DiMonda v. Lincoln Nat'l Corp.

1

2024 Vt Super 102802

Victoria diMonda v. Lincoln National Corp d/b/a Lincoln Financial Group et al

No. 24-CV-00380

Superior Court of Vermont, Civil Division, Bennington Unit

October 28, 2024

ENTRY REGARDING MOTION

David Barra, Superior Court Judge

Titles Motion for Summary Judgment; Motion for Judgment on the Pleadings; Motion for Interpleader Relief; Motion for Judgment on the Pleadings; Motion for Summary Judgment (Motions 9; 10; 11; 12; 13)

Filers: Bernard D. Lambek; Michael S. Munson and Alexander M. Dean; Evan James

O'Brien; Jenny H. Wang; Chris S. Dodig

Filed Dates: June 6, 2024; July 8, 2024; July 12, 2024; July 15, 2024; September 16, 2024

This case involves an ex-wife (diMonda) suing her deceased husband's wife (Barrows) and two life insurance companies, for which she is seeking declaratory relief that she is entitled to the payouts of his life insurance policies. diMonda and her late husband had a Divorce Order and Stipulation Agreement that husband would maintain his current SGLI life insurance policy or a policy with the same minimum death benefit of $400,000 with diMonda as beneficiary for fifteen years or when his spousal maintenance was paid off, whichever is later. Husband let his SGLI policy expire and obtained a USAA policy and Lincoln policy that he held until his death. Additionally, Vermont 504, a corporation that Husband assigned his USAA policy to as collateral for a loan, has intervened in this suit.

There are several motions pending before this Court. diMonda has moved for Summary Judgment on her request for declaratory relief that she is entitled to one or both of Husband's policies. Vermont 504 has moved for Summary Judgment claiming that it is entitled to the USAA policy payout because of the loan agreement. Lincoln and Barrows moved for Judgment on the Pleadings, contending that diMonda has no right to recover from the policies.

The rulings on the motions, for the reasons herein, are:

1. Plaintiff's Motion for Summary Judgment (#13) is denied.

2. Defendant Barrows' Motion for Judgment on the Pleadings (#10) is granted.

3. Defendant USAA's Motion for Interpleader Relief (#11) is granted.

4. Defendant Lincoln's Motion for Judgment on the Pleadings (#12) is granted.

5. Defendant Vermont 504's Motion for Summary Judgment (#9) is granted.

Facts

The following facts are undisputed. Plaintiff diMonda is the ex-wife of deceased Husband, who was married to Defendant Barrows at the time of his death on December 8, 2023. At the time of their divorce in 2011, Husband had an SGLI life insurance policy in the face amount of $400,000 with diMonda as benficiary. As part of their divorce, diMonda and Husband stipulated, and the Family Court ordered, that Husband keep that policy or a similar policy in effect for 15 years or once spousal maintenance was paid off, whichever is later. The Family Court Order provides the following in pertinent part:

[Husband] shall maintain in place his present life insurance policy with SGLI with a payable on death benefit of $400,000, or a policy which has the same minimum death benefit, at his option. [Husband] shall name [diMonda] as primary, 100% beneficiary on this life insurance policy for at least the next fifteen (15) years or until such time as [Husband] has paid his spousal maintenance obligation in full, whichever is later.

The Family Court also ordered that Husband pay a spousal maintenance obligation of $4,000 per month until September 30, 2018, and $2,500 per month beginning October 2018 until September 30, 2025. Husband married Barrows in 2013.

Husband let his SGLI policy lapse and obtained the USAA policy with a face value of $400,000 and then the Lincoln policy with a face value of $250,000. Husband also assigned his USAA policy as collateral for a business loan to Vermont 504 in June 2020. In addition to the USAA policy, Husband used five other interests in collateral to secure the Vermont 504 loan.

Barrows is the named beneficiary on both policies. Husband died on December 8, 2023. USAA has not yet paid out the insurance payout. Lincoln paid Barrows the entire death benefit on its policy.

Discussion

1. diMonda Motion for Summary Judgment for Declaratory Relief

In diMonda's Second Amended Complaint, diMonda asserts that upon the SGLI policy's expiring, Husband obtained a policy with Lincoln and then another with USAA. Pl.'s Second Am. Compl. at 3 (filed Mar. 26, 2024). diMonda seeks declaratory judgement that she is the rightful beneficiary of one or both of these policies, be paid $400,000 from the polices, and be awarded other costs. Id. at 4-5.

diMonda then moved for Summary Judgment pursuant to V.R.C.P. 56 on her claim for declaratory relief. Pl.'s Mot. for Summ. J. at 1 (filed Sep. 16, 2024). In her motion, diMonda avers that Husband violated the Order and Stipulation to keep a life insurance policy naming her as beneficiary, the Family Court Order is valid, the Stipulation is enforceable, her claim to the policies is superior to Barrows and Vermont 504, and that she should get paid $400,000 from the policies and not just the amount that is her spousal maintenance not yet received. Pl.'s Mem. in Supp. of Mot. for Summ. J. at 4-14 (filed Sep. 16, 2024).

Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law, after giving all reasonable doubts and inferences to the nonmoving party. Sabia v. Neville, 165 Vt. 515, 523 (1996).

A. diMonda has no equitable claim to the policies based on the Family Court Order or the Stipulation Agreement.

diMonda insists that she is entitled to the life insurance policies at issue based on principles of equity. That said, diMonda fails to identify any Vermont caselaw enforcing a family court order based on principles of equity under similar circumstances. Rather, diMonda cites to precedent of the Court of Appeals of New York and the United States Court of Appeals for the Seventh Circuit. See Simonds v. Simonds, 380 N.E.2d 189, 195 (N.Y. 1978); Travelers Ins. Co. v. Daniels, 667 F.2d 572, 576 (7^th Cir. 1981). However, this Court is not persuaded by these cases because the facts here are readily distinguishable from those cases. As will be discussed, this case involves an invalid Family Court Order provision and a Stipulation with no indication that it was meant to be enforced outside of the Family Court Order. The above cases cited by diMonda involved either a valid separation agreement or a valid divorce decree. Because those factors are not present here, diMonda has no equitable claim to the policies in dispute.

B. The Family Court Order is unenforceable because Vermont prohibits Family Courts from ordering spouses to maintain or buy life insurance to secure spousal maintenance directly or indirectly.

The first issue before the court is whether the Family Court could order a spouse to maintain or purchase a life insurance policy to secure spousal support under Vermont law. The Supreme Court of Vermont has held that family courts do not have authority to order maintenance to continue beyond the life of the obligor spouse. Narwid v. Narwid, 160 Vt. 636, 638 (1993) (citing Justis v. Rist, 159 Vt. 204, 244 (1992)). There, the Court found that the Family Court did not have the authority to order a divorcing spouse to maintain a life insurance policy because the plaintiff would realize benefits from the policy only upon the death of the defendant, and the benefits would function as a form of continued maintenance that the plaintiff would no longer be entitled to. Id. As a result, the Court struck that portion of the Family Court order. Id. Additionally, the Court has held that while Family Courts may order an insured spouse to maintain an existing policy for the benefit of the other spouse, they cannot do so for the benefit of the other spouse to assure continued maintenance payments following the death of the obligor spouse. Theise v. Theise, 164 Vt. 577, 581 (1996). The Court noted that the Family Court cannot use life insurance to secure the maintenance award either directly or indirectly. Id. at 580. Again, the remedy was to strike that portion of the Family Court order. Id. at 581. Thus, Family Courts may order a spouse to maintain a policy for the benefit of the other spouse, but this cannot be done to secure maintenance directly or indirectly. The proper interpretation of a previous court order is a matter of law for the trial court to determine. See Youngbluth v. Youngbluth, 2010 VT 40, ¶ 8, 188 Vt. 53.

diMonda argues that this order is valid because the requirement for Husband to maintain his existing policy is not being used to secure maintenance, but rather is an asset of the divorce that is subject to equitable division. Pl.'s Mem. in Supp. of Mot. for Summ. J. at 5-6. In response, Lincoln argues that this part of the Family Court Order is invalid because it requires Husband to maintain his policy to secure his spousal maintenance obligation to diMonda. Lincoln's Reply in Supp. of Mot. for J. on the Pleadings at 5-7 (filed Aug. 28, 2024).

Based on a plain reading of the Family Court Order, the Family Court invalidly ordered Husband to maintain his policy, or another policy with the same benefit, that has diMonda as the beneficiary until his spousal support obligation is paid off. If fifteen years passed, and Husband had not paid off his support, he would have to maintain the policy until the support was paid in full. This indicates an intention to use this policy to directly secure maintenance if the maintenance was not yet paid to diMonda in full. The timing of when Husband no longer has to maintain the policy is tied to the date when his spousal maintenance is paid off in full. This is at...