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Burton v. Mooneyham

Court of Appeals of Tennessee, Nashville

March 19, 2018


          Session January 11, 2018

          Appeal from the Chancery Court for Davidson County No. 16-604-IV Russell T. Perkins, Chancellor

         This is an action by the ex-wife of the decedent to establish a constructive trust to the proceeds of a life insurance policy that are payable as a consequence of the death of the plaintiff's ex-husband. In the 2011 Final Decree, the ex-husband was ordered to maintain a specified life insurance policy in the amount of $500, 000 with the plaintiff to be designated as the sole beneficiary. Following the divorce, the ex-husband allowed the specified policy to lapse; however, he maintained a second life insurance policy that had a death benefit of $250, 000 with seventy percent of the death benefits payable to the plaintiff and thirty percent to the decedent's mother. Following the ex-husband's death, the plaintiff commenced this action against the decedent's mother and the insurance company. The decedent's mother filed an answer in which she claimed the plaintiff had no legal rights to the insurance policy at issue. The decedent's mother also claimed she had a vested right to her share of the death benefits based on an oral contract. The insurance company deposited the insurance proceeds into court and was dismissed from the case. Thereafter, the parties filed cross-motions for summary judgment. The trial court granted summary judgment in favor of the plaintiff, relying principally on the holding in Holt v. Holt, 995 S.W.2d 68 (Tenn. 1999). We affirm, finding the decedent's mother had no vested interest in the policy.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

          Richard J. Braun, Nashville, Tennessee, for the appellant, Edna Aileen Crecelius.

          D. Scott Parsley and Joshua G. Strickland, Nashville, Tennessee, for the appellee, Wendy Ann Burton.

          Frank G. Clement Jr., P.J., M.S., delivered the opinion of the Court, in which Andy D. Bennett and Richard H. Dinkins, JJ., joined.


          FRANK G. CLEMENT JR., P.J., M.S.

         This is a dispute between Wendy Ann Burton ("Plaintiff") and Edna Aileen Crecelius ("Defendant") over thirty percent of the insurance proceeds from a $250, 000 life insurance policy on the life of Robert M. Mooneyham ("Mr. Mooneyham"), who was Plaintiff's ex-husband and Defendant's son.

         Plaintiff and Mr. Mooneyham divorced on May 13, 2011, and the Final Decree of Divorce ("Final Decree") provided that Mr. Mooneyham would "designate [Plaintiff] as the beneficiary of his life insurance policy in the amount of $500, 000, Policy No: TRO 167391 with Tennessee Farmers Life Reassurance Companies." Mr. Mooneyham also owned other policies at the time of the divorce, including Tennessee Farmers Life Insurance Company, Policy Number 149380 (hereinafter "Farmers Policy No. 149380"); however, this policy was not mentioned in the Final Decree. Following the divorce, Policy No: TRO 167391 lapsed and was never reinstated.

         Although the record suggests that Mr. Mooneyham owned several policies prior to the divorce, it appears that all but one of them lapsed or were cashed in by Mr. Mooneyham over a period of time as his financial circumstances deteriorated.[1] With regard to the policy at issue in this appeal, Farmers Policy No. 149380, on March 3, 2014, Mr. Mooneyham notified the insurance company to modify the policy by reducing the death benefit from $984, 019 to $500, 000 and for Plaintiff to receive eighty-five percent of the death benefit and for Defendant to receive fifteen percent. On September 30, 2014, Mr. Mooneyham once again changed this policy by reducing the death benefit from $500, 000 to $250, 000 with Plaintiff to receive seventy percent of the death benefit and with Defendant to receive thirty percent.

         In the interim, upon learning the life insurance policy that was the subject of the Final Decree had lapsed, Plaintiff filed a petition against Mr. Mooneyham for criminal contempt in Sumner County Chancery Court. Plaintiff alleged, inter alia, that Mr. Mooneyham no longer maintained a $500, 000 life insurance policy payable to Plaintiff in violation of the Final Decree. On March 24, 2016, after holding a hearing on Plaintiff's petition for criminal contempt, the court found Mr. Mooneyham guilty of criminal contempt due to his willful and intentional failure to provide life insurance payable to Plaintiff in the amount of $500, 000.[2] The court noted that "[Mr. Mooneyham] testified that he had an insurance policy with [a] face amount of $250, 000.00 with [Plaintiff] designated to receive 70% of the proceeds and [Mr. Mooneyham's] mother to receive 30% of the proceeds upon [Mr. Mooneyham's] death." The court ordered Mr. Mooneyham "to reinstate life insurance on his life in the face amount of $500, 000, and make such policy solely payable to Plaintiff…."

         On April 11, 2016, Mr. Mooneyham filed an appeal with the Court of Criminal Appeals. Mr. Mooneyham died on May 31, 2016, before the appellate court could hear the appeal. Counsel for Mr. Mooneyham filed Mr. Mooneyham's death certificate with the Court of Criminal Appeals, and on August 17, 2016, the court entered an order stating that the appeal as well as the underlying convictions for criminal contempt were abated due to the death of the appellant.

         Following Mr. Mooneyham's death, Plaintiff commenced this action to impose a constructive trust on the life insurance proceeds payable to Defendant from the $250, 000 Farmers Life Policy No. 149380. Defendant filed an answer denying that Plaintiff had any right to the proceeds and, by agreed order, the insurance company was dismissed from the action once it deposited the insurance proceeds with the court.[3]

         Plaintiff filed a motion for summary judgment on March 10, 2017, accompanied by her affidavit. In her statement of undisputed facts, Plaintiff noted, inter alia, that the Final Decree required Mr. Mooneyham to maintain a $500, 000 life insurance policy with Plaintiff as the sole beneficiary, and the only life insurance policy in effect at the time of his death was the $250, 000 Farmers Life Policy No. 149380. Because Plaintiff relied, in part, on the Sumner County Chancery Court's ruling in which it found Mr. Mooneyham in contempt for failing to maintain the required insurance, Defendant filed a motion to strike the portions of Plaintiff's affidavit that relied on the criminal contempt order. Defendant argued that since "any judgment of criminal contempt was abated, ab initio, " Plaintiff could not use the trial court's criminal contempt order to support her motion for summary judgment.

         Additionally, Defendant filed a cross-motion for summary judgment, contending the case should be dismissed because Plaintiff was claiming an interest in a life insurance policy that was not subject to the Final Decree. Defendant also contended that Plaintiff "has no vested interest in [the policy at issue] and is not entitled to the beneficial interest of the Decedent's mother . . . who relied upon this policy in loaning her son . . . substantial funds in the months prior to his death."

         Following a hearing on April 21, 2017, the trial court denied Defendant's motion to strike, concluding that while the Sumner County Chancery Court's criminal contempt order was void ab initio as it pertained to the finding that Mr. Mooneyham was in willful contempt of the court's order, it was not void to the extent the ruling identified the court's interpretation of the Final Decree. Then, the trial court granted summary judgment to Plaintiff, stating:

The Court finds that the Final Decree and the subsequent Order of the Court entered March 24, 2016 create in [Plaintiff] a vested right to any life insurance policy obtained by [Mr. Mooneyham] that satisfies the mandate in the decree. See Holt, 995 S.W.2d at 77. A "contrary ruling would 'abrogate the power' of divorce courts in this state." Id. (citing Equitable Life Assurance Soc'y v. Flaherty, 568 F.Supp. 610, 615 (S.D. Ala. 1983)). The public policy of this state strongly favors the enforcement of court orders, and, as between [Mr. Mooneyham] and [Plaintiff], both of whom were parties to the divorce suit, neither can be heard to dispute the Final Decree or its legal effect. ...

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