The Prudential Insurance Company of America v. Jean Kopp ( 2016 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 15-14085
Non-Argument Calendar
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D.C. Docket No. 1:14-cv-01878-RWS
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
Plaintiff - Appellee,
versus
JEAN KOPP,
Defendant - Cross Defendant -
Cross Claimant - Appellant,
GREGORY KOPP,
as Co-Trustee of the Gerald A. Kopp Irrevocable Trust
Dated December 10, 1998, et al.,
Defendants - Cross Claimants -
Cross Defendants.
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Appeal from the United States District Court
for the Northern District of Georgia
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(July 12, 2016)
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Before HULL, MARCUS, and ROSENBAUM, Circuit Judges.
PER CURIAM:
This case involves a dispute about who is entitled to death benefits under
Gerald Kopp’s life-insurance policy. On one side of the dispute is Appellant Jean
Kopp (“Jean”), Gerald’s wife at the time of his death. On the other side are
Appellees Steven Kopp (“Steven”) and Gregory Kopp (“Gregory”), Gerald’s sons
from a prior marriage and co-trustees of an irrevocable trust established by Gerald.
Both Appellant and Appellees claim they are Gerald’s beneficiary and thus entitled
to the death benefits. Faced with these competing claims, the insurer, The
Prudential Insurance Company of America (“Prudential”), filed this interpleader
action to determine the rightful beneficiary. Steven and Gregory moved for
judgment on the pleadings, while Jean moved for summary judgment. The district
court granted judgment on the pleadings to Steven and Gregory and denied Jean’s
motion for summary judgment. Jean appeals.
The question in this case is whether a written request to change the
beneficiary of the policy to Jean—submitted to Prudential in July 2012 and signed
by Gregory and Gerald—was sufficient to show that Jean is the rightful beneficiary
notwithstanding the fact that Prudential did not process the request. The district
court concluded that it was not sufficient because the request did not strictly or
substantially comply with Prudential’s regulations for beneficiary changes. Jean
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argues that the district court applied too strict a standard of compliance and that, as
an equitable matter, she is entitled to receive the death benefits from Gerald’s life-
insurance policy. After careful review, we vacate and remand for further
proceedings.
I.
Jean and Gerald were married from 1969 until Gerald passed away in 2012.
Gerald had two sons, Gregory and Steven, from a prior marriage. In 1973, Gerald
obtained the life-insurance policy at issue from Prudential. At that time, Gerald,
the insured, named Jean the sole beneficiary of the policy.
In 1998, Gerald established The Gerald A. Kopp Irrevocable Trust (the
“Trust”). The Trust instrument named as trustees Gregory and Ron Jones,
Gerald’s accountant, with Steven named as a replacement if either Gregory or Ron
Jones ceased to serve as such. In 2000, Gerald, Gregory, and Ron Jones executed
and submitted a form to Prudential changing the owner and beneficiary of the
policy to the Trust.
In July 2012, Prudential received a standardized form requesting a change in
beneficiary and ownership for the policy (the “2012 Form”). The 2012 Form
purported to change the owner of the policy from the Trust to Gerald and the
beneficiary of the policy from the Trust to Jean. The 2012 Form was signed by
both Gregory, in the blank designated for the “[c]urrent owner’s signature,” and
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Gerald. 1 Instructions on the 2012 Form state that if the owner of the policy is a
trust, “each trustee must sign unless the trust itself or state law provides otherwise”
and must insert the title “trustee” after the signature.
After receiving the 2012 Form, Prudential sent notice that it did not process
the change-in-beneficiary request for the following reason: “A trust is currently
listed as the owner of this policy. The trustees of the trust must sign the enclosed
form, insert the title ‘trustee’ after the signatures, and initial the insertion.” The
letter was sent on August 1, 2012. No completed form was submitted to
Prudential.
Gerald passed away on August 11, 2012, leaving around $400,000 in death
benefits payable under the policy. Both Jean and the Trust, through Gregory and
Steven2, claimed to be the beneficiary of the policy. Faced with conflicting
demands for payment of the death benefits, Prudential filed this interpleader action,
disclaiming any ownership of the subject funds and asking the district court to
determine the rightful recipient. 3 Jean, Gregory, and Steven filed answers to the
interpleader complaint and crossclaims asserting entitlement to the policy
1
Gregory alleges that Jean fraudulently procured his signature by misrepresenting the
purpose of the form. We do not consider this allegation in this appeal because we construe the
facts in the light most favorable to Jean, the non-moving party. Perez v. Wells Fargo N.A., 774
F.3d 1329, 1335 (11th Cir. 2014).
2
Steven had replaced Ron Jones as trustee in December 2013, after Gerald’s death but
before the insurance claim was filed.
3
Prudential was later dismissed by agreement of the parties.
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proceeds. Thereafter, Gregory and Steven moved for judgment on pleadings, and
Jean moved for summary judgment.
The district court granted judgment on the pleadings to Gregory and Steven
and denied summary judgment to Jean. The court first found that the 2012 Form
did not strictly comply with Prudential’s regulations and therefore was not legally
effective to change the beneficiary of the policy. Specifically, the 2012 Form did
not contain either the signatures of both trustees or a trustee designation after
Gregory’s signature. The court also rejected Jean’s argument that the 2012 Form
substantially complied with the contractual requirements because “additional steps
could have been taken to effectuate the change in accordance with the Policy
requirements.” For instance, Ron Jones could have, but did not, sign the 2012
Form. Accordingly, the district court found as a matter of law that the 2012 Form
failed to change the beneficiary of the policy to Jean. Jean now appeals.
II.
We review de novo an order granting judgment on the pleadings. Perez v.
Wells Fargo N.A., 774 F.3d 1329, 1335 (11th Cir. 2014). “Judgment on the
pleadings is appropriate where there are no material facts in dispute and the
moving party is entitled to judgment as a matter of law.” Id. (quoting Cannon v.
City of West Palm Beach, 250 F.3d 1299, 1301 (11th Cir. 2001)). We accept as
true the material facts alleged in the non-moving party’s pleading and construe
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them in the light most favorable to that party. Id. Judgment on the pleadings
should be denied “[i]f a comparison of the averments in the competing pleadings
reveals a material dispute of fact.” Id.
III.
Under Georgia law, which governs this dispute, where the insurer “stands
indifferently as to the parties in an interpleader action,” strict compliance with the
insurer’s regulations is not required, and “the court is permitted to use its equitable
powers to determine which claimant should receive the benefit.” Westmoreland ex
rel. Westmoreland v. Westmoreland, 622 S.E.2d 328, 329 (Ga. 2005). An insurer’s
regulations are made solely for its benefit and protection, id., so if the insurer is not
an interested party, “the court may award the fund on equitable principles, and
without regard to the technical defenses open to the [insurer] under regulations
made by it for the change of such beneficiary,” Faircloth v. Coleman, 86 S.E.2d
107, 109–10 (Ga. 1955); see also Barrett v. Barrett, 160 S.E. 399, 401–02 (Ga.
1931). The insurer’s regulations “merely serve as an indication of the possible
intent” of the insured or other party authorized to request a change in beneficiary.
Westmoreland, 622 S.E.2d at 329. Thus, courts may award interpleaded funds to a
party who is not the designated beneficiary of the policy.
This Court, applying Georgia law, has stated that a change-in-beneficiary
request is effective where it is clear the requesting party has a right to make a
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change, intends a change, and takes reasonable steps to bring about a change.
Bohannon v. Manhattan Life Ins. Co., 555 F.2d 1205, 1210 (5th Cir. 1977).4
“Mere expression of intent to change a beneficiary without some overt act is not
sufficient to effectuate such a change.” Westmoreland, 622 S.E.2d at 329. But
equitable relief is appropriate if the requesting party “did substantially all that he
could do to effectuate a change of the beneficiary,” id., because “[e]quity considers
that done which ought to be done and directs its relief accordingly,” O.C.G.A.
§ 23–1–8. See West v. Pollard, 43 S.E.2d 509, 511 (Ga. 1947) (“[S]ubstantial
compliance with the terms of the policy respecting a change in beneficiary is
sufficient.”).
Here, the district court erred to the extent it required strict compliance with
the insurer’s regulations. Because Prudential stood indifferently as to the parties in
this interpleader action, strict compliance was not required, and the policy’s
regulations merely served as an aid to ascertain the intention of the Trust—the
owner and beneficiary of the policy when the 2012 Form was filed. See
Westmoreland, 622 S.E.2d at 329; Faircloth, 86 S.E.2d at 110.
In any case, the district court also found that Jean had not shown substantial
compliance. The court determined that the 2012 Form did not comply with a
policy regulation requiring that, if a trust is the owner of the policy, “each trustee
4
This Court adopted as binding precedent all Fifth Circuit decisions prior to October 1,
1981. Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc).
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must sign unless the trust itself . . . provides otherwise,” Doc. 65 at 6 (emphasis
added), as it was undisputed that Ron Jones did not sign the 2012 Form. The court
reasoned that this regulation was not simply a technical requirement that could be
disregarded. As a result, the court concluded that Jean failed to establish
substantial compliance because “additional steps could have been taken to
effectuate the change in accordance with the Policy requirements.”
Jean contends on appeal, as she did in the district court, that Ron Jones need
not have signed the 2012 Form because “the trust itself . . . provides otherwise”
than the policy requirement that each trustee must sign. More precisely, Jean
argues that the Trust instrument authorized Gregory to change the policy’s primary
beneficiary unilaterally. She contends that the following “Nongeneral Power of
Appointment” provision in the Trust instrument grants Gregory that power
individually:
Notwithstanding anything in this Trust agreement to the
contrary[,] GREGORY A. KOPP[] shall have the power
at any time and from time to time, to make gifts of the
principal of this Trust, in whole or in part and in any
manner and in such proportions as [he] see[s] fit, to
whomever [he] desire[s], . . . .”
Doc. 38-1 at 9–10. She also contends that other provisions in the Trust instrument
gave Gregory the right as co-trustee to unilaterally execute the 2012 Form. If
Gregory had the right to unilaterally execute the 2012 Form, Jean contends, his
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signing and submission of the 2012 Form is sufficient to establish substantial
compliance for purposes of this equitable interpleader action.
Appellees Steven and Gregory respond that both Georgia law and the Trust
instrument make clear that Gregory was not authorized to give away trust property
unilaterally. They cite, among other things, a provision in the Trust instrument
stating that unanimous consent of the trustees is required if one of Gerald’s
children is serving as trustee and the action proposed to be taken involves trust
property valued at $50,000 or more.
While the district court found that the 2012 Form did not substantially
comply with the insurer’s regulations, the court did not address Jean’s arguments
that the Trust agreement provided differently from the policy’s default requirement
that each trustee sign the form. In other words, an unresolved question exists
concerning whether Gregory had the power to unilaterally effect a change in
beneficiary. And if Gregory had such authority, we do not think it could be said as
a matter of law—at least based on the limited record applicable to our review of
the grant of judgment on the pleadings—that the 2012 Form could not show both
intent and reasonable, overt actions sufficient to effect a change in beneficiary. See
Bohannon, 555 F.2d at 1210.
Although the interpretation of a trust instrument is a question of law that we
may address in the first instance, see Perling v. Citizens & S. Nat’l Bank, 300
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S.E.2d 649, 651 (Ga. 1983), we generally prefer that the district court address the
parties’ arguments in the first instance. See Wilkerson v. Grinnell Corp., 270 F.3d
1314, 1322 & n.4 (11th Cir. 2001) (noting our preference for the district court to
address issues in the first instance); Bufman Org. v. F.D.I.C., 82 F.3d 1020, 1028
(11th Cir. 1996) (same). Consequently, we vacate the entry of judgment on the
pleadings and remand for proceedings consistent with this opinion.
VACATED AND REMANDED.
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