Opinion ID: 852072
Heading Depth: 2
Heading Rank: 3

Heading: Equitable State Law Claim

Text: Because FEGLIA does not preempt equitable state law claims, we turn to the merits of the parties' arguments. Phyllis and the grandchildren argue that they are entitled to the full proceeds of Carlos's FEGLI policy. Mary Jo argues that if this Court allows Phyllis and the grandchildren's equitable claims to proceed, this Court should find that they are entitled to only the value of the FEGLI policy at the time of the 1998 divorce decree. As stated earlier, this case involves cross-motions for summary judgment. Here it is undisputed that in 1998 Carlos and Phyllis entered into a property settlement agreement that was incorporated into their final decree of dissolution of marriage. This agreement provided that Carlos Hardy shall maintain the Met Life Insurance Policy which has been held during the marriage. Phyllis Hardy and the parties' grandchildren shall each be designated as equal beneficiaries of the policy. At the time of the divorce, the death benefit value of the policy was based on Carlos having elected the policy's Option A. Furthermore, it is undisputed that Carlos subsequently married Mary Jo, designated her as the beneficiary of his FEGLI policy, and increased his FEGLI policy coverage by electing Option B. And when Carlos and Mary Jo divorced, they were each awarded any life insurance policies securing their respective lives. Property settlement agreements crafted upon divorce are contractual and binding. Rodriguez v. Rodriguez, 818 N.E.2d 993, 996 (Ind.Ct.App.2004), trans. denied. An action to recover the proceeds of a life insurance policy based on an insured's violation of a divorce decree may be brought against any person or entity designated by the insured as a beneficiary of the policy in question. See Meece v. Meece, 495 N.E.2d 827, 827-28 (Ind.Ct. App.1986). Mary Jo acknowledges these established legal principles, but she argues that the amount of recovery is limited to the contracted amount between parties. She contends that the word maintain in the 1998 settlement agreement means she is entitled to any gains of the policy after Carlos and Phyllis divorced. Here, the divorce decree and property settlement agreement undoubtedly entitle Phyllis and the grandchildren to whatever the death benefit under Option A would have been at the date of Carlos's death, as Carlos had to maintain his policy for the benefit of Phyllis and the grand-children. The trial court never reached the issue of who is entitled to any balance above that amount, as it agreed with Mary Jo's preemption argument and awarded all of the proceeds to her. Accordingly, remanding to the trial court on that issue is appropriate.