Pluemer ex rel. Buggs v. Pluemer

• Decision Date: 08 October 2009
• Docket Number: No. 2009AP155.,2009AP155.
• Citation: 776 N.W.2d 261,2009 WI App 170
• Parties: Jessica M. PLUEMER, a minor, by her Guardian ad Litem, Stephen R. BUGGS, Plaintiff-Respondent, v. Patricia PLUEMER, Defendant-Appellant.
• Court: Wisconsin Court of Appeals

776 N.W.2d 261

2009 WI App 170

Jessica M. PLUEMER, a minor, by her Guardian ad Litem, Stephen R. BUGGS, Plaintiff-Respondent, v. Patricia PLUEMER, Defendant-Appellant.

No. 2009AP155.

Court of Appeals of Wisconsin.

Submitted on Briefs April 8, 2009.

Opinion Filed October 8, 2009.

On behalf of the defendant-appellant, the cause was submitted on the briefs of Robert L. Sudmeier of Fuerste, Carew, Coyle, Juergens & Sudmeier, P.C., Dubuque, Iowa.

On behalf of the plaintiff-respondent, the cause was submitted on the brief of Stephen R. Buggs, Platteville.

Before DYKMAN, P.J., LUNDSTEN and BRIDGE, JJ.

¶ 1 DYKMAN, P.J

Patricia Pluemer appeals from an order granting summary judgment to Jessica Pluemer in Jessica's action to recover life insurance proceeds paid to Patricia following the death of Gerald Pluemer, who was Patricia's husband and Jessica's father.¹ Patricia contends that the trial court erred in imposing a constructive trust over the insurance proceeds based on the marital settlement agreement between Gerald and Jessica's mother, Lisa, which required both parents to name Jessica as the beneficiary on their life insurance policies.² Patricia contends that she is entitled to the life insurance proceeds despite the marital settlement agreement because (1) she is a bona fide purchaser of the life insurance proceeds, and therefore her right to the proceeds is superior to Jessica's; and (2) the life insurance provision in the marital settlement agreement is not "support-related," and thus the court was prohibited from imposing a constructive trust over the insurance proceeds.

¶ 2 We conclude first that Patricia has not identified a legal requirement that life insurance provisions in divorce agreements must be "support-related" to allow courts to impose constructive trusts over life insurance proceeds. However, we also conclude that there are competing reasonable inferences from the undisputed facts as to whether Patricia is a bona fide purchaser of at least a portion of the life insurance proceeds, which goes to the material issue of whether Patricia's right to that portion of the proceeds supersedes Jessica's and therefore invalidates the constructive trust over that amount. Accordingly, we reverse and remand with instructions to deny both parties' motions for summary judgment and proceed to trial on the issue of whether Patricia is a bona fide purchaser of any of the insurance proceeds.

Background

¶ 3 The following undisputed facts are taken from the parties' summary judgment submissions. The "life insurance" section of Gerald and Lisa's marital settlement agreement provided that "[e]ach party shall name the parties' daughter [Jessica] as primary beneficiary on his or her [life insurance] policy."³

¶ 4 Gerald married Patricia in 2004. At that time, Gerald was retired from his position at John Deere and co-owned a business called Night Hawk Security. Several months after Gerald and Patricia married, Night Hawk began to struggle financially. Because Night Hawk was not a profitable business, Patricia financially supported the family, including Jessica when she resided with Gerald and Patricia.⁴

¶ 5 In July 2006, Gerald asked Patricia to take out a second mortgage on her home in order to satisfy Night Hawk's debts. Patricia refused. In May 2007, Gerald was diagnosed with cancer. Several months later, he again asked Patricia to take out a second mortgage to satisfy Night Hawk's outstanding debt. Patricia again refused. Gerald continued to demand that Patricia take out a second mortgage to satisfy Night Hawk's debts, and said to her: "You will have my life insurance. What more do you want?" Patricia expressed concern over whether she was actually named as the beneficiary on Gerald's life insurance policy, and Gerald insisted that she was. Nonetheless, Patricia asked Gerald to verify who was the named beneficiary on his policy. The next day, Gerald informed Patricia that she was not named as the beneficiary, but that he would change it. Patricia then agreed to take out a second mortgage on her house to pay Night Hawk's debts, and on July 5, 2007, she gave Badger State Bank a mortgage on her house in the amount of $32,117.11 in exchange for a loan, which was used to pay Night Hawk's debt with First National Bank. Patricia testified at her deposition that she gave a second mortgage on her home to satisfy Night Hawk's debt as consideration for being named the beneficiary of Gerald's life insurance policy, but that there was no written contract between Patricia and Gerald concerning this agreement. She also stated that she did not know of the insurance provision in Gerald's marital settlement agreement from his first marriage. On August 23, 2007, Gerald changed the beneficiary on his life insurance policy to Patricia.

¶ 6 Also on August 23, 2007, Gerald and Patricia signed a contract with Doug Bartow, Night Hawk Security's co-owner, and his wife. The contract stated that Doug Bartow and his wife would obtain a loan to pay off Patricia's second mortgage with Badger State Bank. Doug did not do so and only made one payment of $600.00 to Badger State Bank. In his deposition, Doug stated that he agreed to make payments on Patricia's second mortgage, but would need to talk to an attorney to determine if he was legally responsible for its payment.

¶ 7 Gerald died on September 22, 2007. Patricia received the proceeds of Gerald's life insurance policy in the amount of $43,994.87. Patricia used the money from the life insurance policy to pay off her second mortgage and other debts left by Gerald. Jessica then brought this action to recover the proceeds of Gerald's life insurance policy from Patricia. Both parties moved for summary judgment. The trial court granted summary judgment to Jessica, imposing a constructive trust over the proceeds in Jessica's favor. Patricia appeals.

Standard of Review

¶ 8 We perform summary judgment analysis de novo, applying the same methodology employed by the trial court. See Brownelli v. McCaughtry, 182 Wis.2d 367, 372, 514 N.W.2d 48 (Ct.App.1994). "[S]ummary judgment is a drastic remedy and should not be granted unless the material facts are not in dispute, no competing inferences can arise, and the law that resolves the issue is clear." Lecus v. American Mut. Ins. Co. of Boston, 81 Wis.2d 183, 189, 260 N.W.2d 241 (1977). "The court determines only whether a factual issue exists, resolving doubts in that regard against the party moving for summary judgment." Preloznik v. City of Madison, 113 Wis.2d 112, 116, 334 N.W.2d 580 (Ct.App.1983). If a genuine issue of fact exists, the motion for summary judgment must be denied. Id. at 118, 334 N.W.2d 580. "The question upon review of an order granting a motion for summary judgment is not necessarily whether the inferences that have been drawn are reasonable but whether the record reveals there are competing inferences that could be considered reasonable." Lecus, 81 Wis.2d at 189-90, 260 N.W.2d 241.

¶ 9 A constructive trust is an equitable remedy imposed to prevent unjust enrichment. Richards v. Richards, 58 Wis.2d 290, 296, 206 N.W.2d 134 (1973). We review the trial court's decision to impose a constructive trust under an erroneous exercise of discretion standard. Duhame v. Duhame, 154 Wis.2d 258, 265-68, 453 N.W.2d 149 (Ct.App.1989). "Discretionary acts are sustained if the trial court examined the relevant facts, applied the proper standard of law, and, using a demonstrated rational process, reached a conclusion that a reasonable judge could reach." Parge v. Parge, 159 Wis.2d 175, 179, 464 N.W.2d 217 (Ct.App.1990) (citation omitted).

Discussion

¶ 10 Patricia contends that she is a bona fide purchaser of Gerald's life insurance proceeds and therefore her right to the proceeds supersedes Jessica's, invalidating the constructive trust the trial court imposed on the proceeds in Jessica's favor. See Richards, 58 Wis.2d at 298, 206 N.W.2d 134 ("Where a person holding property transfers it to another in violation of his duty to a third person, the third person can reach the property in the hands of the transferee by means of a constructive trust unless the transferee is a bona fide purchaser." (citation omitted)). Patricia argues that she is a bona fide purchaser because she gave a second mortgage on her home for a loan to pay Night Hawk's business debt for Gerald in consideration for Gerald's naming her as the beneficiary on his life insurance policy, without knowledge of the life insurance provision in Gerald's marital settlement agreement. Alternatively, Patricia asserts that even if she is not a bona fide purchaser, a constructive trust is improper under the facts of this case because we held in Duhame that a constructive trust is prohibited where the life insurance provision in a divorce judgment is not "support-related." Lastly, Patricia argues that even if a constructive trust is allowed under the facts of this case, it would be inequitable to impose a constructive trust in Jessica's favor.

¶ 11 Jessica argues that the trial court properly imposed a constructive trust on the insurance proceeds because Gerald and Lisa's marital settlement agreement deprived Gerald of the right to transfer or sell his life insurance proceeds. Thus, Jessica contends that Patricia's lack of knowledge of the insurance provision in the marital settlement agreement is irrelevant. She asserts that, as in Richards, Gerald's wrongful conduct of naming his second wife as beneficiary means that his second wife was not a bona fide purchaser and that a constructive trust was properly imposed. Jessica responds to Patricia's alternative argument by asserting that the language of the marital settlement agreement and Lisa's affidavit clearly demonstrate that the life insurance provision in Gerald and Lisa's marital settlement agreement was support-related under Duhame. Finally, she argues that equity weighs in her favor.

¶ 12 We conclude first that Duhame does not...