Bli v. Dixson Irrevocable Trust

• Decision Date: 03 April 2009
• Docket Number: No. 34873.,34873.
• Citation: 206 P.3d 481,147 Idaho 117
• Parties: BANNER LIFE INSURANCE COMPANY, Plaintiff, v. The MARK WALLACE DIXSON IRREVOCABLE TRUST; and Tammie Sue Dixson, individually, Defendants. The Mark Wallace Dixson Irrevocable Trust, Cross Claimant-Respondent, v. Tammie Sue Dixson, Cross Defendant-Appellant. Tammie Sue Dixson, Third Party Plaintiff, v. Robert and Jackie Young, Third Party Defendants.
• Court: Idaho Supreme Court

206 P.3d 481

147 Idaho 117

BANNER LIFE INSURANCE COMPANY, Plaintiff, v. The MARK WALLACE DIXSON IRREVOCABLE TRUST; and Tammie Sue Dixson, individually, Defendants.

The Mark Wallace Dixson Irrevocable Trust, Cross Claimant-Respondent, v. Tammie Sue Dixson, Cross Defendant-Appellant.

Tammie Sue Dixson, Third Party Plaintiff, v. Robert and Jackie Young, Third Party Defendants.

No. 34873.

Supreme Court of Idaho, Boise, February 2009 Term.

April 3, 2009.

Finch & Associates Law Office, P.A., Boise, and Ellsworth, Kallas, Talboy & DeFranco, P.L.L.C., Boise, for appellant. Robert W. Talboy argued.

Cosho Humphrey, LLP, Boise, for respondent. Mackenzie Whatcott argued.

J. JONES, Justice.

Tammy Dixson and The Mark Wallace Dixson Irrevocable Trust filed competing claims to the proceeds of a term life insurance policy insuring the life of Tammy's deceased husband, Mark Dixson. The insurance company, Banner Life Insurance Company (BLI), filed a complaint for interpleader asking the district court to resolve the competing claims. Tammy and the Trust subsequently filed cross-motions for summary judgment contesting the character of the policy proceeds and Mark's designation of beneficiaries. The district court granted the Trust's motion for summary judgment, denied Tammy's motion, and awarded the Trust costs and fees. Tammy now appeals the district court's orders. We vacate and remand.

I.

Tammy¹ Sue Dixson and Mark Wallace Dixson were married on January 1, 2000. While married to Tammy, Mark obtained an annual renewable term life insurance policy in the amount of $300,000.00 from BLI. Initially, Mark designated Tammy as the sole beneficiary of the policy.

In September 2003, Mark was diagnosed with Amyotrophic Lateral Sclerosis (ALS), or Lou Gehrig's disease. As a result of the ALS, Mark's physical condition began to deteriorate and he eventually required skilled nursing care. Consequently, Mark was admitted into the Life Care Center of Treasure Valley (LCC) in December 2004. While at LCC, Mark's health continued to decline, resulting in hampered motor and verbal communication skills.

After being diagnosed with ALS, Mark's financial situation also worsened. Eventually, Mark became unable to pay the premiums on his life insurance policy. When Mark confided his inability to pay the premiums to the Dixsons' family home teacher,² Cory Armstrong, Armstrong offered his financial assistance. Armstrong subsequently paid the policy premiums for the years 2005 and 2006.

In addition to their financial problems, the Dixsons' marriage became increasingly strained. On January 31, 2005, acting without Tammy's consent, Mark signed a beneficiary change form removing Tammy as the beneficiary of the policy. The form named Mark's mother, Jackie Young, as the primary beneficiary and his stepfather, Robert Young, as the contingent beneficiary. Mark's recreational therapist, Canyin Barnes, witnessed the execution of the beneficiary change form. Although Ms. Barnes mailed the form to BLI, it is unclear whether BLI ever received the form.

That same day, Mark also executed a durable power of attorney designating Jackie, Robert, and his brother, David Dixson, as his attorneys-in-fact. Mark granted these agents the authority "[t]o exercise or perform any act, power, duty, right or obligation whatsoever" on his behalf. He also authorized them to make gifts of his property and engage in self-dealing without such acts being considered breaches of their fiduciary duty. The power of attorney form was initialed by Mark and notarized by Kaye Baker, an employee of LCC.

Approximately eight months later, on August 18, 2005, Mark filed a complaint for divorce against Tammy. After the complaint was filed, the magistrate court issued a joint temporary restraining order so as "to maintain the status quo" of the couple's property. Among other things, the order prohibited both parties from changing the beneficiary on any life insurance policy "held for the benefit of the parties." By its terms, the order was to remain in effect until a final order was entered on the complaint for divorce or until further order of the court. A default decree of divorce was subsequently issued on January 9, 2006, but the decree was set aside after the court determined that Tammy had not been personally served with the complaint. As a result, Tammy and Mark continued to be married and the temporary restraining order remained in effect.

On April 27, 2006, despite the existence of the temporary restraining order, Robert, acting as Mark's attorney-in-fact, executed a second beneficiary change form on Mark's behalf. The form named Jackie as the primary beneficiary of the policy and Mark's six children as contingent beneficiaries.³ Although the beneficiary change form indicated that spousal consent was required under Idaho law, the change of beneficiary was made without Tammy's knowledge or consent. Mark's attorney faxed the form to BLI on May 2, 2006. Shortly thereafter, on May 5, 2006, Mark died from complications associated with ALS. At the time of Mark's death, he and Tammy were still married.⁴

After Mark's death, Jackie and Tammy both filed claims to the policy proceeds. Jackie subsequently assigned her claim to "The Mark Wallace Dixson Irrevocable Trust."⁵ As a result of the parties' inability to settle their dispute, BLI filed a complaint for interpleader asking the district court to resolve the competing claims to the policy proceeds.⁶ The Trust filed an answer and cross-claim against Tammy alleging that she had no interest in the proceeds. It requested that the proceeds be paid to the Trust as Jackie's assignee. Tammy then filed answers to both claims and a third-party complaint against the Trust. In her complaint, Tammy asserted that she was entitled to the policy proceeds because the change of beneficiary was invalid. She requested that the Trust's claim to the proceeds be dismissed and that she be awarded costs and attorney fees. Similarly, in its answer to Tammy's complaint, the Trust asked the court to dismiss Tammy's claim. It alleged that the policy premiums were paid with Mark's separate property and, therefore, that Tammy had no legitimate claim to the proceeds. It further requested an award of costs and attorney fees. Neither party requested that the case be tried before a jury.

Tammy and the Trust subsequently filed cross-motions for summary judgment contesting the character of the policy proceeds and the validity of the designation of beneficiaries. On November 9, 2007, the district court entered an order granting the Trust's motion for summary judgment. The court reasoned that the Trust was entitled to summary judgment because the policy proceeds were Mark's separate property and Jackie was the policy beneficiary. Since Jackie had assigned her interest in the policy proceeds to the Trust, the Trust was entitled to the "entire net sum of the remaining proceeds from the life insurance policy." Accordingly, the court ordered that the proceeds and accrued interest be released to the Trust. The court subsequently granted the Trust's request for attorney fees and costs, relying on Idaho Code sections 12-120(3) and 15-8-208.

Tammy now appeals the trial court's decision granting the Trust's motion for summary judgment and denying her cross-motion for summary judgment. She also appeals the court's award of attorney fees and costs. On appeal, Tammy argues that she is entitled to the policy proceeds because the policy premiums were paid with community property, in the form of a loan from Armstrong to Tammy and Mark. She also argues that she should have been awarded the proceeds because the beneficiary changes were made without her consent and violated the joint temporary restraining order. Finally, she requests an award of costs and attorney fees on appeal. The Trust argues that the district court's orders granting its motion for summary judgment and awarding it costs and fees should be upheld. It requests an additional award of fees on appeal.

II.

We are concerned with four issues on appeal, namely, whether: (1) the district court correctly concluded that the life insurance proceeds were Mark's separate property; (2) Mark effectively changed the policy beneficiary; (3) the district court erred in awarding the Trust attorney fees and costs; and (4) either party is entitled to an award of fees and costs on appeal.

A.

On appeal from an order granting a party's motion for summary judgment, we employ the same standard of review that the trial court uses in ruling on the motion. Baxter v. Craney, 135 Idaho 166, 170, 16 P.3d 263, 267 (2000). Summary judgment is appropriate when the pleadings, affidavits, and discovery documents before the court indicate that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. Idaho R. Civ. P. 56(c); Baxter, 135 Idaho at 170, 16 P.3d at 267. The moving party carries the burden of proving the absence of a genuine issue of material fact. Baxter, 135 Idaho at 170, 16 P.3d at 267.

In construing the record on a motion for summary judgment, all reasonable inferences and conclusions must be drawn in favor of the party opposing summary judgment. Student Loan Fund of Idaho, Inc. v. Duerner, 131 Idaho 45, 49, 951 P.2d 1272, 1276 (1997). The nonmoving party, however, "may not rest upon the mere allegations or denials of that party's pleadings, but the party's response, by affidavits or ... otherwise ..., must set forth specific facts showing that there is a genuine issue for trial." Idaho R. Civ. P. 56(e); Baxter, 135 Idaho at 170, 16 P.3d at 267. "A mere scintilla of evidence is not enough to create a genuine issue of fact," but circumstantial evidence may suffice. Tingley v. Harrison, 125 Idaho 86, 89, 867 P.2d 960, 963 (1994); Doe v. Durtschi, 110 Idaho 466, 470, 716 P.2d 1238, 1242 (1986). Still, the evidence offered in support of or in opposition to a motion for summary judgment...