Mary A. Howell v. Phoenix Insurance Co.

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 11-13468 ELEVENTH CIRCUIT
JANUARY 19, 2012
Non-Argument Calendar
JOHN LEY
________________________
CLERK
D.C. Docket No. 1:07-cv-00014-WBH
MARY A. HOWELL, Executor of the
Estate of Donald G. Howell,
Plaintiff-Counter Defendant-
Cross Defendant-Appellee,
ESTATE OF DONALD G. HOWELL,
Plaintiff-Counter Defendant-
Appellee,
versus
PHOENIX INSURANCE COMPANY,
Defendant-Counter Claimant,
BRIAN P. RUSH,
BRIAN P. RUSH, P.A.,
Defendants-Appellants,
CAPITAL CITY SUPPLY COMPANY,
NATIONAL CINEMA SUPPLY CORPORATION,
Defendants-Counter Claimants-
Cross Claimants-
Cross Defendants- Appellants.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(January 19, 2012)
Before CARNES, WILSON and COX, Circuit Judges.
PER CURIAM:
I. BACKGROUND
Capital City Supply Company (“Capital City”), National Cinema Supply
Corporation (“National Cinema”), Brian P. Rush, and Brian P. Rush, P.A.
(collectively the “Defendants”1 ) appeal, challenging the district court’s order
directing payment of life insurance proceeds to Mary A. Howell (“Executrix”) in her
capacity as the executrix of the estate of her deceased husband Donald G. Howell
(“Howell”). Capital City purchased a “key man” life insurance policy on the life of
Howell when he was the sole owner of Capital City. The policy designated Capital
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Capital City and National Cinema have assigned their interest in the life insurance proceeds
to their attorney Brian P. Rush.
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City as the owner and beneficiary of the policy. Howell later sold all of his stock in
Capital City to National Cinema. In the Stock Purchase Agreement (“Purchase
Agreement”), National Cinema and Capital City agreed to transfer the life insurance
policy to Howell “with a change of beneficiary to [Howell] or [Howell’s] designee.”
(Dkt. 20 at 53.) After the parties closed the purchase, neither Capital City nor Howell
took any steps with the insurer to change the owner designation or the beneficiary.
Following Howell’s death, National Cinema submitted a claim for the policy
proceeds. The Executrix responded by filing suit to establish the estate’s entitlement
to the insurance proceeds.
In response to the parties’ competing motions for summary judgment, the
district court granted summary judgment in favor of the Executrix and directed that
the insurance proceeds be paid to the estate. The court agreed with the Executrix that
equitable considerations demanded the imposition of a constructive trust in favor of
the estate. It held that the Defendants’ claim of record ownership failed against the
estate’s claim of equitable ownership.
The Defendants present three arguments in support of their contention that the
district court erred by granting summary judgment in favor of the Executrix. First,
the Defendants maintain that the Executrix could not assert an equitable unjust
enrichment claim in light of the express contract between the parties. Second, the
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Defendants argue that the statute of limitations has expired on an equitable claim for
a constructive trust. Finally, the Defendants assert that Capital City is the beneficiary
of the policy.
II. STANDARD OF REVIEW
“We review a grant of summary judgment by a district court de novo.” Gish v.
Thomas, 516 F.3d 952, 954 (11th Cir. 2008) (citing Cruz v. Publix Super Mkts., Inc.,
428 F.3d 1379, 1382 (11th Cir. 2005)). “We apply the same legal standards as the
district court and view all facts and reasonable inferences in the light most favorable
to the nonmoving party.” Id. (citing Strickland v. Water Works & Sewer Bd., 239
F.3d 1199, 1203 (11th Cir. 2001)).
III. DISCUSSION
The parties agree that under Georgia law a constructive trust is a remedy to
prevent unjust enrichment, not an independent cause of action. (Appellant’s Br. at
18-19; Appellee’s Br. at 8.) As the Georgia Supreme Court makes clear, a
constructive trust “is not an independent cause of action . . . but a device by which
property might be recovered if [an] unjust enrichment claim were to prevail.” St.
Paul Mercury Ins. Co. v. Meeks, 508 S.E.2d 646, 648 (Ga. 1998). Furthermore, the
Georgia courts have stated plainly that “[a]n unjust enrichment theory does not lie
where there is an express contract.” See, e.g., Cox v. Athens Reg’l Med. Ctr., Inc.,
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631 S.E.2d 792, 798 (Ga. Ct. App. 2006) (quoting Pryor v. CCEC, Inc., 571 S.E.2d
454, 456 (Ga. Ct. App. 2002)).
The Defendants apply that law to this case and argue that the existence of the
Purchase Agreement bars the Executrix’s claim for unjust enrichment. The Executrix
responds that when an express agreement does not contemplate a future event a party
may assert a claim for unjust enrichment. She argues that the parties’ dispute here
arises out of events which occurred after the execution of the Purchase Agreement
and were not anticipated by the agreement. So, according to the Executrix, the
Purchase Agreement does not preclude the imposition of a constructive trust. We
reject this argument. We hold that the district court erred by granting summary
judgment in favor of the Executrix because the express contract between Howell,
Capital City, and National Cinema precludes an equitable claim and remedy in this
case.
The Executrix overstates the principle that a party may assert a claim for unjust
enrichment when the express contract does not contemplate a future event. It is true
that the court will allow recovery on an implied contract theory when services are
performed outside the scope of an express agreement. See Gerdes v. Russell Rowe
Commc’ns, Inc., 502 S.E.2d 352, 355 (Ga. Ct. App. 1998). However, this case does
not present those circumstances. Here, the parties’ competing claims to the insurance
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proceeds are the direct result of Capital City’s failure to abide by the plain terms of
the Purchase Agreement. The Purchase Agreement required Capital City to transfer
the policy to Howell with a change of beneficiary to Howell or Howell’s designee.
The policy terms require a “written request” to the insurer to change the owner of the
policy. (Dkt. 20 at 26.) Capital City breached its promise to transfer ownership of
the policy to Howell when it failed to take any steps with the insurer to change the
ownership of the policy.
The cases the Executrix has cited do not allow a court to transform a run-of-
the-mill breach of contract action into a suit in equity to circumvent the expiration of
the statute of limitations for a breach of contract action. Thus, we hold the district
court erred by remedying the Executrix’s equitable claim of unjust enrichment by
imposing a constructive trust. Any claim the Executrix may have at law for breach
of contract is barred by Georgia’s statute of limitations on breach of contract actions.
See Ga. Code Ann. § 9-3-24; Moore v. Dep’t of Human Res., 469 S.E.2d 511, 512-13
(Ga. Ct. App. 1996) (stating that statute of limitations on breach of contract claim
runs from the time the contract is broken (citing Owen v. Mobley Constr. Co., 320
S.E.2d 255, 256 (1984))).
The Defendants also argue that Capital City is the beneficiary of the policy.
We agree. In Georgia, the insured must change the beneficiary of a life insurance
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policy according to the terms of the policy or do substantially all that is required by
the policy. See Hinkle v. Woolever,2 547 S.E.2d 782, 783-84 (Ga. Ct. App. 2001)
(citations omitted). Some affirmative act on the part of the owner to change the
beneficiary is required. Mere intention to change the beneficiary will not suffice to
work a change. Id. (citing Maxwell v. Britt, 319 S.E.2d 88, 90 (Ga. Ct. App. 1984)).
Here, the policy’s plain terms required written notice to the insurer to change the
beneficiary designation. (Dkt. 20 at 26.) While the Purchase Agreement may express
an intention to change the policy’s beneficiary to Howell or his designee, there is no
evidence any steps were taken to notify the insurer to change the beneficiary. Under
Georgia law then, Capital City remains the beneficiary of the policy.
IV. CONCLUSION
The district court’s order that the Defendants challenge on appeal disposed of
a variety of summary judgment motions including the Defendants’ motion for
summary judgment on their cross-claims and counterclaims. To the extent the
Defendants believe the denial of their motions for summary judgment on these claims
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The district court’s opinion suggests that the Georgia Supreme Court’s opinion in DeRyke
v. Teets, 702 S.E.2d 205 (Ga. 2010) has modified Hinkle. However, the rule the court established
in DeRyke does not govern this case. There, the court stated that if a party by agreement
unequivocally waives his or her rights as a beneficiary of a benefit plan, this waiver remains effective
even if the beneficiary designation in the plan remains unchanged. DeRyke, 702 S.E.2d at 208. In
this case, the Purchase Agreement did not operate as an unequivocal waiver of Capital City’s claim
to the life insurance proceeds. It only gave Howell the power to designate a beneficiary of his
choice. Thus, DeRyke does not alter the application of the basic rule stated in Hinkle in this case.
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was error, they have waived this argument. See United States v. Jernigan, 341 F.3d
1273, 1283 n.8 (11th Cir. 2003) (“Under our caselaw, a party seeking to raise a claim
or issue on appeal must plainly and prominently so indicate. Otherwise, the
issue—even if properly preserved at trial—will be considered abandoned.” (citing
Greenbriar, Ltd. v. City of Alabaster, 881 F.2d 1570, 1573 n.6 (11th Cir. 1989))). We
therefore AFFIRM the district court’s order to the extent it denied summary judgment
on the Defendants’ cross-claims and counterclaims. We REVERSE the district
court’s order in so far as it granted summary judgment on the Executrix’s claim for
an implied trust and REMAND with instructions to enter judgment in favor of Capital
City, the beneficiary of record, for the policy proceeds.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED WITH
INSTRUCTIONS.
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