LINDA DARLEEN WEIAND V. BOARD OF TRUSTEES OF KENTUCKY RETIREMENT SYSTEMS; STEVEN J. WEIAND; AND A. B. CHANDLER, III, ATTORNEY GENERAL OF KENTUCKY
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RENDERED: AUGUST 24,200O
TO BE PUBLISHED
APPELLANT
LINDA DARLEEN WEIAND
V.
ON REVIEW FROM COURT OF APPEALS
1998-CA-1028-MR
FRANKLIN CIRCUIT COURT NO. 91-Cl-1103
BOARDOFTRUSTEESOFKENTUCKY
RETIREMENT SYSTEMS; STEVEN J. WEIAND;
AND A. B. CHANDLER, III, ATTORNEY GENERAL
OF KENTUCKY
APPELLEES
OPINION OF THE COURT BY JUSTICE JOHNSTONE
AFFIRMING
Appellant, Linda Darleen Weiand, brought an action under the Declaratory
Judgment Act, KRS 418.040, in which she challenged the refusal of the Kentucky
Employee Retirement System (KERS) to allow her to receive benefits from her exhusband’s retirement account upon his death. The trial court found for KERS and
Weiand appealed. The Court of Appeals affirmed. We granted discretionary review
and affirm both the Court of Appeals and the trial court.
Darleen married Steven Weiand on July 14, 1973. The couple was still married
when Steven retired from the City of Louisville Police Department on April 1, 1988.
Prior to retiring, Steven elected to receive retirement benefits from KERS under the
“Survivorship 100%” option. This option guarantees a monthly benefit to the member
for life. Upon the member’s death, the designated beneficiary is eligible to receive the
same monthly benefit for life. Steven named Darleen as his beneficiary and began
receiving benefits in April, 1988.
Darleen and Steven separated in July, 1988. They entered into a Marital
Settlement Agreement in February, 1989. The agreement clarified that nothing
contained within it was intended to alter Darleen’s rights as Steven’s named beneficiary
to receive his pension benefits should he predecease her. After their divorce was
finalized on February 21, 1989, Steven and Darleen submitted a Qualified Domestic
Relations Order (QDRO), which incorporated the terms of the Marital Settlement
Agreement, to KERS for approval. KERS notified Steven and Darleen that it could not
approve the QDRO because the divorce decree terminated Darleen’s status as
Steven’s beneficiary pursuant to KRS 61.542(2)(b).
KRS 61.542 (2)(b), as it was in effect at the time Steven elected the
“Survivorship 100%” option, provides:
A member shall not have the right to change his beneficiary
after the first benefit payment has been drawn by the state
treasurer. The estate of the retired member becomes the
beneficiary if the date of the death of the beneficiary
precedes or coincides with the date of death of the retired
member or if the retired member has designated a spouse
and they were divorced on the date of the retired member’s
death.
1986 Ky. Acts Ch. 90 § 9
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Subsequent to this Court’s grant of discretionary review, Steven died on April 8,
2000. Upon his death, KERS made his estate the beneficiary pursuant to the above
statute.
Darleen makes multiple attacks on the trial court’s order and the Court of
Appeals’ opinion. She argues: (1) KERS’s interpretation of KRS 61.542(2)(b) is
contrary to the legislative intent and the plain meaning of the statute; (2) KERS is
estopped from denying Darleen status as Steven’s beneficiary; and (3) KERS’s
construction of KRS 61.542(2)(b) violates the United States Constitution’s Equal
Protection, Due Process and Takings Clauses under the Fourteenth and Fifth
Amendments.
STATUTORY CONSTRUCTION
KRS 61.542(2)(b) provides in pertinent part: “The estate of the retired member
becomes the beneficiary . . . if the retired member has designated a spouse and they
were divorced on the date of the retired member’s death.” (Emphasis added).
Darleen
argues that under the plain language of this statute, the estate becomes the beneficiary
only if the retired member and the beneficiary-spouse get a divorce on the actual date
of the retired member’s death. This argument assumes that the word “divorced” in the
statute refers to the act of getting divorced, u, q: Are you married? a: No. I got
divorced a year ago from today. However, the word “divorced” can also refer to a
status, m, q: Are you married? a: No. I’m divorced. The more reasonable
interpretation of the statute is that the word “divorced” refers to a status and not an act.
The situation where a divorce and death coincide would be quite rare. Further, singling
out such a particular event for depriving a person of beneficiary status makes little
sense and would appear to be quite arbitrary.
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Therefore, we agree with both the Court of Appeals and the trial court that, under
KRS 61.542(2)(b), the estate becomes the beneficiary if the retired member and the
beneficiary-spouse have the status of being divorced from each other on the date of the
retired member’s death.
ESTOPPEL
Darleen next argues that KERS should be estopped from denying her beneficiary
status.
As stated in Electric and Water Plant Board of City of Frankfort v. Suburban
Acres Development, Inc., Ky., 513 S.W.2d
489 (1974):
The essential elements of equitable estoppel are[:] (1)
conduct which amounts to a false representation or
concealment of material facts, or, at least, which is
calculated to convey the impression that the facts are
otherwise than, and inconsistent with, those which the party
subsequently attempts to assert; (2) the intention, or at least
the expectation, that such conduct shall be acted upon by,
or influence, the other party or other persons; and (3)
knowledge, actual or constructive, of the real facts. And,
broadly speaking, as related to the party claiming the
estoppel, the essential elements are (1) lack of knowledge
and of the means of knowledge of the truth as to the facts in
question; (2) reliance, in good faith, upon the conduct or
statements of the party to be estopped; and (3) action or
inaction based thereon of such a character as to change the
position or status of the party claiming the estoppel, to his
injury, detriment, or prejudice.
Id. at 491 (internal quotation marks omitted).
Darleen argues that the Summary Plan Description KERS provided the Weiands
did not put them on notice that Darleen would lose her beneficiary status if she and
Steven divorced while he was “in pay” status, which occurred after the state treasurer
drew Steven’s first retirement check. The Summary Plan Description provides the
following description for the “Survivorship 100%” option, which Steven chose:
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This option guarantees a monthly benefit to the member for
life. In the event the member dies, the beneficiary is eligible
for the same monthly benefit until death.
Darleen argues that this description is either a false representation or a
concealment of material facts. She further argues that this description breaches
KERS’s statutory duty under KRS 61.540(2) to draft a Summary Plan Description in a
manner calculated to be understood by both members and beneficiaries alike and to be
“sufficiently accurate and comprehensive to reasonably apprise [members and
beneficiaries] of their rights and obligations under the provisions of KRS 16.505 to
16.652, 61.510 to 61.705 and 78.510 to 78.852.” In addition, she argues that the
Summary Plan Description provided Steven by KERS violated its statutory obligation
under KRS 61.540(3)(f) to include in the plan a “reasonable list of circumstances which
would result in disqualification, ineligibility, or denial or loss of benefits.”
Equitable estoppel cannot be invoked against a governmental entity, except in
unique circumstances where the court finds exceptional and extraordinary equities
involved. Urban Renewal and Communitv Development Aaencv of Louisville v.
International Harvester Company of Delaware, Ky., 455 S.W.2d 69, 72 (1970). Further,
estoppel is a question of fact to be determined by the circumstances of each case.
Anspacher v. Utterback’s Adm’r, Ky., 68 S.W.2d 15, 18,252 Ky. 666 (1934); McKenzie
v. Oliver, Ky. App., 571 S.W.2d 102, 106 (1978); cf. United Parcel Service Companv v.
Rickert, Ky., 996 S.W.2d 464, 470 (1999).
The trial court concluded on this issue that “the equities involved in this case are
not so extraordinary as to warrant a finding of estoppel.” In support of this finding, the
trial court found: (1) another section of the Summary Plan Description clearly states
that an employee should not rely solely upon the limited language contained in the Plan
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in determining which option to choose; (2) the Plan also states that, if the Plan and the
controlling statutes are in conflict, the statutes will be the final authority; (3) the Plan
also states that a final divorce decree voids a spouse’s designation as beneficiary
unless the member re-designates the spouse after the decree has been issued; (4)
further, the Plan recommends that each member discuss his retirement options with a
retirement benefits counselor prior to making a choice, because a member may not
change his or her beneficiary after the first retirement check is issued; and (5) no one at
KERS affirmatively advised the Weiands that a divorce subsequent to Steven’s benefit
option would not affect Darleen’s beneficiary status.
The findings of a trial judge sitting without jury may not be set aside unless
clearly erroneous. Lawson v. Loid, Ky., 896 S.W.2d
1, 3 (1995); CR 52.01. Upon
review of the trial courts findings of fact on this issue, we cannot say its ultimate finding
of no equitable estoppel was clearly erroneous.
CONSTITUTIONAL CHALLENGES
Finally, Darleen argues that KERS’s construction of KRS 61.542(2)(b) violates
the United States Constitution’s Equal Protection, Due Process and Takings Clauses
under the Fourteenth and Fifth Amendments.
EQUAL PROTECTION
“The Equal Protection Clause of the Fourteenth Amendment commands that no
State shall ‘deny to any person within its jurisdiction the equal protection of the laws,’
which is essentially a direction that all persons similarly situated should be treated
alike.” Cleburne v. Cleburne Living Center, 473 U.S. 423, 439, 105 S. Ct. 3249, ,
87 L. Ed. 2d 313, 320 (1985). As a general rule, a statute is presumed valid and will
survive an equal protection challenge if it can be shown that the classification drawn by
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the statute is rationally related to a legitimate state interest. Id., 473 U.S. at 440, 87 L.
Ed. 2d at 320. However, if the challenged statute classifies by race, alienage or
national origin or impinges on a fundamental right, the statute is subject to strict scrutiny
and only survives an equal protection challenge if it can be shown that the statute is
narrowly tailored to serve a compelling state interest. Id. There is an intermediate,
heightened standard of review which is normally applied to classifications based on
gender and illegitimacy. Id., 473 U.S. at 440-41, 87 L. Ed. 2d. at 320-21.
Darleen argues that we should apply strict scrutiny to our review of the statute in
question because it classifies based on divorce. Darleen notes that marriage is a
fundamental right and laws that impinge upon that right are subject to strict scrutiny.
Loving v. Virginia, 388 U.S. 1, 87 S. Ct. 1817, 18 L. Ed. 2d 1010 (1967). Thus, she
argues that divorce likewise should be considered a fundamental right. The ability to
obtain a divorce has not heretofore been declared a fundamental constitutional right
and is a dubious proposition.
However, we have no call to decide the issue as the
statute does not impinge upon Darleen’s ability to obtain a divorce.
Statutes and regulatory schemes that do not significantly interfere with the right
to enter into marriage are subject to a rational basis review. See Califano v. Jobst, 434
U.S. 47, 53-54, 98 S. Ct. 95, -, 54 L. Ed. 2d 228, 234-35 (1977). The statute in
question did not impinge upon Darleen’s ability to obtain a divorce. It did not impose
any affirmative costs to obtain a divorce, nor did it place any legal obstacles in her path
to a divorce decree. Rather, the statute merely deprived her of a possible financial
benefit. Thus, the statute is subject to a rational basis review. “Under the rational basis
test, a classification must be upheld against an equal protection challenge if there is
any reasonably conceivable state of facts that could provide a rational basis for the
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classification.”
Commonwealth v. Howard, Ky., 969 S.W.2d 700, 703 (1998), citing
Heller v. Doe, 509 U.S. 312, 113 S. Ct. 2637, 125 L. Ed. 2d 257 (1993); F.C.C. v.
Beach Communications. Inc., 508 U.S. 307, 113 S. Ct. 2096, 124 L. Ed. 2d 211 (1993).
The trial court found that there was a rational basis for the classification contained in
KRS 61.542(2)(b):
The statute is designed to prevent a retired member’s exspouse from receiving his retirement benefits after the
member dies, as the member has no other means of
changing his beneficiary after he enters pay status, and it is
likely that he no longer desires to support an ex-spouse.
As the trial court has articulated a perfectly reasonable basis for the
classification, we hold that the statute does not violate Darleen’s right to equal
protection.
DUE PROCESS AND TAKINGS
We do not believe that we can improve on the reasoning of the trial court on this
issue and adopt it as our own:
Likewise, the statute does not violate the Due
Process Clause. In order for Darleen to have a claim under
Due Process, she must first have a property interest in the
retirement benefits. In this respect, it is important to
remember that even if Steven and Darleen did not divorce,
she might never receive any of his pension benefits, as
there is a possibility that she could predecease Steven.
Property rights are created and defined by state law.
Cleveland Board of Education v. Loudermill, 470 U.S. 532,
105 S. Ct. 1487, 84 L. Ed. 2d 494 (1985). Thus, whatever
property rights Darleen may have are created and defined
by the statutory scheme which governs the Kentucky
Employees Retirement System. KRS 61.542(2)(b) is part of
this statutory scheme, and that statute clearly states that
Darleen has no rights to Steven’s benefits after they divorce.
Therefore, there can be no violation of due process.
Similarly, there can be no unconstitutional taking of
Darleen’s property, as she has no property interest in these
benefits.
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Trial Order, Weiand v. Board of Trustees of Kentucky Retirement Systems, 91-Cl-1103
at 8 (Franklin Circuit Court, Div. II, April 7, 1998).
For the reasons set forth above, the opinion of the Court of Appeals is hereby
affirmed.
Cooper, Graves, Keller, Stumbo, and Wintersheimer, JJ., concur. Lambert, C.J.,
dissents by separate opinion.
COUNSEL FOR APPELLANT:
J. Baxter Schilling
1513 South Fourth Street
Louisville, KY 40208
COUNSEL FOR APPELLEE, BOARD OF
TRUSTEES OF KENTUCKY RETIREMENT SYSTEMS:
Robert W. Kellerman
Lizbeth Ann Tully
307 Washington Street
Frankfort, KY 40601
COUNSEL FOR APPELLEE, STEVEN J. WEIAND:
Stephen M. George
1100 Republic Building
429 W. Muhammad Ali Boulevard
Louisville, KY 40202
COUNSEL FOR APPELLEE, A. B. CHANDLER, III:
A. B. Chandler, III
Attorney General
Capitol Building
Frankfort, KY 40601
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RENDERED: AUGUST 24,200O
TO BE PUBLISHED
1999-SC-0486-DG
LINDA DARLEEN WEIAND
V.
APPELLANT
ON REVIEW FROM COURT OF APPEALS
1998-CA-1028-MR
FRANKLIN CIRCUIT COURT NO. 91-Cl-1103
BOARDOFTRUSTEESOFKENTUCKY
RETIREMENT SYSTEMS; STEVEN J. WEIAND;
AND A. B. CHANDLER, III, ATTORNEY GENERAL
OF KENTUCKY
APPELLEES
DISSENTING OPINION BY CHIEF JUSTICE LAMBERT
Judge Schroder’s dissenting opinion in the Court of Appeals well
expresses my view as to the proper resolution of this case. As such, I adopt and
publish herewith Judge Schroder’s dissenting opinion:
I have a real problem with this case. Prior to
retirement, the parties chose the “Survivorship 100%”
retirement benefits payout. At retirement, the beneficiary
and the benefits payable become etched in stone, with
actuaries based on the age and death of both. The retirees
had bargained for and received less retirement benefits
monthly in exchange for 100% survivorship benefits. I
believe that the retirees’ benefits become vested and the
divorce should have no effect on the survivorship benefits.
The bargain was to continue retirement benefits until death,
not divorce. The policy provision which terminates benefits
based on divorce is against public policy, and does not
reasonably relate to the purpose of retirement benefits - to
provide benefits during retirement, not during marriage.
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