The case centered on David Malinowski, who died in 2021 leaving three daughters from two marriages, and had named his sister Regina Geels as beneficiary of two MetLife insurance policies worth $150,000. Three years before his death, Malinowski had asked Geels to help with estate planning and appointed her as his attorney-in-fact, with Geels managing his finances as he struggled with health problems and congestive heart failure. Despite evidence that Malinowski intended for Geels to distribute the insurance proceeds to his daughters, with the youngest daughter's share held in trust, Geels claimed the money for herself after his death.
The court rejected Geels' argument that federal ERISA law preempted the daughters' state law claims for a constructive trust. As Justice Goff explained, 'ERISA preemption is a choice-of-law defense' that must be raised as an affirmative defense, and 'a party who raises ERISA preemption for the first time on appeal without raising it at trial waives the defense.' The court noted that while MetLife had raised ERISA preemption in its answer, Geels never joined that defense or raised it herself, instead arguing throughout the proceedings that 'Indiana State Law' governed and that she was entitled to relief under state law.
In particularly sharp language, Justice Goff wrote that Geels 'cannot sit idly by, permit the court to proceed under the wrong law,' and then 'complain because the court' did so. The court found that Geels had 'represented to the trial court throughout the proceedings that Indiana law, not ERISA, required judgment in her favor' and had argued in her proposed findings that it was 'well-settled' Indiana law that 'life insurance policies are non-probate assets and pass directly to the beneficiary as a matter of law.'
The dispute began in 2018 when Malinowski asked Geels to help hire attorneys for estate planning and a child custody dispute. In June 2018, daughter Mackenzi Hatfield texted Geels saying that according to her father, he had instructed Geels to split his life insurance benefits among the daughters with the youngest's share in trust. Geels responded affirmatively, saying 'Yes I am convincing him of [a] trust to protect his assets' and that 'it will pay out when [Marley] is 18.' The Allen Superior Court initially found in favor of the daughters under a preponderance standard, but the Indiana Court of Appeals twice reversed on ERISA preemption grounds before the Supreme Court granted transfer.
Geels argued that the clear and convincing evidence did not support finding that Malinowski intended her to distribute the proceeds to his daughters, testifying that she never knew about the policies and that Malinowski intended for her to keep the money as repayment for financial assistance she provided. But the trial court found her testimony not credible, noting Geels had admitted Malinowski once said he had life insurance. Justice Goff wrote that the evidence supported the trial court's finding, including Malinowski's will stating 'I leave all my worldly goods money and property to my children' and witness testimony that he 'greatly loved his Daughters and intended to leave everything to them.'
The court found that Geels and Malinowski had a fiduciary relationship based on her extensive control over his financial, legal, and health affairs, making her 'a de facto guardian' who exercised 'superiority and influence' over him. Justice Goff explained that as Malinowski's fiduciary, Geels 'owed Father a duty of loyalty' but instead breached that duty 'by claiming the insurance proceeds for her own advantage rather than fulfilling Father's wish to provide for his Daughters.' The court noted this amounted to constructive fraud, which supports imposing a constructive trust.
Justice Slaughter dissented, believing transfer should be denied, but did not write a separate opinion explaining his reasoning. The ruling resolves a case that had ping-ponged through the courts multiple times, with the Court of Appeals twice reversing trial court rulings in favor of the daughters on ERISA preemption grounds. The decision clarifies that parties cannot strategically avoid raising federal defenses at trial only to assert them later on appeal when state law proves unfavorable.