HOCKNELL v. METROPOLITAN LIFE INSURANCE COMPANY

Filing 13

OPINION. Signed by Judge Noel L. Hillman on 9/6/2017. (rtm, )

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

JUDITH L. HOCKNELL,
1:16-cv-09093-NLH-AMD
Plaintiff,
OPINION
v.
METROPOLITAN LIFE INSURANCE
COMPANY,
Defendant.

APPEARANCES:
DONALD L. MASTEN
MICHAEL J. NAPUDA
MASTEN AND RAY
254 SOUTH BROADWAY
PO BOX 406
PENNSVILLE, NJ 08070
On behalf of Plaintiff
RANDI F. KNEPPER
MCELROY, DEUTSCH, MULVANEY & CARPENTER, LLC
1300 MT. KEMBLE AVENUE
P.O. BOX 2075
MORRISTOWN, NJ 07962
On behalf of Defendant
HILLMAN, District Judge
This is an ERISA matter concerning the denial of life
insurance benefits to the decedent’s niece who held her uncle’s
power of attorney.

Currently pending are the parties’ cross-

motions for summary judgment.

For the reasons expressed below,

Defendant’s motion will be granted, and Plaintiff’s motion will
be denied.

BACKGROUND
Plaintiff, Judith L. Hocknell, is the niece of Douglas W.
Saul, who held a group term life insurance policy through
Defendant, Metropolitan Life Insurance Company (“MetLife”), as
part of his employment with Mannington Mills, Inc.
(“Mannington”).

On June 3, 2015, Plaintiff forwarded an

insurance beneficiary designation form to Mannington’s human
resources department naming herself as the sole beneficiary of
the MetLife policy because her uncle was under hospice care and
his life expectancy was short.

Plaintiff believed, apparently

mistakenly, that the beneficiary designation needed to be
revised to remove as a beneficiary Plaintiff’s sister, who had
died a year before. 1

(Docket No. 7-5 at 28-29.)

On October 27, 2015, Saul passed away.

There were several

miscommunications between Plaintiff, Mannington’s human
resources department, and MetLife, as well as missing
documentation, including a page from Saul’s durable power of
attorney.

Eventually Plaintiff received a letter from MetLife

denying her claim for benefits on April 7, 2016.
MetLife denied Plaintiff’s claim because it determined that

1

Even though Plaintiff thought that a previous designation of
beneficiaries for Saul’s life insurance policy named Plaintiff
and her sister, Lynette A. Ladlee, it appears that the
designation of beneficiaries on file with Mannington related to
Saul’s pension benefits, not the MetLife life insurance policy.
2

the durable power of attorney did not permit Plaintiff to change
the designation of beneficiary to herself. 2

(Id.)

MetLife also

determined that because Saul had no designated beneficiaries, it
was required to apply the Plan’s Line of Succession provision,
which awarded benefits to Saul’s spouse or civil union partner,
child, parent, or siblings, and if no such persons survived him,
the estate.

(Id.)

MetLife denied benefits to Plaintiff under

the Line of Succession provision because she was Saul’s niece
and did not qualify as a lineal heir.

(Id. at 84.)

Plaintiff appealed that decision, arguing that the durable
power of attorney did allow her to designate herself as a
beneficiary. 3

(Docket No. 7-5 at 85-87).

She cited to several

provisions in the document, including Paragraph 1, General Grant
of Power, Paragraph 2, Powers of Collection and Payment,

2

The initial denial letter states:
According to our records, the latest beneficiary
designation on file was completed by you as the decedent's
Power of Attorney. This designation is not acceptable as
the Power of Attorney papers don't provide you the powers
to change such designation nor name yourself as the
beneficiary. In order to have those powers as the Attorney
in Fact the Power of Attorney papers would have to
explicitly provide you such powers, which they do not.

(Docket no. 7-5 at 81.)
3

Plaintiff does not appear to contest that she does not qualify
for benefits under the Plan’s Line of Succession provision. It
is unclear from the record which of Saul’s heirs would be deemed
the beneficiary of the policy under the Line of Succession
provision.
3

Paragraph 3, Life Insurance, and Paragraph 25, Good Faith
Reliance.

(Id.; see also Docket No. 7-5 at 56-65.)

MetLife denied her appeal, stating that the power of
attorney “may not be read to include the power to designate a
beneficiary of life insurance unless that power is specifically
listed on the executed form,” and “the Power of Attorney does
not specifically state that the Attorney-in-Fact has power to
designate or change a life insurance beneficiary.”

(Docket No.

7-5 at 95.)
Plaintiff filed the instant suit against MetLife, 4 claiming
that MetLife illegally denied her claim for the life insurance
benefits 5 because the durable power of attorney clearly grants
Plaintiff the power to designate herself as a beneficiary,
citing to Paragraph 1, the General Power “to exercise or perform
any act, power, duty, right, or obligation whatsoever,” and
Paragraph 2, Power of Collection and payment, “to forgive,
request, demand, sue for, recover, collect checks, drafts,
accounts, deposits, legacies, bequests, annuities and pensions.”
(Docket No. 7-5 at 111.)
Both parties have moved for summary judgment in their
favor.

MetLife argues that under the arbitrary and capricious

4

Plaintiff originally filed her complaint in New Jersey state
court. MetLife removed the case to this Court.
5

The amount of benefits under the policy is $3,500.00.
4

standard of review that must be applied to its benefit
determinations under the Plan, its denial of Plaintiff’s claim
was based on a reasonable interpretation of the Plan and the
governing documents.

MetLife argues that a New Jersey statute,

N.J.S.A. 46:2B-8.13a, controls and precludes an attorney-in-fact
from gratuitously transferring property of the principal to
herself without express and specific authority.

Because MetLife

determined that the durable power of attorney did not provide
Plaintiff with that authority, MetLife argues that its denial of
Plaintiff’s claim to benefits cannot be deemed arbitrary and
capricious.
In response, Plaintiff argues that Paragraph 20 in the
durable power of attorney, a “Gifts” provision which allows the
attorney-in-fact to make gifts to certain enumerated classes of
people, satisfies N.J.S.A. 46:2B-8.13a, and therefore MetLife’s
denial of her claim was an abuse of discretion.

DISCUSSION
A.

Subject matter jurisdiction

Defendant removed Plaintiff’s complaint from state court on
the basis that the Court has federal question subject matter
jurisdiction over this action pursuant to 28 U.S.C. § 1331, and
specifically under the Employee Retirement Income Security Act
of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq., as amended.
5

B.

Standard for Cross-Motions for Summary Judgment

Summary judgment is appropriate where the Court is
satisfied that the materials in the record, including
depositions, documents, electronically stored information,
affidavits or declarations, stipulations, admissions, or
interrogatory answers, demonstrate that there is no genuine
issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.

Celotex Corp. v.

Catrett, 477 U.S. 317, 330 (1986); Fed. R. Civ. P. 56(a).

If

review of cross-motions for summary judgment reveals no genuine
issue of material fact, then judgment may be entered in favor of
the party deserving of judgment in light of the law and
undisputed facts.

See Iberia Foods Corp. v. Romeo Jr., 150 F.3d

298, 302 (3d Cir. 1998) (citation omitted).
C.

Standard of Review under ERISA

There is no dispute that the Plan meets the test to qualify
as an ERISA plan.

ERISA provides that a plan participant or

beneficiary may bring a suit “to recover benefits due to him
under the terms of his plan, to enforce his rights under the
terms of the plan, or to clarify his rights to future benefits
under the terms of the plan.”

29 U.S.C. § 1132(a)(1)(B).

The

statute, however, does not specify a standard of review for an
action brought pursuant to § 1132(a)(1)(B).

Firestone Tire &

Rubber Co. v. Bruch, 489 U.S. 101, 109 (1989).
6

The Supreme Court held that “a denial of benefits
challenged under § 1132(a)(1)(B) is to be reviewed under a de
novo standard unless the benefit plan gives the administrator or
fiduciary discretionary authority to determine eligibility for
benefits or to construe the terms of the plan.”

Id. at 115.

When the plan affords the administrator with discretionary
authority, courts must review the benefit decision for an abuse
of discretion.

Conkright v. Frommert, 559 U.S. 506, 517 (2010)

(affirming deferential standard of review to the plan
administrator); see Howley v. Mellon Fin. Corp., 625 F.3d 788,
793 n.6 (3d Cir. 2010) (explaining that courts in this Circuit
have referred to this standard of review as “abuse of
discretion” or “arbitrary and capricious” - these standards of
review are essentially identical and the terms are
interchangeable).
The parties agree that the abuse of discretion/arbitrary
and capricious standard applies to this case because the Plan
gives the plan administrator discretionary authority to decide
eligibility benefits or interpret terms of the Plan.
Under the abuse of discretion standard of review, “the
Court’s role is not to interpret ambiguous provisions de novo,
but rather to ‘analyze whether the plan administrator’s
interpretation of the document is reasonable.’”

Connor v.

Sedgwick Claims Management Services, Inc., 796 F. Supp. 2d 568,
7

580 (D.N.J. 2011) (quoting Bill Gray Enters. Inc. Employee and
Health Welfare Plan v. Gourley, 248 F.3d 206, 218 (3d Cir.
2001)) (other citation omitted).

A decision is considered

arbitrary and capricious “if it is without reason, unsupported
by substantial evidence or erroneous as a matter of law.”
Abnathya v. Hoffman-La Roche, Inc., 2 F.3d 40, 45 (3d Cir.
1993).
To determine whether a plan administrator abused its
discretion, the Court must focus “on how the administrator
treated the particular claimant.”

Miller v. Am. Airlines, Inc.,

632 F.3d 837, 845 (3d Cir. 2011) (quoting Post v. Hartford Ins.
Co., 501 F.3d 154, 162 (3d Cir. 2007)).

“Specifically, in

considering the process that the administrator used in denying
benefits, we have considered numerous irregularities to
determine whether . . . the administrator has given the court
reason to doubt its fiduciary neutrality.”
quotations omitted).

Id. (internal

This is accomplished “by taking account of

several different, often case-specific, factors, reaching a
result by weighing all together.”

Id. (quoting Metropolitan

Life Ins. Co. v. Glenn, 554 U.S. 105, 117 (2008)).
The scope of a court’s review is narrow, however, and the
court “is not free to substitute its own judgment for that of
the plan administrator in determining eligibility for plan
benefits.”

Connor, 796 F. Supp. 2d at 579 (quotation omitted).
8

Thus, the plaintiff retains the burden to prove that he is
entitled to benefits, and that the plan administrator’s decision
was arbitrary and capricious.
D.

Analysis

The primary dispute in this case is not the interpretation
of Plan documents, but the interpretation of a New Jersey
statute and its application to Saul’s durable power of attorney.
On January 28, 2004, N.J.S.A. 46:2B-8.13a codified a longstanding common law rule regarding a power of attorney’s
authority to provide gifts under a power of attorney document.
See Wolpin v. Wolpin, 2010 WL 1028164, at *6 (N.J. Super. Ct.
App. Div. 2010) (citing Manna v. Pirozzi, 130 A.2d 55 (N.J.
Super. Ct. App. Div. 1957)) (explaining that N.J.S.A. 46:2B8.13a codified New Jersey common law, which provided that “one
holding a power of attorney could not appropriate to oneself or
give away the assets of the principal unless the power of
attorney ‘contain[ed] very clear language’ permitting such
action”); see also Von Wedel v. McGrath, 180 F.2d 716 (3d Cir.
1950)(attorney-in-fact exceeded his powers by gratuitously
transferring property because the power of attorney instrument
contained only general language to conduct business transactions
and did not authorize expressly authorize gifts), cert. denied,
340 U.S. 816 (1950).
This Court holds after a review of the language of the
9

relevant statute, N.J.S.A. 46:2B-8.13a, and the few cases that
interpret it, that MetLife did not abuse its discretion in
denying benefits in this case.
We begin with the language of the statute itself.

N.J.S.A.

46:2B-8.13a provides:
A power of attorney shall not be construed to authorize the
attorney-in-fact to gratuitously transfer property of the
principal to the attorney-in-fact or to others except to
the extent that the power of attorney expressly and
specifically so authorizes. An authorization in a power of
attorney to generally perform all acts which the principal
could perform if personally present and capable of acting,
or words of like effect or meaning, is not an express or
specific authorization to make gifts.
Id. (emphasis added.)
It is clear from a simple application of the statutory
language in the section’s second sentence that the “General
Grant of Power” provision in Saul’s durable power of attorney 6 is
not sufficient to permit Plaintiff to designate herself a
beneficiary of the life insurance policy.

We view the first

sentence of the section to be disjunctive as we have underlined
it above 7 and to mean what it plainly says: to meet the

6

A durable power of attorney differs from a standard power of
attorney because it exercisable even if the principal becomes
disabled or incapacitated. N.J.S.A. 46:2B-8.2(b). A durable
power of attorney is an “inexpensive device that permits a
person to cope with the ever-increasing risks of future
incapacity,” and “it can do so without court involvement and the
potential expense and requirements of court supervision.” §
52:1.Commentary, 16A N.J. Prac., Legal Forms § 52:1 (4th ed.).
7

As one New Jersey court has noted “’[t]he word . . . ‘or’
10

requirements of the statute a power of attorney must expressly
state that an attorney-in-fact may make gifts to himself or
herself.
The next question then is whether Saul’s durable power of
attorney otherwise “expressly and specifically” “authorizes”
“the attorney-in-fact to gratuitously transfer property of the
principal to the attorney-in-fact . . . .”

The answer is no.

We recognize that Paragraph 20 in Saul’s durable power of
attorney “expressly and specifically” permits the attorney-infact to make gifts of property to the descendants of his
siblings.
20. GIFTS. My Agent may make outright gifts of cash or
property to adults or under applicable Gifts to Minors’
Acts in custodial form to persons under the age of twentyone (21) years. Permissible donees hereunder shall include
my spouse, any child or step­child of mine and their
descendants, parents, any sibling of mine or their
descendants or any person to whom I shall have been
married, as well as any person who shall be married to any
of the foregoing.
(Docket No. 7-5 at 62.)

Plaintiff argues that she, as Saul’s

carries with it natural disjunctive import.’ State v. Duva, 192
N.J.Super. 418, 421, 470 A.2d 53 (Law Div.1983). Furthermore,
‘the legislature is deemed to have intended what it wrote and
the Court may not construe a contrary concept.’ Ibid.” Pine Belt
Chevrolet, Inc. v. Jersey Cent. Power & Light Co., 132 N.J. 564,
578–79, 626 A.2d 434, 441 (1993). Ambiguities that arise as to
whether “and” might actually mean “or” are not implicated here.
See e.g., Howard v. Harwood's Restaurant Co., 25 N.J. 72, 88,
135 A.2d 161 (1957)(determination of whether the word ‘and’ as
used in a statute should be read in the conjunctive or
disjunctive depends primarily upon legislative intent).
11

agent, is therefore authorized by the durable power of attorney
to gratuitously give property – i.e., the benefits of the life
insurance property 8 – to herself as niece.
Even though it is uncontroverted that Plaintiff is a
descendent of one of Saul’s siblings, and clearly falls within a
category of permissible gift recipients described in Paragraph
20, this Court finds that Paragraph 20 is not specific or
express enough within the meaning of N.J.S.A. 46:2B-8.13a to
confer power to Plaintiff to make gifts to herself.
There are several reasons why we think this is so.

First,

if Saul had intended to give his niece power to give herself
gifts he chose an odd, inartful, and indirect way to do it.

It

would have been much simpler, more direct, and clearer for her
uncle and the drafter to grant that power to her explicitly, by
name and by title as attorney-in-fact, rather than have that
power derived by her status as a member of a broad category that
included at least one other person and maybe more.

This lack of

clarity in what is otherwise a comprehensive legal document
suggests that Plaintiff’s interpretation of the Paragraph 20 was

8

In light of our disposition of this matter, we need not address
Defendant’s alternative argument that by statute a durable power
of attorney must expressly grant an attorney-in-fact the power
to designate a beneficiary of a life insurance policy. The
parties appear to agree that no such provision exists in the
power of attorney document at issue in this case and Plaintiff
relies solely on the Gifts provision for her argument that she
had express authority to designate herself as beneficiary.
12

not her uncle’s intent.
Second, Plaintiff’s interpretation of Paragraph 20 would
undermine the New Jersey Legislature’s goal of preventing the
very ambiguity and potential for self-dealing this case
presents. 9

An attorney-in-fact owes a fiduciary duty to

administer assets solely for the principal’s benefit.

Manna,

130 A.2d at 57 (“[W]hen a person undertakes to act as an agent,
he assures the obligations of a fiduciary.”)); N.J.S.A. 46:2B–19
(“An agent presenting or acting pursuant to or relying on a
power of attorney described in section 2 of this act shall be a
fiduciary within the meaning of the “Uniform Fiduciaries Law,”
P.L.1981, c. 405 (C.3B:14-52 et seq.).”).
The purpose of N.J.S.A. 46:2B-8.13a is to preclude an
attorney-in-fact from using her position of power to violate her
fiduciary duty to the principal by transferring the principal’s
property to herself. 10

Only if the principal explicitly provides

9

To be clear, we make no finding that Plaintiff acted with
larcenous intent or other ill motive when she attempted to name
herself as the sole beneficiary of the policy at issue here. We
accept for purposes of this Opinion that she believed, albeit
without supporting documentation, Saul had, before granting her
power of attorney, named Plaintiff and her sister as
beneficiaries. Viewed in that light, we accept her claim that
she was merely attempting to manage Saul’s financial affairs
after her sister predeceased her uncle. In the end, it is not
Plaintiff’s intent that concerns us as much as how her
interpretation of N.J.S.A. 46:2B-8.13a would enable those whose
intent is less than benign.
10

The N.J. Legislative history relates:
13

in the power of attorney document that the attorney-in-fact may
transfer property or make gifts – to others, to herself, or both
– can such gratuitous transfers be countenanced.

Saul’s durable

power of attorney does not contain the explicit power to his
attorney-in-fact the statute requires.
Interpretation of a statute faithful to its language and
legislative intent is always important but we consider this
judicial obligation even more pronounced under the facts of this
case.

Here, Plaintiff operated under a “durable” power of

attorney which extended her broad power of attorney, and with it
the power to gift, into and throughout the term of her
principal’s incompetency; that is to say, long after Saul
himself lacked the ability to detect and prevent any
unauthorized self-dealing or acts inconsistent with his other
directives and bequeaths. 11

This bill is intended to protect the individual, known as
the principal, who authorizes another person to act on his
behalf in financial transactions by means of a power of
attorney. The bill is intended to prevent fraudulent
transfers of the principal's assets by clarifying that a
power of attorney does not automatically give authority to
the attorney-in-fact to make gratuitous transfers of
property belonging to the principal. Under the bill, the
attorney-in-fact would not be authorized to make gratuitous
transfers or gifts unless the power of attorney expressly
and specifically so authorizes.
New Jersey Senate Committee Statement, S.B. 2082, 5/8/2003.
11

Saul’s durable power of attorney contains a broad health care
14

Driven by the complexity, sophistication, privacy concerns,
risk, cost, and the overall nature of medical and custodial
care, durable powers of attorney are more and more common.

We

recognize, of course, that Saul could have decided while
competent to give his niece full power to gift to herself all of
his property before he died despite what any unrevoked will or
trust document might direct, his care might require, or how any
disenfranchised party might react.

We simply hold that the New

Jersey Legislature has determined by statute that if a grantor
of a power of attorney intends such a result, they must do so
clearly, expressly, and without ambiguity.

Cf., Manna, 130 A.2d

at 58-59 (noting gift by attorney-in-fact directly conflicted
with reaffirmed bequeath of same property).
Lastly, the few cases that discuss N.J.S.A. 46:2B-8.13a are
in accord with our reading of the statute or do not change our
interpretation.

See, e.g., Estate of Pauli v. Wachovia Bank,

N.A., 2014 WL 8765427, at *8 (N.J. Super. Ct. App. Div. 2015)(in
case where power of attorney document did not grant power to
make gifts or change beneficiary designations, holding daughter

directive that provides Plaintiff with the authority to “make
any arrangements for my medical care or hospitalization,” and
its intent, by making it “durable” and entered into six month
before his death, is to authorize Plaintiff to have the full
power to do “everything necessary” “as fully as [Saul] might or
could do if personally present.” (Docket No. 7-5 at 57, 59, 61.)
Saul’s conveyance of power to Plaintiff is overarchingly broad
so that she may act in his stead while he is ill and dying.
15

of decedent would have exceeded her authority if she had
diverted to herself and her sisters IRA CD proceeds which had
been designated to the father’s second wife); Wolpin, 2010 WL
1028164, at *6 (applying New Jersey common law to invalidate
attorney-in-fact’s transfer of real property to herself under
power of attorney that did not clearly allow such self-dealing
and noting that post-conduct passage of N.J.S.A. 46:2B-8.13a was
consistent with ruling); cf., In Re Estate of Moskowitz, 115
A.3d 372, 388 n. 17 (noting similarity between New Jersey law
and Pennsylvania law in requiring specific authority for
attorney-in-fact to make gifts). 12

12

The only case we are aware of that could be interpreted to
suggest otherwise is a pre-statute United States Tax Court case,
Bronston v. C.I.R., T.C. Memo. 1988-510 (U.S. Tax Court 1988).
In Bronston, the Tax Court applied New Jersey common law to
allow an attorney-in-fact to make six pre-death (hence lowering
the amount of the taxable estate) transfers of cash to family
members including the attorney-in-fact under a broad power of
attorney that expressly allowed the transfer of any property of
the decedent. In doing so, the Tax Court distinguished Von
Wedel v. McGrath, 180 F.2d 716 (3d Cir. 1950), cert. denied, 340
U.S. 816 (1950) and Manna v. Pirozzi, 130 A.2d 55 (N.J. Super.
Ct. App. Div. 1957):
The power of attorney in the present case differs
materially from that in Von Wedel and Manna. The
decedent's power of attorney . . . . specifically
authorizes Bronston, ‘to grant and * * * convey * * * any
property now or in the future owned by me.’ The power of
attorney in Von Wedel and Manna did not include such
language. The SPECIFIC language in decedent's power of
attorney could authorize gifts in appropriate
circumstances. While this language also appears with
language granting powers to sell, bargain, lease and
contract, in Von Wedel and Manna the language clearly
16

CONCLUSION
In sum, we hold that MetLife properly interpreted New
Jersey law in determining that Saul’s durable power of attorney
failed to meet a statutory obligation to expressly and
specifically grant his attorney-in-fact the power to transfer or
gift property to herself regardless of the type of property
involved.

Consequently, MetLife did not act arbitrarily or

capriciously in its denial of Plaintiff’s claim.
Accordingly, Plaintiff’s motion for summary judgment in her
favor on her claim for benefits as a beneficiary of an ERISA
plan administrated by MetLife must be denied, and MetLife’s
motion for summary judgment must be granted.
An appropriate Order will be entered.

Date: September 6, 2017
At Camden, New Jersey

s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.

limited the exercise of powers to business transactions.
In this case there is not such a specific limitation and
the circumstances surrounding the decedent's giving the
power are quite unlike those present in either Von Wedel
and Manna. . . .
We find Bronston inapposite. First, it makes no mention of, and
therefore does not address, the fact that one of the recipients
of the transfers was the attorney-in-fact. Second, as we have
noted, it predates the passage of N.J.S.A. 46:2B-8.13a. We have
no difficulty in concluding that the outcome in Bronston would
have been different for those funds the attorney-in-fact
transferred to himself if that statute was in force at the time
of the transfer.
17