Blalock v. Sutphin

• Decision Date: 26 October 2018
• Docket Number: 1170879
• Citation: 275 So.3d 519
• Parties: Kimberly Denise BLALOCK v. Crimson Jade SUTPHIN and New York Life Insurance Company
• Court: Alabama Supreme Court

275 So.3d 519

Kimberly Denise BLALOCK

v.Crimson Jade SUTPHIN and New York Life Insurance Company

1170879

Supreme Court of Alabama.

October 26, 2018

Robert B. French, Jr., Fort Payne, for appellant.

Robert T. Ray, Fort Payne, for appellee Crimson Jade Sutphin.

John N. Bolus and Mark D. Foley, Jr., of Maynard, Cooper & Gale, P.C., Birmingham, for appellee New York Life Insurance Company.

SELLERS, Justice.

Kimberly Denise Blalock appeals from an order of the DeKalb Circuit Court holding that Crimson Jade Sutphin is the rightful beneficiary of a policy insuring the life of Loyd Sutphin, Jr. ("Loyd"), issued by New York Life Insurance Company. We affirm.

I. Facts and Procedural History

In late 2011, an agent for New York Life met with Loyd at his place of work in Chattanooga, Tennessee. At that time, Loyd completed an application for a $250,000 individual whole life-insurance policy. In that application, he listed his home address in Henegar, Alabama, and named his daughter, Sutphin, as the sole beneficiary. Shortly thereafter, New York Life issued Loyd a life-insurance policy in accordance with that application and delivered it to him at his place of work in Chattanooga.

In October 2012, Loyd married Blalock, and they lived together at his home in Henegar. Soon after, in December 2012, Loyd submitted a change-of-beneficiary-designation form to New York Life, designating Blalock and Sutphin each as a 50% beneficiary under the policy. A few years later, in February 2016, Loyd and Blalock divorced; however, the life-insurance policy was not addressed in the divorce judgment, and Loyd never changed the beneficiary designation following the divorce.

Loyd died later that year on December 23, 2016.

In April 2017, Sutphin filed a action in the DeKalb Circuit Court,¹ seeking a judgment declaring that she was the rightful beneficiary of the entire proceeds of the New York Life policy because, she asserted, pursuant to § 30-4-17, Ala. Code 1975, Blalock's beneficiary designation had been revoked upon her divorce from Loyd. Blalock moved to dismiss the action, arguing that Tennessee, not Alabama, law should govern and, thus, that the DeKalb Circuit Court did not have subject-matter jurisdiction to hear the case.² The circuit court denied the motion to dismiss; Blalock filed a motion to reconsider the denial. At an evidentiary hearing on her motion to reconsider, Blalock again argued that the DeKalb Circuit Court lacked subject-matter jurisdiction but also asserted that the application of § 30-4-17 in this instance violated § 22 of the Alabama Constitution of 1901; the circuit court denied Blalock's motion to reconsider.

The case proceeded to a bench trial, at which Blalock argued that she and Loyd had established a common-law marriage after their divorce and before his death, thereby reviving her beneficiary designation under the policy. The circuit court heard testimony from numerous witnesses on this issue, most of whom testified on Blalock's behalf. On March 26, 2018, the circuit court issued a final order in the case, holding that Sutphin was the rightful beneficiary under the policy because Blalock's beneficiary designation had been revoked by virtue of § 30-4-17 and no common-law marriage existed to revive that designation before Loyd's death.

Blalock then filed this appeal asserting (1) that the circuit court did not have subject-matter jurisdiction to adjudicate the case; (2) that the application of § 30-4-17 violated § 22, Ala. Const. 1901; and (3) that the circuit court erred in finding that Blalock and Loyd were not remarried at common law before his death.

II. Subject-Matter Jurisdiction

Blalock first argues that the DeKalb Circuit Court did not have subject-matter jurisdiction to adjudicate the underlying action. We disagree.

"Matters of subject-matter jurisdiction are subject to de novo review." DuBose v. Weaver, 68 So.3d 814, 821 (Ala. 2011). Under § 12-11-30, Ala. Code 1975, the circuit courts of this state "have exclusive original jurisdiction of all civil actions in which the matter in controversy exceeds ten thousand dollars ($10,000), exclusive of interest and costs."

This action was filed as a request for a declaratory judgment in accordance with Rule 57, Ala. R. Civ. P., and §§ 6-6-222 and 6-6-223, Ala. Code 1975. Specifically, Sutphin requested a judgment declaring that she is the rightful, sole beneficiary of Loyd's life-insurance policy and that, by virtue of § 30-4-17, Blalock has no legal right to any proceeds from the policy. The proceeds in dispute amount to over $132,000.³ The jurisdictional threshold was, therefore, clearly met.

Blalock's claim that the circuit court lacked subject-matter jurisdiction rests primarily on her assertion that Tennessee's substantive law should govern any interpretation and implementation of the terms of the life-insurance policy. Even if that were true, however, the circuit court still maintained subject-matter jurisdiction over the action. The question of the propriety and applicability of subject-matter jurisdiction is distinct from the question of what forum's law should be applied to interpret a contract. See Cherokee Ins. Co. v. Sanches, 975 So.2d 287 (Ala. 2007) (holding that the circuit court should have applied Tennessee law to plaintiff's claim seeking uninsured-motorist benefits under automobile-insurance policy without ever questioning if subject-matter jurisdiction was proper).

Because Blalock's subject-matter-jurisdiction argument was essentially a choice-of-law argument, it is appropriate to address whether the circuit court was correct in applying Alabama law when interpreting the policy. We conclude that it was.

When determining which state's law applies in a contract dispute, Alabama follows the lex loci contractus rule. Cherokee Ins. Co., 975 So.2d at 292. Under this principle, we "first look to the contract to determine whether the parties have specified a particular sovereign's law to govern." Stovall v. Universal Constr. Co., 893 So.2d 1090, 1102 (Ala. 2004). Absent such a specification, we follow the general rule that the "law of the state where the contract was formed" should be applied, "unless it is contrary to [this State's] fundamental public policy." Id.

There is no language in the policy application or the policy itself that specifies a particular state's law to govern its interpretation. Under the general rule, we then look to where the contract was formed. Although Loyd was a resident of Alabama at all times relevant to this action, he applied for the policy and the policy was delivered in Chattanooga, Tennessee, where he worked. The policy was, therefore, formed in Tennessee. See Cherokee Ins. Co., 975 So.2d at 293 (holding that "Tennessee was the place of contract because the policy was issued and delivered to [the policyholder] in that state"). The question now becomes whether the application of Tennessee's substantive law would be contrary to this State's fundamental public policy.

A state's public policy may be found in its constitution, its statutes, its published rules, the decisions of its courts, and the prevailing customs of the state. See San Francisco Residence Club, Inc. v. Baswell-Guthrie, 897 F.Supp.2d 1122, 1172 (N.D. Ala. 2012) (citing 16 Am. Jur. 2d Conflict of Laws § 18 (2012) ). The public-policy exception in a choice-of-law analysis is intended to be narrowly applied; however, "[t]he exception is more likely to apply if the state has memorialized its public policy in a statute." Id. This is in recognition that it is primarily "for the lawmakers to determine the public policy of the state." Twin City Pipe Line Co. v. Harding Glass Co., 283 U.S. 353, 357, 51 S.Ct. 476, 75 L.Ed. 1112 (1931).

This case centers around the applicability of § 30-4-17, which states, in pertinent part:

"(b) Except as provided by the express terms of a governing instrument, a court order, or a contract relating to the division of the marital estate made between the divorced individuals before or after the marriage, divorce, or annulment, the divorce or annulment of a marriage:

"(1) revokes any revocable:

"a. disposition or appointment of property made by a divorced individual to his or her former spouse in a governing instrument and any disposition or appointment created by law or in a governing instrument to a relative of the divorced individual's former spouse...."

(Emphasis added.) This section was derived from the Uniform Probate Code and expanded the predecessor statute "to cover ‘will substitutes’ such as ... life insurance and retirement-plan beneficiary designations ... that the divorced individual established before the divorce." Alabama Comment, § 30-4-17 ; see also Uniform Probate Code § 2-804 (2010). The statute was passed by the Alabama Legislature in 2015 and became effective September 1, 2015. Act No. 2015-312, Ala. Acts 2015.

Tennessee has not adopted this section of the Uniform Probate Code. Under Tennessee law, a divorce revokes any testamentary disposition made by a divorced individual to his or her former spouse; however, it does not affect nontestamentary will substitutes such as life-insurance-beneficiary designations. See Tenn. Code Ann., § 32-1-202.

Applying Tennessee law in this case, therefore, violates the fundamental public policy of Alabama. When enacting § 30-4-17, the Alabama Legislature weighed the options and determined that the approach provided for in the Uniform Probate Code better reflected the presumed intent of divorced individuals in this state. Here, the decedent policyholder resided in Alabama at all times relevant to this action. He was divorced in Alabama, and he died in Alabama. His policy application listed his address in Alabama, and he received correspondence from New York Life at that Alabama address. Thus, it is appropriate that Alabama law, and not Tennessee law, govern the interpretation of his life-insurance policy to determine the beneficiaries of the policy and the impact of his divorce on the terms...