Opinion
Index E2020003948
05-28-2021
CARL WELTE, Plaintiff, v. PROTECTIVE LIFE INSURANCE COMPANY, LIBERTY MUTUAL LIFE INSURANCE COMPANY, Defendants. PROTECTIVE LIFE INSURANCE COMPANY, AS ADMINISTRATOR FOR LINCOLN LIFE ASSURANCE COMPANY OF BOSTON, F/K/A LIBERTY LIFE ASSURANCE COMPANY OF BOSTON, Interpleader Plaintiff, v. CARL WELTE, FRANK WELTE, HELEN MCEWEN, Interpleader Defendants.
Aaron M. Gavenda, Esq., for Plaintiff. Jeffrey H. Marks, Esq., for Defendants Frank W.
Unpublished Opinion
Aaron M. Gavenda, Esq., for Plaintiff.
Jeffrey H. Marks, Esq., for Defendants Frank W.
DECISION
Honorable William K. Taylor Supreme Court Justice.
The evidentiary question before the Court is whether or not CPLR 4519 - the so-called "Dead Man's Statute" - bars Carl Welte's ("Plaintiff") proposed testimony of personal transactions or communications with Friedl Welte (the "decedent" or "Mrs. Welte") concerning two whole life insurance policies she purchased.
The issue came before this Court shortly after commencement of a bench trial by way of Frank Welte and Helen McEwen's ("Interpleader Defendants") objection to Plaintiff's proposed line of testimony concerning communications he had with Mrs. Welte about two whole life insurance policies she purchased and subsequent irrevocable beneficiary forms she executed removing Plaintiff as a named beneficiary. To rule upon the Interpleader Defendants' objection and ascertain whether or not CPLR 4519's testimonial bar applies, the Court permitted an offer of proof whereby both Plaintiff and the Interpleader Defendants could elicit testimony and highlight documents previously stipulated into evidence.
By way of background, in October 2008 Mrs. Welte purchased a whole life insurance policy from Liberty Life Assurance Company of Boston with an initial death benefit of $254,865.00. See Plaintiff's Exhibit 1, October 2, 2008 Life Insurance Contract. In March 2009 Mrs. Welte purchased a second whole life insurance policy with an initial death benefit of $89,805.00. See Plaintiff's Exhibit 2, March 27, 2009 Life Insurance Contract. Her children - Carl Welte ("Plaintiff"), Frank Welte and Helen McEwen ("Interpleader Defendants") were named as three equal beneficiaries under both policies. In December 2011 Mrs. Welte executed irrevocable beneficiary change forms as to both policies listing only the Interpleader Defendants as co-equal beneficiaries. Mrs. Welte died in February 2020 and Plaintiff commenced the instant action seeking to set aside the beneficiary change request forms alleging the Interpleader Defendants fraudulently induced Mrs. Welte to make the changes.
Known as the "Dead Man's Statute," CPLR 4519 provides that "[u]pon the trial of an action...a party or a person interested in the event, or a person from, through or under whom such a party or interested person derives his interest...shall not be examined as a witness in his own behalf or interest...against ...[a] survivor of a deceased person...concerning a personal transaction or communication between the witness and the deceased person..."
As an initial matter, Plaintiff is an interested party insofar as judgment in his favor would restore him to a one-third beneficiary status under the policies. And it is undisputed that the Interpleader Defendants as Mrs. Welte's children are "survivors" falling within the ambit of the Dead Man's Statute's protections should it apply. See e.g., In re Zalk, 10 N.Y.3d 669, 679 (2008).
To address the instant evidentiary issue, the Court looks to the plain language of the subject policies and the testimony and evidence adduced during the offer of proof. Both policies had a cash value during Mrs. Welte's life. Both policies permitted Mrs. Welte to either take loans or withdrawals against the policies up to the full value of the account. Plaintiff put forward no evidence to indicate that Mrs. Welte's ability to invade the policies was limited. Indeed, during the offer of proof Plaintiff called attorney Andrew Randisi who confirmed that the subject policies permitted Mrs. Welte unfettered access to all or part of the policies' value.
The irrevocability of the beneficiary designations in no way speaks to Mrs. Welte's ability to either take loans or make withdrawals against them. And a close read of the September 11, 2017 electronic mail and attached letter dated September 8, 2017 from Craig D. Chartier, Esq., admitted together as Defendant's Exhibit 500, says nothing to the contrary. An assertion by an attorney implying that the Interpleader Defendants had some role in approving Mrs. Welte's ability to take a loan against the policy means nothing in the face of the policies' plain language.
Having already considered the plain language of CPLR 4519, the Court looks to navigate between two informative cases - Ward v New York Life Ins. Co., 225 NY 314 (1919) and Poslock v Teachers' Retirement Bd. of Teachers' Retirement System, 88 N.Y.2d 146, 152 (1996). In Ward the Court of Appeals found that the Dead Man's Statute's testimonial bar does not preclude testimony relating past communications and transactions with a decedent concerning a term life insurance policy. This narrow exception was carved out because when analyzing the subject asset - the term life insurance policy - it was deemed to be of such a nature that the "property...never belonged to the deceased and...in fact did not come into existence until his death." Ward, 225 NY at 320. Plaintiff urges this Court to apply the exception to CPLR 4519 established in Ward.
But later, in Poslock, the Court of Appeals distinguished and limited Ward by holding that CPLR 4519's testimonial bar does apply where the proposed testimony implicates a vested retirement plan. The Court considered the retirement plan to be an asset belonging to the decedent "during his lifetime and w[as] sufficiently manageable by him in ways that are significantly distinct from the life insurance assets in Ward." Poslock, 88 N.Y.2d at 152. The Court further noted that, unlike the life insurance policy in Ward, the retirement plan did not "merely come into existence on [decedent's] death." Id. Rather, during his lifetime, the decedent in Poslock "had the option to direct where his contributions would be invested, not just to whom they would be paid on his death...[and h]e was eligible at any time to borrow at a favorable [interest rate]...up to 75% of the...funds invested..." Id. Put simply, the Court found that "[t]he indicia of decedent's lifetime interest and control [over the subject assets] legally distinguish such assets from those Ward takes out of the statutory prohibition." Id. at 152-53.
Applying the facts before this Court to the law, the whole life insurance policies here are more akin to the vested retirement account in Poslock rather than the term life insurance policy in Ward. Unlike Mrs. Welte, the decedent in Ward had no vested rights in the insurance asset during his lifetime; the policy possessed value for either his estate or named beneficiaries only upon his death. Not so here. Like the vested retirement account in Poslock, the whole life insurance assets here had cash value during Mrs. Welte's life such that she had loan, withdrawal, and surrender powers for part or all of the subject policies' value. To the extent Plaintiff suggests that Mrs. Welte did not have control over these vested assets during her lifetime, this assertion was speculative and not supported by competent evidence. The policies control.
Accordingly, the Court answers the threshold evidentiary question presented in the affirmative: the Dead Man's Statute applies and CPLR 4519 thereby prohibits Plaintiff from testifying about personal transactions or communications he had with Mrs. Welte concerning the subject policies and beneficiary designations in this proceeding. Objection sustained.