Gralnick v. Gralnick

payment of Alan's outstanding alimony obligation of $235,000 owed to Ann
at the time of Alan's death.
The divorce decree specifically listed the separate assets of
Alan and Ann, and included the following language in the listings of both
Alan's and Ann's separate property: la]ny and all bank accounts,
brokerage accounts, life insurance or other accounts not otherwise
provided for herein solely in [his or her] name or held jointly with anyone
other than [Alan or Ann.]" The district court relied on this language in
concluding that any community property interest held by Ann in Alan's
life insurance policy proceeds was waived upon execution of the divorce
decree and, therefore, constituted Alan's separate property.
We will not disturb a district court's finding as to the
characterization of marital property or an alimony award unless it
appears from the record that the district court abused its discretion or
committed legal error. Wolff v. Wolff, 112 Nev. 1355, 1359, 929 P.2d 916,
918-19 (1996). And, this court will not disturb a district court's factual
determinations that are supported by substantial evidence. Williams v.
Williams, 120 Nev. 559, 566, 97 P.3d 1124, 1129 (2004). Substantial
evidence is evidence that a reasonable person could accept as sufficient to
support a judgment. Id.
Ann contends that the district court erred in awarding her
only $235,000 of the insurance proceeds, which constituted Alan's
outstanding alimony obligation owed to Ann at the time of Alan's death.
Ann alleges that such a determination by the district court violates the
Fifth Amendment because the award of the remaining insurance proceeds
to Susan constitutes an illegal taking of Ann's property. Further, she
contends that the district court failed to consider Aetna Life Ins. Co. v.
2
i;i1EfOffiAfg1
Hussey, 595 N.E.2d 942 (Ohio 1992), in its determination. In Aetna, the
court held that any balance of unused insurance proceeds remaining after
a contractual allocation "must be distributed to the named beneficiary
within the policy." Id. at 942.
Pursuant to Nevada statute, Ann has an explicit right to all
insurance proceeds as the named owner and beneficiary on Alan's life
insurance policy. NRS 687B.260 explicitly provides that
if a policy of life insurance is assigned or in any
way made payable to any such person, the lawful
beneficiary or assignee thereof. . . is entitled to its
proceeds and avails against the
. . . representatives of the insured and of the
person effecting the same, whether or not the right
to change the beneficiary is reserved or permitted
and whether or not the policy is made payable to
the person whose life is insured.
In Ohran v. Sierra Health and Life Ins. Co., we held that "[a] divorce
decree must contain explicit language to divest a former spouse of his or
her rights as a designated beneficiary of a life insurance policy." 111 Nev.
688, 690, 895 P.2d 1321, 1322 (1995) (citing Redd v. Brooke, 96 Nev. 9, 12,
604 P.2d 360, 362 (1980)). Here, the language of the divorce decree
explicitly provides that "[a]ny. . life insurance or other accounts not
otherwise provided for herein" is characterized as separate property not
subject to community property distribution. (Emphasis added). However,
Alan's life insurance policy does not fall within this characterization
because it was "otherwise provided for" in the decree of divorce requiring
that "Alan . . . maintain a life insurance policy on his life. . . naming Ann
as owner and beneficiary thereunder in an amount sufficient to satisfy the
outstanding portion of his alimony obligation."
3
Thus, because we determine that Ann maintains a statutory
right as the named beneficiary on Alan's life insurance policy and the
policy was specifically provided for in the divorce decree, we conclude that
the district court committed legal error in not awarding Ann all of the life
insurance proceeds in the sum of $466,000. 1
Therefore, we ORDER the judgment of the district court
REVERSED.
J.
esty
Parxaguirre
Cherry
'Ann also argues on appeal that Susan cannot be substituted as
Alan's personal representative under NRCP 25(a). We disagree. NRCP
25(a)(1) permits the substitution of a deceased party by their successors or
representatives. Additionally, NRCP 25(a)(2) specifically provides that if
the "right sought to be enforced survives . . . , the action does not abate."
Here, Susan seeks a right to the excess life insurance proceeds after all
outstanding alimony is paid to Ann from the funds. As the district court
stated in its order, "[t]his right is no different than the right Alan (or his
successor) would have had to all the insurance proceeds had there been no
offset for unpaid alimony." Therefore, we conclude the district court
properly permitted Susan's substitution as Alan's personal representative.
Additionally, Ann argues that the district court erred in declining to
disqualify the Abrams Law Firm, LLC, as Susan's attorney due to an
alleged conflict of interest resulting from the law firm's prior
representation of Alan under NRPC 1.7 and NRPC 1.9. However, because
we conclude that the district court did not err in determining that both
Susan and Alan held the same interest "in enforcing the provisions of the
[d]ecree of [d]ivorce," we further conclude that no conflict of interest exists.
SUPREME COURT
OF
NEVADA
4
(0) 1947A <
cc: Hon. Robert Teuton, District Judge, Family Court Division
Robert E. Gaston, Settlement Judge
Moran Law Firm, LLC
Abrams Law Firm, LLC
Eighth District Court Clerk
SUPREME COURT
OF
NEVADA
5
(0) 1947A