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.
OPINION
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. ...