Minnesota Life Insurance Company v. Birney et al

Filing 55

OPINION AND ORDER granting in part and denying in part 35 Motion for Summary Judgment; granting in part and denying in part 40 Motion for Summary Judgment; denying 44 Motion to Strike; granting 52 Motion for Attorney Fees. The Court will sua sponte grant summary judgment to AFF after fourteen (14) days of the date of this Order unless an opposition is filed. The Court will instruct the Clerk to disburse the funds and close this case upon final resolution of the AFF summary judgment matter. Signed by Judge George C. Smith on 1/11/2017. (kk)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
MINNESOTA LIFE INSURANCE CO.,
Plaintiff,

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Case No.: 2:15-cv-2693
JUDGE GEORGE C. SMITH
Magistrate Judge Kemp

CORY BIRNEY, et al.,
Defendants.

OPINION AND ORDER
This is an interpleader action wherein Plaintiff Minnesota Life Insurance Co. seeks a
determination as to who is entitled to the life insurance proceeds from decedent, Richard Birney.
Richard Birney’s surviving spouse, Cory Birney, and his girlfriend Summer Fairman both assert
that they are entitled to the life insurance policies at issue in this case and have both moved for
summary judgment in their favor. (See Docs. 35 and 40). Also pending is Defendant Birney’s
Motion to Strike Defendant Fairman’s Motion for Summary Judgment (Doc. 44)1, as well as
Plaintiff Minnesota Life Insurance Company’s Motion for Attorney Fees and Costs (Doc. 52).
These motions have been fully briefed and are now ripe for review. For the reasons that follow,
Defendant Cory Birney’s Motion is GRANTED IN PART AND DENIED IN PART and
Defendant Summer Fairman’s Motion is GRANTED IN PART AND DENIED IN PART.
1

Defendant Fairman does not dispute that she filed her Motion for Summary Judgment
outside the time limits set forth in the case schedule, however, she submits it was filed as a
response to Birney’s Motion for Summary Judgment. Both parties agree that there are no
genuine issues of material fact and therefore, if the Court does not grant Birney’s Motion,
Fairman thought it appropriate to submit her motion in the interest of judicial economy.

Plaintiff Minnesota Life’s unopposed Motion for Attorney Fees and Costs is GRANTED. And
Defendant Birney’s Motion to Strike is DENIED.
I.

BACKGROUND

The decedent, Richard Birney was employed as a plumber with The Ohio State
University and had three employer provided life insurance policies through Plaintiff, Minnesota
Life. The life insurance policies are:
1.
2.
3.

Basic Life Insurance Policy with a death benefit of $117,260.00.
Accidental Death Policy with a death benefit of $117,260.00.
Voluntary Supplemental Life Insurance Policy with a death benefit of
$375,232.00.

The first two basic life insurance policies were acquired by Richard Birney on December
5, 2011. He did not designate a beneficiary when he first acquired the policies. Richard Birney
applied for the supplemental policy on January 3, 2015 and named Summer Fairman as the
beneficiary.
A.

Family History
The decedent Richard Birney and Defendant Cory Birney were married on August 30,

1998. Mr. Birney adopted their oldest child, Thomas Birney (DOB 6/22/97), and then the couple
had four more children together: Abigail Birney (DOB 2/28/99); Zachary Birney (DOB 1/18/01);
Natalie Birney (DOB 9/2/03); and Phillip Birney (DOB 8/8/04). (Doc. 35-1, Cory Birney Aff. ¶
7).
In early 2012, Richard and Corey Birney separated and Richard moved in with his
girlfriend, Summer Fairman. Richard and Summer continued to live together until Mr. Birney’s
death on February 14, 2015. During the separation, Mr. Birney continued to support his family,
paying the majority of the mortgage and utility bills on the family home. However, the Birney’s
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encountered financial troubles and Richard and Cory entered into a Chapter 13 Bankruptcy in
2013.
On September 9, 2013, Cory Birney filed for divorce against Richard Birney in the
Licking County Domestic Relations Court (see Birney v. Birney, Case No. 13-DR-1010). (Doc.
35-1, Cory Birney Aff. ¶ 7). The same day the Domestic Court issued a Restraining Order that
provided in pertinent part:
(C) Plaintiff and Defendant are hereby restrained from damaging, moving,
selling, giving away, transferring, withdrawing, disposing of, or encumbering any
interest which either party may have in real property, personal property, funds,
accounts, business interests, investments, or any other asset, except for existing
businesses in the ordinary course of business. The Plaintiff and Defendant are
permitted to use a checking account for ordinary living expenses.
*
*
*
(G) Plaintiff and Defendant are hereby restrained from terminating, modifying,
or changing the beneficiaries on any policy of life, health, automobile, or other
insurance which covers a party or a minor child of the parties.
(Doc. 35-1, Restraining Order at 7).
In addition to the divorce proceedings, there were numerous custody hearings and Cory
Birney continued to care for the children until there was an accusation that Cory slapped her son
Zachary. As a result of this, Children’s Services suggested that the children be placed with their
father, Richard. Before the final adjudication of both the juvenile and divorce proceedings,
Richard Birney was killed in a car accident on February 14, 2015. Mr. Birney was hit by a drunk
driver who went left of center at a high rate of speed and hit him head on. The other driver’s
blood alcohol was found to be almost three times the legal limit.
During her separation from Mr. Birney, Mrs. Birney began a relationship with Keith
Nutter and she had a child with him, Michael Nutter (DOB 2/26/13). There are also a number of

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other statements included in the parties’ briefs regarding the care of the children, Summer
Fairman’s new relationship, the funds Summer Fairman received upon Richard’s death and other
possessions and assets she retained from his estate. However, the Court has not included those
details are they are not relevant to the legal determination as to who is entitled to the life
insurance proceeds.
B.

Life Insurance Policies
The details of each of the life insurance policies at issue in this case are as follows:

(1)

A basic Life Insurance policy (“basic life policy”) that provided for a death benefit of

$117,260.00. This policy was obtained by Richard Birney on December 5, 2011. He did not
name a specific beneficiary at that time. However, Minnesota Life’s policy was that the
surviving spouse would be the beneficiary where no beneficiary is designated.
(2)

An accidental death policy (“accidental death policy”) with a death benefit of

$117,260.00. This policy was also obtained by Richard Birney on December 5, 2011, and again
no beneficiary was designated at that time. There is no dispute that because Richard Birney died
as a result of an automobile accident, his death qualifies as an accidental death under this policy.
Although Richard Birney did not initially name a beneficiary to the aforementioned two
policies, on November 20, 2014, he named Summer Fairman as the beneficiary of these two
policies.
(3)

A voluntary supplemental life insurance policy with a death benefit of $375,232.00, that

was taken out by Richard Birney shortly before he died. Birney applied for the supplemental
policy on January 3, 2015. He designated Summer Fairman as the primary beneficiary, and
designated Thomas Birney and the minor children as contingent beneficiaries. (Doc. 1, Compl. ¶

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21). This policy was not due to begin coverage until a date after Birney’s death, but Minnesota
Life has determined that it will honor the policy.
Together, the aforementioned life insurance policies provide for a total death benefit of
$609,752.00.
C.

Procedural History
This case was initiated on August 5, 2015. Minnesota Life has named all potential

interested parties as Defendants in this case. Defendants Cory Birney and Summer Fairman are
both seeking the entirety of the life insurance proceeds of Richard Birney and have moved for
summary judgment in their favor. Minnesota Life has deposited a sum of $651,350.64 with the
Court, the total of all the life insurance proceeds ($609,752.00), plus accrued interest from the
date Minnesota Life received proof of claim. (See Doc. 51). On August 12, 2016, Plaintiff
Minnesota Life was terminated as a party to this case. The Court ordered that the insurance
proceeds be deposited in an interest-bearing account. (See Id.).
In addition to the family members of Richard Birney and his girlfriend, American
Funeral Financial, LLC (“AFF”) has been named as a Defendant because they provided the
financing for Richard Birney’s funeral expenses at the Kauber-Sammons Funeral Home. (See
Ex. A attached to Doc. 26, AFF’s Answer). Summer Fairman made the funeral and burial
arrangements, which cost $20,793.71. To obtain financing with AFF, Fairman assigned that
amount from the purported life insurance proceeds she would receive. Upon Birney’s death,
AFF made a claim to Minnesota Life for their assigned portion of the life insurance proceeds.
AFF has filed cross-claims against all the Defendants. Specifically, AFF filed a breach of
contract cross-claim against Defendant Summer Fairman, for $20,793.71, the cost of the funeral

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expenses, plus interest. Alternatively, AFF has also filed an unjust enrichment cross-claim
against all the other Defendants, asserting that the Defendants have been unjustly enriched by
receiving the benefit of decedent’s funeral and burial services.2
Summer Fairman falsely reported on Richard Birney’s death certificate that he was
“Divorced and Unremarried.” (Ex. D to Doc. 35 at A-8, death certificate). Cory Birney was
able to have a corrected death certificate prepared at the health department that included her as
the surviving spouse.
II.

STANDARD OF REVIEW

Defendants Cory Birney and Defendant Summer Fairman have both moved for summary
judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Summary judgment is
appropriate “if the movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The Court’s purpose
in considering a summary judgment motion is not “to weigh the evidence and determine the truth
of the matter” but to “determine whether there is a genuine issue for trial.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249 (1986). A genuine issue for trial exists if the Court finds a jury
could return a verdict, based on “sufficient evidence,” in favor of the nonmoving party; evidence
that is “merely colorable” or “not significantly probative,” however, is not enough to defeat
summary judgment. Id. at 249–50.
The party seeking summary judgment shoulders the initial burden of presenting the court
with law and argument in support of its motion as well as identifying the relevant portions of

2

Notably, Summer Fairman forbid Cory Birney from attending the funeral and even
threatened that she would be arrested for trespass if she attempted to attend. Therefore, Cory
Birney did not attend her husband’s funeral. (Doc. 35, Birney Mot. for Summ. J. at 11).
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“‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material fact.”
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P. 56). If this initial
burden is satisfied, the burden then shifts to the nonmoving party to set forth specific facts
showing that there is a genuine issue for trial. See Fed. R. Civ. P. 56(e); Cox v. Kentucky Dep’t
of Transp., 53 F.3d 146, 150 (6th Cir. 1995) (after burden shifts, nonmovant must “produce
evidence that results in a conflict of material fact to be resolved by a jury”). In considering the
factual allegations and evidence presented in a motion for summary judgment, the Court must
“afford all reasonable inferences, and construe the evidence in the light most favorable to the
nonmoving party.” Id.
That the parties have filed cross-motions for summary judgment does not alter the
Court’s standard of review. See Taft Broad. Co. v. United States, 929 F.2d 240, 248 (6th Cir.
1991) (“[T]he standards upon which the court evaluates the motions for summary judgment do
not change simply because the parties present cross-motions.”). Thus, in reviewing crossmotions for summary judgment, the Court must still “evaluate each motion on its own merits and
view all facts and inferences in the light most favorable to the non-moving party.” Wiley v.
United States, 20 F.3d 222, 224 (6th Cir. 1994).
III.

DISCUSSION

Both Cory Birney and Summer Fairman assert multiple arguments in support of their
claim to the proceeds of Richard Birney’s three life insurance policies at issue in this case.
There is no dispute that the decedent Richard Birney was killed in a car accident and Minnesota
Life has agree to pay on all three policies. Plaintiff Minnesota Life deposited the funds of the

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three life insurance policies at issue in this case with the Court. (See Doc. 53, Notice).
Therefore, the Court must now determine who is the legal beneficiary of the life insurance
policies. The Court will address the arguments of both Birney and Fairman in turn.
As a preliminary matter, the Court denies Defendant Cory Birney’s Motion to Strike
Defendant Summer Fairman’s Motion for Summary Judgment. There is no dispute that the
dispositive motion deadline was April 30, 2016, and Fairman’s Motion for Summary Judgment
was not filed until May 23, 2016. However, the Court finds that the parties agree that this matter
is purely legal in nature, there are no factual issues in dispute, and there was no prejudice to
Defendant Birney as her motion was not even ripe before the filing of Defendant Fairman’s
motion. Therefore, in the interest of judicial economy, this matter should be resolved on the
summary judgment motions and the Court will consider both motions.
A.

Life Insurance Policy Language
Defendant Cory Birney argues that under the plain language of the life insurance policies,

all of the proceeds should be paid to her as Richard Birney’s surviving spouse.
The life insurance policies set forth “To whom will we pay the death benefit?”:
We will pay the death benefit to the beneficiary or beneficiaries. A
beneficiary is named by an insured to receive the death benefit to be paid at the
insured’s death. The insured may name one or more beneficiaries. The insured
cannot name you or an associated company as a beneficiary.
The insured may also choose to name a beneficiary that the insured cannot
change without the beneficiary’s consent. This is called an irrevocable
beneficiary.
If there is more than one beneficiary, each will receive an equal share,
unless the insured has requested another method in writing. To receive the death
benefit, a beneficiary must be living on the date of the insured’s death.
*

*
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*

If there is no eligible beneficiary, or if the insured does not name one, we
will pay the death benefit to:
(1) the insured’s lawful spouse (does not include a domestic
partner), if living, otherwise;
(2) the insured’s natural or legally adopted child (children) in equal
shares, if living, otherwise;
(3) the insured’s parents in equal shares, if living, otherwise;
(4) the insured’s siblings in equal shares, if living, otherwise;
(5) the personal representative of the insured’s estate.
(Doc. 1, Ex. A, p. 19).
Defendant Cory Birney argues that “[O]ne must assume that a spouse must be a
‘irrevocable beneficiary’ since the policy speaks of this type of beneficiary and then mentions
that the spouse will be the beneficiary if one is not named.” (Doc. 35, Birney Mot. for Summ. J.
at 28). However, the policy language does not define irrevocable beneficiary to include spouse.
The policy allows for the insured to choose an irrevocable beneficiary, but there is no evidence
that Richard Birney did so with respect to any of his life insurance policies. Richard Birney did
not name a beneficiary at the time he applied for the first two policies, and later, on November
20, 2014, made Summer Fairman the beneficiary under the first two policies. Further, when he
applied for the supplemental policy on January 3, 2015, he named Summer Fairman as the
beneficiary.
Therefore, Summer Fairman is the designated beneficiary under all of the life insurance
policies. Generally, “an insured . . . has the right to select a beneficiary of his choice.” Bartlett
v. SunAmerica Life Ins. Co., 2010-Ohio-1884, No. L.-09-1124, ¶ 16 (6th App. Dist. 2010)
(finding domestic relations court restraining order voided beneficiary designations). However,
all of the changes to the policies, including naming Summer Fairman as the beneficiary on the
first two policies and adding the supplemental policy, occurred while Richard Birney was subject
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to the September 9, 2013 domestic relations restraining order. Therefore, the Court must
consider the effect of the restraining order on the determination of who receives the proceeds of
the life insurance policies.
B.

Divorce Proceeding
As set forth above, the Birneys were proceeding with a divorce in the Licking County

Domestic Relations Court (see Birney v. Birney, Case No. 13-DR-1010). (Doc. 35-1, Cory
Birney Aff. ¶ 7). On September 9, 2013, in that case, the Domestic Relations Court issued a
Restraining Order that provided in pertinent part:
(C) Plaintiff and Defendant are hereby restrained from damaging, moving,
selling, giving away, transferring, withdrawing, disposing of, or encumbering any
interest which either party may have in real property, personal property, funds,
accounts, business interests, investments, or any other asset, except for existing
businesses in the ordinary course of business. The Plaintiff and Defendant are
permitted to use a checking account for ordinary living expenses.
*

*

*

(G) Plaintiff and Defendant are hereby restrained from terminating, modifying,
or changing the beneficiaries on any policy of life, health, automobile, or other
insurance which covers a party or a minor child of the parties.
(Doc. 35-1, Restraining Order at 7).
The dispute between Cory Birney and Summer Fairman centers on the issue of the status
of the divorce proceedings upon the death of one party. Fairman argues that if a party to a
divorce action dies before the assets have been distributed or the final decree entered, the action
abates and the trial court loses jurisdiction. (Doc. 40, Fairman Mot. for Summ. J. at 6, citing
State ex rel. Litty v. Leskovyansky, 77 Ohio St. 3d 97 (1996)). Birney counters that the life
insurance is considered held in a constructive trust and must be paid to the surviving spouse
under these circumstances. (Doc. 35, Birney Mot. for Summ. J. at 14, citing Conception v.
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Conception, 131 Ohio App. 3d 271, 722 N.E.2d 176 (3rd App. Dist. 1999)).
1.

Divorce Proceeding Abated

Summer Fairman acknowledges that there was a restraining order in place preventing
Richard Birney from modifying or changing beneficiaries to his life insurance policy since the
outset of his divorce proceedings, and that Richard Birney violated that restraining order by
designating her as the beneficiary of his life insurance policies. However, she counters that if he
was found to have done so while still alive, he would have been subject to contempt proceedings
in domestic court, to which he could have provided a defense. However, because of his untimely
death, he should not be forbidden from designating the beneficiary of his choice.
Fairman, relying on State ex rel. Litty and Hook v. Hook, 35 Ohio App. 3d 51, 519
N.E.2d 687 (8th App. Dist. 1987), argues that since there was no final disposition in the Birneys’
divorce proceedings, the action abates and the temporary restraining order is extinguished. (Doc.
40, Fairman Mot. for Summ. J. at 6). The Litty court held that when one of the parties to a
divorce proceeding dies before the final disposition, the action abates and the trial court lacks
further jurisdiction. 77 Ohio St. 3d at 99. Fairman then asserts that “it stands to reason that any
temporary restraining orders are extinguished as well.” (Doc. 40, Fairman Mot. for Summ. J. at
6, citing Hook). While technically the temporary restraining would no longer be in effect going
forward, Richard Birney was still subject to that order prior to his death.
Ohio courts have held that “[a]n attempt to change the named beneficiary under a life
insurance policy cannot be held to defeat the original beneficiary’s interest upon the insured’s
death, when, at the time of the attempted change, a temporary restraining order prevented the
insured from affecting in any manner the interests in his assets, and that judicial prohibition

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remained in effect at the time of the insured’s death.” Mack v. Allstate Life Ins. Co., 42 Ohio
App. 3d 101, at syllabus (1987). The Mack court ultimately held that “George Mack’s attempt to
change the beneficiary of the policy on his life was not effective because his right or authority to
make any change was inhibited by the TRO, and that the trial court did not err in awarding the
proceeds to Constance Mack, the original beneficiary. Id. The Mack court reasoned that it
would not allow “the insured’s clearly expressed intent to prevail over a valid court order.” Id.
Defendant Birney, however, argues that Ohio law provides that a change to the life
insurance beneficiary while subject to a restraining order is invalid and void, relying on
Concepcion, 131 Ohio App. 3d 271. The Concepcion court discussed:
It is fairly well-settled that the death of a party prior to adjudication of the issues
in a pending divorce case causes the action to abate and ends any jurisdiction that
a judge has over the case except to dismiss it. See State ex rel. Litty v.
Leskovyansky (1996), 77 Ohio St. 3d 97, 671 N.E.2d 236. The Supreme Court of
Ohio in Coffman v. Finney, (1901) 65 Ohio St. 61, 61 N.E. 155 held that an action
termed “personal,” such as for divorce or for determination and order of an
alimony award, generally abates upon the death of one party to the action.
However, an action which seeks to enforce fixed rights and liabilities, such as an
action to enforce alimony already awarded, may survive the death of that party.
Id. Thus, the test set forth by the Court in Coffman, supra, in determining
whether or not an action abates upon the death of a party is whether or not the
action seeks to enforce fixed rights and liabilities. See, also, Diemer v. Diemer
(1994), 99 Ohio App. 3d 54, 649 N.E.2d 1285.
Concepcion, 131 Ohio App. 3d at 276. The Concepcion court discussed the Hook case, relied on
by Fairman here, but dismissed it, and instead held that:
Although an insured generally has the right to select a beneficiary of his choice,
the purpose of the temporary restraining order was to maintain the status quo, thus
preserving the rights and liabilities of the respective parties pending adjudication
of the merits of the case. The effect of the trial court’s temporary restraining
order was to preserve the action, an issue wholly separate and apart from the issue
of jurisdiction. See Deimer, 99 Ohio App. 3d at 60.

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Concepcion, 131 Ohio App. 3d at 277. The Court ultimately concluded that the decedent
disregarded a court order that precluded him from changing the beneficiary of his life insurance
policy. Further, the court found that the newly designated beneficiary was unjustly enriched at
the original beneficiary’s expense giving rise for the imposition of a constructive trust. Id.
The Court of Appeals for the Sixth Circuit considered this issue in Candler v. Donaldson,
272 F.2d 374 (6th Cir. 1959). In Candler, the insured died during a pending divorce proceeding
that had a similar temporary restraining order in effect barring the insured from disposing in any
manner the properties or assets of either or both of the parties. Disregarding the restraining
order, the insured changed the beneficiary of his life insurance policy from his wife to his
mother. The Candler Court held that “although the right of a husband under such circumstances
to change the beneficiary from his wife to another is well established, where the right to change
the beneficiary is reserved by the policy, it is also well established that under certain
circumstances equities may arise in favor of the named beneficiary which would deny to the
insured the right to make such a change.” Id. at 376–377. Further, the purpose of the restraining
order was preservation of the status quo during the pendency of the divorce action until a final
adjudication of the parties’ property rights could be made. Concepcion, 131 Ohio App.3d at 278
(citing Candler, 272 F.2d at 377). Therefore, following the reasoning in Candler, Mack, and
Concepcion, the Court finds that the decedent Richard Birney was subject to a valid restraining
order at the time he changed the beneficiary of his existing life insurance policies and purchased
a new supplemental life insurance policy. Therefore, Summer Fairman would be unjustly
enriched at the expense of Cory Birney and their five children. Accordingly, the Court will
consider the application of a constructive trust in this case.

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Fairman also argues that the Birneys were de facto divorced with a separation date of
September 9, 2013. There is no dispute that the parties had been separated prior to filing for
divorce and were living with other people, not acting as a married couple. However, there were
options available to the Birneys under Ohio law to establish terms and conditions of their
separation while the divorce proceedings were pending, such as a legal separation, or an agreed
order setting a termination date of the marriage, or filing a motion for a termination date.
Richard Birney was represented by counsel in the divorce proceedings and could have exercised
his right to one of the aforementioned options, but he did not do so. The Court does not find that
the parties were de facto divorced and concludes that there was no termination date of the
Birneys’ marriage prior to Richard’s death. Therefore, at the time of Richard’s death, all the life
insurance polices, and proceeds thereof, are considered marital property. See Ohio Rev. Code §
3105.171(A)(2)–(3) (defining during the marriage and marital property).
2.

Constructive Trust

Cory Birney argues that Richard Birney violated the domestic relations court restraining
order when he changed the beneficiary of his basic and accidental life insurance policies, as well
as when he purchased the supplemental life insurance policy, thereby unjustly enriching his
girlfriend Summer Fairman, to the detriment of his wife and children because all the policies
were marital property.
A constructive trust is an equitable remedy that arises by operation of law against one
who holds legal title to property where equity and good conscience demands that he should not.
Hill v. Hill, 2002 Ohio 685, 2002 Ohio App. LEXIS 725 (10th App. Dist. Feb. 21, 2002). A
constructive trust is an appropriate remedy against unjust enrichment, and, although usually
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invoked when property has been acquired by fraud, a constructive trust may also be imposed
where it is against the principles of equity that the property be retained by a person even though
the property was acquired without fraud. Ferguson v. Owens, 9 Ohio St.3d 223, 226, 2005-Ohi3815 (1984). Where a person holds title to property against equity and good conscience and will
be unjustly enriched by retaining title, Ohio courts have not required, as a prerequisite for a
constructive trust, that the holder obtained title by fraudulent or questionable means. See GrozaVance v. Vance, 162 Ohio App.3d 510, 834 N.E.2d 15 (2005).
As set forth above, and as argued by Cory Birney, this is exactly the situation a
constructive trust was designed to protect against. Had the domestic relations case been
finalized, that court would most likely have ordered spousal and child support, as well as a final
decision on the life insurance policies (including the supplemental life insurance policy) because
they were marital assets, acquired while the Birneys were married. See generally Apt v. Apt, 2nd
Dist. Montgomery, No. 25410, 2013-Ohio-619 (2nd App. Dist. 2013) (“In the spousal-support
context, life insurance is often used to secure payments.”).3 In fact, Ohio courts have even
ordered the husband to maintain the wife as beneficiary of his life insurance policies even after
the couple are divorced. See Waites v. Waites, 5th Dist. Fairfield, No. 15-CA-1, 2015-Ohio2916 (5th App. Dist. 2015). Therefore, the Court finds that if all of the life insurance proceeds
were to be distributed to the beneficiary, Summer Fairman, she would be unjustly enriched to the
detriment of Richard Birney’s family.

3

Ohio courts consider all relevant factors in making determinations as to support and
division of marital property, including the duration of the marriage, assets and liability of the
spouses, liquidity of the property to be distributed, retirement benefits, including social security,
etc. See Ohio Rev. Code § 3105.171.
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However, there is no doubt that Richard Birney also wanted to provide for his
girlfriend/fiancee Summer Fairman, as evidenced by adding her as the beneficiary of his life
insurance policies and purchasing a supplemental policy, naming her as the beneficiary. Further,
since the domestic relations court most likely would not have awarded the entire amount of the
life insurance policies to Cory Birney and her children, some of the life insurance proceeds
should be awarded to Summer Fairman.
This Court has been tasked with determining who is entitled to the life insurance
proceeds of the decedent, Richard Birney, totaling $609,752.00. The Court has discretion to
impose a constructive trust having found that if the entire amount of the proceeds were paid to
the beneficiary, Summer Fairman, she would be unjustly enriched to the detriment of Richard
Birney’s five children. Presumably, when Richard Birney took out those life insurance policies,
he intended to provide for his family upon his death. The equities in this case therefore require
the imposition of a constructive trust. The domestic court would not have permitted Richard
Birney to walk away from his family obligations and not provide for them financially.
Therefore, this Court will not either. For the foregoing reasons, the total amount of the life
insurance proceeds, $609,752.00 plus accrued interest, less the attorney fees sought by Plaintiff’s
counsel, shall be held in a constructive trust and disbursed as set forth below. But again, as
equity so requires, a portion of the proceeds will be awarded to Summer Fairman to carry out the
intent of the decedent Richard Birney.
C.

Minnesota Life’s Motion for Attorney Fees
Plaintiff Minnesota Life filed a motion for attorney fees and costs incurred in this action.

The total attorney fees and costs sought is $11,419.45, incurred through October 3, 2016, plus
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any reasonable fees and costs thereafter before their dismissal from this case.
This Court has discretion to award attorney fees to a disinterested stakeholder in an
interpleader action. See Holmes v. Artists Rights Enforcement Corp., 148 F. App’x 252, 259 (6th
Cir. 2005); see also Mutual Life Ins. Co. of New York v. Bondurant, 27 F.2d 464, 465–66 (6th
Cir. 1928) (holding that a disinterested stakeholder who brings an interpleader action is entitled
to reasonable attorneys’ fees and costs).
The Court finds that Minnesota Life is a disinterested stakeholder in this interpleader
action and that despite attempting to resolve this matter, were unable to do so and were forced to
file this interpleader action. Minnesota Life’s Motion has not been challenged by any of the
Defendants. The only response was from Defendant AFF who asserted that any fees and costs
awarded should be paid from the interpleaded funds.
Therefore, the Court finds that the amount of attorney fees and costs sought by Minnesota
Life is reasonable and are hereby awarded a total of $11,419.45, fees and costs incurred through
October 3, 2016, plus any additional fees and costs incurred through the depositing of proceeds
of the life insurance policies with the Court on November 17, 2016.

D.

American Funeral Financial’s Cross-Claims
Having resolved the pending cross-motions for summary judgment seeking the proceeds

Richard Birney’s life insurance policies, the only remaining issue in this case is AFF’s crossclaims against Summer Fairman and the other Defendants for the funeral expenses of the
decedent, Richard Birney, totalling $20,793.71. Like Fairman and Birney, Defendant AFF could

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have moved for summary judgment on their claim for the life insurance proceeds but failed to do
so. The Court could decline to exercise supplemental jurisdiction over AFF’s cross-claims,
however, that defeats the purpose of interpleader. See 28 U.S.C. § 1336.
Federal Rule of Civil Procedure 56(f) gives the Court discretion to enter summary
judgment sua sponte for a nonmovant after giving the party notice and a reasonable opportunity
to respond. The Court hereby gives notice all remaining parties that the Court will grant
summary judgment to AFF on their breach of contract cross-claim against Defendant Summer
Fairman for the contractually agreed upon amount of $20,793.71. If any party wishes to dispute
this, they may file a response and show cause why the Court should not find that Defendant
Summer Fairman contracted with AFF to pay a total of $20,793.71. Any arguments as to
whether Fairman had the authority to assign any proceeds of the life insurance policies are moot
as the Court has already awarded her a portion of the life insurance policies to Fairman based on
Richard Birney’s intent to provide for her. Any response must be filed within fourteen (14) days
of this Order. Failure to respond will result in the granting of summary judgment to AFF against
Summer Fairman for the amount of $20,793.71.

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E.

Distribution of Life Insurance Proceeds
As set forth above, the total amount of proceeds in addition to interest accrued that has

been deposited with the Court to be placed in an interest-bearing account was $651,350.64. The
Clerk of this Court shall pay a total of $11,419.45, plus any additional fees and costs submitted
by Minnesota Life to the Clerk within ten days of the date of this Order.
A total of $100,000, shall be awarded to Defendant Summer Fairman, less the amount of
the contract for the financing of Richard Birney’s funeral expenses with AFF, $20,793.71.
The remainder of the interpleaded funds, approximately $539,931.19, plus interest
accrued since deposited with the Court, shall be awarded to Defendant Cory Birney and the
children of Cory and Richard Birney.

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IV.

CONCLUSION

For the foregoing reasons, Defendant Cory Birney’s Motion is GRANTED IN PART
AND DENIED IN PART and Defendant Summer Fairman’s Motion is GRANTED IN PART
AND DENIED IN PART. Plaintiff Minnesota Life’s unopposed Motion for Attorney Fees and
Costs is GRANTED. Defendant Birney’s Motion to Strike is DENIED. The Court will sua
sponte GRANT summary judgment to AFF after fourteen days of the date of this Order unless
an opposition is filed, then the Court will consider further briefing on the issue.
The Clerk is instructed to remove Document 35, 40, 44, and 52 from the Court’s pending
motions list.
Upon final resolution of the AFF summary judgment matter, the Court will instruct the
Clerk to disburse the funds and close this case.

IT IS SO ORDERED.
/s/ George C. Smith
GEORGE C. SMITH, JUDGE
UNITED STATES DISTRICT COURT

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