PaineWebber v. East

• Decision Date: 14 March 2001
• Docket Number: No. 44,44
• Citation: 363 Md. 408,768 A.2d 1029
• Court: Maryland Court of Appeals
• Parties: PAINEWEBBER INCORPORATED et al. v. Carol S. EAST.

768 A.2d 1029

363 Md. 408

PAINEWEBBER INCORPORATED et al. v. Carol S. EAST.

No. 44, Sept. Term, 2000.

Court of Appeals of Maryland.

March 14, 2001.

Cary J. Hansel (Barbara J. Gorinson of Joseph Greenwald & Laake, P.A., on brief), Greenbelt, for petitioners.

Benjamin Rosenberg (Lynn E. Ricciardella of Rosenberg, Proutt, Funk & Greenberg, LLP, on brief), Baltimore, for respondent.

Argued before BELL, C.J., ELDRIDGE, RAKER, WILNER, CATHELL, HARRELL, and LAWRENCE F. RODOWSKY (retired, specially assigned), JJ.

LAWRENCE F. RODOWSKY, Judge (Retired, Specially Assigned).

This interpleader action involves the interpretation of a separation agreement. The issue is whether, by the separation agreement, the former wife waived her right as the named beneficiary to the proceeds of an individual retirement account (IRA) maintained by her ex-husband, now deceased.

The respondent, Carol S. East (Carol), and her former husband, Dewey F. East, Jr. (Dewey), were married in 1985. In April 1986, Dewey opened an IRA account (the East IRA) with PaineWebber, Inc. (PaineWebber), by completing and executing a form entitled "Adoption Agreement and New Account Form for PaineWebber IRAs." Dewey named Carol the beneficiary of the East IRA, but, under the terms of the account as set forth in the agreement between Dewey and PaineWebber, Dewey reserved the power to change the named beneficiary. On March 14, 1990, Carol and Dewey entered into the subject separation agreement (the Agreement). They were divorced, a vinculo, by the Circuit Court for Prince George's County on May 8, 1991.

Dewey married Deborah East (Deborah) in 1993. He died on December 10, 1996.

In October 1997 Carol sued PaineWebber in the Circuit Court for Prince George's County claiming the East IRA as named beneficiary. PaineWebber counterclaimed in interpleader, joining Deborah and the Estate of Dewey (the Estate) as additional counterclaim defendants under Maryland Rule 2-331(c).¹ PaineWebber averred that claims to the East IRA had been asserted against it by Deborah and also by the Estate.

The two newly joined parties moved for summary judgment on two grounds. First, they argued that Carol, in the Agreement, had waived any right as the named beneficiary to the East IRA. The movants further argued, inter alia, that Dewey, by signing in May 1996 a form headed, "Adoption Agreement and New Account Form for PaineWebber IRAs," on which the spaces for designation of a primary and a contingent beneficiary were left blank, had designated the Estate as beneficiary under the terms of the East IRA and in accordance with PaineWebber's internal operating procedures. The circuit court granted summary judgment in favor of the Estate, concluding that Carol had effectively waived, in the Agreement, any right, including that of a named beneficiary, to the proceeds of the East IRA.² The trial court did not address whether Dewey had effected a change of beneficiary. Carol appealed to the Court of Special Appeals.

In East v. PaineWebber, Inc., 131 Md. App. 302, 748 A.2d 1082 (2000), the Court of Special Appeals reversed. It held that "the Agreement, by itself, [did] not operate as a waiver of Carol's rights as the named beneficiary of the East IRA." Id. at 316, 748 A.2d at 1089. The Court of Special Appeals addressed the provisions of the Agreement on which the appellees based their waiver argument, specifically the provisions entitled "Pension Waiver," "Waiver of Estate Claim," and "Property Division" which we shall discuss below.

Thereafter, we granted the Estate's petition for a writ of certiorari. PaineWebber, Inc. v. East, 359 Md. 668, 755 A.2d 1139 (2000).

I

Maryland Rule 2-501 provides that summary judgment may be granted where "there is no genuine dispute as to any material fact and ... the party is entitled to judgment as a matter of law." Under Maryland's summary judgment rule, a trial court determines issues of law and makes rulings as a matter of law. Beatty v. Trailmaster Prods., Inc., 330 Md. 726, 737, 625 A.2d 1005, 1011 (1993); Heat & Power Corp. v. Air Prods. & Chems., Inc., 320 Md. 584, 591, 578 A.2d 1202, 1205 (1990). Where there are disputed issues of material fact a trial court shall not grant summary judgment. Pittman v. Atlantic Realty Co., 359 Md. 513, 537, 754 A.2d 1030, 1043 (2000); Goodwich v. Sinai Hosp. of Baltimore, Inc., 343 Md. 185, 205-06, 680 A.2d 1067, 1077-78 (1996). Thus, the standard for reviewing a trial court's grant of summary judgment is "whether the trial [court] was legally correct." Okwa v. Harper, 360 Md. 161, 178, 757 A.2d 118, 127 (2000); Sheets v. Brethren Mut. Ins. Co., 342 Md. 634, 638-39, 679 A.2d 540, 542 (1996); Heat & Power Corp.,320 Md. at 592,578 A.2d at 1206. "In reviewing a summary judgment, an appellate court has the same information from the record and decides the same issues of law as the trial court." Heat & Power Corp.,320 Md. at 591-92,578 A.2d at 1206.

Interpretation of the unambiguous separation agreement presented in the instant case is a question of law for the court and, therefore, is subject to de novo review. Auction & Estate Reps., Inc. v. Ashton, 354 Md. 333, 341, 731 A.2d 441, 445 (1999); Calomiris v. Woods, 353 Md. 425, 434, 727 A.2d 358, 362 (1999); Kendall v. Nationwide Ins. Co., 348 Md. 157, 170-71, 702 A.2d 767, 773 (1997); JBG/Twinbrook Metro Ltd. Partnership v. Wheeler, 346 Md. 601, 625, 697 A.2d 898, 911 (1997); Suburban Hosp., Inc. v. Dwiggins, 324 Md. 294, 306, 596 A.2d 1069, 1075 (1991). As we explained in Goldberg v. Goldberg, 290 Md. 204, 428 A.2d 469 (1981):

"Property settlement agreements, as all other contracts scrutinized under the law of this State, are subject to interpretation in light of the settled and oft-repeated principles of objective construction. Orkin v. Jacobson, 274 Md. 124, 128, 332 A.2d 901, 903 (1975). `The written language embodying the terms of an agreement will govern the rights and liabilities of the parties, irrespective of the intent of the parties at the time they entered into the contract, unless the written language is not susceptible of a clear and definite understanding....' Slice v. Carozza Prop., Inc., 215 Md. 357, 368, 137 A.2d 687, 693 (1958). `[W]here a contract is plain and unambiguous, there is no room for construction, and it must be presumed that the parties meant what they expressed.' Kasten Constr. [Co.] v. Rod Enterprises, [Inc.], 268 Md. 318, 328, 301 A.2d 12, 18 (1973); Little v. First Federated Life [Ins. Co.], 267 Md. 1, 6, 296 A.2d 372, 375 (1972); Devereux v. Berger, 253 Md. 264, 269, 252 A.2d 469, 471 (1969). Thus, when interpreting a separation agreement, this Court is `bound to give effect to the plain meaning of the language used.' Woodham v. Woodham, [235 Md. 356,] 360, 201 A.2d [674,] 676 [(1964)]; Sands v. Sands, 252 Md. 137, [142-43,] 249 A.2d 187[, 190-91] (1969)."

Id. at 212, 428 A.2d at 474-75. See also Feick v. Thrutchley, 322 Md. 111, 114, 586 A.2d 3, 4 (1991)

; Bruce v. Dyer, 309 Md. 421, 433, 524 A.2d 777, 783 (1987).

We turn then to the three provisions of the Agreement which the Estate contends constitute a waiver by Carol of any claim to the East IRA as a named beneficiary.

II

The "Pension Waiver" provision reads as follows:

"Each of the parties hereby expressly waives any legal right either may have under any Federal or State law as a spouse to participate as a payee or beneficiary regarding any interests the other may have in any pension plan, profit-sharing plan, or any other form of retirement or deferred income plan including, but not limited to, the right either spouse may have to receive any benefit, in the form of a lump-sum death benefit, joint or survivor annuity, or pre-retirement survivor annuity pursuant to any State or Federal law, and each of the parties hereby expressly consents to any election made by the other, now or at any time hereafter, with respect to the recipient and the form of payment of any benefit upon retirement or death under any such pension plan, profit-sharing plan, or other form of retirement or deferred income plan."

From this language, the Estate constructs the following argument:

"Thus, under the plain language of the `pension waiver clause' quoted above, Carol East has `expressly consent[ed] to any election made by [Dewey East] ... at any time ... with respect to the recipient ... of the IRA. By consenting in advance to any election made by Dewey East at any time with respect to the recipient of the IRA, Carol East has expressly, contractually waived any right even to challenge the change of beneficiary made by Dewey East. By doing so, Carol East agreed that the election she now challenges is valid and unassailable. Given this specific waiver (of the right to challenge any change in beneficiary), Carol East is barred from objecting to any change of beneficiary made by Dewey East."

The argument would be logically unassailable were the facts as the Estate presents them. It has not been determined, however, who the named beneficiary is. If no change of beneficiary was effected by Dewey, then Carol's consent to a change is simply irrelevant. The Estate's consent argument improperly assumes that the named beneficiary of the East IRA was validly and effectively changed. If the beneficiary has been effectively changed, it is pursuant to a power reserved in Dewey to which Carol's consent was not required, as we explain in Part IV, infra.

Furthermore, Carol does not claim the East IRA based on status or relationship as a spouse; she claims under a contract right, as the named beneficiary. Thus, the language waiving "any legal right ... as a spouse to participate as a payee or beneficiary... in any ... retirement or deferred income plan" does not defeat Carol's claim. We agree with the conclusion of the Court of Special Appeals that "the `Pension Waiver' provision of the Agreement does not support a finding that Carol waived her rights as beneficiary to the East IRA." East, 131 Md.App....