Lutz, S. v. Monumental Life Insurance Co. ( 2015 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
SANDRA A. LUTZ IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
MONUMENTAL LIFE INSURANCE
COMPANY AND SHEREE NORDALL
Appellees No. 1400 MDA 2014
Appeal from the Order Entered July 23, 2014
In the Court of Common Pleas of Lebanon County
Orphans' Court at No(s): 2014-469
BEFORE: LAZARUS, J., WECHT, J., and JENKINS, J.
MEMORANDUM BY LAZARUS, J.: FILED MAY 04, 2015
Sandra A. Lutz appeals the order of the Court of Common Pleas of
Lebanon County denying her petition filed pursuant to the Declaratory
Judgment Act.1 Upon careful review, we affirm.
Lutz and Richard Lutz (“Decedent”) were married on May 18, 1985.
On May 4, 1985, Decedent obtained a life insurance policy from Monumental
Life Insurance Company (“Monumental”) and, on July 8, 1988, he named
Lutz the primary beneficiary. Decedent did not designate any contingent
beneficiaries at that time.
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1
42 Pa.C.S.A. §§ 7531-7541.
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On June 7, 2012, Decedent executed a change of beneficiary form, on
which he again named Lutz as the primary beneficiary and added his sister,
Sheree Nordall, as contingent beneficiary. On August 28, 2012, Decedent
and Lutz entered into a Marriage Settlement Agreement and they were
divorced on September 6, 2012. Decedent committed suicide on September
26, 2012.
Lutz and Nordall each filed claims against the Decedent’s policy and,
by letter dated May 13, 2013, Monumental notified Lutz that she was
disqualified as a beneficiary based on section 6111.2 of the Probate, Estates,
and Fiduciaries (“PEF”) Code. Under section 6111.2, a former spouse named
as a beneficiary is treated as having predeceased a decedent unless the
former spouse can prove that the designation was intended to survive the
parties’ divorce.
In light of its determination that Lutz was disqualified under section
6111.2, Monumental paid the policy’s proceeds to Nordall. Thereafter, on
October 17, 2013, Lutz filed a petition for declaratory judgment, claiming
entitlement to the insurance proceeds on the theory that section 6111.2 was
enacted on December 16, 1992, after Decedent first designated her as
primary beneficiary, and that section 6111.2 cannot be applied retroactively.
Nordall and Monumental filed answers to Lutz’s petition; Monumental also
filed new matter, to which Lutz replied. The court held a hearing on June 3,
2014, and rendered its decision by order dated July 23, 2014.
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Lutz filed a timely notice of appeal on August 20, 2014, followed by a
court-ordered statement of errors complained of on appeal pursuant to
Pa.R.A.P. 1925(b).2
Lutz raises the following issues for our review:
1. Whether the trial court committed an error of law and/or
abused its discretion in prohibiting testimony regarding
communications Lutz had with the Decedent under the Dead
Man’s Act, as the Decedent is not a party to the within action?
2. Whether the trial court committed an error of law and/or
abused its discretion in concluding that retroactive application
of section 6111.2 of the [PEF] Code is not required?
3. Whether the trial court committed an error of law and/or
abused its discretion in concluding that the Decedent’s
designation of Lutz as the primary beneficiary on his
insurance policy with Monumental was not intended to survive
the divorce?
Brief of Appellant, at 4.
Lutz appeals the denial of a petition for declaratory judgment.
The Declaratory Judgments Act provides, inter alia:
Courts of record, within their respective jurisdictions, shall have
power to declare rights, status, and other legal relations whether
or not further relief is or could be claimed. No action or
proceeding shall be open to objection on the ground that a
declaratory judgment or decree is prayed for. The declaration
may be either affirmative or negative in form and effect, and
such declarations shall have the force and effect of a final
judgment or decree.
42 Pa.C.S.A. § 7532.
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2
We have renumbered Lutz’ claims for ease of disposition.
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An action for declaratory judgment is available to obtain a
declaration of the existing legal rights, duties, or status of the
parties where the declaration will aid in the determination of a
genuine, justiciable controversy. A declaratory judgment action
is particularly appropriate in construing contracts of insurance in
order to determine whether an insurer is obligated to defend
and/or indemnify one claiming under the policy. The proper
construction of an insurance policy is an issue which may be
resolved as a matter of law in a declaratory judgment action.
Pressley v. Travelers Prop. Cas. Corp., 817 A.2d 1131, 1138 (Pa. Super.
2003) (internal citations omitted).
When reviewing the decision of the trial court in a declaratory
judgment action, our scope of review is narrow. Consequently,
we are limited to determining whether the trial court’s findings
are supported by substantial evidence, whether an error of law
was committed or whether the trial court abused its discretion.
The test is not whether we would have reached the same result
on the evidence presented, but whether the trial court’s
conclusion can reasonably be drawn from the evidence. Where
the trial court’s factual determinations are adequately supported
by the evidence we may not substitute our judgment for that of
the trial court.
Ross Dev. Co. v. Advanced Bldg. Dev., Inc., 803 A.2d 194, 195 (Pa.
Super. 2002) (internal citations omitted).
We also note that
the findings of the trial judge in a non-jury case must be given
the same weight and effect on appeal as a verdict of a jury and
will not be disturbed on appeal absent error of law or abuse of
discretion. When this court reviews the findings of the trial
judge, the evidence is viewed in the light most favorable to the
victorious party below and all evidence and proper inferences
favorable to that party must be taken as true and all unfavorable
inferences rejected.
PARC Holdings, Inc. v. Killian, 785 A.2d 106, 110 (Pa. Super. 2001)
(citation omitted).
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Lutz first claims that the trial court erred in prohibiting her from
testifying to certain communications she had with the Decedent on the basis
of the Dead Man’s Rule. Lutz argues that the Act was inapplicable because
neither the Decedent nor a person representing the interests of his estate
was a party to the action. This claim is meritless.
The Dead Man’s Act provides, in pertinent part, that:
Except as otherwise provided in this subchapter, in any civil
action or proceeding, where any party to a thing or contract in
action is dead, . . . and his right thereto or therein has passed . .
. to a party on the record who represents his interest in the
subject in controversy, neither any surviving or remaining party
to such thing or contract, nor any other person whose interest
shall be adverse to the said right of such deceased . . . party,
shall be a competent witness to any matter occurring before the
death of said party[.]
42 Pa.C.S.A. § 5930.
The purpose of the Act is to prevent the injustice that would
result from permitting a surviving party to a transaction to
testify favorably to himself and adversely to the interest of a
decedent, when the decedent’s representative would be
hampered in attempting to refute the testimony or be in no
position to refute it, by reason of the decedent’s death.
In re Estate of Hall, 535 A.2d 47 (Pa. 1987) (citations omitted).
Here, at the outset of trial, counsel for Monumental raised concerns
regarding whether the Dead Man’s Act rendered Lutz incompetent to testify
with respect to conversations she may have had with the Decedent. The
trial court responded as follows:
THE COURT: All right. If we get into that issue, I will warn
you that that might be an issue because of the Dead Man’s Rule.
I am well aware of that.
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So, if that becomes an issue, Attorney Zeppos, if an objection is
made, we are going to hold off on that until we have
rulings on those matters, because she cannot say what he
said, he’s not here.
...
So I am aware of that, but I just want to – I want to make a
ruling that any statements made up through the time of the
[divorce] Decree – at a very minimum, there is an issue with the
Dead Man’s Rule that I will deal with on a question by
question basis, but my inclination is that would not be
admissible.
N.T. Trial, 6/3/14, at 4-5 (emphasis added).
It is clear from the foregoing that the trial court intended to address
any Dead Man’s Act objections on a question-by-question basis, and made
no blanket ruling regarding what Lutz could or could not testify to.
Thereafter, during Lutz’ testimony, the sole objection raised was by Kim L.
Lengert, Esquire, counsel for Nordall, with respect to Lutz’ answer to one of
Attorney Lengert’s own questions. See N.T. Trial, 6/3/14, at 26. Attorney
Lengert believed that Lutz had referred to a statement made by the
Decedent, but Lutz clarified that the statement in question had actually been
made by an insurance agent.3 No further objections were made to Lutz’
testimony. Accordingly, as the Dead Man’s Act did not arise as an issue
during Lutz’ testimony, her claim is meritless.
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3
Lutz’ original answer created confusion as to whom the word “he” referred.
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Lutz next asserts that the trial court erred in concluding that
application of section 6111.2 of the PEF Code is not unconstitutionally
retroactive. Section 6111.2 provides, in relevant part, as follows:
§ 6111.2. Effect of divorce or pending divorce on designation of
beneficiaries
(a) Applicability. --This section is applicable if an individual:
(1) is domiciled in this Commonwealth;
(2) designates the individual’s spouse as beneficiary of the
individual’s life insurance policy, annuity contract, pension or
profit-sharing plan or other contractual arrangement providing
for payments to the spouse; and
...
(i) at the time of the individual’s death is divorced from
the spouse; or
(b) General rule. --Any designation described in subsection
(a)(2) in favor of the individual’s spouse or former spouse that
was revocable by the individual at the individual’s death shall
become ineffective for all purposes and shall be construed as if
the spouse or former spouse had predeceased the individual,
unless it appears the designation was intended to survive the
divorce based on:
(1) the wording of the designation;
(2) a court order;
(3) a written contract between the individual and the spouse
or former spouse; or
(4) a designation of a former spouse as a beneficiary after the
divorce decree has been issued. . . .
20 Pa.C.S.A. § 6111.2.
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Here, Decedent first designated Lutz as his primary beneficiary on July
8, 1988. Section 6111.2 was enacted on December 16, 1992. Because
section 6111.2 was enacted after Decedent’s initial beneficiary designation
was executed, Lutz argues that applying the statute to the instant matter
would require doing so retroactively, which was deemed by our Supreme
Court to be unconstitutional in Parsonese v. Midland Nat'l Ins. Co., 706
A.2d 814 (Pa. 1998). We disagree.
In Parsonese, the decedent purchased a life insurance policy on June
12, 1988, naming his children as beneficiaries and a friend as contingent
beneficiary. On July 27, 1991, the decedent married Parsonese. He
subsequently changed the beneficiary designation on his insurance policy on
August 27, 1992, naming Parsonese as his primary beneficiary and his
children as contingent beneficiaries. Section 6111.2 took effect on
December 16, 1992. Decedent and Parsonese were divorced on September
27, 1993, and Decedent died on May 4, 1994.
In the trial court, the parties disagreed as to whether section 6111.2
should apply to mandate that the life insurance proceeds be paid to
Decedent’s children.4 Parsonese argued that application of the statute would
violate Article I, Section 17 of the Pennsylvania Constitution, the contracts
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4
The manner in which the case was brought before the trial court (i.e.,
declaratory judgment action, etc.) is not clear from the Supreme Court’s
opinion.
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clause, as it was enacted after he exercised his contractual rights under the
policy to designate her as beneficiary. The trial court agreed and the
Supreme Court, exercising its jurisdiction under 42 Pa.C.S.A. § 722(7), 5
affirmed. In doing so, the Court focused on the date the decedent had
executed the beneficiary designation, not the date the insurance policy
became effective.
Subsequently, in In re Estate of Hoffman, 54 A.3d 903 (Pa. Super.
2012), this Court applied Parsonese to a factual scenario almost identical to
that currently before the Court. In Hoffman, the decedent purchased a life
insurance policy prior to the enactment of section 6111.2, naming his then-
wife as primary beneficiary. After the effective date of section 6111.2, the
decedent divorced his first wife and married appellant Hoffman. He then
executed a change-of-beneficiary form, naming Hoffman as his primary
beneficiary. The couple subsequently divorced, and the decedent died
thereafter. Hoffman filed a declaratory judgment action, seeking payment
as beneficiary under the policy. The trial court applied section 6111.2, which
extinguished Hoffman’s beneficiary designation.
On appeal, this Court affirmed, concluding that the application of
section 6111.2 was not retroactive under the facts of the case. The Court
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5
Section 722(7) grants to the Supreme Court exclusive jurisdiction of
appeals from final orders of the courts of common pleas in matters where
the court holds a statute to be unconstitutional.
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noted that the Supreme Court, in Parsonese, “specifically held that the date
of the beneficiary designation under the life insurance contract in question,
as opposed to the date when the life insurance contract was originally
purchased, is the date to be used” in determining whether any application of
section 6111.2 would be retroactive. Hoffman, 54 A.3d at 906.
Here, Lutz argues that the instant matter is factually distinguishable
from Hoffman because she was originally named as the beneficiary prior to
the enactment of section 6111.2. Although the Decedent executed a later
beneficiary designation after the effective date of the statute, Lutz’ status as
primary beneficiary remained unchanged. Thus, Lutz claims, the earlier
beneficiary designation date should be the operative date in determining the
applicability of section 6111.2. We disagree.
If the written language of a policy is clear and unambiguous, the policy
language is to be given effect. Alkhafaji v. TIAA-CREF Individual &
Institutional Servs., LLC, 69 A.3d 219, 231 (Pa. 2013) (citation omitted).
Here, the change of beneficiary form executed by the Decedent in 2012
states clearly that “[a]ll previous designations are hereby cancelled.”
Beneficiary Change Form, 6/7/12. Thus, by executing the change form in
2012, Decedent cancelled all previous designations of Lutz as beneficiary.
Accordingly, when he named Lutz as primary beneficiary on the 2012 form,
Decedent was, in effect, designating her anew. As section 6111.2 was in
force at the time of the 2012 designation, the constitutional retroactivity
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concerns6 contemplated by the Parsonese court are not implicated by the
factual scenario presented here. Accordingly, we must apply the dictates of
section 6111.2 to the matter at hand, “unless it appears the designation was
intended to survive the divorce based on: (1) the wording of the
designation; (2) a court order; (3) a written contract between the individual
and the spouse or former spouse; or (4) a designation of a former spouse as
a beneficiary after the divorce decree has been issued.” 20 Pa.C.S.A. §
6111.2(b).
In her final issue, Lutz argues that the trial court erred in concluding
that Decedent’s beneficiary designation was not intended to survive the
divorce. On this issue, this Court’s reasoning in Hoffman, supra, is
instructive. There, in concluding that the designation was not intended to
survive the parties’ divorce, the Court noted the following:
Our review of the beneficiary designation reveals that, on the
change of beneficiary form, Decedent specifically indicated
“[Appellant] Hoffman, Wife, 80[%].” Additionally, although
there was a box, which Decedent could have checked indicating
the designation was “irrevocable,” he did not check the box.
Simply put, we cannot say that it appears from the face of the
beneficiary designation that Appellant Hoffman’s designation as
a beneficiary was intended to survive the divorce.
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6
The purpose of the contract clauses of the state and federal constitutions is
to prevent governmental entities from disrupting existing contractual
obligations, and thus, negating the expectations of the parties. Harristown
Dev. Corp. v. Commonwealth, Dep't of General Services, 614 A.2d
1128, 1133 (Pa. 1992). Those concerns are not implicated where the
statute in question was in effect at the time of the Decedent’s final
beneficiary designation.
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Hoffman, 54 A.3d at 907 (emphasis added).
Likewise, here, Lutz is identified on the beneficiary designation as
“Wife” and, although he could have, Decedent did not check the box making
the designation irrevocable. Moreover, the marriage settlement agreement
between Decedent and Lutz does not expressly indicate an intent that the
designation should survive the divorce. The parties each released all rights
in each other’s estates. Moreover, the agreement’s sole reference to
insurance policies merely identifies a policy held by Lutz and states that the
parties “each may maintain or dispose of any existing life insurance policies
and may choose beneficiaries to any such policies as they see fit.” Marriage
Settlement Agreement, 8/28/12, at ¶ 22. Accordingly, neither the
beneficiary designation nor the parties’ marriage settlement agreement
lends any support to Lutz’ claim that her designation as beneficiary was
intended to survive the parties’ divorce. Therefore, the court did not err in
construing the policy as if Lutz had predeceased the Decedent pursuant to
section 6111.2.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 5/4/2015
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