Webb v. Webb (In re Webb)
| Decision Date | 06 February 2015 |
| Docket Number | ADV. NO. 1:13–ap–00214–MDF,CASE NO. 1:13–bk–03036–MDF |
| Citation | 525 B.R. 226 |
| Parties | In re: Dennis E. Webb and Marjorie M. Webb, Debtors, Thomas E. Webb, Karen M. Fillmore and Laura C. Tapp, Plaintiffs v. Dennis E. Webb, Defendant |
| Court | U.S. Bankruptcy Court — Middle District of Pennsylvania |
Torren C. Ecker, Becker & Strausbaugh, P.C., Hanover, PA, for Plaintiff.
Scott Alan Harper, S. Harper Law, York, PA, for Plaintiff/Defendant.
On August 29, 2013, Thomas E. Webb, Karen M. Fillmore, and Laura C. Tapp (“Plaintiffs”) filed the instant adversary case alleging that their claims against Dennis E. Webb (“Defendant”) should be excepted from discharge under 11 U.S.C. § 523(a)(6). Plaintiffs and Sharri A. Kandarczyk (“Kandarczyk”), who is not a party to this proceeding, are the adult children of Defendant. In the schedules filed in the case, Plaintiffs and Kandarczyk each are listed as holding an unsecured claim in the amount of $14,250.00.1 The claims of Defendant's children arise from a dispute among the parties over the disposition of proceeds of an insurance policy on the life of Rebecca Webb (“Rebecca”), Plaintiffs' sister and Defendant's daughter. The dispute was the subject of a lawsuit filed in the Court of Common Pleas of York County, Pennsylvania (the “York County Court”) prior to the bankruptcy petition. After Defendant and his wife (“Debtors”) filed their petition, Kandarczyk assigned her claim against Defendant to the Plaintiffs in equal shares.
On September 25, 2014, Plaintiffs filed a Motion for Summary Judgment pursuant to Fed. R. Civ. P. 56 (the “Motion”). In the Opinion filed on November 17, 2017 in support of the Order denying the Motion, I determined that although Plaintiffs were able to establish that Defendant converted certain life insurance proceeds, they failed to meet their burden to establish that Defendant knew that his retention of the insurance proceeds was wrongful and that he retained the proceeds intending to injure Plaintiffs or with the substantial certainty that injury would occur.
In the pretrial statement submitted by the parties, they stipulate that the issues remaining before the Court are whether Defendant's conversion of the insurance proceeds was willful and malicious and whether Defendant knew that he was interfering with the right of his children to receive the life insurance proceeds when he submitted a claim to The Standard Insurance Company (“Standard”).
Trial was held on December 17, 2014. For the reasons set forth below, I find that Plaintiffs' request that the debts owed to them be determined to be excepted from discharge must be denied.
For the sake of brevity, the findings of fact and conclusions of law set forth in my Opinion on the summary judgment motion set forth at Docket # 34 are incorporated by reference. It is necessary, however, to repeat the salient facts that support my decision in this matter.
In its December 13, 2012 decision, the York County Court determined that Defendant disclaimed his rights to the proceeds of Rebecca's life insurance policy when he executed a “Disclaimer and Renunciation” (the “Disclaimer”) on May 24, 2011. In the Disclaimer, Defendant stated that as “father of decedent and an intestate beneficiary of the estate[,]” he disclaimed and renounced “any right, title and/or interest” that he may have had in “any property passing through the estate or to [him] by virtue of the Decedent's death without condition or reservation of any kind pursuant to 20 Pa.C.S.A. Section 6201 et seq., as amended.” He further asserted that he had not “in any way acted to accept any interest in the above estate or otherwise.” (Ex. P–4). The York County Court found that while Rebecca's employer, Baltimore County, sent Defendant an insurance claim form on May 11, 2011, Defendant was unable to prove that he returned the claim form before he signed the Disclaimer on May 24, 2011. If Defendant had returned the completed form before executing the Disclaimer, the Court held, it may have constituted acceptance of the insurance proceeds.2 The York County Court concluded that while the insurance company may have provided Defendant with some inaccurate information regarding whether the life insurance proceeds were part of the estate, “[Defendant] knew what he was signing when he executed the Disclaimer and Renunciation.” (Ex. P5).
Defendant is estranged from his children. Plaintiff Thomas Webb (“Thomas”) testified that neither he nor any of his other siblings had spoken with their father for twenty years at the time of Rebecca's death. Thomas testified that he was the first family member to be notified of his sister's death and that he “took care of her” during her life. After her death, Thomas was named as the administrator of his sister's estate. Although Baltimore County notified Thomas of Rebecca's death, the County's insurance division would not discuss her insurance with him when he contacted the office in June 2011.
Defendant learned of his daughter's death through a phone call from Thomas on May 9, 2011. On May 11, 2011, Thomas contacted Defendant to discuss Rebecca's burial arrangements and memorial service. On the same day, Baltimore County sent Defendant a life insurance death benefits claim form. Defendant was aware that Rebecca's mother, his former wife, was the named beneficiary on the policy. He also knew that because his former wife had predeceased Rebecca, under the terms of the policy he was next in line to receive the proceeds. He also was aware that if he did not receive the proceeds they would be distributed equally to Rebecca's four surviving siblings. Defendant testified that when he was contacted by Baltimore County he was told that the insurance policy was not part of Rebecca's estate.
Although the record is not precisely clear as to when Defendant received the insurance claim form, it was at or about the time Rebecca's memorial service was held, which Defendant did not attend. The day after the service Defendant and Thomas met so that Defendant could sign a waiver that would authorize the funeral home to have Rebecca's body cremated. Several days thereafter, Defendant and Thomas again met to discuss the administration of Rebecca's estate at which time Thomas presented Defendant with a copy of the Disclaimer and asked him to consider signing it. At neither meeting did Defendant disclose the existence of the insurance policy, that he had been in contact with Baltimore County and Standard, or that he intended to claim the proceeds. Several days later Defendant agreed to sign the Disclaimer, and the parties scheduled a meeting at a bank on May 24, 2011 to obtain his signature before a notary.
At the hearing in this matter, Defendant testified that Thomas “slipped in” the Disclaimer when the waiver regarding the disposition of Rebecca's body was signed. He further implied that he did not have an opportunity to review the document. Defendant's testimony was not credible on this point. Defendant signed the Disclaimer ten days after he signed the burial waiver. Thomas' testimony that he gave his father several days to think about whether he wanted to sign the Disclaimer was supported by other evidence at the hearing. Defendant signed the Disclaimer on May 24, 2011 without discussing with anyone whether it might affect his right to receive the life insurance proceeds.
After he signed the Disclaimer, Defendant asked Thomas for a copy of the death certificate for Defendant's former wife. Defendant did not say why he wanted the death certificate and Thomas, who was not in possession of a copy to provide to Defendant, did not ask for an explanation.
Standard required Defendant to complete several documents before it would remit the proceeds. Baltimore County completed a claim form and sent it to Standard on June 6, 2011. Although a beneficiary statement signed by Defendant was attached to the claim form, it was not dated. After receiving the claim form, Standard requested Defendant to sign an “Order of Beneficiary Affidavit” stating that he was next in line under the terms of the insurance policy to receive the proceeds. On July 5, 2011, Defendant executed a beneficiary affidavit before a notary and submitted it to Standard. On July 8, 2011, the insurance company sent Defendant a check for half of the proceeds of the policy.
After learning independently of the existence of the life insurance policy, Plaintiffs' counsel, in correspondence dated August 1, 2011, requested Standard to pay the proceeds to Rebecca's surviving siblings and enclosed a copy of the Disclaimer. Standard responded by notifying Defendant of the competing claims to the funds and by directing that the proceeds either should be returned or legal justification provided to Standard as to why Defendant was entitled to retain the funds. Defendant did not respond to Standard or surrender the funds to Plaintiffs. He instead filed a petition with the York County Court seeking a determination that the Disclaimer did not apply to the life insurance proceeds. After the York County Court ruled against him, he refused to turnover the proceeds to his children.
Issue preclusion, otherwise known as collateral estoppel, “prevents relitigation of an issue in a later action, despite the fact that it is based on a cause of action different from the one previously litigated.” Balent v. City of Wilkes–Barre, 542 Pa. 555, 669 A.2d 309, 313 (1995). When a federal court considers whether it is appropriate to invoke collateral estoppel principles, the court must look to state law to determine the extent to which a state court would find that a judgment would have a preclusive effect in a later action. Schwartz v. Prudential Ins. Co. of Am. (In re Kridlow) , 233 B.R. 334, 342 (Bankr.E.D.Pa.1999). Under Pennsylvania law, a court will apply...
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