Court Opinion

ID: 3170811
Source: CourtListenerOpinion
Date Created: 2016-01-20 17:06:12.556854+00
Date Added: 2024-06-11T11:58:36.971837
License: Public Domain

[Cite as Sentry Life Ins. v. Chuchanis, 2016-Ohio-183.]

                                        COURT OF APPEALS
                                       STARK COUNTY, OHIO
                                    FIFTH APPELLATE DISTRICT

SENTRY LIFE INSURANCE COMPANY                                JUDGES:
                                                             Hon. W. Scott Gwin, P. J.
        Plaintiff                                            Hon. William B. Hoffman, J.
                                                             Hon. John W. Wise, J.
-vs-
                                                             Case No. 2015 CA 00063
ANDREW CHUCHANIS, et al.

        Defendant-Appellee                                   OPINION

CHARACTER OF PROCEEDING:                                  Civil Appeal from the Court of Common
                                                          Pleas, Case No. 2013 CV 01591

JUDGMENT:                                                 Affirmed

DATE OF JUDGMENT ENTRY:                                   January 19, 2016

APPEARANCES:

For Defendant-Appellant Veach                             For Defendant-Appellee Chuchanis

JAMES L. DYE                                              EDMOND MACK
THE LAW OFFICE OF JAMES L. DYE                            TZANGAS, PLAKAS & MANNOS
Post Office Box 161                                       220 Market Avenue South
Pickerington, Ohio 43147                                  Canton, Ohio 44702
Stark County, Case No. 2015 CA 00063                                                     2

Wise, J.

       {¶1}   Appellant, Christine Veach appeals the March 10, 2015, decision of Stark

County Court of Common Pleas finding in favor of Appellee Andrew Chuchanis following

a trial to the bench.

                          STATEMENT OF THE FACTS AND CASE

       {¶2}   The facts of the case are not in dispute and have been stipulated to by the

parties.

       {¶3}   Sentry Life Insurance company ("Sentry") issued life insurance policy

number 73-05927-71 (the "Policy") to Tracy Veach Lytle Brown ("Tracy") in 1991. In 1991,

at the time Sentry issued the Policy to Tracy, she selected Andrew Chuchanis as the

Policy's beneficiary and Christine Veach as the contingent beneficiary. In October 1998,

seven years after obtaining the Policy, Tracy sent Sentry a letter indicating that she had

gotten married, she had a name change, and she wanted to change her primary

beneficiary from Chuchanis to her new husband, Richard Lytle. That same letter

requested that Sentry send her confirmation of the changes.

       {¶4}   Later that month, Sentry responded to Tracy's letter, in pertinent part, as

follows: "Enclosed is the form that is needed to change the beneficiary designations on

your life insurance policy." The letter enclosed a change of beneficiary form that required

Tracy to list the name and address of her beneficiaries, sign in front of a witness who is

not a beneficiary of the Policy, and provide the witness's signature. The Sentry letter and

form were sent to Tracy at her then-current address—the same address where she

received the quarterly premium invoices that she paid,

       {¶5}   The Policy provision regarding change of beneficiaries reads as follows:
Stark County, Case No. 2015 CA 00063                                                     3

               Change of Beneficiary- You may change the beneficiary during the

        insured's lifetime. The change requires satisfactory written notice to us.

        After we record it, the change is effective from the date you signed the

        notice. The insured does not have to be living at the time we record the

        change for it to be effective. We will not be responsible for any payment we

        make or other action we take before we record the change.

        {¶6}   Tracy never completed the change of beneficiary form Sentry sent to her in

October, 1998. Richard Lytle (the person Tracy named in her letter to Sentry) died in

2000.

        {¶7}   In 2001, Tracy married John Brown. Later that year, Tracy sent a request

to Sentry to change her name because of her most recent marriage. In response, Sentry

mailed Tracy another change of beneficiary form. This form was also sent to Tracy's then-

current address. Again, Tracy did not respond.

        {¶8}   On at least two occasions after the paperwork at issue in this case, once in

2009 and once in 2011, Tracy told her good friend that she still loved Chuchanis and that

she intended for him to have the Policy proceeds in the event of her death.

        {¶9}   In March, 2013, Tracy died, thus giving rise to a $100,000 payout under the

Policy. After Tracy died, both Chuchanis and Veach sent letters to Sentry claiming

entitlement to the Policy proceeds.

        {¶10} In June, 2013, because two different people claimed entitlement to the

proceeds, Sentry filed an interpleader action, obtained approval to deposit the funds, and

deposited $102,161.36 with the Clerk of Courts.
Stark County, Case No. 2015 CA 00063                                                  4

      {¶11} Chuchanis and Veach filed cross Motions for Summary Judgment. By

Judgment Entry filed February 3, 2014, the trial court granted summary judgment to

Chuchanis.

      {¶12} Veach appealed to this Court, which reversed and remanded the matter

back to the trial court for a determination of the decedent’s clearly expressed intent,

without regard for whether there was substantial compliance with policy provisions. See

Veach v. Chuchanis, Stark App. 2014 CA 00026, 2014-Ohio-2949.

      {¶13} Upon remand, the trial court conducted a bench trial on March 2, 2015.

      {¶14} By Judgment Entry filed March 10, 2015, the trial court found “that the only

clearly manifested intent of the decedent was to have Chuchanis receive the policy

proceeds” and entered judgment in favor of Appellee Chuchanis.

      {¶15} Appellant Veach now appeals, raising the following Assignment of Error for

review:

                                 ASSIGNMENT OF ERROR

      {¶16} “I. THE TRIAL COURT ERRED AND FAILED TO FOLLOW THE CLEAR

RULE SET FORTH BY THE OHIO SUPREME COURT IN GRANTING JUDGMENT FOR

THE APPELLEE BY IMPERMISSIBLY CONSIDERING THE FAILURE OF THE

DECEDENT TO FOLLOW THE INSURANCE COMPANY’S RULES AND BY

CONSIDERING STATEMENTS MADE NOT TO THE INSURANCE COMPANY BUT TO

A THIRD PARTY.”
Stark County, Case No. 2015 CA 00063                                                      5

                                                I.

       {¶17} Appellant Veach argues that the trial court erred in finding that decedent

intended for Appellee Chuchanis to be the rightful beneficiary of her life insurance policy.

We disagree.

       {¶18} More specifically, Appellant Veach argues that the trial court erred in

considering statements made to a third party as evidence of the decedent’s intent in this

matter and further in giving consideration to the decedent’s failure to follow the rules of

the insurance company for changing a beneficiary designation.

       {¶19} Initially, we note our standard of review in this matter following the bench

trial in the lower court. According to the Ohio Supreme Court, an appellate court should

be “guided by a presumption” the fact-finder's findings are correct. Seasons Coal Co., Inc.

v. Cleveland (1984), 10 Ohio St. 3d 77, 79-80, 461 N.E.2d 1273. Under these guidelines,

an appellate court should not reverse the trial court's judgment unless it is against the

manifest weight of the evidence. Therefore, an appellate court shall not reverse if the

judgment is supported by “ ‘some competent, credible evidence going to all the essential

elements of the case * * *.’ ” Id. at 80, 461 N.E.2d 1273, quoting C.E. Morris Co. v. Foley

Constr. Co. (1978), 54 Ohio St. 2d 279, 376 N.E.2d 578, at syllabus. “Unlike

determinations of fact which are given great deference, questions of law are reviewed by

a court de novo.” (Emphasis sic.) Ohayon v. Safeco Ins. Co. of Illinois (Dec. 22, 1999),

9th Dist. No. 19617, at *2, quoting Nationwide Mut. Fire Ins. Co. v. Guman Bros. Farm

(1995), 73 Ohio St. 3d 107, 108, 652 N.E.2d 684.

       {¶20} Appellant Veach argues that the decedent’s failure to complete and return

Sentry’s change of beneficiary form was waived because the decedent expressed her
Stark County, Case No. 2015 CA 00063                                                     6

intent to remove Appellee Chuchanis as the primary beneficiary of the Policy in her

October 7, 1998, letter to Sentry. Further, Appellant maintains that because Sentry

interpleaded and deposited the policy proceeds to the court, the decedent’s intention is

determinative of the rights of the contesting claimants to the policy proceeds,

notwithstanding the absence of the written approval by the decedent required by the

provisions of Sentry’s policy.

       {¶21} In Rindlaub v. Traveler's Ins. Co., 175 Ohio St. 303, 194 N.E.2d 577 (1963),

the Ohio Supreme Court of Ohio held that by filing an interpleader action, an insurance

company waives all of the insurance policy's requirements.

       {¶22} In 2012, the Supreme Court of Ohio re-affirmed its decision in Rindlaub,

articulating that the only factor to be considered in an interpleader beneficiary action is

the clear intent of the decedent. LeBlanc v. Wells Fargo Advisors, L.L.C., 134 Ohio St. 3d
250, 2012-Ohio-5458, 81 N.E.2d 839 (2012).

       {¶23} LeBlanc concerned a dispute over money that Wells Fargo Advisors, L.L.C.,

was holding in two IRAs for John F. Burchfield when he committed suicide on December

16, 2009. In 2002, John designated his mother, appellant Gloria Welch, and his

stepfather, Bruce Leland, as beneficiaries, 75 percent and 25 percent respectively.

LeBlanc, ¶2. On May 5, 2007, John married appellee Cynthia Burchfield. Shortly before

the marriage, John designated Cynthia as the sole beneficiary on both accounts.

       {¶24} On October 28, 2009, John sent an e-mail to his Wells Fargo advisor, Aaron

Michael, stating that he and Cynthia were getting divorced and requesting paperwork to

remove Cynthia as the beneficiary on his IRAs. Thereafter, by telephone, John gave

Michael specifics regarding a change in the beneficiary designation for the IRAs. Michael
Stark County, Case No. 2015 CA 00063                                                      7

prepared change-of-beneficiary forms that again designated Welch and Leland as the

beneficiaries, 75 percent and 25 percent respectively. In addition, John’s sister, appellant

Lori LeBlanc, was listed as the contingent beneficiary. Michael predated the forms

“November 2, 2009” and mailed them to John, along with a self-addressed, stamped

envelope. LeBlanc, ¶5. On November 2, 2009, Cynthia filed a divorce complaint against

John. Around the same time, John spoke with Michael and informed him that the change-

of-beneficiary forms were “already taken care of.” Approximately six weeks later, John

committed suicide. He left a note that contained a postscript in which he expressed his

love for Cynthia.

       {¶25} After John’s death, Leland and LeBlanc asked Michael to look through

John’s financial documents to wind up John’s affairs. Around January 25, 2010, Michael

and one of John’s co-workers discovered the signed change-of-beneficiary forms in an

envelope among John’s papers. That same morning, Michael gave the forms to his

manager at Wells Fargo. Cynthia, LeBlanc, and Welch made conflicting demands of Wells

Fargo for the IRA proceeds. LeBlanc, ¶7 (Footnote omitted). In response, Wells Fargo

filed an action in interpleader against LeBlanc, Welch, and Cynthia, in which it

represented that it was “unable to determine the validity of the conflicting demands.” Wells

Fargo disclaimed any interest in the proceeds of John’s IRA accounts and offered to

deposit the funds with the court’s clerk or to maintain the account until the dispute was

resolved. The trial court granted summary judgment to Cynthia, the beneficiary

designated on the form in Wells Fargo’s possession at the time of John’s death.

       {¶26} The Second District Court of Appeals affirmed. LeBlanc v. Wells Fargo

Advisors, L.L.C., 196 Ohio App. 3d 213, 2011-Ohio-5553, 962 N.E.2d 872. In doing so, it
Stark County, Case No. 2015 CA 00063                                                      8

emphasized that John had not complied with the Wells Fargo policy, which required that

change-of-beneficiary forms be returned to the company. Id. at ¶12. The Second District

further concluded that Wells Fargo had not waived compliance with its change-of-

beneficiary procedure by filing an action in interpleader against the claimants. Id. at ¶11.

       {¶27} The Court in LeBlanc noted that in reaching its conclusion, the Second

District rejected the Ninth District Court of Appeals’ decision in Kelly v. May Assoc. Fed.

Credit Union, 9th Dist. No. 23423, 2008-Ohio-1507, 2008 WL 836014, which held that an

IRA custodian waives compliance with its change-of-beneficiary procedures when it

interpleads disputed funds.

       {¶28} As is true in the case at bar, the Second District concluded that John’s

failure to return the forms to Wells Fargo before his death constituted a failure to

substantially comply with Wells Fargo’s procedure and that that failure was fatal to Welch

and LeBlanc’s claims, without regard to John’s actual intent. It affirmed summary

judgment in favor of Cynthia. LeBlanc, ¶13.

       {¶29} The Ninth District came to the opposite conclusion on similar facts. In Kelly

v. May Assoc. Fed. Credit Union, 9th Dist. Summit No. 23423, 2008-Ohio-1507, the Court

acknowledged that Barbara had not complied with the May Associates’ procedures, which

required that changes to beneficiaries “be made by completing and signing an IRA

beneficiary designation form.” Id. at ¶ 5. But it concluded that May Associates waived the

signature requirement when it filed the interpleader action. Id. at ¶ 13. In LeBlanc, the

Supreme Court noted,

              To reach that conclusion, the Kelly court applied our holdings in

       cases dealing with life-insurance-policy proceeds and justified doing so
Stark County, Case No. 2015 CA 00063                                                  9

     because life-insurance policies and individual retirement accounts share a

     salient feature - they both “typically include a procedure for designating and

     changing beneficiaries.” Id. The court then explained that “[i]t has long been

     the rule in Ohio that those procedures are intended to protect the insurer

     from duplicate liability and the insurer is free to waive them.” Id., citing

     Rindlaub v. Travelers Ins. Co., 175 Ohio St. 303, 305, 194 N.E.2d 577

     (1963), and Atkinson v. Metro. Life Ins. Co., 114 Ohio St. 109, 150 N.E. 748

     (1926), paragraph four of the syllabus.

            Indeed, “if, in the face of conflicting claims to insurance proceeds,

     the insurer interpleads those proceeds, it has waived any interest in the

     resolution of the claims, including enforcement of the procedure set forth in

     its policy for designating and changing beneficiaries.” Id., citing Rindlaub

     and Atkinson. “In such a case, if the insured communicated to the insurer

     her ‘clearly expressed intent’ to change beneficiaries, the proceeds will be

     paid to the newly designated beneficiary rather than the originally

     designated beneficiary * * *.” Id., citing Rindlaub at paragraph two of the

     syllabus.

            There was no question that Barbara had telephoned May Associates

     and told a teller to change her beneficiary designation. “Based on [the

     teller’s] testimony, coupled with the change of beneficiary form completed

     by the teller,” the Ninth District concluded that there was no genuine issue

     of fact whether Barbara had clearly expressed to May Associates her intent

     to change her beneficiary. Kelly, 2008-Ohio-1507, 2008 WL 836014, at ¶
Stark County, Case No. 2015 CA 00063                                                      10

       27. Accordingly, it affirmed summary judgment in favor of Janice. Id. at ¶

       32.

LeBlanc v. Wells Fargo Advisors, L.L.C., 134 Ohio St. 3d 250, 2012-Ohio-5458, 81 N.E.2d
839, ¶¶24-27.

       {¶30} The Supreme Court granted LeBlanc’ and Welch’s discretionary appeal and

certified a conflict between the decisions of the Ninth District Court of Appeals and the

Second District Court of Appeals concerning the effect of an individual retirement account

(“IRA”) custodian’s filing of an interpleader action against competing claimants.

       {¶31} In LeBlanc, the Supreme Court agreed that the case is analogous to cases

in which an insurer brings an interpleader action asking the court to determine the rightful

beneficiary of a life-insurance policy when there is evidence of an insured's intent to

change the beneficiary coupled with substantial, but not strict, compliance with

beneficiary-change procedures contained in the policy. LeBlanc, ¶43.

       {¶32} In LeBlanc, the Supreme Court of Ohio re-affirmed its earlier decision in

Rindlaub and emphasized that the only factor to be considered in an interpleader

beneficiary action is the clear intent of the decedent. Specifically, the Court stated,

              We hold that when the custodian of an individual retirement account

       files an interpleader action against the parties claiming to be the

       beneficiaries of the account, the custodian waives its contractual change-

       of-beneficiary procedures, and a person who proves that the owner of the

       account clearly intended to designate him or her as the beneficiary does not

       also need to prove that the owner substantially complied with the change-
Stark County, Case No. 2015 CA 00063                                                      11

       of-beneficiary procedures in order to recover. Instead, the account owner’s

       clearly expressed intent controls.

LeBlanc v. Wells Fargo Advisors, L.L.C., 134 Ohio St. 3d 250, 2012-Ohio-5458, 81 N.E.2d
839, ¶1. The Court reasserted this position applies to insurance cases:

              We also adopt the “clearly expressed intent” test from our insurance

       cases. See Rindlaub at paragraph two of the syllabus. Therefore, if an IRA

       custodian files an interpleader action, and the account owner’s intent to

       change beneficiaries was clearly communicated to the custodian, the

       proceeds will be paid to the newly designated beneficiary rather than to the

       original beneficiary. Id. In such a case, proof of substantial compliance with

       the custodian’s procedures for changing the beneficiary is not required.

LeBlanc, ¶46.

       {¶33} As set forth above, the Ohio Supreme Court has made clear that in a

change-of beneficiary case where the insurer files an interpleader action, the trial court

should apply the “[c]learly expressed intent” test. In such a case, proof of substantial

compliance for changing beneficiaries is not required.

       {¶34} Upon review, we do not find that the trial court’s decision was against the

manifest weight of the evidence.

       {¶35} At the bench trial in this matter, the trial court heard testimony from Appellee

Chuchanis, Jennifer Laliberte, Appellant Christine Veach, Joseph Veach, Karen Veach

and Julie Long.

       {¶36} The trial court found the testimony of the Jennifer Laliberte, the decedent’s

best friend since the late 1980’s, to be of particular importance:
Stark County, Case No. 2015 CA 00063                                                 12

              Based on Laliberte's testimony, the Court finds that the decedent

     recognized that she had sufficient means to take care of her family, and that

     as late as 2011, she knew that Chuchanis was still the beneficiary of this

     policy because no beneficiary change had been effectuated. The Court

     finds that on one occasion in 2009 and on another in 2011, the decedent

     specifically expressed her intent to leave Chuchanis the proceeds of this

     policy upon her death because of the lengthy and special relationship they

     had shared. This testimony also corroborated that of Mr. Chuchanis, who

     indicated the decedent had made a similar, clear verbal expression of that

     same recognition and intent in March of 2000, just after the death of Richard

     Lytle.

     {¶37} (Judgment Entry, March 10, 2015 at 3.)

     {¶38} The trial court further found:

              Based on the evidence presented at trial, which included

     expressions of the decedent's intent both before and after 1998, the Court

     is not convinced that the 1998 letter was a clear expression of the

     decedent's intent (as opposed to an intent to keep the peace in a new

     marriage), nor is the letter dispositive of the issue of the decedent's most

     recent expression of intent.

              Specifically, the Court finds that the decedent was financially

     sophisticated and knew that the letter she sent would not be sufficient to

     effectuate the change. The Court also finds that having this knowledge, she

     intentionally opted to not complete the additional steps that were needed to
Stark County, Case No. 2015 CA 00063                                                   13

      effectuate the change. While compliance with policy provisions is not

      relevant in and of itself, the Court finds that the decedent's knowledge,

      coupled with her intentional failure to complete follow-up actions is evidence

      that she intended to keep the originally named beneficiary, especially when

      viewed in light of all the other evidence adduced at trial.

      {¶39} (Judgment Entry, March 10, 2015 at 2-3.)

      {¶40} Upon review, we find that evidence of the decedent’s intent was presented

to the trial court through the testimony of Ms. Laliberte and Mr. Chuchanis. Based on the

foregoing, we find that there exists competent, credible evidence to support the trial

court’s judgment.

      {¶41} Appellant’s sole Assignment of Error is overruled.

      {¶42} For the foregoing reasons, the decision of the Court of Common Pleas of

Stark County, Ohio, is affirmed.

By: Wise, J.

Gwin, P. J., and

Hoffman, J., concur.

JWW/d 104