Opinion
No. 006718
December 13, 2005
The consolidated motions for summary judgment now before the court arise out of a dispute over the proceeds of a deferred annuity life insurance policy ("Policy"). The question presented is whether the annuitant effectively canceled the policy prior to his death. For the reasons stated below, the answer to this question is in the affirmative.
The insurance company that now owns the Policy (having acquired the Policy from the original issuer) has cited in the administrator of the annuitant's estate ("Administrator") and takes no position on the outcome of the dispute. The actual dispute is between the Administrator, on the one hand, and the beneficiary of the policy, St. Stanislaus Church ("St. Stanislaus"), on the other. Those parties have filed the contending motions for summary judgment now before the court.
The parties agree that there is no genuine issue as to any material fact. The issue presented is the proper application of controlling law to the facts agreed upon by the parties.
The documentary evidence submitted by the parties establishes the following facts. The annuitant, Peter Laskowski, was born on October 8, 1919. On July 26, 1995, Laskowski (who described himself in his application as "widowed") purchased the Policy from Western National Life Insurance Company ("Western"). The stated beneficiary of the policy is St. Stanislaus. Western's interest in the Policy was later purchased by the defendant AIG Annuity Insurance Company ("AIG").
A copy of the Policy has been submitted to the Court. The crucial provision of the Policy for purposes of this case concerns the surrender of the Policy. The Policy states that:
Subject to the limitations described below, this policy can be surrendered at any time prior to the Annuity Date and while the Annuitant and the Owner are living.
The policy must be returned to the Company for a full cash surrender.
On December 18, 2003, Laskowski completed an Annuity Withdrawal Request on a printed form provided by AIG. He checked the box on the form entitled "COMPLETE CASH SURRENDER." Laskowski signed the form before a notary public. The completed form was then faxed to AIG on the same date.
Laskowski died on December 23, 2003. He did not return the Policy to AIG while he was still living. The Policy was subsequently returned to AIG by his estate on March 30, 2005.
On November 9, 2004, a representative of AIG wrote to the attorney for St. Stanislaus that, "The company does not require submission of the original policy with a surrender request." This statement is in some tension with the language of the Policy quoted above.
On January 25, 2005, St. Stanislaus commenced No. 006718, St. Stanislaus Church v. AIG Annuity Insurance Co., by service of process. The action seeks payment of the annuity to St. Stanislaus. The Administrator was subsequently cited in as a party defendant. On September 20, 2005, St. Stanislaus filed a motion for summary judgment (No. 128). On December 1, 2005, the Administrator filed his own motion for summary judgment (No. 140).
On June 20, 2005, the Administrator commenced No. 012432, Richards v. AIG Annuity Insurance Co., by service of process. The action seeks payment of the annuity to the estate. On December 1, 2005, the Administrator filed a motion for summary judgment.
The three motions for summary judgment just described were heard in a consolidated hearing on December 12, 2005.
The parties agree that the controlling legal standard is set forth in Engleman v. Connecticut General Life Insurance Co., 240 Conn. 287, 690 A.2d 882 (1997). Engleman explains that, "Although `the general rule [is] that a change of beneficiary of an insurance policy can be effected by following the procedure prescribed in the policy'; Bigley v. Pacific Standard Life Ins. Co., 229 Conn. 459, 464, 642 A.2d 4 (1994) . . . the `substantial compliance doctrine' [is] an exception to the general rule." 240 Conn. at 295. The Engleman court further explains that,
[U]nder the substantial compliance doctrine, which we affirm as the law of this state, the owner of a life insurance policy will have effectively changed the beneficiary if the following is proven: (1) the owner clearly intended to change the beneficiary and to designate the new beneficiary; and (2) the owner has taken substantial affirmative action to effectuate the change in the beneficiary.
Id. at 298.
The first prong of the Engleman test is clearly satisfied in the present case. Laskowski demonstrated that he clearly intended to change the beneficiary of his annuity by signing and sending the Annuity Withdrawal Request. In completing this form, Laskowski unambiguously chose the option of "complete cash surrender." His intent could not have been more plain.
The disagreement of the parties is focused on the second prong of the Engleman test. The question presented is whether the completion, signing, and sending of the Annuity Withdrawal Request constituted "substantial affirmative action to effectuate the change in the beneficiary." The positions of the parties are, predictably, forged by their interests. The Administrator argues that Laskowski's actions satisfied this test; St. Stanislaus contends that, because Laskowski failed to comply with the terms of the Policy by returning the Policy while he was alive, his actions fell short of the Engleman mark.
The range of "affirmative actions" that arguably constitute "substantial compliance" covers a wide spectrum, and the case law on this point is not uniform. There are, to begin with, easy cases at each end of the spectrum. On the one hand, where the insured does everything in his power to change the beneficiary in compliance with the requirements of the policy but his intent is frustrated because of the internal procedures of the insurance company, almost all courts will find substantial compliance. See Sun Life Assurance Co. v. Richardson, 299 F.3d 500, 503 (5th Cir. 2002); Engleman v. Connecticut General Life Insurance Co., supra, 240 Conn. at 298 n. 11. On the other hand, where the insured merely makes an oral statement that he intends to change the beneficiary, virtually no court will find substantial compliance in the absence of more concrete evidence. Connecticut General Life Insurance Co. v. Gulley, 668 F.2d 325, 327 (7th Cir.), cert. denied, 456 U.S. 974 (1982).
This case falls between the poles of the easy cases just described. The insured, Laskowski, did not comply with the exact terms of the Policy by returning the Policy to the insurance company. There is no evidence that he was frustrated in this endeavor by the internal procedures of the company. On the other hand, his actions in completing, signing, and sending the Annuity Withdrawal Request went well beyond the simple making of an oral statement as to his intent.
While some courts require proof that the contract holder perform "`every act in his power' to comply with the contract," LaMarche v. Metropolitan Life Insurance Co., 236 F.Sup.2d 34, 45 n. 13 (D.Me. 2002), Connecticut follows the less restrictive model of courts that simply require a reasonable effort on the part of the contract holder to comply with the contract. Id. at 46 n. 13. Engleman explains that, under Connecticut law, only "substantial affirmative action" is required. Laskowski's actions in completing, signing, and sending the Annuity Withdrawal Request can comfortably be described as both "substantial" and "affirmative."
Actions well short of Laskowski's have been held to satisfy the judicial test of substantial compliance in a number of cases. In Connecticut General Life Insurance Co. v. Gulley, supra, for example, the owner of the policy executed a change of beneficiary form in the presence of a witness but failed to deliver it prior to his untimely death. Notwithstanding the failure to deliver the form, the United States Court of Appeals found substantial compliance. As the court explained, "This holding conforms to the general rule that where insured takes a positive action which evidences his obvious desire for a change of beneficiary, the courts will adopt such construction as will assist in carrying out such intention." 668 F.2d at 328. (Internal quotation marks, brackets, and citations omitted.) Accord, IDS Life Insurance Co. v. Estate of Groshong, 736 P.2d 1301 (Idaho 1987); Capitol Life Insurance Co. v. Porter, 719 S.W.2d 908 (Mo.App. 1986); Messier v. Metropolitan Life Insurance Co., 578 A.2d 98 (Vt. 1990).
For reasons explained above, both prongs of the Engleman "substantial compliance" test have been satisfied here. Laskowski clearly expressed his intention to surrender the Policy and took substantial affirmative action to carry out his intent. For this reason, the motion for summary judgment (No. 128) filed by St. Stanislaus in No. 006718 must be denied.
For the same reasons, the defendant's motion for summary judgment (No. 140) in No. 006718 and the motion for summary judgment filed by the Administrator in No. 012432 must be granted as to liability. Because the Administrator seeks an award of damages, and the parties did not address the appropriate amount of damages in their briefs or arguments, appropriate final judgments in these cases cannot be determined on the record now before the court. The parties may, if they wish, present motions for judgment accompanied by a stipulation of damages, to the court in chambers. If damages cannot be so stipulated, a consolidated hearing in damages must be scheduled by the clerk.