Marriage of O'Connell, In re

• Decision Date: 29 July 1992
• Docket Number: No. H008692,H008692
• Citation: 8 Cal.App.4th 565,10 Cal.Rptr.2d 334
• Court: California Court of Appeals
• Parties: In re the Marriage of John and Raytha O'CONNELL. Nona O'CONNELL, As Special Administrator, etc., Intervenor and Appellant, v. Raytha O'CONNELL, Respondent.

Page 334

10 Cal.Rptr.2d 334

8 Cal.App.4th 565

In re the Marriage of John and Raytha O'CONNELL Nona O'CONNELL, As Special Administrator, etc., Intervenor and Appellant, v. Raytha O'CONNELL, Respondent.

No. H008692.

Court of Appeal, Sixth District, California.

July 29, 1992.

Robert L. Wood, Campbell, for intervenor and appellant.

Robert A. Jette, Jr., San Jose, for respondent.

COTTLE, Acting Presiding Justice.

Introduction

John O'Connell died on December 25, 1990, leaving two life insurance policies sponsored by his employer totaling $212,000, according to his widow, Nona O'Connell. ¹ At issue is whether John's ex-wife, Raytha O'Connell, and their son, Richard, are entitled to two-thirds of the insurance proceeds because of a court order requiring they be designated as beneficiaries of the policies. Nona, as an individual and as executrix of John's estate, appeals from an order denying her motion to vacate the order that John designate Raytha and Richard as joint life insurance beneficiaries with Nona. Nona contends the court lacked jurisdiction to make the original order because it was beyond the court's power, the life insurance was not properly before the court, and Nona received no prior notice of the request to modify the life insurance. Facts are stated where relevant. For the reasons stated below, we will affirm the order.

Facts

On July 15, 1985, John, a design specialist for Lockheed Missiles and Space Co., filed for dissolution of his 16-year marriage to Raytha. In July 1986 the parties stipulated to bifurcate the proceedings as to the issue of status. On November 12, 1986, their marriage was dissolved with the court reserving jurisdiction over "all other issues in this proceeding, including, but not limited to, division of property and debts, spousal support, child support and injunctive orders."

According to Nona, John married her on November 14, 1986, and designated her the beneficiary of life insurance provided through Lockheed.

On December 30, 1987, after trial of remaining issues, the court ordered John to pay monthly spousal support of $651 and child support of $912 for two minor children. This amended judgment also divided the parties' property and reserved jurisdiction over other issues. There was no disposition of John's life insurance.

By stipulation and order filed April 18, 1990, the parties agreed that child support would be reduced to $450 and spousal support to $200 monthly as of September 1, 1989.

On June 4, 1990, John filed a motion seeking a reduction in child and spousal support due to his disability. ² Raytha offered, by letter and telephone call but without a formal responsive pleading, to agree to reduction if she alone or she and their children were named beneficiaries of John's life insurance. According to Nona, John did not appear at the hearing on July 27, 1990, due to illness. At the hearing John's counsel objected to the request to modify the insurance because it was not made through formal pleadings, ³ it would be unfair to Nona, John had no obligation to support his adult son, and both children would be entitled to social security benefits on John's death if he survived to the age of 62 on October 17, 1990. The court ordered reductions in monthly spousal support to nothing and child support to $125 during John's disability and, as child and spousal support, that John name Raytha and Richard, his minor son, as beneficiaries of his life insurance along with Nona. This order was served on John on September 20, 1990.

John died on December 25, 1990, without providing for his children in his will. According to Nona, John was covered by two life insurance policies purchased through his employer, a $112,000 basic policy and a $100,000 optional policy, the latter purchased by John's earnings without his employer's contribution.

On January 15, 1991, Raytha filed a motion seeking enforcement of the life insurance modification order and alleging John did not change beneficiaries before he died. On January 31, 1991, the court granted Nona's request to intervene in this action. Nona was appointed the executrix of John's estate on March 4, 1991.

On March 15, 1991, Nona filed a motion to vacate the order modifying the life insurance. The motion was denied at a hearing on May 10, 1991, for reasons partly quoted below.

Discussion

1. Was the Marital Dissolution Court Empowered to Order the Designation of Life Insurance Beneficiaries as a Support Substitute?

In a dissolution action the court can order a spouse as a form of support to maintain life insurance to benefit either the other spouse or a minor child. (Franklin Life Ins. Co. v. Kitchens (1967) 249 Cal.App.2d 623, 629-631, 57 Cal.Rptr. 652; Civ.Code, § 4801.4; ⁴ see Annot., Divorce: Provision in decree that one party obtain or maintain life insurance for benefit of other party or child (1974) 59 A.L.R.3d 9.) Section 4801.4 of the Family Law Act (§ 4000 et seq.), cited in the trial court's statement of decision, provides in pertinent part: "For the purposes of Section 4801, where it is just and reasonable in view of the circumstances of the respective parties, the court, in determining the needs of a supported spouse, may include an amount sufficient to purchase an annuity for the supported spouse or to maintain insurance for the benefit of the supported spouse on the life of the spouse required to make the payment of support, ... so that the supported spouse will not be left without means for support in the event that the order for support is terminated by the death of the party required to make the payment of support. Except as otherwise agreed to by the parties in writing, an order made under this section may be modified or terminated at the discretion of the court at any time prior to the death of the party required to make the payment of support."

As explained in In re Marriage of Ziegler (1989) 207 Cal.App.3d 788, 255 Cal.Rptr. 100: "[T]he Law Revision Commission comments to section 4801.4 ... state: 'If insurance is already in force on the life of the support obligor, this section authorizes the court to order that the support obligor maintain some or all of the insurance in force and name the supported spouse as the beneficiary of the insurance.' " (Id. at p. 791, 255 Cal.Rptr. 100.) The statute authorized a court to require an ex-husband to maintain a military survivor benefit plan as a form of annuity for his ex-wife. (Ibid.)

Nona challenges the order as requiring a security for future support payments unauthorized by section 4701.1. (Cf. Taylor v. Superior Court (1990) 218 Cal.App.3d 1185, 1188, 267 Cal.Rptr. 519.) Ziegler, supra, 207 Cal.App.3d 788, 255 Cal.Rptr. 100, rejected a contention that an order to provide an annuity was the equivalent of such a security deposit. The purpose of section 4801.4 "is to insure support is provided for the supported spouse after the obligor dies. It has nothing to do with providing 'security' for the payment of support owed during the obligor's lifetime." (Id. at p. 793, 255 Cal.Rptr. 100, emphasis in original; but see Franklin Life Ins. Co., supra, 249 Cal.App.2d 623, 630-632, 57 Cal.Rptr. 652.)

Nona also contends this order violates the rule that a spousal support obligation ordinarily ends on the obligor's death. (§ 4801, subd. (b).) Ziegler, supra, 207 Cal.App.3d 788, 255 Cal.Rptr. 100, also rejected this contention. "Section 4801.4 does not change this rule. (Cal.Law Revision Com. com., 12A West's Ann.Civ.Code, supra, § 4801.4....)" (Id. at p. 792, 255 Cal.Rptr. 100.) The obligor's death still ends the obligor's support obligation, specifically to maintain the insurance or annuity, and creates a new obligation in the insurer or annuity provider to the supported spouse. (Ibid.)

On the same reasoning, provision of insurance for a minor does not extend the obligor's child support obligation beyond the obligor's death. Even if it did, a child support obligation survives the obligor's death and becomes the obligation of the obligor's estate. (Franklin Life Ins. Co., supra, 249 Cal.App.2d 623, 631, 57 Cal.Rptr. 652; In re Marriage of Gregory (1991) 230 Cal.App.3d 112, 115-116, 281 Cal.Rptr. 188.)

Thus, courts have the power in marital dissolutions to order maintenance of life insurance for the benefit of children and former spouses as a support substitute.

2. Was the Issue of Modifying John's Life Insurance Before the Court?

Nona contends this particular dissolution court had no jurisdiction to order modification of John's life insurance because Raytha did not formally bring the issue before the court by either a motion or a pleading responding to John's request to reduce support. We examine what actually transpired in further detail.

After entry of the dissolution judgment, on June 4, 1990, John filed a motion, set for July 27, 1990, seeking a reduction in child and spousal support because he was on disability after having major surgery. His motion requested support be established pursuant to Santa Clara County guidelines. ⁵ The motion for modification form advised Raytha to file any responsive declarations with the court and serve them on John at least five court days before the hearing. By letter dated July 13, 1990, and a later telephone call between counsel, Raytha offered to agree to the support reductions if she was named sole beneficiary of John's employer-sponsored life insurance or if she and their two children were named equal beneficiaries with Nona. In this way John was expressly notified that his life insurance was in issue, contrary to Nona's claim that "[n]o notice whatsoever was given...."

The objections by John's counsel at the hearing and the resulting order have been described above in our statement of the facts. In view of the objection to lack of notice, there neither is nor can be any contention of waiver of the notice issue. (Compare Grenall v. Grenall (1959) 169 Cal.App.2d 748, 751, 337 P.2d 896.) Contrary to Nona's contention, ...