Security Mut Life Ins Co of New York v. Jamila Aquila Amira-Bell

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
SECURITY MUTUAL LIFE INSURANCE FOR PUBLICATION
COMPANY OF NEW YORK, July 21, 2022
9:30 a.m.
Plaintiff-Appellee,
v No. 357105
Wayne Probate Court
JAMILA AQUILA AMIRA-BELL, LC No. 2020-860910-CZ
Defendant-Appellant,
and
ANIYA BELL YOUNG, by Next Friend AISHA
YOUNG, KENNEDY LOYD BELL, by Next Friend
LAKIYA LOYD, CAROL BRAY, by Next Friend
MICHAEL BRAY, TODD E. BRIGGS, Personal
Representative of the ESTATE OF OMARI
KAMAU BELL, and KAMARI BLACK,
Defendants-Appellees.
.
Before: M. J. KELLY, P.J., and MURRAY and BORRELLO, JJ.
PER CURIAM.
This case arises out of a probate dispute regarding insurance benefits owed by plaintiff,
Security Mutual Life Insurance Company of New York, as a result of the death of its insured,
Omari Kamau Bell. On November 19, 2020, Security Mutual Life Insurance filed a complaint for
interpleader, requesting the trial court determine the proper beneficiaries of Bell’s five insurance
policies because Bell’s estate and Bell’s sister, defendant Jamila Aquila Amira-Bell, claimed
competing interests in the benefits. On April 23, 2021, the trial court entered an opinion and an
order determining Bell’s estate was the proper beneficiary of the insurance policies. Amira-Bell
appeals as of right, arguing the trial court improperly found Bell substantially complied with
Security Mutual Life Insurance’s beneficiary change provisions because Bell did not do everything
in his power to effectuate the change. For the reasons stated in this opinion, we reverse the trial
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court’s order and remand for entry of an order releasing the insurance benefits to the five original
beneficiaries.
I. BASIC FACTS
On December 9, 2018, Bell named five individuals as equal beneficiaries to his insurance
policies through Security Mutual Life Insurance. On December 20, 2018, Security Mutual Life
Insurance sent Bell five letters indicating it accepted Bell’s beneficiary designations on each
policy. Thereafter, on January 31, 2019, Bell completed five beneficiary designation change forms
requesting to alter the beneficiaries on each insurance policy. On the change-of-beneficiary forms,
he requested Security Mutual Life Insurance name his estate as his sole beneficiary. However,
Bell also listed Michigan Guardian Services as a beneficiary, both as a trust and as a business, and
Bell indicated Michigan Guardian Services was to receive 100% of the benefits in each separate
capacity.
On February 7, 2019, Security Mutual Life Insurance sent Bell—at the address of Bell’s
guardian—five letters indicating it could not process the change in beneficiaries because the
respective percentages did not equal 100%. Security Mutual Life Insurance requested Bell submit
new beneficiary designation forms that properly allocated the benefits, and Security Mutual Life
Insurance advised Bell that the five original beneficiaries remained the beneficiaries on each
policy. On November 6, 2019, approximately nine months after being advised that his requests
for a change of beneficiaries had been rejected, Bell died without having completed new change-
of-beneficiary forms.
After Bell’s death, Security Mutual Life Insurance and the personal representative of Bell’s
estate requested the trial court determine the proper beneficiaries under the insurance policy. The
trial court found Security Mutual Life Insurance improperly denied Bell’s beneficiary designation
because Bell clearly intended to name his estate as the sole beneficiary, and Bell substantially
complied with the beneficiary change provisions by indicating such on the relevant forms. The
trial court accordingly released the insurance benefits to Bell’s estate.
II. CHANGE OF BENEFICIARY
A. STANDARD OF REVIEW
Amira-Bell argues the trial court improperly found Bell substantially complied with
Security Mutual Life Insurance’s beneficiary change provisions because Bell did not do everything
in his power to effectuate the change. This Court reviews for an abuse of discretion a probate
court’s dispositional rulings and it reviews for clear error a probate court’s factual findings. In re
Portus, 325 Mich App 374, 381; 926 NW2d 33 (2018). “An abuse of discretion occurs when the
probate court chooses an outcome outside the range of reasonable and principled outcomes.” Id.(quotation marks and citation omitted). “A probate court’s finding is clearly erroneous when a
reviewing court is left with a definite and firm conviction that a mistake has been made, even if
there is evidence to support the finding.” Id. (quotation marks and citation omitted).
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B. ANALYSIS
“It is well settled in Michigan that substantial compliance with change-of-beneficiary
requirements is sufficient to effect a substitution.” Aetna Life Ins Co v Brooks, 96 Mich App 310,
315; 292 NW2d 532 (1980).1 Under this threshold,
where the contract of insurance outlines the manner or method by which
beneficiaries may be designated or changed, the steps or formalities so stipulated
must be at least substantially complied with . . . [because] in such a case a
designation can be made effective only by following the policy provisions and by
conforming to the manner or mode specified in the contract. [Dogariu v Dogariu,
306 Mich 392, 398; 11 NW2d 1 (1943) (quotation marks and citation omitted).]
See also Innovation Ventures v Liquid Mfg, 449 Mich App 491, 507; 885 NW2d 861 (2016)
(explaining courts must “examine the language of the contract according to its plain and ordinary
meaning,” and “[i]f the contractual language is unambiguous, courts must interpret and enforce
the contract as written . . . .”) (quotation marks and citations omitted); Home-Owners Ins Co v
Andriacchi, 320 Mich App 52, 62; 903 NW2d 197 (2017) (“[A]n insurance contract must be
enforced in accordance with its terms.”) (quotation marks and citation omitted). “When an insured
has done all he can to change a beneficiary, the original beneficiary loses all rights under the
policy.” , citing Quist v Western & Southern Life Ins Co, 219 Mich 406, 409; 189 NW 49 (1922)
(emphasis added).
The question on appeal is whether Bell substantially complied with Security Mutual Life
Insurance’s beneficiary designation provisions. Based on our review of the relevant caselaw, we
conclude that he did not.
In Aetna Life Ins Co, this Court examined compliance with a provision stating the insured
may change his designated beneficiary “by written request filed . . . [with] the insurance company”
and that “[s]uch designation or change shall take effect on the date of designation of such request,
whether or not the [insured] be living at the time of such filing.” (quotation marks omitted). The
insured in that case “attempted to comply with the provision by indicating his change in beneficiary
in written form,” but the insurer never received the delivered form. Id. The Aetna Life Ins Co
Court held the insured substantially complied with the beneficiary change provision because,
although the insured used the wrong form to make his request and although the form was never
1
Although this Court is not required to follow cases decided before November 1, 1990, see MCR
7.215(J)(1), a published case decided by this Court “has precedential effect under the rule of stare
decisis,” MCR 7.215(C)(2). See also Woodring v Phoenix Ins Co, 325 Mich App 108, 114-115;
923 NW2d 607 (2018) (stating that although this Court is not “strictly required to follow
uncontradicted opinions from this Court decided before November 1, 1990,” those opinions are
nonetheless “considered to be precedent and entitled to significantly greater deference than are
unpublished cases.”).
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received by the insurer, the policy only required that the insured make a written request to change
his beneficiary designation. Id. at 316.
We consider persuasive this Court’s decision in American Equity Investment Life Ins Co v
Bitto, unpublished per curiam opinion of the Court of Appeals, issued September 28, 2017 (Docket
No. 332203).2 In that case, this Court held an insured failed to substantially comply with the
insurer’s beneficiary designation provision merely by completing and signing the relevant form
because the policy required the insurer to receive the form for the change to take effect. Id. at 4-
5. The Bitto Court reasoned the insured failed to “do all in his power to comply with the contract’s
provisions” because the evidence demonstrated the insured signed the form before his death, and
the insurer did not receive the form until after his death. Id. at 5. Although it was clear the insured
intended to effect the change in his beneficiary, the Bitto Court noted, “ ‘[t]he mere unexecuted
intention to change the beneficiary is not sufficient to effectuate such a change.’ ” Id. at 6, quoting
Gignac v Columbian Nat’l Life Ins Co, 321 Mich 201, 203; 32 NW2d 442 (1948). Consequently,
the Bitto Court concluded “merely filling out a form is not substantial compliance when the
contract required that it be received by the insured.” Id.Also persuasive is this Court’s decision in In re Estate of Pellegrini, unpublished per
curiam opinion of the Court of Appeals, issued June 15, 2017 (Docket No. 332285). In Pellegrini,
this Court held the insured substantially complied with the insurer’s beneficiary designation
provision by mailing a signed form unequivocally expressing her intent to change her beneficiary.
Id. at 3-4. The Court noted the insurer’s policy required only a “signed written request” to
effectuate a beneficiary modification, so the insured’s failure to accurately and fully complete the
form was irrelevant. Id. at 3. Conversely, in Mazaitis v Noel, unpublished per curiam opinion of
the Court of Appeals, issued October 11, 2005 (Docket No. 253959), p 3, this Court held the
insured did not do “all that he could to execute an appropriate change of beneficiary form” because
he failed to utilize the appropriate language and procedure to make the change, despite doing so
multiple times before.
Taken together, the above cases make clear that determining whether an insured
substantially complied with a change-of-beneficiary provision in an insurance policy requires an
individualistic examination of the specific policy at issue. That is, what constitutes substantial
compliance under one policy may not qualify as substantial compliance under another.
Here, Bell’s insurance policies expressly required Security Mutual Life Insurance to
approve Bell’s designation of beneficiaries. Consequently, under the terms of the specific policy
in this case, any intended beneficiary designation is invalid if Security Mutual Life Insurance
disapproves such designation. Accordingly, even though the trial court did not clearly err by
finding that Bell’s handwritten notes on the January 2019 beneficiary designation forms
demonstrated Bell’s clear intent to name his estate as his sole beneficiary, such intent does not
necessarily mean that he substantially complied with the change-of-beneficiary provision in his
2
Unpublished cases by this Court are “not precedentially binding under the rule of stare decisis,”
MCR 7.215(C)(1); however, they may be used as persuasive authority, Cox v Hartman, 322 Mich
App 292, 307; 911 NW2d 219 (2017).
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insurance policies. Indeed, as explained by our Supreme Court in Prudential Ins Co of America
v Irvine, 338 Mich 18, 28; 61 NW2d 14 (1953):
To hold that, without substantial compliance with the provisions of the policy
relative to change of beneficiary, an insured by his will alone, could change such
beneficiary, would open the door to possible fraud and irregularities and would
create uncertainty tending to interfere with the customary practice of prompt
payment. We are convinced that in the absence of a showing of substantial
compliance with the policy's requirements, the will of the insured, standing alone,
should not effect a change of beneficiary. [Quotation marks and citation omitted.]
See also Gignac, 321 Mich at 203 (“[T]he mere unexecuted intention to change the beneficiary is
not sufficient to effectuate such a change.”). Rather, as explained by the above cases, it is the
insured’s compliance with the specific policy provisions that matters.
In this case, Bell incorrectly completed the beneficiary designation forms by apportioning
100% of his benefits to Michigan Guardian Services as two distinct beneficiaries: once as a trust
and once as a business. Bell did so after he already indicated his estate was to serve as his primary
beneficiary. Bell’s erroneous completion of these forms is apparent on their face, which is the
reason that Security Mutual Life Insurance denied the beneficiary designation. Security Mutual
Life Insurance timely informed Bell it denied the beneficiary designation, explained it did not
know how to apportion Bell’s designated beneficiaries because of the error, requested Bell
recomplete an accurate beneficiary designation form, and advised Bell his five original
beneficiaries would remain as such until Security Mutual Life Insurance is able to approve an
appropriate beneficiary designation at Bell’s request. Thereafter, Bell did not resubmit any
beneficiary designation form for over nine months, at which point he died having left unaltered
the five original beneficiary designations. During that time, Bell could have done more to
effectuate his desired beneficiary modification, but he did not. As a result, it is apparent that Bell
failed to “do all in his power to comply with the contract’s provisions” by resubmitting
appropriately completed beneficiary designation forms. Bitto, unpub op at 5; see also Aetna Life
Ins Co, 96 Mich App at 315-316 (stating that an original beneficiary loses all rights under a policy
if an “insured has done all he can to change a beneficiary.”). In other words, because Bell failed
to comply with the “manner or method by which beneficiaries may be designated or changed”
under the specific terms of the insurance policies—e.g., by obtaining Security Mutual Life
Insurance’s approval of his beneficiaries—his attempt to modify his beneficiaries was ineffective,
regardless of how clearly he intended to do so. See Dogariu, 306 Mich at 398.
We note that the trial court correctly concluded, Bell’s erroneous designation of Michigan
Guardian Services as a beneficiary had no legal effect because fiduciaries cannot benefit from their
wards’ estates. See MCL 700.1214. Regardless of whether such impossible beneficiary
designations generally can be ignored and severed, there was no valid beneficiary designation from
which to sever the invalid designation. Bell’s attempt to modify his beneficiaries failed the
moment Security Mutual Life Insurance denied the January 2019 beneficiary designations,
meaning any intent clearly expressed therein is irrelevant because it was repudiated by the denial
of the designations. As such, the entirety of each beneficiary designation form was invalid, and
no parts could be severed from any other parts as successful beneficiary designations. The only
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way Bell’s intent could have been fulfilled was if he resubmitted other forms that listed his estate
as the sole beneficiary, which he failed to do.
Bell’s estate also argues the issue of whether Bell could have done more to effectuate the
change is improper on appeal because Security Mutual Life Insurance sent the denial letters to
Michigan Guardian Services, not directly to Bell. Bell’s estate contends that there is nothing in
the record to show that Bell was ever notified that he was not successful in his attempt to change
his beneficiaries. We conclude that, although the question of whether Bell’s guardian had a duty
to ensure Bell responded to this letter was unexplored in the trial court, it is ultimately irrelevant
on appeal. Under the terms of the policy, Security Mutual Life Insurance may disapprove any
beneficiary designations that do not comply with its rules and regulations, and Bell’s request to
modify his beneficiaries violated those rules by failing to appropriately allocate the beneficiaries’
respective percentages. Bell’s estate has not presented any evidence demonstrating anything in
the policy limited Security Mutual Life Insurance’s approval or disapproval to instances in which
the insured was offered, or accepted, an opportunity to rectify the issue. Security Mutual Life
Insurance fulfilled its duty by providing notice to Bell, through his guardian, that the beneficiary
designations were denied and that the original beneficiary designations remained unaltered. Any
action by either party after that point is irrelevant as to whether the original beneficiaries remained
in place at the time Security Mutual Life Insurance denied the beneficiary designations.
III. CONCLUSION
In sum, Security Mutual Life Insurance properly denied Bell’s January 2019 beneficiary
designations for failing to comply with Security Mutual Life Insurance’s rules and regulations.
Thereafter, Bell failed to substantially comply with the policy’s provisions by resubmitting
appropriately completed beneficiary designation forms before his death. Bell’s five original
beneficiaries accordingly remained in place at the time of his death. Consequently, the trial court
erred by holding Bell’s estate was the correct beneficiary to the insurance benefits.
Reversed and remanded for entry of an order releasing the insurance benefits to the five
original beneficiaries. We do not retain jurisdiction. Amira-Bell may tax costs as the prevailing
party. MCR 7.219(A).
/s/ Michael J. Kelly
/s/ Christopher M. Murray
/s/ Stephen L. Borrello
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