Opinion
Docket No. 14–1021–cv.
2015-01-12
The MINISTERS AND MISSIONARIES BENEFIT BOARD, Interpleader–Plaintiff–Cross–Defendant–Appellee, v. Leon SNOW, LeAnn Yowell Snow, Interpleader–Defendants–Cross–Claimants–Appellants, v. The Estate of Clark Flesher, Michele Arnoldy, Individually & as Personal Representative of the Estate of Clark Flesher, Interpleader–Defendants–Appellees.
Jesse T. Wilkins (Gregory R. Preston, on the brief), Preston & Wilkins, LLC, Levittown, N.Y., for Leon and LeAnn Yowell Snow. Brian Rosner, (Natalie A. Napierala, on the brief), Carlton Fields Jorden Burt, P.A., New York, N.Y., for the Estate of Clark Flesher and Michele Arnoldy.
Decided: March 5, 2015.
Jesse T. Wilkins (Gregory R. Preston, on the brief), Preston & Wilkins, LLC, Levittown, N.Y., for Leon and LeAnn Yowell Snow. Brian Rosner, (Natalie A. Napierala, on the brief), Carlton Fields Jorden Burt, P.A., New York, N.Y., for the Estate of Clark Flesher and Michele Arnoldy.
This case raises important, yet unanswered, questions of New York State law. Specifically, its resolution turns on whether a governing-law provision that states that the contract will be governed by and construed in accordance with the laws of the State of New York, in a contract not consummated pursuant to New York General Obligations Law section 5–1401, requires the application of New York Estates, Powers & Trusts Law section 3–5.1(b)(2), a New York statute that may, in turn, require application of the law of another state. For the reasons discussed below, we conclude that this is a threshold issue that is determinative, unsettled, likely to recur, and has important public policy implications. See Osterweil v. Bartlett, 706 F.3d 139, 142 (2d Cir.2013); State Farm Mut. Auto. Ins. Co. v. Mallela, 372 F.3d 500, 509 (2d Cir.2004). Accordingly, we two questions concerning this issue to the New York Court of Appeals. See N.Y. Comp.Codes R. & Regs. tit. 22, § 500.27(a); 2d Cir. Local R. 27.2(a).
Under Second Circuit Local Rule 27.2, we may certify questions of New York law to the New York Court of Appeals. See N.Y. Comp.Codes R. & Regs. tit. 22, § 500.27(a) (“Whenever it appears to ... any United States Court of Appeals ... that determinative questions of New York law are involved in a case pending before that court for which no controlling precedent of the [New York] Court of Appeals exists, the court may certify the dispositive questions of law to the Court of Appeals.”) Our decision whether to certify such questions is discretionary. See 10 Ellicott Square Court Corp. v. Mountain Valley Indem. Co., 634 F.3d 112, 125 (2d Cir.2011). In this regard, our analysis is “principally guided by three factors.” Id. They are: “(1) whether the New York Court of Appeals has addressed the issue and, if not, whether the decisions of other New York courts permit us to predict how the Court of Appeals would resolve it; (2) whether the question is of importance to the state and may require value judgments and public policy choices; and (3) whether the certified question is determinative of a claim before us.” Barenboim v. Starbucks Corp., 698 F.3d 104, 109 (2d Cir.2012). Applying this rubric to the present case, we conclude that two questions warrant certification to the New York Court of Appeals.
First, the New York Court of Appeals has not expressly considered the specific questions at issue in this case.
As we explained above, the New York Court of Appeals has considered similar questions in the context of contracts consummated pursuant to the Large Contract Statute in IRB–Brasil Resseguros. However, it is not clear from that decision whether the New York Court of Appeals would apply the same reasoning outside of that statutory context. There, the Court of Appeals relied not only on the general conflict-of-laws principles embodied in the Restatement (Second) of Conflict of Laws, but also on the specific legislative purpose of the Large Contract Statute. In addition, in that decision, the Court of Appeals rejected the application of common-law conflict-of-laws principles, whereas the contracts in this case may implicate a choice-of-law directive in a New York State statute. We therefore cannot confidently predict whether the New York Court of Appeals would apply the holding of IRB–Brasil Resseguros to the contracts at issue here. Moreover, if the New York Court of Appeals would apply the holding in IRB–Brasil Resseguros to these contracts, we are unaware of any New York Court of Appeals decision that dictates whether a person's entitlement to the proceeds of a death benefit or retirement plan constitutes “personal property ... not disposed of by will” within the meaning of New York Estates, Powers & Trusts Law § 3–5.1(b)(2). Accordingly, this factor supports the certification of these sequential questions to the New York Court of Appeals. See Osterweil, 706 F.3d at 143.
The Appellate Division considered a somewhat similar question in McCarthy v. Aetna Life Ins. Co., 231 A.D.2d 211, 214, 661 N.Y.S.2d 625, (N.Y.App.Div.1997), rev'd on other grounds, 92 N.Y.2d 436, 681 N.Y.S.2d 790, 704 N.E.2d 557 (1998), and concluded, notwithstanding New York Estates, Powers & Trusts Law section 3–5.1(b)(2), that the governing-law provision required the application of Delaware law. See id. That case does not help us accurately predict how the Court of Appeals would interpret the contractual provisions in the case, however, because: (1) the Appellate Division's decisions are not binding on the Court of Appeals; (2) McCarthy predates IRB–Brasil Resseguros; (3) McCarthy does not squarely apply to the specific facts of the present case; and (4) in reaching its decision, the Court of Appeals stated that “it need not decide [the] question” of which state's law applied, McCarthy, 681 N.Y.S.2d 790, 704 N.E.2d at 560.
Second, these questions are of great importance to New York State contract law and implicate significant issues of public policy. Many contracts select New York law as their governing law, and the New York legislature has decided that there is value in allowing parties to choose to do so. The State Legislature adopted the Large Contract Statute for just this reason. That said, it is not clear whether the legislators wanted to provide this opportunity for all contracts or whether the decision to require a $250,000 statutory threshold indicates their intention to treat contracts concerning lesser amounts differently.
Moreover, the questions are likely of great importance to the New York Estates, Trusts & Powers Law as well. The New York legislature enacted a new version of section 5–1.4 in 2008 to provide that a divorce automatically revokes retirement and death benefit plan beneficiary designations in favor of an ex-spouse, and the relationship between governing-law provisions in such plans and section 3–5.1(b)(2) has yet to be addressed by the courts. Both plan administrators and participants have significant interests in determining which state's law applies to a beneficiary designation if a policyholder dies while domiciled outside of New York. For example, while New York's revocation statute applies only to an ex-spouse, several other states in addition to Colorado have enacted statutes that revoke certain non-probate beneficiary designations of an ex-spouse's relatives upon divorce. See, e.g., N.J. Stat. Ann. § 3B:3–14(a); Mass. Gen. Laws ch. 190B, § 2–804(b); Haw.Rev.Stat. § 560:2–804(b). Thus the issue of whether another state's revocation statute applies may often be determinative where the deceased has designated an ex-spouse's relative as a beneficiary.
Third, the answer to these questions could resolve this case. If the Court of Appeals were to conclude that the governing-law provisions preclude the application of New York Estates, Powers & Trusts Law section 3–5.1(b)(2) or that section 3–5.1(b)(2) does not apply to the payment of proceeds under the MMBB plans, that could have a decisive impact on which party would be awarded the disputed funds.
For all of these reasons, we deem it appropriate to certify the following questions to the New York Court of Appeals:
(1) Whether a governing-law provision that states that the contract will be governed by and construed in accordance with the laws of the State of New York, in a contract not consummated pursuant to New York General Obligations Law section 5–1401, requires the application of New York Estates, Powers & Trusts Law section 3–5.1(b)(2), a New York statute that may, in turn, require application of the law of another state?
(2) If so, whether a person's entitlement to proceeds under a death benefit or retirement plan, paid upon the death of the person making the designation, constitutes “personal property ... not disposed of by will” within the meaning of New York Estates, Powers & Trusts Law section 3–5.1(b)(2)?
“Consistent with our usual practice, we do not intend to limit the scope of the Court of Appeals' analysis through the formulation of our question[s], and we invite the Court of Appeals to expand upon or alter [these] question[s] as it should deem appropriate.” Nguyen v. Holder, 743 F.3d 311, 317 (2d Cir.2014) (internal quotation marks omitted).
It is hereby that the Clerk of Court transmit to the Clerk of the New York Court of Appeals a Certificate in the form attached, together with a copy of this opinion and a complete set of the briefs, appendices, and record filed by the parties 156 in this Court. This panel will retain jurisdiction to decide the case once we have had the benefit of the views of the New York Court of Appeals, or once that court declines certification. Finally, we order the interpleader defendants to bear equally any fees and costs that may be requested by the New York Court of Appeals.