i

wba on

Motion for Summary Judgment,

and GRANTS in part and DENIES in part

Teresa M. Ullsmith’s Motion to Strike, as noted above.

IT IS SO ORDERED.
DATE: July 19, 2002

hte. f LA

Hon. wifi am J. Hibbler
United Binet’. District Court Judge

13


ac

The decedent and Teresa divorced on June 25, 1999. During
their marriage, the decedent and Teresa maintained separate
checking accounts, and did not jointly own any property. The
decedent executed a will in January 1992, devising his estate to
Linda. During their marriage, Teresa suspected the decedent was
engaging in an adulterous relationship with a previous girlfriend.
The decedent died in a motorcycle accident on October 21, 2000.

Linda challenges the validity of the beneficiary change, and
maintains she should still be the sole beneficiary of the
decedent’s life insurance policy. Linda argues Teresa cannot
establish the “substantial compliance” with policy provisions
necessary to effect a valid change of beneficiary. Specifically,
Linda questions the certainty with which Teresa can establish the
decedent’s intent to change beneficiaries. Linda maintains Teresa
may have employed surreptitious means to change the beneficiary of
the decedent’s life insurance policy, therefore maintaining the
decedent may not have taken any steps to make these changes
himself. Linda asks the Court to consider the possibility that
Teresa, who knew the decedent’s date of birth and social security
number, instructed a male friend to call and impersonate the
decedent. Linda offers as further support for this theory the fact
the November 30, 1995 confirmation letter from JNL has not been

found among the decedent’s records, and alleges Teresa could have


decedent did not call JNL with any questions or concerns regarding
this confirmation letter. This establishes the decedent’s intent
to change the beneficiary of his policy, and shows the decedent did
“everything he could have reasonably done under the circumstances”
to change the beneficiary. Aetna, 184 F.3d at 663. The
confirmation letter from JNL would relieve any reasonable concern
that further action was necessary; the decedent did “everything
within his power” to manifest his intent to change beneficiaries.
Id. at 665.

Linda questions the certainty with which it can be determined
the decedent himself called JNL and directed the change of
beneficiary. Linda raises the possibility that Teresa instructed
a male friend to make this call, and provided him with the date of
birth and/or social security number necessary to complete the
authorization process. Linda argues Teresa resented the decedent’s
“continuation of his relationship with a former girlfriend and may
have further resented [the decedent’s] refusal to contribute any of
his property or income to the marriage.” (Linda Mem. Supp. Summ.
J. at 5.) Linda further contends Teresa demonstrated a pattern of
“little regard” for the decedent’s intentions or privacy. Id.
However, Linda does not provide factual support for this
speculation, and has therefore not alleged any more than

“metaphysical doubt” as to these material facts. Mills, 83 F.3d at


cored

wen A a

paenes ae

depositions, answers to interrogatories, admissions, and affidavits
that are part of the record. Fed. R. Civ. P. 56(c). The Court
will draw all reasonable inferences in favor of the non-moving
party; however, the Court is “not required to draw every
conceivable inference from the record - only those inferences that
are reasonable.” Bank Leumi Le-Israel, B.M. v. Lee, 928 F.2d 232,
236 (7 Cir. 1998). “One of the principal purposes of the summary
judgment rule is to isolate and dispose of factually unsupported
claims or defenses.” Celotex Corp. v. Catrett, 477 U.S. 317, 323-
34 (1986). To avoid summary judgment, then, the nonmoving party
must set forth more than some metaphysical doubt as to material
facts. Mills v. First Fed. Sav. and Loan Ass’n of Belvidere, 83
F.3d 833, 840 (7 Cir. 1996).
Defendants’ Motions for Summary Judgment

A party asserting a change of beneficiary has occurred must
establish “substantial compliance” by the insured, showing: (1) the
certainty of the insured’s intent to change his beneficiary and (2)
the insured did everything he could have reasonably done under the
circumstances to carry out that intention. Aetna Life Ins. Co. v.
Wise, 184 F.3d 660, 663 (7% Cir. 1999); Dooley v. James A. Dooley
Assocs. Employees Ret. Plan, 92 I111.2d 476, 486, 442 N.E.2d 222,
226, 227 (1982). Although life insurance provisions “invariably”

require written beneficiary designations be received by the


intercepted this letter. Linda also maintains Teresa resented the
decedent’s apparent extra-marital affair and Teresa’s absence from
the decedent’s will or any joint property ownership arrangements,
and offers this resentment as evidence of Teresa’s motive to make
herself the beneficiary. Teresa challenges this allegation as mere
suspicion and conjecture. JNL filed a claim for interpleader with
this Court, and was granted leave to deposit the policy proceeds
plus all accrued interest due. Linda and Teresa have each filed
Claims for Interpleader of Funds and Motions for Summary Judgment
in regards to their claims. Teresa also filed a Motion to Strike
portions of affidavits attached in support of Linda’s Motion for
Summary Judgment.
Standard of Review

Summary judgment is appropriate if, after drawing all
reasonable inferences in favor of the nonmoving party, the court
concludes there is no genuine issue of material fact and the moving
party is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(c); Juarez v. Ameritech Mobile Communications, Inc., 957 P.2d
317, 320 (7 Cir. 1992). The interpretation of an insurance policy
is a question of law that is an appropriate subject for disposition
by summary judgment. Jupiter Aluminum Corp. v. Home Ins. Co., 225
F.3d 868, 873 (7 Cir. 2000). To determine whether any genuine

fact exists, the Court must assess the proof as presented in


it ao...

Ponene

however, the decedent’s policy with JNL provided only that policy
owners “may” change beneficiaries by filing written requests. This
provision does not clearly declare written requests to be the
exclusively valid method of effecting beneficiary changes. The
permissive nature of this provision is made more clear when
compared to the provisions governing changes of ownership and
premium payments, and even more so in light of Ms. Beatty’s
deposition testimony. Therefore, written change requests may not
have been a component of even “strict compliance” with JNL’s change
of beneficiary provisions.

Regardless, the decedent at the very least “substantially
complied” with JNL’s change of beneficiary provision. UNL records
indicate the decedent telephoned JNL, followed the authorization
protocol, and informed the JNL telephone representative of the
desired changes. The JNL representative then entered those
changes, and sent a confirmation letter to the decedent. This
letter notified him of the change, clearly indicated the new
beneficiary arrangement, did not indicate any need for further
action, and provided the decedent with a telephone number he could
use to voice concerns or ask questions. Between the November 30,

1995 date of the letter and his death in October of 2000, the

if you want to change your beneficiaries, you must submit another form at that
time.” Metro. Life Ins. Co. v. Johnson, No. 00 C 2138, 2001 WL 831366, at *2
(N.D. ILL. July 23, 2001)


3 i a ak

‘Minute Order Form (06/97)

United States District Court, Northern District of Illinois
LE i
Para
Name of Assigned Judge William J. Hibbler Sitting Judge if Other
or Magistrate Judge than Assigned Judge
CASE NUMBER 01C 641 DATE 7/19/2002
ea ‘
CASE TITLE Jackson Natl Life v. Schultz, et al
[in the following box (a) indicate the party filing the motion, e.g, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
M or ON: of the motion being presented.]

Defendant Teresa Ullsmith’s Motion for Summary Judgment (#16-1);
Defendant Teresa Ulismith’s Motion to Strike (#21-1)
Defendant Linda Schultz’s Motion for Summary Judgment (#19-1)

DOCKET ENTRY:

qd) o Filed motion of [ use listing in “Motion” box above.]

(2) a] Brief in support of motion due

(3) Oo Answer brief to motion due. . Reply to answer brief due.

(4) oO Ruling/Hearing on set for at

(5) Oo Status hearing [held/continued to] [set for/re-set for] on set for at

(6) im Pretrial conference {held/continued to] [set for/re-set for] on set for at .

(7) ao Trial [set for/re-set for] on at

(8) a [Bench/Jury trial] [Hearing] held/continued to at

(9) oO This case is dismissed [with/without] prejudice and without costs [by/agreement/pursuant to}

COFRCP4(m) OGeneral Rule 21 CFRCP41(a)(1)  FRCP41(a)(2).

(0) «xl (Other docket entry} For the attached reasons, Defendant Linda K. Schultz’s Motion for Summary
Judgment is DENIED, Defendant Teresa M. Ullsmith’s Motion for Summary Judgment is GRANTED,
and Teresa M. Ullsmith’s Motion to Strike is GRANTED in part and DENIED in part. All pending dates
and motions are terminated as moot. Enter Memorandum Opinion and Order.

(1) ff [For further detail see order attached to the original minute order.]

No notices required, advised in open court.
No notices required. number of tices
Notices mailed by judge’s staff. . 7 een
Notified counsel by telephone, A " 29 onN7
v | Docketing to mail notices.
V7 | Mail AO 450 form.
Copy to judge/magistrate judge. Q

courtroom Og rid Ce iy 20

deputy's
h . initials

OT US-Cckdide received in

central Clerk’s Office mailing deputy initials

fe



oo ce

is generally inadmissible. Fed. R. Evid. 801(c). Statements
comprising admissions by a party-opponent and statements of the
declarant’s then existing state of mind or intention are among the
exceptions to the hearsay rule. Fed. R. Evid. 801{d) (2); Fed. R.
Evid. 803(3).

None of Linda’s statements in the first or last sentences of
Paragraph 8 or the first sentence of Paragraph 9, fall within the
hearsay exceptions of the Federal Rules of Evidence. Her statement
that the decedent “told me that he was very concerned about
teresa‘ s habit of accessing his answering machine and intercepting
his mail” is offered not to establish his state of mind in relation
to his life insurance policy, but to prove the truth of the
assertion that Teresa employed surreptitious methods to make
changes to the decedent’s policy provisions. Linda’s remaining
statements are more clearly outside of the hearsay exceptions, and
Teresa’s Motion to Strike the first and last sentences of Paragraph
8 and the first sentence of Paragraph 9 of the Affidavit of Linda
Schultz is GRANTED. See Davis, 2002 WL 1396515, at *5.

The fourth sentence of Paragraph 2 of the Affidavit of
Stephanie Ullsmith, however, is within the hearsay exception of
Federal Rule of Evidence 803(3). Her statements that the decedent
told her he was “mad at our mother, Linda, for buying things for

Teresa’s house . . . that he didn’t want Teresa to get a dime of

il


4
t

840. As such, Linda fails to create a genuine issue of material
fact or to impeach the certainty of the decedent’s intent to change
beneficiaries. See David v. Combes, etal., No. 00-3910, 2002 WL
1396515, at *5 (7 Cir. June 28, 2002) (Slip Copy) (quoting Monninger
v. Koob, 405 Ill. 417, 91 N.E.2d 411, 415 (I11. 1950)) (“The
Illinois Supreme Court has long warned that testimony from
interested parties regarding what a deceased individual has said is
‘subject to great abuse and will be carefully scrutinized when
considered with the other evidence in the case.’”) .

Therefore, as a matter of law, the decedent validly executed
the change of beneficiary from Linda to Teresa. Accordingly,
Linda’s Motion for Summary Judgment is DENIED, and Teresa’s Motion
for Summary Judgment is GRANTED.

TERESA’S MOTION TO STRIKE

Teresa also moved to strike portions of affidavits attached to
Linda’s Motion for Summary Judgment, maintaining they contain
inadmissible hearsay. Supporting and opposing affidavits
considered by a court must set forth such facts as would be
admissible in evidence. Fed. R. Civ. P. 56(c). The district court
has broad discretion in determining the admissibility of evidence.
Aetna, 184 F.3d at 665. Hearsay is a statement, other than that
made by the declarant while testifying at a trial or hearing,

offered in evidence to prove the truth of the matter asserted, and

10


ee

ees a i

insurance company to be effective, “courts often relax this
requirement considerably in the name of substantial compliance.”
Prudential Ins. Co. of America v. Parker, 840 F.2d 6, 7 (7° Cir.
1988). Therefore, “‘(w)here [the] insured takes a positive action
which evidences his obvious desire for a change in beneficiary, the
courts will adopt such construction as will assist in carrying out

a

such intention.’” Conn. Gen. Life Ins. Co. v. Gulley, 668 F.2d
325, 328 (7% Cir. 1982) (quoting 2 Appleman, Insurance Law and
Practice § 963 (1941)).

There is no dispute the decedent did not submit a written
change request to JNL. Generally in substantial compliance cases,
the insured submitted or at least executed a written change of
beneficiary request, but some fortuity or technical deviation
prevented strict compliance with policy provisions.?

However, this case also involves a uniquely liberal policy
provision for beneficiary changes. Life insurance policy

provisions requiring written requests for beneficiary changes

typically do so in a decidedly unambiguous manner.? In this case,

1 See, e.g., Aetna, 184 F.3d at 662 (finding substantial compliance despite
the decedent’s failure to fill out all parts of a “confusing” annual
enrollment form); Conn. Gen, Life Ins. Co., 668 F.2d at 326, 328 (finding
substantial compliance although the decedent, because of his unexpected death,
failed to personally deliver his executed change of beneficiary form to his
employer); Dooley v. James A. Dooley Assocs. Employees Ret. Plan, 100 Ill.
App. 3d 389; 426 N.E.2d 1028 (1982).

? See, e.g., Dooley, 442 N.E.2d at 225 (“A Participant may designate the
beneficiary of his choice . . . The Beneficiary Designation must be in writing
and filed with the company.”). In another instance, the insurance provider
sent a confirmation letter reiterating the requirements: “Please remember that
if in the future you enroll in a plan requiring a beneficiary designation, or

7


not exclusively require written change of beneficiary requests, and
has accepted such requests by telephone. (Beatty Dep. 13, 17, 18.)

The decedent met Teresa in September of 1994. She gave birth
to their son, Ryan Ullsmith (“Ryan”), on November 23, 1995, and
they were married on November 28, 1995. The couple moved to
Teresa’s home in South Chicago Heights shortly after their wedding.
During the time period relevant to this matter, however, Michael
maintained ownership of and received mail at his premarital
residence in Joliet, Illinois.

JNL records indicate the decedent telephoned JNL on November
30, 1995, and requested a change in beneficiary. JNL telephone
security protocol requires their telephone representatives to
request the caller’s policy number, then to verify the caller’s
identity by requesting either the caller’s social security number
or date of birth. (Beatty Dep. 18.) In accordance with company
policy as described by Ms. Beatty (Beatty Dep. 19), JNL
automatically sent a letter dated November 30, 1995 to Michael’s
Joliet address. This letter confirmed the beneficiary changes
listing Teresa as the primary beneficiary and Linda as the
contingent beneficiary. The letter did not indicate any further
action was necessary, and concluded, “If you have any questions, or
need additional information, please contact our Service Center”.

JNL did not receive any response to this confirmation letter.


omni a

they are thus ripe for adjudication.

For the reasons set forth below, Linda K. Schultz’s Motion for
Summary Judgment is DENIED, Teresa M. Ullsmith’s Motion for Summary
Judgment is GRANTED, and Teresa M. Ullsmith’s Motion to Strike is
GRANTED in part and DENIED in part.

Background

On October 3, 1994, the decedent purchased a $100,000 life
insurance policy from JNL, naming his mother Linda the sole
beneficiary. The policy included provisions governing changes in
ownership and beneficiaries. The provision entitled CHANGE OF
OWNERSHIP stated: “The ownership of this Policy may be changed at
any time during the Insured’s lifetime. Such change must be made
by written notice acceptable to the Company” (emphasis added). An
amending endorsement to the provision entitled HOW PREMIUMS ARE
PAYABLE stated, “The Owner may request a change in the frequency of
premium payments. Such a request must be in writing and must be
approved by the Company” (emphasis added) . However, the provision
entitled HOW BENEFICIARY MAY BE CHANGED stated in relevant part,
“While this Policy is in force, the Owner may change the
Beneficiary, unless otherwise provided by endorsement, by filing at
the Home Office of the Company an acceptable written request”
(emphasis added). According to Carla Beatty, JNL’s director of

operations for the midwestern and western United States, JNL does


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

JACKSON NATIONAL LIFE INSURANCE COMPANY )
Plaintiff )
)NO. O01 C 641

v. )
) JUDGE WILLIAM J. HIBBLER

LINDA K. SCHULTZ and TERESA M. ULLSMITH )

Defendants )

MEMORANDUM AND ORDER

The Court has before it Defendants’ Cross~Motions for Summary
Judgment regarding Plaintiff's complaint of interpleader, as well
as Defendant Teresa M. Ullsmith’s Motion to Strike portions of the
Affidavits of Linda K. Schultz, Stephanie Ullsmith, and Theodore
Osuch. Plaintiff Jackson National Life Insurance Company (‘JNL”)
has asked the Court to determine whether life insurance proceeds
made payable upon the death of Michael O. Ullsmith, Jr. (“the
decedent”) should be paid entirely either to Linda K. Schultz
(“Linda”) or to Teresa M. Ullsmith (“Teresa”). Jurisdiction is
proper under 28 U.S.C. § 1332. The parties are diverse; Plaintiff
is incorporated under the laws of the State of Michigan, with its
principal place of business in Lansing, Michigan, Defendants are
residents of the State of Illinois. The amount in controversy,

i.e. the life insurance proceeds, exceeds $75,000 exclusive of

interest and costs. All parties have fully briefed the issues;


his family’s money . . . He said he was going to change the
beneficiary on his life insurance from Linda to me” are evidence of
his state of mind and intent with regards to this policy, and
Teresa’s Motion to Strike these sentences is DENIED. Her statement
in the first sentence of Paragraph 7 that the decedent told her in
numerous conversations that “Teresa was harassing him on the phone
and that she was breaking into his house, reading his mail, and
going through his belongings,” is similar to the first offending
sentence of Linda’s Affidavit, and Teresa’s Motion to Strike this
sentence is GRANTED.

The last sentence of Paragraph 3 of the Affidavit of Theodore
Osuch is offered to establish the intent of the decedent with
respect to his policy provisions, and Teresa’s Motion to Strike
this sentence is DENIED. The second and third sentences of
Paragraph 7 are statements allegedly made by Teresa, a party~
opponent, and Teresa’s Motion to Strike these sentences is also
DENIED. However, the second sentence of Paragraph 9, and all of
Paragraphs 10 and 11, do not fall within any of the hearsay
exceptions, and Teresa’s Motion to Strike these portions of the
Affidavit of Theodore Osuch is GRANTED.

CONCLUSION
For the reasons stated above, this Court DENIES Linda K.

Schultz’s Motion for Summary Judgment, GRANTS Teresa M. Ullsmith’s

12