Dawson v. Estate of Ott

• Decision Date: 08 October 2003
• Docket Number: No. 35A02-0304-CV-347.,35A02-0304-CV-347.
• Parties: Barbara DAWSON, Appellant-Plaintiff, v. ESTATE OF Michael OTT, Deceased, Kay Ott, Personal Representative, Appellee-Defendant.
• Court: Indiana Appellate Court

796 N.E.2d 1190

Barbara DAWSON, Appellant-Plaintiff, v. ESTATE OF Michael OTT, Deceased, Kay Ott, Personal Representative, Appellee-Defendant.

No. 35A02-0304-CV-347.

Court of Appeals of Indiana.

October 8, 2003.

David W. Stone IV, Stone Law Office & Legal Research, Anderson, IN, Donald H. Leslie, Marion, IN, Attorneys for Appellant.

Benton W. O'Bryan, O'Bryan, Brazill and Drics, Indianapolis, IN, Attorney for Appellee.

OPINION

NAJAM, Judge.

STATEMENT OF THE CASE

Barbara Dawson (formerly "Barbara Ott") appeals the trial court's order which granted the Estate of Michael Ott ("the Estate") a set-off of the proceeds payable to Dawson, as beneficiary of the decedent's life insurance policy, against Dawson's lien on the decedent's real estate. Dawson raises the following issues for review:

1. Whether the Estate's argument that Dawson waived any interest in life insurance proceeds is barred by the doctrine of res judicata.

2. Whether the trial court had jurisdiction over the life insurance proceeds it used as a set-off against the amount the Estate owed on the real estate lien.

We reverse.

FACTS AND PROCEDURAL HISTORY

Dawson and Ott were married in 1973 and divorced in 1997. On December 19, 1997, Dawson and Ott entered into a Property Settlement Agreement ("settlement agreement") in which they agreed, in part, that Ott would receive title to the couple's real estate and that Dawson would receive one-half of the equity, valued at $50,000. The parties further agreed that Ott would pay Dawson a lump sum of $5,000 toward her share of the equity and that Dawson would retain a lien against the property in the amount of $45,000. Ott was to pay Dawson $536 per month until the lien amount was paid in full. In the event of Ott's death, the full balance of the lien would become due.

The settlement agreement also contained the following relevant provisions:

5. GENERAL COVENANTS AND REPRESENTATIONS

(a) HUSBAND and WIFE hereby represent and warrant to each other and to the Court that there has been a full disclosure of assets and debts and that the property referred to in this agreement represents all of the property of any kind or character, wheresoever located, real, personal, intangible or mixed, which either of them have any interest in or right to, whether legal or equitable.

* * *

9. TERMINATION OF MUTUAL RIGHTS

In consideration of all of the promises contained herein, HUSBAND and WIFE each hereby release all claims and rights which said HUSBAND and WIFE ever had or have or might have hereafter against the other, by reason of such relationship, as HUSBAND and WIFE, or otherwise, except only claims and rights of each party created and outstanding against the other pursuant to the terms of this agreement, or the [D]ecree of Dissolution of Marriage granted by the Court, it being the intent hereof that each party accept the provisions of this agreement in full release of settlement and satisfaction of any and all claims and rights against the other. The provisions of this agreement shall inure to the benefit and be binding upon the heirs, executors, administrators and personal representatives of the parties. The parties hereto agree that any time after the entry of the Decree of Dissolution of Marriage, they will execute and deliver to the other any and all deeds, bills of sale, assignments, titles and other documents which the other may require for the giving of full force and effect to the provisions of this agreement.

On December 31, 1997, the trial court issued its Decree of Dissolution in which it approved the parties' settlement agreement and dissolved the marriage.

Ott died, and on April 12, 2001, his Estate was opened. Kay Ott ("Personal Representative"), the decedent's wife at the time of his death, was appointed as Personal Representative. In July 2001, the Personal Representative filed a Petition for Instruction which informed the court that the Estate was "frustrated by the continued refusal by Metropolitan Life Insurance Company a/k/a/ MetLife[,] to disclose to [it] the particulars as to a certain life insurance policy[,] the owner of which was [the decedent] at the time of his death and the extent to which the insurance policy relates to or is impacted by the property division in the aforementioned divorce between the decedent and his then spouse." In its petition, the Estate requested that the trial court issue an order directing Metropolitan Life Insurance Company ("MetLife") to produce, in part, a copy of all policies in which the decedent is an owner, beneficiary, or trustee. In August 2001, the trial court issued that order.

In November 2001, MetLife filed an interpleader action in the United States District Court for the Northern District of Indiana under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., requesting that the district court determine who was properly entitled to the proceeds of the decedent's employer-issued life insurance policy in which Dawson was named as beneficiary. MetLife named Dawson, the Estate, and Kay Ott in her individual capacity, as interpleader defendants. The court dismissed MetLife after it had deposited the $18,000 in policy proceeds with the clerk. The court also dismissed Kay Ott, in her individual capacity. Dawson then filed a motion for summary judgment against the Estate and argued that she was entitled to the proceeds of the life insurance policy because she was the named beneficiary at the time of death. In April 2002, the district court determined that Dawson was entitled to the proceeds as a matter of law, granted her motion, and entered judgment. Metropolitan Life Ins. Co. v. Dawson, et al., Civil No. 1:01cv357 (N.D. Ind. April 10, 2002).

Thereafter, in May 2002, the Personal Representative filed another Petition for Instruction with the trial court requesting, in part, that the court apply the life insurance proceeds payable to Dawson as a set-off against the balance of the unpaid real estate lien. In support, the Personal Representative claimed that Dawson had failed to reveal her interest in the life insurance policy during the divorce proceedings and that, under the terms of the settlement agreement, she had waived any claim to the proceeds. Dawson filed a response in which she alleged that any issue regarding entitlement to the life insurance proceeds was res judicata and, in the alternative, that she did not waive her interest in the decedent's life insurance proceeds because, at the time she entered into the settlement agreement, she did not have a property interest but had only a mere expectancy in those proceeds.

In June 2002, the Personal Representative filed a "Petition to Withdraw her Motion for Instructions and In Lieu Thereof Petitions the Court to Reopen Cause No. 35C01-9705-DR-00237," in which the Estate asked the court to reopen the parties' dissolution action and, again, to apply the policy proceeds to the outstanding balance owed on the real estate lien. Following the submission of written briefs and two hearings, the trial court entered the following order in the Chronological Case Summary ("CCS") in the probate action:

Comes now the Court and makes the following ruling. The Court now rules that the divorce proceeding of December 31, 1997 settled all claims between the parties and the total on qualified disclaimer given by Barbara Dawson based on the representations of the Property Settlement Agreement, to-wit: property settlement granted Barbara Dawson, properties, cash, and a Forty-Five Thousand Dollar ($45,000.00) equity lien on the real estate. The Court now grants the petitions by the Personal Representative of the supervised estate of Michael K. Ott and now grants the estate a credit against the unpaid balance of that lien. Judgment on the findings. Notice ordered.¹

Dawson filed a Motion to Correct Error, which the trial court denied. This appeal ensued.²

DISCUSSION AND DECISION

Dawson asserts that the trial court erred as a matter of law when it applied the life insurance proceeds as a set-off against the outstanding balance she was owed on the real estate lien. The Estate responds that the set-off was proper because the court correctly determined that the settlement agreement "settled all claims between the parties" and Dawson had waived any interest in the life insurance proceeds. The parties agree that the issues presented are pure questions of law, which we review de novo. See Young v. Indiana Dept. of Natural Res., 789 N.E.2d 550, 554 (Ind.Ct.App.2003)

(stating where motion to correct error involves question of law, we review de novo and owe no deference to trial court) (citing State v. Rans, 739 N.E.2d 164, 165 (Ind.Ct.App. 2000),

trans. denied); Wayne Metal Prod. Co. v. Indiana Dept. of Envtl. Mgmt., 721 N.E.2d 316, 317 (Ind.Ct.App.1999) (stating we review questions of law under de novo standard), trans. denied.

I. Res Judicata

In response to Dawson's contention that the set-off was improper as a matter of law, the Estate asserts that the court correctly determined that Dawson waived any interest in the decedent's life insurance proceeds because: (1) the policy was not disclosed during negotiation of the settlement agreement in 1997; and (2) provisions in the settlement agreement support the conclusion that Dawson released the decedent and the Estate from any and all claims she may have regarding the proceeds. Dawson's response to the Estate's waiver argument is that the United States District Court held she was entitled to the policy proceeds as a matter of law and, thus, that issue is barred by the claim preclusion component of the doctrine of res judicata.³ We agree with Dawson.

Res judicata serves to prevent repetitious litigation of disputes which are essentially the same. Wagle v. Henry, 679 N.E.2d 1002, 1005 (Ind.Ct.App.1997). The doctrine of res judicata consists of two distinct components, claim preclusion and issue preclusion. Collard v. Enyeart, ...