Western-Southern Life Assurance Company v. Cropenbaker et al
Filing
35
MEMORANDUM OPINION AND ORDER signed by Judge William O. Bertelsman on 9/19/2016.IT IS ORDERED that: (1) Defendant Larry Strasinger's 25 motion for summary judgment be, and is hereby, DENIED; (2) Defendant Pamela Jo Cropenbaker's 26 moti on for summary judgment be, and is hereby, GRANTED and (3) The Clerk of Court is directed to disburse to Defendant Pamela Jo Cropenbaker's counsel the sum currently being held in the registry of the Court pursuant to Doc. 23 . (eh) Modified on 9/19/2016 (eh).
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
CIVIL ACTION NO. 1:15cv00246-WOB-KLL
WESTERN-SOUTHERN LIFE
ASSURANCE CO.
VS.
PLAINTIFF
MEMORANDUM OPINION AND ORDER
PAMELA JO CROPENBAKER, ET AL
DEFENDANTS
This is an action involving a dispute over life insurance
proceeds between a decedent’s estate and his former spouse.
This matter is currently before the Court on the defendants’
cross motions for summary judgment (Docs. 25, 26), the parties’
respective responses (Docs. 27, 29), and the parties’ respective
replies (Docs. 30, Doc. 31).
The Court previously heard oral argument on these motions and
took the matter under submission.
(Doc. 34)
reviewed
now
these
motions,
the
Court
issues
Having further
the
following
Memorandum Opinion and Order.
Factual and Procedural Background
On December 12, 1991, Decedent Steven Strasinger (“Steven”)
purchased a life insurance policy with a benefit of $100,000 from
Western-Southern
Life
(Doc. 29, Exh. 1).
Cropenbaker
Assurance
Company
(“Western-Southern”).
On August 25, 2001, Steven married Pamela Jo
(“Pamela
Jo”)
and
designated
her
as
the
primary
beneficiary of the Policy.1
When Steven married Pamela Jo, he also
had two children from a previous relationship.
On May 31, 2004, Steven was in a motorcycle accident and
suffered “damage and bleeding to his brain.”
Strasinger ¶ 13) (Doc. 28, Exh. 1).2
(Affidavit of Larry
Larry states that after the
accident, Steven was never the same, specifically, that “[h]e could
not focus on multitasks, and [Larry and their mother] needed to
assist him with his affairs for the remainder of his life.”
¶ 18.
Id.
Additionally, Steven received Social Security Disability
benefits and lived with his mother, needing her assistance.
Id.
¶¶ 19-21.
Larry also states in his affidavit that:
22. To the best of my knowledge, [Decedent]
had no friendly, on-going relationship with
[Pamela Jo].
23. In fact, [Decedent] had expressed nothing
but negative feelings about [Pamela Jo] for
the remainder of his life.
24.
To the best of my knowledge, the life
insurance bills never reminded [Decedent] who
was listed as the beneficiary on the policy.
Id. ¶¶ 22-24.
1
Paula Reed was the alternate beneficiary of the policy. However,
because she preceded Steven in death, the only living beneficiary
is Pamela Jo.
2
Defendant Larry Strasinger (“Larry”) is Steven’s brother and
the administrator of his estate.
2
On April 24, 2006, the Campbell County Family Court entered
a divorce decree that terminated Steven and Pamela Jo’s marriage.3
(Doc. 1-1).
In a separation agreement filed concurrently with the
divorce decree, the parties agreed that Steven would “have all of
his bank accounts and insurance policies.”
Id. at 6.
The
Separation Agreement also contained a comprehensive mutual release
clause.4
Id. at 7.
Steven died on November 10, 2014.
(Doc. 29, Exh. 4).
time of his death, the Policy was in full effect.
At the
It is undisputed
that at no time after the divorce did Steven designate anyone other
than Pamela Jo as the primary beneficiary of the Policy.
After Steven’s death, Western-Southern received claims by
both Pamela Jo and Steven’s estate for the proceeds of the policy.
3
The Findings of Fact section of the divorce decree also states
that the parties had “lived separate and apart from each other
since March 7, 2004.” (Doc. 1-1 at 1).
4
Specifically, the mutual release clause states:
Each party does hereby release and
discharge the other from any and all claims,
demands, liabilities, obligations, damages,
actions, including but not limited to any and
all claims for past, present and future
maintenance, dower, curtesy, descent and
distribution and any and all other claims
arising out of the marriage or otherwise, but
excepting from said releases the obligations
contained in the herein agreement.
(Doc. 1-1 at 7).
3
Western-Southern thus filed a complaint for interpleader in this
Court on April 15, 2015. (Doc. 1). The Court subsequently granted
Western-Southern’s motion for interpleader, allowed it to deposit
into the Court the balance of the policy proceeds (after allowing
its fees and costs), and dismissed Western-Southern as a party to
this action.
(Doc. 19).
Analysis
Pamela Jo, as the primary beneficiary of the policy at the
time of Decedent’s death, argues that she is entitled to the policy
proceeds because the Separation Agreement failed to specifically
state that she was divested of her beneficiary expectancy.
Under
Kentucky case law, she is correct.
In Kentucky, it has long been held that “divorce alone does
not disturb a former spouse’s status as an insurance policy
beneficiary.”
Hughes v. Scholl, 900 S.W.2d 606, 607 (Ky. 1995)
(citing Ping v. Denton, 562 S.W.2d 314 (Ky. 1978)).
However, the
Supreme Court of Kentucky has also clarified that this does not
limit “the power of divorcing parties to provide for termination
of either spouse’s beneficiary expectancy in a property settlement
agreement.”
Hughes, 900 S.W.2d at 607.
In other words, parties
to a divorce may waive any beneficiary expectancy to each other’s
life insurance proceeds by including divestiture language to that
effect in a separation agreement.
Importantly though, Kentucky’s
highest court has held that such “divestiture language should be
4
clear and unambiguous.” Id. at 608 n.2 (emphasis added). Finally,
“a general waiver of any interest in the property of the other
spouse is insufficient to destroy a beneficiary’s right to receive
insurance policy proceeds.”
Id.
Turning to the Separation Agreement in this case, the Estate
argues that the language contained therein is sufficiently clear
and unambiguous to sever Pamela Jo’s right to Steven’s insurance
policies.
Specifically, the Estate points to two sections of the
Separation Agreement, one being the mutual release clause of the
agreement contained in Section 4.1.
See Doc. 1-1 at 7.
However,
because this clause is the exact type of “general waiver” clause
that the Hughes court explicitly held was insufficient to divest
a former spouse’s beneficiary expectancy, this argument fails.
The Estate also points to Section 2.9 of the Separation
Agreement, which states that “[t]he Husband will have all of his
bank accounts and insurance policies.”
(Doc. 1-1 at 6).
While at
first glance this language may seem sufficient to divest Pamela Jo
of her beneficiary expectancy under the policy, Kentucky courts
are
of
a
different
view.
Specifically,
Section
2.9
of
the
Separation Agreement, in stating that Steven will “have all of his
. . . insurance policies,” only addresses Decedent’s ownership of
the Policy as opposed to Pamela Jo’s beneficiary expectancy in its
proceeds.
5
Illustrative of this distinction is the case of Stull v.
McGill, wherein the Kentucky Court of Appeals dealt with facts
directly on point with the case at hand.
No. 2010-CA-001565-MR,
2011 WL 4117891 (Ky. Ct. App. Sept. 16, 2011).
In Stull, a
divorcing couple entered into a separation agreement that stated
“[the husband] shall have as his own free and clear of any claim
of [the wife], the following: . . . (e) All life insurance policies
on his life, if any.”
Id. at *1.
Three years later when the
husband died, his estate filed a complaint against the ex-wife,
alleging among other things, that the ex-wife had breached the
separation
proceeds.
agreement
Id. at *2.
judgment to the estate.
by
claiming
and
receiving
the
policy
The trial court agreed and granted summary
Id.
On appeal, the ex-wife argued that the trial court’s judgment
was in error, and maintained that “the agreement failed to divest
her of any beneficiary expectancy because the language of the
agreement did not specifically state so.” Id. The appellate court
agreed, and it reversed and remanded the case with instructions
for the lower court to enter judgment in favor of the ex-wife.
Id. at *2-3.
In doing so, the court explained:
The agreement between Holly and Kenneth does
not
specifically
address
the
right
to
beneficiary expectancy; it only addresses
ownership over the policy itself. This
distinction is pivotal. As owner of the
policy, Kenneth retained the discretion to
continue the policy, cancel it, increase it,
6
change the beneficiary, or even cash it. He
chose not to make any changes.
Id. at *2 (emphasis added).
As in Stull, Section 2.9 of the Separation Agreement here
addresses only Steven’s ownership of the policy itself; it does
not
specifically
expectancy.
address
Pamela
Jo’s
right
to
beneficiary
Additionally, like in Stull, Steven, as the owner of
the policy, retained the discretion to make changes to the policy,
including the right to remove Pamela Jo as the beneficiary.
However, in the eight years between the parties’ divorce and
Steven’s death, he did not make this change.
Further, the Supreme Court of Kentucky recently issued an
opinion endorsing the soundness of the appellate court’s decision
in Stull.
See Sadler v. Buskirk, 478 S.W.3d 379 (Ky. 2015).
In
Sadler, a divorcing couple entered into a separation agreement
that stated, “[t]he parties mutually agree to make no claim upon
any interest owned by the other, now or in the future, in the
current accounts and any life insurance . . . . ”
S.W.3d at 383.
Sadler, 478
Upon the husband’s death, the ex-wife filed a
declaratory action to obtain funds in the husband’s Individual
Retirement
Account
beneficiary.
Id.
(“IRA”)
The
to
which
ex-wife
she
argued
remained
that
her
the
named
beneficiary
expectancy in the IRA was not extinguished by the above clause in
the separation agreement, because that clause only addressed the
7
husband’s ownership interest in the IRA, as opposed to specifically
addressing her beneficiary expectancy.
Id. at 384.
In explaining
“the unique nature of the property that is transferred upon the
death of the IRA owner and how it differs from the interest of a
life insurance beneficiary[,]” the Court stated:
If the property at stake were the proceeds of
a life insurance policy on [the husband’s]
life, the language used in Paragraph 5 would
conceivably support the disposition advocated
by [the ex-wife]. That is because Paragraph 5,
by
its
express
language,
affects
only
interests in property that [the husband]
“owned ... now or in the future.” It is obvious
that the proceeds of a life insurance policy
payable at [the husband’s] death could never
be property that [the husband] owned during
his lifetime. Since [the husband] could not
have “owned” the proceeds paid on an insurance
policy on his own life, and since [the exwife’s] disclaimer in Paragraph 5 is limited
to property “owned by [the husband],” it
follows
that
[the
ex-wife’s]
limited
disclaimer could not extend to the life
insurance proceeds.
Id.
Therefore,
because
the
Separation
Agreement
here
only
addressed Decedent’s ownership interest in the policy, as opposed
to specifically divesting Pamela Jo of her beneficiary expectancy
to the proceeds, her right to the proceeds remains intact.
The Estate also argues that nothing in the record suggests
Decedent intended for Pamela Jo to receive the Policy proceeds.
In doing so, the Estate primarily relies on Larry Strasinger’s
affidavit
testimony
that
Steven
8
“had
no
friendly,
ongoing
relationship” with Panela Jo after their divorce, but instead
“expressed nothing but negative feelings” about her.
(Doc. 28,
Exh. 1 ¶¶ 22-23).
There is no way of knowing whether these statements are
accurate.
However, even if true, they do not overcome the fact
that Steven chose to leave Pamela Jo as the beneficiary to the
Policy for eight years after their divorce.
See Stull, 2011 WL
4117891, at *3 (stating the husband “was made aware of [his former
spouse’s] designation as beneficiary on the policy and chose not
to alter it”).
Thus, contrary to the Estate’s assertions, this
fact alone appears to be the strongest evidence of Steven’s intent:
for Pamela Jo to receive the proceeds of the Policy.
Finally, the Estate asks the Court to carve out an exception
to this rule.
Specifically, the Estate now argues that Steven’s
motorcycle accident caused him to become mentally disabled to the
point that he “lacked the requisites to have clearness of mind,
sufficient memory, and understandings of his actions.”
at 7).
(Doc. 29
For support, several statements from Larry Strasinger’s
affidavit are cited, including that the Steven was unable to work
due to his disability, that he “suffered from memory loss”, and
that he “had limited movement in part of his body.”
Id.
Based on
the above, the Estate contends that “[a]s a matter of public
policy, [Kentucky] law should not assume individuals suffering
brain injuries intended for their ex-spouse to receive their entire
9
wealth at the expense of their surviving children.”
Id.
Thus,
based on this proposed exception, the Estate asks to be awarded
the Policy proceeds, or in the very least, that the Court deny
summary judgment because there is a genuine issue of material fact
with regard to Steven’s mental capacity.
at7).
(Doc. 25 at 10; Doc. 29
The Court does not find this argument to be well taken.
First, as Pamela Jo points out, Steven’s medical records
indicate that his injuries from the motorcycle accident did not
affect his mental capacity.
For example, on August 4, 2005, a
little over a year after the motorcycle accident and approximately
eight months before the divorce, Ralph Huller, M.D. evaluated
Steven and found that “[h]is cognitive function and his ability to
relate to others appear normal.”
(Doc. 25 at 74).
Moreover,
during an evaluation on May 11, 2013, approximately a year and a
half before Steven died, Nicole Kershner, M.D. opined that “[h]is
ability to speak, listen, reasoning [sic] and socializes [sic]
does not appear to be impaired.”
(Doc. 25 at 148).
Thus, the
medical record supports the conclusion that Steven was mentally
competent during the eight years between his divorce from Pamela
Jo and his death.
Again, during this time, he chose not to remove
Pamela Jo as the beneficiary of the Policy.
The Estate fails to identify any portions of these records
that dispute the above findings of Dr. Huller and Dr. Kershner.
Larry Strasinger’s affidavit testimony that Steven had memory
10
loss, limited movement in part of his body, and received Social
Security
Disability
benefits
does
not
refute
the
doctors’
professional opinions, nor does it support an inference that Steven
lacked the mental capacity to make informed life decisions, such
as designating the beneficiary of the Policy.
See e.g., Sloan v.
Sloan, 197 S.W.2d 77, 79-81 (Ky. 1946); Nelson v. Metro. Tower
Life Ins. Co., 4 F. Supp. 2d 683, 684-86 (E.D. Ky. 1998) (finding
that two months before his death, an insured who had terminal
cancer was competent to exercise his right to receive accelerated
benefits).
Other facts in the record further undermine the Estate’s
assertions that Steven was mentally incapacitated.
First, it was
after the accident that Steven and Pamela Jo began their divorce
proceedings, during which Steven testified in court.
Second,
sometime between 2011 and his death, Steven purchased a 2011 Ford
Ranger pickup truck.
(Doc. 26-5).
Steven purchased a house.
Third, in November of 2013,
(Doc. 26-4 at 1-3).
Fourth, Steven
died from injuries he sustained in an accident while operating an
all-terrain vehicle (ATV).
(Doc. 25 at 161).
Further, there can be no colorable argument that Steven was
not aware that Pamela Jo remained the policy beneficiary after
their divorce.
The record shows that Steven received annual
statements that listed the policy beneficiaries, Pamela Jo being
the primary beneficiary.
(Doc. 26-2 at 3-11).
11
Based on these
facts, plus the medical record evidence, it cannot be said that
Steven was mentally incapacitated such that he could not have
removed Pamela Jo as the policy beneficiary if he had so desired.
See e.g., Stull, 2011 WL 4117891, at *3 (“We must conclude that if
[the husband] was lucid enough to appoint a power of attorney,
that he was also lucid enough to comprehend the existence of the
[life insurance] policy and the consequence of having [his former
spouse] as the named beneficiary.”).
In sum, under Kentucky law, because the Separation Agreement
did not directly address Pamela Jo’s beneficiary expectancy with
regards to the policy proceeds, it did not divest her of the same.
Moreover, the record is devoid of any convincing evidence that
Steven had a mental disability that would warrant creating an
exception to Kentucky law.
Therefore, having reviewed this matter, and being otherwise
sufficiently advised,
IT IS ORDERED that:
(1)
Defendant Larry Strasinger’s motion for summary judgment
(Doc. 25) be, and is hereby, DENIED;
(2)
Defendant Pamela Jo Cropenbaker’s motion for summary
judgment be, and is hereby, GRANTED’ and
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(3)
The Clerk of Court is directed to disburse to Defendant
Pamela Jo Cropenbaker’s counsel the sum currently being
held in the registry of the Court pursuant to Doc. 23.
This 19th day of September, 2016.
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