Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Ballex v. Municipal Police Employees' Retirement System

Court of Appeals of Louisiana, First Circuit

April 18, 2017

LINDA ARANGUREN BALLEX, INDIVIDUALLY AND ON BEHALF OF HER MINOR CHILD, VERNA MARIA BALLEX
v.
MUNICIPAL POLICE EMPLOYEES' RETIREMENT SYSTEM

         Appealed from the Nineteenth Judicial District Court In and for the Parish of East Baton Rouge, Louisiana Docket Number C616165 Honorable Todd Hernandez, Judge Presiding

          Robert Angelle Metairie, LA Counsel for Plaintiff/ Appellee, Linda Ballex, individually and on behalf of her minor child, Verna M. Ballex

          Carlton Jones, III Baton Rouge, LA Counsel for Defendant/Appellant, Municipal Police Employees' Retirement System

          BEFORE: WHIPPLE, C.J., GUIDRY ANDON, JJ.

          WHIPPLE, C.J.

         In this appeal, the Municipal Police Employees' Retirement System ("MPERS") challenges the trial court's judgment, which ordered it to pay plaintiff monthly survivor benefits from the date of death of her former husband for the remainder of her life and further awarded plaintiff one-half of the Deferred Retirement Option Plan ("DROP") benefits received by her deceased former husband. Plaintiff has answered the appeal, seeking an amendment to the monthly figure in survivor benefits awarded to her, as well as interest from the date of judicial demand and attorney's fees.

         For the following reasons, we reverse in part, amend in part, and affirm in part as amended.

         FACTS AND PROCEDURAL HISTORY

         Plaintiff, Linda Aranguren Ballex, married Chetley Michael Ballex on August 16, 2001. They had one daughter during their marriage, Verna Ballex, who was born on October 9, 2002.

         Chetley was a member of the New Orleans Police Department, and, as such, he was also a member and participant of MPERS, a retirement system established for, among others, police officers employed by municipalities of the state of Louisiana.[1] In May 2005, Chetley completed a Personal History Information Update form, designating Linda, his wife, as his beneficiary with MPERS, and in June 2005, he became eligible for retirement, after twenty-five years of service.

         On July 27, 2005, Chetley completed an application for DROP.[2] On that application, Chetley listed Linda and Verna as his beneficiaries and selected the Maximum Plan as his retirement plan option, The Maximum Plan pays the largest monthly benefit to the retiree, but does not provide for a monthly benefit to the named beneficiary upon the retiree's death. However, by letter dated July 28, 2005, MPERS informed Chetley that because MPERS is a "qualified plan" under the Internal Revenue Code, see 26 U.S.C. § 401, et seq., a member's spouse must consent to the selection of a retirement plan that does not provide a monthly benefit to the spouse after the member's death of at least fifty percent of the benefit payable to the retiree, pursuant to 26 U.S.C. § 417(a)(2)(A).[3] Enclosed with the letter was a form entitled "Spouse's Approval of Retirement Option Selected, " and the letter further informed Chetley that failure to return the completed form within ten days of the date of the letter would result in his benefit being computed under the Option 3 plan of retirement, which option provides the surviving spouse with a lifetime retirement benefit of 50% of the retiree's benefit upon the death of the retiree. Chetley did not return the required "Spouse's Approval of Retirement Option Selected" form and, instead, withdrew his DROP application.

         Thereafter, on November 8, 2006, Chetley completed another DROP application, again selecting the Maximum Plan retirement option. He did not include the "Spouse's Approval of Retirement Option Selected" form with his DROP application, falsely indicating instead on the application that he was divorced. Also on this application, he listed only his daughter Verna as his beneficiary. MPERS did not request a copy of a judgment of divorce or otherwise verify that Chetley was in fact divorced. Rather, relying solely on Chetley's representation that he was divorced, MPERS processed Chetley's application with his selection of the Maximum Plan retirement option without requiring or receiving a signed and notarized consent form from Linda, consenting to Chetley's selection of a retirement plan that would pay no spousal benefit upon his death.

         Chetley participated in DROP from December 10, 2006 until April 7, 2009. At the end of his DROP participation, Chetley had a balance of $91, 551.37 in his DROP account. Chetley ceased working immediately after the expiration of the period of his DROP participation, and on April 7, 2009, he began receiving monthly retirement benefits under the Maximum Plan retirement option, in the amount of $3, 280.27, which he continued to receive until his death in 2011.

         The following month, on May 19, 2009, MPERS received a rollover request from Chetley, through which he requested that the entire balance in his DROP account be transferred from the MPERS system to an IRA with the Police and Firemen's Insurance Association. The requested transfer took place on June 1, 2009, thereby removing all of Chetley's DROP funds from the MPERS system.

         On September 14, 2011, Chetley's wife Linda called MPERS, at a time when, due to illness, Chetley was nearing death, to inquire about what her benefits would be upon his death. At that time, she learned that, despite her lack of consent, Chetley had retired under the Maximum Plan retirement benefit, such that she would receive no retirement benefit upon his death.[4]Taking the position that once the election of the Maximum Plan retirement option is made, the election is irrevocable, MPERS maintained that no change could be made to Chetley's retirement plan option. Thus, upon Chetley's death on October 10, 2011, Chetley's monthly retirement benefit ceased, and MPERS did not pay Linda any monthly retirement benefit.

         Thereafter, Linda instituted this suit, individually and on behalf of her minor child Verna, against MPERS, seeking all benefits to which she and Verna were entitled, as well as one-half of all DROP account funds attributable to Chetley's employment and retirement contributions during his marriage to Linda. Linda also named as a defendant Kathy Bourque, the director of MPERS, contending that Bourque had breached her fiduciary duty to Linda and Verna by, inter alia, allowing Chetley to receive benefits under the Maximum Benefit plan without an affidavit showing Linda's consent and allowing Chetley to change his beneficiary from her to his daughter, also without an affidavit evidencing her consent. Thus, she also sought judgment against Bourque for all benefits to which she and Verna would have been entitled, together with costs, interest, and attorney's fees.

         Following a trial on the merits, the trial court, in written reasons for judgment, found that Chetley had selected the Maximum Plan retirement option and MPERS had paid him benefits under that option, all without the consent of his wife, Linda, and that Chetley's removal of Linda as a beneficiary to his retirement plan was without legal effect. Thus, the court concluded that Linda was entitled to benefits under the default retirement option, Option 3, as provided in MPERS's member handbook. Because the court concluded that Chetley's removal of Linda as a beneficiary was without legal effect, the court further concluded that it was unnecessary to address Linda's claims of breach of fiduciary duty and MPERS's statutory immunity defenses. In amended reasons for judgment, the court found that Linda also was entitled to one-half of the DROP benefits that had been paid to Chetley.

         In accordance with its reasons, the trial court rendered judgment on February 2, 2016, in favor of Linda and against MPERS, awarding Linda the following amounts: $1, 373.69 per month, representing one-half of the amount to which Chetley would have been entitled under the Option 3 retirement plan, as provided in the MPERS Member Handbook, retroactive to October 10, 2011, the date of Chetley's death, and continuing for the remainder of Linda's life; and $45, 775.69, representing one-half of the DROP benefits received by Chetley. Regarding Linda's claims of breach of fiduciary duty, the judgment provided that Linda's claims against Kathy Bourque were dismissed, "the Court having found that the defendant Kathy Bourque as the Director of [MPERS] did not breach any fiduciary duty to the plaintiff ... ." In the judgment, the court declined to award Linda attorney's fees and ordered each party to bear their own costs.

         From this judgment, MPERS appeals, contending that the trial court erred: (1) in holding that the November 8, 2006 retirement application was without legal effect; (2) in failing to recognize MPERS's statutory immunity under LSA-R.S. 9:2798.1; (3) in awarding Linda a spousal retirement benefit based upon what Chetley should have done on his November 8, 2006 retirement application; (4) in awarding Linda half of Chetley's DROP account, which was legally withdrawn from MPERS in 2009; and, (5) alternatively, if Linda is entitled to judgment in her favor, resulting in the Maximum Plan being revoked and Option 3 implemented, in failing to grant a credit to MPERS for overpayments made to Chetley.

         Thereafter, Linda filed an answer to appeal, contending that the trial court erred in failing to award her attorney's fees, legal interest, and costs. She later filed a supplemental answer to appeal, contending that the trial court further erred in awarding an incorrect amount for the monthly spousal benefit, which she contends was "clearly a clerical error."

         In response to the supplemental answer to appeal, this court issued a rule to show cause order, wherein it noted, upon examination of the record, that the supplemental answer to appeal appeared to have been filed untimely. Thus, this court ordered the parties to show cause by briefs as to whether the supplemental answer to appeal should be dismissed as untimely. Ballex v. Municipal Police Employees' Retirement System, 2016-0905 (La.App. 1st Cir. 8/29/16). By subsequent order of this court, the rule to show cause was referred to the panel to which the appeal is assigned. Ballex v. Municipal Police Employees' Retirement System, 2016-0905 (La.App. 1st Cir. 11/15/16).

         LEGAL EFFECT OF CHETLEY'S NOVEMBER 8, 2006 SELECTION OF THE MAXIMUM BENEFIT RETIREMENT PLAN AND LINDA'S ENTITLEMENT TO A RETIREMENT BENEFIT (Assignments of Error Nos. 1, 2 & 3)

         In its first and third assignments of error, MPERS contends that the trial court erred in concluding that Chetley's November 8, 2006 retirement application, through which he falsely asserted that he was divorced and selected the Maximum Plan retirement option without the consent of his wife Linda, was without legal effect and, thus, in awarding Linda a monthly spousal retirement benefit.

         MPERS is a retirement system established by the Louisiana Legislature for the purpose of providing retirement benefits for municipal policemen in Louisiana. LSA-R.S. 11:2211(A). The evidence of record establishes that MPERS is also a "qualified" plan under section 401 of the Internal Revenue Code, 26 U.S.C. § 401, entitled "Qualified pension, profit-sharing, and stock bonus plans." A trust forming part of an employee benefit plan and satisfying the requirements of 26 U.S.C. § 401, et seq., constitutes a qualified trust that entitles the employer and plan participants to certain tax benefits. See 26 U.S.C. §§ 402(a), 404, & 501(a); see also Trebotich v. Commissioner of Internal Revenue, 492 F.2d 1018, 1024 n.11 (9th Cir. 1974). One of the requirements of a "qualified" trust forming part of such a plan under 26 U.S.C. § 401 is that the trust pay a lifetime survivor benefit to the surviving spouse of a participant who has become vested in a pension plan prior to retirement, unless the plan participant elects to waive the survivor benefit. See 26 U.S.C. §§ 401(a)(11) & 417(a)(1). This annuity benefit, which combines a benefit payable for the life of the plan participant with a survivor annuity of not less than 50 percent of plan participant's annuity, payable for the life of the spouse, is referred to as a ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.