Metropolitan Life Insurance Company v. Hoenstine et al

Filing 32

FINDINGS OF FACT AND CONCLUSIONS OF LAW. Signed by District Judge Denise Page Hood. (JOwe)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

METROPOLITAN LIFE INS. CO.,
Case No. 14-CV-11525-DT
Plaintiff,
v.

HON. DENISE PAGE HOOD

PHYLLIS HOENSTINE, MARCUS W.
MILLARD and R.S.H. (a minor),
Defendants.
____________________________________
PHYLLIS HOENSTINE and R.S.H. (a minor),
Cross-Plaintiffs/Counter-Defendants,
v.
MARCUS W. MILLARD,
Cross-Defendant/Counter-Plaintiff.
_____________________________________/

FINDINGS OF FACT AND CONCLUSIONS OF LAW
I.

INTRODUCTION
Metropolitan Life Insurance Company (“Metropolitan Life”) filed this

interpleader action on April 15, 2014 against Phyllis Hoenstine, the
decedent’s sister, Marcus W. Millard, a caretaker, and R.S.H., the
decedent’s minor grandson.

All three defendants made claims for the
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proceeds of the decedent Robert Hynds’ life insurance benefits under a
group life insurance policy issued by Metropolitan Life through Hynds=
employer, General Motors.

The life insurance benefit was part of the

General Motors Life and Disability Program (the APlan@), an employee
welfare benefit plan regulated by the Employee Retirement Income
Security Act of 1974, as amended, 29 U.S.C. ' 1001 et seq.
Hynds died on July 22, 2013.

The primary beneficiary of record

pursuant to the latest designation form dated December 3, 2011 is Millard.
In a prior March 9, 2008 beneficiary designation form, Hoenstine, the
decedent=s sister, and R.S.H., the decedent=s grandson, were named as
primary beneficiaries. Metropolitan Life sent letters to Hoenstine, R.S.H.
and Millard indicating their claims were adverse to one another and that
Metropolitan Life could not resolve the issue without exposing the Plan to
the danger of double liability. Metropolitan Life deposited the proceeds of
the insurance policy into the Court and was dismissed from this action.
The case then proceeded on Hoenstine’s claim that Millard had
falsified the change of beneficiary forms filed by decedent or that Millard
had unduly influenced decedent to change the insurance policy beneficiary.
Pursuant to Rule 52(a) of the Rules of Civil Procedure, the Court makes the
following findings of fact and conclusions of law.
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II.

JURISDICTION
The jurisdiction of the Court is not in dispute.

III.

FINDINGS OF FACTS
Decedent and policyholder Hynds lived alone and was blind. He was

in need of physical care and help with his daily meals and other affairs. For
a time, Hoenstine’s son, Steve Hoenstine, took care of Hynds. When her
son took care of Hynds, Hoenstine and R.S.H. would visit her brother and
Hynds would play with R.S.H.

R.S.H.’s mother, Hynds’ daughter, died

when R.S.H. was two years old. R.S.H. lived with Hynds until R.S.H. was
four years old. R.S.H. was ten years old when Hynds died.
Hoenstine claims that Hynds told her that the insurance money
should go to R.H.S. Hoenstine was familiar with Hynds’ signature, but she
did not recognize the signature on the Metropolitan Life forms shown to her
at trial.
In July 2011, Millard came to help Hynds and lived with Hynds for
about six months until January 2012. Millard was a friend of Steve, Hynds’
nephew and previous caregiver. Millard’s fiancée and children also stayed
at Hynds’ home some of this time, although Millard claims his children
never lived at the home. Hynds paid Millard and his fiancée approximately
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$900 per month for caring for him. Millard would read Hynds’ mail to him,
which were mostly bills. Hynds saved his records in folders. Millard, his
fiancée, his mother, Katherine Millard, and some of Hynds’ friends would
drive Hynds to do his errands. Millard would take Hynds to the bank when
Hynds got paid, which was twice a month. Millard paid his bills in cash.
Millard’s mother would drive Hynds and Millard around town to pay Hynds’
bills and buy cigarettes. Millard cleaned and cooked Hynds’ meals. Millard
was able to shower himself. Millard claims he was not interested in Hynds’
money.
Millard did not see Hynds fill out the two beneficiary forms. Millard
was not present when Hynds signed the forms. Millard does not know how
Hynds possessed the beneficiary forms. Millard claims that Hynds was
capable of signing forms if his hand was placed on the signature line.
Hynds had signed forms for nurses who visited him. Millard asserts he
does not know what Hynds’ signature looks like.
Hoenstine did not feel comfortable at Hynds’ home when Millard, his
fiancée and children lived there. She visited her brother a couple of times
while Millard lived there, but would not stay for very long. Hoenstine initially
had the ability to call her brother, until Millard took the telephone away from
her brother.
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Hoenstine claims that Millard fraudulently executed a new beneficiary
on Hynds’ insurance policy or unduly influenced him to change the policy
beneficiary during the time Millard lived with and cared for him. Millard
asserts that he was only a “helper” and never assisted him in changing the
beneficiary.

Millard claims he had no knowledge of the beneficiary

designation until after Hynds died. The first change of beneficiary was on
November 11, 2011 and the second on December 3, 2011.
In January 2012, Hoenstine removed Hynds from his home and
placed him in a nursing facility. She did this based on reports that Hynds
was living in “deplorable” conditions. According to Nona Vickers, a witness
at trial, Hynds’ house was in poor condition, that she found that Hynds had
messed himself and messed all over the bathroom. She said that Hynds
told her that Millard had taken his telephone from him so that he could not
call out and Millard and his fiancée had abandoned him. He had not eaten
in several days. Hoenstine first took her brother to the hospital and then to
a home health care facility.
Connie McNeal, from the home health care facility, testified that when
Hynds came to the facility, he was underweight and malnourished. McNeal
learned that Millard beat Hynds for urinating on himself and that Hynds did
not like having Millard’s children in the home. McNeal also learned that
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Hynds would give the caregiver the money to pay the house note, but that
the note did not get paid and Hynds lost his house. Hoenstine, her son and
daughter, and R.S.H. would visit Hynds. Hynds was always happy when
Hoenstine and R.S.H. would visit. McNeal observed a normal and loving
interaction between Hynds and R.S.H.
Hoenstine and Millard agree that Hynds was able to handle his
financial affairs at the time of these claims. The parties agree that Hynds
was independent in his personal affairs and strong-willed. Millard claims
that Hynds chose to spend the 2011 Thanksgiving holiday with Millard
rather than accepting the invitation of Hoenstine. Hoenstine asserts that
Hynds spent either the 2011 Thanksgiving or Christmas holiday with her.
IV.

CONCLUSIONS OF LAW
Federal law governs this matter because it involves an employee

welfare benefit plant that is governed by ERISA. Tinsley v. General Motors
Corp., 227 F.3d 700, 703 (6th Cir. 2000). ERISA preempts any state law
that relates to, or “has a connection with or reference to” an ERISA-covered
plan. Id. (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97 (1983); see
29 U.S.C. § 1144(a)). Claims touching on the designation of a beneficiary
of an ERISA-governed plan fall under ERISA’s broad preemptive reach and
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are consequently governed by federal law. Id. at 704 (citing Metropolitan
Life Ins. Co. v. Marsh, 119 F.3d 415, 420 (6th Cir. 1997)).

Questions

regarding competing claimants to proceeds of insurance policies due to
alleged forgery on the beneficiary designation change form or any alleged
exercise of undue influence are preempted by ERISA and governed by
federal law. Id. Courts “look to either the statutory language or, finding no
answer there, to federal common law which, if not clear, may draw
guidance from analogous state law.” Id.
Drawing from shared general principles to guide the federalcommon-law analysis of an undue influence claim, the Sixth Circuit
identified a number of factors the Court may use to determine whether
undue influence has been exerted in a given case, including: the physical
and mental condition of the benefactor; whether the benefactor was given
any disinterested advice with respect to the disputed transaction; the
“unnaturalness” of the gift; the beneficiary’s role in procuring the benefit
and the beneficiary’s possession of the document conferring the benefit;
coercive or threatening acts on the part of the beneficiary, including efforts
to restrict contact between the benefactor and his relatives; control of the
benefactor’s financial affairs by the beneficiary; and the nature and length
of the relationship between the beneficiary and the benefactor. Id. at 705.
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The inquiry into the exercise of undue influence is highly fact-intensive.
Because “of the subtle and often covert ways in which undue influence may
be exercised, it must often be proven by means of circumstantial evidence.”
Id.
The Court, relative to these factors, finds that Hynds was blind and
physically infirm making him vulnerable and susceptible to undue influence.
Although each party has indicated that Hynds seemed mentally competent
and able to take care of his affairs, Millard also admitted he helped Hynds
with his banking and took him to the bank. Even though Hynds paid for
Millard’s care of Hynds, Millard moved his family into Hynds’ home, used
Hynds’ money to feed Millard’s family. Millard had full access to the home
of this blind person. Millard took the telephone when he left Hynds alone,
isolating him from his family and other people. There is no evidence that
Hynds received any disinterested advice from Millard. However, there is
evidence that Hynds wanted to leave his policy to his grandson.
As to the “unnaturalness” of the gift, Millard only knew Hynds for
about six months, all of that in the capacity of a caregiver. There was no
indication that Hynds was especially otherwise connected to Millard. Millard
makes much of Hynds’ decision to spend the Thanksgiving holiday with
Millard’s family instead of Hynds’ sister, Hoenstine. The beneficiary change
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was made shortly before Thanksgiving and then again a few weeks after,
but before Hynds was removed from his home. The Court does not find
Hynds’ decision regarding the Thanksgiving holiday deserves significant
weight, because Hoenstine testified that Hynds spent either Thanksgiving
or Christmas with her.
There is no direct evidence to indicate that Millard played a role in
procuring the benefit or his possession of the document procuring the
benefit. It is only speculation that Millard assisted Hynds in obtaining the
beneficiary forms. Of course, his unlimited access to Hynds and his home
(coupled with Hynds’ blindness) support an argument that Millard coerced
Hynds to change the beneficiary or Millard changed it himself. Hynds was
unable to drive and was driven around by Millard or Millard’s mother.
Millard admitted he opened Hynds’ mail and had full access to his records.
There is also some evidence of the ability of Millard to control Hynds’
financial affairs.

The Court notes it could be reasonably inferred that

Millard is likely person to have assisted Hynds with obtaining any change of
beneficiary form. Millard, though he assisted Hynds with his banking, could
not recognize Hynds’ writing on the beneficiary designation form. Millard
claims that he first learned he was the beneficiary from Hoenstine and had
no copy of the document.
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There is evidence that Millard isolated Hynds by taking his telephone.
This is demonstrative of an effort to restrict contact between the benefactor
and his relatives. However, there is also evidence that Hoenstine visited
her brother on occasion at his home, but that she felt uncomfortable.
As to the nature and length of the relationship between the
beneficiary and benefactor, Hynds knew Millard just a few months.
Sufficient evidence, albeit circumstantial, has been presented to show
that Millard was a confidant or acted as Hynds’ fiduciary, that he benefited
from the change of beneficiary transaction and that he had the opportunity
to influence Hynds’ decision in the transaction. No one else had access to
Hynds’ mail and financial records during the time period when the
beneficiary form was changed, other than Millard.

Millard suggests an

array of other scenarios and persons who could have influenced or
assisted Hynds in changing the beneficiary. Yet, it is of note that none of
them benefited from such a change.
The Court finds the evidence supports a finding of undue influence by
Millard based on the various factors noted by the Sixth Circuit. As such,
the insurance proceeds are awarded to Hoenstine and R.S.H. as noted in
the Beneficiary Designation form dated and signed by Hynds on March 9,
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2008.

Metropolitan Life and/or Hoenstine and R.S.H. may present the

appropriate withdrawal order to the Court pursuant to E.D. Mich. LR 67.1,
after reviewed and approved by the Clerk’s Office (Financial Department).
IT IS SO ORDERED. This action is deemed CLOSED on the docket.

Dated: September 13, 2017

s/Denise Page Hood
Chief, U.S. District Court

I hereby certify that a copy of the foregoing document was served upon
counsel of record on September 13, 2017, by electronic and/or ordinary
mail.

s/Julie Owens acting in the absence of LaShawn R. Saulsberry
Case Manager

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