Lincoln Life & Annuity Co. of N.Y. v. Wittmeyer

211 A.D.3d 1564

182 N.Y.S.3d 421

LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK, Plaintiff,

v.Cami WITTMEYER, Cathy Decker, George W. Burnett, Inc., Defendants-respondents,Maria R. Bauer, Lawrence J. Adymy, Jr., Defendants-appellants, et al., Defendants. (Appeal No. 1.)

829

CA 21-00521

Supreme Court, Appellate Division, Fourth Department, New York.

Entered: December 23, 2022

THE TARANTINO LAW FIRM, LLP, BUFFALO (ANN M. CAMPBELL OF COUNSEL), FOR DEFENDANTS-APPELLANTS.

DUKE, HOLZMAN, PHOTIADIS & GRESENS LLP, BUFFALO (ELIZABETH A. KRAENGEL OF COUNSEL), FOR DEFENDANTS-RESPONDENTS.

BRADLEY ARANT BOULT CUMMINGS, LLP, CHARLOTTE, NORTH CAROLINA (C. BAILEY KING, JR., OF THE NORTH CAROLINA BAR, ADMITTED PRO HAC VICE, OF COUNSEL), AND GOLDBERG SEGALLA LLP, BUFFALO, FOR PLAINTIFF.

PRESENT: WHALEN, P.J., SMITH, LINDLEY, NEMOYER, AND WINSLOW, JJ.

MEMORANDUM AND ORDER

It is hereby ORDERED that the order and judgment so appealed from is unanimously modified on the law by denying the motion of defendants Cami Wittmeyer, Cathy Decker, and George W. Burnett, Inc. insofar as it sought summary judgment determining that the 2019 change in beneficiaries was void as a matter of law and insofar as it sought summary judgment dismissing the cross claim of defendants Maria R. Bauer and Lawrence J. Adymy, Jr. for unjust enrichment against Wittmeyer and Decker and reinstating that cross claim, and as modified the order and judgment is affirmed without costs.

Memorandum: Interpleader plaintiff, Lincoln Life & Annuity Company of New York (Lincoln Life), issued a life insurance policy to decedent naming his daughters, defendants Cami Wittmeyer and Cathy Decker (collectively, daughters), and his wife, defendant Maria R. Bauer (wife), as beneficiaries (first designation). The wife was to receive 22% of the policy benefits, and the daughters were each to receive 39% of the benefits. The premiums for the policy had been paid by defendant George W. Burnett, Inc. (GWB), a company formerly owned by decedent that was, at all relevant times, owned by decedent's son. In June 2019, the wife learned that the policy had lapsed or was about to lapse due to nonpayment of the premiums and that certain amounts must be paid in order to keep the policy active (encouraged amount). GWB could no longer afford to pay the premiums, and the daughters were unwilling to contribute toward the encouraged amount or any policy premiums going forward. Thus, the wife and her son, defendant Lawrence J. Adymy, Jr. (son), paid the encouraged amount and took over paying the premiums. The wife, as decedent's power of attorney, thereafter submitted a change of beneficiary form to Lincoln Life removing the daughters as beneficiaries of the policy and designating herself and her son as the primary beneficiaries, splitting the policy benefits equally (second designation). According to the wife, in changing the beneficiaries, she followed the procedure described to her by defendant Lee V. Stadler, an agent of an affiliate of Lincoln Life, defendant Lincoln Financial Advisors Corporation (Lincoln Financial). Decedent died in August 2019, after all amounts owed on the policy had been paid and the beneficiaries had been changed. The wife and son, and the daughters, each submitted a claim for the policy benefits.

Lincoln Life commenced this interpleader action to determine the competing claims of the wife and son (collectively, Bauer defendants) and the daughters to a death benefit payable pursuant to the policy. The daughters answered and asserted a cross claim against the Bauer defendants, alleging that the wife lacked the authority to change the beneficiaries under the policy because the power of attorney executed by decedent in 2013 that she submitted to Lincoln Life did not have a statutory gift rider as required under General Obligations Law § 5-1514. The daughters therefore sought a judgment determining that the second designation was void and ordering payment of policy benefits in accordance with the first designation. In their amended answer, the Bauer defendants asserted counterclaims against Lincoln Life for specific performance, breach of contract, negligence, and equitable estoppel. The Bauer defendants also asserted a cross claim for negligence against, among others, Stadler; cross claims against the daughters for unjust enrichment and interference with contractual relations; and a cross claim against GWB for breach of implied contract. The daughters and GWB then moved for, inter alia, summary judgment determining that the second designation was void and dismissing the Bauer defendants’ cross claims against them. The Bauer defendants cross-moved for summary judgment determining that they were entitled to the death benefit under the policy in accordance with the second designation and dismissing the cross claim of the daughters against them.

Supreme Court denied the motion, granted the cross motion, and ordered that Lincoln Life tender the death benefit to the Bauer defendants in accordance with the second designation. The daughters and GWB moved for, inter alia, leave to reargue their motion and their opposition to the cross motion. Lincoln Life, Lincoln Financial, and Stadler (collectively, Lincoln defendants) moved for summary judgment dismissing the Bauer defendants’ counterclaims and cross claims against the Lincoln defendants.

In appeal No. 1, the Bauer defendants appeal from an order and judgment that, among other things, granted leave to reargue and, upon reargument, granted the motion of the daughters and GWB for summary judgment determining that the second designation was void and dismissing the cross claims against them, and denied the Bauer defendants’ cross motion.

In appeal No. 2, the Bauer defendants appeal from an order granting in part the motion of the Lincoln defendants and dismissing the Bauer defendants’ counterclaims against Lincoln Life.

In appeal No. 1, we agree with the Bauer defendants that the court erred in granting that part of the motion of the daughters and GWB for summary judgment determining that the second designation is void as a matter of law, and we therefore modify the order and judgment accordingly. Initially, we reject the Bauer defendants’ contention that a 2009 power of attorney is the controlling document inasmuch as the execution of the 2013 power of attorney modified the 2009 power of attorney in a manner that directly affected the wife's ability to engage in the contested action (see generally Lopez v. Fenn , 90 A.D.3d 569, 573, 937 N.Y.S.2d 1 [1st Dept. 2011], lv dismissed 19 N.Y.3d 1022, 951 N.Y.S.2d 711, 976 N.E.2d 239 [2012] ; Zaubler v. Picone , 100 A.D.2d 620, 621, 473 N.Y.S.2d 580 [2d Dept. 1984] ). However, although the 2013 power of attorney executed by decedent appointing the wife as his attorney-in-fact did not grant the wife the authority to change the beneficiaries of decedent's life insurance policy inasmuch as it lacked a statutory gifts rider (see General Obligations Law former § 5-1514 [1], [3], [7] ; § 5-1502F [former (3)]), "exact compliance with the contractual procedure [in the policy concerning a change in beneficiaries] will be deemed waived where the insurer, faced with conflicting colorable claims to the same policy proceeds, pays the proceeds into court in an interpleader action so that the opposing claimants may litigate the matter between themselves" ( Lincoln Life & Annuity Co. of N.Y. v. Caswell , 31 A.D.3d 1, 5-6, 813 N.Y.S.2d 385 [1st Dept. 2006] ). In such cases, "[t]he paramount factor in resolving the controversy is the intent of the insured. Mere intent, however, on the part of the insured is not enough; there must be some affirmative act or acts [on the part of the insured] to accomplish the change" ( McCarthy v. Aetna Life Ins. Co. , 92 N.Y.2d 436, 440, 681 N.Y.S.2d 790, 704 N.E.2d 557 [1998] [internal quotation marks omitted]; see Cook v. Aetna Life Ins. Co. , 166 A.D.2d 895, 896, 560 N.Y.S.2d 556 [4th Dept. 1990] ; Cable v. Prudential Ins. Co. of Am. , 89 A.D.2d 636, 636, 453 N.Y.S.2d 86 [3d Dept. 1982] ). Assuming, arguendo, that the daughters and GWB met their initial burden on that part of the motion seeking a determination that the second designation is void, we conclude that the Bauer defendants raised a triable issue of fact. In opposition to the motion, the Bauer defendants submitted the wife's affidavit in which she averred that decedent was angry that the policy had been allowed to or was about to lapse and that the daughters were unwilling to contribute toward the encouraged amount or the future premiums. The wife further averred that decedent had told her that if she and the son made the payments necessary to keep the policy active, they should be designated as the beneficiaries of the death benefit. In addition to the evidence of decedent's intent to change the beneficiaries, the wife stated that decedent affirmatively acted to accomplish that intent by signing a memo granting Lincoln Life permission to release information to Stadler, who then advised the wife how to reinstate the Policy. The wife also stated that decedent sent her as his power of attorney in his place to sign the documents necessary to institute the second designation under the mistaken belief that the 2013 power of attorney granted her such authority. Additionally, inasmuch as the Bauer defendants’ own submissions raised issues of fact with respect to the validity of the second designation, we reject their further contention that the court erred in denying their cross motion for summary judgment with respect to that issue (see generally Johnson v. Pixley Dev. Corp. , 169 A.D.3d 1516, 1519-1520, 93 N.Y.S.3d 780 [4th Dept. 2019] ).

We agree with the Bauer defendants that the court erred in granting that part of the motion of the daughters and GWB seeking summary judgment dismissing the Bauer defendants’ cross claim against the daughters for unjust enrichment, and we therefore further modify the order and judgment...