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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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF WASHINGTON

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NATIONAL ELECTRICAL ANNUITY
PLAN,
Plaintiff,

No. 1:15-CV-3213-MKD

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vs.

ORDER DENYING DEFENDANTS’
CROSS-MOTIONS FOR
SUMMARY JUDGMENT

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SHAWNA T. ROYBAL et al
Defendants.

ECF Nos. 46, 49

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BEFORE THE COURT are Defendant Roybal’s Motion for Summary

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Judgment (ECF No. 49) and Defendant Hill’s Motion for Summary Judgment

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(ECF No. 46). The Court heard argument on October 11, 2017. Jeffrey Maxwell

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appeared by telephone on behalf of Plaintiff National Electrical Annuity Plan

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(NEAP). Tyler Farmer appeared on behalf of Ms. Roybal. Russell Gilbert

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appeared on behalf of Mr. Hill. The Court, having reviewed the briefing, the

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record, and files therein and heard argument, is fully informed. For the reasons

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discussed below, the Court denies Ms. Roybal’s motion (ECF No. 49) and denies

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ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 1

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Mr. Hill’s motion (ECF No. 46).

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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,

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49. As part of the briefing of those motions, Ms. Roybal sought partial summary

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judgment. ECF No. 58 at 2. The Court heard argument on the motions on October

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11, 2017. During argument, Defendant Hill conceded that Ms. Roybal is entitled

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to at least half of the proceeds of Ronnal Hill’s NEAP account. Based on this

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concession, Ms. Roybal filed a subsequent motion for partial summary judgment,

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reiterating some of the claims raised in her initial motion for summary judgment.

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ECF No. 76. Mr. Hill filed an objection on procedural grounds but did not dispute

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Ms. Roybal’s factual and legal entitlement to partial summary judgment. ECF No.

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81. The Court granted the motion for partial summary judgment in a separate

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order. ECF No. 83. The Court now addresses the remainder of the issues raised in

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the parties’ cross motions for summary judgment.

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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

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ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 2

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to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The moving party bears the

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initial burden of demonstrating the absence of any genuine issues of material fact.

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Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to the

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non-moving party to identify specific facts showing there is a genuine issue of

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material fact. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986).

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“The mere existence of a scintilla of evidence in support of the plaintiff's position

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will be insufficient; there must be evidence on which the jury could reasonably

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find for the plaintiff.” Id. at 252. For purposes of summary judgment, “[i]f a party

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fails to properly support an assertion of fact or fails to properly address another

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party's assertion of fact as required by Rule 56(c), the court may . . . consider the

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fact undisputed.” Fed. R. Civ. P. 56(e)(2); see also L.R. 56.1(d).

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A fact is “material” if it might affect the outcome of the suit under the

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governing law. Anderson, 477 U.S. at 248. A dispute concerning any such fact is

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“genuine” only where the evidence is such that the trier-of-fact could find in favor

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of the non-moving party. Id. “[A] party opposing a properly supported motion for

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summary judgment may not rest upon the mere allegations or denials of his

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pleading, but must set forth specific facts showing that there is a genuine issue for

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trial.” Id. (internal quotation marks and alterations omitted); see also First Nat’l

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Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968) (holding that a party

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is only entitled to proceed to trial if it presents sufficient, probative evidence

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ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 3

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supporting the claimed factual dispute, rather than resting on mere allegations).
Finally, in ruling upon a summary judgment motion, a court must construe

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the facts, as well as all rational inferences therefrom, in the light most favorable to

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the non-moving party. Scott v. Harris, 550 U.S. 372, 378 (2007); see also Tolan v.

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Cotton, 134 S. Ct. 1861, 1863 (2014) (“[I]n ruling on a motion for summary

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judgment, the evidence of the nonmovant is to be believed, and all justifiable

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inferences are to be drawn in his favor.” (internal quotation marks and brackets

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omitted)).

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UNDISPUTED FACTS

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NEAP is an employee pension benefit plan, governed by the Employee

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Retirement Income Security Act of 1974 (ERISA). ECF No. 1 at 2-3. NEAP’s

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Plan of Benefits (Plan) contains the governing rules, regulations, policies, and

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procedures for payment of benefits under NEAP. ECF No. 47 at 5; ECF No. 73

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at 8. The Plan affords “full discretionary power and authority to construe and

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interpret the provisions of this Plan, the terms used herein, and the rules,

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regulations, and policies related thereto.” Id. at 25-26.; ECF No. 73 at 27.

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Ronnal L. Hill (Participant) participated in the NEAP Plan through his

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employment. ECF No. 1 at 3. On or about November 14, 2009, Participant

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submitted a NEAP Normal Benefit Application, in which he selected a fifteen

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year payout of his NEAP account. Id. Included in Participant’s Normal Benefit

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ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 4

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Application was a Designation of Beneficiary and Spouse Consent Form

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(beneficiary form). ECF No. 53 at 7. Participant completed certain fields on the

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beneficiary form, including the name, relationship to, and birthday of intended

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beneficiary with the information of his daughter Shawna Roybal. ECF No. 52 at

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34. Participant did not sign the beneficiary form. Id. Instead, Participant’s

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daughter Ms. Roybal signed the beneficiary form in the section designated for

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Participant’s signature. Id. Participant signed two other pages in the benefits

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application. ECF No. 53 at 10-11.

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NEAP’s trustees approved Participant’s application for benefits. ECF No.

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1 at 3. Participant died on December 7, 2014, with an outstanding NEAP

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account balance of approximately $400,000. Id. On January 22, 2015, NEAP

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informed Ms. Roybal she was the designated beneficiary of Participant’s NEAP

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account. ECF No. 52 at 100. On February 6, 2015, Ms. Roybal submitted an

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application for NEAP benefits. ECF No. 52 at 9. On February 18, 2015, NEAP

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informed Ms. Roybal that the beneficiary form was invalid because it lacked

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Participant’s signature. ECF No. 56 at 7.

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NEAP’s Plan specifies that in the event an unmarried participant dies

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without having designated a valid beneficiary, the participant’s children are

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entitled to equal shares of the NEAP account. ECF No. 47 at 18; ECF No. 73 at

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19-20. Participant was not married, and Ms. Roybal and Mr. Hill are Participant’s

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ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 5

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only surviving children. ECF No. 1 at 5; ECF No. 43; ECF No. 52 at 92.
Deference to NEAP’s Discretion

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A.

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ERISA fiduciaries must distribute benefits “in accordance with the

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documents and instruments governing the plan.” 29 U.S.C. § 1104(a)(1)(D). “[I]f

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a plan grants the administrator discretion to interpret it or to determine benefit

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eligibility, a court will uphold such interpretation or determination if reasonable.”

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Becker v. Williams, 777 F.3d 1035, 1040 (9th Cir. 2015) (citing Firestone Tire &

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Rubber Co. v. Bruch, 489 U.S. 101, 103 (1989)). However, if a plan administrator

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declines to award benefits to competing claimants and instead files an interpleader

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action, the administrator “impliedly decline[s]” to exercise its discretion. Becker,

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777 F.3d at 1041. When the administrator fails to exercise its discretion, the court

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reviews de novo the question of who is entitled to benefits. Id.

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Here, NEAP’s Plan gives the trustees “full, discretionary, and exclusive

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power and authority … to determine all questions of coverage and eligibility” for

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benefits. ECF No. 47 at 25-26; ECF No. 73 at 27. However, upon realization that

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Participant did not sign the designation of beneficiary form, NEAP declined to

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award benefits to Ms. Roybal as the sole beneficiary. ECF No. 56 at 7. NEAP

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also declined to award equal shares of Participant’s account to Ms. Roybal and Mr.

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Hill, despite the fact that both parties submitted proof that they are Participant’s

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legal heirs. ECF No. 1 at 5; ECF No. 43. Instead, NEAP filed the present

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ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 6

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interpleader action. ECF No. 1 at 6-7. Filing an interpleader action implies

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NEAP’s trustees declined to exercise the discretion they are otherwise entitled to

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exercise. Becker, 777 F.3d at 1041.

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This case differs factually from Becker, in that the administrators in Becker

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filed the interpleader motion after receiving competing claims for benefits. Becker,

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777 F.3d at 1037. Here, NEAP initially notified Ms. Roybal that she was the

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designated beneficiary. ECF No. 52 at 100. Shortly thereafter, NEAP notified Mr.

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Hill that Participant had a designated beneficiary on file other than Mr. Hill. ECF

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No. 52 at 102. Only after this correspondence, and after Ms. Roybal submitted an

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application for benefits, did NEAP determine that the beneficiary form was invalid

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and filed the interpleader action. ECF No. 48 at 53. Despite the factual

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dissimilarities, the rule set forth in Becker controls. In determining when a plan

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administrator has exercised discretion, the Ninth Circuit seems to draw the line at

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the act of awarding benefits. Becker, 777 F.3d at 1041. Although NEAP contacted

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Ms. Roybal, it never approved her application for benefits or awarded her the

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funds. ECF No. 48 at 53. Moreover, NEAP did not jointly award benefits to Ms.

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Roybal and Mr. Hill and instead filed an interpleader action. Therefore, NEAP’s

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Trustees declined to exercise its discretion to determine the appropriate

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beneficiaries in this case. Thus, the Court will review de novo whether Ms. Roybal

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was validly designated as a beneficiary.

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ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 7

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B.

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When reviewing competing claims to ERISA plan benefits, the Court should

Force of Plan Documents

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consider the plan documents. Becker, 777 F.3d at 1041. “An ERISA fiduciary

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must distribute benefits ‘in accordance with the documents and instruments

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governing the plan.’” Becker, 777 F.3d at 1038. “[O]nly those documents that

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elucidate ‘exactly where [the participant] stands with respect to the plan—what

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benefits he may be entitled to, what circumstances may preclude him from

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obtaining benefits, what procedures he must follow to obtain those benefits…” are

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plan documents. Id. at 1039 (citing Hughes Salaried Retirees Action Comm. v.

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Adm’r of the Hughes Non-Bargaining Ret. Plan, 72 F.3d 686, 690 (9th Cir. 1995)).

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Here, the NEAP Plan grants significant deference to NEAP’s administrators

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to interpret the Plan and determine benefits. ECF No. 47 at 25-26; ECF No. 73 at

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27. NEAP’s Plan provides that if a participant dies unmarried and without

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designating a valid beneficiary, the participant’s benefits shall be distributed

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equally among the participant’s living children. Id. at 18; ECF No. 73 at 19-20.

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However, the Plan itself does not specify what steps a participant must take to

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designate a beneficiary. Notably, the Plan does not state whether the participant’s

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signature is required on the beneficiary form in order to designate a valid

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beneficiary.

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Mr. Hill asserted at oral argument that a signature requirement for the

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ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT - 8

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beneficiary form exists if the Plan is read together with the Summary Plan

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Description, including the sample beneficiary form contained therein. The Ninth

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Circuit has held that designation of beneficiary forms like this one are not “plan

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documents” under ERISA. Becker, 777 F.3d at 1039-40. Summary plan

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documents are also not plan documents. CIGNA Corp. v. Amara, 563 U.S. 421,

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438 (2011). Even if Mr. Hill can identify portions of these documents that can be

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read together to imply a signature requirement to validly designate a beneficiary,

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the documents Mr. Hill identifies are not entitled to the force of plan documents.

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The Trustees were not bound to rely on these documents in determining a

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beneficiary, and the Court similarly is not bound.
The Court is left to consider the Plan itself, which does not specify how to

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designate a beneficiary. ECF No. 47 at 5-29; ECF No. 73 at 8-30. In such a

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situation, the Court is to apply the equitable doctrine of substantial compliance to

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determine whether Participant validly designated Ms. Roybal as his beneficiary.

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See Becker, 777 F.3d at 1041.

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C.

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“ERISA is a comprehensive statutory scheme designed to govern employee

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benefit plans, which provides that it ‘shall supersede any and all State laws insofar

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as they … relate to any employee benefit plan’ covered by the statute.”

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BankAmerica Pension Plan v. McMath, 206 F.3d 821, 828 (9th Cir. 2000).

Applicable Law of Substantial Compliance

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However, ERISA does not “expressly govern[] disputes between claimants to plan

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proceeds.” Id. When a dispute over ERISA benefits turns on a question of

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substantial compliance, ERISA does not preempt state law. Id. at 828-30.

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Therefore, the Court must apply the law of the forum state. Id.; see also Erie

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Railroad v. Tompkins, 304 U.S. 64, 78 (1938).

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Here, the question of whether Participant validly designated Ms. Roybal as

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his sole beneficiary turns on whether Participant’s actions rise to the level of

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substantial compliance. Therefore, this Court applies the law of the forum state,

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Washington, in order to determine substantial compliance.

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D.

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In Washington, courts can act in equity to enforce an attempted change in

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beneficiary if the insured “has substantially complied with the provisions of the

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policy regarding that change.” In re Estate of Freeberg, 122 P.3d 741, 743 (Wash.

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Ct. App. 2005) (internal citations omitted). Substantial compliance is

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demonstrated by the participant having “manifested an intent to change

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beneficiaries and done everything reasonably possible to make that change.” Id.

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Therefore, the question in this case becomes whether the Participant manifested an

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intent to designate Ms. Roybal as the beneficiary of his NEAP account, and

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whether the Participant did everything reasonably possible to do so.

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Washington Law of Substantial Compliance

“When confronted with the fact-specific inquiry of determining a deceased's

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intent, the failure to complete simple, mundane tasks undermines [the

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participant’s] alleged unequivocal desire to change his beneficiary.” Becker, 168

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F. Supp. 3d at 1328. A review of Washington’s case law, however, does not reveal

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a requirement that a document must be signed in order to requisite intent for

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substantial compliance. See Freeberg, 122 P.3d at 744 (insured’s in-person oral

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request to change IRA beneficiary and investment agency’s failure to do so was

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substantial compliance); Allen v. Abrahamson, 529 P.2d 469 (Wash. Ct. App.

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1974) (insured’s act of giving parents insurance certificates but making no written

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request to insurance company did not substantially comply with insurance

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company’s policy requiring written notice of change); Sun Life Assur. Co. of

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Canada v. Sutter, 95 P.2d 1014, 1017 (Wash. 1939) (unsigned letter clearly written

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by decedent substantially complied with plan requirement of written notice to

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change beneficiary).

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The Court finds the question of Participant’s intent and the determination of

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whether he did everything reasonably possible to effectuate his intent present

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outstanding issues of fact that are inappropriate to resolve on summary judgment.

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In considering a motion for summary judgment, the Court is to consider the facts

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and draw all rational inferences therefrom in the light most favorable to the non-

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moving party. Scott v. Harris, 550 U.S. at 378. Here, both Defendants moved for

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summary judgment.

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A genuine issue of material facts exists as to Participant’s intent when he

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completed certain aspects of the beneficiary form identifying Ms. Roybal as his

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sole beneficiary, but did not sign it, and then submitted it to NEAP as part of the

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application. Moreover, the rational inferences to be drawn from viewing the

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evidence in the light most favorable to each defendant support each defendant’s

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separate positions. If all rational inferences are drawn in Ms. Roybal’s favor, a

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reasonable trier of fact could conclude Participant intended to designate Ms.

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Roybal as his beneficiary by his actions of completing some of the beneficiary

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form in his own hand, signing other portions of the application, and submitting the

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application to NEAP. Alternatively, if all rational inferences are drawn in Mr.

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Hill’s favor, a reasonable trier of fact could conclude Participant did not intend to

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designate Ms. Roybal as his beneficiary because Participant correctly completed

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other portions of the application calling for Participant’s signature.

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Moreover, the Court finds that the proffered evidence presents evidentiary

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and credibility issues that are inappropriate to resolve on summary judgment. For

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example, the evidence regarding Participant’s 2012 will (ECF No. 48 at 55) and

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Ms. Roybal’s deposition testimony regarding this document (ECF No. 48 at 25-26)

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can support a rational inference in favor of each defendant. Mr. Hill offers this

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document as evidence of Participant’s testamentary intent to treat all1 of his

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children equally. ECF No. 46 at 27. Ms. Roybal stated that this document was the

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product of a “mock meeting” meant to pacify the concerns of Participant’s other

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children without revealing Participant’s true intent to designate Ms. Roybal as his

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beneficiary. ECF No. 48 at 25-26. A reasonable trier of fact could conclude from

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this evidence that Participant did in fact intend for Ms. Roybal to be his sole

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beneficiary, and the 2012 meeting was meant to hide this intent from Participant’s

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other children. An equally reasonable inference from these events is that

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Participant’s failure to sign the NEAP beneficiary form reflects Participant’s intent

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to treat his children as equal beneficiaries and constitutes an attempt to once again

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conceal his true intent from a beneficiary, this time Ms. Roybal. The parties’

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competing interpretations of these events raise issues of fact and credibility that are

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not appropriate to resolve at summary judgment.

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The Court finds similar outstanding issues of material fact exist regarding

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the reasonableness of Participant’s actions as they relate to substantial compliance.

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Based on the current record, viewed in the light most favorable to each opposing

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party, neither defendant is entitled to judgment as a matter of law on the issue of

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case and was dismissed as a defendant. ECF No. 44.

Defendant’s other alleged child, Christopher Hill, could not prove paternity in this

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Participant’s substantial compliance with NEAP’s procedure to designate a

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beneficiary. Celotex Corp., 477 U.S. at 323.

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CONCLUSION
The Court finds that neither Defendant has not met their burden of

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demonstrating the absence of any genuine issues of material fact, which precludes

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summary judgment.

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Accordingly, IT IS HEREBY ORDERED:

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1.

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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.
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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

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