The Ministers and Missionaries Benefit Board v. Leon Snow v. The Estate of Clark Flesher

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This opinion is uncorrected and subject to revision before

publication in the New York Reports.

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No. 131

The Ministers and Missionaries

Benefit Board,

Interpleader Plaintiff,

v.

Leon Snow et al.,

Appellants,

v.

The Estate of Clark Flesher, et

al.,

Respondents.

Jesse T. Wilkins, for appellants.

Brian Rosner, for respondents.

STEIN, J.:

In IRB-Brasil Resseguros, S.A. v Inepar Invs., S.A. (20

NY3d 310 [2012], cert denied ___ US ___, 133 S Ct 2396 [2013]),

this Court held that, where parties include a New York

choice-of-law clause in a contract, such a provision demonstrates

the parties' intent that courts not conduct a conflict-of-laws

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analysis (see id. at 312). We now extend that holding to

contracts that do not fall under General Obligations Law § 5-

1401, and clarify that this rule obviates the application of both

common-law conflict-of-laws principles and statutory

choice-of-law directives, unless the parties expressly indicate

otherwise.

I.

Plaintiff Ministers and Missionaries Benefit Board

(MMBB) is a New York not-for-profit corporation, based in New

York County, that administers a retirement plan and a death

benefit plan for certain ministers and missionaries. Decedent

Clark Flesher was a minister enrolled in both plans. He named

his then-wife, defendant LeAnn Snow, as his primary beneficiary

and her father, defendant Leon Snow, as the contingent

beneficiary. Both plans state that they "shall be governed by

and construed in accordance with the laws of the State of New

York."

Flesher and LeAnn Snow divorced in 2008. Flesher moved

to Colorado in 2010 and died there in 2011. A Colorado court has

apparently admitted his will to probate, naming his sister,

defendant Michele Arnoldy, as personal representative of the

estate. Despite the divorce, Flesher never changed his

beneficiary designations under the MMBB plans. Because MMBB was

unsure to whom the plan benefits should be paid after Flesher's

death, it commenced a federal interpleader action against

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Flesher's Estate, Arnoldy (individually and as personal

representative of the Estate), LeAnn Snow and Leon Snow.1

The United States District Court for the Southern

District of New York (Griesa, J.) allowed MMBB to post a bond and

be released from the case, with the obligation to pay the

benefits as the court directs. Arnoldy and the Estate moved for

summary judgment, and the Snows cross-moved for summary judgment.

The District Court (Forrest, J.) denied the Snows' motion,

granted the motion of Arnoldy and the Estate and directed MMBB to

pay the disputed funds to Arnoldy, as representative of the

Estate. In making that determination, the District Court

reasoned that: (1) the parties agreed that the relevant

choice-of-law rules are the rules of New York, as the forum

state; (2) the disputed funds constitute personal property; (3)

under EPTL 3-5.1 (b) (2), revocation of a disposition of personal

property, where such property is not disposed of by a will, is

determined by the law of the state where the decedent was

domiciled at the time of death; (4) Flesher was domiciled in

Colorado at the time of his death, so Colorado law applied; and

(5) Colorado's revocation law terminated any claims to the plans

by both Snows (i.e., the former spouse and her relatives) when

1

The complaint was filed in federal court based on

diversity of the parties. MMBB is a New York corporation, the

Estate is considered a resident of Colorado, Arnoldy resides in

North Carolina, LeAnn Snow resides in California and Leon Snow

resides in Minnesota.

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Flesher and LeAnn Snow were divorced.

On the Snows' appeal, the Second Circuit Court of

Appeals determined that there were important and unanswered

questions of New York law and, therefore, certified two questions

to this Court before deciding the appeal (780 F3d 150 [2d Cir

2015]). Those questions are:

"(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)?"

(780 F3d at 155).

This Court accepted the certified questions (25 NY3d

935 [2015]). We now answer the first question in the negative

and, accordingly, have no occasion to reach the second question.

II.

The retirement and death benefit plans here each state

that they "shall be governed by and construed in accordance with

the laws of the State of New York." The first certified question

essentially asks us how to interpret the phrase "laws of . . .

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New York" in those contractual provisions.

We begin with the basic premises that courts will

generally enforce choice-of-law clauses and that contracts should

be interpreted so as to effectuate the parties' intent (see

Welsbach Elec. Corp. v MasTec N. Am., Inc., 7 NY3d 624, 629

[2006]). In a case based on New York law, the United States

Supreme Court held that a choice-of-law provision in a contract

"may reasonably be read as merely a substitute for the

conflict-of-laws analysis that otherwise would determine what law

to apply to disputes arising out of the contractual relationship"

(Mastrobuono v Shearson Lehman Hutton, Inc., 514 US 52, 59

[1995]). Thus, the parties here agree that, pursuant to the

choice-of-law provisions in the MMBB plans, the contracts will be

governed only by New York's substantive law, not by New York's

common-law conflict-of-laws rules.

Nevertheless, we must decide whether the New York law

to be applied includes a New York statutory choice-of-law

directive, such as EPTL 3-5.1 (b) (2). That statute provides

that "[t]he intrinsic validity, effect, revocation or alteration

of a testamentary disposition of personal property, and the

manner in which such property devolves when not disposed of by

will, are determined by the law of the jurisdiction in which the

decedent was domiciled at death" (EPTL 3-5.1 [b] [2]).2 The

2

The District Court determined that Flesher was a Colorado

domiciliary. While the Snows apparently continue to dispute

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question is whether section 3-5.1 (b) (2) should be characterized

as part of New York's substantive or "local law," which the

contracting parties intended to apply, or whether it is simply a

conflict-of-laws rule, which they did not intend to apply. The

answer to this question is crucial here because the recipients of

the MMBB plan benefits will be different depending on whether

courts apply the law of New York or the law of Colorado.

As for indisputably substantive New York law, EPTL

5-1.4 (a) states that,

"[e]xcept as provided by the express terms of

a governing instrument, a divorce . . .

revokes any revocable (1) disposition or

appointment of property made by a divorced

individual to, or for the benefit of, the

former spouse, including, but not limited to,

a disposition or appointment by will, . . .

by beneficiary designation in a life

insurance policy or (to the extent permitted

by law) in a pension or retirement benefits

plan."

The plans here fall under the definition of governing instruments

(see EPTL 5-1.4 [f] [5]). Thus, under New York's purely

substantive law, Flesher's designation of LeAnn Snow as a

beneficiary of the plans was revoked upon their divorce in 2008,

while the designation of Leon Snow as contingent beneficiary

remained in effect (see Matter of Lewis, 25 NY3d 456, 459

Flesher's domicile, that issue is not before us given the

procedural posture of this case. Thus, for purposes of this

appeal, we assume that Flesher was domiciled in Colorado at the

time of his death.

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[2015]).

In contrast, the relevant Colorado statute provides

that a divorce acts to revoke any dispositions or appointments by

the divorced person to his or her former spouse and to relatives

of the former spouse (see Colo Rev Stat § 15-11-804 [2]).

Colorado courts have confirmed that the term "governing

instruments" in that state's revocation statute includes

designations of beneficiaries in life insurance policies (see

Matter of Johnson, 304 P3d 614, 616 [Colo Ct of Appeals 2012],

cert denied 2013 WL 3321113 [Colo July 1, 2013]). Because Leon

Snow, as the father of LeAnn Snow, falls within the definition of

a "[r]elative of the divorced individual's former spouse" in

relation to Flesher (Colo Rev Stat § 15-11-804 [1] [e]), under

Colorado law, the divorce revoked the designations of both LeAnn

Snow and Leon Snow as beneficiaries of the MMBB plans.

The Second Circuit concluded that this case presented a

close question based, in part, on this Court's recent decision in

IRB-Brasil Resseguros, S.A. (20 NY3d 310). There, we decided

that the need for a conflict-of-laws analysis is obviated by a

contract, made pursuant to General Obligations Law § 5-1401, that

contains a New York choice-of-law clause (see id. at 312).

Section 5-1401 embodies the Legislature's desire to encourage

parties to choose the New York justice system to govern their

contractual disputes (see id. at 314-315). In IRB, we concluded

that, where a contract met the requirements of General

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Obligations Law § 5-1401 -- including that the transaction

exceeded $250,000 and the parties designated New York law as

controlling -- "New York substantive law must govern" and

"[e]xpress contract language excluding New York's

conflict-of-laws principles is not necessary" (id. at 315). We

reasoned that, "[t]o find . . . that courts must engage in a

conflict-of-laws analysis despite the parties' plainly expressed

desire to apply New York law would frustrate the Legislature's

purpose of encouraging a predictable contractual choice of New

York commercial law and, crucially, of eliminating uncertainty

regarding the governing law" (id. at 316). Significantly, this

Court noted that the Restatement (Second) of Conflict of Laws §

187 (3) supports the same result (see IRB-Brasil Resseguros,

S.A., 20 NY3d at 316). Section 187 (3) provides that, in the

absence of an expressed contrary intention, references to the law

of a state chosen by the parties means the "local law" of that

state (see IRB-Brasil Resseguros, S.A., 20 NY3d at 316), which is

defined elsewhere in the Restatement as the chosen state's "body

of standards, principles and rules, exclusive of its rules of

Conflict of Laws, which the courts of that state apply in the

decision of controversies brought before them" (Restatement

[Second] of Conflict of Laws § 4 [1] [emphasis added]).3

Referring to New York's overarching principle of

3

A state's standards, principles and rules would be treated

equally under that definition, regardless of whether they were

expressed in the common law or in statutes.

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providing certainty and finality to contracting parties, the

Court in IRB concluded by saying that

"[i]t strains credulity that the parties

would have chosen to leave the question of

the applicable substantive law unanswered and

would have desired a court to engage in a

complicated conflict-of-laws analysis,

delaying resolution of any dispute and

increasing litigation expenses. We therefore

conclude that parties are not required to

expressly exclude New York conflict-of-laws

principles in their choice-of-law provision

in order to avail themselves of New York

substantive law. Indeed, in the event

parties wish to employ New York's

conflict-of-laws principles to determine the

applicable substantive law, they can

expressly so designate in their contract"

(IRB-Brasil Resseguros, S.A., 20 NY3d at

316).

Although IRB concerned only common-law conflict-of-laws

principles, whereas EPTL 3-5.1 (b) (2) is a statutory choice-of-

law directive, the latter is merely a codification of a long-

standing common-law conflict-of-laws principle, eventually placed

within the EPTL because it corresponds to that general area of

law (see Matter of Gifford, 279 NY 470, 474-475 [1939];

Chamberlain v Chamberlain, 43 NY 424, 433 [1871]; Parsons v

Lyman, 20 NY 103, 112 [1859]; Holmes v Remsen, 4 Johns Ch 460,

470 [NY Ch Ct 1820]; see also EPTL 3-5.1 [b], derived from former

Decedent Estate Law § 47, derived from former Code of Civil

Procedure § 2694; L 1966, ch 952). While the EPTL may have

initially been created, at least in part, to revise the substance

of New York estates law, the placement of section 3-5.1 (b) (2)

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within the EPTL primarily served another of its creators'

purposes, which was to organize the statutes addressing that area

of the law and consolidate them into one source (see Governor's

Mem of Approval, Bill Jacket, L 1966, ch 952 at 91 [while noting

that the bill enacting the EPTL and SCPA made numerous changes in

substantive law, one of the "chief virtues" was the consolidation

of statutes pertaining to estates law that were previously

scattered throughout numerous other areas of law]; Mem of Temp

Commn on Law of Estates, 1966 NY Legis Ann at 121 [the Commission

made an effort to keep substantive changes to a minimum, worked

to simplify the form of the statutes, and perhaps the most

notable contribution the new EPTL makes is its format, compiling

estates law in one source]). Although codification may be an

indication that the Legislature attaches some importance to the

rule, EPTL 3-5.1 (b) (2) nevertheless remains, in its essence, a

conflict-of-laws rule, rather than a statement of substantive

law. The fact that the Legislature may have made a substantive

decision to codify the rule, or had a substantive public policy

reason for placing the former common-law rule within a statute,

does not somehow elevate or transform this conflict-of-laws

directive into a statement of substantive law.4

4

Thus, the fact that EPTL 3-5.1 (b) (2) is contained within

EPTL article 3, which is entitled "[s]ubstantive [l]aw of

[w]ills," is not determinative of its character. Due to the

practicality of attempting to organize all of the statutory

rules, by putting provisions that relate to one another together

or in close proximity, portions of statutes may be placed in an

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To be sure, our decision in IRB does not preclude a

different result here. However, our conclusion in that case --

that when parties include a choice-of-law provision in a

contract, they intend application of only that state's

"substantive law" (IRB-Brasil Resseguros, S.A., 20 NY3d at 315) -

- is equally applicable to the contracts now before us. If New

York's common-law conflict-of-laws principles should not apply

when the parties have chosen New York law to govern their dispute

-- a point on which all parties to this appeal agree -- and EPTL

3-5.1 (b) (2) simply represents a common-law conflicts principle

that has been codified into statute, that provision should not be

considered in resolving this dispute.5

article or section whose title -- while correctly applying to

that article or section in general -- does not accurately reflect

every individual provision therein. Nevertheless, a statutory

provision that is, by its nature, procedural cannot be converted

into substantive law by virtue of the title of the overall

article including that particular provision (see Squadrito v

Griebsch, 1 NY2d 471, 475 [1956] [text of statute takes

precedence over title, which cannot alter or limit the language

in the body of a statute itself]; McKinney's Cons Law of NY,

Statutes § 123 [a]).

5

The Restatement (Second) of Conflict of Laws § 6 (1)

states that "[a] court, subject to constitutional restrictions,

will follow a statutory directive of its own state on choice of

law." While that section articulates a general rule -- a fairly

basic and uncontroversial proposition -- that courts must follow

statutory directives, contracting parties are generally free to

include provisions altering the application of certain state laws

to disputes concerning their contract (see Welsbach Elec. Corp.,

7 NY3d at 629). Thus, that section of the Restatement does not

suggest that courts should apply a statutory choice-of-law

directive when interpreting a contract containing a choice-of-law

provision.

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Stated differently, New York courts should not engage

in any conflicts analysis where the parties include a

choice-of-law provision in their contract, even if the contract

is one that does not fall within General Obligations Law §

5-1401. That provision applies only to contracts for

transactions involving an aggregate of over $250,000, but it

specifically states that "[n]othing contained [herein] shall be

construed to limit or deny the enforcement of any provision

respecting choice of law in any other contract" (General

Obligations Law § 5-1401 [2]).6 While IRB does not entirely

answer the current question because that case does not address

the applicability of a statutory choice-of-law directive, logic

dictates that, by including a choice-of-law provision in their

contracts, the parties intended for only New York substantive law

to apply (see IRB-Brasil Resseguros, S.A., 20 NY3d at 315-316;

see also Mastrobuono, 514 US at 63-64 [harmonizing choice-of-law

provision and arbitration provision by reading the phrase "laws

of the State of New York" to include New York substantive

principles that courts would apply, but not include special rules

limiting arbitrators' authority]). A contrary interpretation is

6

It is unclear from the current record whether the amount

due under either individual MMBB plan is more than $250,000.

However, the combined benefits due under the two plans now exceed

that amount. While the parties appear to acknowledge that

General Obligations Law § 5-1401 does not apply to the MMBB

plans, our decision here ensures that all contractual choice-of-

law provisions are interpreted under the same rules, regardless

of the amount at issue.

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conceivable. However, we should apply the most reasonable

interpretation of the contract language that effectuates the

parties' intended and expressed choice of law (see Welsbach Elec.

Corp., 7 NY3d at 629). To do otherwise -- by applying New York's

statutory conflict-of-laws principles, even if doing so results

in the application of the substantive law of another state --

would contravene the primary purpose of including a choice-of-law

provision in a contract -- namely, to avoid a conflict-of-laws

analysis and its associated time and expense.7 Such an

interpretation would also interfere with, and ignore, the

parties' intent, contrary to the basic tenets of contract

interpretation.

Moreover, allowing the application of a statutory

choice-of-law directive would mean that the contracts here could

be interpreted differently for each plan member, depending on

where the member was domiciled at the time of his or her death.

It seems unlikely that MMBB intended to have its contracts -- a

retirement plan and a death benefit plan -- interpreted in many

different ways based on the whim and movements of its plan

members. The intention to provide for predictable results

7

The dissent takes issue with our conclusion regarding the

ability of parties to waive application of EPTL 3-5.1 (b) (2)

(see Dissent at 22). To be clear, our analysis is not primarily

based on that statute's origins in the common law. Further, our

holding narrowly addresses waiver based only on the nature of the

statute -- namely, a choice-of-law directive -- as a natural

extension of our holding in IRB.

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regarding the distribution of funds to beneficiaries is

particularly apt for these plans, which are issued to ministers

and missionaries, who presumably are more likely than the general

population to move often and who may live in all parts of the

world, not just in different states. Contractually planning for

the application of New York substantive law regarding benefit

distribution would provide stability, certainty, predictability

and convenience (see Restatement [Second] of Conflict of Laws §

187, Comment h), so that MMBB could easily determine who should

receive plan benefits.8

Conversely, if application of the statutory choice-of-

law provision -- EPTL 3-5.1 (b) (2) -- was required, it would be

necessary for MMBB to keep abreast of the laws of all other

states and nations to ensure that it paid the proper

beneficiaries, which would invite the very uncertainties that

MMBB and the plan members presumably intended to avoid. While it

8

There is no reason to assume that the parties would expect

that death benefits under the MMBB plans would be subject to the

laws of the decedent's domicile state simply because a majority

of states follow that rule. To the contrary, the parties here

reasonably could have believed that courts would apply the

substantive law of New York -- without resorting to any conflict-

of-laws rules or the laws of any other state -- based on the

choice-of-law provisions in the contracts at issue. It was not

necessary for the parties to explicitly waive the application of

the domicile-based rule, or EPTL 3-5.1 (b) (2) itself, in the

contracts. As we held in IRB, parties are not required to

expressly exclude New York common-law conflict-of-laws principles

in a contractual choice-of-law provision (see IRB-Brasil

Resseguros, S.A., 20 NY3d at 316). That rule similarly applies

to New York statutory choice-of-law directives.

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might appear to be a simple task to determine a decedent's

domicile at the time of his or her death, that will not always be

the case. Therefore, we hold that, when parties include a

choice-of-law provision in a contract, they intend that the law

of the chosen state -- and no other state -- will be applied. In

such a situation, the chosen state's substantive law -- but not

its common-law conflict-of-laws principles or statutory

choice-of-law directives -- is to be applied, unless the parties

expressly indicate otherwise.

Accordingly, the first certified question should be

answered in the negative and the second certified question not

answered as academic.

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The Ministers and Missionaries Benefit Board v Leon Snow et al.

v The Estate of Clark Flesher et al.

No. 131

ABDUS-SALAAM, J. (dissenting):

When is a duly enacted law of the State of New York not

part of "the laws of the State of New York"? One would think

that the answer is never. But the majority disagrees. In the

majority's estimation, a law passed by New York elected

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representatives is not part of the "laws of the State of New

York" if those legislators modeled the statute on a common-law

rule specifying a particular jurisdiction's laws as controlling

the disposition of a person's property upon death. Thus, the

majority holds that, where a governing-law clause in a death or

retirement benefit plan declares that the "laws of the State of

New York" are controlling, the clause waives the application of

Estates Powers & Trusts Law ("EPTL") § 3-5.1 (b) (2), which is a

properly enacted law of New York dealing with property

dispositions upon death (see majority op. at 2). In light of

that holding, the majority answers in the negative the first

question of law certified to us by the United States Court of

Appeals for the Second Circuit, and it declines to answer the

second question on the ground that no answer is necessary to the

resolution of this appeal (see majority op. at 4, 15).

In reaching the erroneous conclusion that the decedent

Reverend Clark Flesher and the Ministers and Missionaries Benefit

Board ("MMBB") implicitly waived the provisions of EPTL § 3-5.1

(b) (2) via the governing-law clauses of their death benefit and

retirement plans, the majority relies on our decision in

IRB-Brasil Resseguros, S.A. v Inepar Invs., S.A. (20 NY3d 310

[2012]). But, a close examination of that decision reveals that

the majority is incorrect, for IRB-Brasil Resseguros, S.A.

identifies New York substantive law, such as EPTL § 3-5.1 (b)

(2), as exactly the sort of New York law invoked by a governing-

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law clause of the kind at issue here. Consequently, I would

answer the first certified question in the affirmative.

Furthermore, because the plain language of EPTL § 3-5.1 (b) (2)

clearly demonstrates that the benefit plans at issue here are

covered by that statute, the second certified question should be

answered in the affirmative as well. Accordingly, I respectfully

dissent from the majority's decision to answer the first

certified question in the negative and to decline to answer the

second certified question.

I.

A

The first certified question asks "[w]hether 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" (see Ministers &

Missionaries Benefit Bd. v Estate of Flesher, 780 F3d 150, 155

[2d Cir 2014]).

The statute at the heart of this question, EPTL § 3-5.1

(b) (2), is part of the EPTL article setting forth the

"[s]ubstantive [l]aw of [w]ills" (EPTL art 3); the statute

states, "[t]he intrinsic validity, effect, revocation or

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alteration of a testamentary disposition of personal property,

and the manner in which such property devolves when not disposed

of by will, are determined by the law of the jurisdiction in

which the decedent was domiciled at death." Thus, under the

statute, if the decedent is domiciled in New York at the time of

death, the devolution of property not disposed of by will is

determined by, among other provisions, EPTL § 5-1.4, which

declares in relevant part:

"[e]xcept as provided by the express terms of

a governing instrument, a divorce . . .

revokes any revocable (1) disposition or

appointment of property made by a divorced

individual to, or for the benefit of, the

former spouse, including, but not limited to

a disposition or appointment by will, by

security registration in beneficiary form

(TOD), by beneficiary designation in a life

insurance policy or (to the extent permitted

by law) in a pension or retirement benefits

plan" (EPTL § 5-1.4 [a]).

Accordingly, when a person dies while domiciled in New

York, his or her ex-spouse cannot recover any death or retirement

benefits under the decedent's relevant plans because the divorce

prior to death serves as a revocation of the beneficiary

designation by operation of law. However, since the statute does

not cut off the ex-spouse's family members, New York law would

still appear to permit a resident decedent's former in-law named

as a beneficiary of such plans to recover the benefits upon the

death of the decedent, notwithstanding the divorce. By contrast,

the former in-law's beneficiary designation would be revoked if

the decedent perished while domiciled in another jurisdiction,

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such as Colorado, which has a statute automatically removing ex-

spouses and their relatives as beneficiaries of the decedent's

benefit policies upon death (see Colo Rev Stat § 15-11-804 [2]).

In addition to these statutory principles, we must look

to the relevant rules for interpreting a benefit plan to discern

the manner in which EPTL § 3-5.1 (b) (2) impacts such plans.

Because the MMBB policies at issue in this case are, in effect,

contracts between Flesher and MMBB for the payment of death and

retirement benefits, they are logically subject to the same rules

of construction as a life insurance policy or similar contract.

Under those rules, a court "bear[s] the responsibility of

determining the rights or obligations of parties under insurance

contracts based on the specific language of the policies," and

unambiguous provisions "must be given their plain and ordinary

meaning" (Sanabria v American Home Assurance Co., 68 NY2d 866,

868 [1986]). "Contracts of insurance, like other contracts, are

to be construed according to the sense and meaning of the terms

which the parties have used, and if they are clear and

unambiguous the terms are to be taken and understood in their

plain, ordinary and proper sense" (Johnson v Travelers Ins. Co.,

269 NY 401, 408 [1936]; see Roman Catholic Diocese of Brooklyn v

National Union Fire Insurance Company of Pittsburgh, 21 NY3d 139,

148 [2013]). A contract's express choice-of-law clause takes

precedence over any contrary common-law choice-of-law principles,

provided that the contract has some reasonable relationship to

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New York and does not violate New York public policy (see Reger v

National Ass'n of Bedding Mfrs Group Ins. Trust Fund, 83 Misc 2d

527, 540-541 [Sup. Ct. Westchester Co. 1975]; see also Bank of

N.Y. v Yugoimport, 745 F3d 599, 609 [2d Cir 2014]; see generally

Welsbach Elec. Corp. v MasTec N. Am., Inc., 7 NY3d 624, 629

[2006] ["Generally, courts will enforce a choice-of-law clause so

long as the chosen law bears a reasonable relationship to the

parties or the transaction," unless the chosen law "violates some

fundamental principle of justice, some prevalent conception of

good morals, some deep-rooted tradition of the common weal"]

[internal quotation marks and citations omitted]).

We reaffirmed this principle in IRB-Brasil Resseguros,

S.A. v Inepar Invs., S.A. (20 NY3d at 310), a case that did not

involve the disposition of property upon death. In IRB-Brasil

Resseguros, S.A., the plaintiff Brazilian corporation purchased a

series of notes issued by the defendant Uruguayan power company

(see id. at 312-313). The guarantee contract under which the

notes were issued stated that the agreement would be "governed

by, and . . . be construed in accordance with, the laws of the

State of New York" (id. at 313). Because the parties'

transaction involved the exchange of more than $250,000, it fell

within the ambit of General Obligations Law § 5-1401 (1), which

states in relevant part, "'[t]he parties to any contract . . .

arising out of a transaction covering in the aggregate not less

than two hundred fifty thousand dollars . . . may agree that the

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law of this state shall govern their rights and duties in whole

or in part, whether or not such contract, agreement or

undertaking bears a reasonable relation to this state'" (id. at

314, quoting General Obligations Law § 5-1401 [1]). Eventually,

the defendant corporation defaulted on its obligations under the

notes, and the plaintiff corporation sued to recover damages

under the guarantee contract (see id. at 313-314). The defendant

corporation opposed the suit in part on the ground that, under a

New York common-law conflict-of-laws analysis, Brazilian

substantive law should be applied in interpreting the contract

(see id. at 313).

On appeal, we decided that New York substantive law,

but not New York choice-of-law principles or Brazilian law,

controlled the interpretation of the contract in accordance with

the choice-of-law clause (see id. at 314-316). As a starting

point for the analysis, we determined that the Legislature had

passed General Obligations Law § 5-1401 out of concern that

parties to large contracts, which lacked sufficient contacts with

New York, might be unable to effectively invoke New York

substantive law, despite an express contractual provision

designating New York law as the controlling legal framework,

because courts might apply common-law choice-of-law principles

and decide that the law of a jurisdiction with a greater

connection to the transaction should control (see id. at 314).

Hence, the statute was designed to allow parties to large

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contracts that were otherwise unconnected to New York to choose

to have their contracts interpreted in accordance with New York

law (see id. at 315).

"Applying General Obligations Law §§ 5-1401 and 5-1402

to the facts of the present case," we "conclude[d] that New York

substantive law must govern, since the parties designated New

York in their choice-of-law provision in the Guarantee and the

transaction exceeded $ 250,000" (id. at 315). We also rejected

the defendant corporation's argument that the entirety of New

York common law, including New York's common-law choice-of-law

principles, should control the interpretation of the contract

because the guarantee contract used the unlimited phrase

"governed by . . . the laws of the State of New York," without

explicitly excluding New York choice-of-law rules (id. at 315).

We explained:

"Express contract language excluding New

York's conflict-of-laws principles is not

necessary. The plain language of General

Obligations Law § 5-1401 dictates that New

York substantive law applies when parties

include an ordinary New York choice-of-law

provision, such as appears in the Guarantee,

in their contracts. The goal of General

Obligations Law § 5-1401 was to promote and

preserve New York's status as a commercial

center and to maintain predictability for the

parties. To find here that courts must

engage in a conflict-of-laws analysis despite

the parties' plainly expressed desire to

apply New York law would frustrate the

Legislature's purpose of encouraging a

predictable contractual choice of New York

commercial law and, crucially, of eliminating

uncertainty regarding the governing law."

(id. at 315-316).

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We also observed that the Restatement (Second) of

Conflict of Laws supported the conclusion that the contractual

choice-of-law clause was intended to apply only New York

substantive law because that treatise said, "'in the absence of a

contrary indication of intention, the reference [to the law of

the state chosen by the parties] is to the local law of the state

of the chosen law'" (id. at 316, quoting Restatement [Second] of

Conflict of Laws § 187 [3]). Importantly, we continued,

"'[l]ocal law' is defined as 'the body of standards, principles

and rules, exclusive of its rules of Conflict of Laws'" (id.

[emphasis in original], quoting Restatement [Second] of Conflict

of Laws § 4 [1]). Thus, we said, "[u]nder the Restatement

(Second), the parties' decision to apply New York law to their

contract results in the application of New York substantive law,

not New York's conflicts principles," and we added, "[i]t strains

credulity that the parties would have chosen to leave the

question of the applicable substantive law unanswered and would

have desired a court to engage in a complicated conflict-of-laws

analysis, delaying resolution of any dispute and increasing

litigation expenses" (id. at 316). Accordingly, IRB-Brasil

Resseguros, S.A. holds that a contract which both is subject to

General Obligations Law § 5-1401 and designates New York law as

controlling must be interpreted in accordance with New York

substantive law, and the decision supports the more general

proposition that, in most instances, a contractual provision

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stating that New York law governs must be read to invoke only New

York substantive law, rather than common-law choice-of-law

principles.

The principle that a contractual governing-law

provision generally precludes a common-law choice-of-law analysis

has never been extended to eliminate the application of a

statutory choice-of-law directive, which otherwise would be the

applicable local and substantive law of the State (see

Restatement [Second] of Conflict of Laws § 4 [1]). In fact, as

we explained in IRB-Brasil Resseguros, S.A., the parties' choice

of New York law does not remove a contract from the ambit of

"'[l]ocal law,'" and because such local law includes New York's

substantive "'body of standards, principles and rules,'" New York

statutory standards, principles and rules logically govern a

contract that deems the State's law to be controlling (IRB-Brasil

Resseguros, S.A., 20 NY3d at 316, quoting Restatement [Second] of

Conflict of Laws § 4 [1]).

In that vein, there is ample authority demonstrating

that a New York statute embodies the State's substantive policy,

which we cannot readily presume to have been cast aside by a

contractual governing-law provision. New York courts have held

that where a conflict arises between the provisions of a statute

and the terms of a contract, the statute typically controls

because it is the binding substantive policy determination of the

Legislature (see e.g. Fred Schutzman Company v Park Slope

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Advanced Medical, PLLC, 128 AD3d 1007, 1008 [2d Dept 2015]

(Liberty Mut. Ins. Co. v Aetna Cas. & Sur. Co., 168 AD2d 121, 131

[2d Dept 1991]), though a statutory right may be waived expressly

or by unequivocal and necessary implication (see John J. Kassner

& Co. v New York, 46 NY2d 544, 551 [1979]; O'Brien v Lodi, 246 NY

46, 50 [1927]). Additional authority for a statute's role as the

substantive local law of a state can be found in the Restatement

(Second) of Conflict of Laws, which declares that "[a] court,

subject to constitutional restrictions, will follow a statutory

directive of its own state on choice of law" (Restatement

[Second] of Conflict of Laws § 6 [1] [emphasis added]). Thus,

unlike the common-law conflict rules at issue in IRB-Brasil

Resseguros, S.A. and similar cases, statutory rules make up the

substantive law of the state and cannot be easily or

presumptively dispensed with by contrary provisions of a

contract; indeed, in some instances, it is impossible for

contracting parties to avoid the application of a state statute,

even where they clearly and expressly agree to do so (see CONRAIL

v Hudacs, 223 AD2d 289, 293 [3d Dept 1996], aff'd 90 NY2d 958

[1997]; cf. Estro Chemical Co. v Falk, 303 NY 83, 87 [1951]). It

follows that, where, as here, the parties have agreed to apply

the substantive law of New York, they presumably have agreed to

eliminate common-law choice-of-law rules that are inconsistent

with their definitive choice of law under the contract (see IRB

Brasil Resseguros, N.A., 20 NY3d at 316), but they have not

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clearly manifested an intent to waive application of statutory

choice-of-law directives such as EPTL § 3-5.1 (b) (2), which form

part of the very substantive law that the parties have opted to

apply.

B

Nonetheless, the majority insists that EPTL § 3-5.1 (b)

(2) is a choice-of-law rule that stands on equal footing with the

common-law choice-of-law principles discussed in IRB-Brasil

Resseguros, S.A., such that a contractual choice-of-law clause

necessarily forecloses application of the statute in the same

manner as it does the common-law rules (see majority op. at 9-

11). In this respect, the majority's argument appears to rest on

two false premises: (1) a statute that directs the application of

another state's testamentary laws is no different from the common

law's contacts-based choice-of-law framework and hence can never

be a substantive law (see majority op. at 10); and (2) the

enforcement of a statute that is based on a common-law rule may

be easily waived in the same manner as the common-law rule that

inspired it (see majority op. at 11). As will be shown, however,

the first premise is unfounded in this case because it is

contrary to the basic character and history of EPTL § 3-5.1 (b)

(2) (not to mention the authorities discussed above), and the

second premise is not supported by any legal authority.

In adopting the first premise set forth above, the

majority misapprehends the nature of EPTL § 3-5.1 (b) (2). While

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EPTL § 3-5.1 (b) (2) does direct the choice of a particular

state's law on the handling of a certain type of property upon a

person's death, it does not codify the sort of complex decisional

choice-of-law analysis which parties presumably seek to avoid in

agreeing that the law of New York will govern a contract. Unlike

that common-law analysis, which requires the parties to any type

of contract to determine on a case-by-case basis whether they and

the transaction have sufficient contacts with a particular state

to trigger the application of that state's substantive law (see

Zurich Ins. Co. v Shearson Lehman Hutton, Inc., 84 NY2d 309, 317-

320 [1994]), the statute here provides clearer guidance for a

narrower subset of contracts by specifying that the law of the

decedent's domicile at death will invariably apply to a

testamentary or similar disposition of personal property. In

this sense, EPTL § 3-5.1 (b) (2) is just as much a substantive

determination of the most reasonable means to dispose of personal

property as it is a choice-of-law measure, and as a result, it

does not set forth simply another extremely broad and complex

conflict analysis that may be presumptively discarded by a

contractual governing-law clause.

Indeed, the Legislature plainly considered EPTL § 3-5.1

(b) (2) to be a significant part of the State's substantive

policy regarding the distribution of personal property upon

death, distinguishing it from conflict principles that arose

purely from decisional law and are not protected by legislation.

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The Legislature enacted the predecessor statutes to EPTL § 3-5.1

(b) (2) to enshrine in New York statutory law the common-law rule

that the law of the state where a decedent is domiciled at the

time of death should govern the disposition of personal property

upon death (see Revisers' Notes, EPTL § 3-5.1; see also Matter of

Gifford, 279 NY 470, 474-475 [1939]). In taking this step, the

Legislature evidently made a substantive decision that the

aforementioned rule was so important that it should not be

disturbed in this State by any subsequent change in the common

law via judicial decision-making.

In addition, the Legislature enacted substantive

changes to the scope of this rule over time, making conscious

policy choices to chart the course of this aspect of estates law.

When the rule first appeared in statutory form in 1889, the

statute stated, "[e]xcept where special provision is otherwise

made by law, the validity and effect of a testamentary

disposition of any other property [besides realty] situated

within the State, and the ownership and disposition of such

property, where it is not disposed of by will, are regulated by

the laws of the state or country, of which the decedent was a

resident, at the time of his death" (Annotated Code of Civil

Procedure of 1889, § 2694). In 1911, when the Legislature passed

Decedent Estate Law ("DEL") § 47, it set forth the same rule but

gave individuals some flexibility to choose the law of

disposition for all of their personal property in the express

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provisions of a will -- not other means of disposition -- by

adding, "[w]henever a decedent, being a citizen of the United

States, wherever resident, shall have declared in his will and

testament that he elects that such testamentary dispositions

shall be construed and regulated by the laws of this state, the

validity and effect of such dispositions shall be determined by

such laws" (L 1911, ch 244, § 1).

Furthermore, the incorporation of DEL § 47 into the

EPTL via section 3-5.1 (b) (2) was no less substantive than the

previous legislation. In that regard, the Legislature passed

EPTL § 3-5.1 (b) (2) as part of a legislative package meant to

overhaul the substance of New York's estates law. As stated by a

member of the Temporary Commission on Estates, which drafted the

EPTL, the legislation was a provision "for the substantive law"

and designed "to collect into one volume all the substantive law

relating to estates" (Letter of Hon. John M. Keane, Bill Jacket,

L 1966, ch 952 at 76). In approving the legislation, the

Governor noted that it "ma[de] numerous substantive changes in

existing law" and wisely consolidated previous enactments in this

field (Governor's Memorandum of Approval, Bill Jacket, L 1966, ch

952, at 91). Indeed, article 3 of the EPTL, which contains EPTL

§ 3-5.1 (b) (2), is entitled "Substantive Law of Wills" (EPTL

article 3), underscoring that its provisions, such as EPTL § 3-

5.1 (b) (2), are exactly the sort of substantive expression of

New York public policy that contracting parties adopt when they

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agree to have their agreement governed by New York law.1

As for EPTL § 3-5.1 more particularly, the Legislature

passed that statute in response to substantive policy concerns.

One scholar has described the development of the statute and the

driving policy considerations behind it as follows:

"Recognizing 'the need for a fresh approach

to the legal problems presented by

multi-jurisdictional transactions and for

a release from the traditional bind of

antiquated and moribund rules,' the Bennett

Commission undertook to design 'substantive

rules to govern the testamentary and

intestate distribution of

multi-jurisdictional estates.' The resulting

comprehensive set of rules for the regulation

of wills and estates that are related to a

jurisdiction other than New York is set forth

in EPTL 3-5.1 and makes New York 'a

pathfinder in this area of estate law.'"

(Joseph T. Arenson, An Analysis of Certain

Provisions of the Estates, Powers and Trusts

Law, 33 Brook L Rev 425, 445 [1966]).

And while this new "pathfind[ing]" law "codified" the "settled

rule that the intestate distribution of the personal property of

a decedent be determined by the law of his domicile at the time

1

The majority observes that the title of article 3 "is not

dispositive" because the "text of [a] statute takes precedence

over title, which cannot alter or limit the language in the body

of a statute itself" (majority op. at 11 n4). That is true, and

I do not suggest otherwise. But it is equally true that the

title of article 3 is in accord with the plain meaning of the

text and history of EPTL § 3-5.1 (b) (2), all of which support

the conclusion that EPTL § 3-5.1 (b) (2) is part of the

substantive law of New York (see D'Amico v Christie, 71 NY2d 76,

84 [1987] [where statutory text and history suggest a certain

interpretation, the title of the statute reinforces that

interpretation because the law's meaning "is made plain even by

its title"]).

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of his death," it did so in the context of a statutory framework

that had been "clarified and expanded" by EPTL § 3-5.1 as a whole

(id. at 445-448 [emphasis added]). In other words, EPTL § 3-5.1

is not a reflexive or inconsequential repetition of a common-law

conflict principle that might be readily waived sub silentio by

parties to a contract, but instead represents the Legislature's

considered judgment to keep some aspects of the common law

constant while simultaneously modifying others. As a result,

EPTL § 3-5.1 (b) (2) works in tandem with the other provisions of

the EPTL to create a body of local substantive standards for the

disposition of personal property upon a person's death, and

contracting parties' choice of New York law invokes, and does not

waive, the enforcement of the statute.

This legislative policy choice casts the contracts here

in a different light than the one in IRB-Brasil Resseguros, S.A.

In that case, because the contract fell within the ambit of

General Obligations Law § 5-1401, we interpreted the contract in

light of the policy behind that statute (see IRB-Brasil

Resseguros, S.A., 20 NY3d at 313-315). Given that General

Obligations Law § 5-1401 reflected the Legislature's desire to

make it easier for parties to large contracts to avoid a common-

law choice-of-law analysis, we harmonized that policy with the

language of the contract to infer that the parties' generalized

invocation of New York law reflected their intent to waive the

application of common-law conflict rules in a manner consistent

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with -- indeed, buttressed by -- the legislative scheme, and in

that context, we concluded that it would have made little sense

to draw a contrary inference regarding the parties' wishes (see

id. at 315-316). By contrast, here, any inference that the

parties intended to eliminate the application of EPTL § 3-5.1 (b)

(2) would be in tension with the Legislature's desire to ensure

that, in most cases, personal property not disposed of by will

shall pass in accordance with the laws of the decedent's last

domicile, and hence we must reject the view that the parties

implicitly signaled an intent to abandon that legislative

directive and instead interpret the contract consistently with

the substantive policy embodied in EPTL § 3-5.1 (b) (2), just as

we did in IRB-Brasil Resseguros, S.A.

Moreover, even if it can be assumed that the parties to

a contract usually mean to escape the reach of certain state

statutes solely by declaring that the contract will be "governed

by the laws of New York," it would make little sense to make that

assumption with respect to the particular statute at issue here.

After all, the parties to a death benefit contract would

ordinarily expect that, regardless of which state's law they

choose, they will be subject to the rule that the law of the

state of domicile determines the recipients of personal property

upon the owner's death. That is so because a clear majority of

states follow that rule (see Hoglan v Moore, 219 Ala 497, 501

[Ala 1929]; Vansickle v Hazeltine, 29 Idaho 228, 233-234 [Idaho

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1916]; Gibson v Dowell, 42 Ark 164, 166 [AK 1883]; Estate of

Moore, 190 Cal App 2d 833, 841-843 [Cal Ct App, 4th App Dist

1961]; Estate of Madril v Madril, 71 Colo 123, 126 [Colo 1922];

Oehler v Olson, 2005 Conn Super LEXIS 574, *5-*6 [Conn Super Ct

2005]; PNC Bank v N.J. State SPCA, 2008 Del Ch LEXIS 288, *5 n3

[Del Ch 2008]; Cockrell v Lewis, 389 So 2d 307, 308 [Fla Dist Ct

App 5th Dist 1980]; In re Estate of Grant, 34 Haw 559, 564 [Haw

1938]; Davis v Upson, 209 Ill 206, 212-213 [Ill 1904]; Thieband v

Sebastian, 10 Ind 345, 347 [Ind 1858]; Estate of Lincoln v

Briggs, 199 NW2d 337, 338 [Iowa 1972]; In re Estate of Rivas, 233

Kan 898, 901 [Kan 1983]; Radford v Fidelity & Columbia Trust Co.,

185 Ky 453, 459 [Ky 1919]; Williams v Pope Mfg. Co., 52 La Ann

1417, 1438-1439 [LA 1900]; Smith v Howard, 86 Me 203, 205-206 [Me

1894]; Harding v Schapiro, 120 Md 541, 548 [Md 1913]; Blake v

Williams, 23 Mass 286, 314 [Mass 1828]; In re Stewart Estate, 342

Mich 491, 499-501 [Mich 1955]; Lane v St. Louis Union Trust Co.,

356 Mo 76, 82 [Mo 1947]; In re Smith's Estate, 126 Mont 558, 563

[Mont 1953]; In re Estate of Forney, 43 Nev 227, 232 [Nev 1919];

Cade v Davis, 96 NC 139, 147 [NC 1887]; In re Estate of Coleman,

98 NW2d 784, 789 [ND 1959]; Estate of Luoma, 2011-Ohio-4701, P28

[Ohio Ct App 2011]; In re Revard's Estate, 1936 OK 844, P10 [Okla

1936]; Pickering v Pickering, 64 RI 112, 117-120 [RI 1940]; cf.

Smith v Normart, 51 Ariz 134, 138 [Ariz 1938]; but see Neblett v

Neblett, 112 Miss 550, 559 [Miss 1916]; State by Van Riper v Am.

Sugar Ref. Co., 20 NJ 286, 301-302 [NJ 1956]). Therefore,

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although the parties here presumably wished that New York

contract interpretation rules would determine the decedent's

rights during life and some other aspects of the contract, it

would have been odd for them to have sought the application of an

outlier rule for choosing the law regarding the disposition of

the property upon death.

By the same token, the commonplace nature of the rule

set forth in EPTL § 3-5.1 (b) (2) belies the majority's

suggestion that Flesher and MMBB could not have anticipated that

their benefit contracts would trigger the law of the state where

Flesher would be domiciled at death (see majority op. at 14; id.

at n7).2 Certainly, MMBB, which has as one of its central

2

In discussing the expectations of the parties to the

contracts here, the majority seems to focus primarily on MMBB's

expectations and lack of desire to transfer the benefits of the

plans in accordance with EPTL § 3-5.1 (b) (2) (see majority op.

at 13-14). To an extent, this approach is understandable because

MMBB drafted the plans at issue here and had more control over

their terms. But a focus on MMBB's presumed wish to avoid the

purported burdens imposed by EPTL § 3-5.1 (b) (2) -- a wish not

directly expressed in the benefit plans -- overlooks the fact

that Flesher presumably expected that his property would devolve

in accordance with the entirety of New York's substantive

statutory law, i.e., that all of his personalty would pass under

the laws of the State where he chose to live out his final days.

Indeed, while the majority assumes that Flesher wanted to give up

the protections which that State's law might confer upon his

property, such as the automatic elimination of the inheritance

rights of his ex-spouse LeAnn Snow and her family, there is no

basis for that assumption, especially since there is no

indication that Flesher willingly waived the potential benefits

of EPTL § 3-5.1 (b) (2) in exchange for some particular valuable

consideration (cf. Welsbach Elec. Corp., 7 NY3d at 630 ["[n]o

good reason can be suggested why a contractor cannot, for a

valuable consideration, waive the provisions of the statute

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purposes the administration of property distributions upon a plan

member's death, had good reason to learn of the widespread

domicile-based rule and to explicitly waive application of that

principle if it saw fit to do so. Instead, MMBB agreed to

contracts containing only a generic invocation of New York law,

without addressing either EPTL § 3-5.1 (b) (2) in particular or

the routinely-followed doctrine it embodies more generally.

The majority also claims that, absent a finding that a

generalized governing-law clause presumptively waives statutory

choice-of-law directives such as EPTL § 3-5.1 (b) (2), benefit

plan administrators will face the intolerable burden of

familiarizing themselves with the revocation laws of every state

where plan members might die because they cannot know in advance

the state of domicile at death (see majority op. at 13-14).

Initially, though, there is no proof in the record of the extent

of this alleged burden, and nothing suggests that organizations

like MMBB are unable to have their attorneys perform the

necessary research without extreme expense or delay. More to the

point, plan administrators can eliminate this burden by adding an

extra sentence to each benefit contract expressly precluding the

application of the chosen jurisdiction's statutory choice-of-law

directives.

All of the foregoing discussion belies the majority's

giving him the right to file a notice of lien"] [emphasis added,

internal quotation marks, punctuation and citation omitted]).

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evident belief that EPTL § 3-5.1 (b) (2) is no different than,

and creates the same practical difficulties as, the common-law

conflicts analysis discussed in IRB-Brasil Resseguros, S.A.

As for the second major premise underlying the

majority's opinion -- that a statute based on the common law may

be waived by a generalized governing-law clause because such a

clause may waive certain common-law rules -- it is simply

unprecedented. The majority does not cite any authority for the

novel proposition that a statute inspired by the common law may

be more readily evaded by a governing-law clause than a statute

designed to depart from the common law, and there is no logical

support for that notion. Regardless of whether the Legislature

adopts or disavows a common-law principle in passing a law, the

statute retains its force as a binding substantive policy choice

of the State, compelling the adherence of contracting parties

absent a clear waiver of its application. Indeed, if anything,

the Legislature's decision to incorporate a common-law rule into

a statute shows its desire to elevate the rule's stature above

its prior position as an ordinary common-law rule that might have

been more easily waived.

In sum, a contract section that specifies that the

contract must be "governed by and construed in accordance with

the laws of the State of New York" should be interpreted to

incorporate the entire body of New York's substantive statutory

law (see Restatement [Second] of Conflict of Laws §§ 187 [1]; 187

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[3]), including EPTL § 3-5.1 (b) (2). Thus, I would answer the

first certified question in the affirmative.

II.

Because I would answer the first certified question in

the affirmative, I find it necessary to answer the second

certified question to resolve this case. The second question

asks "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)" (Matter of Missionaries

and Ministers Benefit Bd., 780 F3d at 155). As noted in this

question, EPTL § 3-5.1 (b) (2) applies to, among other things, a

decedent's "personal property . . . not disposed of by will," and

it incorporates a related statutory subsection's definition of

"personal property" as "any property other than real property,

including tangible and intangible things" (EPTL § 3-5.1 [a] [2]).

The parties agree that, in general, a benefit plan and the rights

thereunder are "personal property," as those contractual rights

are "intangible things" which do not create or transfer an

interest in real property.

The Snows nevertheless assert that the plan and any

payments thereunder were not Flesher's personal property, and

hence are not his estate's property, because MMBB must transfer

all benefits under the plans to the Snows immediately upon death

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in accordance with the beneficiary designation forms. But a

member of a benefit plan, such as Flesher, personally controls

the entitlement to the proceeds of the plan, holding an

intangible property right that is "personal" to the member and

subject to his or her disposition "not by will" via the governing

contract (EPTL § 3-5.1 [b] [2]). In that regard, like the holder

of a life insurance policy, a member of a benefit plan

essentially owns the benefits of the plan while he or she is

alive because he or she can control the transfer of those funds

by choosing a beneficiary. It is for this reason that, under the

common law of this State, a life insurance policy has

traditionally been regarded as a chose in action, which is the

personal property of the holder (see Olmsted v Keyes, 85 NY 593,

591-601 [1881]). Thus, a benefit plan and its attendant rights

are the "personal property" of the plan member during his or her

life within the meaning of EPTL § 3-5.1 (b) (2), and until the

validity of a beneficiary designation can be conclusively

established in a probate proceeding, these property rights become

inextricably linked with the plan member's estate and the

proceedings thereon following his or her death.

Additionally, a death benefit plan and a retirement

benefit plan confer property rights that are "not disposed of by

will within the meaning of EPTL § 3-5.1 (b) (2). It is true, as

the Snows observe, that the phrase "not disposed of by will,"

read in isolation, could be construed as a reference to the

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transfer of property in accordance to the rules of intestate

succession rather than by a written instrument like a benefit

plan. However, in the context of the remaining terms of EPTL §

3-5.1 (b) (2), the disputed phrase applies to benefit plans.

Notably, the statute is broadly worded to apply to virtually all

dispositions of personal property upon death, including both

"testamentary disposition[s]" of property and the "dev[olution]"

of property "not disposed of by will," and given this wide-

ranging language, it makes sense to interpret the phrase "not

disposed of by will" to cover both property that passes by rules

of intestate succession and property, such as entitlements under

a benefit plan, that devolves via a beneficiary designation not

included in a formal will. Accordingly, because a benefit plan,

which belongs to the plan member in life and transfers funds upon

death, resembles a substitute testamentary instrument such as a

trust with lifetime benefits (see e.g. Matter of Estate of

Reynolds, 87 NY2d 633, 636 [1996] [trust as testamentary

instrument] Matter of Estate of Riefberg, 58 NY2d 134, 138-139

[1983] [stockholders' agreement]; see also 38 NY Jur Decedents'

Estates § 260) and yet is not technically a will or controlled

thereby, it qualifies as personal property of the decedent which

is "not disposed of by will" under EPTL § 3-5.1 (b) (2).

The Snows maintain that it would be illogical to hold

that EPTL § 3-5.1 (b) (2) governs death and retirement benefit

plans because another statute, EPTL § 13-3.2 (a), expressly

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preserves plan beneficiary designations that EPTL § 3-5.1 (b) (2)

might otherwise disrupt if it applied to such benefit plans.

However, this contention runs afoul of the modest intended scope

of EPTL § 13-3.2 (a). That statute says, "[i]f a person is

entitled to receive [ ] payment in money, securities or other

property under a pension, retirement, death benefit, stock bonus

or profit-sharing plan . . . the rights of persons so entitled or

designated and the ownership of money, securities or other

property thereby received shall not be impaired or defeated by

any statute or rule of law governing the transfer of property by

will, gift or intestacy." At first glance, because my reading of

EPTL § 3-5.1 (b) (2) would make it a statute that governs a vast

array of transfers of personal property upon the death of the

owner, including transfer by will or intestacy, EPTL § 13-3.2 (a)

arguably seems to preserve beneficiary designations in benefit

plans, even where EPTL § 3-5.1 (b) (2) threatens to undo those

designations. But the legislative history of the statute

clarifies that this provision was never intended to create the

sort of perplexing conflict with EPTL § 3-5.1 (b) (2) that the

Snows envision.

As observed by the Appellate Division in Kane v Union

Mut. Life Ins. (84 AD2d 148 [2d Dept 1981]), the legislative

history of EPTL § 13-3.2 (a) reveals that it was primarily

intended to recodify a provision of the Personal Property Law

that had prevented courts and estate representatives from

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invalidating beneficiary designations on the ground that the

designation forms did not bear the same formalities as a will.

The Appellate Division explained:

"Generally stated, the law of this State is

that the designation of a beneficiary to a

pension, retirement annuity or other

insurance contract is not a testamentary act

which must comply with the Statute of Wills

(see Study: Braucher, Unification of the

Rules Governing Payment of Funds by

Institutional Debtors on Death of the Person

Entitled and Designations of Beneficiaries to

Receive Payment of Such Funds, 1951 Report of

NY Law Rev Comm, pp 609, 618). Former

section 24-a of the Personal Property Law,

the predecessor of EPTL 13-3.2, was

recommended by the Law Revision Commission

simply to remove 'any doubt as to the

validity and effectiveness of beneficiary

designations' of pension, annuity and

insurance contracts and to indicate that such

designations were not required to be executed

with the formality required by the Statute of

Wills (see 1952 Report of NY Law Rev Comm, p

177). Accordingly, the statute provides that

the rights of such beneficiaries 'shall not

be impaired or defeated by any statute or

rule of law governing the transfer of

property by will, gift or intestacy' (EPTL

13-3.2, subd [a]), provided that the

designation is made in writing, is signed by

the person making it, and is, so far as here

relevant, made in accordance with the rules

prescribed for the pension plan or is agreed

to by the insurer (EPTL 13-3.2, subd [d],

pars [1], [2]). Thus, the statute relied

upon by the Kane sons merely provides that

such designations of beneficiaries are not

invalid if accomplished by a document not

executed with the formalities required by the

Statute of Wills, but it does not answer the

question raised here, the converse of that

proposition, namely, whether a provision in a

will changing the beneficiaries of an

insurance contract is valid." (id. at 151

[emphasis in original]).

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Clearly, then, the statute was intended to overcome a

technicality regarding the formalities required by the Statute of

Wills, not to prevent the application of EPTL § 3-5.1 (b) (2) and

similar laws to benefit plans. That being so, EPTL § 13-3.2 (a)

does not cast doubt on my proposed application of EPTL § 3-5.1

(b) (2) to benefit plans. In light of my conclusion that the

latter statute encompasses death benefit and retirement plans, I

would answer the second certified question in the affirmative.

III.

In relation to contracts, choice-of-law issues are

often vexing and complex, routinely dividing courts over the

conclusion that a certain state's law applies and the proper

method by which such a conclusion should be reached. But, the

vagaries of this area of law should not cause us to lose sight of

the vital substantive policies established by the Legislature,

and where it is possible to reconcile those policies with the

terms of the parties' contract, it behooves us to do so. Here,

because the substantive policy of New York requires the

application of EPTL § 3-5.1 (b) (2) to retirement and death

benefit plans, I conclude that, absent an unequivocal waiver of

the statute's application, benefit plans of the kind at issue

here should be interpreted to trigger EPTL § 3-5.1 (b) (2).

Accordingly, I would answer the first and second certified

questions in the affirmative, and I dissent from the majority's

contrary decision.

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* * * * * * * * * * * * * * * * *

Following certification of questions by the United States Court

of Appeals for the Second Circuit and acceptance of the questions

by this Court pursuant to section 500.27 of this Court's Rules of

Practice, first certified question answered in the negative and

second certified question not answered as academic. Opinion by

Judge Stein. Chief Judge Lippman and Judges Pigott and Fahey

concur. Judge Abdus-Salaam dissents and votes to answer the

certified questions in the affirmative in an opinion in which

Judge Rivera concurs.

Decided December 15, 2015

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