Opinion
No. 601254/07.
2010-08-9
Robert VERMYLEN, as Executor of the Estate of Christopher Ursprung, and Diane Ursprung, Plaintiffs, v. GENWORTH LIFE INSURANCE COMPANY OF NEW YORK, American Mayflower Insurance Company, Donna Ursprung, Nikki Ursprung, Kristen Ursprung, Defendants.
Irwin Lewin Cohn & Lewin, for Plaintiff. Ann Marie Barbagallo, Alter & Alter, Windels Marx Lane & Mittendorf, for Defendants.
Irwin Lewin Cohn & Lewin, for Plaintiff. Ann Marie Barbagallo, Alter & Alter, Windels Marx Lane & Mittendorf, for Defendants.
SHIRLEY WERNER KORNREICH, J.
Motion sequence numbers 004 and 005 are hereby consolidated for disposition.
Both motions, and a cross-motion by defendant Genworth Life Insurance Company of New York (Genworth), seek a modification of the court's February 19, 2010 decision, order and judgment (Judgment), by which the court ruled, among other things, that plaintiff Diane Ursprung is to be paid 30% of the insurance proceeds at issue in this lawsuit, and that defendant Donna Ursprung is to be paid the remaining 70%, as custodian for her two daughters, Nikki Ursprung and Kristen Ursprung, each of whom is to get one-half of that amount.
In motion sequence 004, defendant Kristen Ursprung asks that the court modify the Judgment by allowing payment to Kristen individually since she is now over the age of majority. Defendant Nikki Ursprung, also now of majority age, joins in the request which is unopposed by any other party ( see 6/3/10 Tr., at 3–4). Since the court is granting reargument and renewal of the prior motion, and modifying the Judgment, granting no relief to Nikki and Kristen at this time, the motion is denied as moot.
In motion sequence number 005, defendant Donna Ursprung moves, pursuant to CPLR 2221(f), for renewal and reargument of the Judgment to the extent that it dismissed all but one of her counterclaims and granted plaintiffs summary judgment on the 2006 change of beneficiary. Donna, inter alia, argues that her ex-husband, Christopher Ursprung, lacked the mental capacity to execute the 2006 change of beneficiary, and that the 2005 change of beneficiary, which granted her $660,000—her unpaid maintenance as of that time period-should be upheld as consistent with Christopher and Donna's divorce agreement.
Genworth cross-moves for reargument and renewal of its prior motion for interpleader relief on the ground that the escrow agreement among the claimants to the life insurance policy at issue had not been honored and performed and that claimants did not release Genworth from their claims after Genworth paid the $1 million proceeds to the attorneys for Diane and Donna on October 8, 2009. This aspect of the cross-motion has been rendered moot by virtue of the fact that the Appellate Division, on March 30, 2010, directed Genworth to cancel the check dated October 7, 2009, which was never deposited by Mr. Cohn and Ms. Verkowitz in accordance with the terms of the escrow agreement, and issue a new check payable to Mr. Cohn's firm, who was directed to deposit the replacement check in an interest-bearing escrow account, pending decision on Donna's appeal of the Judgment. However, Genworth also seeks a further award of costs, including attorneys' fees, incurred due to the claimants' failure to honor the terms of the escrow agreement.
I. Background and Procedural History
As stated in the court's prior decision, this dispute concerns a $1 million life insurance policy (the Policy) written on the life of Christopher Ursprung, who died on October 29, 2006, and the validity of change of beneficiary forms that Christopher executed in 2004, 2005 and 2006. Under the terms of a Stipulation of Settlement, dated September 18, 2003 (Stipulation), entered into by Christopher and Donna as part of their divorce, Christopher was required to obtain a life insurance policy with a death benefit of $984,000, naming his daughters, Nikki and Kristen, as beneficiaries, and their mother, Donna, as trustee or custodian. Christopher was allowed to reduce the face amount of the Policy on the first and second anniversary of the Stipulation by $100,000, and by $96,000 on the third anniversary.
Christopher obtained the required Policy from Genworth, naming Donna the trustee for Nikki and Kristen and naming each daughter as a 50% beneficiary. The Policy allowed Christopher to change the designation of beneficiaries during his lifetime. In 2004, Christopher filed a change of beneficiary form in which he added his new wife, Diane, as a 10% beneficiary and reduced Nikki and Kristen's share to 45% each. In November 2005, he executed a second change of beneficiary form with these percentages: Nikki (14%), Donna (66%) and Diane (20%). On October 26, 2006, he signed a third change of beneficiary giving Diane 30% of the proceeds, and naming Donna as Nikki and Kristen's custodian entitled to the remaining 70%. An identical change of beneficiary was initially signed on October 21, 2006, but it contained the wrong policy number at the top. On October 26, 2006, Christopher was discharged from the hospital with incurable cancer. He died at home three days later.
This action was commenced on April 17, 2007 by the executor of Christopher's estate and Christopher's wife Diane, seeking a declaration that the October 26, 2006 beneficiary change is valid. In their answers to the complaint, Donna, Nikki and Kristen argued that Christopher did not have the right or ability to change or alter the beneficiaries named in the Policy or to change or alter the percentage each child was to receive, pursuant to the Stipulation. Donna and Nikki, but not Kristen, also asserted affirmative defenses challenging Christopher's mental capacity to sign the 2006 beneficiary change three days before he died, and they claimed that it was the result of fraud, duress and/or undue influence.
In October of 2007, plaintiffs moved for partial summary judgment declaring that Diane was at least entitled to be paid $100,000 pursuant to the 2004 change of beneficiary, because none of the defendants had challenged that document. In opposition to the motion, Donna, Nikki and Kristen argued that the Stipulation did not permit Christopher to change the beneficiaries under the Policy. The court ruled that the Stipulation permitted the change, and the Policy allowed Christopher to change beneficiaries during his lifetime. The court further ruled, after searching the record, that Christopher did not breach the terms of the Stipulation when he added Diane as a beneficiary to the Policy and reduced the benefit payable to his daughters, after the third anniversary of the Stipulation, by $300,000. The court dismissed all of the defendants' counterclaims that are based on invalidating the beneficiary changes, and declared that Diane was entitled to 30% of the proceeds, with the remaining 70% to be paid to Donna as custodian for Nikki and Kristen based on the 2006 change of beneficiary.
II. Discussion
In moving for reargument and renewal, Donna claims that the court erred in searching the record and granting summary judgment based on the 2006 change of beneficiary, because Christopher's competency to sign that document three days before his death, was raised in the answers to the complaint. Donna contends that she did not raise this issue in her opposition papers, because she relied on the statement in the supporting affirmation of plaintiffs' counsel, wherein he stated: “Plaintiffs acknowledge the claims raised by Defendant regarding the validity of the Change of Beneficiary–2006 present questions of fact, which must be resolved by the trier of fact.” Cohn 10/10/07 Affirm., ¶ 27. Thus, the medical evidence that Donna now attempts to place before this court was not submitted on the prior motion, because only the 2004 beneficiary change was at issue on the prior motion. Under these circumstances, a grant of reargument and renewal of the motion is required. CPLR 2221(d), (e).
“[A] person is presumed to be competent at the time of the performance of the challenged action and the burden of proving incompetence rests with the party asserting incapacity.” Matter of Obermeier, 150 A.D.2d 863, 864 (3d Dept 1989). Thus, to prevail, defendants must demonstrate that Christopher's mind was “so affected as to render him wholly and absolutely incompetent to comprehend and understand the nature of the transaction” (Aldrich v. Bailey, 132 N.Y. 85, 89 [1892];see also Lansco Corp. v. N.Y. Brauser Realty Corp., 63 AD3d 513, 514–15 [1st Dept 2009] ), or that the 2006 beneficiary change was the result of a condition, such as a psychosis, that created impulsive or irrational behavior beyond his control. Blatt v. Manhattan Med. Group, 131 A.D.2d 48, 52 (1st Dept 1987). Further, such incompetency/incapacity must have existed when he executed the 2006 change of beneficiary. See Feiden v. Feiden, 151 A.D.2d 889, 890 (3d Dept 1989); Matter of Obermeier, 150 A.D.2d 864.
In support of her defense that Christopher was not mentally competent to sign the 2006 change of beneficiary form, Donna submits an affidavit in which she states that she visited her ex-husband in the hospital “when he was in the terminal stages of his illness” and “during his last days prior to passing.” Ursprung 3/18/10 Aff ., ¶ 5. “In the days leading up to his discharge on October 26, 2006,” Donna claims that Christopher was “heavily medicated and sleeping,” and that during his brief waking moments, Christopher was unable to recognize herself or their children and that he “appeared confused and agitated, and was delirious.” Id., ¶¶ 5, 6. While plaintiffs' counsel objects to Donna's affidavit on the ground that she does not claim that she was present when Christopher signed either of the two 2006 beneficiary change forms or that she saw him on either of those days, her affidavit, which the court must accept as true, is sufficient to raise questions regarding Christopher's mental capacity during his final days in the hospital.
Donna also submits various unsworn medical records from Dr. John Marino, uncertified hospital records from North Shore University Hospital and excerpts from medical internet sites purporting to explain the meaning of terms in the hospital and medical records. Plaintiff objects to all of this evidence as inadmissible. Normally, unsworn statements from treating physicians and uncertified hospital records have no probative value in determining a motion for summary judgment. See Migliaccio v. Miruku, 56 AD3d 393, 394 (1st Dept 2008); Mensah v. Badu, 68 AD3d 945 (2d Dept 2009). However, plaintiff remedied this problem in her reply papers, and thus the court will consider only those medical reports and hospital records attached to the reply affirmation of Charlene Verkowitz.
As for the information offered from Internet websites, although plaintiffs object to this evidence as not coming from the sworn testimony of a medical expert, courts often rely on medical texts to decipher the meaning of medical terms ( see Eddine v. Federated Dept. Stores, Inc., 72 AD3d 487, 488 n 1 [1st Dept 2010]; Felty v. Felty, 66 AD3d 64, 69 n 1 [2d Dept 2009] ), and hearsay evidence may be considered to defeat a motion for summary judgment as long as it is not the only evidence submitted or the sole factual basis for denying summary judgment. See Rivera v. GT Acquisition 1 Corp., 72 AD3d 525 (1st Dept 2010); Guzman v. L.M.P. Realty Corp., 262 A.D.2d 99, 100 (1st Dept 1999). Notably, plaintiffs do not challenge the reliability of these internet sites, nor contend that Donna has misrepresented the meaning of these medical terms.
The “Medical Oncology Admission Note” dated October 19, 2006 that Donna refers to in her affidavit, at paragraph 14, is not part of the certified records submitted on reply and thus has not been considered by the court.
The hospital records contain a “Neurology Admission Note,” dated October 20, 2006, from Christopher's hospitalization at North Shore University Hospital. In this document, Dr. Alexis Demopoulis, the attending neurologist, reports that Christopher was admitted to the hospital on October 19th for metastatic cancer and was suffering from “progressive confusion.” Verkowitz 4/26/10 Reply Affirm., Exh. A at 354–55. The doctor's assessment of Christopher's mental status that day was:
Awake and alert; inattentive, oriented to place and month, not year, Fluent speech with normal naming, repetition and comprehension; appears confused with agitated delirium.
Id. There are also “Neurology In–Patient Progress Notes” dated October 24th, 25th, and 26th. On October 24, 2006, Dr. Demopoulis assessed Christopher's mental status as:
Awake and alert; inattentive, oriented to place and month, not year, Wernicke's aphasia, appears confused with agitated delirium.
Id. at 7. According to www.psychology.about.com, “Wernicke's Aphasia” is “a language disorder that impacts language comprehension.” Ursprung 3/18/10 Aff., Exh. I. The next day, on October 25th, Dr. Demopoulis reported that Christopher was:
Awake and alert; inattentive, oriented to place and month, not year, Fluent speech with normal naming, repetition and comprehension, appears confused with agitated delirium.
Verkowitz 4/26/10 Reply Affirm., Exh. A at 7. On October 26, 2006, the day Christopher signed the 2006 change of beneficiary, Dr. Demopoulis reported that his mental status had deteriorated. The doctor reports that Christopher was:
Lethargic & inattentive, disoriented, appears confused and with agitated delirium; Fluent speech with normal naming, repetition and comprehension.
Id., at 3.
Although these hospital records are both positive and negative, they clearly serve to raise a triable issue of fact as to Christopher's ability to understand and comprehend that he was making a major change regarding who would be the beneficiary of a valuable life insurance policy. The hospital records also indicate that Christopher was being given strong narcotics and opiates during this time, to relieve his pain. And while plaintiffs object to the fact that Donna does not provide any sworn testimony from the physicians who wrote these reports, her counsel avers that she attempted, without success, to get affidavits, but that the physicians would only agree to testify in this case if subpoenaed for deposition or trial.
The court also has carefully examined the change of beneficiary forms. The 2004 and 2005 forms appear to be handwritten by Christopher. The 2006 form is typewritten, suggesting it was prepared by someone other than Christopher, and the signature of the owner is very different from the signature on the prior forms.
The court erred in searching the record and granting summary judgment based on the 2006 beneficiary change. Summary judgment cannot be granted where there is any doubt as to the existence of a triable issue of fact. Rotuba Extruders v. Ceppos, 46 N.Y.2d 223, 231 (1978); Grossman v. Amalgamated Hous. Corp., 298 A.D.2d 224, 226 (1st Dept 2002). In addition, “evidence should be analyzed in the light most favorable to the party opposing the motion.” Martin v. Briggs, 235 A.D.2d 192, 196 (1st Dept 1997). Plaintiffs' counsel acknowledged in the moving papers that questions of fact exist regarding the validity of the 2006 change of beneficiary “which must be resolved by the trier of fact.” The evidence Donna now offers that Christopher was suffering from “progressive confusion” and “agitated delirium” in the last couple of days of his hospitalization, when he executed the two 2006 change of beneficiary forms, clearly bolsters that view. Consequently, I find that Donna has raised a triable issue of fact on her affirmative defense that Christopher lacked the mental capacity to execute the 2006 change of beneficiary.
In opposition to the plaintiffs' motion for partial summary judgment based on the 2004 change of beneficiary form, Donna contends that the signature of the witness on the form dated November 15, 2004 is not, in fact, that of Ethel Ursprung, Christopher's mother. She makes this claim based on “having known [Christopher and his family for over forty years, and [being] fully acquainted with the handwriting of his mother, Ethel Ursprung.” Ursprung Aff., ¶ 44. Donna allegedly failed to raise this defense previously, because she only became aware of this in discovery.
It appears that Christopher executed three change of beneficiary forms in 2004. See Verkowitz Affirm., Exh. V. The first, dated September 20, 2004, was rejected by the insurance company on October 12, 2004, because it used dollar figures rather than percentages. The second, dated October 25, 2004, was also rejected by Genworth by letter dated November 4, 2004, because it did not contain certain language for naming Donna as a trustee for Nikki and Kristen. The third and final change of beneficiary form is dated November 15, 2004, and purportedly witnessed by Ethel Ursprung, who the parties agree is Christopher's mother, despite the form's instruction that “[e]ach signature must be witnessed by someone not related to the insured or owner.” Cohn 10/10/07 Affirm., Exh. D thereto. Notably, this is not the beneficiary form submitted by the plaintiffs on the prior motion for partial summary judgment. Rather, the form dated September 20, 2004 was submitted. Id.
As stated in McCarthy v. Aetna Life Ins. Co. (92 N.Y.2d 436, 440 [1998] ), the general rule is that “the method prescribed by the insurance contract must be followed in order to effect a change of beneficiary.” However, the requirement of strict compliance with the procedures specified by an insurance policy for designating or changing beneficiaries has been relaxed, and the test is now substantial compliance where the insurance company, faced with competing claimants, pays the money into court in an interpleader action. Lincoln Life and Annuity Co. of N.Y. v. Caswell, 31 AD3d 1, 6 (1st Dept 2006). As between the claimants, “[t]he paramount factor in resolving the controversy is the intent of the insured.” ‘ McCarthy v. Aetna Life Ins. Co., 92 N.Y.2d at 440, quoting Cable v. Prudential Ins. Co., 89 A.D.2d 636 (3d Dept 1982). Mere intent is not enough, there must also be “an act or acts [by the insured] designed for the purpose of making the change, though they may fall short of accomplishing it.” Aetna Life Ins. Co. v. Sterling, 15 A.D.2d 334, 335 (1st Dept), affd11 N.Y.2d 959 (1962). Thus, in Cable v. Prudential Ins. Co. of Am. (89 A.D.2d 636 [3d Dept 1982] ), a change was given effect where the insured failed only to send the policy to the insurer for endorsement, but otherwise followed the procedure set forth in the policy.
Here, by three separate writings executed over the course of two months, Christopher indicated his intent to give his new wife, Diane, 10% of the proceeds of the Policy upon the first anniversary of his divorce. Thus, even if the November 15, 2004 beneficiary change form was not properly witnessed, which is not a legal requirement as is the case for a last will and testament but only a requirement of the insurance contract, that would not serve to invalidate the 2004 beneficiary change. For these reasons, the court finds that Donna has failed to sufficiently raise a triable issue of fact as to the validity of the 2004 change of beneficiary, and that Diane Ursprung will be entitled, at the very least, to be paid 10% of the proceeds of the Policy. Partial summary judgment may be granted as to part of a single cause of action where there are no triable issues of fact. CPLR 3212(e)(1); 5012; Levey v. Saphier, 74 A.D.2d 918, 919 (2d Dept 1980).
Donna also challenges the court's ruling that the Stipulation is not ambiguous. Donna argues that there is an “inherent ambiguity” in the Stipulation, because the life insurance coverage was meant as and for spousal maintenance and not as an additional gift to the children. She cites to a letter dated July 31, 2003 from her divorce lawyer to Christopher's divorce lawyer as support. This letter states:
The purpose of the Life Insurance policy is to provide the Wife with the means to care for her children should Husband pass away prior to the children's emancipation. The policy is also established to provide Wife with support should Husband pass away prior to the termination of maintenance payments. Therefore, please have the Article reflect that Wife will be named as beneficiary on the life insurance policy.
Ursprung 3/18/10 Aff., Exh. K at 9. However, the Stipulation that the parties eventually signed in September 2003 did not require that Donna be added as a beneficiary. Rather, it clearly states in Article V that only Kristen and Nikki are beneficiaries and that Donna is merely to be listed as their trustee or custodian. Article V states, in pertinent part:
The Husband, ..., shall obtain and thereafter maintain until an Emancipation Event has occurred with respect to each Child and/or upon the termination of maintenance, ..., a policy of life insurance on his life with the Children named as beneficiaries and with the Wife named as Trustee or Custodian, ...
Id., Exh. D at 14. Thus, the court may not consider parol or extrinsic evidence which attempts to vary the terms of a written agreement that is clear on its face. W.W.W. Assoc. v. Giancontieri, 77 N.Y.2d 157, 162 (1990). And, as this court previously ruled, it is not the Stipulation that controls, but the Policy. If, after trial, a jury concludes that Christopher had the mental capacity to execute the 2006 change of beneficiary, then Donna is not a beneficiary.
Genworth's cross motion for an award of additional counsel fees from October 8, 2009 to June 3, 2010 is granted. By virtue of the inability of counsel for Donna and Diane to comply with the terms of an escrow agreement that they drafted, and deposit Genworth's check for the proceeds of the Policy, the releases provided to Genworth were still in escrow. Genworth's counsel properly sought relief from both this court and the Appellate Division when Mr. Cohn demanded, on February 18, 2010, that Genworth pay Diane $300,000 per the Judgment. The issue of the amount of counsel fees to be awarded Genworth is referred to a Special Referee to hear and determine. CPLR 4317(b). Accordingly, it is hereby
ORDERED that the motion by defendant Kristen Ursprung (seq. no. 004) to modify the Order and Judgment entered on February 19, 2010 by allowing payment of the insurance proceeds to Kristen individually, joined in by defendant Nikki Ursprung, is denied as moot; and it is further
ORDERED that the motion by defendant Donna Ursprung (seq. no. 005) for reargument
and renewal of the plaintiffs' prior motion for partial summary judgment is granted and the order is modified; and it is further
ORDERED that the court's Order and Judgment entered on February 19, 2010 is hereby vacated and substituted with the following Order and Interlocutory Judgment:
ORDERED that the motion by defendant Donna Ursprung to transfer this case to the Surrogate's Court is denied, except for her Eighth Counterclaim, which is severed and transferred to the Surrogate's Court; and it is further
ORDERED that the cross-motion by defendant Nikki Ursprung to dismiss the Executor as an improper party is denied; and it is further
ORDERED, ADJUDGED AND DECLARED that the motion for partial summary judgment by plaintiffs is granted only to the extent of declaring that plaintiff Diane Ursprung is entitled to be paid, at the very least, 10% of the proceeds of Genworth Policy M310,470, which is currently being held in an interest-bearing escrow account by the plaintiffs' counsel per the March 30, 2010 Order of the Appellate Division, First Department; but that all proceeds continue to be held by plaintiffs' counsel in such interest-bearing account until the adjudication of all remaining claims in this action and the final conclusion of all appeals, unless otherwise stipulated by the parties; and it is further
ORDERED that defendant Donna Ursprung's Sixth, Seventh and Ninth Counterclaims are dismissed; and it is further
ORDERED that plaintiffs' request for attorney's fees and costs is denied; and it is further
ORDERED that all remaining claims and counterclaims are hereby severed and continued; and it is further
ORDERED that counsel for defendant Donna Ursprung shall serve a copy of this Order and Interlocutory Judgment on the Clerk of the Appellate Division, First Department and present the original for entry and docketing with the County Clerk; and it is
ORDERED that the cross motion of defendant Genworth Life Insurance Company of New York is granted to the extent that Genworth shall be entitled to an additional award of reasonable costs, including attorneys' fees, for the period from October 8, 2009 to June 3, 2010 to be paid from the proceeds of Genworth Policy M310,470 at the final conclusion of all appeals, unless otherwise stipulated by the parties; and that the amount of costs and attorneys' fees to be awarded Genworth is referred to a Special Referee to hear and determine in accordance with CPLR 4317(b); and it is further
ORDERED that counsel for Genworth shall, within 30 days from the date of this order, serve a copy of this order with notice of entry, together with a completed Information Sheet, upon the Special Referee Clerk in the Motion Support Office (Room 119), who is directed to place this matter on the calendar of the Special Referee's Part (Part 50 R) for the earliest convenient date; and it is further
ORDERED that the parties appear for a status conference on August 19, 2010 at 11:00 A.M. in Part 54, 60 Centre St., Rm. 228.