Foster v. Hurley
| Decision Date | 28 April 2005 |
| Parties | RICHARD E. FOSTER v. MICHAEL J. HURLEY & another. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Present: MARSHALL, C.J., GREANEY, IRELAND, SPINA, COWIN, SOSMAN, & CORDY, JJ.
Wendy H. Sibbison for the defendant.
David M. Hass for the plaintiff.
This case involves a dispute over the effect of a marital separation agreement on the proceeds of two life insurance policies owned by Janice M. Hurley (deceased), who died on August 31, 2000. After her death, the deceased's former husband, Richard E. Foster, brought an action to recover the proceeds of the policies, which had been paid out to the named beneficiary, Michael J. Hurley, who married the deceased after she and Foster had divorced. Foster claims that he is entitled to equitable substitution as the beneficiary under both policies pursuant to the terms of a separation agreement, which required the deceased to maintain $200,000 in life insurance naming Foster as the primary beneficiary. Hurley counters that he is entitled to the proceeds of both policies, one acquired by the deceased before her divorce and the other after her marriage to him, because neither policy was specifically referenced in the separation agreement. He also contends that Foster's sole remedy under the agreement is in an action against the deceased's estate, which, by statute, cannot reach the proceeds of the policies in any event. Because we interpret the separation agreement to include the life insurance policy in existence at the time the agreement was executed but not the policy acquired after the divorce, we affirm the motion judge's rulings that Foster is entitled to equitable substitution as the beneficiary of the first policy and Hurley is entitled to retain the proceeds of the later one.
1. Background. Foster and the deceased married in 1981. They had two children, one born in 1982, and the other in 1985. In 1995, Foster and the deceased ended their marriage and executed a separation agreement. A provision of the agreement specified:
2
From 1991 until her death, the deceased owned a group life insurance policy issued by UnumProvident Corporation (Unum policy) through her employment at Children's Hospital in Boston. Foster was the policy's named beneficiary through 1999.3 In 1998, she married Hurley and, effective January 1, 2000, named him the beneficiary of the Unum policy. In 2000, the deceased also acquired a second group life insurance policy issued by Prudential Insurance Company (Prudential policy) through other employment at the East Boston Neighborhood Health Center. Hurley was named the beneficiary on the Prudential policy. These two policies, totaling just under $200,000, were the only life insurance policies in existence when the deceased died on August 31, 2000. At the time of her death, both children were unemancipated under the terms of the separation agreement.
After her death, Hurley received the proceeds of both policies: approximately $168,000 from the Unum policy and $31,000 from the Prudential policy.4 Seeking these proceeds, Foster filed suit against Hurley and the deceased's estate in the Superior Court.5 A judge granted Foster a temporary restraining order, which required Hurley to pay the policies' proceeds to the administrator of the deceased's estate to be held in escrow. After the order expired, Foster's request for a preliminary injunction was denied, and the administrator returned the proceeds to Hurley. Foster then moved for partial summary judgment, and Hurley moved for judgment on the pleadings. After a hearing, the judge allowed Foster's motion in part, awarding the proceeds of the Unum policy to him as an equitably substituted beneficiary "acting for the benefit of his children." The judge also issued a declaratory judgment that Hurley was entitled to the proceeds from the Prudential policy. Both parties appealed.
The Appeals Court reversed in part, holding that Foster was entitled to the proceeds of both the Unum and Prudential policies and imposing a constructive trust on them in his favor. Foster v. Hurley, 61 Mass App. Ct. 414, 422 (2004). We granted Hurley's application for further appellate review.
2. Availability of equitable relief. As a threshold matter, the parties dispute whether the separation agreement provides Foster with a basis to pursue an equitable remedy to recover life insurance proceeds from Hurley. Hurley claims that the motion judge erred in not construing the separation agreement to limit Foster's remedy for the deceased's failure to obtain the required life insurance to a "creditor's claim" against her estate.6 The judge rejected this argument, finding that such an interpretation of the separation agreement would fail to effectuate the deceased's and Foster's intent.7
In general, "[a] separation agreement, fair and reasonable at the time of a judgment nisi, and constituting a final resolution of spousal support obligations, should be specifically enforced, absent countervailing equities." O'Brien v. O'Brien, 416 Mass. 477, 479 (1993), citing Stansel v. Stansel, 385 Mass. 510, 514-516 (1982), and Knox v. Remick, 371 Mass. 433, 436-437 (1976). The provision of the agreement governing life insurance obligations provides that the "surviving party shall have a creditor's claim against the deceased's estate for the difference between the face amount of the policy or policies required to be maintained under this Agreement and the amount actually paid under the deceased's insurance policy." Hurley argues that even though this provision does not explicitly exclude other remedies, a claim against the deceased's estate should be interpreted as the exclusive remedy because the word "shall" signifies the parties' intent that it be mandatory. We agree that the agreement makes plain that Foster has a remedy, in the form of a creditor's claim against the deceased's estate. We do not agree, however, that the word "shall," as used in the agreement was intended to preclude Foster from pursuing any other remedies available to him to secure the benefits promised. See, e.g., Leonard v. School Comm. of Attleboro, 349 Mass. 704, 706-707 (1965) (). Contrast Charland v. Muzi Motors, Inc., 417 Mass. 580, 584-585 (1994) ().
"[W]e must construe the [separation] agreement in a manner that `appears to be in accord with justice and common sense and the probable intention of the parties . . . [in order to] accomplish an honest and straightforward end [and to avoid], if possible, any construction of a contract that is unreasonable or inequitable.'" Krapf v. Krapf, 439 Mass. 97, 105 (2003), quoting Clark v. State St. Trust Co., 270 Mass. 140, 153 (1930). The separation agreement had as a preeminent objective "the care, support . . . and education of the children," and, given its expiration on the children's emancipation, the life insurance provision was clearly intended to serve that objective. Interpreting the separation agreement as limiting Foster's ability to pursue an equitable remedy for any type of breach of the life insurance provision (including changing the beneficiary on a preexisting policy) would neither further nor be consistent with that preeminent objective. We agree with the motion judge that such an interpretation would simply fail to effectuate the intentions of the parties most likely existent at the time the agreement was executed.8
3. Unum policy. We turn next to Foster's claim to the proceeds of the Unum policy. Hurley argues that Foster was not entitled to equitable substitution as the beneficiary of the Unum policy because the separation agreement did not specifically identify the Unum policy, and the deceased never waived her right to change its beneficiary. See Gleed v. Noon, 415 Mass. 498, 500 (1993). He further contends that the failure to identify the Unum policy in the agreement distinguishes this case from the many cases "in which wives or children who were removed as beneficiaries of life insurance policies in violation of the terms of separation agreements or divorce judgments have been permitted to recover the proceeds of such policies . . . from the improperly substituted beneficiaries." Green v. Green, 13 Mass. App. Ct. 340, 342 (1982).
Foster responds that the failure to identify specific policies in a separation agreement should not deny him a remedy, notwithstanding Gleed v. Noon, supra,
because the specificity requirement set forth in that case applies only to temporary court orders. He further argues that, under the Appeals Court's decisions in Hurlbut v. Hurlbut, 40 Mass. App. Ct. 521 (1996), and Green v. Green, supra, and persuasive authority from other jurisdictions, an equitable remedy is appropriate to enforce the deceased's obligation to provide security for child support in the form of life insurance proceeds. As to the Unum policy, we agree with Foster that an...
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