Home > FT > Sveen v. Melin: The Retro View of Revocation on Divorce Statutes

Sveen v. Melin: The Retro View of Revocation on Divorce Statutes

/
23 Jun 2018
, , ,

June. 23, 2018

Sveen v. Melin, 584 U.S. ___ (2018) (Kagan, J.).
Response by Naomi Cahn
Geo. Wash. L. Rev. On the Docket (Oct. Term 2017)
Slip Opinion | SCOTUSblog

Sveen v. Melin: The Retro View of Revocation on Divorce Statutes

The Supreme Court rarely considers domestic relations or probate cases; nonetheless, when state statutes regulating insurance benefits and retirement designations upon divorce conflict with federal statutes, the Court has repeatedly held the state statutes preempted.1 Sveen v. Melin2 similarly presented issues concerning a state statute affecting beneficiary designations upon divorce and federal law, but the case concerned a potential conflict between the Constitution’s Contracts Clause and a state revocation-upon-divorce statute.

In 1997, Mark Sveen purchased a life insurance policy, and later that year, he married Kaye Melin. The following year, he named her as the primary beneficiary and his two adult children from a prior marriage, Ashley and Antone Sveen, as contingent beneficiaries. Sveen also had additional life insurance, which listed his children as primary beneficiaries.3 In 2002, years after Sveen had purchased the policy, Minnesota enacted the statute at issue in the case, which states: “[T]he dissolution or annulment of a marriage revokes any revocable . . . beneficiary designation . . . made by an individual to the individual’s former spouse.”4

Sveen and Melin divorced in 2007. Their divorce decree did not mention the insurance policy, and Sveen never changed the beneficiary designation. According to Melin, the two of them agreed to keep the other as the primary beneficiary, even after the divorce.5 In 2011, Sveen died.

Following Sveen’s death, the insurance company filed an interpleader to determine whether the Minnesota statute revoked the beneficiary designation. Sveen’s children, who were the contingent beneficiaries, and Melin crossclaimed for the proceeds. The district court found in favor of the children, but the Eighth Circuit, relying on a case it had decided in 1991 presenting a Contracts Clause challenge to the Oklahoma revocation-upon-divorce statute,6 reversed, finding in favor of Melin. As in the 1991 case, the Eighth Circuit found that the statute disrupted the expectations of the policyholder, who was entitled to “rely on the law governing insurance contracts as it existed when the contracts were made.”7 Other circuits, however, had reached the opposite conclusion. The Supreme Court, 8–1, in an opinion authored by Justice Kagan, resolved the issue by finding no Contracts Clause violation.

The Contracts Clause provides that “[n]o state shall . . . pass any . . . Law impairing the Obligation of Contracts.”8 By its terms, as the Court noted, the Contracts Clause does set limits on when states can enact laws that interfere with pre-existing contracts, that is, on the retroactivity of new legislation. Not all such laws are, however, unconstitutional, and Justice Kagan briefly reviewed the history of the Court’s Contracts Clause jurisprudence. She observed that the “Court has long applied” a two-part test for determining such a law’s validity.9 The first part asks whether the state law “operated as a substantial impairment of a contractual relationship.”10 A law operates as a substantial impairment if it: (1) “undermines the contractual bargain,” (2) “interferes with a party’s reasonable expectations,” and (3) “prevents the party from safeguarding or reinstating his [sic] rights.”11 Only if those factors reflect a substantial impairment does the Court turn to the second step to determine whether the law has been crafted in “an ‘appropriate’ and ‘reasonable’ way to advance ‘a significant and legitimate public purpose.’”12

The Court considered only the first step, finding no substantial impairment. Although the law did make a substantial change—it struck out the policyholder’s designation—that change was not, the Court held, a substantial impairment for three reasons. First, the law was designed to effectuate the policyholder’s intent and thus furthered, rather than impaired, the contractual goal. Second, the Court reviewed divorce law, finding that because a court could make orders concerning life insurance policies at divorce, the Minnesota law was unlikely to disturb a policyholder’s expectations. (I should note that the Court’s analogy between what a divorce court can order, in a proceeding in which the parties participate, and a legislative enactment that makes blanket presumptions, is not entirely convincing.) Finally, the Court observed that the statute served as a mere default because the policyholder could simply affirm an intent to retain an ex-spouse. This last point prompted Justice Gorsuch, the lone dissenter, to start his dissent by pointing out the absurdity of this reasoning:

Because people are inattentive to their life insurance beneficiary designations when they divorce, the legislature needs to change those designations retroactively to ensure they aren’t misdirected. But because those same people are simultaneously attentive to beneficiary designations (not to mention the legislature’s activity), they will surely undo the change if they don’t like it.13

Justice Gorsuch traced the evolution of Contracts Clause jurisprudence, finding that the Framers intended it to be “categoric[al],” a position “hard to square” with the more modern test.14 Even under the modern test, he found a substantial impairment.

Rather than critique Justice Gorsuch’s interpretation of the Contracts Clause,15 I want to focus on another aspect of his dissent: he twice (approvingly) cites to a brief filed by more than a dozen women’s groups supporting Kaye Melin (the majority does not mention this issue at all).16

It is important to acknowledge that, while virtually all states provide for revocation of beneficiary provisions in wills in favor of an ex-spouse, only about half the states (and the Uniform Probate Code) have extended this revocation to nonprobate assets, such as life insurance policies. There is a policy debate among states about whether automatic revocation is a good idea, and Congress does not provide for such automatic revocation in federally regulated nonprobate assets.17

In addition, there is little empirical evidence concerning what policyholders actually want or expect will happen upon divorce.18 Indeed—and here is one of the two contexts in which Gorsuch cited the women’s brief—“[a] sizeable (and maybe growing) number of people do want to keep their former spouses as beneficiaries.”19 The growth of collaborative divorce, for example, shows that divorce is not necessarily the messy, take-no-prisoners assumption that underlies modern divorce revocation statutes. As Justice Gorsuch noted, citing to a brief filed by the U.S. government in a 2013 case that argued a state divorce revocation statute should be preempted, there may well be legitimate reasons why a decedent did not change a beneficiary designation, ranging from wanting to support the ex-spouse’s care for joint children to feelings of connection.20 Justice Gorsuch cited the Women’s Law Project brief again in addressing alternatives to the state’s choice.21

Finally, although this part of the Women’s Law Project brief did not find its way into Justice Gorsuch’s opinion, there are strong public policy reasons against the Minnesota statute’s virtually irrebuttable presumption of revocation upon divorce. Relying on extensive empirical evidence, the brief points out that women are more vulnerable in retirement because they typically have lower levels of resources, assets, and savings than men of their age, and divorce exacerbates that vulnerability. In addition, divorce revocation statutes have a gendered history.22

Ultimately, regardless of its Contracts Clause jurisprudence, the Court upholds the ability of states to retroactively change the beneficiary designations in nonprobate assets upon divorce without ascertaining the spouses’ actual intent. Given the pervasiveness of such statutes, the holding is not a surprise, even with respect to retroactivity; it is the assumptions of the statutes themselves that is the surprise.

Naomi R. Cahn is the Harold H. Greene Professor of Law at The George Washington University Law School. At GW Law, she teaches courses on family law, trusts and estates, elder law, and child, family, and state. She has written numerous law review articles on family law, feminist jurisprudence, and reproductive technology. Her work has been featured in The New York Times, The Washington Post, The Christian Science Monitor, and The New Yorker, and she has appeared on numerous media outlets including NPR, MSNBC, and bloggingheadstv.com.

  1. E.g.,Wissner v. Wissner, 338 U.S. 655 (1950); Hillman v. Maretta, 569 U.S. 483 (2013).
  2. No. 16-1432, slip op. (U.S. June 11, 2018).
  3. See Metro. Life Ins. Co. v. Melin, 853 F.3d 410, 411 (8th Cir. 2017).
  4. Minn. Stat. § 524.2–804 (2018).
  5. See Sveen, slip op. at 5 (Gorsuch, J., dissenting).
  6. See Whirlpool Corp. v. Ritter, 929 F.2d 1318, 1324 (8th Cir. 1991).
  7. Melin, 853 F. 3d at 413 (quoting Whirlpool, 929 F.2d at 1323).
  8. U.S. Const., art. I, § 10, cl. 1.
  9. See Sveen, slip op. at 7 (majority opinion).
  10. Id. (quoting Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 244 (1978)).
  11. Id.
  12. Id. (quoting Energy Reserves Grp., Inc. v. Kansas Power & Light Co., 459 U.S. 400, 411–12 (1983)).
  13. Id. at 1 (Gorsuch, J., dissenting) (emphasis in original).
  14. Id. at 2, 4.
  15. See Ian Millhiser, Gorsuch Just Wrote an Opinion So Radical That Clarence Thomas Wouldn’t Join It, ThinkProgress (June 11, 2018, 4:19 PM), https://thinkprogress.org/neil-gorsuch-sveen-v-malin-most-radical-opinion-yet-233125a182f6.
  16. See Brief of Amici Curiae The Women’s Law Project et al. in Support of Respondent, Sveen v. Melin, No. 16-1432, slip op. (U.S. June 11, 2018); see also The National Women’s Law Center, https://nwlc.org/resources/sveen-v-melin.
  17. E.g., Hillman v. Maretta, 569 U.S. 483 (2013); Egelhoff v. Egelhoff, 532 U.S. 141 (2001); John H. Langbein, Destructive Federal Preemption of State Wealth Transfer Law in Beneficiary Designation Cases: Hillman Doubles Down on Egelhoff, 67 Vand. L. Rev. 1665, 1668–69 (2014).
  18. For a review, see Naomi Cahn, Revisiting Revocation Upon Divorce?, 103 Iowa L. Rev. (forthcoming 2018).
  19. Sveen, slip op. at 7–8 (Gorsuch, J., dissenting).
  20. Id. at 6.
  21. Id. at 7.
  22. For further discussion of these points, see Naomi Cahn, Egelhoff v. Egelhoff, in Feminist Judgments in Trusts and Estates (Deborah Gordon et al. eds. forthcoming 2019); Naomi Cahn, Elder Law and Gender, Fam. L.Q. (forthcoming 2018).

Recommended Citation
Naomi Cahn, Response, Sveen v. Melin: The Retro View of Revocation on Divorce Statutes, Geo. Wash. L. Rev. On the Docket (June 23, 2018), https://www.gwlr.org/sveen-v-melin.

About Post Author