Bowers v. Kushnick
| Decision Date | 22 February 2001 |
| Docket Number | No. 45A04-0004-CV-168.,45A04-0004-CV-168. |
| Citation | 743 N.E.2d 787 |
| Parties | Carolyn BOWERS, Appellant-Third Party Defendant, v. Robert KUSHNICK, et al., Appellee-Third Party Plaintiff. |
| Court | Indiana Appellate Court |
Ray L. Szarmach, Szarmach & Fernandez, Merrillville, IN, Attorney for Appellant.
Mike Bosch, Hammond, IN, Elena Becker, Chicago, IL, Sharon Stanzione, Merrillville, IN, Attorney for Appellee.
Carolyn Bowers appeals the trial court's grant of third-party defendant Robert Kushnick's motion for summary judgment. She raises two issues on appeal, the first of which we find dispositive and restate as: Whether the insured decedent clearly intended to change beneficiaries and whether she did everything she could reasonably do to accomplish that change.
We answer in the negative and affirm the trial court.1
Katherine Kushnick owned a $40,000 life insurance policy issued by Fortis Benefits Insurance Company that she obtained through her employment with the Visiting Nurse Association (VNA) of Porter County, Indiana, Inc. It is undisputed that, shortly before her death, Katherine had misgivings about having recently adopted a teenage daughter with her husband Robert. Specifically, Katherine disapproved of the possibility that her adopted daughter Rebecca, Rebecca's natural mother or Rebecca's siblings would receive the policy proceeds. Katherine's sister, Jane Amrai, was aware of Katherine's concerns.
Slightly more than one month before succumbing to cancer, Katherine obtained a change of beneficiary form from her hospice nurses. Katherine gave the form to Amrai and asked her to type in the information necessary to change the beneficiary of her policy from her husband to her niece Carolyn Bowers (Amrai's daughter) and a family friend. After Amrai prepared the form and returned it to Katherine, neither Amrai nor Katherine raised the subject again.
In the months preceding her death, Katherine made multiple bequests of her personal property to friends and family. Amrai assisted her by making typewritten entries into a tabbed binder to reflect Katherine's wishes. Katherine frequently reviewed the entries in the binder, making additions and modifications to her desired bequests. It was in this cogent and highly organized context that Katherine told Amrai that she (Katherine) had taken care of the insurance and later handed Amrai a sealed envelope with the simple, parol instruction to give the envelope to Barbara Gilbertson of the VNA "if something happens." R. at 308. Unbeknownst to Amrai, the sealed envelope contained the change of beneficiary form executed by Katherine.
Katherine died on July 12, 1996. At Katherine's wake, Amrai delivered the change of beneficiary form still sealed in the envelope to Gilbertson. Robert submitted his claim for the policy proceeds on July 24. Fortis received Katherine's change of beneficiary form on July 25. The family friend, who was named as co-beneficiary with Bowers, disclaimed her interest on September 20, 1996.
Bowers filed a claim against Fortis for the proceeds. Fortis interpleaded Robert, paid the $40,000 into the Clerk's office and was dismissed from the case. Both Bowers and Robert filed motions for summary judgment. The trial court granted Robert's motion, ruling that Katherine did not substantially comply with the requirements for changing the policy beneficiary. Bowers appeals.
Bowers argued in the trial court and now asserts that Katherine substantially complied with policy requirements, in that she signed and dated the appropriate change of beneficiary form and gave it to Amrai to give to Gilbertson. Bowers emphasizes that Katherine was for all practical purposes incapacitated, although not incompetent. She never rescinded her direction to Amrai to give the envelope to Gilbertson, and "died believing" that Bowers and the family friend would receive the policy proceeds. Appellant's Brief at 8.
On the other hand, Robert argued in the trial court and now contends that Katherine's intent was not clearly expressed and that she did not do everything in her power to substantially comply with the insurance policy requirements for changing beneficiaries.
On appeal, the standard of review of a summary judgment motion is the same standard used in the trial court. Summary judgment is appropriate only where the evidence shows there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. Shell Oil Co. v. Lovold Co., 705 N.E.2d 981, 983-84 (Ind.1998). The review of a summary judgment motion is limited to those materials designated to the trial court. Alexander v. Scheid, 726 N.E.2d 272, 275 (Ind.2000); Ind. Trial Rule 56(H). In their cross-motions for summary judgment and in this appeal, both parties concede that there are no genuine issues of material fact. We therefore limit our review to whether the trial court properly applied the law to the undisputed facts. In the instant case, the language of the policy is clear and unambiguous. The policy provides that:
You may change the beneficiary at any time. Any request to name or change the beneficiary must be in writing on a form acceptable to us and signed by you. After we receive the request at our home office, the change will take effect on the date you signed it. A beneficiary change will be without prejudice to us for any payment we made before we receive notice in our home office.
R. at 63 (emphasis added). Neither party has challenged the clarity of this policy provision. Instead, the parties' dispute lies with the relation back clause in the policy, whereby Fortis may permit a change of beneficiary subsequent to Katherine's death.
The interest of an insurance policy beneficiary vests at the time of the insured's death. Metropolitan Life Ins. Co. v. Tallent, 445 N.E.2d 990, 992 (Ind. 1983); Quinn v. Quinn, 498 N.E.2d 1312, 1313 (Ind.Ct.App.1986); Wolf v. Wolf, 147 Ind.App. 240, 243, 259 N.E.2d 93, 95 (1970); 4 Couch on Insurance 3d § 58.16 (1997); 2 John A. Appleman & Jean Appleman, Insurance Law and Practice § 921 (2d ed.1966). This interest is defeated only by a change of beneficiary form executed in accordance with the terms of the policy. Quinn, 498 N.E.2d at 1313. However, if the insured has done everything within her power to effect the change of beneficiary, the rule recognizes substantial compliance with policy requirements as sufficient to change the beneficiary. Id.
Although the concept of "substantial compliance" is based upon the majority "liberal rule" to which Indiana courts have historically subscribed, in our state's caselaw "substantial compliance" has evolved into a hazy, catch-all rubric, lacking any clear-cut standard for analysis. Looking not only to our own caselaw, but to other jurisdictions utilizing the majority rule, we find that there are two salient elements for consideration that appear throughout contested change of beneficiary cases: (1) Whether the insured clearly intended to change the beneficiary; and (2) Whether the insured did everything reasonably within his or her power to effect the change. United Services Life Ins. v. Moss, 303 F.Supp. 72, 75 (W.D.Va.1969).
This analysis is based on equitable principles. "Equity regards that as done which should have been done and if the insured has done all he could to comply with the provisions of the policy, equity will give effect to the intent of the insured." United Services, 303 F.Supp. at 76. When we base our analysis on these elements, intent and effort, it becomes readily apparent that Katherine's executed change of beneficiary form must fail as a matter of law for several reasons.
First, Katherine never clearly expressed her intent to change beneficiaries. The policy language required receipt of the completed form by the home office before it was effective. However, Fortis did not receive the change of beneficiary form before Katherine's death or before Robert's claim was received. Although the relation back clause prevents this in and of itself from being fatal to Bowers' claim, it nevertheless contributes to the conclusion that Katherine did not do all that she could do either to express her intent to or to actually change her beneficiary.
Katherine also never expressed the intent to change beneficiaries to the home office or any other representative of the issuing carrier. Although Bowers contends that Katherine was physically incapacitated at all relevant times, Amrai testified that Katherine telephoned her on the same morning that she passed away. This demonstrates that Katherine actually had the ability to initiate meaningful communication up to the time of her death. At the very least, Katherine could have and should have instructed Amrai to mail or otherwise deliver the completed form to the VNA insurance office and could have confirmed such delivery with Amrai before her death. Had the form been placed in the mail or other objective transit to Katherine's employer or to Fortis during her lifetime, her alleged intent would have been clear. See Shenandoah Life Ins. Co. v. Harvey, 242 F.Supp. 680 (D.Md.1965).
This is not a case where the insured's clearly-expressed intent was frustrated by the carrier or its agent, warranting equitable intervention. See Borgman v. Borgman, 420 N.E.2d 1261 (Ind.Ct.App.1981); Saiter v. Miller, 108 Ind.App. 373, 27 N.E.2d 900 (1940). Likewise, it is not a case where the insured verbally expressed his intent to the person in charge of benefits at his employer's shortly before his death, in which equitable relief was refused. Hoess v. Continental Assurance Co., 130 Ind.App. 562, 164 N.E.2d 125 (1960). "[T]he courts will not complete for an individual that which he [or she] reasonably and without justifiable excuse could have accomplished." United Services, 303 F.Supp. at 76.
In addition, Amrai did not know, either directly or inferentially, that the sealed envelope given to...
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Bowers v. Kushnick, 45S04-0111-CV-00591.
...death, the trial court granted summary judgment in favor of the prior beneficiary, and the Court of Appeals affirmed. Bowers v. Kushnick, 743 N.E.2d 787 (Ind.Ct.App.2001). We granted transfer, Bowers v. Fortis Benefits Ins. Co., 761 N.E.2d 423 (Ind.2001), and now The facts are not in disput......