Billye Olmstead AKA Billye Ryersen v. Roy Michael Napoli, as Independent of the Estate of Anthony John Carona AKA Anthony Carona

Affirmed and Opinion filed September 6, 2012.
In The
Fourteenth Court of Appeals
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NO. 14-12-00149-CV
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BILLYE OLMSTEAD AKA BILLYE RYERSEN, Appellant
V.
ROY MICHAEL NAPOLI, AS INDEPENDENT EXECUTOR OF THE ESTATE
OF ANTHONY JOHN CARONA AKA ANTHONY CARONA, DECEASED,
Appellee
On Appeal from the Probate Court
Galveston County, Texas
Trial Court Cause No. PR-0070577-A
OPINION
Billye Olmstead appeals from a summary judgment awarding the proceeds of an
individual retirement account to Roy Napoli, the independent executor of the estate of
Olmstead’s former husband, Anthony Carona. Olmstead claims entitlement to the
proceeds as the only surviving designated beneficiary of the account. Because
Olmstead’s divorce decree divested her of all rights related to the account, we affirm.
BACKGROUND
Olmstead is the former wife of decedent Anthony Carona. Before their marriage,
Carona opened an individual retirement account (IRA). On the IRA application form,
Carona designated his father and Olmstead, then Carona’s fiancée, as beneficiaries of the
IRA. The form provided that in the event of Carona’s death, the balance in the IRA would
be paid half to each beneficiary, or completely to one beneficiary if the other did not
survive Carona.
Over a year after the IRA was opened, Carona and Olmstead married. Nearly four
years later, they divorced. The Agreed Final Decree of Divorce awarded particular
property, including the IRA, to Carona as his sole and separate property. The Decree also
divested Olmstead of “all right, title, interest, and claim in and to” the following:
all sums, whether matured or unmatured, accrued or unaccrued, vested or
otherwise, together with all increases thereof, the proceeds therefrom, and
any other rights related to any . . . retirement plan . . . or other benefit
program existing by reason of [Carona’s] past, present, or future
employment.
Even after his divorce and the death of his father, Carona never changed the IRA
beneficiary designations.
Carona died in 2008, and Napoli was appointed the independent executor of
Carona’s estate (“the Estate”). The Estate sent a request to the IRA custodian, Extraco
Bank, for disbursement of the IRA funds. When the Bank refused, the Estate filed this
suit. The Bank filed a Counterpetion in Interpleader, notifying the trial court that
Olmstead was listed as the beneficiary of the IRA and naming her as a counter-defendant.
The Estate and Olmstead eventually filed trial briefs. The trial court determined that these
briefs were in substance cross-motions for traditional summary judgment and treated them
as such. Olmstead has not challenged this procedure on appeal.
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In its summary judgment motion, the Estate argued that the divorce decree granted
the IRA to Carona as his separate property and divested Olmstead of all rights to the IRA.
In her motion, Olmstead argued: (1) section 9.302 of the Family Code, which voids certain
spousal beneficiary designations upon divorce, is inapplicable to designations made prior
to marriage; and (2) the divorce decree did not change Carona’s designation of Olmstead as
an IRA beneficiary. The trial court granted summary judgment in favor of the Estate and
awarded the proceeds of Carona’s IRA to the Estate. This appeal followed.
DISCUSSION
Olmstead raises a single issue on appeal: whether the trial court erred in awarding
the IRA account funds to the Estate because the Decree did not change Olmstead’s status as
the beneficiary of Carona’s IRA account. Within this issue, Olmstead makes the same
two arguments she raised below: (1) section 9.302 of the Family Code is inapplicable; and
(2) the Decree did not change the IRA beneficiary designation.
I. Standard of review
We review a trial court’s order granting traditional summary judgment de novo.
Mid-Century Ins. Co. v. Ademaj, 243 S.W.3d 618, 621 (Tex. 2007). To be entitled to
summary judgment, the movant must demonstrate that no genuine issues of material fact
exist and that he is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c). If the
movant does so, the burden shifts to the non-movant to produce evidence sufficient to raise
a fact issue. Walker v. Harris, 924 S.W.2d 375, 377 (Tex. 1996). When reviewing a
summary judgment motion, we cannot read between the lines or infer from the pleadings or
evidence any grounds for summary judgment other than those expressly set forth before the
trial court. Johnson v. Felts, 140 S.W.3d 702, 706 (Tex. App.—Houston [14th Dist.]
2004, pet. denied).
When both sides move for summary judgment and the trial court grants one motion
and denies the other, the reviewing court should review both sides’ summary judgment
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evidence and determine all questions presented. FM Props. Operating Co. v. City of
Austin, 22 S.W.3d 868, 872 (Tex. 2000). When, as here, the trial court’s order granting
summary judgment does not specify the grounds relied on for the ruling, the summary
judgment will be affirmed if any of the theories advanced are meritorious. State Farm
Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 380 (Tex. 1993).
II. Olmstead’s divorce decree divested her of all rights as an IRA beneficiary.
Olmstead first contends that section 9.302 of the Family Code does not divest her
of her rights as the designated beneficiary of Carona’s IRA.1 Emphasizing the statute’s
use of the word “spouse,” she argues that section 9.302 voids only beneficiary designations
made after marriage, not designations like hers that were made prior to marriage. The
Estate responds that section 9.302 does apply here because the relevant inquiry is whether
the parties are spouses at the time they are before the court, not whether they were spouses
at the time the IRA was created.
We need not resolve this dispute because we hold that in the parties’ Decree,
Olmstead agreed to forfeit all rights to the IRA that she may have possessed. Olmstead
admits that the marital property agreement divested her of her community interest in the
IRA, which became Carona’s separate property. She observes that Carona could have
1
Section 9.302(a) provides:
If a decree of divorce or annulment is rendered after a spouse, acting in the capacity of a
participant, annuitant, or account holder, has designated the other spouse as a beneficiary
under an individual retirement account . . . in force at the time of rendition, the designating
provision in the plan in favor of the other former spouse is not effective unless:
(1) the decree designates the other former spouse as the beneficiary;
(2) the designating former spouse redesignates the other former spouse as the
beneficiary after rendition of the decree; or
(3) the other former spouse is designated to receive the proceeds or benefits in trust
for, on behalf of, or for the benefit of a child or dependent of either former spouse.
Tex. Fam. Code Ann. § 9.302 (West 2006).
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removed her as a beneficiary after the divorce, but he did not do so. Therefore, Olmstead
asserts, she is entitled to the proceeds of the IRA as the only living named beneficiary. In
response, the Estate contends that the Decree also extinguished Olmstead’s rights as an
IRA beneficiary. We agree with the Estate.
Courts interpret marital property agreements in divorce decrees under the law of
contracts. Allen v. Allen, 717 S.W.2d 311, 313 (Tex. 1986). Here, the parties’ agreement
provided that Carona “is awarded . . . as [his] sole and separate property” and Olmstead “is
divested of all right, title, interest, and claim in and to . . . any and all sums, whether
matured or unmatured, accrued or unaccrued, vested or otherwise, together with all
increases thereof, the proceeds therefrom, and any other rights related to . . . [Carona’s]
retirement plan.” We hold this language unambiguously terminated not only Olmstead’s
community property interest in the IRA, but also any right or claim Olmstead might have
relating to the IRA, including any unmatured claim to future proceeds she might receive as
an IRA beneficiary.
Other courts interpreting similar language have reached the same conclusion. In
Gillespie v. Moore, a former wife sued the insurance company of her deceased former
husband, claiming she was the beneficiary of his life insurance policy. 635 S.W.2d 927
(Tex. App.—Amarillo 1982, writ ref’d n.r.e.). The property settlement agreement in their
divorce decree provided that the former husband “shall have and hold as his separate
property” and the former wife “releases and transfers unto the [former husband] any and all
interest and equities which she may have in and to [the policy], or the proceeds thereof, and
agrees that she will in no event ever claim any interest in any of such policies or the
proceeds thereof.” Id. at 928. Before his death, the decedent did not remove his former
wife as the designated beneficiary of his life insurance policy. Id.
The court of appeals held the former wife was not entitled to the proceeds of the life
insurance policy. Id. It reasoned that a divorcing spouse who conveys an ownership
interest in a policy does not necessarily lose the right to receive proceeds from that policy
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as a designated beneficiary. Id. (citing Partin v. de Cordova, 464 S.W.2d 956, 957 (Tex.
Civ. App.—Eastland 1971, writ ref’d); Pitts v. Ashcraft, 586 S.W.2d 685, 699 (Tex. Civ.
App.—Corpus Christi 1979, writ ref’d n.r.e.)); see also Parker v. Parker, 683 S.W.2d 889,
890 (Tex. App.—Fort Worth 1985, writ ref’d). The latter right can be lost, however, if it
is clear from the marital property agreement that the spouse also intended to surrender it.
Gillespie, 635 S.W.2d at 928. Because the former wife specifically agreed she would in
no event claim an interest in the policy or its proceeds, the settlement agreement
unambiguously showed that she surrendered both ownership and beneficiary rights. Id.
The Decree in this case resembles the decree in Gillespie because it divested
Olmstead of: (1) her ownership “interest” in any “sums” in the IRA, which became
Carona’s “separate property”; as well as (2) “all . . . interest, and claim in and to . . . the
proceeds” of the IRA. On the second point, this Decree also goes further than the one in
Gillespie, divesting Olmstead of all “right . . . and claim in and to any and all sums,
whether matured or unmatured,” and of “any other rights related to” the IRA. This
language shows that Olmstead surrendered not only her ownership interest in the IRA, but
also any unmatured claim to future proceeds she might receive as an IRA beneficiary. 2
Another similar case is Sanderlin v. Sanderlin, 929 S.W.2d 121 (Tex. App.—San
Antonio 1996, writ denied). In Sanderlin, the husband opened a retirement account
through the Teacher Retirement System (“TRS”), naming his wife as beneficiary. Id. at
122. Soon thereafter, the couple divorced. Id. The marital property agreement in their
divorce decree divested her of any interest in the retirement funds and proceeds, using
language almost identical to the decree before us.3 The court of appeals held that the
2
Because the parties’ Decree contains specific language that divests Olmstead of her rights, we
need not address whether a decree that simply allocates an asset to one spouse as his separate property is
sufficient to revoke a prior designation of the other spouse as a beneficiary of that asset. Cf. Spiegel v.
KLRU Endowment Fund, 228 S.W.3d 237, 244-45 (Tex. App.—Austin 2007, pet. denied). In addition, we
note that Olmstead has not argued that she was unaware of the beneficiary designation when she agreed to
the Decree.
3
“‘The [former husband] is awarded . . . as [his] sole and separate property, and the [former wife]
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agreement was “all-encompassing” and that the “intention of the parties with regard to [the
former husband’s] teacher retirement is clear”: the former wife “is not to receive any of
it.” Id. Thus, any rights the former wife may have had as a result of the beneficiary
designation were extinguished by the divorce decree. Id. at 122-23.
Olmstead points out that the Texas Supreme Court distinguished Sanderlin in
Holmes v. Kent, 221 S.W.3d 622, 629 (Tex. 2007) (per curiam). But Holmes relied on a
statute that was amended after the decision in Sanderlin to require that changes to a TRS
beneficiary designation comply with certain statutory requirements. Id. That statute
does not apply to Carona’s IRA, which is a private investment unrelated to TRS. We
therefore agree with Sanderlin, which focuses on the precise issue here: whether the
divorce decree divested Olmstead of any right to the IRA proceeds as the designated
beneficiary. Sanderlin, 929 S.W.2d at 122; see also Beckham v. Beckham, 672 S.W.2d
41, 42 (Tex. App.—Houston [14th Dist.] 1984, no writ) (focusing on intent of parties at
time of divorce rather than at time beneficiary was designated).
Olmstead and the Estate also discuss Keen v. Weaver, 121 S.W.3d 721 (Tex. 2003),
which the United States Supreme Court overruled in Kennedy v. Plan Administrator for
DuPont Savings and Investment Plan, 555 U.S. 285 (2009). Both cases addressed
whether the Employee Retirement Income Security Act (ERISA), 29 U.S.C.
§§ 1001-1461, precluded a former spouse from waiving an interest in a pension plan by
signing a divorce decree. See Kennedy, 555 U.S. at 288; Keen, 121 S.W.3d at 722. In
this case, we agree with both parties that ERISA does not apply to Carona’s IRA. See 29
C.F.R. § 2510.3-2(d). Thus, neither Keen nor Kennedy affects our conclusion that
Olmstead waived her rights as an IRA beneficiary.
is divested of all right title, interest and claim in and to . . . [a]ll sums, matured or unmatured, accrued or
unaccrued, vested or otherwise, and all increases thereof, the proceeds therefrom, and from any other rights
related to the [former husband’s] retirement plan . . . .’” Sanderlin, 929 S.W.2d at 122 (quoting the
decree).
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CONCLUSION
Because we construe the unambiguous language of the parties’ marital property
agreement as divesting Olmstead of all rights as an IRA beneficiary, we conclude the trial
court did not err in granting summary judgment awarding the proceeds of the IRA to the
Estate.
The judgment is affirmed.
/s/ J. Brett Busby
Justice
Panel consists of Justices Frost, McCally, and Busby.
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