Baker v. Baker

PATRICIA A. BAKER, Defendant - Appellant, v. JESSICA E. BAKER, Individually,and as Administratrix of The ESTATE OF FRANK J. BAKER, JR., Defendant - Appellee,andJACKSON NATIONAL LIFE INSURANCE COMPANY, Plaintiff.

No. 18-2058

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

Argued: October 29, 2019

December 11, 2019

UNPUBLISHED

Appeal from the United States District Court for the Northern District of West Virginia at Wheeling. Frederick P. Stamp, Jr., Senior District Judge. (5:17-cv-00078-FPS)

Before HARRIS, RICHARDSON, and QUATTLEBAUM, Circuit Judges.

Reversed and remanded with instructions by unpublished opinion. Judge Quattlebaum wrote the opinion, in which Judge Harris and Judge Richardson joined.

ARGUED: Joseph Jacob John, II, JOHN & WERNER LAW OFFICES, PLLC, Wheeling, West Virginia, for Appellant. Christian Edward Turak, GOLD, KHOUREY & TURAK, L.C., Moundsville, West Virginia, for Appellee. ON BRIEF: Anthony I. Werner, JOHN & WERNER LAW OFFICES, PLLC, Wheeling, West Virginia, for Appellant.

Unpublished opinions are not binding precedent in this circuit.

QUATTLEBAUM, Circuit Judge:

The question presented by this appeal is whether the designated beneficiary on a life insurance policy waived her interest in the policy proceeds by the terms of a divorce property settlement agreement. Patricia Baker was the designated beneficiary on the life insurance policy of her husband, Frank Baker, Jr. When the couple divorced, they executed a property settlement agreement ("PSA") to resolve "all matters concerning their respective separate and marital property rights . . . ." (J.A. 57). In Paragraph 5(b) of the PSA, Patricia relinquished "any and all right to any life insurance policies" on Frank's life. (J.A. 58). However, that subsection also provided that Frank "may change the beneficiary" on any such policy. (J.A. 58). Several years after the divorce, Frank died without changing the beneficiary designations on the life insurance policy.

As the policy's designated beneficiary, Patricia sought payment of the policy proceeds. However, Jessica Baker, Frank's daughter and a contingent beneficiary on his policy, made her own claim to the proceeds. Jessica argued that Patricia's relinquishment of "any and all right" to Frank's life insurance policy in the PSA waived her interest in the policy proceeds. In the ensuing litigation, the district court agreed with Jessica and granted her motion for summary judgment. It held that Patricia explicitly relinquished "any and all right" to Frank's life insurance policy, including her interest in the policy proceeds, by executing the PSA. (J.A. 215).

Upon review, we conclude that the PSA is reasonably susceptible to multiple interpretations and is therefore ambiguous as to whether Patricia waived her beneficiary interest in the policy proceeds. For this reason, we reverse the judgment of the district courtand remand for a determination of whether the PSA's ambiguity means that Patricia did not waive her contractual right to the policy proceeds or whether extrinsic evidence should be considered to establish the proper interpretation of the PSA.

I.

In July 1998, Frank enrolled in a $250,000 life insurance policy with what is now Jackson National Life Insurance Company ("Jackson National"). On the application, Frank named his wife, Patricia, as the designated beneficiary and his daughter from a prior marriage, Jessica, as a contingent beneficiary.¹ The terms concerning the beneficiaries of policy proceeds are clear. Under § 4.11 of the policy, the designated beneficiary receives the policy proceeds at the time of Frank's death, and any contingent beneficiaries receive the proceeds in the absence of a designated beneficiary. Section 3.35 only allowed Frank to change the policy's beneficiary designations by sending a written notice of the change to Jackson National.

Frank and Patricia divorced in September 2013, citing irreconcilable differences. As part of the divorce proceedings, Frank and Patricia executed a PSA to settle "all matters concerning their respective separate and marital property rights. . . ." (J.A. 57). The PSA was ratified and incorporated into the Final Divorce Order issued by the West Virginia family court. Paragraph 5 of the PSA, entitled "Life Insurance," provides in subsection (b):"Wife hereby releases and relinquishes any and all right to any life insurance policies which the Husband presently has on his life and Husband may change the beneficiary." (J.A. 58). Additionally, in Paragraph 13(a) of the PSA, Frank and Patricia agreed to "execute, acknowledge and deliver any and all papers, documents, instruments and writing that may be reasonably required to effectuate the objects and purposes of this Agreement." (J.A. 60).

Frank died in January 2017. During the three-and-a-half-year period between the divorce and his death, Frank did not change the primary or contingent beneficiary designations on his life insurance policy. Because his life insurance policy was in effect on the date of his death, Jackson National sought to distribute the proceeds pursuant to the policy terms. However, the insurance company received competing claims to the proceeds. A few weeks after Frank's death, Patricia sent a letter to Jackson National requesting payment of the proceeds pursuant to her status as the policy's designated beneficiary. Later, Jessica also sent a letter to Jackson National. She argued that by the unambiguous terms of the PSA, Patricia relinquished her beneficiary interest in the policy proceeds and, as the only living contingent beneficiary,² Jessica was entitled to her share of the proceeds.

Because of these competing claims, Jackson National initiated an interpleader action in the United States District Court for the Northern District of West Virginia, naming Patricia and Jessica as defendants. The district court agreed to accept a deposit of thedisputed proceeds from Frank's life insurance policy while Patricia and Jessica's claims were resolved.

After discovery, Patricia moved for summary judgment, seeking the policy proceeds as a matter of law. Two days later, Jessica moved for the same. The district court granted Jessica's motion, denied Patricia's motion and ordered payment of the policy proceeds to Jessica. The court held that by the unambiguous terms of Paragraph 5(b) of the PSA, Patricia "explicitly released and relinquished . . . 'any and all right to any life insurance policies' held by [Frank] and that such language plainly indicates the intent of the parties to eliminate her interest in the life insurance policy proceeds." (J.A. 215). Patricia timely appealed the final judgment. This Court has jurisdiction over the appeal under 28 U.S.C. § 1291.

II.

This Court reviews grants of summary judgment de novo, applying the same standard as the court below. Sylvia Dev. Corp. v. Calvert Cty., 48 F.3d 810, 817 (4th Cir. 1995). Summary judgment may only be granted if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Covol Fuels No. 4, LLC v. Pinnacle Min. Co., LLC, 785 F.3d 104, 111 (4th Cir. 2015) (quoting Libertarian Party of Va. v. Judd, 718 F.3d 308, 312-13 (4th Cir.2013)). The threshold question for a court asked to grant summary judgment based on the interpretation of a contract is whether the contract is ambiguous. Covol Fuels No. 4, LLC, 785 F.3d at 112 (citing Syl. Pt. 4, Estate of Tawney v. Columbia Natural Res., LLC, 633 S.E.2d 22, 23-24 (W. Va. 2006)). "If acourt properly determines that the contract is unambiguous on the dispositive issue, it may then properly interpret the contract as a matter of law and grant summary judgment because no interpretive facts are in genuine issue." Washington Metro. Area Transit Auth. v. Potomac Inv. Properties, Inc., 476 F.3d 231, 235 (4th Cir. 2007) (quoting Goodman v. Resolution Trust Corp., 7 F.3d 1123, 1126 (4th Cir. 1993)). However, if the contract is deemed ambiguous, a court may "examine evidence extrinsic to the contract that is included in the summary judgment materials, and, if the evidence is, as a matter of law, dispositive of the interpretative issue, grant summary judgment on that basis." Id. But if such extrinsic evidence "leaves genuine issues of fact respecting the contract's proper interpretation, summary judgment must of course be refused and interpretation left to the trier of fact." Id.

A.

With these standards in mind, we turn to the relevant West Virginia law.³ As the designated beneficiary on Frank's life insurance policy, Patricia had a contractual right to the policy proceeds upon Frank's death. In West Virginia, there is no statute that automatically revokes a beneficiary interest in an ex-spouse's life insurance policy upon divorce,⁴ and the parties agree that Frank did not change the beneficiary designations onhis life insurance policy before his death. Therefore, Patricia retained her beneficiary interest in the policy proceeds unless she waived it by the terms of the PSA.⁵

Under West Virginia law, "[w]aiver of a contract right may be made by an express statement or agreement, or it may be implied from the conduct of the party who is alleged to have waived a right." Parsons v. Halliburton Energy Servs., Inc., 785 S.E.2d 844, 850 (W. Va. 2016). "The burden of proof to establish waiver is on the party claiming the benefit of such waiver, and is never presumed." Hoffman v. Wheeling Sav. & Loan Ass'n, 57 S.E.2d 725, 735 (W. Va. 1950). Here, Jessica contends that the execution of the PSA was an express waiver of Patricia's right to the life insurance proceeds as the designated beneficiary.

The West Virginia Supreme Court of Appeals "has long recognized that settlement agreements are contracts and subject to enforcement like any other contract." Marcus v. Staubs, 736 S.E.2d 360, 374 (W. Va. 2012). Accordingly, we analyze the terms of the PSA under West Virginia contract law to determine if Patricia waived her beneficiary interest in the...