR Help, Option 1." The Form states, "In the event of my death, I hereby designate the following as my Beneficiary to receive distribution of my account in the Plan .... The Allocation % must be whole percentages. "

Even if the Plan gave the administrator discretion to accept Sally's defective Form, it is not an abuse of discretion to act in accordance with plan documents. ERISA directs administrators to "discharge [their] duties ... in accordance with the documents and instruments governing the plan." 29 U.S.C.A. § 1104(a)(1)(D) (alteration added). On similar facts, the Supreme Court upheld summary judgment for the plan administrator, ruling:

ERISA requires "[e]very employee benefit plan [to] be established and maintained pursuant to a written instrument," "specify[ing] the basis on which payments are made to and from the plan." The plan administrator is obliged to act "in accordance with the documents and instruments governing the plan ... ," and ERISA provides no exemption from this duty when it comes time to pay benefits ....

The Estate's claim therefore stands or falls by "the terms of the plan," a straightforward rule of hewing to the directives of the plan documents that lets employers "establish a uniform administrative scheme, [with] a set of standard procedures to guide processing of claims and disbursement of benefits." The point is that by giving a plan participant a clear set of instructions for making his own instructions clear, ERISA forecloses any justification for enquiries into nice expressions of intent, in favor of the virtues of adhering to an uncomplicated rule: "simple administration, avoid[ing] double liability, and ensur[ing] that beneficiaries get what's coming quickly, without the folderol essential under less-certain rules."

Kennedy v. Plan Adm'r for DuPont Sav. & Inv. Plan , 555 U.S. 285, 300-01, 129 S.Ct. 865, 172 L.Ed.2d 662 (2009) (citations omitted).

This court applied Kennedy in Matschiner , granting summary judgment to a plan administrator who distributed life insurance benefits to the decedent's ex-husband based on the only valid designation in its files. Matschiner v. Hartford Life & Acc. Ins. Co. , 622 F.3d 885, 889 (8th Cir. 2010) "Hartford acted in accordance with the plan documents and therefore did not abuse its discretion." Id. at 888.

Like the plan documents in Kennedy and Matschiner , the Honeywell 401(k) Plan established a "uniform administrative scheme" with a "set of standard procedures" for designating beneficiaries. The plan administrator did not abuse its discretion by acting in accordance with plan documents and rejecting the defective change-of-beneficiary form.

Neither did Honeywell abuse its discretion by distributing plan benefits to Clifford after learning about the MTA. The Plan says, "Upon the death of a Participant ... the Participant's Beneficiary shall be entitled to elect that the Participant's Account Balance be distributed in a lump sum." After Sally submitted the defective change-of-beneficiary form, Honeywell promptly contacted her with instructions on how to submit a valid designation. For whatever reason, she did not. See Matschiner , 622 F.3d at 889 ("[T]he plan provided an easy way for [the Matschiners] to change the designation, but for whatever reason [they] did not .... The plan administrator therefore did exactly what [ 29 U.S.C.] § 1104(a)(1)(D) required ...."), quoting Kennedy , 555 U.S. at 303, 129 S.Ct. 865. When Sally died, the only valid designation named Clifford as sole beneficiary. Honeywell did not abuse its discretion by following the Plan's instructions to distribute benefits in accordance with that designation.

Gelschus further argues that this case is not controlled by Kennedy and Matschiner because Sally tried to submit a change-of-beneficiary form that "substantially complied" with the plan's requirements, citing Sun Life Assurance Company of Canada v. Wasko , 939 F. Supp. 2d 944, 953 (S.D. Iowa 2013) and Phoenix Mutual Life Insurance Company v. Adams , 30 F.3d 554, 564 (4th Cir. 1994). Kennedy instructs against "blur[ring] the bright-line requirement to follow plan documents in distributing benefits." Kennedy , 555 U.S. at 302, 129 S.Ct. 865 (alteration added). "[A]ssuming for the sake of argument that the substantial-compliance doctrine remains available after Kennedy and Matschiner ," it "would not deprive the administrator of the power to require strict compliance with the terms of the plan." Hall v. Metro. Life Ins. Co. , 750 F.3d 995, 999 (8th Cir. 2014).

Because Honeywell followed plan documents in rejecting Sally's defective change-of-beneficiary form and distributing benefits, Gelschus's breach of fiduciary duty claim fails. The district court properly granted summary judgment.

II.

Gelschus appeals the summary judgment for Clifford. The district court ruled that the claims against Clifford are not preempted by ERISA....