ERISA-New York Supreme Court Holds That Spouse’s Waiver of Retirement Benefits In A Separation Agreement Requires That She Returns The Benefits She Received To Her Husband’s Estate

In Hess v. Wojcik-Hess, 2011 NY Slip Op 06006 (Appellate Division of the Supreme Court of New York, Third Department, July 21, 2011), Robert C. Hess (the “Decedent”) and defendant Karen J. Wojcik-Hess (the “Defendant”) were married in 1993. In the separation agreement they signed in 2006, the Defendant waived any claim or interest in the Decedent’s retirement savings and pension plans. One year later, the Decedent died.

Prior to his death, the Decedent had not designated any individual as the beneficiary of his savings and security program account or personal pension account with his employer, defendant General Electric Company (“GE”). The Defendant was the Decedent’s beneficiary according to GE’s plan documents, since she was decedent’s spouse (they had separated, not divorced). Upon his death, GE began to distribute the proceeds of those accounts to the Defendant. The Plaintiff, upon being appointed executor of the Decedent’s estate, requested that the Defendant turn over the proceeds of the accounts to the estate. When she refused, the Plaintiff commenced this action in New York state court against defendant and GE, seeking those proceeds on the state law grounds that Defendant had breached the separation agreement and was unjustly enriched.

GE removed the case to federal court, on the basis that the matter was controlled by ERISA. The district court determined that GE was required under ERISA to distribute the account funds to the Defendant. The district court then remanded the case back to state court, to decide the Plaintiff’s state law claims. The case wound up in the Appellate Division of the New York State Supreme Court (the “Court”). The Court said that the Defendant was bound by the district court’s ruling, which implied that ERISA did not preempt her state law claim. As to that claim, in the separation agreement, the Defendant had waived her right to any portion of decedent’s pension and retirement savings accounts. This waiver was explicit, voluntary and made in good faith. As such, It to precludes the Defendant from retaining the retirement savings and pension plan account proceeds that GE had paid to her. Accordingly, the Court ruled that the Defendant had to turn these proceeds over to the Decedent’s estate.

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