Summary
finding genuine issue of fact as to insured's intent where he died with completed change-of-beneficiary forms in his briefcase, ready to be sent to the insurer
Summary of this case from Sun Life & Health Ins. Co. v. ColavitoOpinion
01-CV-1751 (NG)
July 25, 2002
ORDER
Plaintiff Metropolitan Life Insurance Company ("Metropolitan") brings this action, by interpleader complaint, under the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., against defendants Kathryn Costello, Andrew Costello, Lori Costello, Eugenia Farlow (collectively "the Costellos"), and Marie Gardner ("Gardner"). Upon depositing the sum of $138,480.66 into the registry of the court, plaintiff was dismissed with prejudice on September 27, 2001. The Costellos now move for summary judgment against Gardner pursuant to Fed.R.Civ.P. 56. Both sides agree that, if the motion is denied, more time will be required to complete discovery.
Eugenia Farlow is improperly named Eugina Farlow in the complaint.
FACTS
Although neither side submitted a Rule 56.1 statement as required by the local rules, the following facts appear undisputed, unless otherwise indicated.
Plaintiff issued its Group Insurance Policy Number 78007-G ("the Policy") to NYNEX Corp., now known as Verizon, in which certain employees, including Robert Costello, were insured. On April 3, 2000, Robert Costello died. At the time of his death, Robert Costello was insured under the Policy in the amount of $44,000 of basic life insurance and $176,000 of supplemental life insurance, and Verizon had on file a beneficiary designation dated May 3, 1995 listing as primary beneficiaries the following: Kathryn Costello, wife 40%; Andrew Costello, son 25%; Lori Costello, daughter 25%; Eugina Farlow, identified as landlady 10%. On June 1, 2000, Gardner submitted a Beneficiary's Life Insurance Claim Statement for the proceeds. In support of her claim, Gardner submitted a copy of a beneficiary designation dated March 20, 2000, naming herself and Kathryn Costello as primary beneficiaries to share the proceeds equally. Robert Costello's signature is in the incorrect place on the form, and there is no witness's signature on the form. This beneficiary designation form was not on file with Verizon. The only beneficiary designation form in Metropolitan's administrative file is the May 3, 1995 beneficiary designation, but Gardner claims that the local personnel office of Verizon has not cooperated with discovery on the issue whether there is any other beneficiary designation on file with the local personnel office. The policy permits an insured individual to change the beneficiary of the policy, but provides that "[n]o change in this Policy will be valid unless it is approved by an authorized officer of Metropolitan. Each such change must be evidenced by an amendment signed by both the Employer and by Metropolitan or by an endorsement signed by Metropolitan."
DISCUSSION
Summary Judgment Standards
Motions for summary judgment are granted if there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. Lipton v. Nature Co., 71 F.3d 464, 469 (2d Cir. 1995). The moving party must demonstrate the absence of any material factual issue genuinely in dispute. Id. The court must view the inferences to be drawn from the facts in the light most favorable to the party opposing the motion. Matsushita Flee. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). However, the non-moving party may not "rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment." Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 12 (2d Cir. 1986). The party must produce specific facts sufficient to establish that there is a genuine factual issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
The Costellos' Summary Judgment Motion
The Costellos argue that they are entitled to summary judgment, and that no further discovery is required, because this court may consider only evidence in the administrative file, and the only beneficiary designation in the administrative file prior to Robert Costello's death is the May 3, 1995 beneficiary designation. In support of their contention that this court may consider only evidence in the administrative file, the Costellos rely on Miller v. United Welfare Fund, 72 F.3d 1066, 1071 (2d Cir. 1995). However, Miller dealt with the scope of a district court's review of an insurance company's denial of health benefits to a beneficiary; there was not, as here, a dispute between two sets of individuals claiming to be beneficiaries. See id. "The means of effecting a change of beneficiary is important only to the insured and the insurer and mainly for the insurer's benefit. The insurer waives precise compliance with the terms of a change of owner or beneficiary provision once it institutes an interpleader action and submits the insurance policy proceeds to the court, thereby withdrawing itself from the action." Provident v. Vergara, 1995 WL 571874 *2 (S.D.N.Y. Sept. 27, 1995), aff'd, 104 F.3d 350 (2d Cir. 1996). In interpleader actions where two sets of individuals claim that they are entitled to the proceeds, "change of beneficiary may be shown by proof of intent to make the change coupled with positive action on the part of the insured evidencing an exercise of the right to change the beneficiary." United States v. Pahmer, 238 F.2d 431, 433 (2d Cir. 1956), cert. denied, 352 U.S. 1026 (1957).
In Pahmer, the Court of Appeals for the Second Circuit held that a mother could recover National Life Insurance proceeds from a policy on her veteran son, even though the only beneficiary of record was the son's ex-wife, because an improperly executed will found with the son when he committed suicide stated that the insurance proceeds were to go to his mother. See id. The Court of Appeals found that the document was proof of an intent to make a change, and positive action on the part of the son, despite the fact that he never sent any change of beneficiary to the Veteran's Administration. See id. The Court of Appeals held that this intent coupled with positive action was sufficient to overcome the fact that the son had not complied with the technicalities of the insurance policy and that the ex-wife was the only beneficiary of record. See id.
New York state courts that have addressed the issue have also held that, in interpleader actions between two individuals who claim to be the proper beneficiary, intent to change a beneficiary coupled with positive action is sufficient to overcome the failure to comply precisely with the terms of a change of beneficiary provision. See Cable v. Prudential Insurance Co., 89 A.D.2d 636, 636 (3rd Dept. 1982); Hunnell v. Hunnell, 45 A.D.2d 521, 523 (4th Dept. 1974); Aetna Life Insurance Co. v. Sterling, 15 A.D.2d 334, 335 (1st Dept.), aff'd, 11 N.Y.2d 959 (1962). Even the cases cited by the Costellos in favor of their claim that this court should not look beyond the administrative record note that the intent of the parties should govern. See Gould v. Travelers Ins. Co., 266 A.D. 545, 548 (Surr.Ct. Onondaga Co. 1963) (holding that "[w]e deem, however, that the intention of the parties should control."); Cantala v. Travelers Ins. Co., 107 N.Y.S.2d 24, 26 (Supp. Ct. N.Y. Co. 1951) (holding that "[t]he insured's clear intent, and unequivocal and complete act should not be thwarted after his death because the insurer did not comply with formalities intended for its protection, and which formalities it now waives."); Mutual Life Ins. Co. v. Gervasint, 178 Misc. 121 (Supp. Co. N.Y. Co.), aff'd, 265 A.D. 847 (1St Dept. 1942) (holding that in an interpleader action, the insurer waives strict compliance with the requirements for changing a beneficiary, and leaves it to the court to determine who is entitled to the funds).
Gardner argues that further discovery, in particular the deposition of Andrew Costello, who had access to Robert Costello's briefcase after his death, is needed to develop her theory that documents completed by Robert Costello prior to his death indicate his intent to change the beneficiary and constitute positive action on Robert Costello's part evidencing an exercise of his right to change the beneficiary. Gardner claims that, prior to his death, Robert Costello submitted a change of beneficiary form to the local Verizon personnel office, changing the beneficiaries to Gardner and Kathryn Costello, but the form was returned to him because there was a new post office box to which to mail the forms, and there were changes to the forms. Gardner claims that this returned form, along with the March 20, 2000 form, were in Robert Costello's briefcase at the time of his death.
Clearly, discovery is needed to determine whether the purported March 20, 2000 beneficiary designation indicates Robert Costello's intent to change the beneficiary and constitutes positive action on Robert Costello's part evidencing an exercise of his right to change the beneficiary. The Costellos' motion for summary judgment is denied without prejudice to moving for summary judgment at the close of discovery. The Costellos' unopposed motion to extend the time to respond to outstanding discovery requests, including to produce Andrew Costello for deposition to thirty (30) days from the date of this order is granted. The parties are directed to advise the undersigned and the Magistrate Judge in writing by September 15, 2002 as to the status of the case.
SO ORDERED.