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SMITH v. ESTATE OF SMITH
February 19, 2003
BARBARA SMITH, PLAINTIFF,
ESTATE OF MARK SMITH AND DUPONT PENSION AND RETIREMENT PLAN, DEFENDANTS.
The opinion of the court was delivered by: Stephen M. Orlofsky, District Judge
Plaintiff, Barbara Smith ("Smith"), and Defendant, DuPont Pension and
Retirement Plan ("DuPont"), have cross-moved for summary judgment. These
cross-motions raise issues of law that fall within the arcana of the
Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001,
et seq., which have not been frequently addressed by this Court —
specifically: (1) under what circumstances does a Property Settlement
Agreement ("PSA"), incorporated into a Judgment of Divorce, qualify as a
Qualified Domestic Relations Order ("QDRO") excepted from ERISA's broad
preemption of state laws relating to pension plans?; and (2) is a QDRO
binding on a plan administrator, despite the parties' failure to send a
copy of the order to the plan?
For the reasons set forth below, I find that the PSA in this case does
qualify as a QDRO that is excepted from ERISA's broad preemption of state
laws. Because ERISA requires no more of a PSA to be qualified as a QDRO
than to meet the requirements of the statute, the fact that the pension
plan never received a copy of the order does not defeat the claimant's
entitlement to benefits. Accordingly, I shall grant Plaintiff's motion
for summary judgment and deny Defendant DuPont's cross-motion for summary
I. FACTUAL AND PROCEDURAL BACKGROUND
Defendant Mark Smith was employed by DuPont from July 9, 1973 until
October 3, 1988. See Aff. of Marsha G. Cauthen, 4/10/00, ¶ 5. He was
thirty-six years old when he resigned from DuPont after more than fifteen
years of service. See id. ¶¶ 5-6. Plaintiff, Barbara Smith, obtained
a final judgment of divorce from Mark Smith on Sept. 24, 1990. See Pl.'s
Ex. A (copies of judgment and order).*fn1 Mark Smith died on September
26, 1998 at the age of forty-six. See Pl.'s Ex. B (death certificate).
Smith claims that DuPont denied her the pension benefits due to her
under a Property Settlement Agreement reached between her and her
ex-husband, Mark Smith. The PSA provides, in relevant part:
Husband therefore does hereby irrevocably assigns[sic]
to Wife the sum of 50% of his said pension. The E.I.
DuPont DeNemours Company is hereby authorized to pay to
Wife 50% of Husband's pension entitlement, directly to
the Wife, at the time Husband begins to receive the said
pension. If, a death benefit is paid in lieu of the
pension then a minimum of 50% of that death benefit
shall be paid to wife.
Pl.'s Ex. A (PSA, Art. V). On November 6, 1998, Plaintiff wrote to
DuPont, attaching copies of the divorce judgment and PSA, and requested
the death benefit to which she believed she was entitled under the PSA.
See Cauthen Aff. ¶ 10. DuPont had not previously received copies of
either the Judgment of Divorce or the PSA. Id. ¶ 11.
On November 9, 1998, Marsha G. Cauthen, DuPont's Employee Benefits
Coordinator, wrote to Plaintiff, informing Smith that her request for
benefits had been denied. See Pl.'s Ex. B. Cauthen informed Smith that
there were no benefits available to her because she had failed to present
a QDRO to DuPont. Id. Cauthen further explained that Smith's ex-husband's
benefits are governed by ERISA, and that the statute only permits DuPont
to release benefits to a former spouse if it is in possession of a QDRO.
On February 15, 1999, Smith again wrote to DuPont, P.O. Box 436, Little
Falls, New Jersey, 07424, requesting an appeal form for survivor
benefits. See Def.'s Supp'l Mem. of Law in Supp. of Summ. J., 12/28/00,
Ex. A. On March 24, 1999, Plaintiff sent a copy of the February 15, 1999
correspondence to DuPont Connection, at the same address, marking it
"second request." Id., Ex. B. On July 23, 1999, Kimberly A. Hill of the
Survivor Benefits Unit of DuPont Connection responded to Smith's two
letters and informed Smith that DuPont's original decision regarding
Smith's benefits that had been reached on November 9, 1998 remained
unchanged. See Pl.'s Ex. C. Hill further explained to Smith, "If you
would like to pursue this further, you can exercise your rights under
ERISA as stated on page 28 of the Pension and Retirement Summary Plan
Description." Id. Hill attached a copy of the relevant sections of the
DuPont's "Pension and Retirement Plan," originally adopted on September
1, 1904, and as last amended March 1, 1998, is over 120-pages-long and
contains nine appendices. Plaintiff points to two sections of the Plan
under which she believes she is entitled to benefits, Sections V and VI.
Section V creates a vested right to deferred pension in certain
employees, as well as their spouses, who meet the specified eligibility
criteria. See DuPont Plan § V.A(1) (attached to Cauthen Aff. as Ex.
A). Section VI provides company-paid survivor benefits to certain
employees who meet the specified eligibility criteria. Id. § VI.A.
Smith's Complaint, which was first filed in New Jersey Superior Court
and subsequently removed by DuPont to this Court on December 22, 1999,
contended that DuPont wrongfully denied her access to her ex-husband's
pension benefits. This is the second time these parties' cross-motions for
summary judgment have been presented to this Court. On January 5, 2001, I
heard oral arguments on the original cross-motions for summary judgment
and concluded that Smith had failed to exhaust her administrative
remedies, as required by ERISA. Thus, I granted DuPont's motion for
summary judgment without prejudice and administratively terminated the
action, so that Smith could file an out-of-time administrative appeal and
reopen her case once she satisfied the exhaustion requirement. See
Order, Smith v. Smith, Civ. A. No. 99-5973 (D.N.J. Jan. 5, 2001).
Having satisfied ERISA's exhaustion requirement, Smith has now moved to
reopen her case. As I noted during the January 5, 2001 hearing, I
interpret Smith's action to be one for civil enforcement pursuant to
29 U.S.C. § 1132(a)(1)(B). Actions brought under this section are
equitable in nature, and do not provide for a right to a jury trial. See
Pane v. RCA Corp., 868 F.2d 631, 636 (3d Cir. 1989). Once again in this
action, both parties have filed cross-motions for summary judgment.
I shall review de novo the plan administrator's decision that the
Smiths' PSA does not constitute a QDRO. See Samaroo v. Samaroo,
193 F.3d 185, 189 (3d Cir. 1999). This Court has federal question
jurisdiction over this action pursuant to 28 U.S.C. § 1331 and
1132(e)(1). I have considered the submissions of the parties and decided
these cross-motions for summary judgment on the papers without oral
argument, pursuant to Fed.R.Civ.P. 78.
II. THE LEGAL STANDARD GOVERNING MOTIONS FOR SUMMARY JUDGMENT
The legal standard governing summary judgment is well-settled. Summary
judgment is proper only "if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law."
Fed.R.Civ.P. 56(c) (West 2002); see also Anderson v. Consol. Rail Corp.
("Conrail"), 297 F.3d 242, 247 (3d Cir. 2002). An issue is genuine "if
the evidence is such that a reasonable jury could return a verdict for
the nonmoving party." Conrail, 297 F.3d at 247 (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A fact is material if it
bears on an essential element of the plaintiff's claim. Abraham v. Raso,
183 F.3d 279, 287 (3d Cir. 1999) (citing Anderson, 477 U.S. at 248-251).
Thus, to survive a motion for summary judgment, the party contesting the
motion must demonstrate a dispute over facts that might affect the
outcome of the suit. Groman v. Township of Manalapan, 47 F.3d 628, 633
(3d Cir. 1995) (citing Anderson, 477 U.S. at 250-52).
Summary judgment is proper "if after adequate time for discovery and
upon motion, a party fails to make a showing sufficient to establish the
existence of an element essential to that party's case, and on which that
party will bear the burden of proof at trial." Conrail, 297 F.3d at 247
(citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)). "When a
motion for summary judgment is made and supported . . . an adverse party
may not rest upon the mere allegations or denials of the adverse party's
pleadings, but the adverse party's response, by affidavits or as otherwise
provided in this rule, must set forth specific facts showing that there is
a genuine issue for trial." Fed.R.Civ.P. 56(e).*fn2 "If the adverse
party does not so respond, summary judgment, if appropriate, shall be
entered against the adverse party." Id.
Here, neither party has asserted the existence of any genuine issue of
material fact which would preclude summary judgment. Thus, this case is
ripe for summary judgment on the questions of law presented.
A. QUALIFIED DOMESTIC RELATIONS ORDERS UNDER ERISA
The parties agree that the plan at issue, the DuPont Pension and
Retirement Plan ("Plan" or "DuPont Plan"), is governed by ERISA. When
ERISA is silent on an issue, courts have applied federal common law to
fill in the gaps. See Zienowicz v. Metro. Life Ins. Co.,
204 F. Supp.2d 339, 344 (D.N.J. 2002) (citing Heasley v. Beiden &
Blake Corp., 2 F.3d 1249, 1257 (3d Cir. 1993)). Additionally, in applying
federal common law, this Court may draw from analogous New Jersey state
law. See id.
As a general rule under ERISA, pension plan benefits are neither
assignable nor alienable. See 29 U.S.C. § 1056(d)(1) (West 2002). A
narrow exception to this anti-alienation provision, however, see
29 U.S.C. § 1056(d)(3)(A) and 1144(b)(7), permits the assignment or
alienation of benefits under a State-issued "qualified domestic relations
order" ("QDRO") Id. The QDRO is one of the few exceptions to ERISA's
broad preemption of state laws which relate to employment benefit plans.
See 29 U.S.C. § 1144(a). "[A] state law relates to an ERISA plan if
it has a connection with or reference to such a plan." Egelhoff v.
Egelhoff, 5 ...