Loading...
HomeMy WebLinkAbout21-2007-753 Orphans' IN RE: : IN THE COURT OF COMMON PLEAS OF ESTATE OF JOSEPH P. BEIL : CUMBERLAND COUNTY, PENNSYLVANIA : : ORPHANS’ COURT DIVISION : NO. 21-07-0753 IN RE: PETITION FOR RULE TO SHOW CAUSE WHY INSURANCE PROCEEDS SHOULD NOT BE PAYABLE TO LEANNE E. BEIL OPINION AND ORDER On April 17, 2000, the decedent, Joseph Beil, contracted with First Colony Life Insurance Company (now Genworth Life and Annuity Insurance Company (Genworth)) for the purchase of a life insurance policy numbered 5590295. Beil designated his then wife, LeAnne E. Beil, as his sole primary beneficiary. The policy did not contain a contingent beneficiary designation. Joseph Beil and LeAnne Beil were divorced on March 6, 2002. Joseph subsequently died on July 20, 2007. Joseph Beil never changed the beneficiary designation in the Genworth policy. LeAnne Beil contends that the decedent intended her to receive 100% of the policy proceeds. Genworth declined to pay the life insurance proceeds to LeAnne pursuant to 20 Pa. C.S. § 6111.2. Title 20 Pa. C.S. § 6111.2 establishes a presumption that upon divorce, ex-spouses intend to revoke all life insurance beneficiary designations in favor of the former spouse. The Statute reads 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 any designation in favor of his his spouse, 21-07-753 ORPHANS’ COURT 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 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. 20 Pa.C.S.A. 6111.2. According to the statute, if at the time of the policyholder’s death, an insurance policy designates a former spouse as beneficiary, the designation is ineffective for all purposes. However, three exceptions exist to override the effect of the statute. First, if a contrary intention appears in the wording of the designation, the proceeds can be remitted to the former spouse. Second, a court order may provide that the designation was intended to survive the divorce. Or, finally, a written contract between the decedent and former spouse may demonstrate an intention to pay the insurance proceeds to the former spouse. The Supreme Court considered the statute’s application and constitutionality in Parsonese v. Midland National Insurance Co., 550 Pa. 423, 706 A.2d 814 (1998). In Parsonese, the Supreme Court held that § 6111.2, when applied retroactively, violates both the Pennsylvania Constitution and the United States Constitution. 550 Pa. at 434, 706 A.2d at 819. It was important to the Court’s analysis that the application of the statute in Parsonese was retroactive. In dicta, the Court opined that the legislation at issue “ ‘protects’ only divorced owners of life 2 21-07-753 ORPHANS’ COURT insurance policies, and of those, only ones who inadvertently neglect to revoke pre-divorce designations of their spouses as beneficiaries.” 550 Pa. at 433, 706 A.2d at 818. Here, Joseph Beil did not inadvertently neglect to revoke the designation of his former spouse as beneficiary. In fact, Joseph fully intended for his former spouse to remain the beneficiary. Joseph’s intention was evidenced by an email to LeAnne in which he stated that “you and Dennis can happily cash the insurance checks. Either way it’s a win-win for you, although its delayed a few years.” Petitioner’s Exhibit J. In a response to the email, LeAnne acknowledged that she remained as beneficiary despite their divorce. Petitioner tangentially mentions an argument that Section 6111.2 unconstitutionally impairs the contractual rights of Joseph Beil. According to the Pennsylvania Constitution, Article I Declaration of Rights, Section 17, the General Assembly shall not pass “any law impairing the obligation of contracts ….” According to Beaver County Building and Loan Ass’n v. Winowich, “[a]ny law which enlarges, abridges, or in any manner changes the intention of the parties as evidenced by their contract, imposing conditions not expressed therein or dispensing with the performance of those which are a part of it, impairs its obligation, whether the law affects the validity, construction, duration, or enforcement of the contract.” 323 Pa. 483, 492, 187 A.2d 481, 486 (1936). Application of Section 6111.2 clearly alters the intention of Joseph Beil as evidenced by the beneficiary designation in the insurance contract. In voiding beneficiary designations, the legislature assumed, inter alia, that insureds will forget to change beneficiary designations following divorce. See Parsonese, supra, at 819. Interestingly, our courts have observed that such an assumption may not be warranted. Divorce does not in all cases and automatically spell the end of interest in or even concern for one 3 21-07-753 ORPHANS’ COURT former spouse by the other… [T]o hold that forthwith upon divorce the husband must be presumed to intend to terminate a contractual arrangement which benefits the other is to engage in speculation not warranted by this record or required by Pennsylvania law. Id. at 818, quoting Adams’ Estate, 288 A.2d 514, 517 (Pa. 1972). Constitutional challenges to the validity of a statute, however, require satisfaction of certain procedural requirements. Most importantly, notice must be provided to the Attorney General, if the Commonwealth is not a party, whenever a litigant challenges the constitutionality of a statute in any court subject to the Pennsylvania Rules of Civil Procedure. Pa.R.C.P. 235. If the statute continues to be challenged on appeal, the Attorney General must be afforded a separate and additional notice pursuant to Pennsylvania Rules of Appellate Procedure 521. When the constitutionality of an act of the General Assembly is challenged on appeal, the Attorney General stands in representative capacity for, at a minimum, all non-Commonwealth parties having an interest in seeing the statute upheld. City of Philadelphia v. Com., 838 A.2d 566 at 584. As such, the Attorney General must be afforded notice of any appeal that raises the alleged unconstitutionality of a statute. Id. In this case, the record indicates that petitioner did not comply with these notice requirements. Therefore, we decline to further address the constitutional issues. Notwithstanding, in construing the statute, we are guided by the “canon of constitutional avoidance” which provides that when “a statute is susceptible of two constructions, by one of which grave and doubtful constitutional questions arise and by the other of which such questions are avoided, our duty is to adopt the latter.” See Harris v. United States, 536 U.S. 545, 555 (2002) (quoting United States ex rel. Attorney General v. Delaware & Hudson Co., 213 U.S. 366 4 21-07-753 ORPHANS’ COURT (1909)0. Pennsylvania explicitly recognizes this canon by statute in instances where construction of a Pennsylvania statute is at issue. See 1 Pa.C.S. 1922; see also Commonwealth v. Bavusa, 574 Pa. 6220, 832 A.2d 1042, 1050-51 (Pa. 2003). The application of this principle constrains us to interpret the statute in a way which allows at least the reasonable prospect of honoring the contractual intent of the insured. It can be argued that the phrase “court order” used in Section 6111.2 refers only to court orders which were contemporaneous with the actual divorce proceedings or, at least, in existence prior to the death of the insured. The statute, however, says nothing concerning the timeframe of the “court order.” The beneficiary, named in this case, urges a more expanded use of the phrase “court order” to permit a determination, even after the death of the insured, that the beneficiary designation was intended to survive the divorce. This is not an unreasonable construction given the fact that our courts are often called upon to discern the intent of the parties in contract matters. We believe, however, that the more logical construction is one which presupposes the existence of a court order prior to the death of the insured. This interpretation is in furtherance of what we think is the clear legislative intent of Section 6111.2; namely, that there be some documentary or written evidence that the beneficiary designation is intended to survive divorce. In the absence of such documentary evidence, the beneficiary designation becomes “ineffective for all purposes.” In Section 6111.2, there is also no further explanation of what is meant by a “written contract between the person and such former spouse.” The legislature refrained from using words like “nuptial agreement” or “marital settlement agreement” nor narrowed the definition in any way. Therefore, we give the term its broadest interpretation and conclude that the exchange of 5 21-07-753 ORPHANS’ COURT emails between the insured and his former spouse satisfy the requirements of a written contract within the meaning of the statute. In his email to his former wife, dated June 29, 2006, the decedent made a clear statement with regard to his intention that LeAnne would receive the proceeds of his life insurance policy. In the same email he made reference to his agreement to continue to make payments on her automobile. In her less than flattering response, LeAnne acknowledges that she will receive the insurance proceeds but laments that she will, nonetheless, be required to sell “the house” to satisfy debt. Admittedly, this exchange is a “contract” in the loosest sense. Nonetheless, the email makes it clear that Mr. Beil did not inadvertently neglect to revoke his pre-divorce designation of LeAnne as his beneficiary. In fact, it is crystal clear from not the writing that he intended that his beneficiary designation change. We have not found any Pennsylvania cases addressing facts similar to those sub judice. Looking to an analogous area of the law, however, we have found cases in which other 1 jurisdictions have concluded that emails may be used to satisfy the Statute of Frauds. See, e.g., Lamle v. Mattel, Inc., 394 F.3d 1355, 1362 (Fed.Cir. 2005); Cloud Corporation v. Hasbro, Inc., th 314 F.3d 289, 295-296 (7 Cir. 2002); Commonwealth Aluminum Corporation v. Stanley Metal Associates, 186 F.Supp.2d 770, 772-774 (W.D.Ky. 2001). ORDER th AND NOW, this 26 day of November, 2008, the petition of LeAnne E. Beil, Executrix of the Estate of Joseph P. Beil, for rule to show cause why insurance proceeds of the decedent’s 1 This was for the purpose of establishing a contract in UCC cases. 6 21-07-753 ORPHANS’ COURT life insurance policy with Genworth Life and Annuity Insurance Company should not be payable to policy beneficiary, LeAnne E. Beil, is GRANTED and it is hereby ordered that: 1. Genworth Life and Annuity Insurance Company shall pay the proceeds of the decedent’s, Joseph P. Beil’s, life insurance policy No. 5590295 to LeAnne E. Beil; and 2. Genworth Life and Annuity Insurance Company shall not be liable to the estate of Joseph P. Beil or its creditors for the issuance of proceeds to LeAnne E. Beil. BY THE COURT, _______________________________ Kevin A. Hess, J. Lowell R. Gates, Esquire For the Petitioner Robert A. Burke, Esquire Lev Kalman, Esquire For Genworth Life and Annuity Ins. Co. William J. Levant, Esquire Rebecca E. Johnson, Esquire For Pramco III, LLC :rlm 7 IN RE: : IN THE COURT OF COMMON PLEAS OF ESTATE OF JOSEPH P. BEIL : CUMBERLAND COUNTY, PENNSYLVANIA : : ORPHANS’ COURT DIVISION : NO. 21-07-0753 IN RE: PETITION FOR RULE TO SHOW CAUSE WHY INSURANCE PROCEEDS SHOULD NOT BE PAYABLE TO LEANNE E. BEIL ORDER th AND NOW, this 26 day of November, 2008, the petition of LeAnne E. Beil, Executrix of the Estate of Joseph P. Beil, for rule to show cause why insurance proceeds of the decedent’s life insurance policy with Genworth Life and Annuity Insurance Company should not be payable to policy beneficiary, LeAnne E. Beil, is GRANTED and it is hereby ordered that: 1. Genworth Life and Annuity Insurance Company shall pay the proceeds of the decedent’s, Joseph P. Beil’s, life insurance policy No. 5590295 to LeAnne E. Beil; and 2. Genworth Life and Annuity Insurance Company shall not be liable to the estate of Joseph P. Beil or its creditors for the issuance of proceeds to LeAnne E. Beil. BY THE COURT, _______________________________ Kevin A. Hess, J. Lowell R. Gates, Esquire For the Petitioner Robert A. Burke, Esquire Lev Kalman, Esquire For Genworth Life and Annuity Ins. Co. William J. Levant, Esquire Rebecca E. Johnson, Esquire For Pramco III, LLC