National Electrical Annuity Plan v. Roybal et al

Filing 85

ORDER denying Defendants' Cross-Motions for Summary Judgment. 46 Motion for Summary Judgment and 49 Motion for Summary Judgment are denied. Signed by Magistrate Judge Mary K. Dimke. (KW, Case Administrator)

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1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 EASTERN DISTRICT OF WASHINGTON 8 NATIONAL ELECTRICAL ANNUITY PLAN, Plaintiff, No. 1:15-CV-3213-MKD 10 vs. ORDER DENYING DEFENDANTS’ CROSS-MOTIONS FOR SUMMARY JUDGMENT 11 SHAWNA T. ROYBAL et al Defendants. ECF Nos. 46, 49 9 12 13 BEFORE THE COURT are Defendant Roybal’s Motion for Summary 14 Judgment (ECF No. 49) and Defendant Hill’s Motion for Summary Judgment 15 (ECF No. 46). The Court heard argument on October 11, 2017. Jeffrey Maxwell 16 appeared by telephone on behalf of Plaintiff National Electrical Annuity Plan 17 (NEAP). Tyler Farmer appeared on behalf of Ms. Roybal. Russell Gilbert 18 appeared on behalf of Mr. Hill. The Court, having reviewed the briefing, the 19 record, and files therein and heard argument, is fully informed. For the reasons 20 discussed below, the Court denies Ms. Roybal’s motion (ECF No. 49) and denies 21 22 ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 1 1 Mr. Hill’s motion (ECF No. 46). 2 3 4 5 6 JURISDICTION This court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1132(e) and 1132(a)(3)(B)(ii). PROCEDURAL BACKGROUND The parties have filed cross-motions for summary judgment. ECF Nos. 46, 7 49. As part of the briefing of those motions, Ms. Roybal sought partial summary 8 judgment. ECF No. 58 at 2. The Court heard argument on the motions on October 9 11, 2017. During argument, Defendant Hill conceded that Ms. Roybal is entitled 10 to at least half of the proceeds of Ronnal Hill’s NEAP account. Based on this 11 concession, Ms. Roybal filed a subsequent motion for partial summary judgment, 12 reiterating some of the claims raised in her initial motion for summary judgment. 13 ECF No. 76. Mr. Hill filed an objection on procedural grounds but did not dispute 14 Ms. Roybal’s factual and legal entitlement to partial summary judgment. ECF No. 15 81. The Court granted the motion for partial summary judgment in a separate 16 order. ECF No. 83. The Court now addresses the remainder of the issues raised in 17 the parties’ cross motions for summary judgment. 18 19 20 STANDARD OF REVIEW Summary judgment may be granted to a moving party who demonstrates “that there is no genuine dispute as to any material fact and the movant is entitled 21 22 ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 2 1 to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The moving party bears the 2 initial burden of demonstrating the absence of any genuine issues of material fact. 3 Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to the 4 non-moving party to identify specific facts showing there is a genuine issue of 5 material fact. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). 6 “The mere existence of a scintilla of evidence in support of the plaintiff's position 7 will be insufficient; there must be evidence on which the jury could reasonably 8 find for the plaintiff.” Id. at 252. For purposes of summary judgment, “[i]f a party 9 fails to properly support an assertion of fact or fails to properly address another 10 party's assertion of fact as required by Rule 56(c), the court may . . . consider the 11 fact undisputed.” Fed. R. Civ. P. 56(e)(2); see also L.R. 56.1(d). 12 A fact is “material” if it might affect the outcome of the suit under the 13 governing law. Anderson, 477 U.S. at 248. A dispute concerning any such fact is 14 “genuine” only where the evidence is such that the trier-of-fact could find in favor 15 of the non-moving party. Id. “[A] party opposing a properly supported motion for 16 summary judgment may not rest upon the mere allegations or denials of his 17 pleading, but must set forth specific facts showing that there is a genuine issue for 18 trial.” Id. (internal quotation marks and alterations omitted); see also First Nat’l 19 Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968) (holding that a party 20 is only entitled to proceed to trial if it presents sufficient, probative evidence 21 22 ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 3 1 2 supporting the claimed factual dispute, rather than resting on mere allegations). Finally, in ruling upon a summary judgment motion, a court must construe 3 the facts, as well as all rational inferences therefrom, in the light most favorable to 4 the non-moving party. Scott v. Harris, 550 U.S. 372, 378 (2007); see also Tolan v. 5 Cotton, 134 S. Ct. 1861, 1863 (2014) (“[I]n ruling on a motion for summary 6 judgment, the evidence of the nonmovant is to be believed, and all justifiable 7 inferences are to be drawn in his favor.” (internal quotation marks and brackets 8 omitted)). 9 UNDISPUTED FACTS 10 NEAP is an employee pension benefit plan, governed by the Employee 11 Retirement Income Security Act of 1974 (ERISA). ECF No. 1 at 2-3. NEAP’s 12 Plan of Benefits (Plan) contains the governing rules, regulations, policies, and 13 procedures for payment of benefits under NEAP. ECF No. 47 at 5; ECF No. 73 14 at 8. The Plan affords “full discretionary power and authority to construe and 15 interpret the provisions of this Plan, the terms used herein, and the rules, 16 regulations, and policies related thereto.” Id. at 25-26.; ECF No. 73 at 27. 17 Ronnal L. Hill (Participant) participated in the NEAP Plan through his 18 employment. ECF No. 1 at 3. On or about November 14, 2009, Participant 19 submitted a NEAP Normal Benefit Application, in which he selected a fifteen 20 year payout of his NEAP account. Id. Included in Participant’s Normal Benefit 21 22 ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 4 1 Application was a Designation of Beneficiary and Spouse Consent Form 2 (beneficiary form). ECF No. 53 at 7. Participant completed certain fields on the 3 beneficiary form, including the name, relationship to, and birthday of intended 4 beneficiary with the information of his daughter Shawna Roybal. ECF No. 52 at 5 34. Participant did not sign the beneficiary form. Id. Instead, Participant’s 6 daughter Ms. Roybal signed the beneficiary form in the section designated for 7 Participant’s signature. Id. Participant signed two other pages in the benefits 8 application. ECF No. 53 at 10-11. 9 NEAP’s trustees approved Participant’s application for benefits. ECF No. 10 1 at 3. Participant died on December 7, 2014, with an outstanding NEAP 11 account balance of approximately $400,000. Id. On January 22, 2015, NEAP 12 informed Ms. Roybal she was the designated beneficiary of Participant’s NEAP 13 account. ECF No. 52 at 100. On February 6, 2015, Ms. Roybal submitted an 14 application for NEAP benefits. ECF No. 52 at 9. On February 18, 2015, NEAP 15 informed Ms. Roybal that the beneficiary form was invalid because it lacked 16 Participant’s signature. ECF No. 56 at 7. 17 NEAP’s Plan specifies that in the event an unmarried participant dies 18 without having designated a valid beneficiary, the participant’s children are 19 entitled to equal shares of the NEAP account. ECF No. 47 at 18; ECF No. 73 at 20 19-20. Participant was not married, and Ms. Roybal and Mr. Hill are Participant’s 21 22 ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 5 1 only surviving children. ECF No. 1 at 5; ECF No. 43; ECF No. 52 at 92. Deference to NEAP’s Discretion 2 A. 3 ERISA fiduciaries must distribute benefits “in accordance with the 4 documents and instruments governing the plan.” 29 U.S.C. § 1104(a)(1)(D). “[I]f 5 a plan grants the administrator discretion to interpret it or to determine benefit 6 eligibility, a court will uphold such interpretation or determination if reasonable.” 7 Becker v. Williams, 777 F.3d 1035, 1040 (9th Cir. 2015) (citing Firestone Tire & 8 Rubber Co. v. Bruch, 489 U.S. 101, 103 (1989)). However, if a plan administrator 9 declines to award benefits to competing claimants and instead files an interpleader 10 action, the administrator “impliedly decline[s]” to exercise its discretion. Becker, 11 777 F.3d at 1041. When the administrator fails to exercise its discretion, the court 12 reviews de novo the question of who is entitled to benefits. Id. 13 Here, NEAP’s Plan gives the trustees “full, discretionary, and exclusive 14 power and authority … to determine all questions of coverage and eligibility” for 15 benefits. ECF No. 47 at 25-26; ECF No. 73 at 27. However, upon realization that 16 Participant did not sign the designation of beneficiary form, NEAP declined to 17 award benefits to Ms. Roybal as the sole beneficiary. ECF No. 56 at 7. NEAP 18 also declined to award equal shares of Participant’s account to Ms. Roybal and Mr. 19 Hill, despite the fact that both parties submitted proof that they are Participant’s 20 legal heirs. ECF No. 1 at 5; ECF No. 43. Instead, NEAP filed the present 21 22 ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 6 1 interpleader action. ECF No. 1 at 6-7. Filing an interpleader action implies 2 NEAP’s trustees declined to exercise the discretion they are otherwise entitled to 3 exercise. Becker, 777 F.3d at 1041. 4 This case differs factually from Becker, in that the administrators in Becker 5 filed the interpleader motion after receiving competing claims for benefits. Becker, 6 777 F.3d at 1037. Here, NEAP initially notified Ms. Roybal that she was the 7 designated beneficiary. ECF No. 52 at 100. Shortly thereafter, NEAP notified Mr. 8 Hill that Participant had a designated beneficiary on file other than Mr. Hill. ECF 9 No. 52 at 102. Only after this correspondence, and after Ms. Roybal submitted an 10 application for benefits, did NEAP determine that the beneficiary form was invalid 11 and filed the interpleader action. ECF No. 48 at 53. Despite the factual 12 dissimilarities, the rule set forth in Becker controls. In determining when a plan 13 administrator has exercised discretion, the Ninth Circuit seems to draw the line at 14 the act of awarding benefits. Becker, 777 F.3d at 1041. Although NEAP contacted 15 Ms. Roybal, it never approved her application for benefits or awarded her the 16 funds. ECF No. 48 at 53. Moreover, NEAP did not jointly award benefits to Ms. 17 Roybal and Mr. Hill and instead filed an interpleader action. Therefore, NEAP’s 18 Trustees declined to exercise its discretion to determine the appropriate 19 beneficiaries in this case. Thus, the Court will review de novo whether Ms. Roybal 20 was validly designated as a beneficiary. 21 22 ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 7 1 B. 2 When reviewing competing claims to ERISA plan benefits, the Court should Force of Plan Documents 3 consider the plan documents. Becker, 777 F.3d at 1041. “An ERISA fiduciary 4 must distribute benefits ‘in accordance with the documents and instruments 5 governing the plan.’” Becker, 777 F.3d at 1038. “[O]nly those documents that 6 elucidate ‘exactly where [the participant] stands with respect to the plan—what 7 benefits he may be entitled to, what circumstances may preclude him from 8 obtaining benefits, what procedures he must follow to obtain those benefits…” are 9 plan documents. Id. at 1039 (citing Hughes Salaried Retirees Action Comm. v. 10 Adm’r of the Hughes Non-Bargaining Ret. Plan, 72 F.3d 686, 690 (9th Cir. 1995)). 11 Here, the NEAP Plan grants significant deference to NEAP’s administrators 12 to interpret the Plan and determine benefits. ECF No. 47 at 25-26; ECF No. 73 at 13 27. NEAP’s Plan provides that if a participant dies unmarried and without 14 designating a valid beneficiary, the participant’s benefits shall be distributed 15 equally among the participant’s living children. Id. at 18; ECF No. 73 at 19-20. 16 However, the Plan itself does not specify what steps a participant must take to 17 designate a beneficiary. Notably, the Plan does not state whether the participant’s 18 signature is required on the beneficiary form in order to designate a valid 19 beneficiary. 20 Mr. Hill asserted at oral argument that a signature requirement for the 21 22 ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 8 1 beneficiary form exists if the Plan is read together with the Summary Plan 2 Description, including the sample beneficiary form contained therein. The Ninth 3 Circuit has held that designation of beneficiary forms like this one are not “plan 4 documents” under ERISA. Becker, 777 F.3d at 1039-40. Summary plan 5 documents are also not plan documents. CIGNA Corp. v. Amara, 563 U.S. 421, 6 438 (2011). Even if Mr. Hill can identify portions of these documents that can be 7 read together to imply a signature requirement to validly designate a beneficiary, 8 the documents Mr. Hill identifies are not entitled to the force of plan documents. 9 The Trustees were not bound to rely on these documents in determining a 10 11 beneficiary, and the Court similarly is not bound. The Court is left to consider the Plan itself, which does not specify how to 12 designate a beneficiary. ECF No. 47 at 5-29; ECF No. 73 at 8-30. In such a 13 situation, the Court is to apply the equitable doctrine of substantial compliance to 14 determine whether Participant validly designated Ms. Roybal as his beneficiary. 15 See Becker, 777 F.3d at 1041. 16 C. 17 “ERISA is a comprehensive statutory scheme designed to govern employee 18 benefit plans, which provides that it ‘shall supersede any and all State laws insofar 19 as they … relate to any employee benefit plan’ covered by the statute.” 20 BankAmerica Pension Plan v. McMath, 206 F.3d 821, 828 (9th Cir. 2000). Applicable Law of Substantial Compliance 21 22 ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 9 1 However, ERISA does not “expressly govern[] disputes between claimants to plan 2 proceeds.” Id. When a dispute over ERISA benefits turns on a question of 3 substantial compliance, ERISA does not preempt state law. Id. at 828-30. 4 Therefore, the Court must apply the law of the forum state. Id.; see also Erie 5 Railroad v. Tompkins, 304 U.S. 64, 78 (1938). 6 Here, the question of whether Participant validly designated Ms. Roybal as 7 his sole beneficiary turns on whether Participant’s actions rise to the level of 8 substantial compliance. Therefore, this Court applies the law of the forum state, 9 Washington, in order to determine substantial compliance. 10 D. 11 In Washington, courts can act in equity to enforce an attempted change in 12 beneficiary if the insured “has substantially complied with the provisions of the 13 policy regarding that change.” In re Estate of Freeberg, 122 P.3d 741, 743 (Wash. 14 Ct. App. 2005) (internal citations omitted). Substantial compliance is 15 demonstrated by the participant having “manifested an intent to change 16 beneficiaries and done everything reasonably possible to make that change.” Id. 17 Therefore, the question in this case becomes whether the Participant manifested an 18 intent to designate Ms. Roybal as the beneficiary of his NEAP account, and 19 whether the Participant did everything reasonably possible to do so. 20 Washington Law of Substantial Compliance “When confronted with the fact-specific inquiry of determining a deceased's 21 22 ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 10 1 intent, the failure to complete simple, mundane tasks undermines [the 2 participant’s] alleged unequivocal desire to change his beneficiary.” Becker, 168 3 F. Supp. 3d at 1328. A review of Washington’s case law, however, does not reveal 4 a requirement that a document must be signed in order to requisite intent for 5 substantial compliance. See Freeberg, 122 P.3d at 744 (insured’s in-person oral 6 request to change IRA beneficiary and investment agency’s failure to do so was 7 substantial compliance); Allen v. Abrahamson, 529 P.2d 469 (Wash. Ct. App. 8 1974) (insured’s act of giving parents insurance certificates but making no written 9 request to insurance company did not substantially comply with insurance 10 company’s policy requiring written notice of change); Sun Life Assur. Co. of 11 Canada v. Sutter, 95 P.2d 1014, 1017 (Wash. 1939) (unsigned letter clearly written 12 by decedent substantially complied with plan requirement of written notice to 13 change beneficiary). 14 The Court finds the question of Participant’s intent and the determination of 15 whether he did everything reasonably possible to effectuate his intent present 16 outstanding issues of fact that are inappropriate to resolve on summary judgment. 17 In considering a motion for summary judgment, the Court is to consider the facts 18 and draw all rational inferences therefrom in the light most favorable to the non- 19 moving party. Scott v. Harris, 550 U.S. at 378. Here, both Defendants moved for 20 summary judgment. 21 22 ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 11 1 A genuine issue of material facts exists as to Participant’s intent when he 2 completed certain aspects of the beneficiary form identifying Ms. Roybal as his 3 sole beneficiary, but did not sign it, and then submitted it to NEAP as part of the 4 application. Moreover, the rational inferences to be drawn from viewing the 5 evidence in the light most favorable to each defendant support each defendant’s 6 separate positions. If all rational inferences are drawn in Ms. Roybal’s favor, a 7 reasonable trier of fact could conclude Participant intended to designate Ms. 8 Roybal as his beneficiary by his actions of completing some of the beneficiary 9 form in his own hand, signing other portions of the application, and submitting the 10 application to NEAP. Alternatively, if all rational inferences are drawn in Mr. 11 Hill’s favor, a reasonable trier of fact could conclude Participant did not intend to 12 designate Ms. Roybal as his beneficiary because Participant correctly completed 13 other portions of the application calling for Participant’s signature. 14 Moreover, the Court finds that the proffered evidence presents evidentiary 15 and credibility issues that are inappropriate to resolve on summary judgment. For 16 example, the evidence regarding Participant’s 2012 will (ECF No. 48 at 55) and 17 Ms. Roybal’s deposition testimony regarding this document (ECF No. 48 at 25-26) 18 can support a rational inference in favor of each defendant. Mr. Hill offers this 19 20 21 22 ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 12 1 document as evidence of Participant’s testamentary intent to treat all1 of his 2 children equally. ECF No. 46 at 27. Ms. Roybal stated that this document was the 3 product of a “mock meeting” meant to pacify the concerns of Participant’s other 4 children without revealing Participant’s true intent to designate Ms. Roybal as his 5 beneficiary. ECF No. 48 at 25-26. A reasonable trier of fact could conclude from 6 this evidence that Participant did in fact intend for Ms. Roybal to be his sole 7 beneficiary, and the 2012 meeting was meant to hide this intent from Participant’s 8 other children. An equally reasonable inference from these events is that 9 Participant’s failure to sign the NEAP beneficiary form reflects Participant’s intent 10 to treat his children as equal beneficiaries and constitutes an attempt to once again 11 conceal his true intent from a beneficiary, this time Ms. Roybal. The parties’ 12 competing interpretations of these events raise issues of fact and credibility that are 13 not appropriate to resolve at summary judgment. 14 The Court finds similar outstanding issues of material fact exist regarding 15 the reasonableness of Participant’s actions as they relate to substantial compliance. 16 Based on the current record, viewed in the light most favorable to each opposing 17 party, neither defendant is entitled to judgment as a matter of law on the issue of 18 19 1 20 case and was dismissed as a defendant. ECF No. 44. Defendant’s other alleged child, Christopher Hill, could not prove paternity in this 21 22 ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 13 1 Participant’s substantial compliance with NEAP’s procedure to designate a 2 beneficiary. Celotex Corp., 477 U.S. at 323. 3 4 CONCLUSION The Court finds that neither Defendant has not met their burden of 5 demonstrating the absence of any genuine issues of material fact, which precludes 6 summary judgment. 7 Accordingly, IT IS HEREBY ORDERED: 8 1. 9 10 11 12 13 14 15 16 Defendant Roybal’s Motion for Summary Judgment (ECF No. 49) is DENIED. 2. Defendant Hill’s Motion for Summary Judgment (ECF No. 46) is DENIED. 3. The District Court Clerk is directed to enter this Order and provide copies to counsel. DATED December 1, 2017. s/Mary K. Dimke MARY K. DIMKE UNITED STATES MAGISTRATE JUDGE 17 18 19 20 21 22 ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 14

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