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Montana: Beneficiary Disputes and Interpleader Under Montana Law

Montana's revocation-on-divorce statute reaches life insurance and was the subject of a Ninth Circuit certified question, but for an employer plan a federal court held ERISA preempted it and rejected a constructive trust.

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On this page
  1. The statute and the timing question
  2. When ERISA decides: Jackson v. Parks
  3. When state law applies: Farmers v. Adams
  4. Decisions
  5. Related guides

Montana is a useful study of the line between an individual policy and an employer plan. The state statute is the same in both settings. Whether it decides the case depends on whether ERISA governs the coverage.

The statute and the timing question

Mont. Code Ann. § 72-2-814 is Montana’s revocation-on-divorce statute, and § 72-2-813 is the neighboring homicide section.1 This page relies on how courts have described these sections rather than paraphrasing them.

The statute’s reach in time was uncertain enough that the Ninth Circuit certified the question to the Montana Supreme Court: “Does Mont. Code Ann. § 72-2-814 serve to revoke a life insurance policy owner’s designation of an ex-spouse as the beneficiary of the insurance policy where the divorce occurred prior to the enactment . . . .”2 The Montana Supreme Court answered in Thrivent Financial for Lutherans v. Andronescu, 300 P.3d 117 (Mont. 2013). A later federal decision cited that answer in concluding that the statute “appears to have divested” a former husband (see Farmers below). Compare the timing outcomes in Minnesota and Nebraska.

When ERISA decides: Jackson v. Parks

Federal law decided this case

The insured's group life coverage came through his employer and was governed by ERISA. He divorced about a year before he died, and later revised his will in favor of his children, but never changed the plan designation naming his former wife. Following Egelhoff, the court held the state divorce statute preempted: "Because ERISA preempts related state law, Claimant Alette Jackson's motion for summary judgment is granted" (slip op. at 1). See federal programs.

The insured’s daughter asked the court to impose a constructive trust on the proceeds. The court refused, reasoning that a “constructive trust would provide an end-run around ERISA requirements. Imposition of a constructive trust on the contested funds is inappropriate.”3 For how other courts treat claims against an ERISA beneficiary after payment, see ERISA post-distribution claims.

When state law applies: Farmers v. Adams

In Farmers, a $250,000 individual policy still named the insured’s former husband. Other claimants asserted competing claims, and the former husband was served but never appeared. The magistrate judge’s findings and recommendation noted that “Montana’s revocation-upon-divorce statute . . . appears to have divested Christopher of any interest in the proceeds of Christine’s life insurance policy.”4 The opinion cites the statute as “§ 72-8-214(2)”; the statute is Mont. Code Ann. § 72-2-814.

The magistrate judge recommended default judgment against the former husband, the insurer’s discharge, and a reduced fee award. Chief Judge Dana L. Christensen adopted the recommendation in full on September 22, 2014, discharging the insurer and awarding $4,809.23 in fees and costs.5 See discharge, fees, and interest.

Decisions

Jackson v. Parks (D. Mont. 2017)

  • No. CV 17-14-M-DWM, Doc. 40
  • Judge Donald W. Molloy
  • Decided Sept. 14, 2017
Facts
An ERISA group policy of about $124,000 named the insured's former wife. His adult child claimed the proceeds under the divorce statute.
Holding
Summary judgment for the former wife; ERISA preempts § 72-2-814; constructive trust denied (slip op. at 1, 15).
Why it matters
For employer plans, the plan designation controls in Montana.

Opinion: GovInfo.

Farmers New World Life Ins. Co. v. Adams (D. Mont. 2014)

  • No. CV 13-85-BU-DLC-JCL, Doc. 23 (findings and recommendation, Magistrate Judge Jeremiah C. Lynch, June 19, 2014); Doc. 24 (adopted, Chief Judge Dana L. Christensen, Sept. 22, 2014)
Facts
A former husband remained the named beneficiary and defaulted.
Holding
Default judgment against him; insurer discharged; $4,809.23 in fees and costs.
Why it matters
A former spouse who ignores an interpleader can lose by default, and the statute pointed the same way.

Opinion: GovInfo.

Thrivent Fin. for Lutherans v. Andronescu (9th Cir. 2012)

  • No. 11-35437 (order certifying question)
  • Judges Silverman, Murguia, and Hall
  • Filed July 3, 2012
Facts
The divorce came before § 72-2-814 was enacted, and the death came after.
Holding
The question was certified to the Montana Supreme Court (slip op. at 2), which answered in 300 P.3d 117 (Mont. 2013).
Why it matters
Federal courts defer to the state court on how far the statute reaches.

Order: GovInfo.

Footnotes

  1. Mont. Code Ann. § 72-2-813 (Montana Legislature); § 72-2-814 (Montana Legislature). ↩

  2. Thrivent Fin. for Lutherans v. Andronescu, No. 11-35437, slip op. at 2 (9th Cir. July 3, 2012). GovInfo. ↩

  3. Jackson v. Parks, No. CV 17-14-M-DWM, slip op. at 15 (D. Mont. Sept. 14, 2017); see id. at 1. GovInfo. ↩

  4. Farmers New World Life Ins. Co. v. Adams, No. CV 13-85-BU-DLC-JCL, slip op. at 8 (D. Mont. June 19, 2014) (findings and recommendation). GovInfo. ↩

  5. Farmers New World Life Ins. Co. v. Adams, No. CV 13-85-BU-DLC, Doc. 24 (D. Mont. Sept. 22, 2014) (order adopting findings and recommendation). ↩