Barbara Jane Irwin v. Mike Irwin, as Representative of the Estate of Richard Lee Irwin ( 2009 )

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OPINION
No. 04-08-00554-CV
Barbara Jane IRWIN,
Appellant
v.
Mike IRWIN, As Representative of the Estate of Richard Lee Irwin,
Appellee
From the 216th Judicial District Court, Gillespie County, Texas
Trial Court No. 11399
Honorable Stephen B. Ables, Judge Presiding
Opinion by: Sandee Bryan Marion, Justice
Sitting: Sandee Bryan Marion, Justice
Rebecca Simmons, Justice
Marialyn Barnard, Justice
Delivered and Filed: November 25, 2009
REVERSED AND REMANDED
This is an appeal from a summary judgment rendered in favor of the Estate of Richard Lee
Irwin. Because we conclude the estate does not have standing to pursue its claim against appellant,
we reverse and remand.
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BACKGROUND
Appellant, Barbara Jane Irwin, and the decedent, Richard Lee Irwin, were married while
Richard was employed by the Drug Enforcement Agency (“DEA”). As an employee of the DEA,
Richard participated in a life insurance program called the Federal Employees Group Life Insurance
Program (“FEGLIP”), which is governed by the Federal Employees Group Life Insurance Act
(“FEGLIA”). Richard designated Barbara as his primary beneficiary and his sons from a prior
marriage, Mike and John, as his contingent beneficiaries. Richard retired in 1995, and he elected
to receive reduced FEGLIA life insurance coverage. In 2006, Richard and Barbara divorced, and
the Agreed Divorce Decree awarded Richard any and all policies insuring his life. During the
pendency of the divorce, Richard signed a new will in which he stated he had filed for divorce in
April 2005 and it was his “specific intent not to provide for [Barbara] in this will and to give [his]
entire estate . . . to [Mike and John] . . . .” However, Richard never changed the designation of his
life insurance beneficiaries. Richard died on April 11, 2007. Pursuant to his beneficiary designation,
the Office of Personnel Management paid the proceeds of Richard’s FEGLIP policy to Barbara.
In July 2007, Mike, as representative of Richard’s estate, sued Barbara to recover the
proceeds and have her designated a constructive trustee of the proceeds for the benefit of Richard’s
estate. In November 2007, Mike, as representative of Richard’s estate, moved for summary
judgment. One month later, Barbara also moved for summary judgment. In January 2008, an
amended plaintiffs’ petition was filed, adding Mike and John individually as plaintiffs. On March
31, 2008, the trial court denied Barbara’s motion for summary judgment, granted the estate’s motion
for summary judgment, and decreed that “all life insurance proceeds paid to [Barbara] from
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[Richard’s FEGLIP policy] are the sole and separate property of the Estate of Richard Lee Irwin” and
“that a constructive trust, in favor of the [estate] is placed upon all life insurance proceeds received
by [Barbara] from [Richard’s FEGLIP policy].” On July 15, 2008, the trial court signed a final
judgment incorporating the terms of its March 31, 2008 summary judgment, awarding the estate
attorney’s fees and post-judgment interest, ordering that Barbara take nothing in the suit, and
granting Mike and John’s request for a nonsuit of their claims against Barbara without prejudice.
Barbara filed this appeal. One of the issues on appeal is whether Barbara waived her right
to the insurance proceeds based upon language contained in Richard and Barbara’s Agree Final
Decree of Divorce that provides Barbara “is divested of all right, title and claim in and to . . . [a]ll
policies of life insurance (including cash values) insuring [Richard’s] life . . . .”
STANDING
As a preliminary matter, we must first determine whether Richard’s estate has standing to
pursue a claim against Barbara for a constructive trust on Richard’s life insurance proceeds when
the estate is not a designated beneficiary of the insurance proceeds. See Tex. Workers’ Comp.
Comm’n v. Garcia, 893 S.W.2d 504, 517 n.15 (Tex. 1995) (holding standing is a component of
subject matter jurisdiction and may be raised by an appellate court sua sponte).
“Proceeds of an insurance policy are by statutory definition nontestamentary in nature.”
Tramel v. Estate of Billings, 699 S.W.2d 259, 262 (Tex. App.—San Antonio 1985, no writ); see also
Patrick v. Patrick, 182 S.W.3d 433, 438 (Tex. App.—Austin 2005, no pet.) (stating “life-insurance
policies are non-probate assets and are generally transferred upon the death of the decedent through
the terms of the policy, not a will”); see also TEX . PROB. CODE ANN . § 450(a) (Vernon 2003).
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Because an insurance policy is statutorily characterized as nontestamentary, “the instrument does not
. . . have to be probated, nor does the personal representative have any power or duty with respect
to the assets involved.” Holley v. Grigg, 65 S.W.3d 289, 293 (Tex. App.—Eastland 2001, no pet.)
(quoting with approval, UNIF. PROBATE CODE 6-201 cmt. (1997)). “It is plain the right to the
proceeds does not accrue as a testamentary right to those who will take under the laws of descent and
distribution.” Tramel, 699 S.W.2d at 262.
FEGLIA provides that life insurance policy proceeds be paid under the following order of
precedence: first, “to the beneficiary or beneficiaries designated by the employee in a signed and
witnessed writing received before death in the employing office”; second, “if there is no designated
beneficiary, to the widow or widower of the employee”; third, “if none of the above, to the child or
children of the employee and descendants of deceased children by representation”; fourth, “if none
of the above, to the parents of the employee or the survivor of them”; fifth, “if none of the above, to
the duly appointed executor or administrator of the estate of the employee”; and sixth, “if none of
the above, to other next of kin of the employee entitled under the laws of the domicile of the
employee at the date of his death.” 5 U.S.C. § 8705(a) (emphasis added).
Here, there is no dispute that Barbara, Mike, and John are the only designated beneficiaries
under Richard’s life insurance policy. Even if an argument could be made that the estate had
standing to enforce the terms of the divorce decree, the estate was not a designated beneficiary under
the insurance policy and had no legal claim to the proceeds of the policy. For these reasons, we
conclude Richard Irwin’s estate does not have standing to pursue a lawsuit against Barbara for the
proceeds. As contingent beneficiaries of the policy, Mike and John are the proper plaintiffs.
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Although Mike and John were still parties to the suit when the trial court rendered summary
judgment against Barbara, the trial court’s judgment ordered a constructive trust in favor of Richard
Irwin’s estate. Therefore, the trial court’s judgment improperly awarded the proceeds to the estate.
CONCLUSION
For these reasons, we reverse the trial court’s judgment in favor of the Estate of Richard
Irwin and we remand the cause to the trial court for further proceedings.
Sandee Bryan Marion, Justice
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