McLaughlin v. Hartford Life & Annuity Insurance Company ( 2017 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
ELIZABETH MCLAUGHLIN, as personal
representative of the estate of John Joseph
McLaughlin,
Plaintiff,
v. Case No. 17-cv-500 (CRC)
HARTFORD LIFE & ANNUITY
INSURANCE COMPANY, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
From the nation’s capital, a case brought by the estate of John Joseph McLaughlin,
longtime moderator of the raucous political roundtable The McLaughlin Group.
Question! On a scale from one to ten—with one being the chance of a Washington, D.C.
professional sports team winning a championship this year and ten being absolute metaphysical
certainty—how certain is the Court that Mr. McLaughlin, upon his divorce from his former wife
Christina Vidal, intended for her to benefit from two life insurance annuities that he brought to
the marriage? Any answer shy of nine would be . . . Wrong! Mr. McLaughlin did not wish his
ex-wife to receive the annuity benefits. His estate is therefore the proper beneficiary and is
entitled to a declaratory judgment saying so.
I. Background
In March 1996, before he married Ms. Vidal, Mr. McLaughlin designated her as the
beneficiary of two annuity contracts that he purchased from Hartford Life & Annuity Insurance
Company (“Hartford”) and Allianz Life Insurance Company (“Allianz”). Pl.’s Supp. Br. Ex. A.
Mr. McLaughlin and Ms. Vidal executed a prenuptial property settlement agreement in 1997 and
were married in June of that year. Compl. ¶ 9. The agreement provided for a lump-sum transfer
of $1 million from Mr. McLaughlin to Ms. Vidal in the event of their divorce and indicated that
the payment would settle all property rights arising out of their marriage. Id. ¶ 11. The couple
divorced in 2010. In granting the divorce, the District of Columbia Superior Court found their
prenuptial agreement fully enforceable and incorporated it into the judgment. Pl.’s Supp. Mem.
Ex. C, at 2. Mr. McLaughlin died in Washington in August 2016. Id. ¶ 14. He was not survived
by a spouse or children. Id.
Plaintiff, who is Mr. McLaughlin’s niece and the representative of his estate, filed this
suit seeking a declaration that the estate is the sole beneficiary of the Hartford annuity. 1 She
served Ms. Vidal personally with a summons and complaint on May 10. Ms. Vidal did not
answer or otherwise respond to the complaint, and on June 26 the Clerk of the Court entered
default against her. ECF No. 25. Plaintiff then moved for an entry of default judgment. ECF
No. 26. On August 29, the Court issued a Minute Order to Show Cause why judgment should
not be entered for Plaintiff and gave Ms. Vidal until September 20 to respond. That deadline
passed over a month ago, and Ms. Vidal has not responded or sought more time to do so.
In her motion for default judgment, Plaintiff relied exclusively on the common law
“doctrine of implied revocation,” which provides that a divorce and division of property
1
Plaintiff also filed a related action, No. 15-cv-502, seeking a declaratory judgment that
Mr. McLaughlin’s estate is the sole beneficiary of the annuity issued by Allianz Life Insurance
Company. Today, the Court issued an Order in that case granting default judgment in Plaintiff’s
favor with respect to the Allianz annuity. The same reasons support the Court’s orders in both
cases, and thus this Opinion and Order refers to both annuities.
In each case, Plaintiff also sought a declaratory judgment against the insurance
companies. But, pursuant to this Court’s Consent Orders, Plaintiff’s claims against the
companies have been dismissed. Hartford and Allianz have each agreed to disburse the annuity
proceeds only upon a final judgment of this Court or upon a settlement between Plaintiff and Ms.
Vidal.
2
generally revokes a former spouse’s status as beneficiary of a will. Estate of Liles, 435 A.2d 379(D.C. 1981). Plaintiff did not, however, cite authority supporting the application of that doctrine
to annuities, life insurance policies, or other contract-based instruments, as opposed to wills.
Noting that the District of Columbia Court of Appeals has expressly declined to extend the
doctrine to contract-based instruments, 2 the Court by Order dated October 6, 2017 directed the
parties to file supplemental briefing on two related issues: (1) Whether the doctrine of implied
revocation operates to revoke a former spouse’s status as beneficiary of an annuity, and (2)
assuming that the doctrine does not apply to annuities, whether Plaintiff is entitled to the
requested declaratory judgment for another reason. Plaintiff filed a supplemental brief and
attached the prenuptial agreement and the judgment of divorce as exhibits.
II. Legal Standard
Default judgment is warranted “when the adversary process has been halted because of
an essentially unresponsive party.” H.F. Livermore Corp. v. Aktiengesellschaft Gebruder
Loepfe, 432 F.2d 689, 691 (D.C. Cir. 1970). Where a plaintiff has moved for default judgment,
the Court must ensure that default was properly entered and, if so, decide whether the facts stated
in the complaint, accepted as true, entitle the plaintiff to judgment in her favor. See Boland v.
Elite Terrazzo Flooring, Inc., 763 F. Supp. 2d 64, 67 (D.D.C. 2011).
III. Analysis
The Clerk properly entered default against Ms. Vidal, as she has yet to respond to the
complaint, to Plaintiff’s motion for default judgment, or to the Court’s show cause order. See
2
See Bolle v. Hume, 619 A.2d 1192, 1198 (D.C. 1993); Estate of Bowden v. Aldridge,
595 A.2d 396, 398 n.6 (D.C. 1991) (declining to reach the question of whether the doctrine
applies to revoke former spouse’s beneficiary status for life insurance benefits and an Individual
Retirement Account).
3
Fed. R. Civ. P. 55. And, having resolved the following issues, the Court finds that the facts
stated in the complaint entitle Plaintiff to declaratory relief.
Issue number one: Subject matter jurisdiction! Do the facts alleged establish it? Yes!
For purposes of diversity jurisdiction, the representative of an estate is “deemed to be a citizen
only of the same State as the decedent.” 28 U.S.C. § 1332(c)(2). At the time of his death, Mr.
McLaughlin was a citizen of Washington, D.C. Compl. ¶ 2. Ms. Vidal is a citizen of
Connecticut. Id. ¶ 5. The annuity contracts at issue each have a value greater than $75,000. Id.
¶ 9. Thus, because the declaratory relief sought in the complaint would result in the
disbursement of over $75,000, and because Plaintiff and Ms. Vidal are citizens of different
states, this Court has diversity jurisdiction over the case. 28 U.S.C. § 1332; see also, e.g.,
Thomas v. Metro. Life Ins. Co., 921 F. Supp. 810, 811 (D.D.C. 1996) (resolving issue of
beneficiary designation through declaratory judgment).
Next issue! Does this Court have personal jurisdiction over Ms. Vidal, a citizen of
Connecticut? Certainly! District of Columbia law allows for specific personal jurisdiction over
non-resident defendants “as to a claim for relief arising from the person’s . . . transacting any
business in the District of Columbia,” D.C. Code § 13-423, and this standard is “coextensive
with the Constitution’s due process limit,” First Chi. Int’l v. United Exch. Co., 836 F.2d 1375,
1377 (D.C. Cir. 1988). Thus, the Court may exercise specific jurisdiction if there is a sufficient
relationship between the gravamen of the complaint—that Ms. Vidal is not the beneficiary of the
annuities—and the District of Columbia, “such that the maintenance of the suit does not offend
‘traditional notions of fair play and substantial justice.’” Int’l Shoe Co. v. Washington, 326 U.S.
310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). That is the case here.
As explained below, the primary issue here is whether Mr. McLaughlin and Ms. Vidal’s
4
divorce—which resulted in the enforcement of a prenuptial agreement and a settlement of
$1 million—revoked Ms. Vidal’s status as beneficiary of the annuities. While Hartford is a
Connecticut business and Allianz is from Minnesota, all other aspects of the transactions
associated with the annuities occurred in the District of Columbia. Specifically: Mr. McLaughlin
purchased the annuities and designated Ms. Vidal as their beneficiary. Compl. ¶ 9. Mr.
McLaughlin and Ms. Vidal were married in Washington in 1997. Id. ¶ 6. While married, the
couple lived together here. Id. In 2010, Ms. Vidal obtained a divorce in District of Columbia
Superior Court, which issued its final judgment of divorce in 2010. Id. ¶ 10. That judgment
resulted in a settlement of $1 million paid to Ms. Vidal. And Mr. McLaughlin died in
Washington in August 2016. Id. ¶ 14. These myriad connections tie Ms. Vidal, through the
annuity contracts, to the District of Columbia, and thus the Court may exercise personal
jurisdiction over her.
Issue number three: The merits! Do the facts alleged show that Mr. McLaughlin’s
estate, rather than Ms. Vidal, is the beneficiary of the annuities? Clearly (but not necessarily
for the reason first offered by Plaintiff). Mr. McLaughlin designated Ms. Vidal as the
annuities’ beneficiary in 1996 and never removed her after their divorce in 2010. Nevertheless,
Plaintiff contends that Ms. Vidal’s status as beneficiary was extinguished by the divorce and
settlement payment. In her motion for default judgment, Plaintiff relied exclusively on the
“doctrine of implied revocation,” which provides that a divorce and division of property
generally revokes a former spouse’s status as beneficiary of a will. See Liles, 435 A.2d at 382(D.C. 1981). The Court found that her motion skirted the issue—noting that District of
Columbia courts have never applied this doctrine to instruments besides wills—and ordered
supplemental briefing. Plaintiff in her supplemental brief raises the alternative argument that,
5
notwithstanding any implied revocation, the prenuptial agreement between Mr. McLaughlin and
Ms. Vidal establishes that the parties intended to terminate Ms. Vidal’s beneficiary status in the
event of divorce. The Court agrees, and therefore it need not decide whether the doctrine of
implied revocation automatically terminates spousal beneficiary designations in annuity
contracts after a divorce.
In deciding whether a former spouse remains a beneficiary of an insurance policy after a
divorce, District of Columbia courts have required “convincing evidence” that the spouses’
“separation and property agreement . . . was intended to deprive the named beneficiary of [the]
interest.” Aldridge, 595 A.2d at 396. “General expressions or clauses” in prenuptial agreements
that waive interests in property are insufficient to show such intent. Mayberry v. Kathan, 232
F.2d 54, 55 (D.C. Cir. 1956) (finding insufficient: “Each of the parties hereto renounces and
releases all right, title and interest which he or she now has or ever could have in the property . . .
of the other whether now owned or hereafter at any time acquired.”); Aldridge, 595 A.2d at 398(relying on Mayberry in finding parties’ “general statements” of waiver insufficient).
The Court finds that the parties’ prenuptial agreement provides clear and convincing
evidence that Mr. McLaughlin and Ms. Vidal intended their divorce to terminate Ms. Vidal’s
interest in the annuities. When Mr. McLaughlin and Ms. Vidal divorced, the District of
Columbia Superior Court enforced this agreement and incorporated it into the divorce judgment,
finding that it “serve[d] to resolve all issues between them incident to their marriage.” Id. ¶ 11;
see Pl.’s Supp. Mem. Ex. C (Divorce Judgment), at 2. Pursuant to the prenuptial agreement, Mr.
McLaughlin paid Ms. Vidal a $1 million settlement of all property rights arising from their
marriage. Compl. ¶ 11. As relevant here, Paragraph 8 of the agreement, titled “Pensions,”
provided that:
6
(a) [E]ach of the parties hereby expressly waives any right in fact or law either may
have under any federal or state law as a spouse to participate as a payee or
beneficiary under the interests the other may have in any such plans including,
but not limited to, the right either spouse may have to receive any benefit, in
the form of a lump sum death benefit, joint or survivor annuity, or preretirement
survivor annuity, pursuant to any state or federal law . . . .
(b) Notwithstanding the foregoing, in the event that either party shall hereafter
expressly designate the other as a participant or beneficiary in any of the plans,
that designation shall control. Specifically, the parties intend that existing
beneficiary designation under the Legg Mason IRA shall survive this
agreement.
Pl.’s Supp. Mem. Ex. B (“Prenuptial Agreement”), at ¶ 8 (emphasis added).
The waiver language in Paragraph 8(a), taken alone, might not sufficiently establish an
intent to terminate Ms. Vidal’s beneficiary status in the event of divorce. To be sure, unlike with
the generalized waivers that District of Columbia courts have held insufficient, the parties here
specifically referenced death benefits and annuities like the annuity contracts at issue here. Cf.
Mayberry, 232 F.2d at 55 (in finding that party had not waived interest in death benefit, noting
absence of “specific reference to the death benefits” in settlement agreement). But their waiver
language focused on rights arising “as a spouse,” which calls to mind rights created by default
rules governing payee and beneficiary status, as opposed to express designations made by
contract.
Taken as a whole, however, Paragraph 8 clearly shows that the parties meant for their
divorce to extinguish Ms. Vidal’s status as beneficiary of the annuities. By specifying that
beneficiary designations made after execution of the prenuptial agreement should be honored
notwithstanding the waiver, the parties manifested their intent to vitiate beneficiary designations
made before the agreement, like those of the annuities here. That Ms. Vidal was designated as
beneficiary before the parties executed their prenuptial agreement is also independent proof that
the parties had the annuities in mind when executing the agreement. Cf. Thomson v. Thomson,
7
156 F.2d 581, 586 (8th Cir. 1946) (“[N]o mention was made of the insurance until after the
[settlement] contract was signed, nor was any mention made of it in the [divorce] decree.”). And
the fact that the parties specifically identified the Legg Mason IRA as exempt from their waiver
suggests they contemplated that other similar assets, including the annuities, would be subject to
the waiver.
The Court therefore finds that Mr. McLaughlin and Ms. Vidal’s prenuptial agreement
provides clear, convincing evidence of the parties’ intent to terminate Ms. Vidal’s status as
beneficiary of the annuities in the event of their divorce. A District of Columbia court enforced
that agreement in full when the parties divorced. And because Mr. McLaughlin did not
designate a contingent beneficiary for the annuities, Mot. Default J. ¶ 22, Mr. McLaughlin’s
estate stands as their sole beneficiary.
Therefore, until the next episode . . .
It is ORDERED that:
1. Plaintiff’s Motion for Default Judgment is GRANTED;
2. The Estate of John Joseph McLaughlin is hereby DECLARED the beneficiary of
Annuity Contract No. 310104648 (the “Annuity”) issued by Hartford Life & Annuity Insurance
Company;
3. Hartford Life & Annuity Insurance Company shall immediately disburse the
Annuity’s death benefit to the Plaintiff Elizabeth McLaughlin in her capacity as Personal
Representative of the Estate of John Joseph McLaughlin; and
8
4. Count Two of the Complaint is DISMISSED as moot.
SO ORDERED.
_________________________
CHRISTOPHER R. COOPER
United States District Judge
Date: October 25, 2017
9