Galloway v. Snell

IN THE SUPREME COURT OF NORTH CAROLINA
No. 90A22
Filed 28 April 2023
MICHAEL R. GALLOWAY, as Trustee of the MELISSA GALLOWAY SNELL
LIVING TRUST DATED May 1, 2018, and as the Personal Representative of the
ESTATE OF MELISSA GALLOWAY SNELL
v.
JEFFREY SNELL
Appeal pursuant to N.C.G.S. § 7A-30(2) from the decision of a divided panel of
the Court of Appeals, 282 N.C. App. 239 (2022), reversing an order entered on
19 August 2020 by Judge A. Graham Shirley II in Superior Court, Wake County, and
remanding to the trial court for further proceedings. Heard in the Supreme Court on
15 March 2023.
Gregory S. Connor for plaintiff-appellant.
Smith Debnam Narron Drake Saintsing & Myers, LLP, by Bettie Kelley Sousa
and Alicia Jurney, for defendant-appellee.
BARRINGER, Justice.
In this matter, we review the Court of Appeals’ determination that provisions
in a settlement agreement are ambiguous. Having reviewed the plain language of the
settlement agreement and having determined it to be unambiguous, we conclude that
the Court of Appeals erred.
I. Background
Defendant Jeffrey Snell and Melissa Galloway Snell (Melissa) married in
GALLOWAY V. SNELL
Opinion of the Court
March 2000 but subsequently separated in August 2017. Thereafter, on
8 February 2018, defendant and Melissa executed a Memorandum of Mediated
Settlement Agreement (Settlement Agreement). On 28 December 2018, a judgment
of divorce was granted to defendant and Melissa in District Court, Wake County. A
few months later, Melissa passed away. At the time of her death, the life insurance
policy on Melissa’s life (Policy) listed the Melissa Galloway Snell Living Trust (Trust),
dated 1 May 2018, as the Policy’s beneficiary. Defendant and Melissa had four
children, who are the beneficiaries of the Trust.
Defendant on his own and through counsel asserted that the proceeds from
Melissa’s Policy should be paid to defendant. As a result, the trustee of the Trust,
plaintiff Michael Galloway, sued and sought a declaratory judgment that the
Settlement Agreement permitted Melissa to lawfully name the Trust as the
beneficiary of her Policy binding defendant.1 Defendant asserted a counterclaim,
seeking a declaration that the Settlement Agreement required payment of the death
benefits from Melissa’s Policy to defendant.
Plaintiff and defendant both moved for summary judgment on the declaratory
judgment claim. The trial court concluded that the Settlement Agreement was not
ambiguous and there was no genuine issue of material fact precluding the granting
of summary judgment on plaintiff’s declaratory judgment claim. The trial court
1 Plaintiff in his capacity as the personal representative of Melissa’s estate also
asserted a breach of contract claim. However, as this claim is not relevant to the appeal, we
do not discuss it further in this opinion.
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granted plaintiff’s motion for summary judgment as to his declaratory judgment
claim and declared as follows:
I. The Settlement Agreement, subject to II below,
required [Melissa Galloway] Snell to maintain life
insurance naming [Defendant] the beneficiary with a death
benefit of at least $1 Million until she no longer had an
obligation to pay for college expenses;
II. The Settlement Agreement permitted Melissa
Galloway Snell to change the beneficiary on insurance she
owned to the children’s trust in lieu of having the
Defendant named as beneficiary, including changing the
beneficiary on the two life insurance policies in which
Defendant was named as the beneficiary, with death
benefits totaling $1,000,000.00, to the Melissa Galloway
Snell Living Trust as beneficiary;
III. That the Melissa Galloway Living Trust dated
May 1, 2018 is the proper sole beneficiary of all of the life
insurance policies owned by Melissa Galloway Snell at her
death.
The trial court denied defendant’s motion for summary judgment.
Thereafter, defendant appealed the trial court’s order granting plaintiff’s
summary judgment motion and denying defendant’s summary judgment motion as
to the declaratory judgment claim to the Court of Appeals. A divided panel of the
Court of Appeals concluded that the relevant language of the Settlement Agreement
was ambiguous. Galloway v. Snell, 282 N.C. App. 239, 240 (2022). Thus, it reversed
the trial court’s order and remanded for further proceedings. Id. In contrast, the
dissent concluded that the relevant language of the Settlement Agreement was
unambiguous. Id. at 251 (Hampson, J., dissenting). The dissent took the position that
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the trial court properly granted summary judgment in favor of plaintiff. Id. at 253.
Plaintiff appealed to this Court based on the dissent.
II. Standard of Review
“Our standard of review of an appeal from summary judgment is de novo; such
judgment is appropriate only when the record shows that there is no genuine issue
as to any material fact and that any party is entitled to a judgment as a matter of
law.” In re Will of Jones, 362 N.C. 569, 573 (2008) (cleaned up).
III. Analysis
Written contracts “are to be construed and enforced according to their terms.”
Gould Morris Elec. Co. v. Atl. Fire Ins. Co., 229 N.C. 518, 520 (1948). They “must
receive a reasonable interpretation, according to the intention of the parties at the
time of executing them, gathered from the language employed by them.” Lane v.
Scarborough, 284 N.C. 407, 411 (1973) (cleaned up). “When the language of a contract
is clear and unambiguous, effect must be given to its terms,” Weyerhaeuser Co. v.
Carolina Power & Light Co., 257 N.C. 717, 719 (1962), and “its terms may not be
contradicted by parol or extrinsic evidence,” Root v. Allstate Ins. Co., 272 N.C. 580,
587 (1968).
Further, a contract’s meaning and effect is a question of law for the court—not
the jury—when the language of the contract is clear and unambiguous. Lowe v.
Jackson, 263 N.C. 634, 636 (1965) (“It is well settled that where the language of a
contract is plain and unambiguous, it is for the court and not the jury to declare its
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meaning and effect.”); Lane, 284 N.C. at 410 (“When a contract is in writing and free
from any ambiguity which would require resort to extrinsic evidence, or the
consideration of disputed fact, the intention of the parties is a question of law.”). And
“[t]he terms of an unambiguous contract are to be taken and understood in their
plain, ordinary and popular sense,” Weyerhaeuser, 257 N.C. at 719–20, and
“harmoniously construed” to give “every word and every provision” effect, Singleton
v. Haywood Elec. Membership Corp., 357 N.C. 623, 629 (2003) (quoting Gaston Cnty.
Dyeing Mach. Co. v. Northfield Ins. Co., 351 N.C. 293, 299 (2000)).
“An ambiguity exists in a contract when either the meaning of words or the
effect of provisions is uncertain or capable of several reasonable interpretations.”
Register v. White, 358 N.C. 691, 695 (2004). “An ambiguity can exist when, even
though the words themselves appear clear, the specific facts of the case create more
than one reasonable interpretation of the contractual provisions.” Id. If a written
contract is ambiguous, the contract’s meaning and effect is a factual question for the
jury and parol evidence may be introduced “not to contradict, but to show and make
certain what was the real agreement between the parties.” Root, 272 N.C. at 590(quoting Hite v. Aydlett, 192 N.C. 166, 170 (1926)).
Given this well-established law concerning contract construction, we turn to
the written contract, the Settlement Agreement, and its terms. The Settlement
Agreement, as pertinent, provides as follows:
Snell Mediated Settlement Agreement
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Opinion of the Court
Equitable Distribution
....
• Non-ED Assets/Children’s Assets:
....
o The children’s life insurance policies shall be
kept intact. [Defendant] will be responsible
for 90% of the premiums and Melissa shall be
responsible for 10% of the premiums until the
child is gainfully employed. The beneficiary
shall be the children’s trust (see details about
trust below)
Custody- see the consent order for custody
Support- Child and Spousal
....
• As long as [defendant] has support obligation[s] or is
obligated to pay for children’s college as outlined
below, he shall maintain a life insurance policy
naming Melissa is [sic] as the beneficiary with a
death benefit of $2 Million.
• Until Melissa no longer has an obligation to pay for
college expenses, she shall maintain a life insurance
policy naming [defendant] the beneficiary with a
death benefit of at least $1 Million. [Defendant] at
his election may maintain (as owner) at his sole
expense [words lined through] life insurance policy
on Melissa’s life totaling $1,000,000 in death benefit.
• Additional term: the parties currently have a health
insurance policy with a deductible of $10K. Prior to
Melissa’s flu and hospitalization, Melissa had paid
almost $1K. [Defendant] shall pay as non-taxable
support the sum of up to $9,000.00 in the form of
payments directly to medical providers as the bills
come due for the 2018 policy term.
• Children’s trust- each party shall, within 90 days,
set up a trust for the benefit of the minor children so
that the children can receive any insurance proceeds
in lieu of the other party being named the
beneficiary. [Defendant’s] brother shall be named as
trustee of the children’s trust established by
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[defendant], and Melissa’s brother shall be named as
trustee of the children’s trust established by
Melissa.
....
College
• Each party shall contribute .05% percent of his/her
annual gross income (per two years’ ago tax return)
per child to the children’s 529 accounts. By way of
example, each party’s obligation for the 2018 year
shall be calculated using each party’s AGI for 2016.
This can be contributed annually or monthly, but in
any case the full amount for each child’s 529 shall be
put into the proper account no later than April 15 for
that year.
• In the event that any child’s 529 account does not
cover the costs for the child to attend college, each
party shall be responsible as follows: Melissa 10%,
[defendant] 90%. Each party’s total obligation shall
be limited to the cost for in-state tuition, books, fees,
etc. at UNC-Chapel Hill, for up to 8 semesters per
child.
Before the Court of Appeals, plaintiff argued that the Settlement Agreement
“unambiguously provides that once a party sets up a trust for the benefit of the
children, the party could change the beneficiary of any insurance policy such that ‘the
children can receive any insurance proceeds in lieu of the other party being named
the beneficiary.’ ” Galloway, 282 N.C. App. at 249 (majority opinion). In contrast,
defendant argued that the Settlement Agreement “unambiguously required Melissa
to ‘maintain a life insurance policy naming [defendant] the beneficiary with a death
benefit of at least $1 Million’ until ‘Melissa no longer had an obligation to pay for
college expenses,’ and the children’s trust was to be the beneficiary of proceeds from
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other policies—including each of the children’s life insurance policies.” Id. In the
alternative, defendant argued the Settlement Agreement is ambiguous. Id. The Court
of Appeals held that the Settlement Agreement is ambiguous. Id. at 250. The dissent
disagreed, id. at 251 (Hampson, J., dissenting), and plaintiff appealed based on the
dissent.
Like the dissent, we disagree with the holding of the Court of Appeals as a
matter of law. The Settlement Agreement is unambiguous as to the controversy
before this Court. When the Settlement Agreement is read as a whole and the
language of the Settlement Agreement is accorded its plain and ordinary meaning,
“the intent of the parties at the moment of its execution emerges clearly.” Preyer v.
Parker, 257 N.C. 440, 445 (1962). “Until Melissa no longer has an obligation to pay
for college expenses, she shall maintain a life insurance policy naming [defendant]
the beneficiary with a death benefit of at least $1 Million,” provided that after setting
up a trust for the benefit of the minor children, such trust for “the children can receive
any insurance proceeds in lieu of the other party being named the beneficiary.”
(Emphasis added).
The foregoing statements are in bullet points under the subheading “Support-
Child and Spousal” and are the only statements under the subheading “Support-
Child and Spousal” that address insurance policies where the other party is named
the beneficiary. Further, the trust for the benefit of the minor children is for “any
insurance proceeds in lieu of the other party being named the beneficiary.” (Emphasis
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added). We must apply the plain and ordinary meaning to the terms of the Settlement
Agreement, including to the word “any,” see Weyerhaeuser, 257 N.C. at 719–20, and
must construe the Settlement Agreement to give every word and every provision
effect, Singleton, 357 N.C. at 629.
When used as a determiner, like in the Settlement Agreement, the word “any”
is “used to refer to one or some of a thing or number of things, no matter how much
or many” and “whichever of a specified class might be chosen.” Any, New Oxford
American Dictionary (3rd ed. 2010); see also Any, The American Heritage Dictionary
(5th ed. 2018) (defining “any” as “[o]ne, some, every, or all without specification”).
Defendant’s interpretation would not give the term “any” its plain and ordinary
meaning, and it would not give effect to the language “the children can receive any
insurance proceeds in lieu of the other party being named the beneficiary.” Rather,
defendant’s interpretation would require us to read into the Settlement Agreement
limiting language to the word any that is not there, which is contrary to the
requirement that a “contract must be construed to mean what on its face it purports
to mean.” Hagler v. Hagler, 319 N.C. 287, 294 (1987) (quoting Hartford Accident &
Indem. Co. v. Hood, 226 N.C. 706, 710 (1946)).
We hold that the Settlement Agreement as it relates to this controversy is
unambiguous because neither “the meaning of words [n]or the effect of provisions is
uncertain or capable of several reasonable interpretations.” Register, 358 N.C. at 695.
Given the lack of ambiguity, construction is a question of law for the court. We agree
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with the Court of Appeals’ dissent that the construction as a matter of law is as the
trial court construed it—“Melissa was permitted to name the [T]rust she set up for
the benefit of the children as the beneficiary of the insurance policies she maintained
to secure her college expense obligations.” Galloway, 282 N.C. App. at 253 (Hampson,
J., dissenting). Thus, the Court of Appeals should have affirmed the trial court’s order
granting summary judgment in plaintiff’s favor on the declaratory judgment claim.
IV. Conclusion
Having reviewed the plain language of the Settlement Agreement, we conclude
that the Court of Appeals erred by holding that the Settlement Agreement is
ambiguous. Accordingly, we reverse the Court of Appeals’ decision.
REVERSED.
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