State Farm Life Ins. Co. v. Benham, Civil Action 2:21-CV-00695-AKK
| Decision Date | 17 December 2021 |
| Docket Number | Civil Action 2:21-CV-00695-AKK |
| Parties | STATE FARM LIFE INSURANCE COMPANY, Plaintiff, v. BRADLEY H. BENHAM III and JOYCE H. BENHAM, Defendants. |
| Court | U.S. District Court — Northern District of Alabama |
This matter arises from an interpleader action initiated by State Farm Life Insurance Company over the proceeds of a $100, 000 policy it issued in 1987 to Bradley H. Benham, Jr., the father of Bradley H. Benham III and the ex-husband of Joyce H. Benham.[1] See docs. 1; 1-1. The court has for consideration Joyce Benham's and Bradley Benham III's cross-motions for summary judgment, docs. 32; 38 in which they assert competing claims to the proceeds. In short, Joyce Benham contends that her divorce agreement with Bradley Benham, Jr., maintains her role as primary beneficiary of the policy and entitles her to the entirety of the proceeds. See doc. 32. On the other hand Bradley Benham III argues that South Carolina law, as applied to the divorce agreement, revoked Joyce Benham's designation as beneficiary to the proceeds exceeding $50, 000. See docs. 38; 42. Both motions are ripe for resolution. As explained below, Joyce Benham's motion is due to be granted, and Bradley Benham III's motion is due to be denied.[2]
I.
Under Federal Rule of Civil Procedure 56, summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56. This rule “mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The movant must first establish the absence of a genuine issue of material fact. Id. at 323. The burden then shifts to the nonmovant to “go beyond the pleadings” and show a “genuine issue for trial, ” see id. at 324, that is, to “produce[] evidence such that a reasonable factfinder could return a verdict in its favor, ” Greenberg v. Bell South Telecomms., Inc., 498 F.3d 1258, 1263 (11th Cir. 2007) (quoting Waddell v. Valley Forge Dental Assocs., Inc., 276 F.3d 1275, 1279 (11th Cir. 2001)). The filing of cross-motions for summary judgment does not alter these standards. See Price v. Dunn, 385 F.Supp.3d 1215, 1225 (S.D. Ala. 2019) (citing Am. Bankers Ins. Grp. v. United States, 408 F.3d 1328, 1331 (11th Cir. 2005)).
Generally, at summary judgment, the court must credit the nonmovant when conflicts arise between the facts evidenced by the parties, Feliciano v. City of Miami Beach, 707 F.3d 1244, 1252 (11th Cir. 2013), and construe the evidence and reasonable inferences arising from it in the light most favorable to the nonmovant, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). “When both parties move for summary judgment, the court must evaluate each motion on its own merits, resolving all reasonable inferences against the party whose motion is under consideration.” Price, 385 F.Supp.3d at 1225 (quoting Muzzy Prods., Corp. v. Sullivan Indus., Inc., 194 F.Supp.2d 1360, 1378 (N.D.Ga. 2002)). “[M]ere conclusions and unsupported factual allegations are legally insufficient to defeat a summary judgment motion.” Ellis v. England, 432 F.3d 1321, 1326 (11th Cir. 2005).
II.
In May 1987, State Farm issued Bradley Benham, Jr., a “Basic Plan” life insurance policy with a face value of $100, 000. See doc. 32 at 3.[3] Bradley Benham, Jr., named his then-wife, Joyce Benham, as the primary beneficiary and his then-newborn son, Bradley Benham III, as the successor beneficiary. Id.; doc. 1-1 at 14. The policy became effective on May 14, 1987. Doc. 1-1 at 3.
In December 2005, the elder Benhams divorced in Marion County, South Carolina. Docs. 32 at 4; 1-2 at 2. Their divorce agreement, incorporated into the family court's divorce decree, stipulated that “the [l]ife [i]nsurance policies [then] in effect” would “remain in effect, ” with Bradley Benham, Jr., “being responsible for all premiums” and Joyce Benham “being the beneficiary.” Docs. 32 at 4; 1-2 at 3. The divorce agreement also provided that “[t]he insurance payable to [Joyce Benham] shall be in the amount of at least Fifty Thousand Dollars.” Doc. 1-2 at 3. Bradley Benham, Jr., never altered the beneficiary designations before his death in Alabama in 2021. See doc. 32 at 4. After his death, State Farm filed this interpleader action, see doc. 1, and deposited the life insurance proceeds of $112, 530.80 with the court, see Minute Entry on 09/01/2021; doc. 24.
III.
Joyce Benham asserts her entitlement to the entirety of the proceeds, arguing that South Carolina law controls the interpretation of the divorce agreement and that the state's revocation-upon-divorce statute does not preclude her receipt of the proceeds given the language of the divorce agreement. See doc. 32 at 6-7. For his part, Bradley Benham III agrees that South Carolina law governs but contends that the law essentially severed Joyce Benham's interest in the proceeds that exceed $50, 000 under the terms of the divorce agreement. See docs. 38 at 4-6; 42 at 3. The court addresses the law governing the action before turning to the divorce agreement.
Stovall v. Universal Constr. Co., 893 So.2d 1090, 1102 (Ala. 2004) (internal citations omitted).
In this case, Bradley Benham, Jr., and Joyce Benham divorced and formed their divorce agreement in South Carolina. See docs. 32 at 5; 1-2 at 2-3. The divorce agreement does not specify a particular sovereign's law to govern. See generally doc. 1-2. Therefore, as the parties agree, South Carolina law applies to the interpretation of the divorce agreement unless South Carolina law “is contrary to [Alabama's] fundamental public policy.” See Stovall, 983 So.2d at 1102. See also docs. 32 at 6; 38 at 4.
On the revocation of property transfers following divorce, the relevant law is South Carolina Code § 62-2-507. See generally S.C. Code Ann. § 62-2-507. Enacted in 1986 and as amended in 2013, § 62-2-507 reads, in pertinent part:
Id. § 62-2-507(c).[4] Alabama's revocation-upon-divorce statute uses nearly identical terms.[5] Accordingly, South Carolina law does not run afoul of Alabama's fundamental public policy, and South Carolina law therefore applies to this action. See Stovall, 983 So.2d at 1102.
The court turns now to the primary issue in dispute: whether § 62-2-507(c) revokes Joyce Benham's designation as beneficiary of the policy at issue despite the language in the Benhams' divorce agreement, which predated the amendment of § 62-2-507 to include life insurance beneficiary designations. Joyce Benham contends that (1) she and the elder Bradley Benham entered into “a contract relating to the division of the marital estate” that preserved her status as beneficiary, see S.C. Code Ann. § 62-2-507(c); and (2) regardless, the divorce agreement and divorce predated the amendment of § 62-2-507(c), which does not apply retroactively, see Id. § 62-2-507 reporter's comment. See doc. 32 at 7-8. Bradley Benham III argues that the amended § 62-2-507(c) (1) applies retroactively and (2) revoked Joyce Benham's interest in the proceeds above $50, 000 because the divorce agreement does not “expressly” enumerate proceeds above that amount.[6] See docs. 38 at 4-6; 42 at 3-4.
Under South Carolina law, “[t]he construction and enforcement of an unambiguous contract is a question of law for the court, and thus can be properly disposed of at summary judgment.” Southern Glass & Plastics Co. v Kemper, 732 S.E.2d 205, 209 (S.C. Ct. App. 2012); South Carolina Dep't of Nat. Res. v. Town of McClellanville, 550 S.E.2d 299, 302-03 (S.C. 2001).[7] Ambiguity results when the terms of the...
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