Gelschus v. Hogen

Background

Robert Francis Gelschus, the personal representative of Sally Aileen Hogen’s estate, sued Clifford Charles Hogen over the distribution of Sally Hogen’s Honeywell 401(k) plan benefits. Clifford Hogen was the plan beneficiary during his marriage to Sally Hogen.

The parties divorced in 2002 and signed a marital termination agreement that was incorporated into the divorce decree. Gelschus argued that the agreement removed Clifford Hogen as the plan beneficiary. Clifford Hogen argued that the agreement did not address beneficiary status and that he and Sally Hogen had orally agreed that he would remain the beneficiary as part of their divorce settlement.

In 2008, Sally Hogen submitted a beneficiary-change form to Honeywell. The form assigned three people 33 1/3 percent each, but the plan required whole percentages. Honeywell therefore did not remove Clifford Hogen as beneficiary. Sally Hogen died in 2019, and Honeywell paid the plan benefits to Clifford Hogen. Honeywell denied the estate’s challenge after reviewing it through the plan’s administrative process. The court had previously dismissed Honeywell from the case after finding that the dispute involving Honeywell was governed by the Employee Retirement Income Security Act, or ERISA.

The remaining parties filed cross-motions for summary judgment. Summary judgment is judgment without a trial when the evidence shows there is no genuine dispute about a fact important to the outcome and the moving party is entitled to judgment under the law.

ERISA preemption

The court held that ERISA preempted any claim asking the court to use equitable powers to change or give effect to a plan beneficiary designation. But the court distinguished the claims against Clifford Hogen from the earlier claims against Honeywell. The court held that the estate’s breach-of-contract, unjust-enrichment, conversion, and civil-theft claims were based on an alleged contract between private parties and therefore were not preempted merely because the dispute involved an ERISA plan.

Standing

The court held that Gelschus lacked standing under Minnesota’s probate statute. That statute gives a personal representative the same standing the decedent had immediately before death, so the claim must have accrued before the decedent died.

The court determined that the alleged breach of the marital termination agreement occurred, if at all, when Clifford Hogen accepted the plan benefits after Sally Hogen’s death. The conversion, civil-theft, and unjust-enrichment claims likewise arose from conduct occurring after her death. Because none of the claims had accrued before Sally Hogen died, the court concluded that Gelschus lacked standing to bring them.

Merits

The court alternatively considered the claims on their merits.

For breach of contract, the court found that the marital termination agreement was ambiguous about whether Clifford Hogen gave up his right to remain the plan beneficiary. The court considered the available evidence, including Clifford Hogen’s statement that he had given up any interest in plan distributions but that Sally Hogen remained free to retain or remove him as beneficiary. Gelschus offered no other record-supported evidence based on personal knowledge to refute that account. The court therefore found that Clifford Hogen had not agreed to waive his beneficiary status and had not breached the agreement by accepting the plan benefits.

The court rejected the unjust-enrichment claim because Clifford Hogen had not agreed to give up his beneficiary status, making his retention of the benefits not wrongful. The court rejected the conversion claim because Clifford Hogen did not wrongfully accept the benefits and because the alleged conduct would, at most, constitute a breach of contract rather than an independent tort. The court also rejected the civil-theft claim based on the same reasoning.

Disposition

The court granted Clifford Hogen’s motion for summary judgment, denied Gelschus’s motion for summary judgment, and dismissed the case with prejudice.