Layton v Layton

Decision Date12 May 2000
Docket Number99-02274
PartiesJOHN K. LAYTON, et al. v. LIFE USA, PENNY LAYTON, et al.IN THE COURT OF APPEALS OF TENNESSEE AT JACKSON
CourtTennessee Court of Appeals

A Direct Appeal from the Circuit Court for Shelby County No. 122776 R.D.

The Honorable D'Army Bailey, Judge

After the mother and father divorced, the minor children of the parties filed a petition in the original divorce case to add additional parties and to impose a constructive trust on life insurance proceeds required by the court's decree concerning child support. From the order of the trial court holding that the court has jurisdiction and the order of the trial court granting summary judgment to the children, the other named policy beneficiaries have appealed.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court reversed.

G. Coble Caperton, Memphis, For Appellant, Penny M. Layton

Mike H. White and John E. Dunlap, Memphis, For Appellants, Ron Kim, Trustee, et al

C. Barry Ward and Adam F. Glankler, Memphis, For Appellees

Crawford, P.J., W.S., delivered the opinion of the court, in which Farmer, J., and Lillard, J., joined.

OPINION

In this case, Lisa Rice Layton Hassell was awarded an absolute divorce from Floyd Douglas Layton, Sr., and the final decree entered June 7, 1989, awarded her custody of their three minor children and ordered appropriate support from the father. On October 5, 1998, after Floyd Douglas Layton, Sr., had died on July 14, 1998, the petitioners, John K. Layton, Amanda N. Layton, and Ashley E. Layton, minor children of the parties, by next friend and natural guardian, Lisa Rice Layton Hassell, filed a "Motion to Amend to Add Additional Parties and to Seek the Imposition of a Constructive Trust on Proceeds of Life Insurance." The trial court granted the motion, and an amended petition was filed by the petitioners against the respondents, Life USA, Penny Layton, Talmar Murphy, Regents Bank, as successor to United American Bank, Douglas Layton, Jr., Tina Reynolds, and Ronald Kim, Esquire, purported trustee for Talmar Murphy, Douglas Layton, Jr., and Tina Reynolds, et al. From the order granting summary judgment to the petitioners, the respondents, Penny Layton and Ronald Kim, Esquire, as trustee for Talmar Murphy, Douglas Layton, Jr., and Tina Reynolds, have appealed.

Floyd D. Layton was married three times. He was first married to Debbie Bray. There were two children of that marriage, Floyd Douglas Layton, Jr., and Tina Layton Reynolds, now 26 and 27 years old. Layton's second marriage was to Lisa Rice Layton (also known as Lisa Rice Layton, Lisa Rice Layton Pitts, or Mrs. Hassell, herein referred to as "Mrs. Hassell"). There were three children born of this marriage, John Kyle Layton, Amanda Nicole Layton, and Ashley Elizabeth Layton, all still minor children and made parties to this action by an order entered by the trial court on November 6, 1998. Floyd Layton's third marriage was to Penny Layton, and they were divorced in 1994. In April of 1994, Floyd Layton was diagnosed with cancer. Although divorced, Floyd Layton moved back in with Penny Layton and lived with her until his death on July 4, 1998. At the time of his death, Mr. Layton was a manager at a car dealership owned by Al Gossett.

On July 13, 1995, prior to Mr. Layton's death, Mrs. Hassell, then Lisa Rice Layton Pitts, filed a petition to modify the previous order and requested, among other things, that Mr. Layton be required to provide at least $250,000.00 in life insurance with the three minor children as beneficiaries stating:

Petitioner would state that Respondent was diagnosed with cancer about a year ago and he had an operation to remove two tumors and his kidney along with undergoing chemotherapy. He is in complete remission now and is working full-time. Because of Respondents health problems, it would be in the best interests and welfare of the minor children of the parties, if Respondent was ordered to name the minor children as the sole and irrevocable beneficiaries of a minimum of $250,000.00 life insurance policy or in an amount set by the Court.

On November 22, 1995, a consent order was entered concerning Mr. Layton's support obligation and, as pertinent to the issues before us, provides:

The Respondent shall provide documentation of the life insurance he has on his life at present. Said life insurance shall show the parties' children as irrevocable beneficiaries so long as he has a child support obligation for them. It is understood that the Respondent's present insurance may not cover the entire obligation he has for child support, but that he is unable to obtain additional insurance coverage because of his medical history.

On January 30, 1996, Mrs. Hassell, then Lisa Rice Layton Pitts, filed a petition for citation for contempt against Mr. Layton, claiming that he had failed to pay the sums required by the consent order, and that he had not provided the documentation of life insurance. On May 21, 1996, counsel for Mr. Layton wrote to counsel for Mrs. Hassell enclosing a copy of the change of beneficiary form that Mr. Layton had supplied to his insurance agent. The form provided beneficiary designation is as follows:

BENEFICIARY CHANGE

* * *

BENEFICIARY DESIGNATIONS ARE IN EQUAL SHARES UNLESS OTHERWISE SPECIFIED IN FRACTIONS OR PERCENTAGES.

First Benefciary(ies):

                John Kyle LaytonSon33,333
                
                Amanda N. LaytonDaughter33,333
                
                Ashley E. LaytonDaughter33,333
                
                Penny M. LaytonSpouseRemainder of Insurance
                

On October 21, 1996, the policy was changed by reducing Penny Layton's share to 23.1 percent and placing the remainder in trust. The form specifies United American Bank as the first beneficiary and reads as follows with regard to the secondary beneficiaries:

23.1% to my ex-wife Penny Layton, the balance to my trustee Ronald W. Kim, to pay the income derived [sic] from said corpus to my mother Talmar Murphy for life and upon her death the balance equally to my children then living, with my trustee to use his discretion [sic] with regard to any payments to or on behalf of my minor children then living and to pay to any of my children over 21 years of age the respective shares. My trustee is is [sic] required to post no bond, however, is to comply with the fiduciary responsibilities applicable in the Tennessee Code.

The petition for contempt was dismissed with prejudice by an order entered October 31, 1996, stating that the parties had announced to the court that they had resolved their dispute.

On October 5, 1998, and again on October 23, 1998,1 after the death of Mr. Layton, Mrs. Hassell filed the instant proceeding seeking to obtain for her children the life insurance proceeds alleging that Mr. Layton failed to make his minor children irrevocable beneficiaries on his policy. The motion was granted on November 6, 1998. On November 22, 1998, Life USA paid proceeds in the amount of $263,000.00 to the registry of the court, and the life insurance company was released as a party. United American Bank was listed as a party because it was named as a beneficiary to protect Mr. Layton's debt to the bank. That debt was satisfied by Penny Layton, and United American Bank and its successor, Regina Bank, are no longer parties.

On January 8, 1999, plaintiffs filed a motion for summary judgment. They assert that the record contains no evidence that Mr. Layton had the right to name additional beneficiaries as long as the minor children remained on the policy. Plaintiffs argue that it is undisputed that the parties entered a consent order on November 22, 1995, after plaintiffs had filed a petition to modify and that in that petition the plaintiff requested that the minor children become the sole, irrevocable beneficiaries.

On January 21, 1999, defendants filed a suggestion of death, and defendant Ronald Kim, purported trustee, and defendant Penny Layton filed motions to dismiss on the grounds that the court lacked jurisdiction to hear this matter. Defendants contend that when a party to a divorce dies, the action abates and therefore cannot be amended, and that the court cannot allow an amendment that drops the original plaintiff and defendant from the style of the case. Plaintiffs' motion for summary judgement and defendants' motions to dismiss were heard on March 5, 1999. Plaintiffs' motion for summary judgement was granted and respondents' motions to dismiss were denied. In interpreting the November 1995 order, the court stated: "[i]t just seems to me that the only reasonable construction of this November 22 order would be that whatever insurance he had was going to the children, except that for (what) he would be legally unable to hold for the benefit of the children." It is from the order granting summary judgment that the defendants, Penny Layton, Ronald Kim, trustee for Talmar Murphy, Douglas Layton, Jr., and Tina Reynolds now appeal, presenting two issues for review:

I.Whether the Trial Court erred by determining that it had jurisdiction to hear this case?

II.Whether the Trial Court erred in granting summary judgment ?

With regard to the first issue, whether the trial court retained jurisdiction over the action after the death of the original party, Floyd Layton, appellants assert that the action abated. Appellants rely on Steele v. Steele, 757 S.W. 2d 340,342 (Tenn. Ct. App. 1988), for the proposition that a divorce action abates upon the death of either party. However, Steele did not involve the custody or support of minor children and we do not believe it is authoritative for the issue before us.

T.C.A. § 36-5-101(a)(1) provides:

Decree for support of spouse and children - Modification- Delinquencies.

- (a)(1) Whether the marriage is dissolved absolutely, or a perpetual or temporary separation is decreed, the court may make an order and decree for the suitable support and maintenance of either spouse by the other spouse, or out of either spouse's property, and of the children, or any of them, by either spouse or out of...

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