Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-arwd-6_05-cv-06026/USCOURTS-arwd-6_05-cv-06026-0/pdf.json

Parties Involved:
Rita Boyce
Defendant
Amber Carpenter
Plaintiff
Larraine Carpenter
Plaintiff
Linda Carpenter
Defendant
Sandra Carpenter
Defendant
Reliance Standard Life Insurance Company
Defendant

Document Text:

AO72A

(Rev. 8/82)

IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF ARKANSAS

HOT SPRINGS DIVISION

LARRAINE CARPENTER and AMBER CARPENTER PLAINTIFFS

v. Case No. 05-6026

RELIANCE STANDARD LIFE INSURANCE COMPANY,

SANDRA CARPENTER, LINDA CARPENTER, and

RITA BOYCE DEFENDANTS

MEMORANDUM OPINION AND ORDER

The Plaintiffs bring this action against the Defendants seeking

the imposition of a constructive trust on proceeds from an insurance

policy. Separate Defendant Reliance Standard Life Insurance Company

(“Reliance”) has filed a Motion for Summary Judgement (Doc. 22), which

is unopposed by all parties (Docs. 30 and 32). Separate Defendants

Sandra Carpenter, Linda Carpenter, and Rita Boyce (“Remaining

Defendants”) filed a Motion for Summary Judgement (Doc. 17),

contending that Plaintiffs have no interest in the disputed proceeds,

to which Plaintiffs filed a Response (Doc. 31). Plaintiffs filed a

Motion for Summary Judgment (Doc. 25) contending that they have an

equitable interest in the disputed proceeds created by a divorce

decree and the incorporated property settlement agreement, to which

Remaining Defendants responded (Doc. 32). 

I. BACKGROUND

Except as noted, the following facts are not disputed. Plaintiff

Larraine Carpenter (“Larraine”) and Alton Ray Carpenter (“the

Decedent”) were married on November 30, 1973 and divorced in November

2000. The Property Settlement Agreement (“Agreement”) was

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incorporated into the divorce decree. The Agreement contained a

provision that the Decedent was to “leave the Wife and the minor child

as sole beneficiaries on the Husband’s life and accidental insurance

as long as the Husband is employed by I.S.G. Resources, Inc.” (Doc.

28.) 

In September 2002, Headwaters, Inc. purchased I.S.G. Resources,

Inc. as a wholly owned subsidiary. According to Headwaters, Inc., the

Decedent continued to be employed by I.S.G Resources, Inc. until his

death (October 17, 2004). Starting on July 26, 2004, the Decedent

became disabled and collected disability benefits from I.S.G.

Resources, Inc. (Exhibit “A”, Doc. 26.)

Sometime in 2003, the Decedent changed the beneficiaries of the

life and accidental insurance policy (provided through his employer,

I.S.G. Resources, Inc.) from the Plaintiffs to his daughters from a

previous marriage, Remaining Defendants. 

After the present lawsuit was initiated, Separate Defendant

Reliance filed a motion to deposit the benefits under the Decedent’s

life insurance policy into the Registry of this Court (Doc. 7), which

was granted (Doc. 10). Reliance has deposited $50,819.09($48,750 (the

original benefit under the life insurance policy) plus interest) into

the Registry of the Court. 

II. DISCUSSION

In determining whether summary judgment is appropriate, the facts

and inferences from the facts are viewed in the light most favorable

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to the non-moving party, and the burden is placed on the moving party

to establish both the absence of a genuine issue of material fact and

that it is entitled to judgment as a matter of law. See Fed. R. Civ.

P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475

U.S. 574, 586-87 (1986); Nat'l. Bank of Commerce of El Dorado,

Arkansas v. Dow Chem. Co., 165 F.3d 602 (8th Cir. 1999). If the

plaintiffs fails to make a showing sufficient to establish the

existence of an element essential to their case and on which they will

bear the burden of proof at trial, then the defendants are entitled

to judgment as a matter of law and all other facts are rendered

immaterial. See Thelma D. By Delores A. v. Bd. of Educ., 934 F.2d

929, 932 (8th Cir. 1991).

A. Separate Defendant Reliance Standard Life Insurance Co.

Before the Court is Separate Defendant Reliance’s Motion for

Summary Judgement (Doc. 22) and the Responses stating no opposition

by both Plaintiffs (Doc. 30) and Remaining Defendants (Doc. 32).

Reliance states in its supporting brief (Doc. 23)that once the

disputed proceeds from the Decedent’s life insurance was deposited

into this Court’s Registry, there is no dispute between it and

Plaintiffs. The parties agree with this contention and have no

objection to the motion for summary judgement. The motion is GRANTED

and Separate Defendant Reliance is DISMISSED WITH PREJUDICE from this

action.

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B. Separate Defendants Sandra Carpenter, Linda Carpenter, and

Rita Boyce

Arkansas law generally applies contract rules to questions

relating to the construction of separation agreements between spouses.

Ray v. Ray, 61 F.3d 662, 664 (8 Cir. 1995) (citing Sutton v. Sutton,

th

771 S.W.2d 791, 792 (Ark. 1989)). A court must “give to the language

employed by the parties the meaning the parties intended.” Ray, 61

F.3d at 664 (citing Conley Transp., Inc. v. Great American Ins. Co.,

849 S.W.2d 494 (Ark. 1993)). Absent some showing that the parties

intended to give some specialized meaning to the words in the

contract, the court must give the words their “plain, ordinary

meaning.” Ray, 61 F.3d at 664 (citing N.R.L.B. v. Superior

Forwarding, Inc., 762 F.2d 695 (8 Cir. 1985)). th

Under Arkansas law, a court must “construe the contract according

to its unambiguous language without enlarging or extending its terms.”

Ray, 61 F.3d at 664 (citing North v. Philliber, 602 S.W.2d 643 (Ark.

1980); Christmas v. Raley, 539 S.W.2d 405 (Ark. 1976)). In addition

to looking at the contested words, the contract as a whole should be

reviewed and the “parts should be construed in a fashion which gives

consistent meaning to each of its parts.” Ray, 61 F.3d at 664 (citing

In Re Workers’ Compensation Ins. Antitrust Lit., 867 F.2d 1552, 1567,

n27 (8 Cir. 1989)). Furthermore, a court must construe the language th

against the party responsible for drafting the instrument. Ray, 61

F.3d at 664 (citing Bradley v. Arkansas Louisiana Gas Co., 659 S.W.2d

180 (Ark. 1983); Gilstrap v. Jackson, 601 S.W.2d 270 (Ark. App.

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1980)).

“[A]s a general rule, a beneficiary does not have a vested

interest in the insurance proceeds where the policy authorizes the

insured to change the beneficiary. . . .” Orsini v. Commercial

National Bank, 639 S.W.2d 516, 517(Ark. App. 1982). However, when the

language in a property settlement agreement that has been incorporated

into a divorce decree is specific enough for a court to find that an

insurance policy was intended to be maintained for a specific

beneficiary, an equitable interest in the insurance policy exists.

See Orsini, 632 S.W.2d 516. The named beneficiary for the insurance

proceeds does not have to have committed any wrongful act for a

constructive trust be imposed on the proceeds, as “[i]nnocent parties

may frequently be unjustly enriched.” Id. at 518 (citing Gutierrez

v. Madero, 564 S.W.2d 185 (Tex. Civ. App. 1978). 

 In the case sub judice, the parties have differing

interpretations for the words contained in the “Life Insurance”

paragraph of the Property Settlement Agreement (“Agreement”): 

“7. LIFE INSURANCE: The parties agree that the Husband will leave the

Wife and the minor child as sole beneficiaries on the Husband’s life

and accidental insurance as long as the Husband is employed by I.S.G.

Resources, Inc.” (Doc. 28.)

Remaining Defendants advance several theories upon which they

conclude that the Decedent’s obligation to list Plaintiffs as

beneficiaries on his life and accidental insurance policy terminated.

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They contend that the paragraph at issue terminated upon Plaintiff

Amber Carpenter (“Amber”) reaching the age of majority; when I.S.G.

Resources, Inc. was purchased by Headwaters, Inc.; and/or when the

Decedent began receiving disability benefits. The first theory is

that the use of the word “and” between “Wife” and “the minor child”

somehow created a single entity for the benefit going to the “minor

child.” They argue that the parties intention was to confer a benefit

to Amber and that Larraine was merely named as a guardian and/or

custodial party for Amber Carpenter. Once the “minor child” reached

the age of majority the life insurance obligation for both parties

ceased to exist. However, there is no evidence that the mere use of

the word “and” between the two named parties created a single entity,

nor is there any evidence that the minor child was in fact the only

intended beneficiary. Plain meaning and the ordinary usage of the

word “and” does not give rise to the interpretation sought by

Remaining Defendants. We find that the usage of the word “and”

between “Wife” and “minor child” was merely a connector between

individual entities.

The Agreement contains the term “minor child” in two other

paragraphs:

6. MEDICAL AND DENTAL EXPENSES: In further consideration of

the covenants and conditions contained herein, the Husband

hereby agrees to maintain health insurance coverage fro the

minor child, Amber Carpenter, and the Wife, Larraine

Carpenter, through his employer, as long as the Husband is

employed by I.S.G. Resources, Inc. The parties further

agree to equally divide those medical, dental, eye care,

orthodontic, and pharmaccutical [sic] expenses which are

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not covered by insurance including, but not limited to the

deductibles on the child, Amber Carpenter, only; and

9. INCOME TAX DEDUCTION: The Husband hereby covenants and

agrees that the wife shall claim the minor child as a

deduction on her federal and state income tax returns.

(Doc. 28.) The only other mention of Amber Carpenter is in the

spousal support and visitation paragraph:

5. SPOUSAL SUPPORT AND VISITATION: The parties agree that

Husband will pay $200.00 per month as spousal support for

the benefit of Larraine Carpenter and Amber Carpenter. This

spousal support shall cease once Amber Carpenter reaches the

age of 18 years.

The parties further agree that the Husband shall have

liberal visitation with Amber Carpenter.

The Parties hereby covenant and agree to cooperate with

one another in exchanging health, medical, school, and any

other records concerning Amber Carpenter.

Id.

The term “minor child” in the Agreement clearly refers to Amber,

as she is the only person mentioned in the Agreement, besides Larraine

(wife) and the Decedent (husband), and she was a minor at the time of

the Agreement. Where the term “minor child” is employed, that clause

fails to state when the benefit/obligation ends. The term “minor

child” in the three paragraphs of the Agreement has a plain and

ordinary meaning of referring to the person named in a previous

paragraph, Amber Carpenter. In a previous paragraph, the document

specifically limited spousal support to continue until Amber reached

her 18 birthday. Had the parties intended the same results regarding th

the life insurance benefits, the document could have done so in the

life insurance paragraph. 

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Even if the Court did adopt the suggested interpretation, in all 1

likelihood, the ambiguity and/or confusion would not have been held against

the Plaintiffs as they were not the author of the agreement. See Larraine

Affidavit, Doc. 26 (stating that she was not represented and that the

Agreement was drafted by the Decedent’s attorney).

8

To read the term “minor child” as a term in which would refer to

Amber only prior to her reaching her 18 birthday would be contrary th

to other uses of the short-hand method to describe other parties in

the Agreement, as well as require the Court to infer an intention of

the parties outside of the plain and ordinary meaning given to the

words. Both parties of the Agreement are referred to throughout the

Agreement as “wife” and “husband”. In order to adopt Remaining

Defendants’ interpretation of “minor child” and to give consistent

meanings to the terms used in the Agreement, all benefits and

obligations under the Agreement that use the neutral words “wife” and

“husband” would terminate upon the parties’ divorce, as they would no

longer belong to the classifications “wife” and “husband”. This

outcome is clearly contrary to the parties intentions upon entering

into the Agreement. Furthermore, it is not necessary to resort to an

interpretation of the disputed term that would render the term

ambiguous or confusing (as the interpretation Remaining Defendants

seek). We find nothing within the Agreement nor in any of the other 1

documents that would require the Court to define the term “minor

child” other than a term to describe a person in being, Amber

Carpenter. 

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While it is unclear on what day Amber Carpenter reached her 18 2 th

birthday, it is clear that she had attained her 18 birthday prior to the th

Decedent’s death in October 2004. See Larraine’s Affidavit, Doc. 28

(stating Amber was 15 years old at the time of the divorce, November 6,

2000). 

The Court was provided with a copy of a letter from Headwater, Inc. 3

to Reliance. That letter stated that Headwaters, Inc. considered the

Decedent an employee of I.S.G. Resources (stating that he was paid from

I.S.G. Resources payroll account) and that Decedent continued to be

employee of I.S.G Resources, Inc. until his death. (Exhibit “A”, Doc. 26.)

9

We conclude the use of the term “minor child” in the Agreement

is given the plain and ordinary meaning of the term “minor child”, is

merely a short-hand method of stating “Amber Carpenter.” We further

find that the life insurance provision containing the term “minor

child” created an obligation for the Decedent to name both Larraine

and Amber as beneficiaries of his life and accidental insurance. That

obligation continued until a point in time in which he was no longer

employed by I.S.G. Resources, Inc. The evidence before this Court

is that the Decedent remained employed by I.S.G. Resources, Inc. until

his death. Therefore, neither Larraine’s nor Amber’s rights to any

insurance proceeds terminated upon Amber reaching her 18 birthday. th 2

Additionally, we hold that the Agreement along with the divorce decree

provide amble evidence that Amber was a third-party beneficiary of the

Agreement. See Orsini, 639 S.W.2d 516.

Remaining Defendants also contend that the life insurance

obligation terminated upon the purchase of I.S.G. Resources, Inc. by

Headwaters, Inc. According to Headwaters, I.S.G. Resources, Inc. was

purchased as a wholly owned subsidiary that continued to exist under

the name, I.S.G. Resources, Inc. (Exhibit “A”, Doc. 26.) The 3

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Decedent continued to be paid by I.S.G. Resources, Inc. and was

considered an employee of I.S.G. Resources, Inc. at his death. Id.

We find that the Decedent’s employer remained I.S.G. Resources, Inc.,

and the life insurance benefits of his employment remained relatively

unchanged, regardless of who owned the company. There is nothing

within the Agreement that would give rise to an interpretation that

a change in ownership of the company would terminate the life

insurance obligation.

Remaining Defendants also contend that the life insurance

obligation terminated upon Decedent’s collection of disability

benefits in lieu of a check for actual time worked. They contend

that the Decedent was no longer employed by I.S.G. Resources, Inc.

when he began drawing disability benefits instead of a pay check for

his work. This theory is undermined by the statement by I.S.G.

Resources, Inc. that the Decedent remained employed by I.S.G.

Resources, Inc. until his death. (Exhibit “A”, Doc. 26.) 

III. CONCLUSION

Based on the foregoing, the Court concludes due to the Decedent’s

failure to comply with the life insurance provision of the Agreement,

the Plaintiffs have established the necessity for a constructive

trust. Therefore, the Court finds that Separate Defendants Sandra

Carpenter, Linda Carpenter, and Rita Boyce’s Motion for Summary

Judgment should be and hereby is DENIED, and the Plaintiffs’ Motion

for Summary Judgment should be and hereby is GRANTED. A constructive

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trust for Plaintiffs is imposed on the insurance proceeds deposited

by Reliance into the Registry of this Court. The Court further finds

that Separate Defendant Reliance Standard Life Insurance Company’s

Motion for Summary Judgment is GRANTED and is hereby DISMISSED WITH

PREJUDICE as a Defendant from this matter.

WHEREFORE, the Clerk of the Court is directed to pay Plaintiffs

the $50,819.09 deposited in the Registry plus any interest that has

accrued. The monies in the Registry regarding this case will be split

equally between the Plaintiffs. All parties are to bear their own

costs and fees. 

IT IS SO ORDERED AND ADJUDGED this 26 day of January 2006. th

 /S/ Robert T. Dawson 

Robert T. Dawson

United States District Judge

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