Galloway v. Snell

• Decision Date: 15 March 2022
• Docket Number: COA21-135
• Parties: Michael R. GALLOWAY, AS TRUSTEE OF the MELISSA GALLOWAY SNELL LIVING TRUST DATED MAY 1, 2018, and as the Personal Representative of the Estate of Melissa Galloway Snell, Plaintiff, v. Jeffrey SNELL, Defendant.
• Court: North Carolina Court of Appeals

871 S.E.2d 408

Michael R. GALLOWAY, AS TRUSTEE OF the MELISSA GALLOWAY SNELL LIVING TRUST DATED MAY 1, 2018, and as the Personal Representative of the Estate of Melissa Galloway Snell, Plaintiff,

v.Jeffrey SNELL, Defendant.

No. COA21-135

Court of Appeals of North Carolina.

Filed March 15, 2022

The Connor Law Firm, PLLC, Durham, by Gregory S. Connor, for Plaintiff-Appellee.

Smith, Debnam, Narron, Drake, Saintsing, & Myers, LLP, Raleigh, by Bettie Kelley Sousa, for Defendant-Appellant.

COLLINS, Judge.

¶ 1 Defendant Jeffrey Snell ("Jeff") appeals the trial court's order granting summary judgment to Plaintiff Michael Galloway, as Trustee of the Melissa Galloway Snell Living Trust and Personal Representative of the Estate of Melissa Galloway Snell ("Michael"), in a declaratory judgment action to determine the beneficiary of $1,000,000 in proceeds from certain insurance policies on the life of Melissa Galloway Snell ("Melissa"), who was Jeff's ex-wife and Michael's sister. At issue is whether the terms of an agreement between Jeff and Melissa permitted Melissa to change the beneficiary of her life insurance policies from Jeff to a living trust Melissa set up for the benefit of the four children she shared with Jeff. Because the pertinent language of the agreement is ambiguous, the trial court erred by granting summary judgment to Michael. We reverse the trial court's order and remand for further proceedings.

I. Facts

¶ 2 Jeff and Melissa were married on 25 March 2000 and separated on or about 11 August 2017. They had four children together. Melissa filed a comprehensive lawsuit against Jeff arising from their separation. The parties entered into a Memorandum of Mediated Settlement Agreement ("Agreement") on 8 February 2018 addressing child support, spousal support, and equitable distribution. ¹

The Agreement was signed by both Jeff and Melissa, their attorneys, and the mediator, and was notarized. The Agreement provides that "more formal" documents reflecting the parties’ agreement will follow and that the parties shall promptly execute the formal documents when their attorneys are "reasonably satisfied that the formal documents substantially comply with the terms of this Memorandum."

¶ 3 The Agreement further states that "[t]he parties agree to be mutually bound by the terms and conditions set forth herein and on the attached document." The attached document consists of "five additional pages containing terms and conditions of the settlement reached by the parties hereto." The terms and conditions provide, in part:

Equitable Distribution

....

• Non ED [Equitable Distribution] Assets/Children's Assets:

• The children's treasury bonds and checking accounts would be kept intact and not used for anything absent the parties mutual agreement. Melissa and Jeff shall be joint owners of the accounts, such that no funds can be removed absent both parties’ signatures. Both parties shall have online access to all statements.

• The children's American Funds accounts shall be used for the children's education only, absent mutual agreement by the parties.

• The [c]hildren's life insurance policies shall be kept intact. Jeff will be responsible for 90% of the premiums and Melissa shall be responsible for 10% of the premiums until the child is gainfully employed. The beneficiary shall be the children's trust (see details about trust below).

Custody- see the consent order for custody

Support- Child and Spousal

• Jeff to pay $4,400/mo. in child support with automatic step down of $750.00 when child support for a child terminates by statute. The amount of child support may be modified if a child begins residing primarily with Jeff, or a court orders a different amount of child support.

• Alimony to be paid as follows: commencing March 1, 2018 and continuing on the first day of each month thereafter for the next six years (February 1, 2024), unless sooner terminated as set forth below Jeff shall pay alimony in the amount of $6,000 month (taxable to Melissa, tax-deductible to Jeff); Alimony shall sooner terminate upon the death of either party, Melissa's remarriage or cohabitation, or reconciliation of the parties, whichever first occurs. The alimony obligation to be contained in SAPS and non-modifiable unless Jeff suffers an involuntary decrease in gross annual income of 20 percent or more below an annual income of $292,000. If Melissa suffers an involuntary increase in her needs, she may also seek modification of the alimony via arbitration. In no event shall the duration of alimony exceed 6 years. The parties shall submit the issue of modified alimony to arbitration, with the arbitrator's cost to be equally divided.

• Jeff will pay 100% of premium costs for kids’ medical, dental, and vision insurance until the child graduates from college or reaches age 21, whichever comes first.

• Unreimbursed children's medical expenses shall be split 90% Jeff and 10% Melissa, unless modified by court order. Party incurring the expense shall submit receipt, etc. to the other party and the other party shall reimburse within 20 days of receiving expense. Unreimbursed or uncovered health care costs shall include any amount not covered by health, dental, or vision insurance for co-pays, doctor's visits, medical and hospitalization, and reasonable and necessary dental, orthodontic, optical, ophthalmologic, psychological, psychiatric, therapeutic, or pharmaceutical or any other health care related expenses incurred for the benefit of or on behalf of the child. The parties shall explore whether they can obtain [an] HSA account to use for the children's medical expenses.

• Jeff to pay for [Eli] and [Landon]’s cell phones and Melissa to pay for [Jill] and [Jamie]’s cell phones until that child graduates from college or turns 21, whichever comes first.²

• As long as Jeff has support obligations or is obligated to pay for children's college as outlined below, he shall maintain a life insurance policy naming Melissa is (sic) as the beneficiary with a death benefit of $2 Million.

• Until Melissa no longer has an obligation to pay for college expenses, she shall maintain a life insurance policy naming Jeff the beneficiary with a death benefit of at least $1 Million. Jeff at his election may maintain (as owner) at his sole expense [words crossed out] life insurance policy on Melissa's life totaling $1,000,000 in death benefit.

• Additional term: the parties currently have a health insurance policy with a deductible of $10K. Prior to Melissa's flu and hospitalization, Melissa had paid almost $1K. Jeff shall pay as non-taxable support the sum of up to $9,000.00 in the form of payments directly to medical providers as the bills come due for the 2018 policy term.

• Children's trust–each party shall, within 90 days, set up a trust for the benefit of the minor children so that the children can receive any insurance proceeds in lieu of the other party being named the beneficiary. Jeff's brother shall be named as trustee of the children's trust established by Jeff, and Melissa's brother shall be named as trustee of the children's trust established by Melissa.

• Jeff shall keep Melissa on his health insurance until the date of divorce. Melissa shall be responsible for her own out of pocket expenses prospectively.

The Agreement also addresses the parties’ payments for the children's private school and college, attorneys’ fees, and business valuation costs.

¶ 4 At the time of signing the Agreement, Jeff had five policies on his own life, each naming Melissa as the beneficiary—two $1,000,000 policies, and three other policies in the amounts of $305,000; $882,393; and $1,695,000. Melissa had three policies on her own life, each naming Jeff as the beneficiary—two $500,000 policies and one $415,392 policy. Each of the four children also had a life insurance policy, each naming Jeff and Melissa as beneficiaries.

¶ 5 In late March or early April 2018, Melissa learned that cancer

, for which she had previously been treated, had returned. On 1 May 2018, Melissa established the Melissa Galloway Snell Living Trust ("Trust"), naming the children as the beneficiaries and her brother Michael as the trustee and contingent beneficiary. On 16 May 2018, Melissa changed the beneficiary of at least her two $500,000 life insurance policies from Jeff to the Trust.³

¶ 6 Melissa sent Jeff a "Separation and Property Settlement Agreement" on 23 May 2018, which she proposed as the anticipated formalization of the Agreement, that included the following terms:

16. Children's Trust:

a. On or before May 9, 2018, each party shall set up a trust for the benefit of the minor children. Wife shall name her brother, Michael Galloway, as the trustee for her trust, and Husband shall name his brother, Justin Snell as the beneficiary for his trust. b. So long as Wife has an obligation to pay for the children's college expenses as outlined hereinbelow, she shall maintain a life insurance policy on her life naming the children's trust as the beneficiary with a death benefit of at least one million dollars. So long as Husband has a child support obligation and/or college expense obligation as outlined hereinbelow, he shall maintain a life insurance policy on his life with a death benefit of at least two million dollars naming the children's trust as the beneficiary.

¶ 7 Neither Jeff nor Melissa signed the Separation and Property Settlement Agreement. On 4 June 2018, Melissa notified Jeff's attorney that she had established the Trust and changed the beneficiary of her two $500,000 life insurance policies from Jeff to the Trust. In or around February 2019, Jeff notified Northwestern Mutual, the issuer of the policies, that he was contesting the beneficiary of Melissa's two $500,000 life insurance policies. On 15 February 2019, Melissa signed an affidavit detailing her intentions for the insurance proceeds and her understanding of the original Agreement. Melissa died of cancer

on 21 February 2019.

¶ 8 Michael filed a Verified Complaint on 26 ...