UBS Fin. Servs., Inc. v. Brescia

• Decision Date: 12 February 2014
• Docket Number: Civil No. 13–cv–4–JNL.
• Citation: UBS Fin. Servs., Inc. v. Brescia, 24 F.Supp.3d 128 (D. N.H. 2014)
• Parties: UBS FINANCIAL SERVICES, INC. v. Glen BRESCIA and the Estate of Toni Ann Brescia.
• Court: U.S. District Court — District of New Hampshire

24 F.Supp.3d 128

UBS FINANCIAL SERVICES, INC.

v.Glen BRESCIA and the Estate of Toni Ann Brescia.

Civil No. 13–cv–4–JNL.

United States District Court, D. New Hampshire.

Signed Feb. 12, 2014.

David E. Buckley, Buckley Law Office, Nashua, NH, Patrick E. Donovan, Donovan Law Office, Salem, NH, for UBS Financial Services, Inc.

MEMORANDUM ORDER

JOSEPH N. LAPLANTE, District Judge.

This is a dispute over whether two individual retirement accounts (“IRAs”), held by a decedent, Toni Ann Brescia, belong to her estate or to her ex-husband, Glen Brescia.Despite their intervening divorce, Glen was designated as the beneficiary of the accounts at the time of Toni Ann's death.In making a claim to the IRAs nonetheless, the estate argues that, through their divorce stipulation and accompanying “Release Agreement,”Toni Ann and Glen “unambiguously articulate[d] an intent to relinquish any anticipatory or expectancy interest in each other[s'] investments or retirement accounts,” or, in any event, that this court should reform the agreement to provide for such a result.Glen disagrees as to both the estate's interpretation of the agreement and its right to reformation.

This court has diversity jurisdiction over this action, see28 U.S.C. § 1332(a)(1), which Glen, a citizen of Massachusetts, commenced by seeking a declaratory judgment of his sole right to the IRAs against UBS Financial Services, Inc., the custodian of the account and a citizen of New Jersey.UBS responded by bringing a third-party complaint for interpleader, see28 U.S.C. § 1335, against both Glen and the estate, which is a citizen of New Hampshire, seeid.§ 1332(c)(2).The estate, for its part, then brought a cross-claim against Glen, seeking a declaratory judgment of its sole right to the IRAs.¹Each party has filed a motion seeking summary judgment, seeFed.R.Civ.P. 56, on its own claim, and against the other's claim, to the IRAs.The parties declined the court's offer of oral argument.

For the reasons explained fully below, the court grants Glen's motion for summary judgment, and denies the estate's, resulting in an award of the IRAs to Glen.The New Hampshire Supreme Court has held that “a divorce decree or stipulation which merely releases all claims of one party to the property of the other does not, in the insurance policy context, destroy the beneficiary status of the first party, because the beneficiary status is not a vested property right.”Dubois v. Smith,135 N.H. 50, 59, 599 A.2d 493(1991).This rule, which the New Hampshire Supreme Court has since applied to an IRA as well, Est. of Tremaine ex rel. Tremaine v. Tremaine,146 N.H. 674, 780 A.2d 522(2001), dictates the outcome here.Dubois likewise dooms the estate's reformation claim, since here (as there) the record contains no evidence that the parties“agreed to forever forfeit [the ex-spouse's] beneficiary interest.”135 N.H. at 60, 599 A.2d 493(quotation formatting omitted).So, despite the estate's game attempts to distinguish these cases—and whatever the equitable appeal of its suggestion that Toni Ann would “want [her] assets to be inherited by family members or loved ones, instead of [her] ex-spouse [ ]”—this court must award the IRAs to Glen.

I.Applicable legal standard

Summary judgment is appropriate where “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 dispute is “genuine” if it could reasonably be resolved in either party's favor at trial, and “material” if it could sway the outcome under applicable law.SeeEstrada v. Rhode Island,594 F.3d 56, 62(1st Cir.2010).In analyzing a summary judgment motion, the court“views all facts and draws all reasonable inferences in the light most favorable to the non-moving”parties.Id.On cross-motions for summary judgment, “the court must consider each motion separately, drawing inferences against each movant in turn.”Merchants Ins. Co. of N.H., Inc. v. U.S. Fid. & Guar. Co.,143 F.3d 5, 7(1st Cir.1998)(quotation marks omitted).

II.Background

The underlying facts are more or less undisputed.Glen and Toni Ann were married in 1999.During the marriage, Toni Ann opened two IRA accounts with UBS, executing, for each account, an “IRA Application and Adoption Agreement” with UBS.²In relevant part, each agreement (a) identified Glen as the “First Primary Beneficiary,”(b) did not identify any “Second Primary Beneficiary,” or contingent beneficiaries, and (c) acknowledged that “any interest in this IRA that is not effectively disposed of by the beneficiary designation I make in this Application or any subsequent beneficiary designation will be paid to my surviving spouse and if no surviving spouse to my estate.”

In 2006, Glen and Toni Ann filed for divorce with the then-Salem Family Division of the Rockingham County Superior Court.Their marriage produced no children.The divorce was granted when the court approved a “Final Decree on Petition for Divorce or Legal Separation” executed and submitted by the parties in August 2006.While the form provided boxes and blanks to complete for the division of various marital assets, many of the blanks had been marked “see attached,” an apparent reference to a “list of the division of property” appended to the form, and also signed by each of the parties.In relevant part, this list stated, “IRA—Each keep their own.”

On the same day they submitted the form divorce decree, the parties also executed the “Release Agreement” mentioned above.This document states, in pertinent part, that the parties

are not represented by Counsel, and they have agreed that they desire and intend to divide their assets independently and without legal assistance.Husband and Wife drafted an instrument to make a final and complete settlement of all matters relating to the interests of each with respect to current assets and liabilities....

Heretofore [sic ], at this time the Husband and the Wife hereby waive [ ], renounce[ ], and relinquish[ ] unto each other, their respective heirs, executors, administrators and assigns forever, in law or in equity, all and any interest of any kind or character which either may have or may hereafter acquire in or to any real or personal property of the other and whether now owned or hereafter acquired by either.

Toni Ann died in a car accident nearly six years later, on May 5, 2012.Her estate has since come forward with a “Last Will and Testament,” which she purportedly executed on April 23, 2012, just 12 days prior to her death.³This instrument leaves (with one exception not relevant here)“everything I own.House, cars, bank accounts, IRAs, investments etc.” to one Joseph Addario, whom the instrument identifies as Toni Ann's “Domestic Partner,” and also names as the executor of the estate.Toni Ann had no children at the time of her death.

As noted at the outset, Toni Ann had not changed the beneficiary designation in favor of Glen on either of the IRAs at any point.At the time UBS deposited the contents of the IRAs into this court, see note 1, supra,they contained a total of $149,379.32.

III.Analysis

As the New Hampshire Supreme Court has held, a “beneficiary's interest in [a life insurance] policy does not rise to the level of a vested property interest unless the insured is somehow prohibited from changing the beneficiary designated in the policy.”Dubois,135 N.H. at 58, 599 A.2d 493.This is so, the court explained, because “the insured may change the designated beneficiary at any time, provided that the insured has not contracted away this right.”Id.Accordingly, as noted above, “a divorce decree or stipulation which merely releases all claims of one party to the property of the other does not, in the insurance policy context, destroy the beneficiary status of the first party, because the beneficiary interest is not a vested property right.”Id. at 59, 599 A.2d 493.As also noted above, the New Hampshire Supreme Court has applied these very same principles in the IRA context, seeTremaine,146 N.H. at 675, 780 A.2d 522, and the parties agree that these principles apply in this case.

The estate argues that, despite its name, the parties' “Release Agreement” did more than merely “release all claims of one party to the property of the other.”In fact, the estate maintains, the agreement—together with the contemporaneous divorce decree—“expressed the parties' mutual intent to renounce, extinguish and revoke their existing and anticipatory interests in either party's retirement accounts.”The interpretation of the agreement and the decree are questions of law for the court.SeeBirch Broad., Inc. v. Capitol Broad. Corp.,161 N.H. 192, 196, 13 A.3d 224(2010);Tremaine,146 N.H. at 675, 780 A.2d 522.

As the New Hampshire Supreme Court held in Tremaine,“a divorce decree must unambiguously evidence an intent to remove a beneficiary in order to effectively alter an original designation under an IRA contract.”146 N.H. at 675, 780 A.2d 522(quotation marks and bracketing omitted; emphasis added).The court ruled there that the language of the parties' stipulated divorce decree—“[e]ach party is awarded any interest in any pension, retirement, 401k, IRA or other retirement account that each one may have and as shown on her or his respective Financial Affidavit, free and clear of any right, title, interest, or claim of the other”—did not suffice.Id. at 674–76, 780 A.2d 522.“While it may be that the stipulation of the parties in the decree was intended to terminate the [ex-spouse's] beneficiary interest in the IRA,”the court allowed, “the language could be interpreted to mean that [the ex-spouse] was to retain her interest.Accordingly, the divorce decree fails to unambiguously change the beneficiary designation.”Id. at 676, 780 A.2d 522.

The language of the parties' agreement in this case likewise fails to unambiguously demonstrate their intent to remove Glen as a beneficiary of Toni Ann's IRAs....