Waldman v. Maini

• Decision Date: 06 November 2008
• Docket Number: No. 48144.,48144.
• Citation: 195 P.3d 850
• Parties: Paul A. WALDMAN, as Executor of the Estate of Susan L. Maini, Deceased; Paul A. Waldman, Individually; and Paul A. Waldman and Lynn Warren, as Co-Administrators of the Estate of Michele Jean Maini, Deceased, Appellants/Cross-Respondents, v. Michael MAINI, Individually; Michael Maini and Marlys Osburn, as Co-Administrators of the Estate of Steven Maini, Deceased; and Maini Distributing, Inc., A Nevada Corporation, Respondents/Cross-Appellants.
• Court: Nevada Supreme Court

195 P.3d 850

Paul A. WALDMAN, as Executor of the Estate of Susan L. Maini, Deceased; Paul A. Waldman, Individually; and Paul A. Waldman and Lynn Warren, as Co-Administrators of the Estate of Michele Jean Maini, Deceased, Appellants/Cross-Respondents, v. Michael MAINI, Individually; Michael Maini and Marlys Osburn, as Co-Administrators of the Estate of Steven Maini, Deceased; and Maini Distributing, Inc., A Nevada Corporation, Respondents/Cross-Appellants.

No. 48144.

Supreme Court of Nevada.

November 6, 2008.

Vannah & Vannah and Robert D. Vannah and Denise M. Ridenhour, Las Vegas, for Appellants/Cross-Respondents.

Law Offices of John P. Foley and John P. Foley, Las Vegas; Foley & Foley and Daniel T. Foley, Las Vegas, for Respondents/Cross-Appellants.

BEFORE THE COURT EN BANC.¹

OPINION

By the Court, HARDESTY, J.:

On Christmas Day 2003, Steven and Susan Maini, their two children, and Susan's parents died in a plane crash at the North Las Vegas airport. This appeal arises out of a conflict between Susan's brother and Steven's brother, the administrators of Susan's and Steven's respective estates, over the distribution of the ownership interest in a Maini family company, respondent/cross-appellant Maini Distributing, Inc. (MDI), and the distribution of Susan's life insurance policies' proceeds. In this appeal, after determining that MDI was Steven's separate property, we consider two issues of first impression in the context of determining the appropriate distribution of Susan's life insurance proceeds.

First, we consider whether a corporation may acquire an ownership interest in life insurance policies by paying the premiums. Although we conclude that a corporation may acquire such an interest under constructive trust and resulting trust principles, the facts in this case do not warrant the application of those doctrines. In so concluding, we also note that under the resulting trust doctrine a company acquiring equitable ownership of a life insurance policy must show that it has an insurable interest in the life of the insured to recover the proceeds. In this case, MDI made no such showing.

Second, we consider the application of the Uniform Simultaneous Death Act. We determine that, in the case of simultaneous death, the Uniform Act applies to the distribution of property when a decedent's will or life insurance policy provides for a property distribution that is the same as that provided for by the Uniform Act. When the Uniform Act applies, it creates a statutory presumption that an insured survived his or her simultaneously deceased beneficiaries.² This presumption controls the distribution of life insurance proceeds through the distribution of the insured's estate even though the policy may be community property.

FACTUAL AND PROCEDURAL BACKGROUND

The parties stipulated to several facts in this case, including that Steven and Susan Maini, their two children, and Susan's parents were all killed simultaneously when their small airplane, piloted by Susan's father, crashed at the North Las Vegas airport on Christmas Day 2003. After the accident, family members filed probate actions for each of the estates. Steven and the children died without valid wills. Susan had a valid will that was admitted into probate; however, none of her intended beneficiaries survived the crash. In probate, respondent/cross-appellant Michael Maini (Maini), Steven's brother, was named the administrator and sole heir of Steven's estate and appellant/cross-respondent Paul Waldman, Susan's brother, was named executor and sole heir of her estate. Although the brothers also took responsibility for the children's estates, they raise no issues regarding those estates in this matter.

The property to be distributed included a 95-percent ownership interest in Steven's family company, MDI. Steven's father founded MDI in 1966 and ran the business until he died in 1973. After his father's death, his mother inherited and ran MDI; when Steven graduated from high school, he joined MDI. After working at MDI for several years, and after his marriage to Susan, Steven's mother gave him 90 percent of her ownership interest in MDI, although his mother remained actively involved in the business until her death. When she died, Maini and Steven each inherited half of her remaining 10-percent interest. Steven continued to work for MDI, and Susan worked as an accountant for the City of Las Vegas. Although Susan prepared MDI's taxes and was named Vice President of MDI, MDI did not pay Susan a salary.

The other assets at issue in the appeal are the proceeds from two life insurance policies held by Susan. She obtained one policy through her membership in the American Institute of Certified Public Accountants (the Prudential policy) and another policy from Jackson National Life Insurance (the Jackson policy). The Prudential policy was for $500,000 but paid an additional $500,000 for accidental death. The Jackson policy was for $100,000. MDI paid all of the premiums on the insurance policies. Each policy stated that if any beneficiary failed to survive the insured, the proceeds would be paid to the insured's estate. Both policies listed Steven as the beneficiary, and the Jackson policy listed Susan's father as the secondary beneficiary.

In probate, Maini, on behalf of MDI and Steven's estate, filed two creditor claims against Susan's estate for proceeds from the Jackson and Prudential insurance policies on her life. MDI's creditor claim stated that Susan's estate owed MDI the full amount of the insurance benefits ($1,100,000) because MDI paid all of the premiums. Alternatively, Maini made a creditor claim on behalf of Steven's estate, arguing that the insurance proceeds were community property and thus Susan's estate owed Steven's estate half of the proceeds. Waldman denied both claims for the proceeds.

After Waldman denied the claims, Maini and MDI filed a complaint in district court seeking the following relief: (1) payment to MDI of all of Susan's life insurance proceeds, or payment of half of the life insurance proceeds to Steven's estate; (2) declaratory relief stating that the Uniform Simultaneous Death Act did not apply to Susan's estate or if it did apply that it did not affect Steven's community property interest in Susan's life insurance proceeds; and (3) declaratory relief stating that the 95-percent ownership interest in MDI was Steven's separate property. Thereafter, Maini and MDI moved the district court for summary judgment, seeking a determination that MDI was entitled to the insurance proceeds. The district court denied the motion. However, Maini and MDI filed a subsequent motion for partial summary judgment, seeking a determination that the Uniform Act did not apply to the Prudential or Jackson policies. The court granted the motion.

The parties then proceeded to a bench trial on the remaining issues. The court ultimately ruled that the life insurance proceeds and the 95-percent ownership interest in MDI were all community property and awarded half of each to each spouse's estate. This appeal and cross-appeal followed.

DISCUSSION

In this opinion, we first address Maini's argument on cross-appeal that the district court erred when it determined that the ownership interest in MDI was community property. We conclude that the district court misapplied the presumptions concerning separate and community property. Properly applying those principles, the MDI ownership interest was presumptively Steven's separate property, as he acquired that interest by gift and devise. Next, we address whether MDI acquired equitable ownership of Susan's life insurance policies by paying the premiums. While in some instances a corporation may acquire equitable ownership of a life insurance policy through such remedies as constructive and resulting trusts, the facts of this case do not support the imposition of those equitable remedies. Moreover, we reject MDI's claim that it acquired a resulting trust in Susan's policies, as NRS 687B.040 prohibits MDI from obtaining insurance on her life under the circumstances of this case. Finally, we consider as a matter of first impression the application of the Uniform Simultaneous Death Act to the division of Susan's life insurance proceeds. The Uniform Act applies when the distribution of a decedent's property under an insurance policy or will is the same as the distribution provided for in the Act. Because that is the case here, we conclude that the Uniform Act governs the distribution of Susan's life insurance proceeds in accordance with the Act. Since Susan presumptively survived Steven, all of the proceeds of her life insurance policies must be distributed to her estate. We therefore affirm in part and reverse in part the district court's judgment.

The district court erred when it concluded that the ownership interest in MDI was community property

On cross-appeal, Maini contends that the district court erred when it determined that Steven's ownership interest in MDI was community property. Specifically, Maini argues that the MDI ownership interest was Steven's separate property because 90 percent of the ownership interest was a gift to Steven from his mother and Steven inherited the other 5-percent ownership interest from her. Waldman presented no contrary evidence but argues that the MDI interest was presumed to be a community asset because Steven acquired it during the marriage. The district court found that Maini had failed to prove that the gift was not a gift to the community and therefore that the MDI interest was community property. We conclude that the district court improperly applied the community property presumption and Maini established that the MDI interest was a separate property asset.

When reviewing a district court's determination of the character of property, this court will uphold the district court's decision if it was based on substantial evidence.³ However, we will review a purely legal...