United States District Court, N.D. Illinois, Eastern Division
OPINION AND ORDER
H. LEFKOW, U.S. DISTRICT JUDGE
case presents competing claims to funds held in a 401(k)
account owned by Patrick Kevin Cunningham at the time of his
death. The dispute is between the executor of Patrick
Cunningham's estate, Isobel A. Hebert (“the
Executor”), and Patrick's ex-wife, Betty
Cunningham. Before the court are cross-motions for summary
judgment (dkts. 33, 47). For reasons explained below, the
court rules in favor of Betty Cunningham on the federal
question and dismisses the claim for constructive
and Patrick were married April 3, 1981. (Dkt. 35, Joint and
Stipulated Statement of Undisputed Material Facts
¶¶ 6, 27). They divorced on November 12, 2003.
(Id. ¶ 28.) A signed marital settlement
agreement was made part of the judgment for dissolution of
marriage (the divorce decree). (Id.) Eleven years
later, on or about March 29, 2014, Patrick died.
(Id. ¶ 1.)
the marriage and until Patrick died, Patrick was employed by
Loparex LLC (Loparex). (Id. ¶ 8.) Patrick was a
participant and account holder in the Loparex LLC 401(k)
Plan. (Id. ¶ 11.) Loparex was and is the plan
administrator for the Plan. (Id. ¶ 16.)
Fidelity Management Trust Company (FMTC) was and is the
designated trustee of the Plan, including Patrick's
401(k) account. (Id. ¶ 17.)
around November 6, 1998, upon opening his 401(k) account,
Patrick identified his marital status as married and
designated Betty as the primary beneficiary on a designation
of beneficiary form. (Id. ¶ 13.) This was the
only designation of beneficiary form on file with the 401(k)
Plan. (Id. ¶¶ 32-33.) Because Patrick did
not file a change of beneficiary form after the divorce, at
the time of his death, the 1998 Designation of Beneficiary
Form incorrectly reflected Patrick's marital status as
married and Betty remained the beneficiary. (Id.
¶¶ 31, 35.)
reflected in the divorce decree, the parties agreed that each
would retain sole ownership of their respective 401(k)
retirement accounts, and each granted the other an
unequivocal release of any rights to the present or
after-acquired property of the other or their estate and
agreed never to sue to enforce any rights relinquished under
the decree. (Id. ¶ 30.)
29, 2014, Patrick's will was admitted to probate, and
Isobel Hebert was appointed Supervised Executor.
(Id. ¶¶ 4-5.) On or about August 15, 2014,
the Executor contacted Fidelity Brokerage Service LLC and
informed them that Patrick's 401(k) account should not
pass to Betty but, rather, to the estate. (Id.
¶ 36.) After reviewing all relevant documents, Loparex
and FMTC determined that the estate was the proper
beneficiary of the 401(k) account (id. ¶ 38)
and caused the transfer of the funds to an account for the
benefit of the estate (id. ¶ 40).
October 16, 2014, plaintiff filed in the probate court a
complaint for a declaratory judgment that she was the
rightful beneficiary of Patrick's 401(k) account. (Dkt.
2, Ex. A.) Loparex and FMTC removed the case to this court
under 28 U.S.C. § 1441 (dkt. 2) and filed an
interpleader counterclaim asking the court to determine the
proper party to be paid from the account proceeds (dkt. 4).
The court granted leave to deposit the funds with the
registry of the court, and Loparex and FMTC have been
dismissed. (Dkt. 21.)
Executor filed an answer and a counterclaim for declaratory
judgment that the estate is the proper beneficiary of the
funds and, alternatively, to enforce Betty's waiver of
any claim to the account imposed by the divorce decree. (Dkt.
14.) The material facts are undisputed such that the pending
cross-motions for summary judgment are a suitable vehicle for
resolving the claims.
judgment obviates the need for a trial where there is no
genuine issue as to any material fact and the moving party is
entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a).
The party seeking summary judgment bears the initial burden
of proving there is no genuine issue of material fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106
S.Ct. 2548, 91 L.Ed.2d 265 (1986). In response, the
non-moving party cannot rest on bare pleadings alone but must
designate specific material facts showing that there is a
genuine issue for trial. Id. at 324; Insolia v.
Philip Morris Inc., 216 F.3d 596, 598 (7th Cir. 2000).
If a claim or defense is factually ...