Opinion ID: 63965
Heading Depth: 3
Heading Rank: 3

Heading: The Mutually Reciprocal Contract

Text: Mr. Kreppein argues that Mrs. Kreppein “contracted away her right to change the insurance beneficiary when she entered into a bilateral contract for reciprocal insurance policies with [him].” In support of the alleged existence of such a contract, Mr. Kreppein relies on his own affidavit testimony that: “[Mrs. Kreppein] and I specifically agreed that the proceeds of the respective policies would reciprocally ensure each the other, in the event of death, . . . and that there would be no change regarding the insurance policies or beneficiaries.” He also attempts to rely upon Sullivan’s affidavit; the most relevant statement therein consisting of the comment that Mr. Kreppein “indicated that he and [Mrs. Kreppein] wanted to discuss obtaining life insurance policies that would protect each of them in the event of the death of the other.” Mr. Kreppein neither submitted a copy of the alleged agreement nor alleged that the contract was in writing. Based solely on the affidavits described above and without citation to any legal authority, Mr. Kreppein argues that the alleged contract prevented Mrs. Kreppein from validly changing her beneficiary designation because one cannot “validly twice sell a car or a property after it has been sold once.” 6 Our decision that the temporary restraining order expired necessarily means that it was not entitled to res judicata effect. See LA. REV. STAT. ANN. § 13:4232(B) (providing that judgments resulting from an action for divorce only have res judicata effect as to causes actually adjudicated); Assocs. Fin. Servs. of Am., Inc. v. Rogell, 449 So. 2d 526, 528 (La. Ct. App. 1984). 9 No. 08-30409 We need not consider whether the district court properly found that Mr. Kreppein failed to raise a genuine fact issue concerning the existence of a mutually reciprocal agreement because we agree with Crane and Luquette that Mr. Kreppein has not demonstrated that such a contract would alter the outcome of this case. Under Louisiana law, life insurance proceeds are considered “sui generis and therefore not subject to many traditional civilian principles.” Fowler v. Fowler, 861 So. 2d 181, 183 (La. 2003) (explaining that the Louisiana Code of 1808 provided that insurance was foreign to the code because insurance contracts derived from common law countries and were considered a form of gambling under the French Civil Code (citation omitted)). “[T]he principle that life insurance proceeds are sui generis has led Louisiana courts for decades to look to the provisions of the policies themselves and any pertinent portions of the Insurance Code to resolve disputes concerning such policies.” Id. at 185. The rules of contract also provide a basis for the protection of life insurance proceeds because the insurance contracts are generally interpreted as ordinary contracts. See id. But if nothing in the laws of insurance or contract control, the policy terms prevail. See Jackson Nat’l Life Ins. Co. v. KennedyFagan, 873 So. 2d 44, 50 (La. Ct. App. 2004). Here, Mrs. Kreppein’s insurance policy specifically provided that the “Owner may change the designations of Owner, Contingent Owner, and Beneficiary during the Insured’s lifetime. Any change is subject to the consent of an irrevocable beneficiary.” This is consistent with the notion under Louisiana law that, “absent a conventional agreement, no one has the vested right to the status of a beneficiary under a life insurance contract, if the contingent event which vests such right, the death of the insured, has not occurred. Until then, the parties to the insurance contract are free to change the beneficiary, if such a change is permitted by its terms.” Id. at 49. Although Mrs. Kreppein’s life insurance policy clearly vested Mrs. Kreppein with the right to 10 No. 08-30409 name an irrevocable beneficiary, nothing in the policy itself or the record in this case suggests that she did so. Nor is there evidence that she assigned ownership of the policy to Mr. Kreppein, which would have had the same effect. See Kambur v. Kambur, 352 So. 2d 99, 103 n.4 (La. Ct. App. 1995) (citation omitted). Indeed, Mr. Kreppein seeks to diminish these facts by arguing that nothing in the record indicates that either he or Mrs. Kreppein was aware of such options. Mr. Kreppein would have us overlook the plain meaning of the insurance policy based on the alleged existence of another contract Mrs. Kreppein entered into with a third party. He provides no legal authority for this argument. See Jackson Nat’l Life Ins. Co., 873 So. 2d at 50 (“Louisiana [law] simply does not address this situation; it is therefore governed by the policy terms, which constitute the law between the parties.”). And he does not respond to Crane and Luquette’s contention that his allegations amount to no more than a potential breach of contract claim against Mrs. Kreppein’s estate. See id. (holding that while a wife’s succession may have claims against a husband’s succession arising from a life insurance policy, the policy proceeds must be disbursed in accord with the policy language). Because Crane and Luquette were the named beneficiaries and nothing in Mrs. Kreppein’s insurance policy indicates that she lacked legal capacity to change the beneficiary designation, the district court correctly awarded the proceeds to Crane and Luquette. See Fowler, 861 So. 2d at 186 (“[T]he beneficiary is a named individual. Thus, the right to ownership of the proceeds should devolve in accordance with the contract provisions which are clear and unambiguous.”).