In the Matter of the Estate of KENNETH LEE BUTLER, Deceased
Review of the judgment of the Court of Appeals in 49 Kan.App.2d 335, 307 P.3d 262 (2013). Appeal from Wyandotte District Court; R. WAYNE LAMPSON, judge.
Jadh J. Kerr, of Speer & Holliday, LLP, of Olathe, argued the cause, and Barry D. Martin, of the same firm, and Diane D. Durbin, of Horn Aylward & Bandy, LLC, of Kansas City, Missouri, were with her on the briefs for appellant Judy Butler McHenry, Administrator of the Estate of Leo E. Butler.
Bruce Hanson, of Oskaloosa, argued the cause and was on the briefs for appellee Estate of Kenneth Lee Butler, Franklin Burch Administrator.
BEIER, J. MICHAEL J. MALONE, Senior Judge, assigned.
This case turns on whether an allocation order and subsequent orders refusing to set it aside, issued in a Wyandotte County probate matter in 2007 and 2008, were final orders appealable within 30 days. We hold that they were and thus ultimately affirm the result in the district court that denied relief to the estate of the decedent's father.
The probate allocation order selected a Colgate-Palmolive Company severance package on behalf of Kenneth Lee Butler, who was employed at the company's closing Kansas City plant at the time he died intestate in October 2006. The order also divided Colgate-Palmolive's obligations under the selected severance package between [301 Kan. 386] Kenneth's father, Leo, and Kenneth's estate. After a federal court interpleader proceeding filed by the administrator of Leo's estate, the amounts allocated by the state pro tern district judge in the probate matter were left intact: $63,640.50 for Leo's estate and $176,359.50 for Kenneth's estate. There was no state court appeal from the allocation order. Nor did Leo or his estate ever file a demand against Kenneth's estate in the state probate proceeding.
Four years after the denial of Leo's motion to set aside the allocation order, Kenneth's son and only heir, Franklin Burch, successfully sought a partial distribution from Kenneth's estate. Leo's estate attempted a late appeal of the order of partial distribution, arguing excusable neglect from lack of notice. The district court judge disallowed the late appeal, ruling that Leo's estate had no
interest in Kenneth's estate to pursue. Leo's estate filed a timely appeal from that order.
A panel of our Court of Appeals ultimately dismissed the appeal for lack of jurisdiction, although, along the way, it addressed the propriety of the district court's ruling on the late appeal from the partial distribution order. In re Estate of Butler, 49 Kan.App.2d 335, 307 P.3d 262 (2013). This court granted the petition for review filed by Leo's estate.
Additional Factual and Procedural Background
Under the Colgate-Palmolive severance program, Kenneth could have selected from one of two options: (1) he could receive a lump sum payment of $127,281 pension benefit under the Colgate-Palmolive Employees' Retirement Income Plan and severance pay of $54,743, or (2) he could forego the lump sum pension benefit and severance pay and instead receive a lump sum " enhanced pension" payment of $240,000. Kenneth had not made a selection before his death.
Leo and his wife, Jenny, were named as 50/50 beneficiaries for Kenneth's pension benefit under the retirement income plan. Jenny died before Kenneth. There was no named beneficiary for any severance payment.
Through an email to Burch's counsel, a Colgate-Palmolive representative informed Burch about the two options that had been available to Kenneth and requested instruction on how to proceed.
[301 Kan. 387] " Had he been actively employed at the time of [Colgate-Palmolive's] Kansas City plant closing in December 2006, [Butler] would have had the following option: (i) to elect his lump sum Personal Retirement Account, which amounts to approximately $127,000, and severance [pay] in the amount of $54,000 (for a total of $182,000), or (ii) to forego his PRA and any severance, and instead elect a lump sum payment of $10,000 per year of service, which, given his 24 years of service, amounts to $240,000. This amount is paid out of the Company's pension plan as an enhanced pension. In order to receive either option, Mr. Butler would have been required to sign a general waiver and release, which, as we discussed, the estate will now execute.
" Mr. Butler's father is named as the beneficiary for pension purposes. Thus, depending on which election is made by Mr. Butler's estate, the Company will disburse the money to the appropriate party (the estate in the case of severance; Mr. Butler's father in the case of pension). Please let me know which option the estate will elect, and we can proceed accordingly."
In May 2007, Burch filed a " Petition for Determination and Allocation of Severance Benefits" with the district court. In the petition, Burch informed the court generally about the two Colgate-Palmolive options and stated that, as administrator of Kenneth's estate, he was " seeking a Court determination of which election to make, and the beneficiary/allocation to each party, either [Leo], or the Estate, or divided between [Leo] and the Estate." The pro tern district judge held a hearing on Burch's petition, at which Burch's counsel said Leo had been served with a copy of the petition and had notice of the hearing. Leo did not appear in person or through counsel.
On the same day as the hearing, the judge issued an " Order Determining Allocation of Severance and Pension Benefits of Colgate-Palmolive Company," i.e., the allocation order. She identified the two severance program options and ruled that Jenny's 50 percent share lapsed when she predeceased Kenneth. As a result, Jenny's 50 percent flowed to Kenneth's estate. The judge also ruled that Leo, as named beneficiary of the other 50 percent of Kenneth's pension, was entitled to $63,640.50 of the $240,000 available under the second Colgate-Palmolive option, leaving $176,359.50 for Kenneth's estate. The judge characterized the payment due Kenneth's estate as " severance pay."
[301 Kan. 388] On July 9, 2007, counsel for Leo entered an appearance in the probate matter, and, on August 27, 2007, Leo filed a motion to set aside the court's allocation order. Leo argued that (1) the allocation order was void because the Colgate-Palmolive pension plan was governed by the federal Employee Retirement Income Security Act of 1974
(ERISA), and the district court lacked subject matter jurisdiction to address the allocation of benefits; (2) Burch failed to follow the proper procedure for seeking to enforce beneficiary rights under an ERISA plan; (3) the order disregarded the plan administrator's discretion in allocating benefits; and (4) the order was inconsistent with the plan options.
Burch argued in his response to the motion that Leo had confused subject matter jurisdiction and choice-of-law principles. In addition, Burch asserted that Leo's argument about the incorrect application of state law instead of federal law had been waived because Leo failed to file a notice of appeal within 30 days of the district court's order. According to Burch, Leo was " ...