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IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF FLORIDA

PANAMA CITY DIVISION

AXA EQUITABLE LIFE

INSURANCE COMPANY, 

Plaintiff,

v. CASE NO. 5:11-cv-65-RS-MD

KAY J. CHERRY and

LYNN L. CHERRY,

Defendants.

_________________________________________/

JUDGMENT

On October 16, 2002, James and Kay Cherry were divorced. In their 

mediation settlement agreement (“MSA”), the husband agreed to pay lump sum 

alimony of $180,000 over ten years. The MSA stated:

The Husband shall pay as non-modifiable alimony the following:

A. Two Thousand Dollars ($2,000.00) per month for a period of sixty 

(60) months with the first payment due on or before November 1, 

2002 and continuing for an addition fifty-nine (59) months.

B. At the end of sixty (6) months, One Thousand Dollars ($1,000.00) 

per month for a period of an addition sixty (60) months.

C. The above alimony shall terminate upon the death or remarriage of 

the Wife and is for the purposes of support.

D. The above alimony will be secured by the Husband maintaining

“Equitable” and “Ohio” life insurance policies on his life with the 

Wife as sole irrevocable beneficiary. The Husband agreed to not 

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encumber or decrease the face value so long as he has an alimony 

obligation. The Husband shall prove the Wife with documentary 

proof of said insurance. In the event that the Husband dies while 

he has an alimony obligation to the Wife, the proceeds from said 

life insurance policies shall be held in trust and transferred to the 

Wife.

James Cherry died on December 2, 2010, and had a surviving spouse, Lynn 

Cherry. At the time of his death, Kay Cherry was owed $26,500 in alimony. Each 

insurance police was valued at $100,000. However, only the Equitable policy is at 

issue here. At some point after executing the MSA, Mr. Cherry changed the 

Equitable policy beneficiary so that his new wife would receive half of the 

proceeds, leaving Kay with only a half interest in the policy.

Kay Cherry claims that she is entitled to the entire proceeds of the policy 

because the MSA says, “In the event that the Husband dies while he has an 

alimony obligation to the Wife, the proceeds from said life insurance policies shall 

be held in trust and transferred to the Wife.” Lynn Cherry argues that the life 

insurance policies were only security for the alimony and that Kay Cherry is 

entitled only to the $26,500 unpaid alimony. Unfortunately, this case arises 

because of poor contract drafting.

A MSA is subject to interpretation like any other contract. Crawford v. 

Barker, 64 So.3d 1246, 1255 (Fla. 2011). “In construing a contract, the court 

should place itself as nearly as possible in the position of the parties when the 

contract was executed, and should consider the object sought to be accomplished 

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by the agreement.” Ballantyne v. Ballantyne, 666 So.2d 957, 959 (Fla. 1st Dist. Ct. 

App. 1996). When a MSA is ambiguous, the terms of the agreement need to be 

read in the context of the entire contract. See Liss v. Liss, 937 So.2d 760 (Fla. 4th 

Dist. Ct. App. 2006). 

Kay Cherry argues that the contract is unambiguous because it says that she 

will receive the proceeds from the policy if James Cherry still owed her any

alimony at the time of his death; however, I disagree. Life insurance policies in 

MSAs can have two separate purposes: (1) security for unpaid obligations or (2) 

part of the property distribution to minimize economic harm to the family. Id. at 

763. If the life insurance is security for unpaid support obligations only the unpaid 

portion may be encumbered. Id. at 763-64; See Smith v. Smith, 912 So.2d 702, 705 

(Fla. 2nd Dist. Ct. App. 2005). The MSA in this case states that the “alimony will 

be secured” by the life insurance policies. 

Additionally, the structure of the agreement further supports that the life 

insurance policies were for security for any unpaid alimony if James Cherry died 

before the total amount was paid. The MSA is divided into three sections. The 

first section divides the parties’ assets and liabilities. The second section 

establishes the alimony payment and security for it. The last section is for other 

designated issues. If the life insurance policies were meant to be part of the 

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property distribution, where Kay Cherry would take the entire proceeds, then it 

would follow that it should have been included in the assets and liabilities section.

Reading the contract in its entirety, while determining the original intent of 

the parties, I find that the life insurance policy was meant only to secure any 

unpaid obligation James Cherry had at his death. The alternative option would 

result in Kay Cherry getting a windfall because she outlived her ex-husband, and I 

do not accept that was the intention when the MSA was made. Parts A, B, C, and 

the beginning of D are clear and unambiguous—the life insurance policies were 

only to be security for clearly defined alimony. It is impossible to reconcile the 

majority of the alimony section with Kay Cherry’s claim that she is entitled to the 

entirety of the proceeds. 

IT IS ORDERED THAT Kay Cherry will only receive the amount of 

unpaid alimony from the life insurance policy, $26,500. Lynn Cherry will receive 

the remaining proceeds of the policy.

ORDERED on December 5, 2011.

/S/ Richard Smoak 

RICHARD SMOAK

UNITED STATES DISTRICT JUDGE

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