Jackson v. Pacific Fidelity Life Ins. Co.
| Decision Date | 29 January 1999 |
| Docket Number | No. CIV.A. 97-1002.,CIV.A. 97-1002. |
| Citation | 34 F.Supp.2d 298 |
| Parties | Joan JACKSON and Robert J. Obiecunas, Executors of the Estate of Patricia A. Obiecunas, Plaintiffs, v. PACIFIC FIDELITY LIFE INSURANCE COMPANY, Defendant, v. Joan Jackson and Robert J. Obiecunas, Individually and as Executors of the Estate of Patricia A. Obiecunas, Janet Obiecunas, Beth Ann Bretcko, Joy E. Wertz, Gary B. Obiecunas, and Mary P. Grubor, Additional Defendants. |
| Court | U.S. District Court — Western District of Pennsylvania |
Elaine Cribbs Rizza, Washington, PA, for Plaintiffs.
Pamela G. Cochenour, Bryan K. Shreckengost, Vincent R. Baginski, Pittsburgh, PA, for Defendants.
Pending before the court are cross-motions (docs. no. 30, 40) of the parties for summary judgment pursuant to Rule 56(c) of the Federal Rules of Civil Procedure. Plaintiffs, Joan Jackson and Robert J. Obiecunas, acting as executors of the estate of Patricia A. Obiecunas, seek summary judgment with respect to a claim by the estate to the proceeds of an annuity contract. Interpleader defendant Gary B. Obiecunas seeks summary judgment regarding claims for the proceeds of the policy by the contingent beneficiaries. For the reasons set forth below, defendant's motion will be granted, and plaintiff's motion will be denied.
On May 6, 1989, Vincent J. Obiecunas purchased an "Excalibur II" annuity from Pacific Fidelity Life Insurance Company ("Pacific"), for which he paid a single premium of $100,000. Doc. no. 2, ex. A. The annuity contract designates Patricia Obiecunas, Vincent Obiecunas' wife, as the primary beneficiary and identifies seven contingent beneficiaries: "Janet — Joy — Beth — Gary — Robert — Mary — Joan." Id. By its terms, the annuity would commence payment to the annuitant, Vincent Obiecunas, on December 7, 2012. Id. In the event of Mr. Obiecunas' death prior to the December 7, 2012 date, section 6(A)(1) of the policy provides that "the Annuity Purchase Value will be paid to the beneficiary unless a contingent annuitant has been designated." Id. Vincent Obiecunas did not designate a contingent annuitant. Section 6(A)(1) also provides that "the beneficiary will receive a lump sum unless a Settlement Option has been elected." Id.
The annuity sets forth certain terms related to beneficiaries. In particular, section 3(K) of the annuity indicates that "[i]f no contingent beneficiary is designated and the beneficiary dies while receiving or entitled to receive payments, any remaining payments would be made to the beneficiary's estate." Id. "Beneficiary" is defined in the annuity as "[t]he person to whom payments will be made if the annuitant dies." Id.
At the time that the annuity was issued, Pacific also issued an amendatory rider which addressed a scenario involving the death of the annuitant prior to the commencement date of the annuity. The rider provides, in part, that "[i]f the annuitant dies before the Annuity Commencement Date, the Annuity Purchase Value must be paid out to the beneficiary within five years after the death of the annuitant." Id. The rider also indicates that the beneficiary may elect a settlement option, or, if the beneficiary is a surviving spouse of the annuitant, may continue the policy with the spouse as the new annuitant. Id.
On September 21, 1994, Vincent Obiecunas died. Doc. no. 2, ex. B. Patricia Obiecunas was the executor of his estate. On December 30, 1994, Pacific sent Mrs. Obiecunas a letter acknowledging receipt of a certified copy of the death certificate of Vincent Obiecunas, letters testamentary, and a letter of authorization from Mrs. Obiecunas. Doc. no. 20, ex. B. At that time, Pacific also informed Mrs. Obiecunas of various options concerning disposition or continuation of the annuity. Id. Such options included a lump sum payout, periodic payments, deferred payment, or a continued annuity with Mrs. Obiecunas as the annuitant. Id. Finally, Pacific advised Mrs. Obiecunas of her obligation to provide certain information to complete whichever of the options she chose to exercise. Id. There is no evidence that Mrs. Obiecunas elected either the continuation of the annuity or any specific payment option. Nor is there evidence of record that she provided any further information to Pacific.
On October 9, 1996, Patricia Obiecunas died. As of that date, Pacific had not distributed any funds related to the annuity. Although plaintiffs have requested that Pacific pay the annuity purchase value to the estate, Pacific has refused claiming that the terms of the annuity mandate payment of the annuity purchase value to the contingent beneficiaries. Both the estate and the contingent beneficiaries claim the proceeds of the policy under the terms of the annuity.
Plaintiffs filed the instant action, asserting their right to the annuity proceeds, and then filed an amended complaint. Pacific answered and requested the court's permission to pay the proceeds of the policy to the Clerk of Court and counterclaimed for interpleader of the contingent beneficiaries pursuant to Rule 22 of the Federal Rules of Civil Procedure. On September 3, 1997, the court granted Pacific's requests, joined the contingent beneficiaries as additional defendants, and ordered Pacific to pay the value of the policy to the Clerk of Court.
Plaintiffs filed an original motion for summary judgment, and defendant Gary Obiecunas filed a cross-motion for summary judgment. The cross-motion was joined by defendant Mary Grubor. This court denied both motions in an opinion dated May 18, 1998, finding that questions of material fact existed concerning which of two conflicting riders controlled.
On or around July 24, 1998, plaintiffs filed a second motion for summary judgment pursuant to Rule 56(c) of the Federal Rules of Civil Procedure. On or around October 27, 1998, Gary Obiecunas filed a second cross-motion for summary judgment.
Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In considering a motion for summary judgment, we must examine the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in favor of that party. Anderson v Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
State law applies to a determination of the rights of rival claimants to an interpleaded fund. Federal Ins. Co. v. Areias, 680 F.2d 962, 963 (3d Cir.1982), citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). See also Metropolitan Life Ins. Co. v. McCall, 509 F.Supp. 439, 441 (W.D.Pa.1981).
As all of the parties to this case have relied principally on Pennsylvania law in their pleadings, it appears that they have determined that Pennsylvania law controls the outcome of the substantive issues in this case. We agree. The annuity appears to have been contracted in Pennsylvania to a Pennsylvania resident. Primary beneficiary Patricia Obiecunas was a resident of Pennsylvania at the time of her death. The competing claimants for the annuity are residents of Pennsylvania. Accordingly, Pennsylvania law will govern in determining the rights of the parties to the proceeds of the annuity.
In our opinion concerning the parties' earlier cross-motions for summary judgment, we found that there was a conflict between the original contract with the attached rider and a second "amendatory rider" which had apparently been issued at some later time. Based on this conflict, we found that we could not grant summary judgment. See Opinion dated May 18, 1998, at 6. The parties now agree that no such second rider was ever part of the contract between the insured and the insurer, and request that the court address their renewed motions for summary judgment.
The supplemental briefs of the parties have been instructive, and we agree that no material issue of fact remains at issue. By disposing of the conflict between the riders, we are now able to consider the annuity as a whole. In so doing, we find that the specific language of the annuity mandates that the policy proceeds be paid to the contingent beneficiaries.
Generally, a beneficiary becomes entitled to the proceeds of a life insurance policy upon the death of the insured.1 Kucera v. Metropolitan Life Ins. Co., 719 F.2d 678, 680 (3d Cir.1983); Quinten v. United States Steel Corp., 186 Pa.Super. 384, 142 A.2d 370, 374-75 (Pa.Super.1958). However, we must honor clear and unambiguous insurance policy language. Reliance Ins. Co. v. Moessner, 121 F.3d 895, 901 (3d Cir.1997); Armotek Indus., Inc. v. Employers Ins. of Wausau, 952 F.2d 756, 762 (3d Cir.1991); Paylor v. Hartford Ins. Co., 536 Pa. 583, 640 A.2d 1234, 1235 (Pa.1994). Thus, an annuitant may, through clear and unambiguous policy language, provide for an exception to the general rule that the right to an annuity vests absolutely in a primary beneficiary who survives the annuitant.2
The relationship between beneficiaries is discussed in section 3(K) of the annuity contract. Neither in that section nor elsewhere in the policy is there any indication that the contingent beneficiaries are only to take the proceeds in the event of the death of Patricia Obiecunas before the death of the insured. Section 3(K) provides, in its most relevant part:
If no contingent beneficiary is designated and the beneficiary dies while receiving or entitled to receive payments, any remaining payments will be made to the beneficiary's estate.
Although section 3(K) could be more clearly stated, it is not ambiguous. "A provision is ambiguous only if reasonably intelligent persons, considering it in the light of the entire policy, can honestly differ as to its meaning." Curbee, Ltd. v. Rhubart, 406 Pa.Super. 505, 594 A.2d...
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