Blansfield v. Alumni Association of Arizona State University ( 2015 )

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
DOROTHY BLANSFIELD, )
)
Plaintiff, )
)
v. ) C.A. No. 9435-VCP
)
ALUMNI ASSOCIATION OF ARIZONA )
STATE UNIVERSITY, ALUMNI )
ASSOCIATION OF TEMPLE )
UNIVERSITY and ROMAN CATHOLIC )
DIOCESE OF WILMINGTON, )
)
Defendants. )
MEMORANDUM OPINION
Date Submitted: April 20, 2015
Date Decided: July 31, 2015
Jeffrey M. Weiner, Esq., LAW OFFICES OF JEFFREY M. WEINER, P.A., Wilmington,
Delaware; Attorneys for Plaintiff, Dorothy Blansfield.
W. Donald Sparks, II, Esq., Chad M. Shandler, Esq., Janice M. Matier, Esq.,
RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; Attorneys for
Defendants Arizona State University Alumni Association and Temple University Alumni
Association.
Anthony G. Flynn, Esq., Jennifer M. Kinkus, Esq., YOUNG CONAWAY STARGATT
& TAYLOR, LLP, Wilmington, Delaware; Attorneys for Defendant Catholic Diocese of
Wilmington, Inc.
PARSONS, Vice Chancellor.
This is a dispute about who is entitled to the proceeds of an individual retirement
account or “IRA” owned by the decedent. Prior to his death, the decedent allegedly
attempted to name the plaintiff as the new beneficiary of this account by requesting a
copy of the requisite change of beneficiary form from the bank. He did not sign or return
the form, however, and died roughly three months later. The defendants, who are
residual beneficiaries named in the decedent‟s will, contend that the IRA change of
beneficiary form was ineffective because the decedent did not comply with the requisite
formalities.
After limited discovery, the defendants moved for summary judgment. The
plaintiff asserts that the defendants are not entitled to such judgment, contending that the
unsigned change of beneficiary form was effective to change the IRA beneficiary under
either the common law doctrine of substantial compliance or the “clearly expressed
intent” standard. The plaintiff also argues that there are disputed issues of material fact.
In this regard, she avers that the decedent was incapacitated from shortly after the time he
requested the change of beneficiary form until his death, and therefore could not have
signed and returned the form, but that his intent to change the IRA beneficiary
nevertheless should be honored.
As discussed herein, I deny the defendants‟ motion for summary judgment,
because material issues of fact remain in dispute.
1
I. BACKGROUND1
A. Parties
Plaintiff, Dorothy Blansfield, was a cousin of the decedent, John J. Egyed, Jr. (the
“Decedent”). Blansfield is one of the alternative residual beneficiaries designated by
Decedent in his last will and testament. Defendants, the Alumni Association of Arizona
State University (“Arizona State”), the Alumni Association of Temple University
(“Temple”), and the Roman Catholic Diocese of Wilmington (the “Diocese”)
(collectively, the “Defendants”), are charities named as alternative residuary beneficiaries
of Decedent‟s estate.
B. Facts
1. Natural objects of Decedent’s bounty
Decedent never married nor had any children. His family apparently included only
his parents and his cousin, Blansfield. Decedent‟s father died on April 8, 1984, and his
mother died on November 20, 2007. After his mother died, Decedent allegedly became
like a member of Blansfield‟s immediate family. Blansfield avers that, during that
period, Decedent spent almost all holidays with Blansfield and her family, took vacations
1
The facts recited herein are drawn from affidavits and exhibits attached to
Defendants‟ Joint Opening Brief in Support of their Motion for Summary
Judgment (“Defs.‟ Opening Br.”), and Plaintiff‟s Answering Brief in Opposition
to the motion (“Pl.‟s Answering Br.”).
2
with her family at the beach, and visited her mother, i.e., Decedent‟s aunt, when she was
in a nursing home.2 Decedent apparently considered Blansfield to be like a sister.3
2. Decedent’s health problems
In April 2010, Egyed became ill. Blansfield asserts that she convinced him to see
her doctor, who later examined Decedent and had him admitted to the hospital, where he
was diagnosed with kidney failure and hospitalized for more than one week. With
Blansfield‟s assistance, Egyed explored kidney transplant opportunities. Blansfield avers
that, in order to determine Egyed‟s eligibility for transplant, she traveled with him to the
University of Kentucky Hospital for additional tests. On April 24, 2013, Decedent
underwent kidney transplant surgery in Kentucky. Blansfield and her husband drove
there the following day and stayed for approximately twenty days to care for Egyed.
A few months following the surgery, Decedent started experiencing “low grade
fevers, malaise and … altered mental status.” He ultimately was admitted to the
emergency room at the Hospital of the University of Pennsylvania where he was
diagnosed with post-transplant lymphoproliferative disease, which is cancerous, on
August 15, 2013.4 Blansfield and her husband again stayed near the hospital to provide
care for Decedent. The hospital‟s records revealed that Egyed was “confused,”
2
Compl. ¶ 10; Blansfield Aff. ¶ 2.
3
Compl. ¶ 5.
4
Pl.‟s Answering Br. App. 238.
3
cognitively impaired, “disoriented,” with his speech garbled, and that he exhibited poor
reasoning, a lack of clarity, and forgetfulness.5
Decedent was discharged on September 3, 2013. He continued to suffer from
various physical ailments. Egyed was readmitted to the hospital on October 20, 2013 and
diagnosed with an infection. He was released on October 25, 2013, but was readmitted
on October 28 and thereafter put on life support. He died on November 12, 2013.
Decedent‟s medical records for both hospitalization periods indicate that his cognitive
status was impaired, causing him to be intubated, deeply sedated, and restrained.6
3. Decedent’s Last Will and Testament
Decedent executed his Last Will and Testament on September 16, 1989 (the
“Will”).7 He bequeathed certain articles of his personal tangible property and devised
“all the rest, residue and remainder of his property and estate” to his mother. The Will
further provided that, if Decedent‟s mother predeceased him, the remainder of his estate
then would be distributed to alternative beneficiaries as follows: a general bequest in the
amount of $50,000 to Blansfield, with the remaining balance to the three Defendant
charitable organizations in varying percentages, i.e., 60% to Arizona State, 30% to
Temple, and 10% to the Diocese. Furthermore, Decedent appointed Blansfield as his
Executrix. Blansfield alleges that, after Egyed received his kidney transplant, he advised
5
Id. at 62-66.
6
Id. at 181-82.
7
Sparks Aff. Ex. C (the Will).
4
her on one or more occasions that he intended to change his Will. Because Decedent
apparently was a “private person,” however, he did not tell Blansfield how he intended to
modify his Will other than expressing the thought that he “had given enough to the
Alumni Associations.”8
Blansfield also submitted evidence that over the last few years, Decedent
gradually transferred portions of his property interests to her, or at least accorded her
control over those interests. Some illustrative examples of Decedent‟s transfers in this
regard are: (1) in 2007, Egyed executed an Advanced Healthcare Directive and appointed
Blansfield as his power of attorney for healthcare; (2) in 2011, he named Blansfield as a
co-owner and an authorized signer on his checking account at PNC Bank; (3) in 2012,
Decedent named Blansfield as a co-owner and authorized signer on his banking account
and Absolute Money Market Account at WSFS Bank, and authorized a debit card for her
to use for his WSFS Plus Free Interest Account; (4) on June 26, 2012, Egyed designated
Blansfield as a co-lessee on his safe deposit box at PNC Bank; (5) on July 9, 2012, he
retitled his CD account with Bank of America as ITF or “In Trust For” Blansfield; and
(6) on February 22, 2013, unbeknownst to Blansfield, he designated her as a beneficiary
to his Natiowide Annuity.9
8
Blansfield Aff. ¶ 10.
9
Id. ¶¶ 4-8, 10.
5
4. Decedent’s Individual Retirement Account
At the time of his death, Decedent owned, among other assets, an IRA worth
approximately $1.3 million that was administered by PNC Investments (“PNC”).10
Thomas J. Cooney, the PNC broker for the IRA, testified that at the time of Decedent‟s
death, the PNC records identified Decedent‟s mother, Marion Egyed, as the sole
beneficiary of the IRA.11
According to Blansfield, however, the evidence suggests that Decedent contacted
PNC shortly before July 25, 2013, and intended to substitute her as the new beneficiary
of the IRA. A few days after Decedent‟s death, Blansfield discovered a letter from a
PNC representative, Julie A. Iocono, along with a change of beneficiary designation form
on Decedent‟s desk at his residence.12 The letter from Iocono, dated July 25, 2013,
advised Decedent to sign and return the attached change of beneficiary designation form
(the “Form”). The Form listed Dorothy Blansfield as the new and sole beneficiary of the
IRA.13 Blansfield‟s name, date of birth and social security number were typed on the
Form. Iocono could not recall, however, how she obtained that information, nor could
she remember sending the letter to Decedent.14
10
Compl. ¶ 16.
11
Sparks Aff. Ex. D (Cooney Dep. 16).
12
Compl. ¶ 25.
13
Pl.‟s Answering Br. App. 41.
14
Sparks Aff. Ex. E (Iocono Dep. 15).
6
The Form provides that any change in beneficiary becomes effective when the
Form is received and accepted by NFS, an agent for PNC, and “will remain in effect until
NFS receives and accepts another designation with a later date.”15 Decedent never signed
the Form or mailed it to PNC.
C. Procedural History
On March 11, 2014, Blansfield commenced this action, seeking a declaration that
she is the beneficiary of Decedent‟s PNC IRA. On April 30, 2014, all Defendants jointly
filed their Answers to the Complaint. Thereafter, the parties engaged in limited
discovery. On December 22, 2014, all Defendants filed a joint motion for summary
judgment pursuant to Court of Chancery Rule 56 (the “Motion”). After full briefing, I
heard argument on the Motion on April 20, 2015.
D. Parties’ Contentions
Blansfield asserts that she is entitled to be the sole beneficiary of Decedent‟s IRA
under the doctrine of substantial compliance. She argues that Decedent intended to
designate her as the new beneficiary by contacting PNC and requesting a change of
beneficiary designation form, and that although Egyed failed to comply with the strict
requirements of signing and returning the Form, he did everything he reasonably could
have done under the circumstances to formalize this change. Blansfield further contends
that this Court should adopt a different standard in the circumstances of this case—i.e.,
15
Pl.‟s Answering Br. App. 43.
7
the clearly expressed intent standard. Under that standard, Blansfield asserts that it is
even more clear that Defendants‟ Motion should be denied.
Defendants contend that the beneficiary designation form was not effective
because Decedent never signed or returned the Form to PNC. They therefore assert that
they are entitled to judgment in their favor, and that proceeds of the IRA should be
distributed in accordance with the beneficiary designation form that PNC had on file,
which named Decedent‟s mother as the beneficiary. In that circumstance, because
Decedent‟s mother predeceased him, the IRA proceeds would default to his estate and be
distributed pursuant to his Will, under which Defendants are named as alternative
beneficiaries and entitled to receive Decedent‟s residuary estate. Defendants make that
argument under the substantial compliance test, which they contend is the correct legal
standard in this situation. They further urge this Court to reject as a matter of law the less
onerous clearly expressed intent standard for which Blansfield argues.
II. ANALYSIS
A. Legal Standard
“Summary judgment is granted if the pleadings, depositions, answers to
interrogatories and admissions on file, together with the affidavits, show that there is no
genuine issue as to any material fact and that the moving party is entitled to a judgment
as a matter of law.”16 When considering a motion for summary judgment, the evidence
16
Twin Bridges Ltd. P’ship v. Draper, 2007 WL 2744609, at *8 (Del. Ch. Sept. 14,
2007) (citing Ct. Ch. R. 56(c)).
8
and the inferences drawn from the evidence are to be viewed in the light most favorable
to the nonmoving party.17 Summary judgment will be denied when the legal question
presented needs to be assessed in the “more highly textured factual setting of a trial.”18
The Court also “maintains the discretion to deny summary judgment if it decides that a
more thorough development of the record would clarify the law or its application.”19
B. Applicable Legal Principles
In the context of beneficiary designations, Delaware recognizes the common law
doctrine of substantial compliance. Under that doctrine, an intended change of
beneficiary designation can be given effect “„despite a failure to comply strictly with the
formalities usually required for such a change,‟” if the account owner intended for the
change of beneficiary designation to be given effect, and the account owner has done all
that is reasonably possible or necessary for him to change the beneficiary. 20 The purpose
of the substantial compliance doctrine is to relax the requirement of strict compliance in
17
Judah v. Del. Trust Co., 378 A.2d 624, 632 (Del. 1977).
18
Schick Inc. v. Amalgamated Clothing & Textile Workers Union, 533 A.2d 1235,
1239 n.3 (Del. Ch. 1987) (citing Kennedy v. Silas Mason Co., 334 U.S. 249, 257
(1948)).
19
Tunnell v. Stokley, 2006 WL 452780, at *2 (Del. Ch. Feb. 15, 2006) (quoting
Cooke v. Oolie, 2000 WL 710199, at *11 (Del. Ch. May 24, 2000)).
20
Travelers Life & Annuity Co. v. Desiderio, 2007 WL 2019795, at *2 (Del. Ch. July
3, 2007) (quoting Greene v. Conn. Mut. Life Ins. Co., 1977 WL 5189, at *3 (Del.
Ch. May 25, 1977)).
9
order to effectuate a decedent‟s intent, in recognition of the fact that “strict enforcement
of the requirement for a duly processed writing may work an inequity.”21
I note that, in opposing Defendants‟ motion, one argument Plaintiff raised was that
I should employ a less onerous standard than the substantial compliance test, such as the
“clearly expressed intent” test that other states apparently have adopted in analogous
circumstances.22 As discussed infra, I find that Defendants are not entitled to summary
judgment under either the substantial compliance standard that they advance or the more
plaintiff-friendly “clearly expressed intent” standard.23 Thus, I do not reach the legal
question of whether Delaware recognizes or should adopt the clearly expressed intent
standard.
C. Summary Judgment is Not Appropriate Here
The substantive issue before the Court is whether Decedent effectively changed
the beneficiary on his IRA to Blansfield. Defendants argue that, based on the undisputed
facts of this case, the answer is “no,” because the terms of the beneficiary designation
form made it clear that a change in beneficiary is not effective until PNC receives the
21
Id.22
PAB 27-32 (citing, inter alia, LeBlanc v. Wells Fargo Advisors, L.L.C., 981
N.E.2d 839, 847 (Ohio 2012)).
23
This does not mean, however, that Blansfield might be entitled to summary
judgment, although she has not moved for it, on either of those standards. The
reason is that both the substantial compliance standard and the clearly expressed
intent standard require proof that the decedent intended to name a new beneficiary.
As discussed infra, there are genuine issues of material fact on that question that
preclude summary judgment for Plaintiff or Defendants.
10
signed beneficiary designation form, and, because Decedent did not sign or return the
Form.
I disagree. For the following reasons, I conclude that Blansfield has met her
burden of showing that an issue of material fact exists, and I therefore deny Defendants‟
motion for summary judgment. In particular, two material facts remain at issue in this
case: (1) whether Decedent intended to change his IRA beneficiary to Blansfield; and (2)
whether Decedent did everything he reasonably could have done to effectuate that change
under the circumstances.
1. Whether Decedent had the requisite intent
It is undisputed that Decedent never signed or returned a beneficiary designation
form as seemingly required. Days after Decedent‟s death, however, the Form designating
Blansfield as the new beneficiary was discovered. Blansfield‟s name, date of birth, and
social security number were typed on the Form, which was accompanied by a letter sent
by PNC. It is possible that someone other than Decedent called PNC and provided
Blansfield‟s information to PNC, but Iocono could not recall how she obtained that
information. It is also reasonable to infer, however, that Decedent himself called to
request a change of beneficiary and provided the information regarding Blansfield. If so,
that would support a finding that Decedent did intend to effect the change of beneficiary
in favor of Blansfield. At this procedural stage, Plaintiff is entitled to have the Court
draw such a reasonable inference in her favor.
Furthermore, the inference of Decedent‟s intent to leave greater portions of his
estate to Blansfield might be supported by the interactions he had with Blansfield over
11
the years. From early 2011 to the time of his death, Decedent repeatedly transferred
other non-probate assets he owned to Blansfield, such as naming her as a co-owner and
an authorized signer of his various checking accounts, designating her as a co-lessee on
his safe deposit box, naming her as ITF for his CD account, and naming her as the
beneficiary of his annuity account. These actions arguably support an inference that
Decedent also intended to name Blansfield as the beneficiary of his IRA account.
Admittedly, another inference that could be drawn from Decedent‟s actions in this regard
is that he believed he had already done enough for Blansfield without also giving her the
entire proceeds of his IRA. On a motion for summary judgment, however, I must review
the evidence in the light most favorable to the nonmoving party. Drawing all reasonable
inferences in favor of Blansfield, I conclude that there is a genuine dispute about whether
Decedent intended to designate Blansfield as the beneficiary of his IRA.
2. Whether Decedent substantially complied
Defendants also assert that no factual disputes exist as to whether Decedent did all
that was “reasonably possible or necessary” for him to effectively change the beneficiary
of the IRA. In particular, Defendants argue that all Decedent had to do was to sign and
date the change of beneficiary form and mail it back to PNC. Defendants further assert
that Decedent had many opportunities to complete this simple task from the time he
received the letter on or about July 25, 2013, until his death over three months later.
Blansfield counters that Decedent was disoriented and extremely ill during this time
period and was in and out of the hospital, effectively making it impossible for him to sign
and return the beneficiary designation form.
12
Plaintiff primarily relies on this Court‟s decision in Travelers Life & Annuity Co.
v. Desiderio as support for her position.24 In that case, the decedent contacted his life
insurance agent to change the beneficiary of his annuity contract. He left a voicemail
stating his intent but died the following day, before he could execute the necessary
paperwork.25 This Court applied the doctrine of substantial compliance and determined
that, by making the call and leaving the voicemail, the decedent demonstrated his intent
to change the beneficiary and that he did all he reasonably could under the circumstances
to effectuate that change.
One distinction between Travelers Life and this case is that, here, the beneficiary
designation form was sent to Decedent on July 25, 2013, and he died on November 12,
2013. Thus, he had more than three months to comply with PNC‟s requirement of
signing and returning the Form, but he failed to do so. There is evidence in the record,
however, that Decedent was disoriented and extremely ill during much of this time,
which could have prevented him from signing the Form and returning it to PNC.
According to Decedent‟s hospitalization record, he was admitted to the hospital on
August 15, 2013 due to an altered mental status.26 His medical records show that
Decedent was confused, cognitively impaired, and generally disoriented. Decedent was
readmitted on October 20, 2013, and again on October 28. He then was put on life
24
2007 WL 2019795 (Del. Ch. July 3, 2007).
25
Id. at *2.
26
Compl. ¶ 18.
13
support before dying on November 12. The records from these hospitalizations again
indicate that he was confused and forgetful and that his cognitive status required him to
be sedated and restrained.27
Thus, there is evidence that Decedent suffered from disorientation and physical or
cognitive impairments during significant portions of the time period between his receipt
of the change of beneficiary form in late July 2013 and his death in November. But, the
record is not clear as to whether Decedent was incapacitated continuously during that
period, or only intermittently. A more developed factual record may lead the Court to
find that Blansfield has failed to satisfy her burden of proof on this aspect of the
substantial compliance test. Granting a motion for summary judgment in favor of
Defendants, however, would be improper, because there is a genuine issue of material
fact regarding Decedent‟s mental status, which could have prevented him from
complying with PNC‟s requirements for changing the beneficiary designation on his IRA.
Based on the existence of that dispute and the dispute discussed above regarding
Decedent‟s intent, I must deny Defendants‟ Motion.
III. CONCLUSION
For the foregoing reasons, Defendants‟ motion for summary judgment is denied.
IT IS SO ORDERED.
27
Pl.‟s Answering Br. App. 181-82.
14