Liberty Life Assur. Co. of Boston v. Kennedy
| Citation | 358 F.3d 1295 |
| Decision Date | 04 February 2004 |
| Docket Number | No. 02-14044.,02-14044. |
| Parties | LIBERTY LIFE ASSURANCE COMPANY OF BOSTON, Plaintiff, v. Barbara KENNEDY, Katherine E. Kennedy, a minor, William B. Kennedy, a minor, Defendants-Appellants, v. Mary Beth Kennedy, individually and as Executrix of the Estate of Clint M. Kennedy, deceased, Bridget Kennedy Richards, Presley Kennedy Wilson, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Joseph Lefkoff, Lefkoff, Duncan, Grimes & Dermer, Atlanta, GA, for Defendants-Appellants.
Henry M. Perlowski, Arnall, Golden & Gregory, Atlanta, GA, for Defendants-Appellees.
Appeal from the United States District Court for the Northern District of Georgia.
Before EDMONDSON, Chief Judge, and KRAVITCH and JOHN R. GIBSON*, Circuit Judges.
Following the death of its insured, Clint Kennedy, Liberty Life Assurance Company filed this interpleader action asking the district court to determine the conflicting claims for life insurance benefits made by Barbara N. Kennedy and Mary Beth Kennedy. Mr. Kennedy obtained this life insurance through his employer, Georgia-Pacific Corporation. The policy is an employee welfare benefit plan governed by the Employee Retirement Income Security Act of 1974, or ERISA.
Barbara Kennedy was Clint Kennedy's second wife. They were married from 1983 to July of 1991, and she asserts a claim to the benefits on her own behalf and on behalf of their minor children, Katherine and William. Mary Beth Kennedy was Clint Kennedy's third wife and was married to him from July of 1991 until the time of his death. She asserts a claim to the benefits on her own behalf and on behalf of Mr. Kennedy's adult children from his first marriage, Bridget Kennedy Richards and Presley Kennedy Wilson, along with Katherine and William. The district court granted summary judgment to Mary Beth Kennedy1 and directed that she receive 25% of the benefits and Mr. Kennedy's four children each receive 18.75% of the benefits. We affirm.
Clint Kennedy was employed by Georgia-Pacific Corporation for more than twenty-five years. His last position was that of Executive Vice President and, by virtue of that position, he participated in the company's executive life and personal accident insurance programs. At the time of his accidental death on October 7, 2000, those policies provided benefits of $1,000,000 in life insurance and $300,000 in accident insurance.
Mr. Kennedy completed a single designation of beneficiary form for these policies on March 14, 1988, naming his then-wife Barbara as the sole beneficiary if she were still living at the time of his death. In 1991, when Clint and Barbara Kennedy divorced, they executed a settlement agreement in which Mr. Kennedy agreed to maintain his employer-sponsored life insurance, with Barbara Kennedy named as trustee for their children as beneficiaries of 50% of the total death benefits. However, the agreement allowed Mr. Kennedy to reduce Katherine's and William's share to 18.75% each if he remarried. Mr. Kennedy did not amend the 1988 designation of beneficiary form when he executed the settlement agreement, but the agreement did not obligate him to keep Barbara Kennedy as a beneficiary. Based on the 1988 designation of beneficiary form and the settlement agreement, Barbara Kennedy has asserted a claim for fifty percent of the insurance proceeds for herself and the remaining fifty percent to be shared equally by Katherine and William.
In 1993, after he had divorced Barbara Kennedy and married Mary Beth Kennedy, Mr. Kennedy executed a will that remained in place without modification until his death. The will included the following provision:
ITEM FIVE
Assuming the named beneficiary of said life insurance is my estate, I hereby give and bequeath all the proceeds of life insurance provided to me by my employer to the following persons:
(a) To my wife Mary Beth Kennedy, one-fourth (25%) outright;
(b) To each of the two (2) children of my first marriage, Bridget and Presley, or their living lineal descendants, per stirpes, three-sixteenths (18.75%) respectively;
(c) To each of the two (2) children of my second marriage, Katherine and William, or their living lineal descendants, per stirpes, three-sixteenths (18.75%) respectively; provided however that if either of said children is less than thirty (30) years old at the time of my death his and/or her shares shall be distributed to their mother, Barbara Nowell Day Kennedy, to be held by her in separate trusts for said children respectively....
If at the time of my death my estate is not the named beneficiary of all my employer-provided life insurance, then I hereby direct that the proceeds thereof be directed to the persons and in the manner hereinabove set forth insofar as the beneficiary designations on said insurance can be made consistent with the terms of this Will.
(Emphasis in original).
Because Mr. Kennedy never amended his 1988 designation of beneficiary form, his estate was not the named beneficiary of his Georgia-Pacific life insurance at the time of his death. The district court concluded that
Georgia-Pacific routinely distributed a Summary Plan Description to provide a succinct explanation of the insurance program to the executives who participated in it. The Summary Plan Description for these policies that was in effect at the time of Mr. Kennedy's death included a section entitled "Naming Your Beneficiary."2 It began:
There is a special beneficiary designation form for this executive program. Your beneficiary is the person, estate, trust, organization, etc., which you designate as such on the form. Unless you have made an irrevocable assignment..., you can change your beneficiary at any time without the consent of your present beneficiary. To do so, contact the Employee Benefits Department for the correct form.
Although the record indicates that it was Georgia-Pacific's policy to distribute a Summary Plan Description to its executives when they entered the program, there is no conclusive evidence that Mr. Kennedy received or retained a copy of any version of that document.
The Plan policy itself — the Georgia-Pacific Group Term Life Insurance Policyholder's Document — included separate sections concerning the naming and changing of beneficiaries. As to the latter, it stated:
An employee may change the Beneficiary. Any change requires acceptable written notice to [Georgia-Pacific]. The notice can be on forms approved by [Georgia-Pacific]. The change shall be filed with [Georgia-Pacific] and will take effect from the date the employee signed the notice. If a notice is not signed, it will be void.
The employee does not have to be living at the time of such filing. [Liberty Life] will not be liable for any payments We make before We receive the change.
The record contains no evidence that Mr. Kennedy was given a copy of the Policyholder's Document.
Liberty Life designated Employers Insurance of Wausau to be the Plan Administrator of this group executive life and personal accident insurance plan. According to the Summary Plan Description, "The Plan Administrator has full discretionary authority to administer and interpret this plan...."
Mr. Kennedy died on October 7, 2000, when an all-terrain vehicle fell off a truck and onto him. Within weeks of his death, Georgia-Pacific prepared proof-of-death forms on the life insurance and the two personal accident insurance policies. These forms continued to list Barbara Kennedy as the beneficiary because the only written direction Mr. Kennedy had given Georgia-Pacific about these policies was his March 14, 1988 designation of beneficiary form. When Mary Beth Kennedy's counsel contacted Georgia-Pacific a short time later to assert her claim to the benefits, Georgia-Pacific referred the matter to Wausau. Wausau engaged the parties in discussions about their conflicting claims, which led to the parties' agreement that Barbara Kennedy would be the trustee of 37.5% of the insurance proceeds on behalf of Katherine and William Kennedy. This is the amount they would have received if the proceeds had been distributed in accordance with Mr. Kennedy's will. Wausau declined to exercise its authority to choose between the conflicting claimants, however, which led to Liberty Life filing this interpleader action.
After filing this action, Liberty Life was permitted to deposit $1,376,858.29 into the registry of the court, reimbursed $10,000 for its attorneys' fees and costs, and dismissed from the case. Consistent with the remaining parties' earlier agreement, the district court entered a consent order distributing 37.5% of the proceeds to The Katherine Elizabeth Kennedy and William Blakely Kennedy Management Trust for their benefit in equal shares. The order also reflected the parties' agreement that the benefits payable under the personal accident policies would be treated in the same manner as the life insurance proceeds.3
On cross-motions for summary judgment, the district court granted Mary Beth Kennedy's motion and denied Barbara Kennedy's motion. The district court concluded that the controlling document was the policy rather than the Summary Plan Description, that the policy did not require Mr. Kennedy to use a company form to change beneficiaries, and that his will was effective in designating Mary Beth Kennedy, Bridget Kennedy Richards, Presley Kennedy Wilson, Katherine Kennedy, and William Kennedy as beneficiaries of the Georgia-Pacific policy. The court entered judgment awarding 25% of the interpleaded funds to Mary Beth Kennedy, 18.75% to Bridget Kennedy Richards, and 18.75% to Presley Kennedy Wilson. Barbara Kennedy appealed, asking that Katherine and William each receive an...
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