Michigan Supreme Court Lansing, Michigan

Marilyn Kelly,
Chief Justice

Michael F. Cavanag h

Elizabeth A. Weave r

Maura D. Corriga n Robert P. Young, Jr. Stephen J. Markma n Diane M. Hathaway,

J ustices 

# Order

June 4, 2010

140017

GAYLORD GENAW, JR., Personal Representative of the Estate of Gaylord Genaw, Sr., Plaintiff-Appellee,

v SC: 140017 COA: 284214 CINDY GENAW, St Clair PC: 07-000069-CZ Defendant, and

UNUM LIFE INSURANCE COMPANY, Defendant-Appellant.

________________ _______________ __________/

On order of the Court, the application for leave to appeal the October 6, 2009 judgment of the Court of Appeals is consid ered and, pursuant to MCR 7.302(H)(1), in lieu of granting leave to appeal, we REVERS E the judgment of the Court of Appeals for the reasons stated in the Court of Appeals dissenting opinion, and REMAND this case to the St. Clair Probate Court for entry of an order granting defendant Unum Life Insurance Company’s motion for summary disposition. Th e defendant insurer wa s discharged from all liability under MCL 552.101(2) when it paid the policy benefits to the named beneficiary prior to receivi ng any notice of a competing or adverse claim to those

benefits.

K ELLY , C.J. ( dissenting ).

I would grant leave to appeal. At issue in this case is the interpretation of MCL 552.101(2), a statute that addresses entitlement to life insurance procee ds after a divorce. The statute declares that, absent an express designation to the contrary, once a divorce is final all policy benefits are payable to the insured. This addresses the problems posed when an ex-spouse is inadvert ently left as the named bene ficiary after a divorce. An additional clause protects insurance carriers. It provides that a carrier is discharged from2

liability for distribution of the insurance proceeds if it pays them to the named beneficiary, absent notice of a competing claim. 1

The issue in this case is whether notice was provided to the insurance company. Gaylord Genaw, Sr. was killed in a traffic accident just three days after he was divorced from his wife. The judgment expressly indica ted that his ex-wife was not entitled to the proceeds of his life insurance policy. Howe ver, his ex-wife’s designation as beneficiary on the policy was never changed. She took adva ntage of this after the accident and made a claim for the proceeds. De fendant paid them to her, even though she disclosed the

divorce on the claim form and the death ce rtificate she submitted to defendant also indicated that Gaylord was divorced. Wh en Gaylord’s son disc overed that she had improperly collected the policy proceeds, he brought this action ag ainst her and against the insurance company.

The trial court ordered the ex-wife to turn over to plaintiff wh at remained of the proceeds. The court then held defendant liable for the rema inder. The Court of Appeals affirmed this action in a published split opinion. 2 It found that the ex-wife qualified as “any other person having interest in the policy” under MCL 552.101(2). Because she had given defendant written notice of the divorce, the court found that defendant had received notice according to the statute and was ther efore responsible for wrongfully disbursing

1 MCL 552.101(2) states, in its entirety:

Each judgment of divorce or judg ment of separate maintenance shall determine all rights of the wife in a nd to the proceeds of any policy or contract of life insurance, endowment , or annuity upon the life of the

husband in which the wife was named or designated as bene ficiary, or to which the wife became entitled by assi gnment or change of beneficiary during the marriage or in anticipati on of marriage. If the judgment of divorce or judgment of separate main tenance does not determine the rights of the wife in and to a policy of life insurance, endowment, or annuity, the policy shall be payable to the estate of the husband or to the named beneficiary if the husband so designates. However, the company issuing the policy shall be discharged of all li ability on the policy by payment of its proceeds in accor dance with the terms of th e policy unless before the payment the company receives written notic e, by or on behalf of the insured or the estate of the insured, 1 of th e heirs of the insured, or any other person having an interest in the policy, of a cl aim under the policy and the

divorce . [Emphasis added.]

2 In re Genaw Estate, 285 Mich App 660 (2009).3

the funds. 3 The dissenting judge would have he ld that a named beneficiary cannot qualify as an “other person ha ving interest in the policy.” 4

The Supreme Court should resolve the correct interpre tation of MCL 552.101(2). The majority has hastily accep ted the dissenting opinion as co rrect without the benefit of full briefing or oral argument. I find this troublesome beca use, under the language of the statute, petitioner’s ex-wife, a named benefici ary of the policy, appears to be a “person having interest in the policy.” Nowhere does the statute contain a re quirement that notice be given by someone other than the named bene ficiary or that the insurer be advised of a competing claim to the insurance benefits.

Accordingly, I would grant leave to appeal to resolve the diffe ring interpretations

of the statute.

3 Under the factual circumstances of this case , it is undisputed that Unum received a claim from Genaw that specifically acknowledge d both her status as the ex-wife of the

decedent and the existence of a divorce. Conse quently, this inform ation, submitted in conjunction with her claim, was sufficient to meet the notice requirement imposed by the existing statutory language, and the insuranc e company was not abso lved of its liability for payment of the proceeds to the designated beneficiary. [ Id . at 669.]

4 [T]he plain language of the statute abso lves an insurer of liability for paying its proceeds in accordance with th e terms of the policy unless be fore the payment it receives

written notice of a claim and of the divorce from one of the persons identified in the

statute . These specified persons—(1) the insured or the estate of the insured, (2) the heirs of the insured, or (3) any other person having an interest in the policy—are plainly ones

who could have an interest in the policy if the beneficiary designated in the policy no longer had a right to the benefits of the pol icy. A claim by such a person would clearly give the insurer notice of the extinguishment of the former wife/beneficiary’s interest in the policy and of the existence of a claim by one other than the beneficiary designated in the policy. Thus, “other person” logically means a person other than the claimant (beneficiary) already known to the insurer. Absent written notice of a claim under the policy by one of the persons identified in the statute before making payment on its policy, the insurer is discharged of all liability on the policy for payment of its proceeds in

accordance with the terms of the policy. This interpreta tion advances the clear purpose of the statutory language at issue, which is to protect an insurer that pays its policy proceeds in accordance w ith the terms of the policy absent the requisite notice of a claim by someone other than the beneficiary designate d in the policy. In my view, the plain language of the statute mandates this conclusion. [ Id . at 675-676; emphasis in original (F ITZGERALD , J., dissenting).]I, Corbin R. Davis, Clerk of the Mi chigan Supreme Cour t, certify that the foregoing is a true and complete copy of the order entered at the direction of the Court.

_______________________________________ __ Clerk June 4, 2010

0601 4

H ATHAWAY , J., would grant leave to appeal.