State Farm v. Kitko, K. ( 2020 )

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2020 PA Super 253STATE FARM INSURANCE COMPANY : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
KIM R. KITKO AND ALLEN J. KITKO :
:
: No. 281 WDA 2020
APPEAL OF: KIM R. KITKO :
Appeal from the Order Entered February 14, 2020
In the Court of Common Pleas of Allegheny County Civil Division at
No(s): GD 19-006821
BEFORE: BOWES, J., OLSON, J., and MUSMANNO, J.
OPINION BY OLSON, J.: FILED OCTOBER 20, 2020
Appellant, Kim R. Kitko, appeals from the February 14, 2020 order
granting summary judgment in favor of Allen J. Kitko (“Allen Kitko”) and
dismissing Appellant’s statement of claim with prejudice. We vacate the order
and remand this case with instructions.
The trial court summarized the undisputed factual and procedural
history as follows:
Gregory R. Kitko [(“Decedent")] purchased a life insurance policy
[(“the policy”)] from State Farm Insurance Company ("State
Farm") on August 6, 2002[,] in the basic plan amount of
$300,000[.00]. The underlying dispute arises over the
distribution of proceeds from [the policy] upon [Decedent’s] death
in 2018.
[Decedent] and [Appellant] were married on October 21, 2000.
[Decedent] named [Appellant] as the primary beneficiary and the
"Estate of the Insured" as the successor beneficiary of the policy
at the time of its purchase.
On March 19, 2008, [Decedent] updated [the policy’s
beneficiaries], naming his older brother, [Allen Kitko] as the
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successor beneficiary. In 2009, [Decedent and Appellant] also
purchased a homeowner's insurance policy from [a] State Farm
agent [(“the agent”)].
On February 5, 2018[, Decedent and Appellant] amicably divorced
after seventeen years of marriage. On March 1, 2018[, Decedent
contacted the agent] via an email initiated through State Farm's
website. The email read, in pertinent part,
[Q]uick update. [Appellant] and [I] divorced. So [I] need
to update a couple of things on my life insurance policy. 1)
[I] need to update my address[.] 2) [I] need to update my
beneficiary[.] 3) [I] need to update the payment to a new
bank account[.]
[Decedent] subsequently called [the agent] on June 18, 2018[,]
to discuss the updates to the policy.
During his deposition, [the agent] testified about the phone call.
Regarding [Decedent, the agent] stated that "[i]n that same
conversation, [Decedent] spoke about business interests that he
and [Appellant] still had that were important to him." [Decedent]
specifically told [the agent] that he wanted [Appellant] to remain
the primary beneficiary because of "his continued relationship with
[Appellant] for business purposes." [Allen Kitko] was to remain
the successor beneficiary of the policy.
[The agent] further testified that he [] reviewed [State Farm’s
electronic records for the policy] and saw that [Appellant] was
identified as the primary beneficiary. [The agent] told [Decedent]
that no other forms, signatures[,] or anything else [were] needed
to designate [Appellant] as the primary beneficiary.
In July 2018, [Decedent] received an annual statement [(“the
statement”)] from State Farm. The [statement] identified
[Appellant] as the primary beneficiary. The [statement contained
a notification] that "probate laws may disqualify a [policyholder’s]
former spouse from receiving life insurance proceeds. You should
update your beneficiary designation if your marital status changes
and you want your former spouse to receive the proceeds of this
policy." The [telephone] conversation between [Decedent] and
[the agent, in which Decedent told the agent he wanted Appellant
to remain the primary beneficiary of the policy, occurred prior to
Decedent’s receipt of the statement.]
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[Decedent] passed away on October 18, 2018. Both [Appellant]
and Allen Kitko [submitted a claim] to the $300,000[.00] life
insurance proceeds [due] under [the terms of the policy.]
State Farm filed a complaint for equitable interpleader on May 9,
2019[,] against [Appellant] and Allen Kitko[.] State Farm
requested that the [trial] court require both [Appellant and Allen
Kitko] to file [statements] of claim [with the trial court] and [for
the trial court] to authorize State Farm to pay into the [trial] court
[the $300,000.00 life insurance proceeds, as well as any accrued
interest.] State Farm also requested that it be discharged from
any and all further liability for the payment of the proceeds once
it [] deposited the [proceeds] plus interest [with] the [trial] court.
The [trial] court granted State Farm's petition for interpleader on
October 4, 2019. [Appellant and Allen Kitko] subsequently filed
their [respective] statements of claim. Both [Appellant and Allen
Kitko] then filed cross[-]motions for summary judgment. [On
February 14, 2020, the trial] court granted Allen Kitko's motion
for summary judgment and[, in a separate order,] denied
[Appellant’s] motion for summary judgment.
Trial Court Opinion, 4/17/20, at 1-3 (extraneous capitalization, section
headings, original brackets, ellipses, record citations, and some quotation
marks omitted).
Appellant filed an appeal from the February 14, 2020 order granting
Allen Kitko’s motion for summary judgment and dismissing Appellant’s
statement of claim with prejudice. The trial court did not order Appellant to
file a concise statement of errors complained of on appeal pursuant to
Pa.R.A.P. 1925(b). The trial court, however, filed a Rule 1925(a) opinion on
April 17, 2020.
Appellant raises the following issues for our review:
1. Whether "it appears" that [Decedent’s beneficiary]
designation of [Appellant,] during their marriage[,] "was
intended to survive the divorce based on: ... (4) a
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designation of a former spouse as a beneficiary after the
divorce decree has been issued" in accordance with 20
Pa.C.S.A. § 6111.2(b)(4) when, after [a] divorce decree
was issued, (a) [Decedent] called [the agent and] advised
[the agent] that [Decedent and Appellant] divorced and that
[Decedent] wanted [Appellant] to remain as [the] primary
beneficiary of [the policy]; (b) [the agent] looked at the
State Farm [electronic records] system, saw that
[Appellant] was designated as the primary beneficiary, and
concluded that there were no documents that [Decedent]
needed to sign in order for [Appellant] to be the primary
beneficiary under the policy; (c) [the agent] never told
[Decedent] that he needed to sign any documents in order
for [Appellant] to remain as the primary beneficiary under
the policy [after the final divorce decree was issued]; (d)
[Decedent] relied on [the agent’s] advice; and (e) State
Farm thereafter issued [the statement] identifying
[Appellant] as the primary beneficiary [of the policy]?
2. Whether, in order for it to "appear[]" that [Decedent’s
beneficiary] designation of [Appellant,] during their
marriage[,] "was intended to survive the divorce based on:
... (4) a designation of a former spouse as a beneficiary after
the divorce decree has been issued" in accordance with 20
Pa.C.S.A. § 6111.2(b)(4), [Decedent] had to "strictly
comply" with the "Change of Beneficiary" provisions in the
policy?
3. Whether [Decedent] substantially complied in effectuating
"a designation of a former spouse after the divorce decree
has been issued" such that "it appears" that his [beneficiary]
designation of [Appellant] during their marriage "was
intended to survive the divorce[”] in accordance with 20
Pa.C.S.A. § 6111.2(b)(4) and [Decedent] made every
reasonable effort under the circumstances to [substantially
comply] such that the [trial] court should [have given] effect
to his intention that [Appellant] remain as [the] primary
beneficiary [of the policy after the divorce decree was
issued]?
Appellant’s Brief at 5-7 (extraneous capitalization omitted).
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Appellant, in sum, challenges the trial court’s order granting summary
judgment in favor of Allen Kitko. Id. at 25-46. Our standard of review and
scope of review of orders granting, or denying, summary judgment are
well-settled.
Our scope of review of summary judgment orders is plenary. We
apply the same standard as the trial court, reviewing all the
evidence of record to determine whether there exists a genuine
issue of material fact. We view the record in the light most
favorable to the non-moving party, and all doubts as to the
existence of a genuine issue of material fact must be resolved
against the moving party. Only where there is no genuine issue
as to any material fact and it is clear that the moving party is
entitled to judgment as a matter of law will summary judgment
be entered.
Motions for summary judgment necessarily and directly implicate
the plaintiff[’s] proof of the elements of [the] cause of action.
Summary judgment is proper if, after the completion of discovery
relevant to the motion, including the production of expert reports,
an adverse party who will bear the burden of proof at trial [] failed
to produce evidence of facts essential to the cause of action or
defense which in a jury trial would require the issues to be
submitted to a jury. Thus[,] a record that supports summary
judgment will either (1) show the material facts are undisputed or
(2) contain insufficient evidence of facts to make out a prima facie
cause of action or defense and, therefore, there is no issue to be
submitted to the jury. Upon appellate review[,] we are not bound
by the trial court's conclusions of law, but may reach our own
conclusions. [This] Court may disturb the trial court's order only
upon an error of law or an abuse of discretion.
Collins v. Philadelphia Suburban Dev. Corp., 179 A.3d 69, 73 (Pa. Super.
2018) (citation, ellipses, and original brackets omitted).
Section 6111.2 of the Pennsylvania Probate, Estates and Fiduciaries
Code states,
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§ 6111.2. Effect of divorce or pending divorce on
designation of beneficiaries
(a) Applicability.--This section is applicable if an individual:
(1) is domiciled in this Commonwealth;
(2) designates the individual's spouse as beneficiary of the
individual's life insurance policy, annuity contract, pension or
profit-sharing plan or other contractual arrangement providing
for payments to the spouse; and
(3) either:
(i) at the time of the individual's death is divorced from the
spouse; or
(ii) dies during the course of divorce proceedings, no decree
of divorce has been entered pursuant to 23 Pa.C.S.[A.]
§ 3323 (relating to decree of court) and grounds have been
established as provided in 23 Pa.C.S.[A.] § 3323(g).
(b) General rule.--Any designation described in subsection
(a)(2) in favor of the individual's spouse or former spouse that
was revocable by the individual at the individual's death shall
become ineffective for all purposes and shall be construed as if
the spouse or former spouse had predeceased the individual,
unless it appears the designation was intended to survive the
divorce based on:
(1) the wording of the designation;
(2) a court order;
(3) a written contract between the individual and the spouse or
former spouse; or
(4) a designation of a former spouse as a beneficiary after the
divorce decree has been issued.
20 Pa.C.S.A. § 6111.2(a) and (b).1
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1 We note that our Supreme Court, in In re Estate of Sauers, held that the
federal Employee Retirement Income Security Act (“ERISA”), 29 U.S.C.A.
§§ 1001-1461, preempted Section 6111.2 to the extent Section 6111.2
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The courts of this Commonwealth have long held that, “[i]n order to
affect a change of beneficiary, the mode prescribed by the policy must be
followed[.]” Sproat v. Travelers’ Ins. Co., 137 A. 621, 622 (Pa. 1927); see
also In re Estate of Golas, 751 A.2d 229, 231 (Pa. Super. 2000) (stating,
“[i]n general, one must follow the requirements specified by the policy in order
to validly change the beneficiary” (citation omitted)). An exception to this
general principle permits a change of beneficiary to be effective if, under the
circumstances, the policyholder substantially complied with the provisions of
the policy. Sproat, 137 A. at 622; see also Riley v. Wirth, 169 A. 139, 140
(Pa. 1933) (holding, that when the policyholder made every reasonable effort,
under the circumstances, to change the beneficiary designation, “more cannot
be required” (citations omitted)). Substantial compliance requires the
policyholder to make “every reasonable effort to effect a change of
beneficiary[.]” Sproat, 137 A. at 622; see also Golas, 751 A.2d at 231(stating, “the intent of the insured will be given effect if he does all that he
reasonably can under the circumstances to comply with the terms of the policy
which permit a change of beneficiary” (citation, original quotation marks, and
brackets omitted)).
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related to insurance policies, annuity contracts, and pension or profit-sharing
plans provided as part of an employee benefit plan. Because the life insurance
policy in the case sub judice was not obtained as part of an employee benefit
plan, the statute, as it applies to the instant case, is not preempted by ERISA.
See In re Estate of Sauers, 32 A.3d 1241, 1257 (Pa. 2011).
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Here, Appellant contends the trial court erred in determining that
Appellant was disqualified as the primary beneficiary under the terms of the
policy because after the divorce decree was issued, Decedent did not
subsequently designate, in writing, that Appellant was to remain the primary
beneficiary of the policy’s life insurance proceeds. Appellant’s Brief at 26.
Appellant argues that Section 6111.2(b)(4) does not require Decedent’s
designation of Appellant as the primary beneficiary of the policy, after the
divorce decree was issued, to be in writing. Id. at 29-30. According to
Appellant, Decedent intended for Appellant to remain the policy’s primary
beneficiary after the divorce decree was issued and, to manifest his intent,
Decedent verbally, in a conversation with the agent, designated Appellant as
the primary beneficiary of the policy. Id. at 31. Appellant further argues that
the trial court erred in determining that a designation of Appellant as the
primary beneficiary of the policy after the divorce decree was issued could
only be accomplished if Decedent strictly complied with the provisions of the
policy governing changes to a beneficiary designation. Id. at 32-35.
Alternatively, Appellant contends that if the beneficiary designation were
required to be in writing, Decedent substantially complied with the terms of
the policy when 1) Decedent verbally indicated to the agent his intention that
Appellant remain the primary beneficiary of the policy after the divorce decree
was issued, 2) the agent indicated that no written documents, signed by
Decedent, were required to be submitted to effectuate that intent, and 3)
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Decedent subsequently received the statement from State Farm indicating
Appellant remained the primary beneficiary of the policy. Id. at 36-46.
Allen Kitko, acknowledging that Section 6111.2(b)(4), in general, does
not preclude a verbal designation, asserts that the term “designation,” as used
in this subsection, and the actions a policyholder must take to effectuate a
change in beneficiary designation, are defined by the terms of the individual
policy. Allen Kitko’s Brief at 25-26. Allen Kitko contends that the policy, in
the instant case, required the designation of Appellant as the primary
beneficiary of the policy to be in writing and that the alleged verbal
conversation Decedent had with the agent did not qualify as an effective
beneficiary designation under the terms of the policy. Id. at 27, 31. Allen
Kitko argues that the July 14, 2018 statement, forwarded by State Farm to
Decedent, clearly stated that Decedent needed to complete a change of
beneficiary form and submit that completed form to State Farm if Decedent
intended Appellant to be the primary beneficiary of the policy after the divorce
decree was issued. Id. at 30. Allen Kitko argues that Decedent’s failure to
submit the change of beneficiary form precludes a finding that Decedent
substantially complied with the terms of the policy pertaining to the
designation of a beneficiary. Id. at 35-41.
The trial court, in granting summary judgment in favor of Allen Kitko
and denying summary judgment in favor of Appellant, stated that, “[t]he term
[‘]designation[’] is not defined [in Section 6111.2(b), and as such, whether]
a person is designated as a beneficiary depends on the contractual terms of
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each individual life insurance policy.” Trial Court Opinion, 4/17/20, at 4. The
trial court found that the policy required, inter alia, that a valid change of
beneficiary designation had to be in writing and signed by the policyholder.
Id. The trial court concluded,
Under the terms of the policy, Decedent's designation of
[Appellant] as the primary beneficiary [of the policy] after the
divorce decree [became final was required] to be in writing and
signed [by Decedent], notwithstanding the incorrect advice
provided by [the agent]. Decedent relied on [the agent’s] advice
and failed to send State Farm a signed written request designating
[Appellant] as the primary beneficiary [of the policy after the
divorce decree was issued].
Pennsylvania law requires a policyholder to strictly comply with
the policy terms to change a beneficiary designation. The
language in Decedent's policy is clear that any changes in
beneficiary designation must be signed and in writing. Decedent
failed to strictly comply with the terms of [the] policy and, instead,
made only a verbal affirmation of the existing designation on file.
A mere declaration of intent to designate [Appellant,] his former
spouse[,] as a beneficiary following the divorce was not enough
to overcome the requirement of strict compliance with the policy
terms. As a result, in accord with the provisions of [Section
6111.2], the designation on file with State Farm must be
construed as though [Appellant] predeceased [Decedent].
Id. at 5-6 (extraneous capitalization and section heading omitted).
Initially, we must discern the meaning of the term “designation” as set
forth in Section 6111.2(b)(4). Statutory interpretation is a question of law for
which our standard of review is de novo and our scope of review is plenary.
A.S. v. Pennsylvania State Police, 143 A.3d 896, 903 (Pa. 2016). “The
object of all interpretation and construction of statutes is to ascertain and
effectuate the intention of the General Assembly.” 1 Pa.C.S.A. § 1921(a). “In
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construing and giving effect to the text, we should not interpret statutory
words in isolation, but must read them with reference to the context in which
they appear.” A.S., 143 A.3d at 906 (citations and original quotation marks
omitted). “Ordinarily, a word's usage accords with its dictionary definition. In
law as in life, however, the same words, placed in different contexts,
sometimes mean different things.” Id.
Section 6111.2, a so-called revocation-on-divorce statute, deems a
spouse, or former spouse, of a life insurance policyholder to have predeceased
the policyholder for beneficiary purposes under the terms of the life insurance
policy when the beneficiary designation occurred prior to the entry of a final
divorce decree or prior to the initiation of divorce proceedings, which remain
pending at the time of the policyholder’s death. 20 Pa.C.S.A. § 6111.2(a) and
(b). In order words, the designation of a spouse, or former spouse, as a
beneficiary under his or her spouse’s, or former spouse’s, life insurance policy
is automatically revoked upon the entry of a final divorce decree or upon
initiation of a divorce proceeding that is not finalized before the policyholder’s
death.2 Id. To apply, Section 6111.2(a) (apart from a domiciliary
requirement, which is not contested herein) requires the policyholder to
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2 Revocation-on-divorce statutes, such as Section 6111.2, are intended to
protect policyholders, who presumably “do not aspire to enrich their former
partners” but through neglect, forget to change the beneficiary of a life
insurance policy after a divorce, by requiring the policyholder to take
affirmative action to restore the former spouse as a beneficiary. Sveen v.
Melin, 138 S.Ct. 1815, 1822-1823 (2018).
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designate his or her spouse as a beneficiary of the policy prior to the entry of
a final divorce decree or prior to the initiation of divorce proceedings. Id. at
6111.2(a) (stating, that the statute is applicable when an individual
“designates the individual's spouse as beneficiary of the individual's life
insurance policy”). Because a life insurance policy is a contract of adhesion
between the policyholder and the company issuing the policy, the policyholder
must designate a beneficiary of the policy in strict, or substantial, compliance
with the terms of the life insurance policy in order to be effective. See Boehm
v. Riversource Life Ins. Co., 117 A.3d 308, 324 (Pa. Super. 2015) (stating,
“[l]ife insurance policies are contracts of adhesion”); see also Golas, 751
A.2d at 231.
The spouse, or former spouse, will not be deemed to have predeceased
the policyholder and will remain a beneficiary of the policy, however, if (1) the
initial beneficiary designation contains words indicating the designation is to
remain effective despite subsequent issuance of a divorce degree, (2) a court
orders the beneficiary designation to remain in effect after a divorce decree is
issued, (3) the spouses, or former spouses, enter into a written contract, i.e.
a divorce settlement agreement, in which they agree the beneficiary
designation is to remain in effect after entry of a divorce decree, or (4) the
policyholder makes a “designation” after the divorce decree is issued that his
or her former spouse is a beneficiary. Id. at § 6111.2(b)(1-4). The first three
methods by which a beneficiary designation remains effective after a divorce
decree is issued, or a divorce proceeding is initiated, as enumerated in Section
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6111.2(b)(1-3), rely on a writing, namely the wording of a written
designation, a court order, or a written contract. Id. at § 6111.2(b)(1-3). A
review of Section 6111.2(b) reveals, however, that the term “designation,” as
set forth in Subsection 6111.2(b)(4), is not defined by the statute. Thus, a
plain-reading of Section 6111.2(b)(4) leaves open the possibility that a
beneficiary designation of a former spouse after a divorce decree is issued can
be accomplished by either an oral designation or a written designation. If the
legislature intended the beneficiary designation contemplated by Section
6111.2(b)(4) to be in written form exclusively, then the word “written” would
have been inserted before “designation,” the same as it was inserted before
the word “contract” in the preceding subsection. Section 6111.2(b)(4),
therefore, does not foreclose the possibility that a beneficiary designation can
assume an oral, in addition to a written, form.
Our analysis cannot end here, however. We must also read the term
“designation” in the context of the statute in toto. While we conclude that the
term “designation,” as used in Subsection 6111.2(b)(4) permits beneficiary
designation by either oral or written form, we further conclude that a valid
“designation” under Subsection 6111.2(b)(4) refers to a designation of a
former spouse as a beneficiary of the policy after the divorce decree was
issued that either strictly or substantially complies with the terms of the
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applicable policy.3 Accordingly, to resolve the dispute in the case sub judice,
we must determine whether, after the divorce decree was issued, Appellant
established Decedent’s strict compliance with the beneficiary designation
provisions of the policy. In the alternative, we must decide whether, in
accordance with Pennsylvania law, Appellant demonstrated Decedent’s
substantial compliance with the policy terms in any post-divorce beneficiary
re-designation. Our analysis, therefore, begins with the policy language itself.
Decedent’s policy defined the procedure to change a beneficiary
designation as follows,
Change of Beneficiary Designation. You may make a change
while the Insured is alive by sending us a request. The change
will take effect the date the request is signed, but the change
will not affect any action we have taken before we receive the
request. We have the right to request your policy to make the
change on it.
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3 We read the term “designation” in Subsection 6111.2(b)(4) in this manner
because to apply, this revocation-on-divorce statute requires the initial
beneficiary designation of a spouse, pre-divorce, to be in strict, or substantial,
compliance with the terms of the applicable life insurance policy. The
re-designation of a former spouse, post-divorce, for purposes of satisfying
Subsection 6111.2(b)(4), must also be in strict, or substantial, compliance
with the terms of the applicable life insurance policy. In other words, oral
beneficiary designation, and re-designation, will be permitted only if the terms
of the life insurance policy allow an oral beneficiary designation. Similarly,
when the life insurance policy requires the beneficiary designation to be in
writing, the beneficiary designation, and re-designation, must be in writing in
order to be effective.
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Decedent’s Life Insurance Policy, 8/6/02, at 6 (emphasis added). Because the
policy stated that the change of beneficiary designation was only effective as
of the date the request was signed, the policy clearly contemplated that the
beneficiary designation change request must be a writing that contains the
policyholder’s signature.4 Therefore, Decedent’s designation of Appellant as
the primary beneficiary of the policy after their divorce decree was issued
needed to be in writing and the writing needed to be signed by the Decedent
to accomplish strict compliance with the terms of the policy. Because this did
not occur, strict compliance has not been shown.
As stated supra, Pennsylvania courts apply an equitable principle
whereby a decedent’s intention to designate his or her former spouse as a
beneficiary of a life insurance policy will be given effect, despite the decedent’s
failure to strictly comply with the policy’s requirements, where the decedent
did all that he or she could reasonably do under the circumstances to comply
with the terms of the policy.5 Golas, 751 A.2d at 231, citing Carruthers v.
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4A policyholder is not required to use the change of beneficiary form provided
by the insurance company for its convenience. Rather a policyholder, whose
policy requires a beneficiary designation to be in writing and signed by the
policyholder, may effectuate a change of beneficiary by any written means
provided the writing, which clearly indicates the policyholder’s intent, is signed
by the policyholder and notice of the change is provided to the insurance
company. Such a writing may be via electronic correspondence, i.e. email,
provided the policyholder can electronically sign the writing and appropriate
authentication protocol is available to verify the policyholder’s “e-signature.”
5 In Sveen, Justice Gorsuch wrote,
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$21,000, 434 A.2d 125, 127 (Pa. Super. 1981). Therefore, we must examine
whether Decedent, under the circumstances of the case sub judice,
substantially complied with the terms of the policy so that Appellant remained
the primary beneficiary of the policy after the divorce decree was issued.
Here, the record demonstrates that Decedent and Appellant’s divorce
decree was issued on February 5, 2018. On March 1, 2018, Decedent
contacted the agent, via the email platform on the State Farm website, and
notified the agent that Decedent and Appellant divorced. Decedent informed
the agent that he needed to update his address, his beneficiary, and his bank
account information. Decedent spoke with the agent on June 18, 2018, at
which time Decedent notified the agent of Decedent’s divorce and expressed
that he intended Appellant to remain the primary beneficiary of the policy
because Decedent and Appellant had a common business interest and he
wanted to provide Appellant protection for that business. Pascoe Deposition,
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As the federal government has recognized,
[revocation-on-divorce] statutes cannot be assumed to
“effectuate the insured's ‘true’ intent” because a policyholder
“might want his ex-spouse to receive insurance proceeds for a
number of reasons - out of a sense of obligation, remorse, or
continuing affection, or to help care for children of the marriage
that remain in the ex-spouse's custody.” After all, leaving your
ex-spouse life insurance proceeds can be a cheaper, quicker, and
more private way to provide for minor or disabled children than
leaving the matter to a trustee or other fiduciary. For these
reasons, the federal government and nearly half the states today
do not treat divorce as automatically revoking insurance
beneficiary designations.
Sveen, 138 S.Ct. at 1828-1829 (Gorsuch, J. dissenting) (citations and
brackets omitted).
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10/9/2019, at 26-27. When Decedent asked the agent if there were any
paperwork he needed to complete in order for Appellant to remain the primary
beneficiary of the policy, the agent advised Decedent that there was no
additional paperwork he needed to complete. Id. at 27. The agent stated, “I
looked on my [computer] screen [at the electronic version of the policy].
[Appellant’s name] was there. She had always been there. There was no
need to do anything with that paperwork.” Id. The following dialogue
occurred during the agent’s deposition,
Q. [] There was no paper that [Decedent] needed to sign in
order to have [Appellant] be designated the beneficiary
following your conversation on June 18, 2018?
A. She already was.
Q. No other papers needed done?
A. No others needed.
Q. I use the word other, which would suggest there would be
one. There were no papers that [Decedent] needed to sign
to effect [Appellant] being [] designated beneficiary; is that
correct?
A. Correct.
Id. at 34. Decedent subsequently received the July 14, 2018 statement from
State Farm identifying Appellant as the primary beneficiary of the policy. The
statement also stated,
Note: Probate laws may disqualify a policy owner’s former spouse
from receiving life insurance proceeds. You should update your
beneficiary designation if your marital status changes and you
want your former spouse to receive the proceeds of this policy.
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Annual Notice of Policy Status, 7/14/18. Decedent did not submit a change
of beneficiary form designating Appellant as the primary beneficiary of the
policy after his divorce decree was issued. Decedent subsequently passed
away on October 18, 2018.
Here, the trial court found that there was no genuine issue of material
fact that Decedent made a verbal declaration to the agent that Decedent
intended for Appellant to remain the primary beneficiary of the policy. Trial
Court Opinion, 4/17/20, at 5. This verbal declaration, the trial court
concluded, did not strictly comply with the policy’s requirements for
designating Appellant as the primary beneficiary. Id. Therefore, the trial
court concluded that pursuant to Section 6111.2(b), Appellant was deemed to
have predeceased Decedent. Id. at 6. The trial court failed, as a matter of
law, however, to examine whether Decedent substantially complied with the
terms of the policy in order to designate Appellant as the primary beneficiary.
We concur with the trial court that no genuine issue of material fact
existed that Decedent verbally indicated to the agent that he intended for
Appellant to remain the primary beneficiary of the policy. We further concur
with the trial court that the agent informed Decedent, albeit incorrectly, that
no additional paperwork, including the change of beneficiary forms Decedent
received in March 2018,6 was necessary to effectuate Decedent’s intent that
____________________________________________
6 Allen Kitko acknowledged that Decedent received change of beneficiary
forms in March 2018 and that the forms remained uncompleted and part of
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Appellant remain the primary beneficiary of the policy. Decedent
subsequently received the statement listing Appellant as the primary
beneficiary of the policy. Although the statement contained a notice stating
that probate laws may disqualify Appellant as the primary beneficiary, the
statement did not specifically advise Decedent that pursuant to Section 6111.2
of the Pennsylvania Probate, Estates and Fiduciaries Code, Appellant was
deemed to have predeceased Decedent and, thus, disqualified as the primary
beneficiary of the policy upon the entry of the final divorce decree unless one
of the four exceptions, as enumerated in Section 6111.2(b), occurred. The
notice further advised Decedent he should, but was not required to, update
his beneficiary designation if his marital status changes and he wanted
Appellant to remain the primary beneficiary of the policy. Before his death on
October 18, 2018, Decedent did not submit the change of beneficiary forms
that he received in March 2018, to State Farm.
Based upon our review of the record, we discern that Decedent, under
the circumstances of this case, reasonably did all that he could have done to
designate Appellant as the primary beneficiary of the policy. Decedent notified
his agent about his divorce and inquired about Appellant remaining the
primary beneficiary of the policy. The agent incorrectly told Decedent that no
additional paperwork was necessary in order to strictly comply with the
____________________________________________
Decedent’s estate at the time of his death. Allen Kitko’s Brief, 1/27/20, at 18
and Exhibit G.
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beneficiary designation provisions of the policy and that Appellant was already
listed as the primary beneficiary of the policy according State Farm’s electronic
records system. See Boehm, 117 A.3d at 324 (stating, “insurance agent's
expertise in the field of life insurance vests his representations with authority
and tends to induce the insured to believe that reading the policy would be
superfluous” (citation, ellipsis, and original quotation marks omitted)).
Decedent subsequently received a statement from State Farm confirming that
Appellant was the primary beneficiary of the policy. Although the statement
contained a change in marital status notice, it is undisputed that Decedent
intended for Appellant to remain as the primary beneficiary of the policy. It
is further undisputed that Decedent believed that no additional paperwork
needed to be submitted in order for Appellant to remain as the primary
beneficiary of the policy. Decedent’s belief was based upon the information
provided by the agent before the statement was received and subsequent
receipt of the statement confirming that Appellant was the primary beneficiary
of the policy. Therefore, Decedent, under the circumstances of the instant
case, substantially complied, as a matter of law, with the policy requirements
to designate Appellant as the primary beneficiary of the policy.
Consequently, we vacate the order that granted summary judgment in
favor of Allen Kitko and dismissed Appellant’s statement of claim with
prejudice. Further, we remand this case with the instructions that the trial
court vacate its order that denied Appellant’s motion for summary judgment.
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Finally, we direct the trial court to enter summary judgment in favor of
Appellant and to dismiss Allen Kitko’s statement of claim with prejudice.
Order vacated. Case remanded with instructions. Jurisdiction
relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 10/20/2020
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