Opinion
NO. 2012 CA 1134
08-14-2013
WESLEY ROBERTSON III AND REBECCA ROBERTSON SEYMOUR v. AXA EQUITABLE LIFE AND ANNUITY COMPANY AFFINION BENEFITS GROUP LLC, ALBERTSON ROBERTSON AND DOROTHY SCOTT
MILES G. TRAPOLIN NEW ORLEANS, LA ATTORNEY FOR PLAINTIFFS-APPELLEES WESLEY ROBERTSON III AND REBECCA ROBERTSON SEYMOUR DOUGLAS T. CURET HAMMOND, LA ATTORNEY FOR DEFENDANTS-APPELLANTS ALBERT N. ROBERTSON SR. AND DOROTHY SCOTT
NOT DESIGNATED FOR PUBLICATION
Appealed from the
21st Judicial District Court
in and for the Parish of Tangipahoa, Louisiana
Trial Court No. 2010-0001166
Honorable Zorraine M. Waguespack, Judge
MILES G. TRAPOLIN
NEW ORLEANS, LA
ATTORNEY FOR
PLAINTIFFS-APPELLEES
WESLEY ROBERTSON III AND
REBECCA ROBERTSON SEYMOUR
DOUGLAS T. CURET
HAMMOND, LA
ATTORNEY FOR
DEFENDANTS-APPELLANTS
ALBERT N. ROBERTSON SR.
AND DOROTHY SCOTT
BEFORE: KUHN, PETTIGREW, AND McDONALD, JJ.
PETTIGREW , J.
This is an appeal by the defendants, Albert Robertson, Sr. and Dorothy Scott (cousins of the decedent, Wesley Robertson, Jr.), from a summary judgment granted in favor of the plaintiffs, Wesley Robertson, III and Rebecca Robertson Seymour, the son and daughter of the decedent (hereinafter referred to as plaintiffs or heirs), finding that the change in beneficiary forms executed by the decedent ten days prior to his death were a "viatical contract" that was null for want of form and statutory requisites, and declaring the plaintiffs be deemed the proper beneficiaries of the proceeds from their father's life insurance policies. On appeal, defendants contend the trial court erred in finding the transactions that occurred to be a viatical sale, rather than an onerous contract which included a change in beneficiary on the decedent's life insurance policies, the terms of which they contend was negotiated with the decedent through oral communications. Further, they maintain the trial court erred in granting summary judgment and voiding otherwise lawful and valid transactions. The plaintiffs filed an answer to the appeal, seeking damages for frivolous appeal as well as attorneys fees. For the reasons that follow, we find genuine issues of material fact exist precluding summary judgment, and reverse.
We note that the original petition identifies this defendant as Albertson Robertson; however, the remainder of the record reveals his name is Albert Robertson, and that correct name will be used throughout this opinion.
BACKGROUND FACTS AND PROCEDURAL HISTORY
On March 18, 2010, the plaintiffs/heirs filed a Petition for Declaratory Judgment and for Sequestration, seeking to be named the proper beneficiaries of the life insurance proceeds from three separate life insurance policies held by their father, the decedent. They claimed that after their father's death on February 25, 2010, they were informed by the insurers/defendants that they had been removed as named beneficiaries on those policies as a result of change in beneficiary forms that had been executed by their father just ten days prior to his death, naming instead his cousins, the defendants. They alleged their father had suffered for many years from alcoholic encephalopathy (that according to the Merck Manual is characterized by profound disorientation, indifference, inattention, drowsiness, or stupor), and as of May 5, 2009, he had suffered from peripheral neuropathy of his legs, which prevented him from walking. They also asserted he needed assistance with all of his daily needs. Despite doctors' orders that he discontinue drinking and smoking, they asserted that the decedent drank approximately four gallons of whiskey per week and smoked two packs of cigarettes a day. They further asserted that since August 2009, medical records indicated instances during which their father was found not to be oriented to place, time, or person, including an August 2009 physical therapy evaluation that noted him to be suffering from dementia. Finally, they asserted the decedent lacked the mental competency to execute a change in beneficiary and/or that he was under undue influence when the forms were executed. (Medical records supporting the plaintiffs' allegations about the decedent's medical condition were attached to the petition as exhibits.)
The original petition for declaratory judgment and for sequestration also named as defendants the insurers who provided the decedent's life insurance policies -- AXA Equitable Life and Annuity Company and Affinion Benefits Group, LLC. When it was subsequently discovered that the proper insurer was Hartford Life and Accident Insurance Company, rather than Affinion, Hartford's unopposed motion of intervention was granted and it was substituted as the proper party defendant. Pursuant to the trial court's order of sequestration, AXA and Hartford subsequently deposited the life insurance proceeds at issue into the registry of the court and were both dismissed by Judgments of Partial Dismissal on July 26, 2010 and September 27, 2010, respectively. Thereafter, the suit proceeded with only Albert Robertson, Sr. and Dorothy Scott as defendants.
On January 30, 2012, the plaintiffs/heirs filed a motion for summary judgment, asserting there were no genuine issues of material facts that (1) the change in beneficiary forms were executed only ten days before the death of their father; (2) the defendants testified they paid $4,600.00 - the cash value of the three insurance policies - in exchange for the change in beneficiary, and they agreed to pay the future premiums on the policies; (3) paying the cash value of the policies was not a valid purchase for the death benefits, because $4,600.00 is a wholly inadequate price for the combined $232,352.53 in death benefits; and (4) the purported "sale" of the insurance benefits was not in writing, as required by law.
In support of their motion for summary judgment, the plaintiffs introduced into evidence the change of beneficiary form executed June 2, 2000, naming them as beneficiaries on all three of their father's life insurance policies; the statement of insurance coverage on those policies as well as the relevant policies; the change of beneficiary forms executed by the defendants, and signed by the decedent on February 15, 2010, naming the defendants as beneficiaries; answers to interrogatories wherein the defendants assert they "purchased" ownership of the life insurance policies pursuant to verbal agreements with the decedent, whereby they paid the decedent the cash value of the policies and promised to pay all future premiums on the policies; the defendants' answer to the petition, wherein they assert the decedent was of sound mind and mentally capable of changing beneficiaries on February 15, 2010; that he did so voluntarily, and where they additionally assert that the negotiated sale of the policies included an "arrangement (contractual obligation) whereby the defendants would financially assist [decedent] in the satisfaction of pending financial arrangements to third parties" (later identified by defendants to consist of mortgage payments); and a copy of a check from defendant Dorothy Scott, written to the decedent, dated February 17, 2010, in the amount of $577.00.
The defendants opposed the summary judgment motion, asserting there are genuine issues of material fact precluding the granting of such motion. Specifically, they assert that there are genuine issues regarding whether the "sale" of the policies to them was a "viatical sale" pursuant to La. R.S. 22:1791, which they deny; and even if so, they claim these transactions were exempt from that statutory provision. They also assert a genuine issue of material fact concerning whether the decedent had the requisite mental capacity to enter into negotiations with them, which they claim he did; and further, they assert that they paid the cash value of the policies, promised to pay future premiums, and provided financial assistance to the decedent "with respect to the pending financial obligations to third parties" that rendered the negotiations with him for the life insurance policy death benefits a valid onerous contract between the parties.
In a memorandum in opposition to the summary judgment, the defendants claim the decedent approached them about serious financial troubles he was experiencing on two mortgages on two separate properties. They claim they aided him in making arrangements for the sale of one of those properties to the sons of Albert Robertson, Sr. in an effort to generate the cash flow decedent needed. (They note that the sale of that property is the subject of another suit by the plaintiffs herein, seeking to rescind that sale.) They also claim they loaned the decedent $2,500.00 in November 2009; and in December 2009, they paid property taxes for the decedent in the amount of $409.49. Further, they claim that in February 2010, when the decedent's lawyer's arrangements to pay $11,740.00 to stop foreclosure proceedings on one of decedent's properties fell short, decedent consulted with the defendants about paying him the cash value in the life insurance policies at issue, totaling $4,600.00, to assist in stopping the foreclosure, and also promising to continue to pay future premiums so the policies would not lapse. They claimed the change in beneficiary forms were executed on February 15, 2010, in pursuit of the parties' agreement; that the decedent was mentally competent on that date; and that his death only ten days later was unexpected. The defendants attached a counter affidavit executed by them wherein they attest to the foregoing facts.
Following the hearing on the motion for summary judgment, the trial court granted the motion, without reasons. The defendants filed a motion for new trial, which was promptly denied after arguments. When asked for reasons, the trial court stated that the price paid for the life insurance policies was inadequate, that the agreement was reached with a "man that['s] at death's door," and that it was a viatical contract that by statute, is required to be in writing.
The defendants/cousins have appealed, assigning error to the following: (1) the trial court's failure to recognize the existence of genuine issues of material fact, and/or finding that the plaintiffs were entitled to judgment as a matter of law; (2) the trial court's denial of the motion for new trial, given that the previous ruling granting summary judgment was contrary to law and evidence; and (3) the trial court's finding that a sale had taken place rather than recognizing the nature of the transactions as changes in beneficiary designation.
APPLICABLE LAW/DISCUSSION
We note at the outset that the most Significant issue underlying the merits of this lawsuit is the mental competency of trie decedent at the time that the change in beneficiary forms were executed by. him. Whether the transactions were a viatical contract or simply a change in beneficiaries, both require that the decedent have the mental capacity at the time of execution. This is a factual issue that remains very much in dispute. Indeed, the trial court failed to make a determination concerning this fact; and on de novo review, we are also unable to reach such a determination. Therefore, on this basis alone, summary judgment is improper.
In Woodmen of the World Life Insurance Society v. LeBlanc, 417 So.2d 886 (La. App. 3 Or. 1982), the decedent, while in the hospital, and shortly prior to his death, changed the formerly designated beneficiaries on two life insurance policies from his wife and their two minor children, to the decedent's concubine, with whom he had been living for approximately one year prior to his death. The insurer instituted proceedings to determine which of the two claims to the policies' benefits was valid. The court of appeal commented on the nature of life insurance beneficiaries by noting "the law does not prevent a person from taking out a policy on his own life, paying the premiums, and naming as beneficiary any person he may choose, including the concubine." Id., at 887, n.2. Accordingly, the salient issue before the court was whether the decedent was mentally competent at the time he made the change in beneficiary designations, a factual determination properly made by the trier of fact
In this matter, the plaintiffs' petition' asserted that their father lacked the mental competency, based on allegations concerning his long term alcoholism and suffering for many years from alcoholic encephalopathy, and the resultant dementia therefrom. They also submitted medical records to support additional allegations that in the months preceding his death, the decedent was found by his treating physician and physical therapist to not be oriented to place or time, They also alleged that the decedent continued to drink four gallons of whiskey per week.
Notably, following these allegations, plaintiffs' petition, paragraph 15, states: "Mr. Robertson did have the mental capacity to change the beneficiaries on the policies," Given the contrary allegations both before and after that paragraph, and the continuing arguments by the plaintiffs that their father lacked the mental capacity, we have concluded that this was a typographical error, and was intended to read that he did not have the mental capacity. Although we note that the defendants, in answer to the petition, admitted the allegations of paragraph 15, we also note that no issue has been made by either party or at the trial below concerning the apparent anomaly in the plaintiffs' petition. Moreover, in a supplemental and amending petition, the plaintiffs additionally asserted that the decedent suffered brain damage as a result of his alcoholism and that at all pertinent times, he was incompetent to enter into an onerous contract or to change the names of beneficiaries on his life insurance policies.
Because the plaintiffs will bear the burden of proving the decedent's lack of mental capacity at trial, the burden remains with them at the summary judgment level. La. C.C.P. art. 966 C(2). The defendants, in answer to the plaintiffs' petition, denied that the decedent was mentally incompetent at the time of the change in beneficiaries, that the forms were lawfully signed by him, and that "he was of sound mind; and he was fully and mentally capable at that time to do th[o]se acts." They further asserted that he was not interdicted, was not suffering from any ailment or condition which prevented him from knowing or understanding his actions or the consequences thereof at the time of the change in beneficiaries. Finally, and only in the alternative, should the court find as a matter of fact that the decedent lacked the mental capacity, the defendants further asserted that the decedent had lucid intervals, including the time of the execution of the change in beneficiaries forms. In opposing the plaintiffs' motion for summary judgment, the defendants submitted a counter affidavit, among other things, attesting to the fact that the decedent was of sound mind and fully competent and capable at all pertinent times.
We also find genuine issues of fact remain concerning whether the changes in beneficiaries were an onerous contract, in which the defendants allegedly provided the decedent with financial assistance in exchange for the change in beneficiaries, and whether those transactions can be properly classified as a viatical contract, which is statutorily mandated to be in writing. We note that there was no documentary proof presented on summary judgment regarding the asserted financial assistance given in exchange for the life insurance policy death benefits, which would be a prerequisite to finding that the transactions were a viatical contract, and if so, whether it was valid as to form.
Louisiana's Insurance Code, La. R.S. 22:1791, provides definitions regarding viatical settlements, and subsection(12) provides:
"Viatical settlement contract" means a written agreement establishing the terms under which compensation or anything of value will be paid, which compensation or value is less than the expected death benefit of the insurance policy or certificate, in return for the viator's assignment, transfer, sale, devise, or bequest of the death benefit or ownership of any portion of the insurance policy or certificate of insurance. A viatical settlement contract also includes a contract for a loan or other financing transaction with a viator secured primarily by an individual or group life insurance policy, other than a loan by a life insurance company pursuant to the terms of the life insurance contract, or a loan secured by the cash value of a policy. A viatical settlement contract includes an agreement with a viator to transfer ownership or change the beneficiary designation at a later date regardless of the date that compensation is paid to the viator, LA-R.S. 22:1791(12)(emphasis added.)We also note that La. R.S. 22:1798 providing the general rules for viatical settlements contracts, in subsection A(l) requires the provider to first obtain:
(a) If the viator is the insured, a written statement from a licensed attending physician that the viator is of sound mind and under no constraint or undue influence to enter into a viatical settlement contract.Whether this requirement was met is also an undeterminable fact, and we note this provision was not mentioned at the trial court level.
However, again, the undetermined fact regarding the decedent's mental capacity remains genuinely disputed, and must be determined prior to reaching the other genuine issues of fact regarding the proper legal nature of the transactions.
CONCLUSION
Accordingly, there can be no doubt that the factual determination of the decedent's mental capacity and competency on February 15, 2010, when he executed the change in beneficiary forms, was very much in dispute at the time of the trial court's ruling. The fact is material whether the transactions are determined to be a viatical contract or simply a change in beneficiary, because neither transaction would be valid if the decedent lacked the mental capacity on the date in question. We also find genuine issues as to the proper nature of the transactions, which are also a prerequisite to determining the validity of said transactions.
Therefore, we reverse the judgment of the trial court, granting summary judgment in plaintiffs' favor, declaring them to be the proper beneficiaries entitled to the death benefits on the policies at issue. We remand the matter for further proceedings consistent herewith. Because we reverse the trial court's judgment, finding it was erroneous, the plaintiffs' answer, seeking damages for frivolous appeal is also hereby denied. Costs of this appeal are assessed to the plaintiffs, Wesley Robertson, III and Rebecca Robertson Seymour.