Title: RANDALL v. TRAVELERS CASUALTY & SURETY COMPANY
Citation: 145 P.3d 1048, 2006 OK 65
Docket Number: 
State: Oklahoma
Issuer: Oklahoma Supreme Court
Date: September 19, 2006

RANDALL v. TRAVELERS CASUALTY & SURETY COMPANY Annotate this Case RANDALL v. TRAVELERS CASUALTY & SURETY COMPANY 2006 OK 65 145 P.3d 1048 Case Number: 103417 Decided: 09/19/2006 THE SUPREME COURT OF THE STATE OF OKLAHOMA CONNIE RANDALL, Plaintiff-Counter-Defendant-Appellant, v. TRAVELERS CASUALTY & SURETY COMPANY, formerly known as Aetna Life and Casualty Company, Defendant-Counterclaimant-Third- Party Plaintiff-Appellee, v. THE ESTATE OF RICHARD D. RANDALL, SR., Third-Party Defendant. CERTIFIED QUESTIONS OF LAW FROM THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT ¶0 The United States Court of Appeals for the Tenth Circuit certified two first impression questions of Oklahoma law under the Revised Uniform Certification of Questions of Law Act, Does the principle articulated in Alkire v. King, May an insurer alter the right to assign rights under a settlement agreement by funding the contract through the purchase of an annuity where the settlement agreement does not anticipate such a purchase and where neither the settlement agreement nor the annuity contains anti-assignment provisions? We answer the initial question "yes." The answer to the second question is "no." CERTIFIED QUESTIONS ANSWERED. N. Franklyn Casey, Casey & Jones, P.C., Tulsa, Oklahoma, for appellant. Phil R. Richards, Thomas D. Hird, Jason L. Glass, Richards & Connor, Tulsa, Oklahoma, for appellee. WATT, C.J.: ¶1 The United States Court of Appeals for the Tenth Circuit certified two first impression questions of Oklahoma law under the Revised Uniform Certification of Questions of Law Act, Does the principle articulated in Alkire v. King, May an insurer alter the right to assign rights under a settlement agreement by funding the contract through the purchase of an annuity where the settlement agreement does not anticipate such a purchase and where neither the settlement agreement nor the annuity contains anti-assignment provisions? ¶2 We answer the first question "yes." Our determination is supported by the Alkire Court's grounding of its decision that the owner of a life insurance policy made payable to the owner's estate may assign all property interests therein ¶3 We answer the second question "no." Our determination is supported by well settled principles of Oklahoma law that: 1) contractual rights are presumed to be assignable; CERTIFIED FACTS ¶4 In 1982, Richard Randall (husband/assignor) was injured in an accident with an insured of the predecessor of the appellee, Travelers Casualty & Surety Company (Travelers/insurer). Two years later, the husband and the appellant, Connie Randall (wife/assignee) entered a release and covenant with the insurer providing that the husband would be entitled to monthly payments of $1,250.00 for three hundred months. Pursuant to the settlement agreement, upon the husband's death, any remaining payments were to be made "to his estate." It is undisputed that the release and covenant, dated August 22, 1984, contains no anti-assignment provision and that it does not provide the manner in which the payments are to be funded. ¶5 Travelers subsequently purchased an annuity from Executive Life Insurance Company of New York, now Metropolitan Life Insurance Company (MetLife) as separate funding for the monthly payments. The husband or his estate is named as the annuitant and payee "subject to change" under the contract while Travelers is its owner. The husband's estate is also named as the primary beneficiary "subject to change" for payments payable after the husband's death.10 Not only does the annuity not contain an anti-assignment provision, it specifically provides that the owner can assign the contract and that the rights of any assignee will supersede those of the owner or beneficiary. Furthermore, the owner can change the beneficiary upon written request "signed while the Annuitant is living." ¶6 On November 6, 2000, two days before his death, the husband executed an assignment of his contract rights under the release and covenant agreement. The assignment provides that it is a transfer of all the husband's "right, title and interest, under and by virtue" of the release and covenant agreement to his wife. ¶7 On August 23, 2002, the wife filed suit against Travelers in Tulsa County District Court alleging breach of contract and bad faith. In September, Travelers removed the cause to federal court asserting a counterclaim/third-party claim for a declaratory judgment specifying the proper recipient of the unpaid funds. ¶8 Asserting that the husband could not alter the terms of the underlying contract by disenfranchising his estate's interest in the annuity payments, Travelers moved for summary judgment. The United States District Court for the Northern District sustained the motion on February 4, 2004. On March 2nd, the wife filed her notice of appeal to the Tenth Circuit Court of Appeals. ¶9 Recognizing that the lawsuit involved unsettled issues of Oklahoma law, the Tenth Circuit sua sponte certified two issues to this Court pursuant to the Revised Uniform Certification of Questions of Law Act, DISCUSSION ¶10 1) The principle articulated in Alkire v. King that the assignment of a life insurance policy conveys to the assignee a right to policy proceeds although the insured's estate is the named beneficiary applies to contracts generally. ¶11 Both parties tend to focus on the assignable aspects of the annuity contact. Nevertheless, they each recognize that the issue here involves the rights of the husband to receive monthly payments under the settlement agreement between himself and Travelers' predecessor -- an agreement which does not contemplate its funding by the purchase of an annuity and which contains no anti-assignment provision. Furthermore, neither the original settlement agreement nor the assignment is subject to the Structured Settlement Protection Act of 2001, ¶12 Alkire v. King, ¶13 Travelers contends that Alkire should be specifically limited to the arena of conveyances involving life insurance policies because of the special relationship between the insured and a beneficiary. ¶14 a) Oklahoma courts have long recognized the basis upon which Alkire v. King was decided -- that a living person has no estate and that there are no vested rights of inheritance in the estate of a living person. ¶15 In determining that an insurance policy naming the owner's estate as a beneficiary could be assigned during the insured's lifetime, the Alkire Court quoted from a Massachusetts case, Chartrand v. Chartrand, 295 Mass. 293, 3 N.E.2d 828 (1936). ¶16 b) Prudential Ins. Co. of America v. Glass states that an assignment of a life insurance policy is an ordinary contract between the assignor and the assignee to be interpreted under general contract principles. ¶17 The issue of whether insurance contracts should be treated differently from other contracts for purposes of assignments was discussed by this Court in Prudential Ins. Co. of America v. Glass, 1998 OK 52, ¶19, 959 P.2d 586 . In Glass, we upheld an assignment of a life insurance policy intended as a pledge of the policy as collateral for a debt owed to the assignee. In doing so, we stated that "[a]n assignment of a life insurance policy is an ordinary contract between the assignor and assignee [citation omitted] and, as such, it is interpreted under general contract principles." ¶18 In answering the first certified question in the affirmative, we consider the underpinnings of the Alkire decision discussing the inseparability of estates and living persons as legal entities in succession by operation of law and the statement in Glass providing that assignments of life insurance policies are nothing more than ordinary contracts to be determined under general contract principles.19 ¶19 2) An insurer may not alter the ability to assign rights under a settlement agreement by funding the contract through the purchase of an annuity where the settlement agreement does not anticipate such a purchase and where neither the settlement agreement nor the annuity contains anti-assignment provisions. ¶20 Having determined that the assignment here is subject to construction under ordinary contractual principles, we now address Travelers' contention that the payments under the settlement agreement could not be assigned. Much of Travelers' argument on this issue continues to turn on whether the annuity contract should be treated as insurance and the fact that the husband did not negotiate for an assignment provision to be included in the covenant and release. The wife argues that the lack of any anti-assignment provision in the contract and in the annuity coupled with the fact that the covenant and release does not anticipate the purchase of an annuity results in the rights of the settlement agreement being subject to assignment. The wife's arguments are supported by general principles of Oklahoma contract law and extant jurisprudence. ¶21 a) Under Oklahoma law, contract rights are presumed to be assignable; generally, where an executor or administrator succeeds to rights and liabilities of a deceased party to a contract the contract is assignable; and failing to include language restricting an assignment results in the assumption that the contract rights may be assigned. ¶22 An assignment is the expressed intent of one party to pass rights owned to another.20 Valid assignments pass the assignor's title, leaving no interest to be reached by a creditor.21 In re Kaufman, 2001 OK 88, 37 P.3d 845 , makes it clear that anti-assignment provisions in structured settlements prohibiting alienation of future payments are enforceable. Nevertheless, the same pronouncement recognizes that, in Oklahoma, contractual rights are presumed to be assignable.22 Furthermore, the use of terms in a contract indicating that the beneficiary of any remaining interest on the death of a contracting party will pass to the party's heirs or estate forecasts an intention to make the contract assignable.23 Where, as here, there is no provision either in the settlement agreement or in the annuity prohibiting assignment, the contract is subject to assignment.24 ¶23 c) Extant jurisprudence supports the determination that rights under the settlement agreement are assignable. ¶24 Other courts addressing the issue of whether settlement agreements and annuities purchased to fund those contracts may be assigned agree with the position we take here. Those cases teach that: 1) the total absence of any anti-assignment language in either the structured settlement or the annuity contract payments under the contracts results in a determination that the contract may be assigned;25 2) where a settlement agreement provides for payment to the original beneficiary's heirs or estate, the payments are assignable;26 3) a settlement agreement will not be converted to an "annuity" to avoid the possibility of assignment;27 4) although the annuitant may not be the technical owner of the annuity, lack of any anti-assignment language supports a determination that the contract may be assigned;28 and 5) if, as here, an annuity contract can be assigned by the owner, it may also be assigned by the annuitant.29 CONCLUSION ¶25 Our answer to the first certified question is supported by the underpinnings of Alkire v. King, 1938 OK 282, 80 P.2d 309 , recognizing the unity of a living person and the person's estate and our pronouncement in Prudential Ins. Co. of America v. Glass, 1998 OK 52, 959 P.2d 586 , that an assignment of a life insurance policy is an ordinary contract between the assignor and the assignee and, as such, is interpreted under general contract principles is determinative of the issue. The answer to the second question certified is governed by well settled principles of Oklahoma contract law and is bolstered by extant jurisprudence. CERTIFIED QUESTIONS ANSWERED. WATT, C.J. WINCHESTER, V.C.J., LAVENDER, HARGRAVE, OPALA, KAUGER, EDMONDSON, TAYLOR, JJ. Concur. COLBERT, J. Not Participarting. FOOT