Prudential Ins. Co. of Am. v. Delph

• Decision Date: 04 June 2020
• Docket Number: No. 6:18-CV-298-REW,6:18-CV-298-REW
• Parties: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Plaintiff, v. VELVA DELPH, et al., Defendants.
• Court: U.S. District Court — Eastern District of Kentucky

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Plaintiff, v. VELVA DELPH, et al., Defendants.

No. 6:18-CV-298-REW

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY SOUTHERN DIVISION LONDON

June 4, 2020

OPINION & ORDER*** *** *** ***

The remaining parties in this interpleader case assert competing claims to decedent William Brent Bundy's life insurance proceeds, payable under a group policy that former Plaintiff Prudential issued through the decedent's employer. Defendants Velva Delph and Willie Bundy, parents of the deceased, seek summary judgment; they contend that the designation of competing claimant Defendant Sarah Carta (the decedent's live-in girlfriend at the time of his death) as beneficiary was fraudulent and, thus, that they are entitled to the funds per the policy's default beneficiary terms. However, disputed fact questions underly movants' theories of designation invalidity. Summary judgment is thus inapt on this contested record.

1. Factual and Procedural Background

William Brent Bundy ("Brent") died on September 8, 2018 from a gunshot wound to the forehead. The Madison County Coroner ruled the death a suicide. DE #1-2 at 74 (Death Certificate).¹ Brent's parents, Delph and Bundy, were appointed co-administrators of his estate. DE #30-2 ¶ 3 (Delph Declaration). At the time of his death, Brent worked as a fork-truck driver for Sherwin-Williams in Richmond, Kentucky; he had life insurance coverage, issued by Prudential, through his employer. See DE #1-2 (Group Life Insurance Policy). Brent began dating Carta in January 2017, while she was separated (though not yet divorced) from her husband. DE #39-1 (Carta Dep. at 15);² see also DE #30-6 (Carta Divorce Decree, dated August 15, 2018). Brent was divorced at the time, with no children. DE #30-2 ¶ 2 (Delph Declaration). Carta and Brent began living together, with Carta's four minor children, sometime before September 2017. DE #39-1 at 6-7. The couple comingled their finances, to a degree; Carta and Brent had a joint checking account, and each had his or her own, separate account, all at Chase Bank. Id. at 43. They further shared the account access information for their individual accounts with one another. Id. at 47.³

On November 13, 2017, several changes were made to Brent's life insurance policy selections during his employer's open enrollment period, via the online portal. DE #39-1at 50-51. Someone, on Brent's account, purchased three life insurance policies: Optional Life Insurance in the amount of $46,000, Basic Life Insurance in the amount of $91,000, and Optional Accidental Death & Dismemberment Insurance in the amount of $400,000. DE #30-4 (November 2017 Benefits Summary). Each policy listed Carta as the sole beneficiary. See DE #30-15 (Beneficiary Confirmation Notice, dated November 14, 2017). Absent any specific beneficiary designation, the proceeds would have been payable to Brent's parents, per the default policy terms. DE #1-2 at 54.⁴ Carta testified that she made the life insurance (as well as other health insurance) benefit selections from a laptop at the home she and Brent shared, at Brent's request, and that the two were texting about the choices throughout the process because Brent was then at work. DE #39-1 at 55-56. She further testified that she and Brent also may have discussed the choices a few days before making the online changes, and that Brent had come home for lunch on November 13, just before the benefits enrollment. Id. at 56-59. Carta is unable to retrieve the text messages that she and Brent exchanged during the November 2017 selections process. See id. at 59-62.

Carta did, however, produce text messages between the pair, from April 2017, that discussed beneficiary designation. DE #40-1.⁵ On April 3, 2017, Brent expressly advisedCarta that he would be designating her as his life insurance, pension, and 401(k) beneficiary. He texted Carta: "I'm signing u as my beneficiary for my life insurance. My 401 k and my pension. I want you and kids to have it. I'm not waiting till u marry me to do it cause if something happens to me before then it won't be set don't argue with me on it if u do I'll have it willed to all 4 kids." DE #40-1 at 24. Though Carta responded that Brent did not "have to do that," Brent insisted there would be "[n]o negotiation" on the subject. Id. Brent proceeded to further explain and justify his decision. See id. at 29 ("It's just what I want to do with it and that's what I'm doing I will not take any other suggestions."); id. at 30 ("I see it like this. I'm the one working for it so it's mine to do with as I please. I love you and those kids. I'll never and wouldn't ever love another woman the way I love you. So I'm giving it to the people I love. My mom don't need my money my brother is almost a millionaire my sister doesn't hurt for money so I don't wanna hear you say give it to one of them."); id. at 32 ("I'm not working my ass of here paying into 401k. Having them give me a pension if I can't give it to the love of my life and those kids. So if I die tonight. It's yours."). The April 3 conversation concerning benefits concluded with Carta insisting that Brent had promised not to leave her, "even in death[,]" and urging him not even to "say it[.]" Id. at 33.

Carta and Brent discussed the life insurance topic again a week later. See DE #40-2 (April 10, 2017 text messages). Brent again broached the subject, saying: "How much I'm worth dead. 698 thousand. 6 dollars 98 cents alive." Id. at 14. Carta seemed surprised at Brent's statements, asking him, "Why would u look that up[?]" Id. Brent responded:"Remember the other day when I put u down as [beneficiary] I said I wanted to look up how much life insurance I had[.]" Id. Brent persisted on the topic: "I wanna make you a promise . . . [I don't] know why this is on my mind today. But I think it's cause we talked about money." Though Carta thought Brent was referring to an earlier discussion between them about starting a savings account, Brent clarified that he was thinking about his "life insurance and 401k." Id. at 21. He then informed Carta that, even if she left him at that moment, he would maintain her designation as beneficiary. Id. at 22 ("First off this would devastate me. But if you looked at me today and told me u couldn't stand me. Ur still gonna be the [beneficiary] to that. Cause I couldn't stand to think you would have to worry over money ever[.]"). Carta assured Brent that she "would never do that[,]" and Brent responded that, if she did, he would "step off [a] mountain[.]" Id. The discussion ended with Brent explaining that he "just want[ed] to know [that Carta was] taken care of[,]" and Carta asking that Brent "[s]top thinking about that[.]" Id. at 23. The April discussions preceded the benefit changes by 6+ months. Brent's death occurred the following September.

On September 14, 2018, seven days after Brent's death, Bundy sent a letter directed to the "Sherwin-Williams Benefits Department[,]" inquiring about Brent's life insurance proceeds and "questioning the legitimacy" of Carta's designation as beneficiary. DE #1-2 at 82 (Bundy Letter). Delph sent a similar letter on September 20, noting that she "would like to file an objection on the life insurance beneficiary for [her] son, contesting the on-line changes" made in November 2017. Id. at 84 (Delph Letter). Sherwin-Williams confirmed internally that Carta was in fact the nominal beneficiary on all three life insurance policies. Id. at 76. However, given the competing claims and Delph's representations, the company initiated a fraud investigation concerning the beneficiarychange. DE #30-12. The fraud investigation revealed that the beneficiary change was made on Brent's account while he was at work; Sherwin-Williams, through its Director of Health and Welfare Plans, Martha Lanning, confirmed that two benefits system access points occurred on November 13, 2017 (at 1:08 p.m. and 1:26 p.m. Eastern Time) from an iPad, and that Brent was paid for eight hours of work on that date.⁶ DE #30-11 (Lanning Dep.) at 6-9. Lanning further noted that Brent had never purchased optional life insurance coverage before November 2017. Id. at 8.

On September 27, 2018, Carta submitted a Group Life Insurance Claim. DE #1-2 at 88-91. The following day, Carta wrote a letter to Prudential, advising that she was Brent's sole beneficiary and inquiring about an assignment for Brent's funeral payment. DE #39-8 (September 2018 Carta Letter). On October 22, 2018, Delph's counsel submitted a letter to Prudential, reiterating Delph's continued claim to the insurance proceeds and encouraging Prudential to file an interpleader action to resolve the apparent dispute. DE #1-2 at 93-101. Delph's letter accused Carta of fraudulently designating herself as the beneficiary; Delph further characterized Carta as having a "purely financial interest" in Brent and expressed suspicion about Carta's involvement in Brent's death. Id. After the funeral, on November 6, 2018, Carta again wrote to Prudential, providing a "statement" concerning her perceived right to the insurance proceeds. DE #39-9 (November 2018 Carta Letter). In the letter, Carta accused Delph of "telling both companies [Sherwin-Williams and Prudential] anything she can in order to delay the proceeds or mislead them to causedoubts in distributing the proceeds to the rightful beneficiary." Id. at 1. She further described several negative (largely asset- and finance-related) interactions with Delph following the funeral, and she stated her belief that Brent designated her as his beneficiary in February or March of 2017. See id. at 6 ("To the best of my knowledge, he made me his beneficiary around February/March of 2017 or at least that is what he came home from work and told me.").

Carta also referenced a recent conversation with police about the circumstances of Brent's death. Per Detective Allen's resulting report, Delph and Bundy had approached the police on ...