Opinion
No. 05-09-01472-CV
Opinion Filed May 2, 2011. May 11, 2011.
On Appeal from the Probate Court No. 2, Dallas County, Texas, Trial Court Cause No. PR-08-1362-2.
Douglas T. Floyd, John Alan Goren.
Harold Berman, Attorney at Law.
Before Justices MORRIS, LANG, and LANG-MIERS.
MEMORANDUM OPINION
In this probate case, we construe contract language respecting the designation of beneficiaries for retirement accounts. Appellant, Charlene Fullerton Tigert ("Charlene"), appeals the trial court's declaratory judgment declaring the estate of her late husband Tommy F. Tigert ("Tommy") the beneficiary of three retirement accounts. In six issues, Charlene contends: (1) the trial court erred in declaring the Estate of Tommy F. Tigert (the "Estate") was the beneficiary of three retirement accounts created by Tommy and administered by Franklin Templeton Bank Trust ("Franklin Templeton"); (2) contrary to the findings of the probate court, Tommy did not "define" his first wife to be his "spouse" for all purposes related to the Franklin Templeton retirement accounts; (3) the trial court erred in considering extrinsic evidence, particularly of Tommy's intent respecting the designation of beneficiaries; (4) the evidence was legally or factually insufficient to support Findings of Fact numbers three through ten; (5) Tommy's SEP IRA and MPP Plan were subject to ERISA so that the Plan Documents Rule should have prevailed and deference should have been given to Franklin Templeton's beneficiary determination; and (6) the case should be remanded for a re-determination of attorney fees under the Declaratory Judgments Act.
Issue one and two are dispositive, and we decide those issues in favor of the Charlene. We conclude the trial court erred as a matter of law in its construction of the retirement account contracts. We reverse the trial court's judgment and render judgment in favor of Charlene. Furthermore, in response to issue six, we reverse the trial court's award of attorney's fees to the appellees and remand for further proceedings consistent with this opinion. We need not consider appellant's issues three, four, and five. Because all dispositive issues are settled in law, we issue this memorandum opinion. Tex. R. App. P. 47.2(a). The other appellants, Franklin Templeton Bank Trust, Franklin Templeton Distributors, Inc., and Franklin Templeton Investor Services, L.L.C., did not file a brief. Based on the parties' stipulations at trial, these Franklin Templeton entities are stakeholders who have agreed to act in accordance with the final judgment.
I. FACTUAL AND PROCEDURAL BACKGROUND
Tommy's first wife was Clara Tigert ("Clara") who died on October 26, 2002. They had three children, Tommy Ray Tigert, Sandra Gale Craft, and Karen Elizabeth Norman who are the appellees and the independent executors of Tommy's estate. Charlene was Tommy's second wife. They married on October 29, 2005, and remained so until Tommy's death on December 2, 2007. Central to this dispute are three retirement accounts administered by Franklin Templeton and the standard forms Franklin Templeton provided to Tommy to create the three accounts. In February 2008, having been notified of Tommy's death, Franklin Templeton informed the parties the assets of these accounts were payable to Charlene, as Tommy's surviving spouse. In April 2008, appellees filed this declaratory judgment action, seeking a declaration that the assets of the three retirement accounts "belong to the estate" of Tommy. The parties stipulated that Franklin Templeton claimed no ownership in the retirement accounts, would not be required to file responsive pleadings or otherwise defend the declaratory judgment action, and would "comply with any final order entered by the Court regarding the disposition of the Franklin Templeton [accounts]." After a trial in the probate court, a written final judgment was rendered that declared the estate was entitled to recover "all of the Plan assets" of the three retirement accounts and ordered appellant Charlene Tigert to pay $31,200 in attorney's fees, additional attorney's fees if the matter is appealed to the Texas Supreme Court, as well as "all interest as provided by law from the date of this judgment until paid, and all costs hereof."
The three retirement accounts with Franklin Templeton are: (1) a Simplified Employee Pension Individual Retirement Account (the "SEP IRA Account") established by Tommy on May 17, 2002; (2) an Individual Retirement Account established by Tommy on March 31, 2003, after Clara's death, and funded with $100,000 in assets from Clara's IRA (the "Rollover IRA"); and (3) a Money Purchase Pension Plan (the "MPP Plan"), established by Tommy on May 20, 2002.
When Tommy opened the SEP IRA, he designated a beneficiary and agreed to Franklin Templeton's standard Individual Retirement Account Custodial Agreement ("Custodial Agreement"). In section six of the SEP IRA application, titled "Beneficiary Designation," Tommy named Clara as the sole primary beneficiary and did not name any contingent beneficiaries. On the application, beneath the space provided for the beneficiary's name, is a space titled "Relationship." There, Tommy wrote "Spouse." Section eight of the SEP IRA application, titled "Authorizing Signature" states, in relevant part:
I hereby appoint Franklin Templeton Bank Trust as Custodian of my IRA under the terms of the Franklin Templeton Individual Retirement Account Custodial Agreement (the "Agreement"). I have received, read and understand the Agreement, IRA Disclosure Statement and prospectus(es) for each Franklin Templeton Fund in which my IRA assets will be invested and agree to the terms therein. . . .
(emphasis added). Tommy signed below the above paragraph. The application is dated May 17, 2002.
Tommy also completed an application to initiate a Rollover IRA after Clara's death. Section six of the Rollover IRA application provides a blank for "Beneficiary Designation." Tommy did not fill in that blank, so no primary or secondary beneficiaries were identified. Similar to the SEP IRA application, the "Authorizing Signature" section of the Rollover IRA application states, in relevant part: "I hereby appoint Franklin Templeton Bank Trust as Custodian of my IRA under the terms of the Franklin Templeton Individual Retirement Custodial Account Agreement (the "Agreement")." A separate line below that paragraph contains Tommy's signature and is dated March 31, 2003.
The third Franklin Templeton account, the MPP Plan, was established during Clara's lifetime, a few days after Tommy established the SEP IRA Account. The record contains the first two pages of Tommy's MPP Plan application. Section seven of the MPP Plan application is titled "7. Beneficiary Designation." The first paragraph of that section states:
You must complete Sections 7(a) and 7(b) of this form. If you are married and age 35 or older, you should complete Section 7(c), but only if you wish to either waive the right to a Pre-Retirement Survivor Annuity (see below for details) or if you wish to designate a Primary Beneficiary other than your spouse.
Below this paragraph is a sub-heading titled `Section 7(a): Notice of Pre-Retirement Survivor Annuity (to be completed by all Participants)". This sub-section states, in relevant part:
In the case of your death before retirement, the Plan will use 100% of your accrued benefit to purchase a survivor annuity for your spouse, whom you must designate as your Beneficiary. . . .
However, beginning with the first day of the Plan Year in which you attain age 35 (or upon your termination if you are under age 35), you may elect to waive either (a) the requirement that your death benefit will be paid in the form of a survivor annuity, or (b) the requirement that your spouse be your Beneficiary. You may elect to waive both requirements.
However, your spouse must consent in writing before a notary public to any waiver that you elect. You may revoke a waiver any time before your death, and, if you desire you may make a new election.
. . . .
. . . Also, because a spouse has certain rights to the death benefit, you should immediately inform the Plan Administrator of any change in your marital status.
The record does indicate that such notification took place.
At the conclusion of sub-section 7(a) there are spaces provided for the "Participant's Signature" and "Date." Both of these spaces are blank. Below this blank signature line, in small italicized text is the phrase " Continued on the next page". However, no additional pages of the MPP Plan application appear in the record, nor does the record contain any document showing Tommy elected to waive the "requirement" that his spouse be the MPP Plan's beneficiary. Also, we note the record contains nothing that shows Clara or Charlene consented "in writing before a notary public" to such a waiver.
Another document relating to the MPP Plan, titled "Adoption Agreement," was signed by Tommy as "Owner" of Tommy Tigert Consulting. The Adoption Agreement appoints Franklin Templeton Bank Trust as trustee of the MPP Plan.
Tommy's applications for the SEP IRA and the Rollover IRA both appoint Franklin Templeton as custodian of the IRA accounts "under the terms of the Franklin Templeton Individual Retirement Custodial Account Agreement." The Custodial Agreement defines the term "Beneficiary" in paragraph seven of article VIII. Paragraph seven states, in relevant part:
7. "Beneficiary" shall mean the person or persons (including a trust or estate) designated as such by the Depositor or, following the death of the Depositor, designated as such by a Beneficiary (each person making such beneficiary designations is referred to as a "Designator.") . . . . The Custodian may rely upon the last written designation received at the Custodian's office which shall revoke all prior designations and such designations shall apply to all custodial account assets, including each Fund Account opened and maintained in this custodial account. Unless indicated otherwise on the application or designation form, if any primary or contingent beneficiary dies before the Designator, the interest attributable to such beneficiary and to his heirs shall terminate completely and the percentage share of any remaining beneficiary(ies) shall be increased on a pro rata basis. If none of the Designator's primary beneficiaries survive him, the interest in his IRA shall pass to his contingent beneficiary(ies), if named. If no designated beneficiary survives the Designator or if no ascertainable beneficiary is designated, the Designator's Beneficiary shall be his spouse or, if he has no surviving spouse, his estate. A Beneficiary (other than a minor or otherwise under a legal disability as addressed in Section 8 of this Article) with a present interest shall have sole authority and investment discretion to which he is entitled and accept full and sole responsibility for any investment selection that is made.
(emphasis added).
II. THE BENEFICIARY OF THE RETIREMENT ACCOUNTS A. Standard of Review
We review a trial court's legal conclusions de novo. OAIC Commercial Assets, L.L.C. v. Stonegate Vill., L.P., 234 S.W.3d 726, 736 (Tex. App.-Dallas 2007, pet. denied); Hackenjos v. Hackenjos, 204 S.W.3d 906, 908 (Tex. App.-Dallas 2006, no pet.). "A trial court's conclusions of law are independently evaluated to determine whether the trial court correctly drew the legal conclusions from the facts." Walker v. Anderson, 232 S.W.3d 899, 908 (Tex. App.-Dallas 2007, no pet.). "Conclusions of law must be upheld on appeal if any legal theory supported by the evidence sustains the judgment, and will be reversed only if the conclusions are erroneous as a matter of law." OAIC Commercial Assets, 234 S.W.3d at 736.
B. Applicable Law
The construction and meaning of an unambiguous contract is a question of law. Calpine Producer Servs., L.P. v. Wiser Oil Co., 169 S.W.3d 783, 787 (Tex. App.-Dallas 2005, no pet.). The question of whether a contract is ambiguous is also a question of law, which the court must decide "by looking at the contract as a whole in light of the circumstances present when the contract was entered." Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983). "If the written instrument is so worded that it can be given a certain or definite legal meaning or interpretation, then it is not ambiguous. . . ." Id. at 393. "A contract is ambiguous when its meaning is uncertain and doubtful or is reasonably susceptible to more than one interpretation." Las Colinas Obstetrics-Gynecology-Infertility Ass'n, P.A. v. Villalbe, 324 S.W.3d 634, 640 (Tex. App.-Dallas 2010, no pet.). "An ambiguity does not arise simply because the parties advance conflicting interpretations of the contract." Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996). "For an ambiguity to exist, both interpretations must be reasonable." Id. (emphasis original).
"In construing a written contract, the primary concern of the court is to ascertain the true intentions of the parties as expressed in the instrument." Coker, 650 S.W.2d at 393. "The court should consider that the `intent of the parties must be taken from the agreement itself, not from the parties' present interpretation, and the agreement must be enforced as written.'" Calpine Producer Serv., 169 S.W.3d at 787 (quoting Parts Indus. Corp. v. A.V.A. Servs., Inc., 104 S.W.3d 671, 678 (Tex. App.-Corpus Christi 2003, no pet.). Under the "Four Corners Rule," the parties intent must "be ascertained from the instrument as a whole and not from isolated parts thereof." Id. "[C]ourts should examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none with be rendered meaningless." Coker, 650 S.W.2d at 393 (emphasis original). Furthermore, "[w]hen the contract is unambiguous, the court should apply the pertinent rules of construction, [and] apply the plain meaning of the contract language. . . ." Calpine Producer Servs., 169 S.W.3d at 787. We do not consider parol evidence when reviewing unambiguous contracts. See Stewman Ranch, Inc. v. Double M. Ranch, Ltd., 192 S.W.3d 808, 810 (Tex. App.-Eastland 2006, pet. denied) (citing Middleton v. Broussard, 504 S.W.2d 839 (Tex. 1974)).
We find no specific authority in Texas case law as to the meaning of the description of a person's relationship in a beneficiary designation. However, other courts have concluded that when a beneficiary designation form provides a space for "Relationship," a person's answer is only informational. As instructive authority, we look to Egelhoff v. Egelhoff and Duggins v. Fluor Daniel, Inc., two federal cases that discuss beneficiary designations for ERISA employee benefit plans. See Egelhoff v. Egelhoff, 532 U.S. 141, 148 n. 2 (2001); Duggins v. Fluor Daniel, Inc., 217 F.3d 317, 319 (5th Cir. 2000); see generally Employee Retirement Income Security Act of 1974 (ERISA) § 2 et seq., 29 U.S.C. §§ 1001 et seq. Although in each case the court concluded federal law pre-empted state law, both applied a classic plain language analysis to interpret the beneficiary designations. See Egelhoff, 532 U.S. at 148 n. 2; Duggins, 217 F.3d at 319. This standard analysis also comports with Texas law. See Calpine Producer Servs., 169 S.W.3d at 787 (applying "the plain meaning of the contract language").
In Egelhoff v. Egelhoff, the decedent designated "Donna R. Egelhoff wife" as the beneficiary on his life insurance policy. Egelhoff, 532 U.S. at 148 n. 2. The United States Supreme Court characterized the respondents' argument as follows: "In effect, respondents ask us to infer that what Mr. Egelhoff meant when he filled out the form was not `Donna R. Egelhoff, who is my wife,' but rather a new legal person — `Donna as spouse,'. . . ." Id. (internal quotations omitted). However, the Court noted that on the designation form, next to the space provided for first name, middle initial, and last name, was a space for "Relationship." Id. Thus, the court concluded in dicta, that "[r]ather than impute to Mr. Egelhoff the unnatural (and indeed absurd) literalism suggested by respondents, we conclude he simply provided all of the information requested by the form." Id.
The United States Court of Appeals for the Fifth Circuit reached a similar conclusion. Duggins v. Fluor Daniel, Inc. See Duggins, 217 F.3d at 319. In Duggins, the beneficiary designation form for an ERISA plan provided a blank space for a description the beneficiary by name. Id. "David Duggins" was written in that blank, and two lines below was a space for the applicant's relationship to that beneficiary. Id. Written there was "Attorney and Executor." Id. Because the phrase "Attorney and Executor" appeared in the space provided for relationship two lines below the beneficiary name, the Fifth Circuit concluded Duggins was not appointed as a beneficiary in his representative capacity. Id. Instead, the court concluded that the decedent's "truthful response — on a separate line of the designation form asking about [the decedant's] relationship to the beneficiary — that Duggins was his attorney and executor in no way cast[] Duggins in the role of beneficiary in his representative capacity." Id.
C. Application of Law to Facts
In six issues, Charlene argues the trial court erred in failing to award her the assets from the three retirement accounts, instead awarding them to Tommy's estate, and in awarding attorney's fees to appellees. The appellees contend the trial court's conclusion was correct because Tommy specifically defined Clara as his "spouse" and Tommy's objective intent was that the proceeds of the retirement accounts pass to Clara, or in the event Clara predeceased Tommy, to Tommy's estate. We do not agree with appellees for the reasons stated below.
Preliminarily, we note the parties state the documents pertaining to the three retirement accounts are unambiguous contracts. We agree. These documents are worded such that they "can be given a certain or definite legal meaning or interpretation." Coker, 650 S.W.2d at 393. Charlene contends the SEP IRA and MPP Plan are subject to ERISA. Appellees do not agree, and further state that the Rollover IRA is not subject to ERISA. However, we need not decide these issues because the standard for our analysis of the contract language is the same whether or not ERISA applies. We construe these agreements from their four corners, by review of the plain language, and without regard for parol evidence. See Stewman Ranch, 192 S.W.3d at 810; see also Duggins, 217 F.3d at 319.
Our discussion will proceed by analyzing the SEP IRA and Rollover IRA documents separately from those relating to the MPP Plan. This is required because the applications for both the SEP IRA and Rollover IRA incorporate the Custodial Agreement, which defines "Beneficiary" and describes how the account assets shall be distributed upon Tommy's death. However, the third retirement account, the MPP Plan, does not incorporate the Custodial Agreement.
i. The SEP IRA and the Rollover IRA
Appellees argue that by describing Clara as his "spouse" on the SEP IRA application, Tommy's intent "was to give the proceeds [of the retirement accounts] specifically to Clara and if that spouse did not survive, to his estate." According to appellees, the effect of Tommy's description of Clara as "spouse," was to define her as "the" spouse for the purpose of interpreting the terms of all the Franklin Templeton account provisions. Further, appellees contend Clara is likewise defined as "spouse" for the Rollover IRA, despite the fact that Tommy left the beneficiary designation blank on his Rollover IRA application.
We cannot agree with the appellees' contention that Tommy defined Clara as "spouse" and that meaning must be included in our construction of the language of the Custodial Agreement. Rather, we conclude that Tommy's entry of the word "spouse" in the blank space provided for "Relationship" was purely informational. See Egelhoff, 532 U.S. at 149 n. 2. Tommy "simply provided all of the information requested by the form." Id. Appellees have not directed us to any provision in the applications or Custodial Agreement that states in any way that the identification of the relationship of the beneficiary affects or colors the meaning of any provision in the agreement. Morever, it is not dispositive that Tommy used the word "spouse" instead of "wife" to describe his relationship to Clara. The two words are commonly used interchangeably, with "wife" simply being a gender specific description of one's spouse. See Black's Law Dictionary 1438 (8th ed. 2009) (defining "spouse" as "[o]ne's husband or wife by lawful marriage; a married person").
Limiting our inquiry to the four corners of Tommy's agreement with Franklin Templeton, comprised of the SEP IRA application, the Rollover IRA application, and the Custodial agreement, we find no indication that Tommy used the word "spouse" in a technical sense. See Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996) ("We give terms their plain, ordinary, and generally accepted meaning unless the instrument shows that the parties used them in a technical or different sense."). The plain language of the Custodial Agreement directly states that if none of Tommy's primary or contingent beneficiaries survive him, the proceeds of his retirement accounts shall be distributed to his surviving spouse. Under the terms of the Custodial Agreement, because none of Tommy's identified beneficiaries survived him, as a matter of law, Charlene is the beneficiary of the SEP IRA and Rollover IRA.
ii. The MPP Plan
The record contains two documents pertaining to Tommy's MPP Plan: (1) the MPP Plan application, and (2) the Adoption Agreement, which Tommy signed in his capacity as owner of Tommy Tigert Consulting. The MPP Plan application, in Section 7(a), states: "In the case of your death before retirement, the Plan will use 100% of your accrued benefit to purchase a survivor annuity for your spouse, whom you must designate as your Beneficiary. . . ." (emphasis added). Two paragraphs beneath that statement, the application provides Tommy with a choice whereby Tommy could have elected to waive the requirement that his spouse "must" be the Plan's beneficiary. However, it also warns that his spouse must consent to demonstrate a waiver, in writing and before a notary public. Appellees do not suggest that such a waiver occurred, either by Clara or by Charlene, nor do we find anything in the record that shows such a waiver. The beneficiary language included in the MPP Plan application, as described above, makes it clear that the surviving spouse, Charlene, is the beneficiary of this account.
At trial both parties argued the MPP Plan is governed by the beneficiary designation Tommy made when he applied for his SEP IRA. We disagree. The MPP Plan application does not refer to the SEP IRA, Rollover IRA, or Custodial Agreement.
We conclude the trial court erred as a matter of law in its construction of the documents pertaining to the three retirement accounts by concluding Clara was defined as Tommy's spouse, and that Tommy's estate was the beneficiary of the proceeds of the accounts. Rather, Charlene Fullerton Tigert, as the surviving spouse of Tommy, is the beneficiary of the accounts as a matter of law. The trial court's judgment is reversed and we render judgment that Charlene Fullerton Tigerton is the beneficiary of the three retirement accounts. We resolve issues one and two in Charlene's favor. Accordingly, because those issues are dispositive, we need not consider Charlene's issues three through five.
III. ATTORNEY'S FEES
The trial court's judgment states that the premise for the award of attorney's fees to the appellees was the rendition of judgment in their favor. Because we now reverse that judgment, the award of attorney's fees to appellees is also reversed. Charlene's sixth issue is decided in her favor.
IV. CONCLUSION
The trial court's judgment that the Estate of Tommy Tigert "is entitled to all of the Plan Assets of the Franklin Templeton Plans, and the Plaintiffs, as the Independent Executors of the Estate of [Tommy Tigert], are entitled to receive all of the Plan Assets" is reversed, and we render judgment that Charlene Fullerton Tigert is the beneficiary of the three Franklin Templeton retirement accounts. Accordingly, the provision of the trial court's judgment that orders Franklin Templeton "to transfer and deliver all of the Plan Assets of the Franklin Templeton funds to the Plaintiffs within forty-five (45) days of the receipt of a duly authenticated copy of this Order, or if this Order is appealed, an authenticated copy of the final order herein" is reversed and we render judgment that all of "the Plan Assets of the Franklin Templeton funds" shall be transferred and delivered by Franklin Templeton, or by appellees if already transferred and delivered to appellees, to Charlene Fullerton Tigert.
Additionally, we reverse the part of the judgment that orders Charlene Tigert to pay attorney's fees to the appellees, and we remand this case for further proceedings consistent with this opinion.
Dear Attorneys:
Enclosed is a corrected version of the second page of the opinion for the above-mentioned case that was issued by the Court on May 2, 2011. Please note the following typographical error has been corrected:
Opinion: In the third line of the first full paragraph, an apostrophe has been added and the sentence now reads: We reverse the trial court's judgment.
Also note that this Court has issued a judgment nunc pro tunc correcting a similar typographical error in the judgment. Please replace the second page of the opinion and judgment with the newly attached copies.