Sandra D. T. Griffin v. David L. Griffin, c/o Kimberly Cowser-Griffin, etc.

Citations: 62 Va. App. 736; 753 S.E.2d 574; 2014 WL 287906; 2014 Va. App. LEXIS 16Docket: 1177131

Court: Court of Appeals of Virginia; January 28, 2014; Virginia; State Appellate Court

Original Court Document: View Document

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Sandra D.T. Griffin appeals the Circuit Court of Sussex County's denial of her request for a qualified domestic relations order (QDRO) related to her divorce decree with the deceased David L. Griffin. The divorce, finalized on August 12, 1998, incorporated a Separation and Property Settlement Agreement (PSA) that designated their children as co-beneficiaries of all 401(k) plans upon either parent’s death. David Griffin, who worked for Dominion Virginia Power, had a 401(k) plan governed by ERISA and initially named his children as beneficiaries in 2002. However, after marrying Kimberly Cowser-Griffin in 2007, he changed the beneficiary designation to Cowser-Griffin, listing the children as contingent beneficiaries.

David Griffin passed away on May 26, 2012, without having retired from Dominion, and no one had applied for a QDRO or informed the Plan Administrator of any alternate payee. In October 2012, Mrs. Griffin submitted a draft QDRO, which the Plan Administrator rejected, citing a precedent regarding domestic relations orders issued post-death. The Court of Appeals reversed the Circuit Court's order, indicating that the denial of the QDRO should be reconsidered.

Dominion maintained an administrative hold on Mr. Griffin's Salaried Savings Plan benefits pending litigation regarding the proper beneficiary. The circuit court determined it had jurisdiction to reinstate the divorce case to provide full relief, referencing Code § 20-121.1, and held that Code § 20-107.3(K) allows it to issue orders for equitable distribution. The court indicated that entering a Qualified Domestic Relations Order (QDRO) would not modify the final decree but would enforce the property settlement agreement. However, it denied Mrs. Griffin’s request for a proposed QDRO, stating that under federal law, without a preexisting QDRO, Mr. Griffin's retirement benefits fully vested in his surviving spouse, Cowser-Griffin, upon his death. The court cited federal case law, indicating that a former spouse must have perfected a QDRO at the time the benefits became payable or provided notice of any claim to the plan before the participant's death. Mrs. Griffin did not perfect a QDRO prior to Mr. Griffin's passing, and the divorce decree and property settlement agreement did not qualify as a QDRO. There was also no evidence that the plan was notified of the children's potential claims before Mr. Griffin's death. Consequently, the court denied the motion for a QDRO, and Mrs. Griffin appealed, asserting that the trial court erred in its ruling. The disbursement of Mr. Griffin's plan is governed by the federal Employee Retirement Income Security Act of 1974 (ERISA), which preempts state laws related to employee benefit plans, as established by 29 U.S.C. § 1144(a). ERISA aims to create uniform procedures for claims and benefits distribution, preventing employers from conflicting state regulatory requirements.

29 U.S.C. § 1055, which extends protections for surviving spouses under the Retirement Equity Act of 1984, does not apply to the Dominion Salaried Savings Plan. The statute generally governs defined benefit plans and individual account plans subject to specific funding standards, but it includes exceptions for certain individual account plans. Mr. Griffin's estate acknowledges that the Salaried Savings Plan falls under this exception. Despite this, the estate argues based on the Supreme Court's decision in Boggs v. Boggs that all pension plans, including the Salaried Savings Plan, should be governed by § 1055. However, the court emphasizes that the relevant language in Boggs is dicta and does not override the statutory exceptions established by Congress. The Salaried Savings Plan provides full benefits to the participant's surviving spouse upon death, thus meeting the criteria for exemption from § 1055. Additionally, the court clarifies that the broader interpretation of § 1055 does not eliminate the exceptions for individual account plans, as highlighted in the statutory language. The distinction made in Boggs regarding a "qualified joint and survivor annuity" further supports the argument that the case does not apply to individual account plans like the one in question.

29 U.S.C. § 1055(b)(1)(C) mandates excepted plans to pay a surviving spouse the participant’s nonforfeitable accrued benefits in a lump-sum; however, this does not mean all provisions of § 1055 apply to those plans. To be excepted from § 1055, an individual account plan must meet specific criteria, and spousal consent requirements outlined in 29 U.S.C. § 1055(c)(2) do not imply that § 1055 applies to the Plan. The Salaried Savings Plan complies with the criteria for excepted plans: it ensures full benefits to the surviving spouse upon the participant’s death, Mr. Griffin opted not to receive benefits as a life annuity, and there is no indication that the Plan is a transferee of another plan. Mr. Griffin’s estate acknowledges that the Salaried Savings Plan is excepted from § 1055, thus exempting the Plan from regulations on joint and survivor annuities and pre-retirement survivor annuities.

Regarding Mrs. Griffin’s proposed Qualified Domestic Relations Order (QDRO), its validity hinges on meeting statutory QDRO requirements, thus preventing ERISA preemption. ERISA mandates that plan administrators operate in accordance with governing documents, prohibiting assignment or alienation of plan benefits (29 U.S.C. § 1056(d)(1)), but allows exceptions for QDROs (29 U.S.C. § 1056(d)(3)). A QDRO is exempt from the general prohibition against assignment of benefits and can override ERISA's preemption of state law, ensuring pension plans must adhere to the stipulations of any qualified domestic relations order.

The Dominion Salaried Savings Plan outlines that upon an employee's death, the account's total value, including vested Company Matching contributions, is distributed to the designated beneficiary. If the deceased is married, federal law mandates that the spouse must receive the distribution unless they consent to an alternative beneficiary through a signed and notarized Beneficiary Authorization Form. Additionally, in cases of divorce, distributions may only be made to a former spouse, child, or dependent via a Qualified Domestic Relations Order (QDRO), as defined under 29 U.S.C. § 1056(d)(3). A QDRO must specify the participant’s information, the benefit amounts for alternate payees, the payment duration, and applicable plans, while also adhering to restrictions that prevent it from requiring benefits not offered by the plan. The circuit court denied Mrs. Griffin’s proposed QDRO based on three points: the final decree and Property Settlement Agreement (PSA) did not meet ERISA's QDRO specificity requirements, Mr. Griffin’s benefits vested fully in Cowser-Griffin as the designated beneficiary upon his death, and the Plan had no prior notice of alternate payees. The summary concludes that the circuit court's reasoning for denying the QDRO was erroneous.

The Qualified Domestic Relations Order (QDRO) serves as a mechanism for state courts to enforce marital property settlements, specifically those outlined in the Griffin Property Settlement Agreement (PSA) incorporated into the divorce decree. Under Virginia law, divorce suits can be reinstated to ensure full relief is granted to the parties involved. Marital property settlements are typically favored and enforceable unless their illegality is evident. In instances of breach of contract, equity may compel performance according to the terms agreed upon.

In this case, Mr. Griffin violated the PSA by altering beneficiary designations on his Salaried Savings Plan, thus necessitating the issuance of a QDRO for enforcement. The Employee Retirement Income Security Act (ERISA) restricts the assignment of benefits but allows for a former spouse's interest to be established under state law at the time of divorce, pending the acquisition of a QDRO. The circuit court holds the authority to revise orders to align with QDRO requirements, thereby facilitating the enforcement of the PSA and achieving the intended distribution of retirement benefits.

Code § 20-107.3(K)(4) allows courts to amend orders to align with federal law regarding pension awards without altering the substance of the pension award itself, as established in Craig v. Craig. The Pension Protection Act of 2006 clarifies that a Qualified Domestic Relations Order (QDRO) remains valid regardless of when it is issued or if it revises an earlier domestic relations order. Congress directed the Secretary of Labor to issue regulations ensuring that a domestic relations order that meets QDRO requirements cannot be deemed invalid for these reasons.

Both the Pension Protection Act and Virginia law permit modifications to a Domestic Relations Order (DRO) provided they do not substantively change the awarded benefits. In this case, the absence of QDRO status for earlier orders does not preclude a subsequent order from qualifying as a QDRO. The proposed QDRO maintains the agreed-upon benefits, stipulating that the children of the marriage are to be named co-beneficiaries of 401(k) plans. It states that the alternate payees, James J. Griffin, III, and Gloria D. Griffin, will equally share 100% of the vested account under the plan.

The proposed QDRO fulfills ERISA’s specificity requirements under 29 U.S.C. § 1056(d)(3), detailing: the names and addresses of the parties involved, the equal distribution of benefits, the applicable payment terms, and the specific plan referenced.

The proposed Qualified Domestic Relations Order (QDRO) aligns with 29 U.S.C. § 1056(d)(3)(D)(i) by not mandating any benefits or options outside those offered by the Salaried Savings Plan. It requests 100% of the vested benefits in Mr. Griffin's account to be distributed as a single cash sum or other available options for the children, which is permissible under the Plan guidelines. The Plan states that upon Mr. Griffin's death while employed, the entire account value is distributed to his beneficiary, and non-spousal beneficiaries must choose between immediate lump-sum payments or annual payments concluding within five years after his death. The designation of beneficiaries other than Cowser-Griffin does not alter the benefit form. According to 29 U.S.C. § 1056(d)(3)(E)(i)(III), a QDRO can direct payments to an alternate payee without disqualifying it, as long as the payment forms are available under the Plan, excluding joint and survivor annuities. The Salaried Savings Plan is defined as a defined contribution plan, allowing Mr. Griffin to withdraw his entire balance post-retirement. The proposed QDRO does not contravene the requirement for existing benefit forms. Additionally, illustrative examples from 29 C.F.R. § 2530.206(d) reinforce that the proposed QDRO conforms to the required benefit types. Examples illustrate scenarios where QDROs are valid even after participant deaths or annuity start dates, provided they do not request benefits not available under the Plan.

The order will qualify as a Qualified Domestic Relations Order (QDRO) if it mandates that all future payments to the Participant under the plan are redirected to the Spouse as an alternate payee. This would apply to the funds in a 401(k), which the proposed QDRO intends to allocate to the children. The proposed QDRO does not alter the type or form of benefits, conforming with the requirements of 29 U.S.C. § 1056(d)(3)(D). It doesn't seek increased benefits based on actuarial values, as Mr. Griffin’s benefits are calculated solely on contributions and investment earnings, and it does not conflict with any prior QDRO since none exists in this case.

The timing of the proposed QDRO, being submitted after Mr. Griffin's death, does not invalidate it. The Pension Protection Act of 2006 clarifies that a Domestic Relations Order (DRO) should not be deemed invalid as a QDRO based on the timing of its issuance. Specifically, 29 C.F.R. § 2530.206(c) includes examples showing that a QDRO can still be valid if issued posthumously, emphasizing that the lack of prior notice to the Plan about an alternate payee is irrelevant.

Additionally, the circuit court's ruling that Mr. Griffin’s retirement benefits vested entirely in Cowser-Griffin upon his death is incorrect. Federal law does not stipulate automatic vesting at death; rather, the Employee Retirement Income Security Act (ERISA) requires that plan administrators adhere strictly to the governing documents and instruments for the plan.

The Salaried Savings Plan defines "vesting" exclusively in terms of the participant's benefits, allowing for the participant's non-forfeitable right to their account's value. Participants are always vested in their own contributions and earnings, while company matching contributions vest after three years of service. Spousal consent is required for designating a beneficiary other than the current spouse, yet a Qualified Domestic Relations Order (QDRO) can assign benefits to a former spouse, child, or dependent. Under 29 U.S.C. 1056(d)(3)(H), if a domestic relations order's qualification as a QDRO is under review, the plan administrator must account for amounts that would have been payable to an alternate payee during that period. If the order is later deemed a QDRO within 18 months, those amounts, plus interest, must be paid to the entitled parties. The statute allows for the possibility that a QDRO may be presented after benefits become payable without automatically failing due to unresolved beneficiary designations. This contrasts with the circuit court's ruling that benefits vest automatically to the surviving spouse in the absence of a pre-existing QDRO. The case of Tise interprets that a domestic relations order obtained prior to a triggering event can later be perfected into a QDRO, subject to the 18-month rule for retroactive benefits. The estate of Mr. Griffin cites Hopkins v. AT&T Global Information Solutions Co. as a pivotal case regarding the vested rights of surviving spouses.

Hopkins is distinguishable from the current case due to the nature of the benefits involved. In Hopkins, the husband received pension benefits as a qualified joint and survivor annuity, providing him a fixed income for life, with a 50% benefit to his spouse if he died after retirement. If he died before retirement, a preretirement survivor annuity would be payable to his spouse. The former spouse sought to collect alimony from both the pension and surviving spouse benefits, and the state court issued judgments against both. AT&T acknowledged the pension benefit judgment as a Qualified Domestic Relations Order (QDRO) but contended that the surviving spouse benefits were not a QDRO since they had already vested to the current spouse. The Fourth Circuit recognized that the issue of a current spouse's vested interest in surviving spouse benefits was a novel question under federal law and determined that under ERISA, such benefits vest upon the participant’s retirement. The court cited strict ERISA regulations governing joint and survivor annuities as justification for this conclusion. The court emphasized the necessity for plan administrators to ascertain the payee of surviving spouse benefits at retirement due to actuarial calculations. Unlike the benefits in Hopkins, Mr. Griffin’s Salaried Savings Plan benefits are exempt from these regulations and do not rely on life expectancy computations or guarantee defined benefits for Cowser-Griffin. Additionally, Mr. Griffin's estate referenced Carmona v. Carmona to argue for vesting, but the benefits in that case also pertained to qualified joint survivor annuities, making it less relevant to the current situation.

Upon retirement, a participant's spouse at that time is designated as the 'surviving spouse' eligible for Qualified Joint and Survivor Annuity (QJSA) benefits. Under ERISA section 1055, these benefits aim to secure a continuous income for surviving spouses. However, the benefits in question from the Salaried Savings Plan do not qualify as surviving spouse annuity benefits under 29 U.S.C. 1055. The Ninth Circuit Court in Hamilton v. Washington State Plumbing distinguished between surviving spouse benefits regulated by 29 U.S.C. 1055 and a participant's pension benefits after retirement or death, clarifying that preretirement survivor annuity rights are limited to surviving or properly designated former spouses and do not extend to children as alternate payees under a Qualified Domestic Relations Order (QDRO). The court acknowledged that including children as alternate payees in a QDRO could yield various benefits based on factors like their ages and the participant's status at the time of their disability, retirement, or death.

The Tise court further differentiated between pension benefits and surviving spouse benefits under 29 U.S.C. 1055, leaving unresolved whether a QDRO issued post-retirement could alter the distribution of surviving spouse benefits, as this involves different statutory provisions and policy considerations. In the Commonwealth, vested property rights and interests arise when parties reach an agreement, document it in a valid separation agreement, and have it incorporated into a final divorce decree. Such agreements create vested rights through judicial approval, representing a final adjudication of property rights. Consequently, the children’s rights to benefits from Mr. Griffin’s 401(k) plan vested upon the parties' agreement to designate them as co-beneficiaries. The QDRO serves merely as a mechanism to enforce these state law rights, with federal law not superseding this arrangement, affirming that benefits exempt from 29 U.S.C. 1055 vest in the surviving spouse upon the participant's death.

The Commonwealth's law is not pre-empted in this case. Mrs. Griffin's proposed Qualified Domestic Relations Order (QDRO) complies with the requirements of 29 U.S.C. 1056(d)(3). The Salaried Savings Plan is not subject to 29 U.S.C. 1055, and the benefits did not vest in Cowser-Griffin upon Mr. Griffin's death. Consequently, the decision is reversed and remanded for the circuit court to enter the proposed QDRO. Judge Huff dissents, asserting that the Salaried Savings Plan is governed by ERISA, which pre-empts state law as per Boggs v. Boggs, 520 U.S. 833 (1997). He argues that the majority incorrectly interprets the plan as being excepted under 29 U.S.C. 1055(b)(1)(C)(i), which applies to retirement plan annuities payable to a surviving spouse. Mr. Griffin’s estate contended that since the benefit is payable to the surviving spouse in a lump sum, statutory protections for annuities do not apply, and the spouse is safeguarded without a QDRO or consent. Judge Huff emphasizes that even if certain pension plans are excepted from 1055, they must still ensure the spouse receives nonforfeitable accrued benefits. Mr. Griffin, employed by Dominion Virginia Power, failed to name his children as co-beneficiaries in violation of the Griffin DRO, instead designating his new wife as the primary beneficiary. The trial court was asked to issue a QDRO to enforce the Griffin DRO regarding the Dominion Salaried Savings Plan, which is governed by ERISA and requires spousal payout unless consent is provided. The Plan Administrator can only deviate from this payout method in response to a QDRO.

Under the Dominion Salaried Savings Plan governed by ERISA, pension benefits are payable to the surviving spouse after the participant’s death unless there is a signed, notarized consent for a different election. The plan requires that any consent be submitted to the plan administrator prior to the participant's death. Following the death of Griffin, the appellant sought to reinstate prior divorce proceedings and enter a Qualified Domestic Relations Order (QDRO) to secure beneficiary status for her children, despite not notifying the plan administrator of any interest in the benefits prior to Griffin’s death. The trial court denied her motion, affirming that benefits vested in Cowser-Griffin as the designated beneficiary. On appeal, the appellant argued that her children's rights vested with the entry of the Griffin Domestic Relations Order (DRO) and that ERISA allows for posthumous QDROs. She contended that such an order would not disrupt plan administration since benefits are paid in a lump sum. Cowser-Griffin countered that her rights vested at Griffin’s death, asserting that a posthumous QDRO would undermine her status as surviving spouse and argued against recognizing the Griffin DRO as a QDRO due to non-compliance with statutory requirements. ERISA’s preemption clause supersedes state laws relating to employee benefit plans, ensuring proper plan administration throughout the employee's active and retirement years.

ERISA prohibits the assignment or alienation of benefits under a retirement plan, as stated in 29 U.S.C. 1056(d)(1). The Retirement Equity Act of 1984 (REA) introduced exceptions allowing designation of beneficiaries other than the surviving spouse under specific conditions: through a Qualified Domestic Relations Order (QDRO) or with spousal consent. A QDRO, defined in 29 U.S.C. 1056(d)(3)(B)(ii)(I), relates to marital property rights and must meet specific substantive criteria, including not requiring benefits that exceed what the plan provides and not conflicting with previously established orders. The Plan Administrator is responsible for determining whether an order qualifies as a QDRO and must notify the participant and alternate payees of this decision. 

For an order to be a QDRO, it must specify the names and addresses of the participant and alternate payees, the amount or percentage of benefits allocated, the payment period, and the applicable plans. Additionally, the REA enhances protections for surviving spouses by requiring their written consent for a participant to designate a different beneficiary, as outlined in 29 U.S.C. 1055(c)(2)(A)(i)-(iii). This consent must be formally documented and witnessed. Section 1055 applies broadly to all individual account and defined benefit plans, although some individual account plans may be exempt if they provide for nonforfeitable accrued benefits.

The legal excerpt outlines the requirements for beneficiary designations under ERISA (Employee Retirement Income Security Act) related to individual account plans. Upon the death of a participant, benefits are payable to the surviving spouse unless proper spousal consent is obtained to designate a different beneficiary. Failure to secure spousal consent results in the plan not meeting the exemption requirements of ERISA, thus falling under the broader coverage of 29 U.S.C. 1055. The plan documents stipulate that a surviving spouse must receive the distribution unless they sign a spousal consent form prior to the participant’s death. The central issue is determining when the beneficiary rights vested—either at the entry of a Qualified Domestic Relations Order (QDRO) or upon the participant's death. The majority opinion asserts that the plan fits the exemption criteria as it provides a lump-sum distribution, but emphasizes that spousal consent is still necessary for non-spousal beneficiaries. Additionally, there is a conflict between Virginia state law, which holds that rights vest upon the final divorce decree, and ERISA, which establishes that rights vest at the participant's death or retirement. The excerpt cites relevant case law and statutes, highlighting the importance of spousal consent and the legal implications of vesting timing in relation to beneficiary designations.

Alienation of benefits is prohibited except through a Qualified Domestic Relations Order (QDRO). The appellant acknowledges a conflict between Virginia law and the Employee Retirement Income Security Act (ERISA). Specifically, a Virginia circuit court in *Riley v. Riley* determined that a surviving spouse's rights to benefits vested at the participant's death and could not be overridden by claims from an ex-spouse based on a prior Domestic Relations Order (DRO). The appellant argues that because the children's rights to the retirement plan vested before the ex-spouse's claims arose, the case should favor the children. However, the court finds no compelling reason to apply Virginia's vesting rule in light of ERISA's preemption, which invalidates conflicting state laws per 29 U.S.C. § 1144(a). The Supreme Court of Virginia supports this view, affirming that ERISA preempts state laws that conflict with its provisions. In *Boggs*, the U.S. Supreme Court acknowledged that while state courts traditionally manage domestic relations, they do not have exclusive jurisdiction when state law conflicts with ERISA, which aims to ensure effective distribution of benefits and protect participants' rights. The court concludes that neither federal nor state law allows for a posthumous QDRO to divest a surviving spouse's vested rights, and existing case law supports the position that such rights cannot be diminished by a post-retirement QDRO, reaffirmed by the Fourth Circuit in *Hopkins*.

Federal circuits and state courts consistently uphold the vested rights of surviving spouses regarding benefits from retirement plans, particularly when a Qualified Domestic Relations Order (QDRO) is proposed after the participant's death or retirement without prior notice to the plan. In cases such as *Carmona v. Carmona* and *Rivers v. Central Southwest Corp.*, courts ruled that a state Domestic Relations Order (DRO) cannot create enforceable interests in benefits for alternate payees post-retirement, as the surviving spouse's benefits typically vest at retirement. Specifically, the rights of Cowser-Griffin to Plan benefits vested at Griffin’s death, and a posthumous QDRO cannot divest those vested rights. Furthermore, the court noted that the Griffin DRO did not meet the necessary specificity to qualify as a QDRO. The Dominion Plan Administrator has already rejected the proposed Griffin QDRO, deeming it a violation of QDRO requirements by attempting to allocate the surviving spouse's benefits to another party. As a result, entering the proposed QDRO nunc pro tunc would raise the critical issue of vesting, which the trial court cannot bypass.

The exclusion of the posthumous Qualified Domestic Relations Order (QDRO) hinges not on timing but on the vesting issue. The appellant's remedy is for the Court to classify the Griffin Domestic Relations Order (DRO) as a QDRO. The majority's suggestion to assess whether the proposed QDRO meets statutory requirements is disputed. The critical question is whether the Griffin DRO's existing terms fulfill the statutory criteria necessary to challenge the vested surviving spouse’s claims. 

The Griffin DRO does not meet the specificity requirements outlined in 29 U.S.C. § 1056(d)(3)(C), as it fails to specify the percentage distribution of benefits, the number of payments, and the plans to which it applies. Strict compliance with these requirements is mandated, regardless of potential inequities from deviations. Relevant case law emphasizes that a QDRO must clearly detail the applicable plans and the amounts and timing of payments. The Griffin DRO lacks clarity, merely stating that the children should be named as co-beneficiaries without specifying amounts, timing, or plans, rendering it ineffective.

Additionally, the Court cannot relax these specificity requirements as doing so would contradict Congressional intent. The Griffin DRO's vagueness impedes the Plan Administrator’s ability to distribute benefits efficiently, thus failing to meet the necessary legal standards. In this instance, state law conflicts with ERISA provisions, favoring the federal protection of the surviving spouse's rights. Furthermore, a proposed QDRO must assign rights to a former spouse to effectively divest a surviving spouse of their rights, a requirement not recognized in the Fourth Circuit or Virginia courts. Consequently, the Griffin DRO is invalid as a QDRO due to its lack of specificity.