Sun Life Assur. Co. of Canada v. Richardson

• Decision Date: 22 July 2002
• Docket Number: No. 01-30392.,01-30392.
• Citation: 299 F.3d 500
• Parties: SUN LIFE ASSURANCE COMPANY OF CANADA, Plaintiff, v. Sheila RICHARDSON, Defendant-Appellee, v. Diana James, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

299 F.3d 500

SUN LIFE ASSURANCE COMPANY OF CANADA, Plaintiff, v. Sheila RICHARDSON, Defendant-Appellee, v. Diana James, Defendant-Appellant.

No. 01-30392.

United States Court of Appeals, Fifth Circuit.

July 22, 2002.

Daniel Elmore Becnel, III (argued), LaPlace, LA, for Defendant-Appellee.

Al J. Mendoza (argued), Mendoza & Hardin, Harvey, LA, for Defendant-Appellant.

Charles J. Ferrara, Metairie, LA, pro se.

J. Hunter Bienvenu, Gretna, LA, pro se.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before DAVIS, DeMOSS and STEWART, Circuit Judges.

DeMOSS, Circuit Judge:

This case involves the application of Louisiana's doctrine of substantial compliance as to the change of beneficiary in a life insurance policy. The district court found that Melvin Richardson substantially complied with the terms of his life insurance policy to effect a change of beneficiary. For the reasons stated herein, we conclude that the district court erred in such finding.

I. BACKGROUND

On June 29, 1989, Melvin Richardson (Melvin), who worked for Highlines Construction Company (Highlines), executed a written form changing the beneficiary of his life insurance policy to his girlfriend, Diana James (Diana). Melvin and Diana stopped dating in 1993, but remained friends. On June 6, 1998, Melvin married Sheila Richardson (Sheila). Around that time, Melvin went to Linda Lee (Linda) who was responsible for managing employee benefits at Highlines. Melvin requested that "everything" be changed over to his new wife Sheila. Linda testified that she gave Melvin numerous forms to fill out. Melvin had limited reading and writing skills and, as a result, Sheila filled out the forms then gave them back to Melvin who signed them and then returned them to Linda.

Melvin was accidentally electrocuted on February 23, 2000, while working for Highlines. After Melvin's death, Sheila learned that she was the beneficiary of his workmen's compensation benefits and his 401(k) plan, but not his life insurance policy. Rather, Diana was still named as the beneficiary.

Sun Life Assurance Company of Canada (Sun Life), the company that issued Melvin's life insurance policy, filed in the district court an interpleader pursuant to Rule 22 of the Federal Rules of Civil Procedure to determine who was the legal beneficiary. Sun Life deposited the proceeds of the policy into the registry of the district court and named Sheila, Diana, and Melvin's sister, Shirley Ann Richardson (Shirley), as defendants. Diana filed an answer to the complaint, and Sheila answered and filed a third-party complaint naming Highlines as a third-party defendant. Highlines answered the third-party complaint and Shirley abandoned any claim to the insurance proceeds.

During a bench trial, the district court found four possible explanations for Sheila being named beneficiary for everything except Melvin's life insurance policy. First, Linda gave Melvin the life insurance change of beneficiary form, which Melvin chose not to return. Second, Linda gave Melvin the form, which he accidentally lost and did not return. Third, Melvin completed and returned the form, which Linda subsequently misplaced. Fourth, Linda never gave Melvin the change of beneficiary form when she gave him the paperwork concerning his other benefit plans.

The district court concluded that the fourth alternative was the most likely to have occurred — that Linda mistakenly failed to give Melvin the form. In support of this conclusion, the district court found that two witnesses corroborated Sheila's testimony that Linda had told her that Melvin wanted to change "everything" to Sheila's name, but that Linda had "overlooked" the life insurance policy because it was in a separate place. The court also found that the witnesses corroborated Sheila's testimony that Linda stated she had not finished or completed the paperwork. In addition, the court found that Linda was adamant that Melvin had requested that "everything" be changed to his wife. Ultimately, the court concluded that Linda did not make the change to the life insurance because Linda did not realize that the form was missing.

The district court noted that Louisiana requires strict compliance with the terms of an insurance contract to effect a change of beneficiary. See American Gen. Life Ins. Co. v. Fine, 944 F.2d 232, 234 & n. 5 (5th Cir.1991). The district court, nevertheless, applied the doctrine of substantial compliance. See Bland v. Good Citizens Mut. Ben. Ass'n, 64 So.2d 29, 33-34 (La.Ct.App. 1st Cir.1953). In doing so, the court held that Melvin had complied with the requirements of changing his life insurance policy's beneficiary to Sheila because he had intended to do so and he took affirmative steps to do so. As a result, the court ordered that judgment be entered in favor of Sheila, which entitled her to the insurance proceeds of $104,000. The court also dismissed Sheila's third-party claim against Highlines as moot.

On March 20, 2001, Diana filed a notice of appeal and Sheila filed a protective appeal preserving her claim against Highlines. On April 26, 2001, Highlines filed a notice of appeal. Thereafter, attorneys J. Hunter Bienvenue (Bienvenue) and Charles Ferrara (Ferrara) filed an original brief in intervention alleging that they are entitled to reimbursement of costs and expenses and attorney's fees in this...