Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division, No. 85-1305-C -- S. Hugh Dillin, Judge.
Bauer, Chief Judge, Flaum and Ripple, Circuit Judges.
In this case, we must decide whether the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq., preempts state law governing testamentary transfers. The appellant, Kenneth MacLean, is the executor of the estate of David Jamie Pithie (the decedent). MR. MacLean filed suit to collect, on behalf of the estate, the assets accumulated in the decedent's Savings and Stock Investment Plan (SSIP or Plan). The decedent was employed by Ford Motor Company, Ford Electronics and Refrigeration Corporation, and Ford Aerospace and Communications Corporation (collectively referred to as Ford) for over twenty years prior to his death. Manufacturers National Bank of Detroit (Bank) serves as the trustee for Ford's SSIP. Mr. MacLean filed a motion for summary judgment, claiming that the decedent's SSIP assets should be distributed in accordance with the terms of his will. The appellees filed a motion for summary judgment, contending that the SSIP assets should be distributed in accordance with the terms of the SSIP's beneficiary designation provision. The district court granted the appellees' motion for summary judgment. We affirm.
The material facts underlying this case are undisputed. The decedent was employed by Ford prior to his death, and during his employment, he participated in Ford's SSIP. A prospectus dated April 30, 1983 contained Ford's newly implemented policy regarding the designation of SSIP beneficiaries. The prospectus, in pertinent part, provided:
Designation of Beneficiaries. Effective on and at all times after January 1, 1983, a member shall be deemed to have designated as beneficiary or beneficiaries under the Plan the person or persons who are entitled in the event of the member's death to receive the proceeds under the Company's Group Life Insurance Plan unless such member shall have filed with the Company on or after November 1, 1982, a written designation of a different beneficiary or beneficiaries . . . Any designation of beneficiary under the Plan shall be controlling over any testamentary or other disposition . . .
R.10, Ex. 1 at 50, Para XXX.*fn1
The decedent never executed a beneficiary clause to designate the person he wanted to be the recipient of the SSIP assets upon his death. However, in 1963, he had designated Allen David Pithie, his son, as the beneficiary of the proceeds from his life insurance policy with a group carrier for Ford. R.5, Ex. H.
The decedent executed his will on October 4, 1984 and died on October 25, 1984. The will, inter alia, provided that the residue of the decedent's estate be distributed in the following manner: three-fourths of the residue to the decedent's sister, if she survives, and if not, to the decedent's brother-in-law, and if neither of them survives, to the decedent's niece; and one-fourth of the residue to the decedent's son, if he survives the decedent, and, if not, then to the same persons receiving the three-fourths share. R.5, Ex. D. The decedent intended that the SSIP assets be included as part of the estate. Affidavit of Lawrence M. Simkin, R.4, Ex. B Para 5. The issue presented in this case is whether the SSIP assets pass with the residue of the decedent's estate under the terms of his will or whether the SSIP assets are distributed to the designated beneficiary of his life insurance policy in accordance with the terms of the employee pension plan.
The District Court Opinion
The district court held that the provisions under the employee pension plan for the designation of beneficiaries preempted the state testamentary transfer law and accordingly granted the appellees' motion for summary judgment. The court stated "clearly, a state law which would change the beneficiary designated by the terms of an employee benefit plan is a law relating to the plan and as such would be superseded by ERISA." MacLean v. Ford Motor Co., No. 85-1305-C, mem. op. at 4-5 (S.D. Ill. Oct. 8, 1986); R.16 at 4-5 [hereinafter Mem. op.]. The court further noted that Ford and Manufacturers upheld their fiduciary obligations under ERISA by holding the assets accrued in the plan for the beneficiary designated by the terms of the plan. Finally, the court observed that, if the decedent had desired his SSIP assets to pass through his will, this intent could have been effectuated in accordance with the terms of the plan by filing with Ford a written ...