Opinion
00-CV-0454E(Sr)
July 22, 2002
MEMORANDUM and ORDER
Plaintiff ("Aetna") commenced this interpleader action May 24, 2000 alleging itself to be a disinterested stakeholder in an Aetna life insurance policy valued at $300,000 to which defendants Frazier and Allen have made adverse claims. Aetna deposited the policy proceeds with the Clerk of the Court and was discharged from this action. Frazier seeks summary judgment in his favor declaring that he is entitled to $175,000 of the proceeds and that Allen is entitled to the remaining $125,000. For the reasons stated hereinafter, Frazier's motion for summary judgment will be granted.
Maria Rosa, as Allen's guardian, is also a defendant. Rosa and Allen will be collectively referred to as "Allen."
Preliminarily, it should be noted that Rule 56 of the Local Rules of Civil Procedure ("LRCvP") requires the moving party to set forth the material facts that it contends are not in dispute, whereas the non-moving party must then set forth the material facts that it contends are in dispute — i.e., material facts as to which the non-moving party contends there is a genuine issue of material fact. Allen's Statement Of Disputed Facts agrees with paragraphs one through seven of Frazier's Statement Of Material Facts.
Although not expressly required, the best practice under LRCvP 56 is to respond to the moving party's statement of undisputed facts — factual allegation by factual allegation. This approach — similar to answering a complaint — enables the Court to discern which factual allegations are disputed by the parties, as opposed to having two sets of largely duplicative "factual allegations" from which the non-moving party expects the court to cull the genuine issues of material facts. Such is the responsibility of counsel for the non-moving party. Allen, however, submitted a Statement Of Disputed Facts that failed to specifically controvert paragraphs 8-16 of Frazier's Statement Of Material Facts. Rather, Allen set forth her own set of "factual allegations" — leaving it to this Court to sort out which facts are disputed by the parties. Inasmuch as the facts are relatively straightforward, this Court will overlook such inadvertence. Holtz v. Rockefeller Co., 258 F.3d 62, 73-74 (2d Cir. 2001) ("A district court has broad discretion to determine whether to overlook a party's failure to comply with local court rules"). Additionally it should be noted that it is good practice under LRCvP 56 to include citations to the record for all facts set forth in the parties' LRCvP statements.
The facts are relatively straightforward. Carl R. Allen (the "Insured"), a former employee of the Buffalo News, married Maria Rosa in 1984. Frazier's Statement, at ¶ 1; Allen's Statement, at ¶ 2. Corrie Allen, born in 1987, is their daughter. Frazier's Statement, at ¶ 2. The Insured and Maria divorced and entered into a Separation And Property Settlement Agreement (the "Agreement") in 1992. Id. at ¶¶ 3-4. The Agreement was incorporated into but not merged with the judgment of divorce. Allen's Mem. Of Law, at 2. Article 10 of the Agreement provides in relevant part:
"The Husband's life is insured through:
Northwestern Mutual — face value $25,000. — cash value $1,000.00
Principal Mutual — face value $123,000. — a term policy
Aetna Life — face value $2,000. — a term policy
On all of the above life insurance policies the child will be named irrevocable beneficiary with the Wife as trustee. Husband agrees to keep the Northwestern Mutual policy in force at least until the Child is emancipated."
Frazier Aff., at Ex. C. In 1994, Aetna issued policy No. 05990 to the Insured in the amount of $300,000 (the "Disputed Policy"). Frazier's Statement, at ¶ 10. Allen concedes that, "[i]n 1994, pursuant to a change in the group life insurance contract of the Buffalo Evening News [sic] Group policy No. 05990 was issued. The policies previously issued on the life of CARL R. ALLEN were replaced pursuant to the Life, Supplemental Life, AD D And Supplemental ADD plan." Allen's Statement, at ¶ 5 (emphasis added). Consequently, the Aetna Life term policy (face value $2,000) listed in the Agreement (the "Aetna Policy") was replaced by the Disputed Policy, which was described by Allen as a "new insurance arrangement." Sims Decl., at ¶ 7. Moreover, by its own terms, the Disputed Policy "replaces and supercedes any prior life insurance. It will be in exchange for everything under the prior life insurance." Id. (quoting Disputed Policy) (emphasis added).
Allegations are made concerning the Principal and Northwestern policies referred to in Article 10 of the Agreement. For example, Frazier alleges that the Principal policy lapsed (Def.'s Statement, at ¶ 9) and that Allen received the benefits of the Northwestern policy upon her father's death (id. at ¶ 14). This Court, however, does not address such allegations inasmuch as the Northwestern and Principal policies are not at issue.
Frazier's Statement refers to the Disputed Policy as policy No. 005990. A copy of the policy itself, however, attached as an exhibit to Allen's Memorandum Of Law, indicates that the Disputed Policy is No. 05990. Allen's Mem. Of Law, at Ex. 1.
The Insured made various changes to the beneficiary designation for the Disputed Policy on August 1, 1999, which ultimately resulted in the present beneficiary designation allocating 58.33% of the proceeds to Frazier ($175,000) and 41.66% to Allen ($125,000). Frazier's Statement, at ¶¶ 11-12. The Insured died November 7, 1999. Id. at ¶ 13.
Aetna commenced this interpleader action May 24, 2000 and subsequently deposited the proceeds of the Disputed Policy with the Clerk of this Court. Aetna was discharged and is no longer a party to this action. From the proceeds of the Disputed Policy, Aetna was awarded costs and attorneys' fees of $4,812.90.
Rule 56(c) of the Federal Rules of Civil Procedure ("FRCvP") states that summary judgment may be granted only if the record shows "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." In other words, after discovery and upon a motion, summary judgment shall be entered "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Summary judgment is thus appropriate where there is "no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Of course, the moving party bears the burden of showing that no genuine issue of material fact exists and that he is entitled to judgment as a matter of law. Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995) (citing Adickes v. S.H. Kress Co., 398 U.S. 144, 157 (1970)). If the moving party makes such a showing, the non-moving party must then come forward with evidence of specific facts sufficient to support a jury verdict in order to survive the summary judgment motion. Ibid.; FRCvP 56(e).
With respect to the first prong of Anderson, a genuine issue of material fact exists if the evidence in the record "is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, at 248. Stated another way, there is "no genuine issue as to any material fact" where there is a "complete failure of proof concerning an essential element of the nonmoving party's case." Celotex, at 323. Under the second prong of Anderson, the disputed fact must be material, which is to say that it "might affect the outcome of the suit under the governing law ***." Anderson, at 248.
See also Anderson, at 252 ("The mere existence of a scintilla of evidence in support of the [movant's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [movant].")
Furthermore, "[i]n assessing the record to determine whether there is a genuine issue as to any material fact, the district court is required to resolve all ambiguities and draw all factual inferences in favor of the party against whom summary judgment is sought." St. Pierre v. Dyer, 208 F.3d 394, 404 (2d Cir. 2000) (citing Anderson, at 255). Nonetheless, mere conclusions, conjecture, unsubstantiated allegations or surmise on the part of the non-moving party are insufficient to defeat a well-grounded motion for summary judgment. Goenaga, at 18.
See fn. 5.
Turning to the merits, the dispositive issue is whether the Agreement entitled Allen to all of the proceeds of the Disputed Policy. In this diversity action, New York's substantive law governs. This Court finds that Allen has no right to the proceeds of the Disputed Policy other than those arising from the policy itself — to wit, Allen is entitled to the amount provided by Insured's beneficiary designation for such policy, which provides that Allen is entitled to 41.66% of the proceeds ($125,000).
Neither party explicitly addressed the choice-of-law issue, but rather implicitly assumed that New York law applied by relying exclusively thereon. Accordingly, this Court will apply New York law because the parties have impliedly consented to such. See Tehran-Berkeley v. Tippetts-Abbett, et al., 888 F.2d 239, 242 (2d Cir. 1989).
The Clerk of this Court will be ordered to distribute the funds held by it as follows: 58.33% to Frazier and 41.67% to Rosa on behalf of Allen. Consequently, Frazier and Allen will share pro rata the gains (interest accrued) and losses (costs and attorneys' fees disbursed to Aetna) chargeable to the Policy proceeds while in the possession of the Clerk. The Court notes that Frazier concedes that Allen is entitled to 41.66% of the Disputed Policy's proceeds. Inasmuch as Frazier's suggested allotment would leave .01% unaccounted for, the Court will grant such remainder to Allen.
Article 10 of the Agreement lists three insurance policies on the Insured's life. Frazier Aff., at Ex. C. These policies were Northwestern Mutual ($25,000), Principal Mutual ($123,000 term policy) and Aetna Life ($2,000 term policy). The Agreement provides that Allen will be the irrevocable beneficiary "[o]n all of the above life insurance policies." Ibid. The Agreement further provides that "[the Insured] agrees to keep the Northwestern Mutual policy in force at least until [Allen] is emancipated."
Ibid. No similar provision is made for either the Principal Mutual or Aetna Life policy. Ibid. Accordingly, the Insured was free to allow either of such policies to lapse without violating the Agreement. This fact distinguishes the present case from cases cited by Allen. Consequently, the replacement of the Aetna Policy — which is specifically referred to in the Agreement — with the Disputed Policy — which was not referred to in the Agreement because it was issued after the Agreement had been executed — enabled the Insured to make the August 1, 1999 beneficiary designation without violating the Agreement because the Aetna Policy and the Disputed Policy — although both issued by Aetna — are different policies. Cf. Frey v. Feller, 127 N.Y.S.2d 302, 305 (Sup.Ct. Bronx Cty. 1953) (holding that niece named as beneficiary under a new group policy was entitled to policy proceeds despite fact that insured had unilaterally designated his step-daughter as irrevocable beneficiary under the old/replaced group policy). Of critical importance is the fact that the Agreement lacked a provision requiring the Insured to name Allen as beneficiary in any after-acquired insurance policies or a clause requiring him to maintain the Aetna Policy in force — as the Agreement expressly provided with respect to the Northwestern Mutual policy. Accordingly, Allen is entitled to 41.67% of the proceeds and Frazier is entitled to 58.33% of the proceeds.
Unlike the separation agreement in Simonds v. Simonds, 45 N.Y.2d 233, 237 (1978), the Agreement did not require the Insured to maintain the Aetna Policy. The Agreement required him to maintain the Northwestern Mutual policy — and the parties were thus aware how to include such a clause in the Agreement where they desired a policy to be maintained. The Insured was required to name Allen as the irrevocable beneficiary of the Aetna Policy. Frazier Aff., at Ex. C, Art. 10. This obligation, however, only required him to continue Allen as the irrevocable beneficiary for the Aetna Policy — such obligation required him neither to re-designate Allen as irrevocable beneficiary in any after-acquired policy nor to maintain the Aetna Policy. Cf. Von Buren v. Von Buren, 675 N.Y.S.2d 739, (4th Dep't 1998) (holding that defendant was not required to elect the retirement option that would maximize his former wife's benefits because such was not required by the separation agreement); Fankuchen v. Fankuchen, 311 N.Y.S.2d 704, 706-707 (Civ.Ct. 1970) (holding that insured party was allowed to borrow against the policy to the detriment of his former wife — who had been named an irrevocable beneficiary pursuant to a separation agreement — because the separation agreement did not prohibit the insured party from borrowing against the policy).
The cases cited by Allen involve separation agreements that required the insured to maintain insurance policies specified in the respective separation agreements. See e.g., Marwica v. Marwica, 64 N.Y.2d 38, 40 (1984); Rogers v. Rogers, 63 N.Y.2d 582, 586-587 (1984) (quoting Simonds). Where an insured agrees to maintain a specified policy naming specified persons as irrevocable beneficiaries, such persons obtain an equitable interest in the policy to be maintained superior to that of subsequently named beneficiaries or different beneficiaries named in different policies that replaced the policy that the insured was required to maintain but did not. See, e.g., Marwica, at 40.
See Allen's Mem. Of Law, at Ex. 1, p. 2 (indicating that the Disputed Policy was issued and effective as of January 1, 1994). The Agreement did not include an "after-acquired policies" clause. But see Lerner v. Lerner, 508 N.Y.S.2d 191, 192-193 (3d Dep't 1986) (construing a separation agreement that contained a clause requiring the insured to name his children as beneficiaries for "any and all future life insurance"). Notably, the separation agreement construed in Lerner — which required the insured to maintain specified insurance policies — also required that "such policy will not be cancelled by an overt act of the Husband [and that the] Husband will so notify the Wife if the policy is terminated." Id. at 192 (emphasis added). The Agreement here contained no such language. Consequently, because the parties could have contemplated the possibility that the Insured's group life insurance policy would be canceled by an act other than an overt act by him — i.e., by his employer — they should have drafted the Agreement in such a manner as to require the Insured to designate Allen as the irrevocable beneficiary of any such replacement policy if the parties intended such.
Frey is instructive despite the fact that it did not involve a separation agreement — see id. at 305 (citing Salinas v. Salinas, 187 Misc. 509 (Sup.Ct. Bronx Cty. 1946), aff'd, 271 A.D. 917 (1st Dep't 1947)) — because, like the present case, the insured "did not, by agreement or otherwise, bind himself to redesignate that [irrevocable] beneficiary in the event [the insured], in good faith and without the purpose of frustrating the rights of the beneficiary, obtained a new policy of insurance ***." The fact that the replacement policy in Frey was provided by a different insurer is irrelevant.
See e.g., Lerner, at 192-193 — see fn. 12 — (construing a separation agreement that contained an after-acquired insurance clause).
See e.g., Metro. Life Ins. Co. v. Benevent, No. 90 Civ. 6768, 1993 WL 437757, at *3-4 (S.D.N.Y. Oct. 22, 1993) (holding that the insured's children — who were named irrevocable beneficiaries pursuant to a separation agreement that required the insured to maintain the policy — had a right to the policy proceeds superior to that of a subsequently named beneficiary).
In finding that the Disputed Policy replaced the Aetna Policy, this Court need not resolve any genuine issue of material fact. Indeed, the parties appear to be in agreement as to the relevant facts, albeit in disagreement as to the legal significance thereof. In her Statement Of Disputed Facts, Allen concedes that the Disputed Policy replaced the Aetna Policy listed in the Agreement. Allen's Statement, at ¶ 5. Allen's counsel further concedes that the Disputed Policy was a "new insurance arrangement." Sims Decl., at ¶ 7. The Disputed Policy itself indicates that it "replaces and supercedes any prior life insurance" and was being exchanged for "the prior life insurance." Id. (quoting Disputed Policy) (emphasis added); Allen's Mem. Of Law, at Ex. 1, p. 4. Each such admission constitutes a "`formal judicial admission [that is] conclusive against [her] in [a] motion for summary judgment." Bank of Am., N.A. v. Farley, No. 00 CIV. 9346 (DC), 2002 WL 5586, at *6 (S.D.N.Y. Jan. 2, 2002); Purgess v. Sharrock, 33 F.3d 134, 144 (2d Cir. 1994) ("A court can appropriately treat statements in briefs as binding judicial admissions of fact"). There is no genuine issue of material fact that the Disputed Policy replaced and superceded the Aetna Policy — and is thus not referenced or governed by the Agreement. See VKK Corp. v. Nat'l Football League, 244 F.3d 114, 129 (2d Cir. 2001) (stating that, under New York law, "the initial interpretation of a contract `is a matter of law for the court to decide") (citations omitted); Rainbow v. Swisher, 72 N.Y.2d 106, 109-110 (1988) ("The settlement agreement is a contract subject to principles of contract interpretation *** [and where] the contract is clear and unambiguous on its face, the intent of the parties must be gleaned from within the four corners of the instrument ***.").
Furthermore, Allen appears to concede that the Aetna Policy is different from the Disputed Policy when she contends that the Disputed Policy "was for all intents and purposes the very same policy which had been taken out by the Decedent in which his daughter was named irrevocable beneficiary." Allen's Mem. Of Law, at 4 (emphasis added). The policies were either one and the same or they were not. It is of no relevance that the Aetna Policy was canceled in favor of a new policy issued by Aetna (i.e., the Disputed Policy) — as opposed to the cancellation of the Aetna Policy and the subsequent acquisition of a different policy issued by a different insurer. Cf. Frey, at 304-305.
Accordingly, it is hereby ORDERED that Frazier's motion is granted, that thirty-one days after the date of this Order, unless notified by Allen that she has filed an appeal, the Clerk of this Court shall distribute 58.33% of the funds in his possession to Mark Frazier and 41.67% to Maria Rosa as guardian of Corrie Allen, and that the Clerk of this Court shall close this action.