Robert Gelschus v. Clifford Hogen, No. 21-3453 (8th Cir. 2022)
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Plaintiff made contributions to a 401(k) plan during her employment at Honeywell International Inc. She originally designated her husband, Defendant, as the sole beneficiary in the event of her death. The parties later divorced and in the marital termination agreement (MTA), they agreed that Plaintiff will be awarded, free and clear of any claim on the part of Defendant’s, all of the parties’ right, title, and interest in and to the Honeywell 401(k) Savings and Ownership Plan. Plaintiff submitted a change-of-beneficiary form to Honeywell. She, however, did not comply with a requirement.
Plaintiff died in 2019 and Honeywell paid the benefits to Defendant. The personal representative of Plaintiff’s estate sued Honeywell for breach of fiduciary duty, and Defendant for breach of contract, unjust enrichment, conversion, and civil theft. The Eighth Circuit affirmed summary judgment for Honeywell and reversed summary judgment for Defendant on the breach of contract and unjust enrichment claims.
The court explained that even if the Plan gave the administrator discretion to accept Plaintiff’s defective Form, it is not an abuse of discretion to act in accordance with plan documents. ERISA directs administrators to “discharge [their] duties . . . in accordance with the documents and instruments governing the plan.” Thus, because Honeywell followed plan documents in rejecting Plaintiff’s defective change-of-beneficiary form and distributing benefits, the breach of fiduciary duty claim fails. Further, even if the MTA were ambiguous, a reasonable jury could find that Plaintiff and Defendant intended for the MTA to waive his beneficiary interest in the 401(k).
Court Description: [Benton, Author, with Gruender and Grasz, Circuit Judges] Civil case - ERISA. Honeywell did not breach its fiduciary duties under ERISA by failing to remove Galchus's decedent's ex-husband as beneficiary of a retirement plan awarded to the decedent in the parties' divorce decree because Honeywell acted in accordance with plan documents in rejecting the decedent's defective change-of-beneficiary form; nor did it abuse its discretion by distributing the death benefits to the ex-husband as he was the sole beneficiary under the only valid designation; ERISA does not preempt post-distribution suits against recipients, and decedent's administrator had standing to bring this claim for breach of contract; even if the parties' marital dissolution agreement was ambiguous, a reasonable jury could find that they intended for the agreement to waive the ex-husband's beneficiary interest in the 401(k) benefits; if a jury finds the agreement did not waive the ex-husband's beneficiary interests, the district court must consider whether equity requires him to give them up on a theory of unjust enrichment; the district court did not err in granting the ex-husband summary judgment on the estate's conversion and civil theft claims; in sum, summary judgment for the ex-husband on claims for breach of contract and unjust enrichment is reversed and the case is remanded for further proceedings.
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