Opinion
DOCKET NO. A-3114-11T1
02-04-2013
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Plaintiff, v. BRANDON CHARLES REITER, a minor, CYNTHIA REITER, solely as natural guardian of Brandon Charles Reiter, a minor, Defendant-Respondent, and LEANNE RAJKOWSKI, Defendant-Appellant.
Daniel J. Gallagher argued the cause for appellant (Miller, Gallagher & Grimley, attorneys; Mr. Gallagher, on the brief). Michael A. Gill argued the cause for respondent (Goldenberg, Mackler, Sayegh, Mintz, Pfeffer, Bonchi & Gill, attorneys; Mr. Gill, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Messano and Lihotz.
On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-9448-11.
Daniel J. Gallagher argued the cause for appellant (Miller, Gallagher & Grimley, attorneys; Mr. Gallagher, on the brief).
Michael A. Gill argued the cause for respondent (Goldenberg, Mackler, Sayegh, Mintz, Pfeffer, Bonchi & Gill, attorneys; Mr. Gill, on the brief). PER CURIAM
Following the death of Kevin Evans, competing claims were filed seeking the proceeds of a group term life insurance policy, issued by plaintiff, Prudential Insurance Company of America (Prudential), insuring Evans' life. The claims were filed by defendants Leanne Rajkowski, who Evans had named the beneficiary and who was the mother of Evans' two older sons; and Cynthia Reiter, who had previously secured a Family Part order requiring Evans to maintain a $150,000 life insurance policy to secure his child support obligation for their son, Brandon. Unable to determine the proper claimant to the death benefit, Prudential paid the policy proceeds into court. The trial judge, following review, granted Reiter's motion for summary judgment and ordered payment of $150,000 to Brandon along with counsel fees and costs. The balance of the death benefit was paid to Rajkowski. Rajkowski appeals from the order, claiming the entirety of the proceeds should be paid to her, or, alternatively, seeking to equitably allocate the death benefit among Evans' three children. Following our review of the arguments presented, in light of the record and applicable law, we affirm.
I.
When Rajkowski and Evans ended their relationship, the parents amicably agreed to provide for their children. In a November 13, 2006 Family Part consent order, Evans agreed to directly pay Rajkowski $150 per week for the support of their two boys. Although the order made no mention of a life insurance requirement, Rajkowski asserted she and Evans "had an oral agreement wherein [he] promised that if and when he passed . . . portions of the Atlantic City Fire Department test, he would . . . ensure that [their] children . . . would receive the benefits of any employment[-]related insurance or annuity policies[.]"
The agreed support amount was less than the amount provided for by the New Jersey Child Support Guidelines (Guidelines). R. 5:6A.
Later that month, Reiter gave birth to Evans' third son, Brandon. At that time, Evans and Reiter were not romantically involved. Reiter, through her attorney, negotiated the terms of a February 7, 2007 support order. The order required Evans to pay $150 per week in child support, "provide medical insurance . . . once . . . available to him through his employ[er,]" and "take out a $150,000 life insurance policy naming [Brandon] as sole irrevocable beneficiary." A subsequent consent order between Evans and Reiter, filed December 10, 2008, granted Reiter sole custody of Brandon and reaffirmed Evans' obligation to provide health and life insurance for Brandon. Evans was to provide proof of the life insurance policy within thirty days, and annually thereafter upon request.
By agreement, Evans and Reiter fixed child support below the $228 amount required by the Guidelines.
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Evans was hired by the Atlantic City Fire Department and became eligible for employment benefits through the Police and Firemen's Retirement System of New Jersey on March 26, 2007. He was insured under a group term life insurance policy issued by Prudential. Tragically, on September 6, 2011, Evans died in a single-vehicle collision in Galloway Township. At the time of his death, Evans had reconciled with Rajkowski, and he had listed her as his fiancée and designated primary beneficiary of the life insurance death benefit, which totaled $243,102.90 at the time of his death.
On September 12, 2011, Reiter submitted a claim to Prudential attaching a copy of the February 7, 2007 child support order. If Prudential would not release $150,000 to her on behalf of Brandon, she requested the death benefit not be released to Rajkowski "until the matter can be resolved by the [c]ourt."
Prudential had no interest in the policy proceeds and filed an interpleader complaint, requesting the trial court determine and direct payment of the death benefit as between defendants, and discharge it from any liability stemming from the release of the policy proceeds. Reiter was named as guardian ad litem for Brandon; Rajkowski, although asserting the interests of her sons Kevin, Jr. and Cody, claimed the proceeds as the policy beneficiary.
Reiter moved for summary judgment and an order directing Prudential to pay $150,000 to Brandon to satisfy the life insurance provision of the February 7, 2007 support order. Rajkowski opposed the motion. Prudential responded, requesting to deposit all funds into court and be released and discharged from further liability.
Judge James E. Isman considered argument then entered an oral opinion, which he followed by an order and accompanying written memorandum of decision. The judge ordered Prudential to deposit the life insurance proceeds with the court pursuant to Rule 4:57-1, and released it from further liability. The judge granted Reiter's motion for summary judgment. He observed there was "no support whatsoever for the concept that the agreement entered into between Ms. Rajkowski and[,] now[,] the deceased Mr. Evans has the same weight or same imprimatur as a court order." Judge Isman concluded:
[I]t is clear to this [c]ourt that Mr. Evans was required to take out a life insurance policy and name Brandon as his beneficiary; he took out a life insurance policy; but he did not name Brandon as the beneficiary. Therefore, the Prudential policy, being Evans' only life insurance policy, must be the policy from which Brandon is entitled to benefits.Additionally, the judge ordered payment from the policy proceeds of $6,627.02 in counsel fees payable to Reiter, which was "incurred as a direct result of Mr. Evans' failure to comply with the [o]rder." Prudential was directed to pay the remaining balance of the death benefit to Rajkowski. Judge Isman denied Rajkowski's request to stay payment pending appeal.
II.
A.
"[O]n appeal from an order granting summary judgment, we apply the same standard that governs the analysis by the motion judge." Atl. Mut. Ins. Co. v. Hillside Bottling Co., 387 N.J. Super. 224, 230 (App. Div.) (citing Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998)), certif. denied, 189 N.J. 104 (2006). Applying the standard set forth in Rule 4:46-2(c), we first give "the non-moving party the benefit of all reasonable inferences," and determine whether "the movant has demonstrated that there are no genuine issues of material fact." Id. at 230-31 (citing Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995)). That determination requires consideration of all "competent evidential materials presented," to determine whether the evidence is "sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill, supra, 142 N.J. at 540. We next "analyze whether the motion judge's application of the law was correct." Hillside, supra, 387 N.J. Super. 231. See also Boylan, supra, 307 N.J. Super. at 167 (stating appellate courts "employ the same standard that governs trial courts"). In carrying out our review, however, we owe no deference to the interpretation of the motion judge on matters of law. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
B.
1.
Rajkowski notes, "the general principle that the designated beneficiary of a life insurance policy has a vested right to the insurance proceeds payable in the event [s]he survives the insured subject to divestment only if the insured changes the beneficiary in the manner provided by the policy." Prudential Ins. Co. of Am. v. Prashker, 201 N.J. Super. 553, 557 (App. Div. 1985) (citation omitted). Further, she argues her binding oral agreement with Evans for the benefit of their two children, which pre-dates the support order relied upon by Reiter on behalf of Brandon, makes her claim to the death benefit superior. Citing Travelers Insurance Company v. Johnson, 579 F. Supp. 1457, 1463 (D.N.J. 1984), and Della Terza v. Estate of Della Terza, 276 N.J. Super. 46, 49 (App. Div. 1994), Rajkowski believes her equitable rights were established prior in time to claims by Reiter, making them superior. We disagree.
In Johnson, supra, also an interpleader action to determine the priority of claims for life insurance proceeds, the court held "the first wife (or children) has a superior equitable interest in the proceeds of a life insurance policy even when the husband has failed to act -- by not naming the first wife as a beneficiary and/or by not even acquiring the insurance required by the divorce decree." 57 9 F. Supp. at 1463 (alteration in original) (emphasis added). Analyzing the guiding case law in New Jersey, the district court explained:
There are . . . many cases concerning a related fact pattern: A husband and wife make a settlement agreement requiring the husband to make the wife (or children) irrevocable beneficiary of his existing life insurance policy. The settlement agreement is incorporated into the divorce decree. The husband, however, subsequently remarriesSee also Konczyk v. Konczyk, 367 N.J. Super. 551, 561 (Ch. Div. 2003) ("A person who is required to be named as the beneficiary of life insurance under a divorce decree has a vested equitable interest in such life insurance."), aff'd, 367 N.J. Super. 512 (App. Div. 2004); Paulino v. Ramirez, 311 N.J. Super. 420, 429 (Ch. Div. 1998) (observing "where a Judgment of Divorce ordered the obligor to name the child of the marriage as beneficiary on the life insurance provided to him through his employment, and the obligor died without complying, the Judgment served as an equitable assignment of at least a portion of the insurance proceeds to the child named as beneficiary therein") (citing Della Terza, supra, 276 N.J. Super. at 49-50).
and makes his new wife the beneficiary of the policy. The husband dies, and the first wife (or children) and the second wife claim the insurance proceeds. Courts considering these facts view the first wife (or children) as having a superior right, frequently referred to as a vested equitable interest, in the insurance policy.
[Id. at 1460 (citations omitted).]
We reached a similar conclusion in Della Terza, supra, 276 N.J. Super. at 49. In that matter, the plaintiff, a minor child from the decedent's first marriage, sought to enforce provisions of a judgment of divorce requiring her father, the decedent, to "maintain the child of the marriage as beneficiary on his life insurance policy until she becomes emancipated." Id. at 48 (internal quotation marks omitted). The decedent remarried and had a child with his second wife. Ibid. Upon his death, the only life insurance policy insuring the decedent's life was an employment-related group term policy similar to the one in this matter, which named his second wife as sole beneficiary. Ibid. We concluded "a provision . . . contained in the judgment of divorce . . . to maintain [a] child as beneficiary in a life insurance policy until emancipation creates an equitable assignment where such a designation has not, in fact, occurred." Id. at 49 (citations omitted).
These authorities reveal it is not the date of the parties' relationship that establishes the priority of interest to the proceeds of the policy, rather it is the existence of a court order establishing the life insurance obligation that gives it priority over a subsequent contractual arrangement made by a decedent with an insurance carrier. Id. at 48-49. A parent obligated to maintain life insurance for the support of a child cannot effectively terminate the obligation by disregarding or taking action inconsistent with the obligation. See Prashker, supra, 201 N.J. Super. at 557 (holding "an insured by reliance on standard insurance law is not able to frustrate a judgment of a court").
Although Rajkowski had secured a child support order for the benefit of her children before the order relied upon by Reiter, that order did not impose a life insurance requirement upon Evans. On the other hand, the February 7, 2007 child support order advanced by Reiter compelled Evans to acquire and maintain life insurance benefits totaling $150,000 to secure Brandon's future support. The order establishes Brandon's equitable interest in the policy as of the date of the order, which is superior to Rajkowski's contractual claim. We conclude Judge Isman correctly applied the legal principles applicable in this matter.
2.
Rajkowski next argues the court's order effectively and improperly implemented a constructive trust upon the insurance proceeds to benefit Brandon. In light of the above discussion, this argument lacks sufficient merit to warrant extensive discussion in a written opinion. R. 2:11-3(e)(1)(E). We add these brief comments.
Generally, the equitable remedy of a constructive trust is imposed "to prevent unjust enrichment or fraud." Carr v. Carr, 120 N.J. 336, 351 (1990) (citations omitted). Consequently, "[w]hen property has been acquired in such circumstances that the holder of legal title may not in good conscience retain the beneficial interest, equity converts [the owner] into a trustee." Kay v. Kay, 405 N.J. Super. 278, 284-85 (App. Div. 2009) (internal quotation marks and citations omitted).
Here, the judge ordered payment as required by an existing court order. A constructive trust was not imposed or contemplated as Prudential filed its interpleader action prior to making any distribution of the policy death benefit. Judge Isman enforced Brandon's equitable interest in the policy proceeds. See Johnson, supra, 579 F. Supp. at 1462 ("[I]f a judicial decree requires an insured to designate or change a beneficiary under a policy and he fails to do so . . . an equitable assignment arises in favor of the person designated by the judicial decree as beneficiary." (internal quotation marks and citations omitted)); Paulino, supra, 311 N.J. Super. at 430 (holding child excluded as beneficiary of policy in violation of a court order has "an equitable claim" against the decedent's estate, including the "proceeds of [the] insurance policy").
C.
Rajkowski further maintains Reiter did not press for enforcement of the provisions of the February 7, 2007 and December 10, 2008 orders such that laches bars relief. We reject this argument.
"Laches is an equitable doctrine that applies when a party sleeps on [his or] her rights to the harm or detriment of others." N.J. Div. of Youth & Family Servs. v. F.M., 211 N.J. 420, 445 (2012) (citing Fox v. Millman, 210 N.J. 401, 417 (2012)). The doctrine may be "'invoked to deny a party enforcement of a known right when the party engages in an inexcusable and unexplained delay in exercising that right to the prejudice of the other party.'" Fox, supra, 210 N.J. at 418 (quoting Knorr v. Smeal, 178 N.J. 169, 180-81 (2003)). "Laches may only be enforced when the delaying party had sufficient opportunity to assert the right in the proper forum and the prejudiced party acted in good faith believing that the right had been abandoned." Knorr, supra, 178 N.J. at 181 (citation omitted). Consequently, the defense is inapplicable where its application would lead to an inequitable result. See Linek v. Korbeil, 333 N.J. Super. 464, 475 (App. Div.) (holding the "tools of equity jurisprudence cannot validly be used to sponsor an inequitable result"), certif. denied, 165 N.J. 676 (2000).
The facts do not suggest an "inexcusable" or "unexplained delay" in enforcing Brandon's right to secure his continued child support through the use of life insurance. See Della Terza, supra, 276 N.J. Super. at 48 (enforcing ordered obligation to provide life insurance by awarding a portion of the death benefit, despite the failure to assure compliance with the initial order for a six-year period). Again, the February 7, 2007 order provides a "vested equitable interest" in $150,000 of the life insurance proceeds for Brandon's benefit. Konczyk, supra, 367 N.J. Super. at 561. Consequently, the inequitable result of depriving him of that interest by imposing laches because Evans disregarded his affirmative legal obligation would be inappropriate and unreasonable. See Della Terza, supra, 276 N.J. Super. at 50-51 (stating an order establishing a parent's obligation to maintain life insurance for a child is enforceable regardless of a subsequent re-designation of beneficiary after the birth of an additional child).
Contrary to Rajkowski's assertion, we do not view the result required by law as "punishing" her sons. The older children were not excluded from all receipt of support as they, through their mother, were paid the balance of the insurance proceeds. Further, Evans' parental duty to support his children directly reaches the estate's other assets. Paulino, supra, 311 N.J. Super. at 428-29 (citing DeCeglia v. Estate of Colletti, 265 N.J. Super. 128, 138-40 (App. Div. 1993)). While empathy might suggest the three children receive equal shares of the insurance proceeds, public policy and the law require we maintain the integrity of court orders by assuring their enforcement. Della Terza, supra, 276 N.J. Super. at 50-51.
III.
In conclusion, we have considered each of the legal and equitable arguments advanced by Rajkowski on behalf of her sons. Following our review of the applicable law, we conclude Judge Isman correctly interpreted and applied the case law to the undisputed facts presented in the motion for summary judgment. Accordingly, we affirm. Brill, supra, 142 N.J. at 540.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION