DEGELMAN et al v. LINCOLN NATIONAL LIFE INSURANCE COMPANY et al

Filing 15

OPINION. Signed by Judge Jose L. Linares on 6/21/16. (DD, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

VERONICA DEGELMAN and ANA PAULA
BARRE SE,
Civil Action No. : 16-286 (JLL) (SCM)
Plaintiffs,
OPINION
V.

LINCOLN NATIONAL LIFE INSURANCE
COMPANY, ADRIANA ANDRADE, and GARY
BEANE,
Defendants.

LINARES, District Judge.

This matter concerns the payment oflife insurance benefits and comes before the Court by
way of a motion to dismiss: Defendants Lincoln National Life Insurance Company ("Lincoln"),
Adriana Andrade ("Andrade") and Gary Beane ("Beane") (collectively "Defendants") move to
dismiss the complaint filed by Plaintiffs Veronica Degelman ("Degelman") and Ana Paula Barrese
("Barrese") (collectively "Plaintiffs"). (ECF No. 7.) The Court has considered the parties'
submissions and heard oral argument on June 8, 2016. For the reasons set forth below, the Court
grants in part and denies in part the motion to dismiss. Degelman's claims shall proceed against
Lincoln and Beane (but not against Andrade), and Barrese's claims shall be dismissed without
prejudice.

FACTUAL BACKGROUND 1

On or about July 23, 2007, Lincoln issued policy number T201611441 (the "Policy") of
life insurance on the life of Edivaldo Coutinho ("Coutinho"), with a benefit amount of $500,000.
(Compl. ~ 1.) Degelman was named as the primary beneficiary under the Policy, and at the time,
was married to Coutinho and known as Veronica Coutinho.

(Id.~~

2, 3.)

With respect to Designation and Change of Beneficiary, the Policy states as follows:

Designation of Beneficiary
The Beneficiary named in the application for this Policy will receive
the Proceeds when the Insured dies unless the Beneficiary
designation has been changed by the Owner.

Change of Beneficiary
The owner may change any Beneficiary designation while the
Insured is alive unless otherwise provided in the previous
designation. A change of Beneficiary designation will revoke any
previous designation.
A change of designation may be made by filing a written request
with the Home Office. The request must be in a form acceptable to
the Company.
The Company may require this Policy for
endorsement of a change of Beneficiary designation.
(See ECF No. 7-2, Rauls Deel., Ex. B (the Policy) at 3.)

In or about the early part of 2008, Coutinho and Degelman sent a fax to Defendant Andrade,
requesting that the contingent beneficiary under the Policy be changed from Degelman's minor
children2 to Barrese, and that Degelman remain as primary beneficiary. (Id.~ 5.) Andrade sent a
blank change of beneficiary form to Coutinho, asking him to sign and return it. (Id.

1

~ 6.)

Andrade

This background is derived from Plaintiffs Complaint, and other documents that are integral to and/or explicitly
relied upon in the Complaint, which the Court must accept as true at this stage of the proceedings. See Alston v.
Countlywide Fin. Corp., 585 F.3d 753 , 758 (3d Cir. 2009).
2
The original contingent beneficiaries were Edivaldo Coutinho (son of Degelman and Coutinho), and Ana Licia
Santan (daughter ofDegelman). (Comp!. ii 4.) Both were minors at the time. (Id.)

2

stated that she would fill in the change of beneficiary form in accordance with Coutinho's
instructions. (Id.) Coutinho signed the form and returned it as instructed, and assumed that the
change of beneficiary went into effect as requested. (Id.
execute the change of beneficiary request. (Id.

iii! 7, 8.) Andrade allegedly failed to

if 19.)

Degelman and Coutinho divorced on August 24, 2009. (Id.

if 9.) Since their divorce,

Degelman paid all of the Policy premiums pursuant to a verbal agreement with Coutinho. (Id.

if

10.)
At various times since 2011, Degelman spoke to and communicated in writing with
Defendant Beane, who was the Lincoln agent servicing the Policy. (Id.

if 11.) Degelman advised

Beane that she and Coutinho had divorced, that her last name was no longer Coutinho, that she
had remarried and her last name was now Degelman, and asked Beane if she should change her
name as the beneficiary under the Policy. (Id.

if 12.) Beane advised Degelman that it would not

be necessary to change her name as the beneficiary under the Policy, and he failed to advise
Degelman of New Jersey law to the contrary. (Id.

iii! 13, 14.)

On or about July 24, 2015, Coutinho died while residing in Brazil. (Id.

if 15.) Degelman,

believing herself to be the primary beneficiary, filed a claim to receive the benefits of the Policy.
(Id.

if 16.) Lincoln denied the claim on grounds that Degelman was no longer a beneficiary as a

result of the divorce, in accordance with New Jersey law, specificallyN.J.S.A. 3B:3-14. (Id.

if 17.)

Lincoln further advised that there were no contingent beneficiaries named under the Policy, and
that the request made in 2008 had only removed the original contingent beneficiaries, but had not
named Barrese as contingent beneficiary. (Id.

iii! 18, 19.)

3

This lawsuit followed. Count 1 of the Complaint alleges negligence against Andrade and
Beane, for failure to properly execute the change of beneficiary request in 2008 and for failure to
advise on the impact of the New Jersey law regarding divorce and beneficiary designation,
respectively. (See iii! 21-24.) In Counts 2 and 3, Plaintiffs seek reformation of the Policy to name
Degelman as primary beneficiary and Barrese as contingent beneficiary under the Policy,
respectively, such that they would be entitled to the $500,000 face value. (Id. at 6-7.)

PROCEDURAL HISTORY

On December 7, 2015, Plaintiffs filed a three-count Complaint in the Superior Court of
New Jersey, Law Division, Essex County. (ECF No. 1-1 ("Comp!.").) Defendants removed the
action to this Court on January 15, 2016. (ECF No. 1.) This Court has jurisdiction under 28 U.S.C.
§ 1332.

Defendants moved to dismiss on February 25, 2016. (See ECF No. 7-1 ("Mov. Br.").)
Plaintiffs filed opposition on March 21, 2016. (ECF No. 9 ("Opp. Br.").) Defendants replied on
March 28, 2016. (ECF No. 11 ("Reply Br.").) The Court heard oral argument on June 8, 2016.
(See ECF No. 14.)

LEGAL STANDARDS

Defendants seek to dismiss Plaintiffs Complaint for lack of subject matter jurisdiction
and/or failure to state a claim, under Federal Rules of Civil Procedure 12(b)(l) and 12(b)(6),
respectively. There are differing standards of review under each. See Cohen v. Kurtzman, 45 F.
Supp. 2d 423, 428 (D.N.J. 1999) (citing cases).

4

A. Rule 12(b)(l)- Subject Matter Jurisdiction I Standing
Federal courts have limited jurisdiction and are permitted to adjudicate "cases" and
"controversies" only as permitted under Article III of the Constitution. See U.S. Const. art. III, §
2; see also Phila. Fed'n a/Teachers v. Ridge, 150 F.3d 319, 322-23 (3d Cir. 1998). "That case-or
controversy requirement is satisfied only where a plaintiff has standing." Sprint Commc 'ns Co.,

L.P. v. APCC Servs., Inc., 554 U.S. 269, 273 (2008). "Absent Article III standing, a federal court
does not have subject matter jurisdiction to address a plaintiffs claims, and they must be
dismissed." Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d 181, 188 (3d Cir. 2006) (citing Storino

v. Borough of Point Pleasant Beach, 322 F.3d 293, 296 (3d Cir. 2003)); DaimlerChrysler Corp.
v. Cuno, 547 U.S. 332, 341 (2006) ("If a dispute is not a proper case or controversy, the courts
have no business deciding it .... ").
"Standing implicates both constitutional requirements and prudential concerns." Common

Cause v. Pennsylvania, 558 F.3d 249, 257 (3d Cir. 2009) (citing Kowalski v. Tesmer, 543 U.S.
125, 128 (2004)). "In essence the question of standing is whether the litigant is entitled to have
the court decide the merits of the dispute or of particular issues." Elk Grove Unified Sch. Dist. v.

Newdow, 542 U.S. 1, 11 (2004) (quotations, citations omitted). The "irreducible constitutional
minimum" of standing consists of three elements: the plaintiff must have (1) suffered an injury in
fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to
be redressed by a favorable judicial decision. Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016)
(citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992); Friends of the Earth, Inc. v.

Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81 (2000)).

5

Additionally, "[i]n contrast to constitutional standing, prudential standing 'embodies
judicially self-imposed limits on the exercise of federal jurisdiction."' Common Cause, 558 F .3d
at 258 (quoting Elk Grove Unified Sch. Dist., 542 U.S. at 11 (quotation omitted)). And "[a]lthough
the Supreme Court has 'not exhaustively defined the prudential dimensions of the standing
doctrine, [the Court has] explained that prudential standing encompasses the general prohibition
on a litigant's raising another person's legal rights .... "' Id. (quoting Elk Grove Unified Sch.
Dist., 542 U.S. at 12.)

"A motion to dismiss for want of standing is ... properly brought pursuant to Rule 12(b)(l),
because standing is a jurisdictional matter."

In re Schering-Plough Corp. Intron/Temodar

Consumer Class Action, 678 F.3d 235, 243 (3d Cir. 2012) (quoting Ballentine v. United States,

486 F.3d 806, 810 (3d Cir. 2007)); Kurtzman, 45 F. Supp. 2d at 428 (noting that a motion to dismiss
under Rule 12(b)(l) "attacks ... the right of a plaintiff to be heard in Federal court"). When ruling
on such a motion, a distinction must be made between a facial and factual attack. Mortensen v.
First Fed. Sav. & Loan Ass 'n, 549 F.2d 884, 891 (3d Cir. 1977). If the Rule 12(b)(l) motion is a

facial attack, "the court looks only at the allegations in the pleadings and does so in the light most
favorable to the plaintiff." U.S. ex rel. Atkinson v. Pa. Shipbuilding Co., 473 F.3d 506, 514 (3d
Cir. 2007) (citing Mortensen 549 F.2d at 891). On the other hand, when the Rule 12(b)(l) motion
is a factual attack, "no presumptive truthfulness attaches to plaintiffs allegations, and the existence
of disputed material facts will not preclude the trial court from evaluating for itself the merits of
jurisdictional claims." Mortensen 549 F .2d at 891.
Here, Defendants' motion to dismiss for lack of subject matter jurisdiction under Rule
12(b)(l) is a factual attack because it challenges the "actual facts" that support jurisdiction, and

6

not merely how those facts were pled. Pa. Shipbuilding Co., 473 F.3d at 514. Accordingly, the
Court may "review evidence outside the pleadings" in determining whether subject matter
jurisdiction exists. Id. (citation omitted).

B. Rule 12(b)(6)- Failure to State a Claim
To withstand a motion to dismiss for failure to state a claim, "a complaint must contain
sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face."'

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell At!. Corp. v. Twombly, 550 U.S. 544,
570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."

Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). "The plausibility standard is not akin to
a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted
unlawfully." Id.
To determine the sufficiency of a complaint under Twombly and Iqbal in the Third Circuit,
the court must take three steps: first, the court must take note of the elements a plaintiff must plead
to state a claim; second, the court should identify allegations that, because they are no more than
conclusions, are not entitled to the assumption of truth; finally, where there are well-pleaded
factual allegations, a court should assume their veracity and then determine whether they plausibly
give rise to an entitlement for relief. See Connelly v. Lane Const. Corp., 809 F.3d 780, 787 (3d
Cir. 2016) (citations omitted). "In deciding a Rule 12(b)(6) motion, a court must consider only
the complaint, exhibits attached to the complaint, matters of public record, as well as undisputedly
authentic documents if the complainant's claims are based upon these documents." Mayer v.

Belichick, 605 F.3d 223, 230 (3d Cir. 2010).

7

The Court's role is not to determine whether the non-moving party "will ultimately prevail"
but whether that party is "entitled to offer evidence to support the claims." United States ex rel.

Wilkins v. United Health Grp., Inc., 659 F.3d 295, 302 (3d Cir. 2011). The Court's analysis is a
context-specific task requiring the court "to draw on its judicial experience and common sense."

Iqbal, 556 U.S. at 679.

ANALYSIS

As noted, Lincoln denied Degelman's claim for the Policy proceeds on grounds that
Degelman was no longer primary beneficiary as a result of the divorce, pursuant to N.J.S.A. 3B:314. (Compl.

iii! 15-17.) Lincoln further advised that Barrese was not a contingent beneficiary,

because the request made in 2008 had only removed the original contingent beneficiaries, but had
not named Barrese as contingent beneficiary. (Id.

iii! 18, 19.)

The complaint alleges three counts against Defendants. Count 1 of the Complaint alleges
negligence against Andrade and Beane-Andrade for failing to properly execute the request to
name Barrese as contingent beneficiary in 2008, and Beane for failing to advise on the impact of
the New Jersey law regarding divorce and beneficiary designation. (See Compl.

iii! 21-24.) In

Counts 2 and 3, Degelman and Barrese, respectively, seek reformation of the Policy so that they
may collect the proceeds. (See Compl. at 5-6.)
In this section, the Court discusses Degelman and Barrese's claims separately, and
concludes that Degelman's claims shall proceed, while Barrese's claims must be dismissed without
prejudice for failure to state a claim.

8

A. Degelman Has Sufficiently Demonstrated Standing and a Plausible Entitlement to
Relief With Respect to Her Claims of Reformation, and Negligence as to Beane.

Defendants first argue that Degelman does not have standing as primary beneficiary under
the Policy because of Coutinho and Degelman's divorce in 2009 and application ofN.J.S.A. 3B:314. (See Mov. Br. at 8-11.) Indeed, Lincoln conceded on the record that the crux of this case is
the application ofN.J.S.A. 3B:3-14. (See Tr.) That statute states in relevant part:
3B:3-14. Revocation of probate and non-probate transfers by
divorce or annulment; revival by remarriage to former spouse
a. Except as provided by the express terms of a governing
instrument, a court order, or a contract relating to the division
of the marital estate made between the divorced individuals
before or after the marriage, divorce or annulment, a divorce or
annulment:
1) revokes any revocable:
a) dispositions or appointment of property made by a
divorced individual to his former spouse in a governing
instrument[ 3l and any disposition or appointment created
by law or in a governing instrument to a relative of the
divorced individual's former spouse[.]
N.J.S.A. 3B:3-14 (emphasis added).
Regardless of whether N.J.S.A. 3B:3-14 applies or not, the Court finds that Degelman has
adequately alleged standing, and plausibly stated a claim upon which relief can be granted,
sufficient to survive the instant motion to dismiss. As explained below, ifN.J.S.A. 3B:3-14 does
not apply, Degelman has stated a claim for reformation; if it does apply, Degelman has stated a
claim for negligence against Beane.
1. Reformation
Lincoln denied Degelman's claim for the Policy proceeds on grounds that she had been
revoked as primary beneficiary upon divorce from Coutinho, in accordance with N.J.S.A. 3B:3-

3

Life insurance policies are included within the definition of "governing instrument." See N.J.S.A. 3B: 1-1.

9

14. (See Compl.

~

17.) In Count 2, Degelman "demands judgment reforming the [Policy] to

provide that . . . Degelman is the proper primary beneficiary and requiring Lincoln to pay
$500,000.00 benefit to ... Degelman along with interest, attorney fees and costs of suit." (Compl.
at 5.) Because the complaint can be construed to find that Degelman was never revoked as primary
beneficiary, Degelman has sufficiently stated a claim for reformation.
Here, in pertinent part, Degelman alleges that "[s]ince their divorce, Degelman has paid all
of the premiums under Coutinho's life insurance policy pursuant to a verbal agreement with
Coutinho." (Compl.

~

10.) Construing the complaint in a light most favorable to Degelman, the

Court finds that she has sufficiently alleged the existence of a contract within the meaning of
N.J.S.A. 38:3-14. Stated differently, the complaint sufficiently alleges that Degelman was not
revoked as beneficiary upon divorce pursuant to N.J.S.A. 38:3-14 because Degelman and
Coutinho entered into an agreement whereby Degelman would remain as primary beneficiary in
exchange for her payment of the policy premiums.
There is nothing to suggest that the alleged oral contract between Degelman and Coutinho
is insufficient as a matter of law to trigger the exception to N.J.S.A. 38:3-14. First, the limited
case law interpreting N.J.S.A. 38:3-14 does not provide guidance on whether a "contract" need be
in writing for purposes of the N.J.S.A. 38:3-14 exception,4 nor could the Court could locate any

4

The cases relied on by Defendants are distinguishable. For example, in Fox v. Lincoln Financial Group, the
Appellate Division held that "mere verbal expression of an intent to change a beneficiary designation is ineffective"
where a policy states that changes must be in writing. 439 N.J. Super. 380, 390 (App. Div. 2015) (citing DeCeglia v.
Estate of Colletti, 265 N.J. Super 128, 136 (App. Div. 1993)). Here, however, the complaint can be construed as
suggesting, for purposes of a reformation cause of action, that Degelman was never revoked in the first place, thus
obviating the need for her to re-establish herself as primary beneficiary. Additionally, Dean v. New England Mut.
Life Ins. Co., No. 14-2211, 2015 WL 404743 (D.N.J. Jan. 29, 2015) is distinguishable because in Dean the Judgment
of Divorce made clear that the divorced spouse had been "supplanted" as beneficiary by the children. Id. at *5.
Finally, the Court notes that in Hadfield v. Prudential Ins. Co., 408 N.J. Super. 48, 50 (App. Div. 2009), the issue of
whetherN.J.S .A. 3B:3-14 applied was addressed at the motion for summary judgment stage, where there was relevant
evidence in the record.

10

relevant legislative history on the scope of "contract" within N.J.S.A. 38:3-14. However, it is
clear that under New Jersey law, contracts need not be in writing to be valid. See Wanaque
Borough Sewerage Auth. v. Twp. of W Milford, 144 N.J. 564, 574 (1996) ("Contracts are

traditionally classified as express, implied-in-fact or implied-in-law. The contract is express if the
agreement is manifested by written or spoken words, and implied-in-fact if the agreement is
manifested by other conduct.") (quoting Robert A. Long, Note, A Theory ofHypothetical Contract,
94 YALE L.J. 415, 415 n.3 (1984)). Second, even though Degelman and Coutinho entered in to a
written Judgment of Divorce, it is premature to determine whether it was meant to be the exclusive
document pertaining to the division of the marital estate. Again, the case law and legislative
history do not provide guidance on this point. Thus, the Court concludes that when construing the
complaint in a light most favorable to Plaintiffs, Degelman has sufficiently demonstrated standing
as the primary beneficiary under the Policy to assert a claim of reformation.
"Reformation corrects the written policy to accurately state the policy terms upon which
the parties agreed." Pierides v. GEICO Ins. Co., No. A-2783-08Tl, 2010 WL 1526377, at *4 (N.J.
Super. Ct. App. Div. Apr. 19, 2010). Generally, the equitable remedy ofreformation is available
"only where there is mutual mistake or where a mistake on the part of one party is accompanied
by fraud or other unconscionable conduct of the other party." Heake v. At. Cas. Ins. Co., 15 N.J.
475, 481 (1954); see also Phillips v. Metlife Auto & Home/Metro. Grp. Prop. and Cas. Ins. Co.,
378 N.J. Super. 101, 104, 874 A.2d 617 (App. Div. 2005). "Reformation will not be granted based
upon a mistake resulting from 'the complaining party's own negligence."' Pierides v. GEICO Ins.
Co., No. A-2783-08Tl, 2010 WL 1526377, at *4 (N.J. Super. Ct. App. Div. Apr. 19, 2010)

(quoting Millhurst Milling & Drying Co. v. Auto. Ins. Co., 31 N.J. Super. 424, 434 (App. Div.

11

1954)). "For a court to grant reformation, there must be clear and convincing proof that the
contract as reformed is what the contracting parties understood and meant it to be." Id. "The party
seeking reformation, usually the insured, has the burden to prove the actual agreement." Id.
Here, when construing the complaint in a light most favorable to Degelman, the Court
agrees that she has sufficiently stated a plausible reformation claim. In short, if Degelman is able
to convince the finder-of-fact that she and Coutinho entered in a "contract" whereby she would
remain as primary beneficiary under the Policy in exchange for continued payment of the Policy
premiums, then she can plausibly demonstrate that Lincoln erred in denying her the Policy
proceeds on grounds that she had been revoked as primary beneficiary under N.J.S.A. 38:3-14. In
other words, under this theory, because Degelman was never revoked under N.J.S.A. 38:3-14,
Lincoln would reform the contract to name her as primary beneficiary and pay the proceeds to
her. 5 Given the factual nature of such a claim, the Court finds that Degelman has sufficiently
pleaded this claim to survive the motion to dismiss. To be clear, the Court has no opinion on
whether Degelman will ultimately prevail on this claim, but simply finds that the complaint
sufficiently shows a plausible claim to reformation such that Plaintiff is "entitled to offer evidence
to support the claims." United States ex rel. Wilkins, 659 F.3d at 302.
2. Negligence
In contrast, if Degelman is unable to convince the finder-of-fact that she and Coutinho
entered into a "contract" for purposes of N.J.S.A. 38:3-14, she alternatively has a potential

5

The Court acknowledges that Degelman's reformation claim speaks in terms of negligence: "But for the negligence
of Lincoln's agents, defendants Andrade and Beane, the policy would have been amended to make clear that the
beneficiary should have been Veronica Degelman, whether or not she was divorced from Coutinho." (Id., Count 2 ~
4.) However, given the related allegation concerning the verbal agreement between Degelman and Coutinho, the
Court construes the reformation claim as speaking to the negligence of Defendants in determining that N.J.S.B.A.
3B:3-14 had revoked Degelman as primary beneficiary.

12

negligence claim against Beane for failing to advise her of the statute. Under this alternate reading
of the complaint, Degelman was revoked as primary beneficiary upon divorce, and Beane breached
his duty by allegedly advising Degelman that it would not be necessary to change her name as the
beneficiary, in spite of the divorce and the operation ofN.J.S.A. 3B:3-14.
First, even if Degelman was revoked under N.J.S.A. 3B:3-14, the Court finds that she has
sufficiently alleged third-party standing to assert a negligence claim against Beane. "It is well
settled in New Jersey that contract interpretation must be based on the intent of the parties."

MG.M. Constr. Corp. v. NJ Educ. Facilities Auth., 220 N.J. Super. 483, 487 (Law Div. 1987).
As the New Jersey Supreme Court has explained,
The determining factor as to the rights of a third party beneficiary is
the intention of the parties who actually made the contract. They are
the persons who agree upon the promises, the covenants, the
guarantees; they are the persons who create the rights and
obligations which flow from the contract. ... Thus, the real test is
whether the contracting parties intended that a third party should
receive a benefit which might be enforced in the courts; and the fact
that such a benefit exists, or that the third party is named, is merely
evidence of this intention.

Broadway Maint. Corp. v. Rutgers, State Univ., 90 N.J. 253, 259 (1982) (quoting Brooklawn v.
Brooklawn Haus. Corp., 124 N.J.L. 73, 76-77 (E. & A.1940)). "The contractual intent to recognize
a right to performance in the third person is the key. If that intent does not exist, then the third
person is only an incidental beneficiary, having no contractual standing." Id. (citing Standard Gas

Power Corp. v. New England Cas. Co., 90 N.J.L. 570, 573-74 (E. & A. 1917)). This "judicial task
is simply interpretative" and the court "should examine the contractual terms to ascertain the
parties' intent and in doing so accord contractual terms 'their plain and ordinary meaning."' Seven

Caesars, Inc. v. Dooley House, No. A-4747-12T2, 2014 WL 4450441, at *10 (N.J. Super. Ct. App.

13

Div. Sept. 11, 2014) (quotingM..I. Paquetv. NJ. Dep'tofTransp., 171N.J.378, 396 (2002)). "A
third party beneficiary analysis is necessarily fact sensitive." Id. at * 11.
The gravamen of the complaint is that Degelman and Coutinho agreed that Degelman
would remain as the primary beneficiary under the Policy, despite the divorce. (See Compl. if 17.)
Construing the complaint in a light most favorable to Plaintiff, this is sufficient to establish thirdparty standing for a negligence claim against Beane at this early stage. As noted in connection
with Degelman's reformation cause of action, discovery is needed to flesh out the contours of the
alleged contract between Degelman and Coutinho, and thus it is premature decide whether or not
the parties actually intended for Degelman to receive the Policy proceeds despite the divorce.
Second, Degelman has alleged the elements of a negligence claim against Beane. Under New
Jersey law, "a negligence cause of action requires the establishment of four elements: (1) a duty
of care, (2) a breach of that duty, (3) actual and proximate causation, and (4) damages." Jersey

Cent. Power & Light Co. v. Melear Util. Co., 212 N.J. 576, 594 (2013). "The first element, duty,
is a question oflaw to be decided by the trial judge." Ilg v. Meade, No. A-1345-14T3, 2016 WL
3022533, at *3 (N.J. Super. Ct. App. Div. May 27, 2016) (citing Carvalho v. Toll Bros. &

Developers, 143 N.J. 565, 572 (1996)). "[N]o bright line rule ... determines when one owes a
legal duty to prevent a risk of harm to another." Wlasiuk v. McElwee, 334 N.J. Super. 661, 666
(App. Div. 2000). "The imposition of a duty depends on the interplay of many factors, including:
(1) the relationship of the parties; (2) the nature of the attendant risk; (3) the ability and opportunity
to exercise care; and (4) the public interest in the proposed solution." Ilg, 2016 WL 3022533, at
*3 (citing Hopkins v. Fox & Lazo Realtors, 132 N.J. 426, 439 (1993)). "Ultimately, [New Jersey]
Supreme Court cases repeatedly emphasize that the question of whether a duty exists is one of

14

'fairness' and 'public policy."' Wlasiuk, 334 N.J. Super. at 666-67 (quoting Hopkins, 132 N.J. at
439). With respect to the duty owed by an insurance agent, Carter Lincoln-Mercury, Inc., Leasing
Div. v. EMAR Grp., Inc. is instructive:

Courts addressing the existence and scope of the duty owed by one
acting on behalf of an insured or prospective insured have
determined that that duty encompasses claims alleging that the agent
or broker failed: to obtain coverage after the client's policy had been
canceled and that the agent failed to inform the client that coverage
could not be obtained; failed to advise a client of insurance options;
obtained insurance that failed to meet the insured's needs; failed to
place the requested insurance; misrepresented to the insurance
company information supplied by the insured; failed to take action
after discovering during an inspection that the insured's sprinkler
system was inoperative; failed to inform the insured that she was
without insurance; and failed to inform the insured of the availability
of immediate insurance coverage through a temporary binder.
135 N.J. 182, 189-90 (1994) (internal citations omitted).
Defendants argue that Beane had no duty to advise Degelman on the legal effects of
N.J.S.A. 3B:3-14 since it is allegedly the matrimonial attorney's duty to resolve life insurance
issues in divorce, and that it could be considered unauthorized practice oflaw for Beane to advise
a client on the law. (See Reply Br. at 9.) Furthermore, the negligence theory presumes that
Degelman was in fact revoked as primary beneficiary, and so it is unclear whether Beane still owed
a duty to Degelman during the relevant time period. However, Degelman's attorney represented
that he will present expert evidence to establish that Beane in fact had a duty to advise Degelman
of the effects ofN.J.S.A. 3B:3-14. (See Opp. Br. at 11; Tr.) Although the Court recognizes that
the existence of duty is a matter of law to be decided by the Court, when construing the complaint
in a light most favorable to Plaintiff, the Court finds that Degelman has sufficiently pleaded a
negligence claim against Beane sufficient to allow such expert evidence to be presented. Again,

15

to be clear, the Court has no opinion on whether Degelman will ultimately prevail on this claim,
but simply finds that the complaint sufficiently shows a plausible negligence claim as to Beane
such that Degelman is "entitled to offer evidence to support the claims." United States ex rel.

Wilkins, 659 F.3d at 302.
With respect to Andrade, under this reading of the complaint, Degelman would not have a
negligence claim against Andrade. First, all of the allegations pertaining to Andrade precede the
2009 divorce. Yet the 2009 divorce and the subsequent triggering of N.J.S.A. 3B:3-14 would
necessarily render moot any alleged act of negligence committed by Andrade preceding the
divorce. Furthermore, it is not clear whether Degelman has standing to assert claims against
Andrade as they pertain to the naming of a contingent beneficiary under Coutinho's Policy.
Accordingly, the Court shall dismiss Degelman's negligence claim as it pertains to Andrade.

B. Barrese's Claims Shall Be Dismissed Without Prejudice For Failure to State a
Claim at This Time.
It is axiomatic that the contingent beneficiary's rights are subordinate to the rights of the

primary beneficiary. As explained above, the gravamen of this lawsuit is the alleged agreement
between Degelman and Coutinho and the operation ofN.J.S.A. 3B:3-14. As the purported primary
beneficiary under the Policy, Degelman has a potential claim against Lincoln for reformation if
she can establish that N.J.S.A. 3B:3-14 does not apply, and, alternatively, she has a potential claim
against Beane for negligence if N .J. S .A. 3B: 3-14 does in fact apply. Under either scenario, Barrese
only has a claim if Degelman has a claim; and if Degelman has a claim, Barrese's claims would
be moot since she would not be entitled to any proceeds under the Policy. Accordingly, the Court
concludes that any potential claim of Barrese's is too speculative at this point, and so dismissal of
Barrese's claims is without prejudice.
16

1. Reformation
In Count 3, Barrese asserts that, "[b]ut for the negligence of Lincoln's agents, Andrade and
Beane, Barrese would be the contingent beneficiary" under the Policy. (Id., Count 3 ~ 2.) Barrese
demands reformation "to provide that she is the contingent beneficiary under [the Policy] and, if
the relief sought in counts one and two are denied, then awarding the policy benefit of $500,000.00
to her along with interest, attorney fees and costs of suit." (Id. at Count 3.)
Barrese has not demonstrated a plausible entitlement to relief at this time. On the one hand,
if the facts prove that N.J.S.A. 3B:3-14 does not apply, Degelman would likely be entitled to
reformation, and she would be entitled to 100% of the Policy proceeds as the non-revoked primary
beneficiary. Barrese, as an alleged contingent beneficiary, would not be entitled to any Policy
proceeds under such a scenario based on the facts as they exist now. In other words, Barrese's
reformation claim would be moot if Degelman succeeds on her reformation claim. On the other
hand, ifDegelman is unsuccessful in her reformation claim, it would necessarily be in part because
Degelman was revoked as primarybeneficiaryunderN.J.S.A. 3B:3-14. IfDegelman was revoked
under N.J.S.A. 3B:3-14, then so was Barrese, as the statute explicitly revokes "any revocable
disposition ... to a relative of the divorced individual's former spouse." See N.J.S.A. 3B:314a(l)(a). Taken together, even if Barrese could prove that it was Coutinho's intent to name her
as contingent beneficiary, she cannot state a claim for reformation because she was either revoked
by operation of law, or because Degelman would take the Policy proceeds instead.
2. Negligence
With respect to the negligence claim, Barrese likewise cannot state a claim upon which
relief can be granted, against either Andrade or Beane.

17

For example, even assuming that Andrade was negligent in failing to name Barrese as
contingent beneficiary, this claim is moot for lack of damages. Again, if Degelman establishes a
"contract" between her and Coutinho sufficient to demonstrate that she was never revoked as
primary beneficiary under N.J.S.A. 3B:3-14, then Degelman would have a valid claim for
reformation and she would be entitled to 100% of the Policy proceeds. Under this scenario,
Barrese would be unable to establish damages flowing from Andrade's negligent act, since the
Policy would be properly payable to Degelman instead. On the other hand, as explained in the
preceding section, if Degelman was revoked under N.J.S.A. 3B:3-14, then Barrese was as well,
likewise mooting any negligence by Andrade for lack of damages.
Similarly, Barrese cannot state a claim against Beane. Barrese acknowledges that she was
not listed as a contingent beneficiary on the Policy due to Andrade's negligence, prior to the
divorce. Barrese cannot establish that Beane owed her a duty, since there are no allegations that
Beane was ever aware of Barrese's alleged contingent beneficiary status. Indeed, the allegations
against Beane pertain only to interactions with Degelman. Thus, as a non-beneficiary who was
revoked prior to Beane's involvement, Barrese is unable to establish that Beane owed her a duty
as a matter of law.
3. Dismissal Without Prejudice
The Court acknowledges that Barrese theoretically has an interest in the Policy proceeds
as a contingent beneficiary, but such a claim is too speculative at this point in time. Accordingly,
dismissal is without prejudice to permit Plaintiffs to reassert Barrese's claims if the facts of this
case change in a manner whereby it can be shown that Barrese is entitled to the proceeds instead
of Degelman.

18

CONCLUSION
For the reasons above, the Court grants in part and denies in part the motion to dismiss.
An appropriate Order accompanies this Opinion.

DATED: June4 -, 2016
. LINARES
ED STATES DISTRICT JUDGE

19