Holmes v. Kent – Case Brief Summary (Texas)

In Holmes v. Kent, 221 S.W.3d 622 (Tex. 2007), Linda Ann McWhorter was married to Tommy Joe Holmes when she retired from teaching in 1997.

At that time, she elected to receive an optional annuity through the Teacher's Retirement System of Texas (TRS) whereby she would receive a reduced annuity payment during her life, and thereafter, her designated beneficiary, Holmes, would receive three-fourths of the reduced payment for his lifetime. Id. at 625--26; see Tex. Gov't Code Ann. § 824.204(c)(5) (West 2012).

A year later, while going through a divorce from Holmes, McWhorter attempted to change the beneficiary of her TRS retirement benefits. Although TRS accepted the change as to some benefits, it notified McWhorter that it was not effective as to the optional annuity, which required a specific procedure to change the beneficiary,3 and advised her of the procedure. Holmes, 221 S.W.3d at 626.

A year later, the divorce became final, and the divorce decree awarded McWhorter:

"any and all sums, whether matured or unmatured, accrued or unaccrued, vested or otherwise, together with all increases thereof, the proceeds therefrom, and any other rights related to McWhorter's retirement benefits through the Teacher Retirement System, and any other profit-sharing plan, retirement plan, pension plan, employee stock option plan, employee savings plan, accrued unpaid bonuses, or other benefit program existing by reason of McWhorter's past or present employment." Id.

It also "divested Holmes of all right, title, interest, and claim in and to such property" and required him to take steps to effect the decree. Id.

McWhorter's attorney then submitted the divorce decree to TRS, which responded that the decree was insufficient under the statute since it did not clearly order the change in beneficiary. TRS suggested that either McWhorter have the decree clarified with certain specified language or submit a notarized consent by Holmes. Id. at 626-27.

McWhorter never complied and died testate one year later, leaving all of her property to her son, Alan Kent. TRS, pursuant to the beneficiary designations on file, paid the other benefits to Kent and began making the optional annuity payments to Holmes. Kent sued Holmes seeking to enforce the divorce decree and to compel him to execute whatever instruments TRS required to transfer annuity payments to Kent. He also requested the imposition of a constructive trust on any payments Holmes had received. Id. at 627.

After the trial court granted summary judgment for Holmes, the Court held that, since the beneficiary designation had not been changed as required by statute, TRS was required to make the payments to Holmes. Kent v. Holmes, 139 S.W.3d 120, 133 (Tex. App.--Texarkana 2004), rev'd on other grounds, 221 S.W.3d 622 (Tex. 2007).

The Court also held that Holmes' right to any annuity payments had been divested by the divorce decree and that McWhorter's estate was entitled to a constructive trust on the payments, if she did not intend for Holmes to receive the payments. Id. at 124.