Cingrani v. Sheet Metal Workers Local 73 Pension Fund, No. 1:2015cv06430 - Document 22 (N.D. Ill. 2015)

Court Description: MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 12/15/2015:Civil case terminated. Mailed notice(wp, )
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Cingrani v. Sheet Metal Workers Local 73 Pension Fund Doc. 22 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION ANTHONY CINGRANI, JR., Plaintiff, Case No. 15 C 6430 v. Judge Harry D. Leinenweber SHEET METAL WORKERS’ LOCAL NO. 73 PENSON FUND, Defendant. MEMORANDUM OPINION AND ORDER I. The Plaintiff, BACKGROUND Anthony Cingrani, Jr. (“Cingrani” or “Plaintiff”), worked as a sheet metal worker starting in 1978. He was married to Deborah Cingrani (“Deborah”), from whom he was divorced on May 16, 2002. As part of the divorce settlement, a Qualified Domestic Relations Order (“QDRO”) was entered by the Circuit Court of Cook County on May 16, 2002. The intent of this Order was to assign 50% of Cingrani’s vested interests in three pension funds to Deborah. is at issue “Fund”). in this case: One of the three pension funds the Local 73 Pension Fund (the The QDRO did not distinguish between the three funds but treated them the same. possibility that Deborah It also did not provide for the might predecease Cingrani. The Dockets.Justia.com Local 73 Pension Fund was a defined benefit plan in the form of a pension that commenced upon Cingrani’s retirement and was to end with his death. Deborah which was unfortunately prior to passed Cingrani received any benefits. away taking on February retirement, so 17, she 2011 never There were no amendments made to the QDRO prior to her death. In 2014 Cingrani decided to take retirement as of first of the year 2015 and applied to the Fund for his pension. On July 30, 2014, the Fund advised Cingrani that, because of the assignment of 50% of his pension to Deborah by the QDRO, he would only be entitled to 50% of his pension, the remaining 50% was to revert to the Fund due to Deborah’s death. Since possibility that the QDRO Deborah did might not make provision for the predecease Cingrani, the Fund based its decision on what it claimed was the default rule for QDROs, which it disclosed in a document attached to its denial letter. This default rule stated, in haec verba, “Upon the Alternate Payee’s death before benefits commenced to him or her, the Alternate Payee’s assigned benefit will be forfeited and will revert to the [Plan/Participant].” circumstances where one or the It did not explain the other would receive the reversion. In response, on February 15, 2015, Cingrani obtained from the same court that issued the 2002 QDRO an amended QDRO. - 2 - This Order provided that “in the event the Alternate Payee [Deborah] should predecease the participant [Cingrani], and before any benefits were made to the Alternate Payee, all of the Alternate Payee’s assigned benefit and rights thereto shall revert entirely to the Participant and the Participant shall therefore receive this full monthly benefits afforded him.” retirement benefit and all other On March 3, 2015 the Fund refused to honor the February 18, 2015 QDRO. Cingrani appealed this denial pursuant to the Fund’s rules, which was denied on May 4, 2015. The wording of the two denials was identical except the earlier denial was based on Cingrani’s based on his “appeal.” “claim” while the latter was The appeal denial, however, did refer to the “discovery” of a “prior version” of the Fund’s QDRO model form that did not provide a default rule. The Fund concluded that even if there was no default rule, Cingrani still loses because Deborah received all the benefits to which she was entitled which was Zero. On both the claim and the appeal the Fund was deadlocked with the Union Representative voting in favor of Cingrani and the Employer position. Representative Under the Fund’s voting in rules of favor of the Fund’s procedure, the Fund’s position is sustained unless it is overruled by both the Union Representative and the Employer Representative. The reason for rejecting Cingrani’s claim was that the QDRO was silent as to - 3 - what happens in the event of Deborah’s death prior to Cingrani’s retirement and the commencement of benefits, and the so-called “default rule” quoted above was applied to deny the claim; and that an amended QDRO cannot retroactively reverse a result that had already occurred, i.e., the satisfaction of any claim Deborah had due to her death prior to Cingrani’s retirement. II. The Union DISCUSSION Representative and Cingrani take the position that Deborah died prior to her vesting in the pension which is proved by the fact that the fund claims that her share had no value at the time of her death because Cingrani had not yet retired. benefits. Thus, there is no basis for denying his claim for full Cingrani also claims that the 2015 QDRO effectively amended the 2002 QDRO when it eliminated any interest Deborah had. Based on the above Cingrani filed a two-count Complaint against the Fund, Count I based on ERISA, and Count II based on violation of the Collective Bargaining Agreement. Cingrani has moved for Judgment on the pleading on Count I, contending that the Fund’s denial of his full pension benefits was arbitrary and capricious and therefore violated ERISA. Rule 12(c) permits a party to move for judgment on the pleadings, which consist of the Complaint, the Answer and any written instruments attached to the Complaint as exhibits if it appears that the - 4 - moving party is entitled to judgment as a matter of law. North Ind. Gun & Outdoor Shows, Inc. V, City of Southbend, 163 F.3d 449, 452 (7th Cir. 1998). “Where as here the plan administrator is granted discretion to construe plan administrator’s terms, ruling a under capricious standard of review.” Corp., 423 Cingrani’s Court F.3d 653 (7th Motion for Judgment finds that Administrator’s under refusal a court reviews arbitrary deferential the or Hess v. Reg-Ellen Machine Tool Cir. the to reviewing 2005). on the facts recognize The Court Pleadings of this the fact grants because case the that the Plan Deborah’s interest terminated on her death and reverted to Cingrani as required by the 2015 QDRO was arbitrary and capricious. It is obvious that where the QDRO is silent, and there is no default rule, and a beneficiary dies prior to there is nothing to revert to the Fund. her interest vesting, If the pension had, in fact, vested so that there was an interest that would be owned by her estate there would be a basis for denial of Cingrani’s claim. But that is not the case. The Board specifically held that her “children do not (and did not) have a right to receive [Deborah’s] benefits.” The Fund’s stated position is that even if it is unjustly enriched it has no authority to ignore the 2002 QDRO and apply provisions of the 2015 QDRO. But why no apply the 2015 QDRO even though it was entered after Deborah’s - 5 - death? Courts have held that ERISA application of posthumous QDROs. does not prohibit Marker v. Northrop Grumman Space & Missions Systems Corp. Salaried Pension Plan, 2006 WL 2873191 (N.D, Ill. 2006) and cases cited at *9. See also, Patton v. Denver Post Corp., 179 F.Supp.2d 1232, 1234 (Colo. D.C. 2001). In the Patton case, participant’s spouse, a participant’s pension plans. A included in overlooked and Participant’s not death the one-half the second first interest second the plan QDRO of the plan was the one pension QDRO. was the After in gave discovered omission was believed to have been inadvertent. and its The spouse then filed a motion in domestic relations court for a second QDRO asking it to be entered Nunc Pro Tunc to the date of the divorce and eleven years prior to the participant’s death. The employer refused to recognize the second QDRO and the subject suit was filed. The court found in favor of the spouse holding that such an order was valid under Colorado law in order to correct an error or omission, and it therefore must be recognized by the employer under ERISA law. into account Cingrani the appears inconceivable that Here, similarly, the omission to take possibility to be Deborah an that Deborah obvious would have might predecease oversight. opted to It have is fifty percent of Cingrani’s pension revert to the Union Pension Plan in the event of her prior death. - 6 - It is therefore well within ERISA to allow a domestic relations court to correct such an omission. The first, Court the finds 2002 that QDRO Cingrani allows should Deborah’s win on interest two to bases: revert to Cingrani and, second, even if it does not, the 2015 QDRO was valid to accomplish the same purpose. While ERISA does not allow the assignment or alienation of rights of beneficiaries and participants, there is an exception for QDROs from state courts. of the plan if the Such QDROS will override the terms statutory criteria are met. There are several formal requirements but the main substantive one is that the QDRO must not increase the benefits to be paid by the Plan if to do so would increase § 1056(d)(3)(D)(ii). the actuarial an alternative 29 payee prior The issue is: to the does the death institution of payments increase the actuarial cost of the benefits. in the first participant. instance After U.S.C. In other words, the QDRO cannot itself increase the cost of the pension. of cost. the would QDRO depend on assignment of the 50% age to benefit The cost of the Deborah, presumably the Fund would have recalculated the benefits based on the age of Deborah who was two years younger than Cingrani. A younger woman would presumably increase the cost of the pension unless the payments were somehow reduced because the life expectancy of women is longer than that of men. - 7 - Thus, it would seem that her premature death and the reassignment of her interest back to Cingrani would not have caused the actuarial cost of the pension to increase but quite possibly decrease. The Fund Thus, it does not would suggest appear that that it the would increase recognition of the cost. the 2015 posthumous QDRO would fall well within the statutory criteria to allow a QDRO to override the ERISA plan. Blue v. UAL Motion for Corporation, 160 F.3d 383, 385-386 (7th Cir. 1998). III. For the reasons CONCLUSION stated herein, Plaintiff’s Judgment on the Pleadings [ECF No. 12] is granted. IT IS SO ORDERED. Harry D. Leinenweber, Judge United States District Court Dated: 12/15/2015 - 8 -