In Alcorn v. Appleton, A10A1954 (Ga. Court of Appeals 2011), Tiffany Marie Alcorn, as executrix of the estate of her father Richard Alcorn, and her sister, Amy Darlene Alcorn (together “the Alcorns”) appeal from the Georgia superior court’s grant of partial summary judgment to their father’s second wife, Bonnie Ann Appleton (“Appleton”). The Alcorns assert that Appleton contractually waived her right to receive the benefits under their father’s 401(k) plan and life insurance plan in a settlement agreement incorporated into an order of separate maintenance entered into before their father’s death. The trial court had ruled that the Alcorns’ assertion is precluded, because that waiver was not ERISA compliant. The Ga. Court of Appeals reversed this ruling.
In this case, Richard Alcorn and Appleton had entered into a settlement agreement on July 7, 2007. It provided, in pertinent part : “Each party shall have the right to name any person or organization they choose as beneficiary of their life insurance policies. Each party waives any interest they have in the other party’s life insurance proceeds, cash value, or otherwise. The parties agree to waive and release any rights or claims they may now have to any retirement pay, benefits, or privileges earned by the other during the marriage. ” This settlement agreement was incorporated into an Order of Separate Maintenance on September 25, 2007. Richard Alcorn died on April 11, 2008. He had been a participant in a 401(k) plan and a life insurance plan, both subject to ERISA. Richard had not designated a beneficiary for his benefit from the 401(k) plan, and he had designated Appleton as the beneficiary of his benefit from the life insurance plan. Subsequently, the benefits under both of those plans were paid to Appleton, in accordance with the Supreme Court’s decision in Kennedy v. Plan Administrator for DuPont Savings and Investment Plan et. al, 129 S. Ct. 865 (2009).
After the benefits from the 401(k) and life insurance plans had been paid to Appleton , the Alcorns filed suit against her for, among other matters, breach of contract (the settlement agreement). The Alcorns claimed that Appleton had breached the settlement agreement by accepting the benefits, and refusing to sign a waiver of her rights to those benefits despite repeated requests to do so. On appeal, the Alcorns asserted that Kennedy does not apply after the benefits have been distributed from the plans (an issue the Kennedy court declined to decide). The Court agreed with the Alcorns, and reversed the trial court’s partial grant of summary judgment in favor of Appleton. The Court said that this result is consistent with Georgia decisions concluding that ERISA does not preempt claims against funds already distributed from an ERISA plan.
Note: Presumably, this ruling by the Georgia Court of Appeals means that, depending on applicable state law, Appleton’s waiver of her right to the benefits could be enforced against her.