Gelschus v. Hogen

Francis J. Rondoni, Esq. and Chestnut Cambronne, PA, counsel for plaintiff.

Laura M. Weber, Esq. and Felhaber Larson, counsel for defendant.

ORDER

David S. Doty, Judge United States District Court

This matter is before the court upon the cross-motions for summary judgment by plaintiff Robert Francis Gelschus, personal representative of the estate of Sally Aileen Hogen, and defendant Clifford Charles Hogen. Based on a review of the file, record, and proceedings herein, and for the following reasons, the defendant's motion is granted and plaintiff's motion is denied.

BACKGROUND

This dispute arises out of the distribution of decedent Sally Aileen Hogen's assets in her Honeywell 401(k) Plan (Plan).

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Plaintiff Robert Francis Gelschus is the personal representative of Sally Hogen's estate. Gelschus Dep. at 17:8-10. Defendant Clifford Hogen is Sally Hogen's ex-husband and was the Plan beneficiary during their marriage. Hogen Dep. at 18:8-10; 21:10-13; ECF No. 86, at 4.

On June 26, 2002, the Hogens divorced. Hogen Dep. at 21:10-13. They negotiated and signed a marital termination agreement (MTA), which was incorporated into the divorce decree issued by the Hennepin County District Court. Id. at 21:21-23; Weber Aff. Ex. 5. Plaintiff alleges that the parties agreed in the MTA that Clifford Hogen would no longer be the beneficiary of the Plan. Defendant, however, contends that the MTA is silent as to the beneficiary designation and that he and Sally Hogen agreed in oral negotiations that he would be retained as beneficiary in exchange for his including other accounts in the divorce settlement. Hogen Dep. at 26:5-16.

In May 2008, Sally Hogen submitted a change of beneficiary form to Honeywell in an apparent attempt to remove Clifford Hogen as beneficiary. Weber Aff. Ex. 6. The submitted form, however, did not comply with the Plan's technical requirements.^[1] Id.

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Because the form did not satisfy the requirements, Honeywell did not remove Clifford Hogen as beneficiary.^[2] Id. Ex. 7. The parties dispute whether Sally Hogen received notice from Honeywell that the form was insufficient, but records indicate that Honeywell called Hogen and left a message. Id. In any event, it appears that Sally Hogen took no further action regarding the beneficiary designation.

On March 27, 2019, Sally Hogen passed away. Hogen Dep. at 37:9-16. Honeywell contacted defendant by mail to inform him that he was the named beneficiary of the Plan. Weber Aff. Ex. 11. Plaintiff, however, disputed the designation, sent Honeywell the divorce decree, and requested that the benefits be paid to the estate. Id. Ex. 13. Honeywell nevertheless paid the Plan benefits to Clifford Hogen in December 2019. Id. Ex. 12, at 5.

On December 27, 2019, plaintiff formally challenged Honeywell's determination that Clifford Hogen was the beneficiary. Id. Ex. 16. Honeywell denied plaintiff's claims, finding that Sally Hogen's attempt to change beneficiaries had been ineffective

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and that the divorce decree had no impact on the beneficiary designation.^[3] Id. Ex. 17. Plaintiff appealed the decision, but Honeywell's Pension and Savings Plan Appeals Committee denied that appeal. Id. Ex. 18; id. Ex. 19.

After exhausting administrative remedies, plaintiff filed suit on March 27, 2020, naming both Honeywell and Clifford Hogen as defendants. On April 6, 2021, the court dismissed Honeywell from the case, finding the Employee Retirement Income Security Act of 1974 (ERISA) governed the dispute and that Honeywell did not breach its fiduciary duties or its duties under ERISA's “plan documents rule.” See ECF No. 73.

Now, both plaintiff and the remaining defendant, Clifford Hogen, move for summary judgment. At its core, plaintiff's argument centers on the claim that defendant agreed to waive his status as beneficiary in the MTA and his acceptance of the benefits violated that agreement. The crux of defendant's argument is that, as a threshold matter, plaintiff lacks standing, and if the court finds otherwise, that he never waived his right to remain beneficiary.

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DISCUSSION

I. Standard of Review

The court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A fact is material only when its resolution affects the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either party. See id. at 252.

The court views all evidence and inferences in a light most favorable to the nonmoving party. See id. at 255. The nonmoving party must set forth specific facts sufficient to raise a genuine issue for trial; that is, the nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000); see Anderson, 477 U.S. at 249B50; Celotex v. Catrett, 477 U.S. 317, 324 (1986). Moreover, if a plaintiff cannot support each essential element of its claim, the court must grant summary judgment, because a complete failure of proof regarding an essential element necessarily renders all other facts immaterial. Celotex, 477 U.S. at 322-23.

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II. Preemption of State Law Claims

The court first considers whether plaintiff's claims are preempted by ERISA. ERISA preempts state laws that “relate to any employee benefit plan.” 29 U.S.C. § 1144(a). This preemption provision is expansive. See Cal. Div. of Lab. Standards Enf't v. Dillingham Constr., N.A., Inc., 519 U.S. 316, 324 (1997). A state law “relates to” an employee benefit plan covered by ERISA if it has a connection with or references such a plan. Id.

Here, the court previously found that ERISA governed the dispute as it related to Honeywell, the Plan administrator. ECF No. 73. That finding, however, does not end the inquiry for the claims against Clifford Hogen. Even if ERISA governs how a plan administrator must disburse account proceeds, a court may consider claims that attempt to recover plan proceeds “once those proceeds have been distributed.” Francis v. Donovan, No. 06-10080, 2006 WL 481672, at *3 (E.D. Mich. Feb. 28, 2006); see also Martens v. Hogan, No. 17-5169, 2018 WL 1865931, at *2-3 (D. Minn. Apr. 18, 2018) (finding that claims “relate[ed] to legal obligations separate from ERISA” are not preempted).^[4]

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Here, plaintiff argues its state law claims against defendant remain viable despite ERISA's application to Honeywell.^[5]Defendant counters that although ERISA may not preempt all state law claims, plaintiff's claims in this case are preempted because they seek to modify a plan beneficiary designation, a remedy expressly preempted by ERISA.

The court finds that to the extent that plaintiff asks the court to use its powers of equity to give effect to decedent's attempt to change her beneficiary status, the claims are preempted. See ECF No. 73. Plaintiff's breach of contract, unjust enrichment, conversion, and civil theft claims, however, have a separate basis. These claims allege that defendant contractually waived his status as Plan beneficiary in the MTA. Because these claims arise out of a contract between private parties, they are not preempted by the earlier finding that ERISA applied to Honeywell.

III. Standing

The second issue is whether plaintiff, as administrator of Sally Hogen's estate, has standing to bring the claims. A plaintiff in federal court based on diversity of citizenship must

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“meet[] the ‘case or controversy' requirements of article III ... and also ha[ve] standing to sue under the relevant state law.” Wolfe v. Gilmour Mfg. Co., 143 F.3d 1122, 1126 (8th Cir. 1998) (citation omitted). Under Minnesota law, “[a] party may acquire standing either as the beneficiary of a statutory grant of standing or by suffering an ‘injury-in-fact.'” Sec. Bank & Tr. Co. v. Larkin, Hoffman, Daly & Lindgren, Ltd., 916 N.W.2d 491, 496 (Minn. 2018) (citing Webb Golden Valley, LLC v. State, 865 N.W.2d 689, 693 (Minn. 2015)).

In the probate context, Minnesota law specifies that “a personal representative of a decedent domiciled in [Minnesota] at death has the same standing to sue ... as the decedent had immediately prior to death.” Minn. Stat. § 524.3-703(c). Thus, a personal representative can only bring claims on behalf of the estate if the claim accrued before decedent's death.

Accrual of a cause of action occurs when “a plaintiff can allege sufficient facts to survive a motion to dismiss for failure to state a claim upon which relief can be granted.” Frederick v. Wallerich, 907 N.W.2d 167, 173 (Minn. 2018) (citations omitted). Thus, accrual “requires the existence of operative facts supporting each element of the claim.” Sec. Bank & Tr. Co., 916 N.W.2d at 496.

Defendant argues that plaintiff lacks standing because none of the claims accrued until after decedent's death. Plaintiff

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counters by offering numerous examples of cases in which federal courts permitted claimants to proceed with claims against beneficiaries. As defendant points out, however, only one of those cases proceeded under the Minnesota statute that limits a personal representative's ability to bring claims. Further, in Martens, the one case proceeding under Minnesota law, neither party raised, and the court did not analyze, standing. 2018 WL 1865931, at *3.

The court's analysis in Security Bank & Trust Co. v. Larkin, however, is instructive. 916 N.W.2d at 491. In assessing a personal representative's claim, the court considered the implications of Minn...