interpleader.com
Guides

Basics

What can be interpleaded

If you are involved

Beneficiary disputes

Law and sources

Talk to an attorney

State law

North Dakota: Beneficiary Disputes and Interpleader Under North Dakota Law

The District of North Dakota held that ERISA does not preempt the state's slayer statute, because federal common law points the same way. Undue-influence challenges to late changes can go to a jury.

By

On this page
  1. ERISA and the slayer statute can agree
  2. A procedural point: consent and default
  3. Undue influence and a change the day before death
  4. Decisions
  5. Related guides

ERISA and the slayer statute can agree

Whether ERISA displaces a state slayer statute is a recurring question in plan cases. The District of North Dakota answered it by finding that the state statute and federal law point the same way. The magistrate judge wrote: “It is well established in federal law and North Dakota state law that a person should not financially benefit from the felonious or intentional killing of another human being.”1 And: “Accordingly, ERISA does not preempt North Dakota’s slayer statute because awarding benefits to the defendant Rogers is contrary to federal common law and congressional intent for ERISA.”2

The insured had employer accidental-death coverage of about $212,600, governed by ERISA, naming her husband. He pleaded guilty in her death, the conviction was affirmed on appeal, and he never appeared in the interpleader. Her parents claimed the benefit under N.D. Cent. Code § 30.1-10-03.3

How the recommendation was adopted

Chief Judge Ralph R. Erickson adopted the earlier recommendation on discharge, which included $5,546.04 in fees, on October 3, 2014 (Doc. 40). He entered judgment for the insured's parents on November 12, 2014 (Doc. 44). For the general approach to ERISA and federal programs, see federal programs. Compare Kentucky, where a court found federal common law would also bar the claim.

The insurer and the parents had consented to a magistrate judge. That was not enough, because the husband had not consented. The report explains: “since Rogers is in default, the magistrate judge must issue a report and recommendation rather than an order”.4 Parties in a default-heavy interpleader should expect that extra step.

Undue influence and a change the day before death

Vanguard involved a 401(k) account of $270,000 to $280,000. For years the account named the decedent’s former partner. The day before she died, while seriously ill, she named her niece instead. The former partner claimed lack of capacity and undue influence.

The court set out the test: “North Dakota recognizes four elements for establishing undue influence: (1) an individual was subject to undue influence; (2) the existence of the opportunity to exercise undue influence; (3) a disposition to exercise undue influence; and (4) a result that appears to be the effect of undue influence.”5 It added that “The determination of whether undue influence exists is a fact and ordinarily established by circumstantial evidence.” Citing gaps in the medical evidence and a recorded call in which the decedent needed prompting, it denied summary judgment: “the Court will let a jury decide which party is entitled to the funds in Tompkins’ 401(k) account.”6

See undue influence and capacity and retirement accounts.

Decisions

Hartford Life & Accident Ins. Co. v. Rogers (D.N.D. 2014)

  • No. 3:13-cv-101, Doc. 39 (report and recommendation, Magistrate Judge Karen K. Klein, Sept. 26, 2014)
  • Adopted; judgment Doc. 44 (Chief Judge Ralph R. Erickson, Nov. 12, 2014)
Facts
The ERISA beneficiary was convicted in the insured's death and defaulted.
Holding
The slayer statute was not preempted; the parents take the benefit (slip op. at 4–5).
Why it matters
State slayer law can operate inside an ERISA plan when it matches federal common law.

Opinion: GovInfo.

Vanguard Fiduciary Trust Co. v. Stuart (D.N.D. 2009)

  • No. 3:08-cv-44, Doc. 66
  • Judge Ralph R. Erickson
  • Decided Sept. 16, 2009
Facts
The 401(k) beneficiary was changed the day before the account holder's death.
Holding
Summary judgment was denied; capacity and undue influence went to the jury (slip op. at 5–6, 9).
Why it matters
Late changes by a gravely ill owner often cannot be resolved on paper.

Opinion: GovInfo.

Footnotes

  1. Hartford Life & Accident Ins. Co. v. Rogers, No. 3:13-cv-101, slip op. at 4 (D.N.D. Sept. 26, 2014) (report and recommendation). GovInfo. ↩

  2. Rogers, slip op. at 5. ↩

  3. N.D. Cent. Code ch. 30.1-10. North Dakota Legislative Assembly. ↩

  4. Rogers, slip op. at 1. ↩

  5. Vanguard Fiduciary Trust Co. v. Stuart, No. 3:08-cv-44, slip op. at 5–6 (D.N.D. Sept. 16, 2009). GovInfo. ↩

  6. Vanguard, slip op. at 9. ↩