State Farm Life Ins. Co. v. Youngs

• Decision Date: 05 April 2022
• Docket Number: 20-cv-2120 (ECT/HB)
• Parties: State Farm Life Insurance Company, Plaintiff, v. Dustin K. Youngs; S.A.G., a minor; Nancy Geib, solely in her role as mother/guardian of S.A.G.; and Deborah Cunningham, Defendants.
• Court: U.S. District Court — District of Minnesota

State Farm Life Insurance Company, Plaintiff, v. Dustin K. Youngs; S.A.G., a minor; Nancy Geib, solely in her role as mother/guardian of S.A.G.; and Deborah Cunningham, Defendants.

No. 20-cv-2120 (ECT/HB)

United States District Court, D. Minnesota

April 5, 2022

Brian F. Kidwell, Kidwell Law Office, St. Louis Park, MN, for Defendant Dustin K. Youngs.

Elizabeth C. Henry and Francis J. Rondoni, Chestnut Cambronne P.A., Minneapolis, MN, for Defendants S.A.G., Nancy Geib, and Deborah Cunningham.

OPINION AND ORDER

Eric C. Tostrud, United States District Court

This interpleader action involves competing claims to life-insurance proceeds under a State Farm life insurance policy. The two remaining claimants are the insured's surviving spouse, Deborah Cunningham, and the insured's nephew, Dustin Youngs. Each has moved for summary judgment. Because there is no genuine dispute that the insured clearly and unambiguously intended Deborah to be the primary beneficiary under the policy, Deborah's summary-judgment motion will be granted, and Youngs's motion will be denied.

I.

Defendant Deborah Cunningham was married to Robert Cunningham for 43 years, until Robert's death in June 2020. Deborah Dep. 46 [ECF Nos. 94-2, 104-4]. Defendant Nancy Geib is Deborah's sister and the mother and guardian of Defendant S.A.G. Second Geib Decl. ¶ 1 [ECF No. 59]. Defendant Dustin Youngs is Robert and Deborah's nephew. Youngs Dep. 8 [ECF No 94-1].

In December 2007, Robert and Deborah applied for life insurance policies from State Farm Life Insurance Company. Deborah Dep 16-17. Geib, a licensed life insurance agent employed by a State Farm agency, Geib Dep. 9-11 [ECF Nos. 104-5, 94-4] helped Robert and Deborah apply for the policies. Robert and Deborah executed State Farm life-insurance applications at Geib's home. Deborah Dep. 16-20; ECF No. 108-2 at 4. Geib witnessed the applications, and no others were present. Geib Dep. 11- 12; see ECF No. 104-2 (“Robert Policy”); ECF No. 104-1 (“Deborah Policy”). Robert and Deborah each designated the other as sole primary beneficiary in the application, and each named Youngs the sole successor beneficiary. Deborah Policy at 20; Robert Policy at 19.

In January 2008, State Farm issued $250, 000 life insurance policies to Robert and Deborah each. Id. Those policies incorporated the beneficiary designations from Robert and Deborah's applications: Deborah was Robert's primary beneficiary, Robert was Deborah's primary beneficiary, and Youngs was the sole successor beneficiary under each policy. See Robert Policy at 10 (noting that the Policy's beneficiary designation “is as shown in the Application, unless you have made a change by Request”); Deborah Policy at 8 (same).

In May 2010, Geib gave birth to S.A.G. Deborah Dep. 28. Not quite seven years later, Robert and Deborah decided to complete Change of Beneficiary forms that would add S.A.G. as a beneficiary under their State Farm policies. Id. at 27-29. Deborah and Robert executed the Change of Beneficiary forms at their home in January 2017. Id. at 29-30. Deborah had filled in the Change of Beneficiary forms for both Robert's policy and her policy ahead of time, listing Youngs and S.A.G. in the forms' section for identifying primary beneficiaries. Deborah did not identify successor beneficiaries. In other words, Robert's form did not list Deborah as a primary or successor beneficiary, and Deborah's form did not name Robert. See ECF No. 104-3 at 2, 4; ECF No. 108-1 at 7; ECF No. 108-2 at 4; Deborah Dep. 31.

Robert signed his Change of Beneficiary form. ECF No. 108-1 at 7; ECF No. 108-2 at 4. Once again, Geib witnessed the signatures and signed the paperwork, and no others were present at the time of signing. Deborah Dep. 29-30; Geib Dep. 19; see ECF No. 104-3 at 2, 4. Geib submitted the Change of Beneficiary forms to State Farm. Geib Dep. 30. The beneficiary designations in the Change of Beneficiary forms were reflected in Notice of Policy Status reports mailed annually by State Farm to Deborah and Robert in 2018 through 2020. ECF No. 104-3 at 6-8 (identifying Youngs and S.A.G. as primary beneficiaries).

Robert died in June 2020. See ECF No. 108-1 at 6; Deborah Dep. 46, 50; ECF No. 1-1 at 21. Soon after Robert's death, State Farm informed Youngs that he was a primary beneficiary under Robert's policy. Until this time, Youngs had been unaware of his beneficiary status. Youngs Dep. 19-23, 43. On June 12, Geib discovered State Farm had recorded Youngs and S.A.G. as Robert's primary beneficiary designations after the Change of Beneficiary forms were submitted-something she says was a mistake-and informed Deborah. Geib Dep. 29-31. Deborah shared Geib's surprise. In a letter to State Farm dated June 24, 2020, Deborah explained that an error had occurred:

In January of 2017 Robert and I intended to update our successor beneficiaries by adding our niece, [S.A.G.], to the policy making the successor beneficiaries our nephew, Dustin Youngs and our niece, [S.A.G.], equally. The primary beneficiaries should have remained as us being each other. We updated my life policy at the same time[.]

I understand that letters were sent after the beneficiary changes were processed and we had received renewal notices that showed this. Since our policies are on automatic payments[, ] the notices were not reviewed so neither one of us realized the mistake that was made. We were not aware until the time in which the claim was submitted for my husband.

Given the fact that Nancy Geib, my sister and agent's office representative processed this and did not catch the fact that the beneficiary names were placed in the primary beneficiary box instead of the successor[, ] I am requesting this be reviewed and that the funds be payable to myself and not Dustin or [S.A.G.]. This was an error on [Geib's] part and admittedly so.

Robert and I were married for 43 years and had no children of our own[, ] which is why the successor beneficiaries were our niece and nephew. All of our assets and accounts are/were in both of our names. It only makes sense that we wanted each other to be primary beneficiaries.

ECF No. 104-6 at 8-9.

Deborah and Youngs filed competing claims for the total death benefit under Robert's policy, ECF No. 1-1 at 22-25, prompting State Farm to file this interpleader action to establish the primary beneficiary and rightful recipient of those proceeds, ECF No. 1. State Farm's motion to deposit the proceeds plus interest was granted, ECF No. 80, and it has deposited $255, 551.97 in the court registry, ECF No. 85.

The parties have filed competing motions for summary judgment. ECF Nos. 91, 102. Each side seeks to establish their entitlement to the interpleader funds. Youngs, on the one hand, argues his primary beneficiary status is established by Robert's Change of Beneficiary form identifying him as such, and that the law bars Deborah from recovering the interpleader funds. See ECF No. 103. Deborah and Geib^[1] disagree. In support of their motion, they argue there is no genuine dispute that Robert's true intent in completing the Change of Beneficiary form was to designate S.A.G. as a successor beneficiary, for Youngs to remain a successor beneficiary, and for Deborah to remain the sole primary beneficiary. See ECF No. 93.

II

Absent special circumstances, the merits stage of an interpleader action “proceed[s] like any other action” and “may be adjudicated on a summary-judgment motion.” 7 Mary Kay Kane, Federal Practice and Procedure § 1714 (3d ed. Apr. 2021 Update). Summary judgment is warranted 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(a). A fact is “material” only if its resolution might affect the outcome of the suit under the governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute over a fact is “genuine” only if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. “The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in [its] favor.” Id. at 255 (citation omitted). Courts take a “slightly modified” approach when, as here, multiple parties have moved for summary judgment. Fjelstad v. State Farm Ins. Co., 845 F.Supp.2d 981, 984 (D. Minn. 2012). In resolving Youngs's motion, the record is viewed in the light most favorable to Geib and Deborah, and in resolving Geib and Deborah's motion, the record is viewed in the light most favorable to Youngs. See Id. “[T]he filing of cross motions for summary judgment does not necessarily indicate that there is no dispute as to a material fact, or have the effect of submitting the cause to a plenary determination on the merits.” Young Am.'s Found. v. Kaler, 482 F.Supp.3d 829, 851 (D. Minn. 2020) (citations omitted).

Minnesota law allows a first-named beneficiary of a life-insurance policy to challenge “whether there has been an effective change of beneficiary.” Gwin v. Gappa, 394 N.W.2d 530, 534 (Minn.Ct.App. 1986). That was precisely the situation in Gwin. There, the decedent, Dale Gappa, originally named his then-wife, Jean Gappa, as beneficiary of a life insurance policy. Id. at 532. Dale and Jean divorced, and Dale subsequently executed a change-of-beneficiary form naming his “close friend, ” Delores Gwin, beneficiary. Id. As the court summarized the dispute:

All the parties agreed that the change of beneficiary form had been signed by the insured. The completed form designated Gwin as the primary beneficiary. However, there was conflicting testimony about whether the designated beneficiary portion of the form was in the insured's handwriting or another's.

Id. The trial court determined, following...