Angell v. Angell, No. A09-349.

• Decision Date: 29 December 2009
• Docket Number: No. A09-349.
• Citation: 777 N.W.2d 32
• Parties: In re the Marriage of: Loretta Marie ANGELL, petitioner, Appellant, v. Gordon William ANGELL, Jr., Respondent.
• Court: Minnesota Court of Appeals

777 N.W.2d 32

In re the Marriage of: Loretta Marie ANGELL, petitioner, Appellant, v. Gordon William ANGELL, Jr., Respondent.

No. A09-349.

Court of Appeals of Minnesota.

December 29, 2009.

Arthur M. Albertson, Duluth, MN, for appellant.

Peter L. Radosevich, Esko, MN, for respondent.

Considered and decided by SCHELLHAS, Presiding Judge; MINGE, Judge; and ROSS, Judge.

OPINION

ROSS, Judge.

The former husband and wife in a marriage dissolution proceeding respectively challenge the district court's classification and division of death benefits paid after their son died during active military duty. The son had named only his mother as the beneficiary of his military life-insurance policy, which, by federal law, also made her his beneficiary in a federal death-gratuity program available to active-duty service members. The district court classified these funds as Loretta Angell's exclusive nonmarital property but awarded Gordon Angell a share to prevent an unfair hardship. Loretta Angell argues that this award violated federal anti-attachment statutes protecting military death benefits. Gordon Angell filed a notice of review challenging the district court's property classification. He argues that the district court should have classified the life-insurance and death-gratuity benefits as marital property because Loretta Angell did not acquire them as a gift, bequest, devise, or inheritance and because she did not overcome the presumption that property accumulated during marriage is marital property.

Because we conclude that the district court properly classified the life-insurance and death-gratuity benefits as Loretta Angell's nonmarital property, we affirm the court's classification. But we hold that federal law prohibits the district court from relying on state law to divide the benefits between the parties. We therefore affirm in part, reverse in part, and remand.

FACTS

Gordon and Loretta Angell's 27-year marriage ended in dissolution in 2008. A life-insurance beneficiary designation by one of their five children, Levi Angell, is the focus of this appeal.

Twenty-year-old Levi was killed in April 2004 during active military service with the Marine Corps in Iraq. Levi had designated his mother, Loretta Angell, as the sole beneficiary of two funding instruments: his military life-insurance policy and a related federal death-gratuity program. In April 2004, Loretta received $100,000 from the United States government in death-gratuity benefits payable to the designated survivor of her son, a member of an armed force who died during active duty. See 10 U.S.C. §§ 1475-80 (2000 & Supp. IV 2004). In May 2004, she received $250,352 from Levi's Servicemembers' Group Life Insurance policy. In August 2005, she received another $150,000 in death-gratuity benefits under a law that directed an additional payment to previously paid beneficiaries. See Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief, 2005, Pub. L. No. 109-13, § 1013(b), 119 Stat. 231, 247 (2005) (authorizing retroactive additional payment of death gratuity for deaths incurred in the theater of Operation Enduring Freedom or Operation Iraqi Freedom). These funds were never commingled with marital property. Instead, they were deposited into a separate bank account in Cleveland, Ohio, in Loretta Angell's name. Except for sums spent by Loretta Angell, at dissolution the funds remained in the Cleveland bank account.

The classification and distribution of those funds were the only issues in the dissolution proceeding. The district court originally held that the life-insurance benefits and the second payment of death-gratuity benefits, totaling $400,352, were Loretta Angell's nonmarital property, and that the first death-gratuity payment of $100,000 was a marital asset to be divided evenly. It also awarded Gordon Angell a cash settlement of $100,000 from Loretta Angell's nonmarital property, relying on Minnesota Statutes section 518.58, subdivision 2, which allows the district court to apportion up to one half of a spouse's nonmarital property to the other to prevent an unfair hardship. The district court therefore ordered Loretta Angell to pay Gordon Angell $150,000: $100,000 from her nonmarital property and $50,000 from marital property. The district court later amended its order to find that all of the life-insurance and death-gratuity benefits, totaling $500,352, were Loretta Angell's nonmarital property. But it still awarded Gordon Angell $150,000, all to come from Loretta Angell's nonmarital property under section 518.58.

On appeal, Loretta Angell argues that the district court erred by awarding Gordon Angell any cash from her nonmarital property or, alternatively, by increasing the amount from $100,000 to $150,000. Gordon Angell filed a notice of review challenging the district court's finding that the life-insurance and death-gratuity benefits were Loretta Angell's nonmarital property.

ISSUES

I. Did the district court err by classifying life-insurance and death-gratuity benefits as nonmarital property?

II. Do the Supremacy Clause and the federal anti-attachment provisions governing the distribution of Servicemembers' Group Life Insurance and death-gratuity benefits prohibit the district court from apportioning the benefits as divisible nonmarital property under Minnesota Statutes section 518.58, subdivision 2?

ANALYSIS

I

Gordon Angell challenges the district court's classification of the life-insurance and death-gratuity benefits as Loretta Angell's nonmarital property. Whether property is marital or nonmarital is a legal question, which we review de novo, but we defer to a district court's underlying fact findings unless they are clearly erroneous. Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn.1997). All property, real or personal, is presumed to be marital if "acquired by the parties, or either of them ... at any time during the existence of the marriage." Minn.Stat. § 518.003, subd. 3b (2008). This presumption may be overcome. Id. The operative statute does not expressly classify life-insurance or death-gratuity benefits as either marital or nonmarital, but it states that property acquired by gift, bequest, devise, or inheritance from a third party to one but not the other spouse is nonmarital property. Id.

In determining whether the funds are marital or nonmarital property, we see no material distinction between the death benefits paid from the military life-insurance policy and the death benefits paid as a gratuity by federal statute. The benefits under both instruments result from a servicemember's death, and both are designed to direct payment to the servicemember's designee. The federal government pays a portion of the servicemember's life-insurance premiums and fully funds the statutory death-gratuity benefit program; both are therefore partial compensation for active military service. See 38 U.S.C. § 1969(b) (2006) (requiring the federal government to pay part of the costs of Servicemembers' Group Life Insurance).

Gordon Angell argues that Loretta Angell offered no evidence proving that the benefits were nonmarital and that she therefore failed to overcome the presumption that the property is marital. A party seeking to overcome the presumption must demonstrate by a preponderance of the evidence that the property is nonmarital. Pfleiderer v. Pfleiderer, 591 N.W.2d 729, 732 (Minn.App.1999). Loretta Angell's evidence overcomes the presumption. The evidence established that she was designated as Levi's sole beneficiary. Although the Servicemembers' Group Life Insurance Election and Certificate form that Levi completed offered spaces for up to five beneficiaries, he used only one space, naming Loretta Angell alone as his beneficiary. Levi thereby assured that his mother would receive a 100-percent share of the benefits available from both sources. See Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief, 2005, Pub. L. No. 109-13, § 1013, 119 Stat. 231, 247 (2005) (providing a death gratuity payable to a beneficiary in proportion to the share of benefits she receives from life-insurance proceeds paid under the SGLI program). Loretta Angell testified correspondingly that all financial documents and correspondence that she received in connection with Levi's life-insurance proceeds and death benefits were addressed to her alone.

Gordon Angell contends that no evidence indicates that Levi intended to exclude him from sharing in the funds. At oral argument, his counsel asserted that it was undisputed that Loretta Angell managed the family's finances and that this requires a finding that the sole designation to his mother meant that Levi intended his parents to share the funds. But the district court made no such finding, and attempting to discern why Levi omitted his father as a designated beneficiary is not our role on appeal. See Whitaker v. 3M Co., 764 N.W.2d 631, 640 n. 1 (Minn.App. 2009) ("[O]ur role ... does not extend to making factual findings in the first instance."), review denied (Minn. July 22, 2009). Levi designated his mother as the sole beneficiary, and we therefore accept the district court's implicit finding that Levi intended only his mother to receive the life-insurance and death-gratuity benefits. See also Lanier v. Traub, 934 F.2d 287, 289 (11th Cir.1991) ("The beneficiary designation provisions of the [Servicemen's Group Life Insurance] Act are to be interpreted strictly ... to avoid ... disputes concerning the actual donative intent of insured servicemen.").

Gordon Angell argues that the life-insurance and death-gratuity benefits are marital property because they are not one of the types of instruments that the statute specifies as nonmarital property: gift, bequest, devise, or inheritance. See Minn. Stat. § 518.003, subd. 3b. He relies on the Black's Law Dictionary definition of each term and argues that the proceeds were not...