Case No. 16-1432 | 8th Cir.
Under Minnesota law, the designation of one spouse as a beneficiary on the other spouse’s life insurance policy is automatically revoked when the couple divorces. In this case, the Court will consider whether this law may be constitutionally applied to designations made before the law was passed.
Mark Sveen and Kaye Melin got married in 1997. In 1998, Sveen named Melin as a beneficiary on his life insurance policy. Subsequently, in 2002, the Minnesota legislature passed the so-called “revocation-upon-divorce” statute, Brief of Respondent at 14, Sveen v. Melin, No. 16-1432 (U.S. filed Feb. 21, 2018), depriving Melin of her status as a beneficiary when the couple divorced in 2007. Although Melin has averred that Sveen verbally agreed to retain her as a beneficiary even after the divorce, the statutory default of revocation can be altered only by express agreement. Thus, when Sveen passed away in 2011, the money from the insurance policy was set to go to Sveen’s children. Melin objected.
The Sveen children assert that they should receive the proceeds of the insurance policy by operation of the revocation-upon-divorce statute. Melin, on the other hand, claims that it would violate the Contracts Clause of the Constitution to apply the statute to agreements entered into before the statute was enacted. The district court held for the Sveen children, but the Eighth Circuit reversed, ruling the statute unconstitutional when applied retroactively.
The Contracts Clause of the Constitution provides in relevant part that “No State . . . shall pass any . . . Law impairing the Obligation of Contracts.” U.S. Const. art. I § 10, cl. 1. In their appeal to the Supreme Court, the Sveen children assert that a beneficiary designation is not among the transactions that the Contracts Clause regulates. Alternatively, they contend that any “impairment” caused by the retroactive application of the revocation-upon-divorce statute “would be insufficiently substantial to implicate the Contracts Clause.” Brief of Petitioners at 4, Sveen v. Melin, No. 16-1432 (U.S. filed Jan. 22, 2018).
The latter of these contentions reflects what will likely be a central issue in the case. Indeed, the outcome of the case may hinge on whether the Court finds that the statute causes a “substantial impairment” under the circumstances, according to the standard laid out in Allied Structural Steel Co. v. Spannaus and its progeny. 438 U.S. 234, 244 (1978). A good number of states have enacted or are cotemplating revocation-upon-divorce statutes, so the Court’s decision in this case could have far-reaching implications. See Brief of Petitioners at 8-9, Sveen v. Melin, No. 16-1432 (U.S. filed Jan. 22, 2018).