Opinion ID: 675124
Heading Depth: 2
Heading Rank: 3

Heading: sufficiency of the evidence

Text: 54 Having decided that the federal common law of substantial compliance applies in the instant case, it is necessary to determine whether sufficient evidence supports a finding that Bill Adams substantially complied with the terms of his policy. In our evaluation of the sufficiency of the evidence, we review the district court's factual findings for clear error and conclusions of law de novo. We have held that whether the beneficiary to a life insurance policy has been changed is a question of fact. Williams v. United States, 243 F.2d 573, 573 (4th Cir.1957). Whether the policyholder took steps to effectuate the change is also a question of fact. 27 The district court's formulation of the federal common law of substantial compliance doctrine is, of course, a matter of law reviewable de novo.
55 As a preliminary matter, Jack argues that the district court made errors of law and/or abused its discretion in admitting three pieces of evidence: 1) Rosita's testimony regarding a phone conversation her husband had with an unidentified third party about his intent to change the beneficiary on his Phoenix policy; 2) a note made by Jerry Holcombe during the course of a conversation with Bill confirming the fact that his beneficiary had been changed; and 3) a letter from Phoenix to Jack dated October 31, 1990. Without this evidence, Jack contends that the remaining evidence is insufficient to sustain the district court's decision in favor of Rosita. We review the district court's evidentiary decisions for an abuse of discretion. 56 Jack contends that, under South Carolina law, the district judge made several errors in his decisions to admit the foregoing items of evidence. Because the district court was correct in the conclusion that state law was preempted by ERISA and that federal common law applies, there is no need to address Jack's contentions regarding errors of South Carolina evidentiary law. The district court's admissibility decisions will be analyzed under the Federal Rules of Evidence. 57
58 Jack's primary objection to Rosita's testimony is based on South Carolina's Dead Man Statute. Because federal law supplies the rule of decision in the case, the federal rules of evidence, not South Carolina's rules, apply. Federal Rule of Evidence 601 provides that the competency of a witness shall be determined in accordance with state law when state law provides the rule of decision with respect to an element of a claim or defense in a civil action. Here, it does not. 59 As the district court noted, Rosita's testimony regarding her husband's telephone conversation is admissible under Federal Rule of Evidence (FRE) 803(3) as evidence of Bill's then-existing state of mind. Under 803(3) a statement of the declarant's then-existing state of mind including his intent, plan, or motive, is not excluded by the hearsay rule. In the telephone conversation, Bill expressed his intent to make Rosita the beneficiary of his policy. The evidence, then, shows Bill's intent, and, as the district court has noted, can be used to prove subsequent conduct in conformity with [his] stated intention to change his beneficiary. Phoenix, 828 F.Supp. at 389. United States v. Jenkins, 579 F.2d 840, 842-43 (4th Cir.), cert. denied, 439 U.S. 967, 99 S.Ct. 458, 58 L.Ed.2d 427 (1978). 60
61 The most important aspect of Jack's argument regarding Holcombe's note is its inconsequential nature. Even if the court should not have admitted the note, there is no basis on which to exclude Holcombe's unequivocal testimony that he definitely remembers receiving a phone call from Bill regarding the change of beneficiary, and that he specifically remembers that Bill wanted to name his new wife, Rosita. The existence of the note merely corroborated that memory. 62 Holcombe's testimony in and of itself evidences Bill Adams' intent to change the beneficiary on his Phoenix life insurance policy. Holcombe's testimony also establishes that Bill took substantial steps to effectuate that change. Due to the confidential nature of Bill's salary, Holcombe had the responsibility to make the necessary changes to Bill's policy. Holcombe testified that he was aware that Bill wanted the change made and that he made a note to himself to do it. He also testified that he did not make the necessary change. Holcombe did not offer any information that would lead the court to believe that Bill Adams subsequently changed his mind. 63 Regarding the admissibility of the handwritten note, Holcombe testified that it was his habit or practice to make such notes, that he made the notes in the ordinary course of his business, that he kept the pad on which he made such notes by his phone in his office as a to do list, and that he made the note substantially contemporaneous with the telephone conversation he had with Bill. Such testimony establishes the note as a hearsay exception under Rule 803(1) as a present sense impression, i.e., a statement describing or explaining an event or condition made while the declarant was perceiving the condition or event or immediately thereafter. Jack's contention that the record reveals uncertainty as to when the note was made is incorrect. Holcombe's testimony is clear that he had a habit or practice of making such notes, and that he made the one pertaining to Bill Adams substantially contemporaneous with their conversation. The district court also held correctly that the note's implicit statement that Bill indicated a desire to change beneficiaries was admissible pursuant to 803(3). 64
65 Regarding the letter of October 31, 1990, written to Jack from Barbara Gregory, an agent of Phoenix, the district court held the letter and the information contained in the letter admissible. The letter, outlining the actions Bill took to change the beneficiary of his policy from Jack to Rosita and explaining that Bill did not comply precisely with the policy's change of beneficiary's provisions, contains hearsay within hearsay. Phoenix obtained some of the information contained in the letter from Texfi employees. The letter includes the following statement: Bill said he wanted to change the beneficiary of his life insurance policy. The district court admitted this statement pursuant to Rule 803(3) as a statement of Bill's intent. As Jack has argued, however, 803(3) requires a statement by the declarant, and the October 31 letter does not contain a statement by Bill. The letter does refer to records submitted by Texfi, which presumably included Holcombe's handwritten note recording a statement by Bill. The levels of hearsay, however, multiply under this analysis. 66 The court has also noted that the letter in itself is arguably hearsay but that Phoenix responded to a request for an admission by acknowledging that the letter was authentic and was a record of regularly conducted business activity within the meaning of Rule 803(6). As a prelude to its admissions, however, Phoenix specifically disavowed any admission with regard to the truthfulness of information verifiable only by persons or entities beyond its control including Texfi and its agents and employees. In addition, Phoenix qualified its admissions by objecting to the requests to admit to the extent that they required Phoenix to admit that conduct by others such as Texfi constituted regularly conducted activity for any person or entity other than Phoenix. It would seem that these qualifications render Phoenix's admission irrelevant to the admissibility of the hearsay within hearsay as to Bill's intent as discerned by Texfi. Because the letter does not fall within a recognized exception to the hearsay rule, it should have been excluded. 67 In any event, the letter to Jack recounting his father's attempt to change his beneficiary is not necessary to prove Bill's intent in light of the other evidence in the record.
68 The court finds substantial compliance based on the evidence which was undoubtedly admissible. The evidence indicates that Jack intended to change his beneficiary. Rosita's testimony regarding her understanding of Bill's intent based on her own conversations with him is admissible. Bill's statement of intent to change his beneficiary made over the telephone to an unidentified party while Rosita was in the room is admissible pursuant to 803(3). The fact that Bill completed and signed the form to change his policy from individual medical coverage to family coverage on February 22, 1990 is uncontested. 28 The fact that Bill and the clerk signed a Dual Purpose Form to effectuate the changes is evidenced by Holcombe's testimony regarding the Texfi form bearing Bill Adams' signature and by a copy of that form. The fact that Holcombe had the responsibility to make the changes to the policy based on the confidentiality of Bill's salary is uncontested. Holcombe's testimony regarding the fact that Bill contacted him by phone on March 6, 1990 to ensure that his policy was changed to reflect Rosita, his new wife, as his new beneficiary is admissible. The fact that Holcombe did not actually make the change that Bill requested is uncontested. After Bill died, Texfi officials altered the form to name Rosita Adams as beneficiary because Texfi had some reason to believe that Bill wanted the change to be made. 69 Bill's statements to Rosita, to the unidentified third party on the phone, and to Holcombe evidence his intent to change his beneficiary. By going to the home office of his employer and executing a form which he was told could provide the authority to change his beneficiary when submitted to the appropriate financial officer, Bill took steps to effectuate his intent to change the beneficiary. Bill took the additional step of following up by calling Holcombe on March 6, 1990 to confirm the change. Holcombe, the financial officer at Texfi, failed to complete the process by filling in Rosita's name on the form Bill had signed for that purpose. The evidence on the record establishes that Bill substantially complied with the policy's requirements for changing one's beneficiary, and, under the federal common law of substantial compliance, the district court's conclusion that Rosita is entitled to the proceeds of the policy is affirmed. 70 We therefore affirm the district court's opinion. Rosita is entitled to receive the proceeds of her husband's life insurance policy because he substantially complied with the provisions of the plan governed by ERISA. 71 AFFIRMED.