Gralnick v. Rowe-Gralnick ( 2016 )

IN THE SUPREME COURT OF THE STATE OF NEVADA
ANN L. GRALNICK, No. 67928
Appellant,
vs.
SUSAN ROWE-GRALNICK,
FILED
REPRESENTATIVE FOR THE ESTATE MAY 1 2 2016
OF ALAN GRALNICK,
Resnondent.
ORDER OF REVERSAL AND REMAND
This is an appeal from a post-divorce decree order concerning
distribution of life insurance proceeds following a remand from this court.
Eighth Judicial District Court, Family Court Division, Clark County;
Robert Teuton, Judge.
Appellant Ann Gralnick and her former husband Alan
Gralnick were married for 33 years and had three children together.
During their marriage, they created the Gralnick Family Trust and Alan
procured a life insurance policy with a face amount of $466,000, listing the
beneficiary as "Ann Gralnick, Trustee, or her successor or successors,
under the Gralnick Family Trust Agreement dated August 30, 1990." Ann
and Alan were divorced in 2007 and Alan remarried respondent. Under
the divorce decree, Alan was required to pay Ann $6,500 monthly in
spousal support for 84 months and maintain a life insurance policy on his
life for the amount of his outstanding spousal support obligation. Instead
of obtaining a new life insurance policy, Alan maintained the preexisting
life insurance policy. When Alan died in 2011, his outstanding spousal
support obligation to Ann was $235,000.
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The district court awarded Ann the $235,000 she was owed in
spousal support, but awarded the remaining life insurance proceeds to
respondent. This court reversed the award of the remaining proceeds and
remanded the matter to the district court to determine the owner and
beneficiary of the life insurance policy considering that the policy listed
the beneficiary as "Ann Gralnick, Trustee, or her successor or successors,
under the Gralnick Family Trust Agreement dated August 30, 1990." On
remand, the district court concluded that the remaining insurance
proceeds were Alan's separate property and should be awarded to his
estate.
As a threshold matter, we conclude that the district court did
not violate the law of the case doctrine when it concluded that NRS
687B.260 and Aetna Life Insurance Co. v. Hussey, 595 N.E.2d 942 (Ohio
1992) were inapplicable to give Ann a right to the proceeds. This court did
not specifically provide that they were applicable, but instead directed the
court to consider the effect of NRS 687B.260 on remand and cited to Aetna
for support. See Office of State Eng'r v. Curtis Park Manor Water Users
Ass'n, 101 Nev. 30, 32, 692 P.2d 495, 497 (1985) (providing that "Nile
doctrine of the law of the case provides that where an appellate court
states a principle of law in deciding a case, that rule becomes the law of
the case, and is controlling both in the lower court and on subsequent
appeals, as long as the facts are substantially the same"). Thus, Ann's
argument in this regard is without merit.
Nevertheless, we conclude that the district court abused its
discretion in concluding that the remaining insurance proceeds belonged
to Alan's estate under what appears to be an equitable lien theory. See
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Am. Sterling Bank v. Johnny Mgmt. LV, Inc., 126 Nev. 423, 428, 245 P.3d
535, 538 (2010) (providing that this court will review a district court's
grant of an equitable remedy for an abuse of discretion). The life
insurance policy named the Family Trust as the beneficiary. While Ann
and Alan agreed that the life insurance policy at issue would be
substituted for the insurance policy that Alan was required to maintain
under the divorce decree to ensure Ann received her spousal support after
Alan's death, there is not clear evidence that Alan intended the remaining
life insurance proceeds to go to his estate instead of the Family Trust. See
Commercial Credit Corp. u. Matthews, 77 Nev. 377, 386, 365 P.2d 303, 307
(1961) (requiring clear intention to create an equitable lien). Thus, the
district court abused its discretion to the extent it concluded that Alan's
estate had an equitable lien over the remaining proceeds and we reverse
the district court's decision. Am. Sterling Bank, 126 Nev. at 428, 245 P.3d
at 538.
Therefore, the remaining proceeds must be distributed in
accordance with the Family Trust's distribution provisions. See NRS
687B.260(1) (providing that the lawful beneficiary of a life insurance
policy is entitled to the proceeds from that policy and "avails against the
creditors and representatives of the insured"). Generally, after divorce,
trust provisions take effect as if the spouse had predeceased the settlor of
the trust, and thus, Ann is not entitled to the remaining proceeds. See
NRS 163.565 (providing that the divorce of a settlor of a revocable inter
vivos trust "revokes every devise, beneficial interest or designation to
serve as trustee given by the settlor to the former spouse" unless
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otherwise ordered by the district court); Cal. Prob. Code § 5600(c) (West
2002). Accordingly, we
ORDER the judgment of the district court REVERSED AND
REMAND this matter to the district court for proceedings consistent with
this order.
J.
Saitta
Piekodtu,
Pickering
cc: Hon. Robert Teuton, District Judge, Family Court Division
Moran Brandon Bendavid Moran
The Abrams & Mayo Law Firm
Eighth District Court Clerk
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