Opinion ID: 182984
Heading Depth: 2
Heading Rank: 1

Heading: B & K Is the Owner and Beneficiary of the Life Insurance Policy

Text: Although Protective's records indicate that B & K is the owner and beneficiary of the policy, Hansen contends that in January 2008 McDonald became the owner of the policy and Hansen became the beneficiary of the policy. She reaches this conclusion by setting forth a series of interlocking arguments, which proceed as follows: (1) B & K and Protective made a mutual mistake when they named B & K Inc the owner of the policy, and we should reform the policy to read B & K LLC in order to reflect the contracting parties' true intentions; (2) after reforming the policy to read B & K LLC, we should find that Culligan transferred ownership of the policy from B & K to McDonald because an LLC may transfer ownership of its policy by submitting a change of ownership form that bears only one officer's signature; and (3) after finding that McDonald owned the policy, we must find that Hansen is the beneficiary of the policy because McDonald, as the owner of the policy, had the authority to name Hansen as the new beneficiary. Alternatively, should we reject this series of arguments, Hansen contends that McDonald owned the policy because B & K and McDonald formed a binding contract to transfer ownership of the policy, and Hansen can enforce this contract because she is an intended third-party beneficiary. We address each of these arguments in turn. Hansen begins her series of interlocking arguments by asserting that B & K and Protective made a mutual mistake when they named B & K Inc the owner of the policy and that we should reform the contract to read B & K LLC in order to reflect the true intention of B & K and Protective. Under Wisconsin law, a contract may be reformed when the writing that evidences or embodies an agreement in whole or in part fails to express the agreement because of a mistake as to the contents or effect of the writing. Addison Ins. Co. v. Korsmo, 280 Wis.2d 558, 694 N.W.2d 510, ¶ 11 (Wis.Ct.App.2005) (citing Vandenberg v. Cont'l Ins. Co., 244 Wis.2d 802, 628 N.W.2d 876, 889 (2001)). Establishing the existence of a mutual mistake in an insurance contract, however, requires less proof than is needed for any other contract. Jewell v. United Fire & Cas. Co., 25 Wis.2d 509, 131 N.W.2d 276, 280 (1964). Putting our concerns with standing aside, we will assume without deciding that reforming the contract to read B & K LLC is proper. Hansen next contends that once we reform the contract to read B & K LLC, we must find that Culligan transferred ownership of the policy to McDonald. For support, Hansen relies upon Kathleen Britton, the vice president in charge of Protective's life insurance policies, who testified that if B & K had been properly listed as an LLC, then Culligan's signature alone would have satisfied Protective's terms and requirements. In effect, therefore, Hansen urges us to find that McDonald was the owner of the policy because B & K should have been listed as an LLC and Protective therefore should have accepted Culligan's signature as sufficient to transfer the policy. The problem with Hansen's argument is that we have no authority to do so. We begin by noting that we cannot presume to know what Protective would or should have done if B & K had been listed as an LLC. Although Protective's terms and requirements were clear, there is nothing in the record to suggest that transferring ownership of this policy would have been a simple ministerial task. Hansen's reliance upon Britton's testimony is misplaced because although Britton testified about Protective's general business practices and about whether Culligan's signature satisfied Protective's terms and requirements for LLCs, she never testified that Protective would have actually transferred ownership of the policy from B & K to McDonald if B & K had been listed as an LLC. There is in fact nothing in the record to prevent us from assuming that instead of transferring the policy, Protective would have commenced an investigation or otherwise refused to transfer ownership of the policy. Hansen's assumption about what would have happened is thus nothing more than speculation, and we have no reason to believe that Hansen's assumption is more correct than any other assumptions that could be made. Nevertheless, even if we could somehow discover what Protective would have done had B & K been named an LLC, the proper focus here is not on what should have happened but rather on what actually happened. Hansen argues that because Protective should have accepted Culligan's signature as sufficient to transfer ownership of the policy, we must find that B & K transferred the policy to McDonald. This is not a legal theory, and what should have happened is not a governing standard. Instead, what matters here is what actually happened: Culligan signed a change of ownership form, Protective rejected it either rightly or wrongly (we will presume wrongly) and sent the form back to Culligan, Culligan never mailed the form back, and Protective never changed the owner of the policy. Absent some viable legal theory, we cannot simply unwind this series of events and declare Hansen the beneficiary of the policy. To the extent Hansen argues that we can reform the contract twice, first to make B & K LLC the owner and then to make McDonald the owner, we reject this argument. Although reformation may change B & K Inc to B & K LLC, it certainly does not change the owner from B & K to McDonald. Reformation is an equitable remedy that is available only when a document fails to fully or accurately reflect the contracting parties' actual agreement either because the contracting parties made a mutual mistake or because one party made a mistake while the other party committed a fraud. See, e.g., Hoem v. Town of Franklin, 321 Wis.2d 476, 774 N.W.2d 475, ¶ 15 (Wis.Ct.App.2009); Korsmo, 694 N.W.2d at ¶ 9 (stating that reformation is an equitable remedy. If the circuit court determines [that] . . . the terms of an insurance contract are not fully or accurately set forth, it may, at its discretion, reform the contract to express the parties' actual intent). Here, B & K and Protective intended to create a contract that named B & K as both the owner and beneficiary of a life insurance policy on McDonald's life. They succeeded in doing so. While the contracting parties might have made a mistake in characterizing B & K as a corporation, Hansen does not allege that the contracting parties made any additional mistakes or that one party made a mistake while the other party committed a fraud. There is thus nothing left to reform. Because Hansen points to no legal theory under which we could find that McDonald was the owner of the policy, Hansen's series of interlocking arguments fail. At oral argument, however, Hansen argued that even if we reject her series of arguments, we should still find that McDonald was the owner of the policy because B & K and McDonald formed a binding contract to transfer ownership of the policy, and Hansen can enforce this contract because she was an intended third-party beneficiary. We disagree. First, assuming the change of ownership form was a contract, it was a contract between B & K and Protective. McDonald was not a party to this contract because he had no control over the contents of the form, whether B & K would submit the form, or whether Protective would find the form sufficient. Because McDonald was not a party to this contract, Hansen has no authority to enforce it. Second, there is no evidence in the record proving that Hansen is an intended third-party beneficiary. In Wisconsin, A person may enforce a contract as third-party beneficiary if the contract indicates that he or she was either specifically intended by the contracting parties to benefit from the contract or is a member of the class the parties intended to benefit. Milwaukee Area Technical Coll. v. Frontier Adjusters of Milwaukee, 312 Wis.2d 360, 752 N.W.2d 396, ¶ 20 (Wis.Ct.App.2008). Here, even if the change of ownership form was a contract between B & K and McDonald, it made no mention of Hansen or any other beneficiary; it was merely a contract to transfer ownership of the policy. It is thus impossible to conclude that Hansen was an intended third-party beneficiary who is entitled to enforce the contract. Accordingly, for the reasons set forth above, we find that B & K is both the owner and the beneficiary of the life insurance policy. We therefore affirm summary judgment in favor of B & K. Given our holding, we need not address B & K's arguments that McDonald did not give adequate consideration and that Culligan did not have authority to transfer the policy.