/opinions/HTMLFiles/COA/3648.htm

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

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Frances Walsh as Personal Representative of the Estate of Jerome Walsh, Deceased, and in her individual capacity,        Appellant,

v.

Joyce K. Woods, f/k/a Joyce K. Walsh,        Respondent.

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Appeal From Aiken County
Rodney A. Peeples, Circuit Court Judge

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REVERSED AND REMANDED

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Opinion No. 3648
Heard March 11, 2003 Filed June 2, 2003

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Russell H. Putnam, Jr., of Hinesville; for Appellant

John S. Nichols, of Columbia; Kelli Lister Sullivan, of Columbia; for Respondent.

CURETON, J.: Frances Dudley Walsh (Frances), individually and in her capacity as personal representative of the estate of her deceased husband, Jerome J. Walsh (Walsh), brought this action against Walshs former wife, Joyce K. Woods (Joyce). In her complaint, Frances seeks relief pertaining to the disposition of surviving spouse benefits made available through Walshs retirement plan. Frances appeals from the trial courts order granting Joyces motion for summary judgment. We reverse and remand.

FACTS

Walsh married his first wife, Joyce, in 1957, and the two separated in 1970. Although they continued to live apart, Walsh and Joyce remained married for twenty years after their separation. In 1989, Walsh retired from E.I. Du Pont De Numours And Company (DuPont) after approximately forty years of employment. During his tenure at DuPont, Walsh participated in a DuPont sponsored pension benefits plan governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1001 et. seq. (ERISA). Contemporaneously with his retirement, Walsh signed a Post Retirement Company-Paid Survivor Benefits and Spouse Benefit Option designating Joyce, to whom he was still married, as the sole beneficiary of his surviving spouse benefits plan in the event he predeceased her. Walshs monthly benefit was therefore reduced by the amount necessary to cover the cost of the survivor benefit plan.

Walsh and Joyce were divorced by order of the family court dated August 24, 1990. Incident to the divorce, Walsh and Joyce entered into an agreement which the family court approved, adopted, and incorporated into the divorce decree. The decree provided, in relevant part:

[T]he parties shall sign whatever documents or other paperwork that is necessary to enforce this Agreement. I find that the parties have further agreed that each shall retain what . . . retirement plans, pension plans . . . etc., that he or she has in his or her possession. If the wife is required to sign any papers concerning the husbands retirement or benefit options from DuPont of Westinghouse, then she shall sign those.

It is undisputed Walsh never presented Joyce with any documents to sign regarding his retirement benefits, and that neither party attempted to obtain a Qualified Domestic Relations Order (QDRO) reassigning the surviving spouse benefits during Walshs lifetime.

On May 31, 1991, Walsh advised DuPont he was divorced from Joyce and desired to change the beneficiary of his pension plan to his wife Frances and requested the paperwork to accomplish this [1] . In 1994, Walsh married Frances, with whom he had been involved since 1980. On November 30, 1994, Walsh wrote to DuPont again advising the company that he was married to Frances and wished to designate her as beneficiary under his retirement plan, and that the company should send him any documentation necessary to effectuate the change in beneficiary. Despite the May 31, 1991 letter and other subsequent communications with DuPont wherein Walsh referred to Frances as his designated beneficiary, the change Walsh requested was never made legally effective.

Walsh died testate on January 27, 1996. Pursuant to the terms of Walshs will, Frances became the sole beneficiary and the Personal Representative of his estate.

In 1997, Frances instituted an action against DuPont, which was removed to federal court, seeking a judicial finding that Walshs surviving spouse benefits should be paid to her and not Joyce. DuPont moved for and was granted summary judgment on the grounds that no QDRO existed terminating Joyces right to receive the benefits at the time of Walshs retirement.

Thereafter, Frances contacted John W. Harte, the attorney who represented Walsh in his divorce from Joyce, and requested that he prepare and submit a QDRO to DuPont. Harte prepared the QDRO, then contacted Vickie Johnson, the attorney who represented Joyce in the divorce action, and requested that she obtain Joyces signature on the document. Joyce did not sign the QDRO but authorized Johnson to sign it on her behalf. Joyce noted on the document, however, that she authorized her signature under protest and out of concern she would be held in contempt of court if she refused to sign.

In August of 1998, Harte submitted the QDRO to DuPont. In a letter dated September 16, 1998, DuPont advised Harte that the document was unenforceable as a QDRO inasmuch as [a] QDRO cannot be entered after the death of the participant. A participant must be a living person. There was no QDRO in effect at the participants death that awarded any benefits to an alternate payee. Therefore, there are no benefits payable pursuant to a QDRO. In addition, the letter from DuPont advised that even if the document had been prepared at some point prior to Walshs death, it would nonetheless be ineffective to divest Joyce of her surviving spouse benefits inasmuch as ERISA requires that married participants be offered qualified joint and survivor annuities and their spouses must be offered the option to accept or waive the benefit. Once this election is made it is irrevocable.

Frances filed the instant action against Joyce on December 18, 2000, seeking recovery under seven theories of relief: 1) unjust enrichment; 2) law of the case; 3) res judicata; 4) collateral estoppel; 5) breach of contract; 6) bad faith breach of contract; and 7) conversion. Joyce answered, denying Frances was entitled to the relief sought in her complaint, and asserted as defenses: 1) expiration of the statute of limitations; 2) failure to state a claim upon which relief can be granted; 3) laches; and 4) res judicata.

The parties filed cross motions for summary judgment. Joyce argued, inter alia, that all of Francess causes of actions failed because the surviving spouse benefits vested in Joyce in 1989, at the time of Walshs retirement, and she could not now be divested of her right to the benefits. Joyce further asserted the applicable statute of limitations bars the claims. In support of her cross motion, Frances asserted generally that no genuine issues of material fact existed and specifically that Joyce had waived her rights to the benefits in the divorce decree. In addition, Frances asserted that the court could enforce the property settlement agreement by requiring Joyce to disgorge herself of all surviving spouse benefit payments she had received in the past and will receive in the future by transferring the payments to Frances.

By order dated January 28, 2001, the trial court granted Joyces motion for summary judgment. Specifically, the court cited Hopkins v. AT&T, 105 F.3d 153, 157 (4th Cir. 1997), for the propositions that 1) surviving spouse benefits vest in a plan participants current spouse on the date the participant retires, whether or not spouses are married at the time the participant dies, and 2) surviving spouse benefits may not be paid to a spouse who marries a participant after the participants retirement. The trial court expressly determined the holding in Hopkins was determinative of the entire case and, therefore, declined to address Joyces other grounds for summary judgment and further declined to reach Francess cross motion for summary judgment. This appeal followed.

LAW/ANALYSIS

I.    Error Preservation

We turn our attention first to Joyces assertion Frances failed to properly preserve the issue of whether the trial court properly found that all of Francess claims were barred by ERISA provisions inasmuch as the court expressly declined to rule on the issues and Frances did not request, by a Rule 59(e), SCRCP motion or otherwise, that the court address such claims. We hold the trial courts express finding that it was unnecessary to reach Francess cross motion for summary judgment rendered Francess remaining issues moot and/or amounted to an effective denial of the cross motion. As such, any motion under Rule 59(e) requesting a specific ruling on the cross motion for summary judgment would have been futile, and was in any event, not necessary to discern the trial courts decision as to the issues. Under such circumstances, a litigant is not required to move for relief pursuant to Rule 59(e) in order to properly preserve issues for review before this court. See Wilder Corp v. Wilke, 330 S.C. 71, 77, 497 S.E.2d 731, 734 (1998) (noting that proper use of 59(e) motion is to preserve issues raised to but not ruled upon by the trial court); State v. Pace, 316 S.C. 71, 74, 447 S.E.2d 186, 187 (1994) (excusing the failure to make a contemporaneous objection where the judge's comments are such that any objection would be futile); Jean Hoefer Toal et. al. Appellate Practice in South Carolina 65-68 (1999).

II.    Summary Judgment

Frances argues the trial court erred in granting Joyce summary judgment based on the courts reasoning that ERISA provisions governing vesting and non-alienability of surviving spouse benefit rights are controlling as to the disposition of all of Francess legal and equitable claims. We agree.

Summary judgment is appropriate only when it is clear there is no genuine issue of material fact and the conclusions and inferences to be drawn from the facts are undisputed. Garvin v. Bi-Lo, Inc., 343 S.C. 625, 628, 541 S.E.2d 831, 833 (2001). Summary judgment is inappropriate, however, where further inquiry into the facts of the case is desirable to clarify the application of the law. Carolina Alliance for Fair Employment v. South Carolina Dept of Labor, Licensing & Regulation, 337 S.C. 476, 484, 523 S.E.2d 795, 799 (Ct. App. 1999). In determining whether any triable issue of fact exists so as to preclude summary judgment, the evidence and all inferences reasonably drawn therefrom must be viewed in the light most favorable to the nonmoving party. Strother v. Lexington County Recreation Commn, 332 S.C. 54, 61, 504 S.E.2d 117, 121 (1998).  

Here, the trial court determined that ERISA provisions, as interpreted and applied by a single Fourth Circuit case, were determinative of every issue involved in this case. Specifically, citing and relying exclusively upon the holding in Hopkins, the trial court concluded that Frances could not recover on any of her claims because the surviving spouse benefits vested in Joyce on the date Walsh retired, and, further, the benefits could not be paid to Frances because she married Walsh after the date of his retirement.

In arriving at its ruling, the trial court failed to specifically explore the applicability of federal case and statutory law pertaining to the more narrowly drawn issue of whether the former spouse of an ERISA plan participant may, incident to a separation agreement and in exchange for a comparable waiver on the part of the other spouse, voluntarily waive his or her interest in vested ERISA benefits. In Estate of Altobelli v. Intl Bus. Machs. Corp., 77 F.3d 78 (4th Cir. 1996), a divorced spouse, who was designated beneficiary under her ex-husbands ERISA plan, waived her benefits through a marital settlement agreement that was incorporated into a divorce decree. The court found that ERISAs anti-alienation clause did not apply to a voluntary waiver by a beneficiary, since the purpose of the anti-alienation clause is to safeguard a stream of income for the pensioner and his beneficiaries, and to bar a waiver in favor of pensioner himself would not advance such a purpose. The court held that it was clear that each party intended to relinquish all interests in the others pension plan and therefore the former wifes waiver was to be given full effect. Under the holding in Altobelli, we find it was error for the trial court not to examine the language of the settlement agreement, which was incorporated into the divorce decree, in order to determine if there was a clear intent by Joyce to relinquish all of her interests in Walshs retirement plan and any benefits emanating therefrom.

Further, we are compelled to agree with Frances that although Joyce may have established an unassailable right to receive the surviving spouse benefit payments directly from DuPont, Francess claim to the benefits are not, as found by the trial court, necessarily rendered untenable. By way of example, neither the anti-alienation provisions of ERISA nor the courts holding in Hopkins are in any way determinative of whether Joyces retention of those benefits would constitute unjust enrichment in light of a voluntary agreement to waive her rights to the benefits. The mere fact that Joyce, and not Frances, is entitled to receive surviving spouse benefit payments from DuPont does not negate Francess right to establish, under some legal or equitable theory of recovery, that Joyce is not entitled to retain the payments. See Succession of Netterville, 579 So.2d 1046 (La. Ct. App. 1991) (Although the surviving spouse should be recognized as the beneficiary of the pension plans, she was made accountable to the first wife and heirs, who under Louisiana law had certain vested rights under the states community property laws.)

We find the issue of whether a former spouses right to retain benefits under her ex-husbands ERISA plan may be voluntarily relinquished is a question of first impression in South Carolina. Important questions of novel impression should not be decided on summary judgment if further inquiry into the facts is necessary to clarify the application of the law. ML-Lee Acquisition Fund, L.P. v. Deloitte & Touche, 320 S.C. 143, 153, 463 S.E.2d 618, 624 (1997), revd in part on other grounds, 327 S.C. 238, 489 S.E.2d 470 (1997). As such, the grant of summary judgment was improper. The case is remanded for further proceedings in accordance with this opinion.

REVERSED AND REMANDED.

STILWELL J., concurs. HOWARD, J., concurs in part and dissents in part in a separate opinion.

HOWARD, J. (concurring in part and dissenting in part): Although I agree with my brethren that the issues raised in this case are preserved for appeal, I do not agree the circuit court erred in granting summary judgment.

The pertinent facts may be succinctly stated as follows. Jerome Walsh married his first wife in 1957. He worked for E.I. du Pont de Nemours and Company (Dupont) for forty years, contributing to a pension benefits plan controlled by the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1001-1461 (2003) (ERISA). He retired in 1989, while still married to his first wife.

Walsh and his first wife divorced in 1990, entering into an agreement incorporated into the final decree, which stated as follows:

[T]he parties shall sign whatever documents or other paperwork that is necessary to enforce this Agreement. I find that the parties have further agreed that each shall retain what . . . retirement plans, pension plans . . . etc., that he or she has in his or her possession. If the wife is required to sign any papers concerning the husbands retirement or benefit options from Dupont of Westinghouse, then she shall sign those.

Walsh married his second wife in 1994 and died in 1996. No changes were made to the spousal survivor benefits in his pension plan. After the second wife was notified the first wife was the beneficiary of the spousal retirement benefits, the second wife unsuccessfully tried to block payment to the first wife by bringing an action in federal court. However, having no Qualified Domestic Relations Order (QDRO) to support her position, she was unsuccessful. She then brought this action, asserting the following legal theories for recovery: (1) unjust enrichment; (2) breach of contract; (3) conversion; and (4) bad faith breach of contract. [2]

Citing Hopkins v. AT&T, 105 F.3d 153 (4th Cir. 1997), the circuit court granted summary judgment to the first wife, concluding under any view of the facts she was vested with the survivor spouse benefits before the divorce, and they were not affected by the decree or any other event occurring thereafter. After careful consideration of the pertinent facts, I agree with this disposition of the case.

In Hopkins, the husband retired after marrying his second wife. He then attempted to transfer spousal benefits to his first wife in a QDRO to satisfy his overdue alimony obligations. The court ruled the Domestic Relations Order was not qualified, and was ineffective. Writing for the court, Judge Karen Williams noted the spousal benefits vested in the second wife when the husband retired. From that point on, those future benefits were a separate, beneficial interest belonging to the second spouse as a beneficiary. Under ERISA, a Domestic Relations Order is only Qualified if it assigns a benefit payable with respect to a participant. Because the order attempted to assign a vested beneficiary interest and not a benefit payable with respect to a participant, the court concluded the order was not Qualified. Id. at 157.

Hopkins stands as clear authority for the proposition that the survivor spouse benefit vests in the spouse at the time of the participants retirement. In this case, Walsh retired while still married to his first wife. Therefore, the survivor spouse benefit vested in the first wife at that time, and it was her property.

As the majority points out, ERISA does not preclude the nonparticipating beneficiary from waiving the surviving spouse benefit through specific language in a divorce settlement before the participants retirement. See Altobelli v. I.B.M., 77 F.3d 78, 81 (4th Cir. 1996) (Wilkinson, J., dissenting); Fox Valley & Vicinity Constr. Workers Pension Fund v. Brown, 897 F.2d 275, 280-281 (7th Cir. 1990) (en banc), cert. denied, 498 U.S. 820 (1990). For example, in Altobelli, the wife executed a Voluntary Separation and Property Settlement Agreement, incorporated into a divorce decree, which stated:

All of the following property is hereafter the sole and exclusive property of the Husband, and the wife hereby waives and transfers to the Husband any interest that she may have in the property . . .

(g) Husbands IBM pension and other deferred compensation plans, if any.

77 F.3d at 80.

However, in this case, no such language appears in any agreement between Walsh and his first wife. The only language is that previously noted in the divorce decree. This language states only that each party retains what retirement plans, pension plans . . . etc., that he or she has in his or her possession . . . . Unlike Altobelli, Walsh had retired at the point this agreement was entered. Thus, the beneficial interest had vested in the first wife, and she was in possession of it. Furthermore, the language does not contain a transfer, assignment, or waiver of any interest in the retirement plan. Taking the evidence in a light most favorable to the second wife, the decree of divorce does not contain specific language waiving the surviving spouses interest.

The post-death attempt to modify the circumstances through a family court order purporting to be a nunc pro tunc QDRO has no efficacy for two reasons. First, describing the action as nunc pro tunc does not make it so. Our supreme court has noted, a nunc pro tunc order can be used only for the purpose of placing in the record evidence of judicial action that has actually been taken, not to correct an error, or supply an omission, of judicial action. See Ex Parte Strom, 343 S.C. 257, 265, 539 S.E.2d 699, 703 (2000). Second, the nonparticipating beneficial interest had vested in the first wife at retirement. Therefore, the order did not relate to a benefit payable with respect to a participant. See Hopkins, 105 F.3d at 156. Thus, it was not qualified. Consequently, I would affirm the trial court.

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