NEW YORK LIFE INSURANCE COMPANY v. CRAYTON, ET AL.
Filing
55
MEMORANDUM OPINION AND ORDER signed by CHIEF JUDGE THOMAS D. SCHROEDER on 1/15/2019; that judgment be entered in favor of Taneeda Ferron, and that she be awarded the remaining death benefit, totaling $15,426.05. The Clerk of Court shall tender the funds held by the court, with all interest earned, to Taneeda Ferron. A separate judgment will issue. (Sheets, Jamie)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
NEW YORK LIFE INSURANCE
COMPANY,
)
)
)
)
)
)
)
)
)
)
)
Plaintiff,
v.
ATHALIA CRAYTON; TANEEDA
FERRON,
Defendants.
1:17-cv-593
MEMORANDUM OPINION AND ORDER
THOMAS D. SCHROEDER, Chief District Judge.
Plaintiff New York Life Insurance Company (“New York Life”),
issuer of a life insurance policy for Joyce Ferron, brought this
interpleader
action
to
resolve
conflicting
claims
by
her
daughters, Defendants Athalia Crayton and Taneeda Ferron, for
benefits that had become payable upon her death.
New York Life
admitted liability and was dismissed from the case after depositing
the policy proceeds with the court.
A bench trial was conducted on January 10, 2019.
Athalia
Crayton presented her own testimony, as well as that of her
husband, Robert Crayton, and her brother, Clifford Thompson, and
introduced exhibits.
At the close of Athalia Crayton’s evidence,
Taneeda Ferron moved for judgment in her favor, and the court
reserved ruling.
Taneeda Ferron then presented her own testimony,
introduced exhibits, and rested.
Pursuant to Federal Rule of Civil Procedure 52(a), the court
enters the following findings of fact — based upon an evaluation
of
the
evidence,
including
the
court’s
assessment
of
the
credibility of the witnesses, and the inferences the court has
found reasonable to draw therefrom — and conclusions of law.
To
the extent any factual statement is contained in the conclusions
of law, it is deemed a finding of fact as well.
I.
FINDINGS OF FACT
1.
Joyce Ferron was a member of AARP and was eligible to
apply for life insurance under Group Policy No. AA-31 issued by
New York Life.
2.
Pursuant to the group policy, Joyce Ferron applied
for, and on or about September 17, 2004, was issued individual
life insurance Certificate No. A18-650-60.
(Ferron Ex. 1.)
As
part of the written application mailed to New York Life, Joyce
Ferron designated Taneeda Ferron as sole beneficiary of the
policy death benefit.
3.
(Ferron Ex. 7.)
The monthly insurance premiums were timely mailed and
paid by Joyce Ferron and, at times, members of her family,
including
her
children
Clifford
Thompson,
Taneeda
Ferron,
Anthony Ferron, and Athalia Crayton.
4.
Athalia Crayton is a resident of North Carolina, and
Taneeda Ferron is a resident of South Carolina.
5.
On or about September 30, 2011, by paper form, Joyce
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Ferron mailed New York Life an application to exchange the
original policy for individual life insurance Certificate No.
A60-078-061, which included a transfer of Taneeda Ferron’s
beneficiary status to the new policy.
premiums were $122.15.
6.
(Ferron Ex. 6.)
Monthly
(Id.)
On or about October 29, 2014, by paper form, Joyce Ferron
mailed New York Life a form correcting her social security number
in New York Life’s records.
7.
(Id.)
Joyce Ferron also mailed New York Life a written request
for additional envelopes in which to place her monthly premium
payments.
8.
(Id.)
Joyce Ferron lived at her own residence in Columbia,
South Carolina, until 2010, when she moved in with Taneeda Ferron
— also in Columbia, South Carolina.
Joyce Ferron continued to
reside with Taneeda Ferron until May 2016, when she procured her
own residence.
In November 2016, Joyce Ferron moved back in with
Taneeda Ferron, until December 23, 2016, when Athalia Crayon took
her to the latter’s residence near High Point, North Carolina.
Joyce Ferron resided with Athalia Crayton from December 23, 2016,
until her death on January 10, 2017.
9.
In 2016, Joyce Ferron suffered from cancer.
Her health
deteriorated rapidly as the cancer progressed to Stage IV in
November 2016.
After a fit of vomiting, she was taken to the
Emergency Department, where radiological scans showed that the
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cancer had spread to her liver.
On November 23, 2016, her
oncologist advised her she had only months to live.
10.
Both Athalia Crayton and Taneeda Ferron have from time
to time assisted their mother in coordinating her medical care.
To assist in this manner, Athalia Crayton would drive from her
home in North Carolina.
11.
Although Joyce Ferron’s mental acuity may have begun to
decline by December 2016, she remained mentally competent through
the fall, making a trip by automobile to Miami, Florida, for a
family member’s “gender reveal,” and through December 19, 2016, as
evidenced by her having given
procedure that date.
12.
informed consent to a medical
(See Crayton Ex. 3.)
At times relevant here, Joyce Ferron did not own a
computer or subscribe to an internet service.
Her electronic
devices were limited to a “flip phone” and a CapTel telephone —
designed for persons with hearing loss — that transcribes spoken
words and displays them on a screen.
13.
New York Life records indicate that, on December 19,
2016, through the company’s internet portal, Taneeda Ferron was
removed as the beneficiary of Joyce Ferron’s life insurance policy
and replaced by Athalia Crayton.
This change appears to have been
in compliance with the change of beneficiary procedures of the
policy.
Compare (Ferron Ex. 1 at 9 (“To . . . designate a
beneficiary or change a beneficiary designation; . . . WE must be
4
given a completed, written request on a form satisfactory to US.
Such request must be approved and recorded by or on behalf of
US.”)) with (Doc. 1 (New York Life complaint) ¶ 10 (“On or about
December 19, 2016, the Insured designated Athalia Crayton as the
Policy’s beneficiary via the Company’s website.”)).
14.
Notice of the beneficiary change was sent to Taneeda
Ferron, who called and wrote New York Life to contest the change
as improper.
15.
(Ferron Exs. 3, 4.)
Joyce Ferron died from her cancer on January 10, 2017,
at 71 years of age, at Athalia Crayton’s home near High Point,
North Carolina.
At the time of her death and in the months
preceding it, she also suffered from chronic glaucoma, severe
osteoarthritis, and marked hearing loss that did not improve with
hearing aids.
16.
Upon Joyce Ferron’s passing, the insurance death benefit
became due in the amount of $25,278.65.
17.
At Athalia Crayton’s direction, Joyce’s Ferron’s body
was taken to a funeral home.
Athalia Crayton filed claims with
New York Life for payment of funeral expenses using the life
insurance proceeds.
contested
Athalia
(Crayton Ex. 4.) Although Taneeda Ferron
Crayton’s
entitlement
to
the
proceeds,
she
consented to use of $9,852.60 to pay funeral expenses, which New
York Life approved.
18.
New York Life filed an interpleader action in this court
5
and, upon depositing the remaining $15,426.05 of the death benefit
with the court, was dismissed from the action.
19.
At trial, Athalia Crayton testified that on December 19,
2016, she gave her mother her smartphone and observed her using it
on the internet that morning at Taneeda Ferron’s house to change
the
life
insurance
beneficiary.
Clifford
Thompson,
Athalia
Crayton’s brother, testified that Joyce Ferron had told him that
she wanted to change the beneficiary to Athalia Crayton, and that
— on December 18, 2016, the day before the beneficiary change — he
had observed Joyce Ferron, via a live video chat with her, looking
through her insurance papers to investigate how to make the change.
He also testified that he spoke with his mother on December 19,
2016, before her procedure to give her support and that she told
him she had changed the beneficiary online and asked him to doublecheck it to make sure she did it correctly.
He further testified
that he “did go on the email” and “did see the confirmation that
the change was made.”
Athalia Crayton’s husband, Robert Crayton,
testified that he had observed Joyce Ferron using Taneeda Ferron’s
computer at some unspecified, previous time.1
1
Athalia Crayton also presented evidence that on December 17, 2016,
Joyce Ferron had given her a broad power of attorney to make all financial
and property decisions. (Crayton Ex. 2.) Taneeda Ferron contests the
legitimacy of the alleged power of attorney. But because Athalia Crayton
does not claim, nor did she present any evidence, that she changed the
beneficiary on Joyce Ferron’s life insurance — instead testifying that
Joyce Ferron changed the beneficiary herself — there is no basis on which
the power of attorney could support Athalia Crayton’s claim. The court,
therefore, need not determine the legitimacy of the power of attorney.
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20.
The court does not find Athalia Crayton’s evidence as to
the change in beneficiary credible.
The parties agree that on
December 19, 2016, Joyce Ferron underwent a paracentesis – a
medical procedure that involved draining fluid from her body cavity
- as a consequence of her ongoing cancer.
Athalia Crayton arrived
at Taneeda Ferron’s home to pick up her mother at about 8:15 a.m.,
and sometime after getting her mother ready to travel, drove her
to
the
medical
Carolina.
center
for
the
procedure
in
Columbia,
South
Taneeda Ferron was home while Athalia Crayton was there
and met her sister and mother at the medical center after they
left her home.
Joyce Ferron remained at the medical facility
throughout the completion of the procedure; the medical record
reveals that the procedure was conducted at 2:49 p.m.
(Crayton
Ex. 3.)
21.
Taneeda Ferron presented evidence that she had never
observed her mother use a computer (other than a computerized
voting machine) and that — even beyond computer illiteracy — her
mother’s myriad health issues would have made it difficult to
accomplish
tasks
via
the
internet
on
a
computerized
device.
Taneeda Ferron also testified that she had been with Joyce Ferron
during the morning and afternoon of December 19, 2016, preceding
and following the paracentesis, and that she never witnessed her
mother use a smartphone or other device for any purpose.
In
addition, Taneeda Ferron testified, the desktop computer which
7
Robert Crayton allegedly saw Joyce Ferron use was inoperable, and
had been so for years.
22.
As to the evidence relating to Joyce Ferron’s actions in
maintaining
her
New
York
Life
policy
and
alleged
change
in
beneficiary, the court finds Taneeda Ferron’s evidence credible.
Joyce Ferron was 71 years of age when she died, had no computing
devices or internet service of her own, and was unaccustomed to
navigating internet-connected devices.
She was afflicted with
severe glaucoma, hearing loss, and osteoarthritis, to the point
that — as Athalia Crayton’s evidence shows — her attempts to sign
her own name on the December 17, 2016 power-of-attorney documents
were so fruitless that the notary directed her to simply sign with
an
“X.”
(Crayton
Ex.
2
at
2.)
Finally,
in
every
prior
communication with New York Life referenced at trial, she had
communicated exclusively by mail in paper form.
23.
From December 2016 to the present, Athalia Crayton and
Taneeda Ferron have disputed the proper place of burial for their
mother.
Athalia Crayton seeks to have her mother’s remains buried
in Jamaica, which she contends was her mother’s wish; Taneeda
Ferron disputes the wisdom of doing so.
The relationship between
the sisters has deteriorated to the point that they each called
law enforcement on the other over events related to their mother’s
care and the insurance proceeds.
On December 27, 2016, Taneeda
Ferron contacted the Richland County Sheriff’s Office (Columbia,
8
South Carolina) to complain that her sister, Athalia, had taken
their mother to North Carolina and refused to return her to South
Carolina for medical appointments.
(Ferron Ex. 2.)
That same
week, when Taneeda Ferron came to Athalia Crayton’s residence in
North Carolina to check on her mother and protest the change in
beneficiary, Athalia Crayton called the police to have Taneeda
Ferron removed from her house.
II.
CONCLUSIONS OF LAW
24.
The court has subject matter jurisdiction over this
interpleader action pursuant to 28 U.S.C. § 1335, since the amount
in controversy is greater than $500 and minimal diversity exists,
see State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 530
(1967).
25.
In North Carolina, it is a “well-settled principle that
an insurance policy is a contract” and that “those persons entitled
to the proceeds of a life insurance policy must be determined in
accordance with the contract.”
Fid. Bankers Life Ins. Co. v.
Dortch, 348 S.E.2d 794, 796 (N.C. 1986).
26.
Under
North
Carolina
contract
doctrine,
the
party
wishing to enforce an insurance policy must make out a prima facie
case that the policy exists and that the enforcing party is a
beneficiary.
See Orthodontic Ctrs. of Am., Inc. v. Hanachi, 564
S.E.2d 573, 575 (N.C. Ct. App. 2002) (“Generally, a party seeking
to enforce a contract has the burden of proving the essential
9
elements of a valid contract . . . .”); Wells v. Jefferson Standard
Life Ins. Co., 190 S.E. 744, 746 (N.C. 1937) (“By offering in
evidence the policy of insurance and the [insurer’s] admission of
its execution and delivery and of the death of the insured, the
plaintiffs made out a prima facie case [to entitlement to the death
benefit].”); Lanier v. E. Life Ins. Co., 54 S.E. 786, 787 (N.C.
1906) (discussing a plaintiff’s “prima facie case” for entitlement
to a death benefit).
27.
Once a prima facie case has been made as to the existence
of an insurance policy and the enforcing party’s entitlement
thereunder, the burden shifts to the party attacking the contract
to show the contract’s (or provision’s) illegality.
See Hanachi,
564 S.E.2d at 575 (stating that a contract’s “illegality is an
affirmative defense with the burden of proving it . . . on the one
that asserts it” (internal quotation marks and citation omitted)
(omission in original)); Wells, 190 S.E. at 746 (stating that,
once a prima facie case for the existence of a contract had been
made, “the burden was then upon the defendant to rebut it”);
Lanier, 54 S.E. at 787 (stating that, after the plaintiff made out
a prima facie case for the existence of a life insurance policy,
“the burden of proof [wa]s on defendant to show” that the policy
was invalid).
28.
“[O]nly the owner of a life insurance policy may change
the beneficiary.”
Adams v. Jefferson-Pilot Life Ins. Co., 558
10
S.E.2d 504, 508 (N.C. Ct. App. 2002); accord Primerica Life Ins.
Co. v. James Massengill & Sons Constr. Co., 712 S.E.2d 670, 678
(N.C. Ct. App. 2011) (“[A]ny changes made to an insurance policy
affecting the beneficiary designation . . . must be made by the
policy owner.
If not, the changes are a legal nullity and of no
force and effect . . . .”).
Although the policy owner need not
perfectly comply with the necessary steps to change a beneficiary,
the policy owner must at least “substantially compl[y].”
558 S.E.2d at 508.
Adams,
But “before the doctrine of substantial
compliance may be applied, the policy owner must himself take
affirmative steps to change the beneficiary, must substantially
fulfill the actions required on his part to accomplish the change,
[and] must communicate these efforts to an agent of the insurer.”
Id. at 509; see also 4 Steven Plitt et al., Couch on Insurance
§ 60:40 (3d ed. 2018) (“Where all the insured does toward effecting
a change of beneficiary is to state or express an intention to the
effect that the insured desires to change the beneficiary, with no
positive formal steps taken to accomplish the change, no change of
beneficiary takes place.”).
29.
Here, there is no dispute that the policy was issued to
Joyce Ferron.
Even assuming that Athalia Crayton made out a prima
facie case as to her status as beneficiary of the life insurance
policy per New York Life’s records, Taneeda Ferron met her burden
11
of showing the illegality of that beneficiary change.2
The court
does not find Athalia Crayton’s evidence — that Joyce Ferron
changed the life insurance policy herself via a smartphone —
credible.
Rather, the court finds Taneeda Ferron’s evidence —
that Joyce Ferron did not make and could not have made the
beneficiary change via a smartphone — credible.
30.
Having found that the evidence does not show that Joyce
Ferron changed the life insurance beneficiary via smartphone, and
in light of the total lack of evidence that she (or anyone else on
her instructions) took any other actions to effect the beneficiary
change or communicate the same to the insurer, the court finds
that
Joyce
Ferron
did
not
substantially
requirements for making a beneficiary change.
S.E.2d at 509; Primerica, 712 S.E.2d at 678.
comply
with
the
See Adams, 558
As a result, the
December 19, 2016 beneficiary change cannot be given effect.
31.
Absent the invalid beneficiary change, Taneeda Ferron is
the proper beneficiary and is entitled to the remaining death
2
Athalia Crayton argues that she has established a prima facie case of
entitlement by showing that the company records reflect her as the
beneficiary as a result of an online change. She argues that Taneeda
Ferron bears the burden of establishing that the beneficiary change on
December 19, 2016, was not proper. Taneeda Ferron argues that Athalia
Crayton has the burden of showing that the beneficiary change was made
properly and that Athalia Crayton has failed to do so. The typical rule
is that “the person claiming as substituted or redesignated beneficiary
has the burden of proving that there has been an effective change of
beneficiary,” Plitt et al., supra, § 60:68. However, even assuming that
Taneeda Ferron had the burden of showing the beneficiary change was
improperly made, the court finds that she has met that burden.
12
benefit under the New York Life policy.
See Equitable Trust Co.
v. Widows’ Fund of Oasis and Omar Temples of Charlotte, 177 S.E.
799, 801 (N.C. 1935) (“[T]he court concludes upon the entire record
that . . . the change of beneficiary was invalid.
It necessarily
follows that the [previous beneficiary] is entitled to the proceeds
. . . .); Plitt et al., supra, § 60:79.
III. CONCLUSION
For the reasons stated,
IT IS THEREFORE ORDERED that judgment be entered in favor of
Taneeda Ferron, and that she be awarded the remaining death
benefit, totaling $15,426.05.
The Clerk of Court shall tender the
funds held by the court, with all interest earned, to Taneeda
Ferron.
A separate judgment will issue.
/s/
Thomas D. Schroeder
United States District Judge
January 15, 2019
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