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Home My WebLink About06-03-08 IN THE COURT OF COMMON PLEAS FOR CUMBERLAND COUNTY PENNSYLVANIA ORPHANS COURT DIVISION BLANK ROME LLP BY: ROBERT A. BURKE, ESQUIRE LEV KALMAN, ESQUIRE ATTORNEY ID NOS: 61268, 89844 ONE LOGAN SQUARE PHILADELPHIA, PA 19103-6998 (215) 569-5500 In re: The Estate of Joseph P. Bei1, File No. 21-07-0753 Movant. '1~ L ~':O ;r.;(/)~ C;8~ 8c: ~~ 3l ~ (... c:: z , "" -0 ':Jt W .. N .t:J't RESPONSE OF GENWORTH LIFE AND ANNUITY INSURANCE COMPANY F/K/A FIRST COLONY LIFE INSURANCE CO. TO RULE TO SHOW CAUSE WHY INSURANCE PROCEEDS SHOULD NOT BE PAID TO LEANNE BElL Respondent, Genworth Life and Annuity Insurance Company f/k/a First Colony Life Insurance Co. ("GLAIC") hereby files this Response to the Rule to Show Cause Why The Proceeds of the GLAIC Insurance Policy Should Not Be Paid To Leanne Beil. BACKGROUND Joseph P. Beil held a life insurance policy with GLAIC, designated as Policy Number 5590295 (the "Policy"). A true and correct copy of the Policy is attached to Leanne Beil's Petition for Rule to Show Cause (the "Petition") as Exhibit "A." It is not disputed by GLAIC that, upon Mr. Beil's death, the benefit under the Policy became due and payable. Joseph P. Beil died on July 20, 2007. 114945.00608/21694201v.1 '-'0 <"i :':p ;~=) ?-r~~1 .;f'; The Policy was dated April 17, 2000 and was effective as of that date. Mr. Beil's then wife, Leanne BeiL was listed as the sole beneficiary to the Policy benefit. Pursuant to the terms of the Policy, Leanne Beil's status as beneficiary was revocable by Mr. Beil. On March 6, 2002, Joseph and Leanne Beil were divorced. A Final Decree in Divorce was entered on that date by the Court of Common Pleas of Cumberland County, Pennsylvania. A Separation and Property Settlement Agreement was incorporated into the Final Decree. Attached to the Petition as Exhibit "B" is a true and correct copy of the Decree in Divorce. A Separation and Property Settlement Agreement (the "Separation Agreement") was executed by Leanne and Joseph Beil and was incorporated into their Decree in Divorce. See ld. The Separation Agreement does not provide that the designation of Mrs. Beil as a beneficiary to the Policy was intended to survive her divorce. On the contrary, the Separation Agreement suggests that the designation was not intended to survive their divorce. Section 10 of the Separation Agreement, entitled "Pension Plan," indicates Mr. and Mrs. Beil's intention to release each other's monetary interests and expectancies, and provides as follows: The Party's [sic] release any interest in the opposite spouse's checking, savings, accounts Pension [sic], Retirement, Stocks, Bonds, or any other interest, including business interests wherever located and which may have accumulated during the marriage. In connection with this claim, GLAIC was also provided with the Last Will and Testament of Joseph Beil (the "Will"). Leanne Beil was named as the Executrix of Mr Beil's Will. There are no provisions in the Will that relate to the Policy or the benefit to be paid thereunder. A true and correct copy of the Will is attached to the Petition as Exhibit "C." GLAIC has not been provided with any documents other than the Separation Agreement and the Will, and GLAIC has not been made aware of any other documents demonstrating any intention to keep Mrs. Beil as a beneficiary. 2 1]4945.00608/21694201 v.I GLAIC IS READY AND WILLING TO PAY THE INSURANCE BENEFIT TO LEANNE BElL OR THE CREDITORS OF JOSEPH BElL'S ESTATE AS THE COURT ORDERS GLAIC is ready and willing to pay the Insurance Benefit due under the Policy to whichever person or entities this Court directs and has no interest in seeing that any particular payee be designated by the Court. For the reasons set forth below, GLAIC, however, can not pay the benefit to Mrs. Beil or, for that matter, the creditors ofMr. Beil's Estate, without a Court Order directing it to do so. GLAIC will comply with any Order of this Court directing it to make payment of the Policy benefit. Pennsylvania law provides that, if a person domiciled in Pennsylvania at the time of his death is divorced after designating his spouse as beneficiary of a life insurance policy, any designation in favor of his former spouse which was revocable by him after the divorce shall become ineffective for all purposes and shall be construed as if such former spouse had predeceased him. See 20 Pa. C.S.A. S6111.2. 20 Pa. C.S.A. 96111.2 states as follows: If a person domiciled in this Commonwealth at the time of his death is divorced from the bonds of matrimony after designating his spouse as beneficiary of a life insurance policy, annuity contract, pension or profit-sharing plan or other contractual arrangement providing for payments to his spouse, any designation in favor of his former spouse which was revocable by him after the divorce shall become ineffective for all purposes and shall be construed as if such former spouse had predeceased him unless it appears from the wording of the designation, a court order or a written contract between the person and such former spouse that the designation was intended to survive the divorce. Unless restrained by court order, no insurance company, pension or profit-sharing plan trustee or other obligor shall be liable for making payments to a former spouse which would have been proper in the absence of this section. Any former spouse to whom payment is made shall be answerable to anyone prejudiced by the payment. 3 114945.00608/2] 69420 I v.I The automatic revocation under 20 Pa. C.S.A. 96111.2, however, will not occur if it appears from the wording of the designation, a court order or a written contract between the person and such former spouse that the designation was intended to survive the divorce. Id. Because of Leanne and Joseph Beil's divorce and the absence of any documents indicating a clear intent to keep Mrs. Beil as a beneficiary under the Policy, GLAIC believes that a fair reading of 20 Pa. C.S.A. 96111.2 may render the designation of Leanne Beil ineffective and is to be construed as if she predeceased Joseph Beil. Under the Policy, if there is no valid named beneficiary at the time of Mr. Beil' s death, then the benefit is to be paid to Mr. Beil' s estate. I For the reasons set forth herein, if GLAIC pays the Policy benefit to Mrs. Beil, the creditors of Mr. Beil may have a cause of action against it for the improper payment of the Policy benefit. Conversely, if GLAIC's interpretation of 20 Pa. C.S.A. 96111.2 and the documents identified herein is incorrect, then Mrs. Beil may have a cause of action against it for its failure to pay the Policy benefit to her. GLAIC recognizes that 20 Pa. C.S.A. S6111.2 purports to provide protection to an insurance company who makes payment to a former spouse under a life insurance policy. Indeed, 20 Pa. C.S.A. 96111.2 states that "unless restrained by court order, no insurance company...shall be liable for making payments to a former spouse which would have been proper in the absence of this section. Any former spouse to whom payment is made shall be answerable to anyone prejudiced by the payment." 1JL (the "Non-liability Provision"). There is, however, no case law interpreting the Non-liability Provision. GLAIC believes that similar statutes from other jurisdictions indicate that the most reasonable interpretation of Pennsylvania's Non-liability Provision is that it protects insurance companies who are unaware of a divorce and make an inadvertent payment to a former spouse. Such a situation does not apply in this case and, because GLAIC had notice of the divorce between Mr. and Mrs. Beil, it would not necessarily be insulated from liability should it make payment to Mrs. BeiI. 4 114945.00608/21694201 v.l CONCLUSION GLAIC acknowledges its obligation to pay the Policy benefit. Based upon on a reasonable interpretation of 20 Pa. C.S.A. 96111.2, however, GLAIC requires an Order of the Court identifying the proper payee of the Policy benefit. Respectfully Submitted, ;g:z"p) By: Robert A. Burke Lev Kalman One Logan Square Philadelphia, P A 19103 Attorneys for Genworth Life and Annuity Insurance Company j/k/a First Colony Life Insurance Co. ---- 5 1\4945.00608/21694201 v.l CERTIFICATE OF SERVICE I, Lev Kalman, Esquire, hereby certify that on the 'l-- day of June, 2008, I caused to be served a true and correct copy of the foregoing Response to the Rule to Show Cause Why The Proceeds of the GLAIC Insurance Policy Should Not Be Paid To Leanne Beil, by first class mail, postage prepaid, on the individual listed below: Sarah E. McCarroll, Esquire Gates, Halbruner & Hatch, P.C . 1013 Mumma Road Suite 100 Lemoyne, PA 17043 cj;;6) Lev Kalman 6 J 14945.00608/2169420 I v. J