IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
January 3, 2012
IN RE: ESTATE OF MICHAEL BURKLAND, GABRIEL BURKLAND PLAINTIFFS,
DORLEEN BURKLAND, ET AL.,
The opinion of the court was delivered by: Goldberg, J.
This case emanates from a pending homicide trial in Bucks County, Pennsylvania, where Dorleen Burkland is accused of shooting her husband, Michael Burkland ("the deceased"). Plaintiff, Gabriel Burkland, the son of Dorleen and Michael Burkland, alleges that he is entitled to insurance proceeds under a life insurance and accidental death policy, issued by Defendant, Metropolitan Life Insurance Company, Inc. (MetLife) on the life of his father.Defendant, Dean Burkland, the brother of the deceased and the executor of the deceased's estate ("the Estate"), challenges the distribution of these proceeds to Plaintiff under Pennsylvania's Slayer's Act, 20 PA. CONS. STAT. § 8801-15, and the Employee Retirement Income Security Act ("ERISA").
Presently before the Court is Plaintiff's motion for summary judgment, which requests an order directing that the insurance proceeds be distributed to him by MetLife. For the reasons stated herein, we will deny Plaintiff's motion and order that the proceeds remain with MetLife pending the outcome of the criminal proceedings in Bucks County.
I. FACTUAL AND PROCEDURAL BACKGROUND*fn1
Plaintiff is the son of Dorleen and Michael Burkland. Dorleen Burkland is accused of killing the deceased, her husband Michael, on October 3, 2010, and is currently represented by the Bucks County Public Defender's office. The deceased was a participant in a life insurance and accidental death plan through his employer, United Airways. The plan was issued by Defendant, MetLife, and provided for $149,000 in total coverage. Dorleen Burkland is named as primary beneficiary and Plaintiff is named as contingent beneficiary. (Pl.'s State. Facts ¶¶ 1-9, 12; Estate Resp. State. Facts ¶¶ 1-9, 12.)
On April 20, 2011, Dorleen Burkland appeared before the Honorable Jeffrey L. Finley of the Bucks County Court of Common Pleas to discuss the status of her counsel for the pending homicide trial. Plaintiff was present for this proceeding, and through his counsel, informed Judge Finley that Dorleen Burkland was in the process of disclaiming her rights to the life insurance policy and that Plaintiff, as contingent beneficiary, planned to gift a portion of the proceeds to Dorleen Burkland so that she could retain a private criminal defense attorney. In fact, at the time of this hearing, Dorleen Burkland had already faxed correspondence to MetLife, stating that she "disclaim[ed] any and all rights to collect as primary beneficiary or otherwise under the group term life insurance policy that was in effect for decedent, Michael A. Burkland[.]" (Doc. No. 2, Exs. 1-3; Doc. No. 6, Ex. A, Doc. No. 11, Ex. B.)
On May 2, 2011, the Estate sent correspondence to MetLife asserting
that Gabriel's "plan . . . violates the spirit, if not letter, of
[Pennsylvania's] Slayer Act[,]" and may be the product of "undue
influence" on the part of Dorleen Burkland. The correspondence also
stated that the Estate was
planning to seek an injunction in state court, "requesting that the
proceeds of the life insurance policy be paid into the Trust
established for the benefit of Gabriel Burkland under the last will
and testament of Michael Burkland." (Doc. No. 2, Ex. 3.) In response,
MetLife put an "administrative hold" on the disbursement of proceeds
under the policy, which presently remains in effect.*fn2
(Pl.'s State. Facts ¶¶ 18-20; MetLife Resp. State. Facts ¶¶
On May 19, 2011, Plaintiff filed an emergency injunction petition in the Court of Common Pleas, Bucks County, Orphan Division, to prevent the estate from interfering in the delivery of the insurance proceeds. On May 21, 2011, the Estate filed a cross petition for an injunction, seeking to prevent MetLife from distributing the funds until the dispute over the proceeds was resolved on the merits. On May 24, 2011, a hearing was held on these petitions before the Honorable C. Theodore Fritsch, Jr. Plaintiff testified that his mother had agreed to disclaim her interest in the deceased's life insurance policy after he informed her that he would use the proceeds to "pay out the sum that is required to give [her] private counsel."*fn3 (Doc. No. 12, Ex. E, pp. 29-38.)
On June 29, 2011, Judge Fristch denied Plaintiff's petition and granted the Estate's petition "in part insofar as [MetLife] is directed to maintain the status quo and refrain from disbursing life insurance proceeds . . . until further Order of the Court." (Doc. No. 12, Ex. F.) On July 12, 2011, Plaintiff filed a "Petition for Payment of Insurance Proceeds," in the Orphan's Court of Bucks County, naming MetLife, Dorleen Burkland and the Estate as Defendants. This petition requested a declaratory judgment declaring that Dorleen Burkland had disclaimed her benefits under the deceased's policy, thereby making Plaintiff the rightful beneficiary. In the alternative, Plaintiff requested that Dorleen Burkland be adjudicated a "slayer," under Pennsylvania's Slayer's Act, such that he would be entitled to payment as the contingent beneficiary.
On July 22, 2011, Dorleen Burkland filed a pro se notice of removal regarding all state court proceedings, invoking federal question jurisdiction under ERISA. No party involved in this litigation objected to, or challenged, this removal. On August 15, 2011, MetLife filed an answer to Plaintiff's petition in this Court and raised claims of interpleader, requesting that Dorleen Burkland, Plaintiff and the Estate be ordered to settle this dispute "among themselves." On September 19, 2011, the Estate also filed an answer in this Court to Plaintiff's petition and MetLife's claim of interpleader. (Doc. Nos. 2, 6.)
On October 19, 2011, we held a status conference. There, the parties agreed that discovery was not necessary and consequently, we entered a briefing schedule for summary judgment motions. On November 11, 2011, Plaintiff filed a motion for summary judgment, which Defendants MetLife and the Estate oppose. On December 15, 2011, oral argument was held on this motion.
II. SUMMARY JUDGMENT STANDARD
Under Federal Rule of Civil Procedure 56(a), summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." "[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the non-moving party bears the burden of proof on a particular issue at trial, the moving party's initial Celotex burden can be met by showing that the non-moving party has "fail[ed] to make a showing sufficient to establish the existence of an element essential to that party's case." Id. at 322.
After the moving party has met its initial burden, summary judgment is appropriate if the non-moving party fails to rebut the moving party's claim by "citing to particular parts of materials in the record" showing a genuine issue of material fact. Fed. R. Civ. P. 56(c)(1)(A). To survive a motion for summary judgment, the non-moving party must refer to specific facts in the record rather than "rely[ing] on unsupported assertions, conclusory allegations, or mere suspicions." Schaar v. Lehigh Valley Health Servs., Inc., 732 F.Supp.2d 490, 493 (E.D.Pa. 2010) (citing Williams v. Borough of W. Chester, Pa., 891 F.2d 458, 461 (3d Cir. 1989)). Evidence must be viewed in the light most favorable to the non-moving party. Galena v. Leone, 638 F.3d 186, 196 (3d Cir. 2011).
III. LEGAL ANALYSIS
Plaintiff moves for summary judgment, asserting that he is entitled to receive the proceeds payable under the deceased's insurance policy, pursuant to 29 U.S.C. § 1104(a)(1)(D) of ERISA.*fn4 This provision requires the administrator of a plan to distribute benefits in accordance with "plan documents." See Kennedy v. Plan Admin. for DuPont Sav. & Inv. Plan, 555 U.S. 285, 300-03 (2009). Plaintiff contends that his mother has disclaimed her interest as primary beneficiary of the policy and thus, because the plan designates him as contingent beneficiary, MetLife should be ordered to turn the proceeds over to him. See (Pl.'s Br. at 4, 10-11.) The Estate disagrees and argues that distribution of the proceeds to Plaintiff would violate Pennsylvania's Slayer's Act, 20 PA. CONS. STAT. § 8801-15, and ERISA, because Plaintiff and Dorleen Burkland have "conspired" to use the proceeds to fund her defense on criminal homicide charges. The remaining Defendants, Dorleen Burkland and MetLife, have not taken a position on this issue.*fn5 (Estate Resp. at 10-16.)
In support of his motion, Plaintiff argues that: (1) the Estate does not have standing to challenge the distribution of proceeds under ERISA; and (2) the Estate's claims under "state law or otherwise" have no bearing on Plaintiff's status as the rightful beneficiary of the proceeds under the "plan document" and ERISA. See (Pl.'s Br. at 4, 10-11.) We will address each argument in turn.
A. The Estate's Standing Under ERISA to Contest Distribution to Plaintiff
Plaintiff claims that the Estate does not have standing under ERISA or the Slayer's Act to contest MetLife's distribution of the deceased's insurance proceeds. To assert a claim under ERISA, a party must have constitutional, statutory and prudential standing. Leuthner v. Blue Cross and Blue Shield of Northeastern Pennsylvania, 454 F.3d 120, 125 (3d Cir. 2006). Plaintiff contends that the Estate "lacks all three." (Pl.'s Mot. at 4.)
Constitutional standing is a question of a federal court's "power to resolve a dispute" under Article III of the Constitution. Graden v. Conexant Sys. Inc., 496 F.3d 291, 295 (3d Cir. 2007). To establish constitutional standing, and invoke federal jurisdiction, a party must: (1) have suffered an "injury in fact;" (2) establish a causal connection between the injury and the complained of conduct; and (3) demonstrate that the injury is likely to be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).
An "injury in fact" is "an invasion of a legally protected interest which is (a) concrete and particularized," id., and (b) "actual or imminent, not 'conjectural' or 'hypothetical.'" Whitmore v. Arkansas, 495 U.S. 149, 155-56 (1990) (quoting Los Angeles v. Lyons, 461 U.S. 95, 102 (1983)). The United States Court of Appeals for the Third Circuit has described the "injury in fact" requirement as a "generous inquiry" as to whether the "plaintiff alleged some specific, 'identifiable trifle' of injury[.]" Bowman v. Wilson, 672 F.2d 1145, 1151 (3d Cir. 1982) (internal citations and quotations omitted).
Here, the Estate seeks to enforce the deceased's rights under a plan governed by ERISA. The Estate contends that it would be "aggrieved" if the deceased's life insurance proceeds were distributed to Plaintiff at this time. The Estate urges that distribution would be improper under ERISA and the Pennsylvania Slayer's Act, because after allegedly killing the deceased, Dorleen Burkland attempted to disclaim her interest in the policy so Plaintiff could effectively distribute the proceeds to her. (Estate Resp. at 7-8, 12-13; Doc. No. 12, Ex. E, pp. 29-38.)
We conclude that the Estate's allegations, along with the undisputed facts of record, are sufficient to satisfy the "injury in fact" requirement. The Estate, on behalf of the deceased, has a legally protected interest in seeing that the deceased's insurance proceeds are not delivered in a manner that would violate ERISA or the terms of the plan.*fn6 See 29 U.S.C. § 1132(a)(1)(B)(3) (providing that a civil action may be brought by a participant, beneficiary or fiduciary to "enjoin any act or practice which violates any provision of [ERISA] or the terms of the plan[,]" or "obtain other appropriate equitable relief"). Cf. Finn v. Dugan, 394 A.2d 595, 369 (Pa.Super. 1978) ("The law is clear that all actions that survive a decedent must be brought by or [a]against a personal representative, duly appointed by the Register of Wills"). The alleged invasion of this protected interest is "concrete and particularized," as it effects the Estate in "a personal and individual way," and is "actual or imminent" given Dorleen Burkland's attempt to disclaim her interest in the policy and Plaintiff's statement in court that he intends to use the insurance proceeds to fund Dorleen Burkland's criminal defense.
The Estate has also satisfied the second and third elements necessary to establish constitutional standing. There is a clear "causal connection" between the Estate's imminent injury and the complained of conduct. Further, a decision directing that Dorleen's disclaimer is ineffective as a matter of law or that the insurance proceeds should not be distributed to Plaintiff at this time would redress the Estate's asserted injury.*fn7
Plaintiff also argues that the Estate does not have statutory or prudential standing in this matter. Statutory standing requires the Court to interpret "whether Congress has accorded this injured [party] the right to sue the defendant to redress his injury." Graden v. Conexant Sys. Inc., 496 F.3d 291, 295 (3d Cir. 2007). In the ERISA context, the prudential standing analysis is "inextricably tied" to the statutory standing question, which generally asks whether a party qualifies as a "participant" or "beneficiary" under the provisions of ERISA. Miller v. Rite Aid Corp., 334 F.3d 335, 340-41 (3d Cir. 2003); see Baldwin v. University of Pittsburgh Medical Center, 636 F.3d 69, 74-75 (3d Cir. 2011). Based on the body of precedent that follows, we disagree with Plaintiff and conclude that the Estate has statutory and prudential standing as the representative of a "participant" in the ERISA plan. Shea v. Esensten, 107 F.3d 625, 628 (8th Cir. 1997) ("We are persuaded that Mrs. Shea, as the representative of Mr. Shea's estate, has standing to assert her husband's ERISA claims"); Tolton v. American Biodyne, Inc., 48 F.3d 937, 941 (6th Cir. 1995) ("Furthermore, plaintiffs, who brought this action as representatives of Tolton's estate, have standing under ERISA"); Estate of J.D. Boss, Jr. v. Boss, 2011 WL 482874 at *3 (W.D.Ky. Feb. 4, 2011) ("At the time of his death, J.D. Boss, Jr., was an ERISA participant. The Estate, therefore, has derivative standing as a successor-in-interest"); Estate of Casella v. Hartford Life Ins. Co. et al., 2009 WL 2488054 at *4 (D.N.J. Sept. 11, 2009) ("The Court finds that decedent's estate has standing to sue as it is a representative of decedent, a participant in the ERISA plan[.]")
B. The Estate's Claims Under ERISA and Pennsylvania's Slayer's Act
Plaintiff urges that even if the Estate does have standing to contest the distribution of the policy's proceeds, its claims under "state law or otherwise" have no bearing on Plaintiff's status as the rightful beneficiary of the proceeds under the "plan document" and ERISA. More specifically, Plaintiff asserts that the "plan document" dictates that he is entitled to the proceeds as a result of Dorleen Burkland's purported disclaimer of interest, regardless of what he intends to do with the money.
While not entirely clear from an examination of Plaintiff's written submissions, Plaintiff's argument appears to be based upon the following propositions: (1) The Estate's claim under Pennsylvania's Slayer's Act is preempted by ERISA; and (2) ERISA's "plan document" rule applies without alteration in this case, despite the fact that Dorleen Burkland, the primary beneficiary, allegedly killed the deceased and stands to receive the benefit of his life insurance proceeds. See (Pl.'s Br. at 10-11.) At oral argument, Plaintiff's counsel more clearly stated that ERISA preempted the Estate's Slayer's Act arguments. (Transcript of Oral Argument, Dec. 15, 2011, p. 7.) For the following reasons, we conclude that it is unnecessary to decide whether ERISA preempts the Estate's claim under the Slayer's Act because under either the Slayer's Act or ERISA, the insurance proceeds at issue should not be distributed to Plaintiff at this time.
ERISA's preemption provision, 29 U.S.C. § 1144(a), states that ERISA "shall supercede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." This provision is "clearly expansive," New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co, 514 U.S. 645, 655 (1995), but federal courts must draw some reasonable limits on its scope, especially in areas traditionally reserved for state regulation. See De Buono v. NLSA-ILA Medical & Clinical Servs. Fund, 520 U.S. 806, 812-15 (1997). In evaluating whether a state law "relate[s] to" an employee benefit plan, and is thereby expressly preempted, courts must "look both to 'the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive,' as well as to the nature of the effect of the state law on ERISA plans." Egelhoff v. Egelhoff, 532 U.S. 141, 147 (2001) (quoting California Div. of Labor Standards Enforcement v. Dillingham Constr., N.A., Inc., 519 U.S. 316, 325 (1997)).
Pennsylvania's Slayer's Act provides, in pertinent part, that "[n]o slayer shall in any way acquire any property or receive any benefit as the result of the death of the decedent[.]" 20 PA. CONS. STAT. § 8802. The Act defines a "slayer" as "any person who participates, either as principal or as an accessory before the fact, in the wilful and unlawful killing of any other person." 20 PA. CONS. STAT. § 8801. These directives "shall not be considered penal in nature, but shall be construed broadly in order to effectuate the policy of [Pennsylvania] that no person shall be allowed to profit by his own wrong, wherever committed." Id. § 8815.
Our research has not revealed any authority that has determined whether the Pennsylvania Slayer's Act is preempted by ERISA.*fn8 Nor does the ERISA statute specifically address a "slayer" situation. Honeywell Sav. & Ownership Plan v. Jicha, 2010 WL 276237 at *6 (D.N.J. Jan. 15, 2010) (acknowledging that none of "ERISA's provisions address the distribution of benefits to a beneficiary responsible for killing the plan participant"). However, where ERISA preempts state law but is itself silent on an issue, courts look to the "federal common law of rights and obligations" that has developed under ERISA-regulated plans. McGurl v. Trucking Employees of North Jersey Welfare Fund, Inc., 124 F.3d 471, 481-82 (3d Cir. 1997) (providing that Congress envisioned an area of federal common law would develop where ERISA preempted state law and was silent on the issue). Federal common law instructs that, no person "'should be permitted to profit from his own wrong.'" Atwater v. Nortel Networks, Inc., 388 F. Supp. 2d 610, 615 (M.D.N.C. 2005) (quoting Prudential Ins. Co. v. Tull, 690 F.2d 848, 849 (4th Cir. 1982). This common law principle has been interpreted to preclude the killer of a plan participant from collecting insurance proceeds in the ERISA context. See Addison v. Metro Life Ins. Co., 5 F.Supp.2d 392, 393-94 (W.D. Va. 1998) (collecting cases). Cf. New York Mutual Life Ins. Co. v. Armstrong, 117 U.S. 591, 600 (1886) ("It would be a reproach to the jurisprudence of the country, if on[e] could recover insurance money payable on the death of a party whose life he had feloniously taken").
Given the application of ERISA's general preemption provision and federal common law, it is thus unnecessary to determine whether ERISA preempts Pennsylvania's Slayer's Act. This is because the principles underlying the Slayer's Act and ERISA require the same result and preclude distribution of the insurance proceeds to Plaintiff at this time. See Honeywell, 2010 WL 276237 at *5 (noting that several district courts have found that "it was unnecessary to determine [whether ERISA preempts a state slayer's act] since federal common law provides the same result as a slayer statute" and taking this approach).
Although Dorleen Burkland has not been convicted of killing the deceased, she has been charged with his death and awaits trial on first degree murder charges. Six months after she allegedly killed the deceased, Dorleen Burkland faxed a letter to MetLife seeking to disclaim her interest in his life insurance policy. Her "disclaimer" was provided pursuant to "an arrangement" she had with Plaintiff. As described by Plaintiff's counsel in the Bucks County Court, Dorleen Burkland "would disclaim the policy, we'd get it paid out to [Plaintiff], and [Plaintiff] would use part of the policy proceeds to pay for [Dorleen's] defense counsel." (Doc. No. 6, Ex. A, pp. 3-4.) At the preliminary injunction hearing in Bucks County, Plaintiff stated that he was "pushing the disclaimer issue" to his mother so that he could obtain the insurance money and use it to pay for her defense. When asked what he intended "to do with the money once [he got] the insurance proceeds[,]" he testified that his "intentions would be to pay out the sum that is required to give my mother private counsel." (Doc. No. 12, Ex. E, pp. 29-38.)
Given these circumstances, the arrangement between Dorleen Burkland and Plaintiff clearly circumvents the principles of Pennsylvania's Slayer's Act and the federal common law developed under ERISA. These principles clearly dictate that individuals convicted of murdering another may not receive financial benefits from the victim's death. This long-standing rule would have little effect if, after being charged with homicide, Dorleen Burkland could "disclaim" her interest in the victim's life insurance policy and effectively collect the proceeds from Plaintiff prior to a judicial determination as to her "slayer" status.
Atwater v. Nortel Networks, Inc, 388 F.Supp.2d at 612-13, a Middle District of North Carolina case, supports our conclusion. In Atwater, the primary beneficiary of an ERISA-covered plan was charged with the murder of the insured. The plan administrator distributed the insurance proceeds to the primary beneficiary, after he was charged, but before he was convicted of murder. After the conviction, the estate of the insured sought to collect the insurance proceeds from the plan administrator, arguing the proceeds should never have been distributed. The Atwater Court determined that the administrator's distribution of the proceeds to the alleged murderer was a breach of its fiduciary duty, reasoning that:
The indictment made it at least foreseeable that [he] would be judicially determined to be the killer of the plan participant, thus giving rise to a fiduciary responsibility to act in response to such a formal accusation. If a pending judicial determination could serve to bar distribution to a particular beneficiary, it reasonably follows that [the plan administrator has] . . . a fiduciary responsibility to delay the distribution to that person until a judicial determination regarding that beneficiary's ability to receive plan benefits has been made."
Atwater, 388 F. Supp. 2d at 616.
Although Plaintiff's position as an uncharged individual in this case certainly creates a different factual scenario than Atwater, the common sense principles espoused in Atwater apply here: If Dorleen Burkland is convicted of the murder of her husband, she should not be entitled to the proceeds of his life insurance policy. Permitting Dorleen Burkland to "disclaim" her interest in these proceeds now, before her culpability can be determined, and allowing the distribution of these proceeds to a third party who has clear intentions to transfer part of these proceeds to her, undermines the principles underlying the Slayer's Act and federal common law. We thus conclude that MetLife should continue to hold the insurance proceeds at issue pending final resolution of Dorleen Burkland's homicide trial.
For the foregoing reasons, Plaintiff's motion for summary judgment will be denied and the life insurance and accidental death benefits at issue shall remain with Defendant, MetLife Insurance Company, until the resolution of Dorleen Burkland's criminal case in the Bucks County Court of Common Pleas.*fn9
An appropriate Order follows.