Motorist Life Ins. Co. v. Sherbourne

[Cite as Motorist Life Ins. Co. v. Sherbourne, 2014-Ohio-5205.]
IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
ALLEN COUNTY
MOTORISTS LIFE INS. CO.,
PLAINTIFF-APPELLEE,
v. CASE NO. 1-14-17
PATRICIA SHERBOURNE,
DEFENDANT-APPELLANT,
-AND- OPINION
CHARLES E. MURRAY, ET AL.
DEFENDANTS-APPELLEES.
Appeal from Allen County Common Pleas Court
Trial Court No. CV20140069
Judgment Reversed and Cause Remanded
Date of Decision: November 24, 2014
APPEARANCES:
James C. King for Appellant
Bruce A. Curry for Appellee, Motorists Life Ins. Co.
David E. Bowers for Appellee, Charles E. Murray
Jerry M. Johnson for Appellee, T.R. Chiles & Sons-Laman
Case No. 1-14-17
SHAW, J.
{¶1} Defendant-appellant, Patricia Sherbourne (“Patricia”) appeals the May
30, 2014 judgment of the Allen County Court of Common Pleas overruling her
motion for summary judgment and granting the motion for summary judgment
filed by defendant-appellee, Charles E. Murray (“Charles”). As a result of the trial
court’s ruling, the proceeds of two life insurance policies owned by the decedent,
William R. Murray (“William”), were ordered distributed to Charles and
defendant-appellee, T.R. Chiles & Sons-Laman Funeral Home (“Chiles & Sons”).
The proceeds totaling $165,216.80 were deposited with the trial court by plaintiff-
appellee, Motorists Life Insurance Company (“Motorists”) pending the trial
court’s determination of this matter.
{¶2} The facts of this case are undisputed by the parties. William and
Patricia were married on October 21, 1989. William bought two policies insuring
his life from Dennis Rockhold (“Rockhold”), a duly licensed servicing agent for
the sale of life insurance policies for Motorists.1 On June 15, 2002, William
designated Patricia as the sole beneficiary of both policies. There was no
contingent or successor beneficiary designated.
{¶3} On April 16, 2004, William and Patricia divorced. The divorce decree
did not mention the Motorists policies and William did not change his beneficiary
1
Specifically, William purchased policy number 9107553570 with a death benefit of $150,000 and policy
number 9107554020 with a death benefit of $15,880.
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designation of Patricia on the policies. William subsequently had three separate
post-divorce discussions with Rockhold regarding his designation of Patricia as
beneficiary on the policies. On each occasion, William indicated that he wanted to
retain Patricia as the beneficiary on both policies. During the course of this
litigation, Rockhold’s notes from William’s client file contemporaneously
memorializing his conversations with William were submitted as evidence.
{¶4} The first post-divorce discussion took place on September 1, 2005, at
which time Mr. Rockhold noted in writing that William stated he wanted to keep
his beneficiary designation of Patricia the same.
{¶5} The second post-divorce discussion between Rockhold and William
occurred on September 1, 2011. During this conversation, William indicated that
he still wanted to keep Patricia as his beneficiary on the policies. Rockhold’s
notes in William’s client file specifically stated that “[William] told me that Pat
was the best thing that ever happened to him. He was sorry he put her through the
stuff he did.” (Doc No. 13, Rockhold Aff. at 2, Ex. A-2).
{¶6} The third post-divorce conversation Rockhold had with William took
place on September 12, 2012. At this time, Rockhold again inquired as to whether
William wanted to retain Patricia as the beneficiary of the policies. Rockhold’s
notes stated the following, “asked him about Pat being a bene[ficiary] and he said
yes keep it that way.” (Doc. No. 13 Rockhold Aff. at 2, Ex. A-3).
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{¶7} Nearly a year later, on September 3, 2013, William died. William’s
son, Charles, was appointed as the acting fiduciary of William’s estate and in that
capacity made a claim to Motorists asserting that the proceeds of the two life
insurance policies were payable to William’s estate.
{¶8} On September 23, 2013, Charles and his siblings executed an
Insurance Proceeds Assignment to Chiles & Sons in the amount of $13,516.28 for
William’s funeral arrangements.
{¶9} On February 3, 2014, Motorists initiated this action by filing a
complaint in interpleader naming Patricia, Charles, and Chiles & Sons as
defendants. In its complaint, Motorists acknowledged the competing claims for
the proceeds made by the defendants and stated that it “cannot safely determine
the proper beneficiary.” (Doc. No. 1 at 3). Motorists further admitted “that it
owes and is ready and willing to pay the proceeds from the Policies, adjusted for
accrued interest, loans, etc. in accordance with the terms of the Policies in such
amounts and to whichever defendant(s) as the Court shall designate.” (Id.).
Accordingly, Motorists requested the trial court authorize it to deposit the
proceeds from the policies with the court and discharge it from any further liability
under the policies. The trial court subsequently approved Motorists’ request to
deposit the proceeds of the policies in the amount of $165,216.80.
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Case No. 1-14-17
{¶10} Each defendant timely filed answers in the case. On March 21, 2014,
Charles filed a motion for summary judgment asserting that pursuant to R.C.
5815.33(B)(1), the termination of Patricia and William’s marriage automatically
revoked William’s designation of Patricia as the beneficiary of the life insurance
policies at issue. Chiles & Sons filed a response in support of Charles’ motion for
summary judgment.
{¶11} On April 21, 2014, Patricia filed a motion for summary judgment
asserting that R.C. 5815.33(B)(1) did not preclude her from being entitled to the
policies’ proceeds because William had on at least three separate occasions post-
divorce affirmed his intent to his insurance agent to retain her as the beneficiary of
the policies. Patricia submitted an affidavit from Rockhold and a copy of his notes
from William’s client file in support of her motion for summary judgment.
{¶12} On May 30, 2013, the trial court issued a ruling granting Charles’
motion for summary judgment and overruling Patricia’s motion for the same. In
rendering its decision, the trial court determined that because William’s explicit
intent to retain or re-designate Patricia as his beneficiary after the divorce was not
stated in either the divorce decree or in the insurance policies, William’s original
designation of Patricia was automatically revoked under the terms of R.C.
5815.33(B)(1). Accordingly, the trial court ordered the life insurance proceeds be
disbursed to Charles and Chiles & Sons.
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Case No. 1-14-17
{¶13} Patricia filed this appeal, asserting the following assignment of error.
THE TRIAL COURT ERRED IN GRANTING DEFENDANT
CHARLES MURRAY’S MOTION FOR SUMMARY
JUDGMENT BASED SOLELY ON THE APPLICATION OF
OHIO REV. CODE § 5815.33(B)(1) AND IN OVERRULING
DEFENDANT PATRICIA SHERBOURNE’S MOTION FOR
SUMMARY JUDGMENT AS THERE WAS NO GENUINE
ISSUE OF MATERIAL FACT AND DEFENDANT
SHERBOURNE WAS ENTITLED TO JUDGMENT AS A
MATTER OF LAW.
{¶14} In her sole assignment of error, Patricia argues that the trial court
erred in overruling her motion for summary judgment. Specifically, Patricia
maintains that the trial court erroneously concluded that R.C. 5815.33(B)(1)
precluded her from being entitled to William’s life insurance proceeds when it was
uncontroverted that William repeatedly affirmed his designation of her as his sole
beneficiary on the policies after they divorced.
{¶15} This Court reviews a grant of summary judgment de novo, without
any deference to the trial court. Conley–Slowinski v. Superior Spinning &
Stamping Co., 128 Ohio App.3d 360, 363 (6th Dist.1998). A grant of summary
judgment will be affirmed only when the requirements of Civ.R. 56(C) are met.
This requires the moving party to establish: (1) that there are no genuine issues of
material fact, (2) that the moving party is entitled to judgment as a matter of law,
and (3) that reasonable minds can come to but one conclusion and that conclusion
is adverse to the non-moving party, said party being entitled to have the evidence
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construed most strongly in his favor. Civ.R. 56(C); see Horton v. Harwick Chem.
Corp., 73 Ohio St.3d 679, 1995–Ohio–286, paragraph three of the syllabus.
{¶16} The party moving for summary judgment bears the initial burden of
identifying the basis for its motion in order to allow the opposing party a
“meaningful opportunity to respond.” Mitseff v. Wheeler, 38 Ohio St.3d 112,
syllabus (1988). The moving party also bears the burden of demonstrating the
absence of a genuine issue of material fact as to an essential element of the case.
Dresher v. Burt, 75 Ohio St.3d 280, 292, 1996–Ohio–107. Once the moving party
demonstrates that he is entitled to summary judgment, the burden shifts to the
nonmoving party to produce evidence on any issue which that party bears the
burden of production at trial. See Civ.R. 56(E).
{¶17} Initially, we note that the Supreme Court of Ohio has held that by
filing an interpleader action, an insurance company waives all of the insurance
policy’s requirements. Rindlaub v. Traveler’s Ins. Co., 175 Ohio St. 303 (1963).
Specifically in Rindlaub, the Court stated that
[w]here an insured during his lifetime communicated to the
insurer his clearly expressed intent to name certain new
beneficiaries and the insurer has interpleaded and deposited the
policy proceeds in court, such expressed intention of the insured
will be determinative of the right of contesting claimants to the
policy proceeds, notwithstanding the absence of the written
approval by the insurer required by the provisions of the policy.
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Rindlaub v. Traveler’s Ins. Co., 175 Ohio St. 303 (1963), syllabus paragraph two;
Atkinson v. Metropolitan Life Ins. Co., 114 Ohio St. 109 (1926), syllabus
paragraph four. Recently, the Supreme Court of Ohio re-affirmed its decision in
Rindlaub and the “clearly expressed intent” test, articulating that the controlling
factor to be considered in an interpleader beneficiary action is the clear intent of
the decedent. LeBlanc v. Wells Fargo Advisors, L.L.C., 134 Ohio St.3d 250,
2012–Ohio–5458, ¶ 46 (2012). Therefore, any question the parties may have
regarding William’s compliance with Motorists’ beneficiary designation
procedures is irrelevant as those requirements have been waived as a result of
Motorists filing this interpleader action. Consequently, the only issue left to
determine is whether, under the provisions of R.C. 5815.33(B)(1), the record is
sufficient to establish that after their divorce William communicated to Motorists
his clearly expressed intent to name Patricia as the beneficiary of the policies.
{¶18} Specifically, we must determine whether of R.C. 5815.33(B)(1)
operates to preclude Patricia’s entitlement to the insurance proceeds as a matter of
law, as found by the trial court, because William’s expression of intent was not
included in either the divorce decree or in the insurance policies. R.C.
5815.33(B)(1) states as follows:
Unless the designation of beneficiary or the judgment or decree
granting the divorce, dissolution of marriage, or annulment
specifically provides otherwise, and subject to division (B)(2) of
this section, if a spouse designates the other spouse as a
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beneficiary or if another person having the right to designate a
beneficiary on behalf of the spouse designates the other spouse
as a beneficiary, and if, after either type of designation, the
spouse who made the designation or on whose behalf the
designation was made, is divorced from the other spouse, obtains
a dissolution of marriage, or has the marriage to the other
spouse annulled, then the other spouse shall be deemed to have
predeceased the spouse who made the designation or on whose
behalf the designation was made, and the designation of the
other spouse as a beneficiary is revoked as a result of the
divorce, dissolution of marriage, or annulment.
(Emphasis added).
{¶19} Notably, the statute does not define or explain the term “designation
of beneficiary” and the statute does not make any reference to an “insurance
policy” in its language. However, in finding Patricia was not entitled to the
proceeds, it is apparent that the trial court construed the statutory language
“[u]nless the designation of beneficiary * * * specifically provides otherwise * * *
” to require that the insured’s express intent for the former spouse to remain as the
beneficiary after the divorce to be explicitly included in the insurance policies at
issue in this case. (Doc. No. 18 at 5-6). In fact, the trial specifically found the
affidavit and notes of Rockhold evidencing William’s communications with
Rockhold expressing his intent that Patricia remain as the beneficiary on the
policies after the divorce to be “insufficient” as a matter of law under R.C.
5815.33(B)(1) in essence, because there was no written statement of that intent
included in the insurance policies. (Id. at 6).
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{¶20} In its decision, the trial court relied on an opinion from the Twelfth
Appellate District, Pennsylvania Life Ins. Co. v. Pattison, 12th Dist. Clermont No.
CA2006-09-073, 2007-Ohio-2703. In Pattison, the separation agreement between
the decedent and his former spouse provided that “unless and except as otherwise
provided herein, each of the parties agree that the other, after execution of this
Agreement, shall have the right to make any changes in his or her respective
insurance policies, including * * * change of his or her beneficiary, increasing or
decreasing the coverage amount, or cancellation of such policy.” Id. at ¶ 3. The
decedent never removed his former spouse as the beneficiary of his life insurance
policy after he divorced her and died several years later. The former spouse
argued that the language of R.C. 1339.63(B)(1)2 did not automatically revoke the
decedent’s designation of her as the beneficiary because the separation agreement
specifically referred to the insurance policies. Id. at ¶ 9. The court in Pattison,
analyzed the “specifically provides otherwise” language in the statute and
determined that the provision in the separation agreement, which was also
incorporated into the divorce decree, failed to meet the statutory requirement
because it “does not explicitly designate appellant as the beneficiary of the policy
following the divorce, nor does it plainly and explicitly indicate the [divorcing
2
R.C. 1339.63(B)(1) was recodified as R.C. 5815.33(B)(1) in 2007. The statutory language remained the
same.
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couple’s] intent to keep appellant as the beneficiary following the divorce.” Id. at
¶ 12.
{¶21} Even though the issue and judgment in Pattison only involved the
portion of the statute addressing the expression of the insured’s intent in the
divorce decree, the court nevertheless went on to further opine in dicta that “a
divorce automatically revokes the designation of a spouse as a beneficiary to an
insurance policy unless the deceased explicitly provided in the insurance policy
that the spouse was to remain a beneficiary after the divorce * * *.” Id. at ¶ 10
(Emphasis added).
{¶22} At the outset, we would note that in Pattison, there was no evidence
in the record of the decedent’s intent to keep his former spouse as the beneficiary
of the insurance policy, which is clearly distinguishable from the repeated post-
divorce communications to the insurance agent in the case sub judice. More
importantly, however, it is unclear to us why the court in Pattison imposes what
appears to be an additional statutory requirement, unless the deceased explicitly
provided in the insurance policy when the statutory language simply states
“[u]nless the designation of beneficiary * * * specifically provides otherwise * *
*.”
{¶23} As noted earlier, R.C. 5815.33(B)(1) does not define the phrase
“designation of beneficiary,” does not mention the phrase “insurance policy” and
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does not specify that the “designation of beneficiary” refers only to a designation
of beneficiary clause in a particular insurance policy. Nor does the statute contain
any language which would preclude the phrase “designation of beneficiary” from
including a specific request or instruction by the insured to the insurance company
as opposed to a clause in the policy itself. Nor does the statute provide any
guidance as to whether such a request, instruction or “designation” by the insured
must be in writing or whether such a designation must meet some other
requirement in the insurance policy as to when the insurance company might deem
the “designation” to be effectively accomplished or acknowledged to their
satisfaction.
{¶24} Finally, where the insurance policy already “provides” a designation
of beneficiary naming the former spouse, the statute does not address whether an
insurance policy must simply “provide” a designation of beneficiary that can
somehow be shown to post-date the divorce—and if so, exactly how that is to be
established—or whether in fact, the policy must contain some actual explanation
of the express intent to re-designate the original beneficiary after the divorce, in
order to fulfill the statutory requirement of “specifically provide otherwise.”
{¶25} We have previously concluded that Motorists waived any defense
regarding William’s compliance with the insurance policy procedures when it
initiated this action. However we would note that even in the absence of waiver,
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reliance on the terms of any given insurance policy to answer the foregoing
questions, does not seem likely to resolve the ambiguities in any clear or
consistent way. For example, the policies at issue in this case appear to both
permit, but not necessarily require, a designation of beneficiary request to be in
written form. Although both policies appear to indicate that the designation
request will ultimately be effective on the date it is signed, one policy seems to
give effect to a new designation only “if we acknowledge receipt in writing.”
(Policy No. 9107553570 at 7).
{¶26} Neither policy is clear at what point the designation, once accepted
by them, would actually appear in the insurance policy itself. And nothing in
either policy seems to acknowledge or set any special protocol for the
circumstances addressed in R.C. 5815.33(B)(1)—which likely explains why
Motorists itself appears willing to concede that in this instance, Williams’ repeated
and clearly expressed intent to have Patricia remain the beneficiary on the policies
after the divorce, as communicated to and memorialized by their authorized agent,
could not be shown to be contrary to either its own policy provisions or to the
language of the statute.
{¶27} For all of the foregoing reasons, it is our conclusion that by judicially
inserting language into R.C. 5815.33(B)(1) which would require us to recognize
the “designation of beneficiary” referred to in the statute only when and if it
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appears as a provision within a particular insurance policy, we would inevitably
open the door and be bound in each case to the nuances of each individual
insurance policy as to the effective means of changing a beneficiary to the
satisfaction of a particular insurance company as our only remaining method of
statutory construction. We find this to be inconsistent with effective judicial
process and entirely unnecessary to our decision given the circumstances of this
case.
{¶28} In sum, we do not concur with the reasoning of the trial court finding
the uncontroverted evidence of William’s post-divorce confirmations of his intent
to keep Patricia as the beneficiary of the policies to be “insufficient,” especially in
light of the “clearly expressed intent” rule articulated by the Supreme Court of
Ohio. See Rindlaub and LeBlanc, supra.
{¶29} Accordingly, we conclude that the trial court erred in granting
Charles’ motion for summary judgment. We hold that where there is uncontested
evidence of the insured’s clearly expressed intent to retain a former spouse as the
beneficiary on an insurance policy after the divorce, as in this instance, R.C.
5815.33(B)(1) does not operate to preclude the former spouse from being entitled
to the insurance policy proceeds as a matter of law. We note that our decision is
consistent with the Supreme Court of Ohio’s acknowledgment of “the policy
behind the enactment of R.C. 1339.63 [now R.C. 5815.33(B)(1)] might have been
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to remedy the mistake of a spouse who inadvertently fails to remove the ex-spouse
as a beneficiary to a life insurance policy” given that there is no evidence in this
case that William made this mistake. In re Estate of Holycross, 112 Ohio St.3d
203, 208, 2007-Ohio-1, ¶ 24.
{¶30} Therefore, we also find that the trial court’s overruling of Patricia’s
motion for summary judgment was in error and that summary judgment in
Patricia’s favor is appropriate and should be granted by the trial court on remand.
{¶31} Based on the foregoing discussion, the assignment of error is
sustained and the judgment of the trial court is reversed and the cause remand for
further proceedings consistent with this opinion.
Judgment Reversed and
Cause Remanded
PRESTON, J., concurs.
ROGERS, J., concurs in Judgment Only.
/jlr
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