Court Opinion

ID: 3203319
Source: CourtListenerOpinion
Date Created: 2016-05-13 15:05:59.161981+00
Date Added: 2024-06-11T14:28:28.195381
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF NEVADA

                  ANN L. GRALNICK,                                       No. 67928
                  Appellant,
                  vs.
                  SUSAN ROWE-GRALNICK,
                                                                            FILED
                  REPRESENTATIVE FOR THE ESTATE                             MAY 1 2 2016
                  OF ALAN GRALNICK,
                  Resnondent.

                                   ORDER OF REVERSAL AND REMAND
                              This is an appeal from a post-divorce decree order concerning
                  distribution of life insurance proceeds following a remand from this court.
                  Eighth Judicial District Court, Family Court Division, Clark County;
                  Robert Teuton, Judge.
                              Appellant Ann Gralnick and her former husband Alan
                  Gralnick were married for 33 years and had three children together.
                  During their marriage, they created the Gralnick Family Trust and Alan
                  procured a life insurance policy with a face amount of $466,000, listing the
                  beneficiary as "Ann Gralnick, Trustee, or her successor or successors,
                  under the Gralnick Family Trust Agreement dated August 30, 1990." Ann
                  and Alan were divorced in 2007 and Alan remarried respondent. Under
                  the divorce decree, Alan was required to pay Ann $6,500 monthly in
                  spousal support for 84 months and maintain a life insurance policy on his
                  life for the amount of his outstanding spousal support obligation. Instead
                  of obtaining a new life insurance policy, Alan maintained the preexisting
                  life insurance policy. When Alan died in 2011, his outstanding spousal
                  support obligation to Ann was $235,000.

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                             The district court awarded Ann the $235,000 she was owed in
                 spousal support, but awarded the remaining life insurance proceeds to
                 respondent. This court reversed the award of the remaining proceeds and
                 remanded the matter to the district court to determine the owner and
                 beneficiary of the life insurance policy considering that the policy listed
                 the beneficiary as "Ann Gralnick, Trustee, or her successor or successors,
                 under the Gralnick Family Trust Agreement dated August 30, 1990." On
                 remand, the district court concluded that the remaining insurance
                 proceeds were Alan's separate property and should be awarded to his
                 estate.
                             As a threshold matter, we conclude that the district court did
                 not violate the law of the case doctrine when it concluded that NRS
                 687B.260 and Aetna Life Insurance Co. v. Hussey, 595 N.E.2d 942 (Ohio
                 1992) were inapplicable to give Ann a right to the proceeds. This court did
                 not specifically provide that they were applicable, but instead directed the
                 court to consider the effect of NRS 687B.260 on remand and cited to Aetna
                 for support. See Office of State Eng'r v. Curtis Park Manor Water Users
                 Ass'n, 101 Nev. 30, 32, 692 P.2d 495, 497 (1985) (providing that "Nile
                 doctrine of the law of the case provides that where an appellate court
                 states a principle of law in deciding a case, that rule becomes the law of
                 the case, and is controlling both in the lower court and on subsequent
                 appeals, as long as the facts are substantially the same"). Thus, Ann's
                 argument in this regard is without merit.
                             Nevertheless, we conclude that the district court abused its
                 discretion in concluding that the remaining insurance proceeds belonged
                 to Alan's estate under what appears to be an equitable lien theory.      See

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                      Am. Sterling Bank v. Johnny Mgmt. LV, Inc.,     126 Nev. 423, 428, 245 P.3d
535, 538 (2010) (providing that this court will review a district court's
                      grant of an equitable remedy for an abuse of discretion). The life
                      insurance policy named the Family Trust as the beneficiary. While Ann
                      and Alan agreed that the life insurance policy at issue would be
                      substituted for the insurance policy that Alan was required to maintain
                      under the divorce decree to ensure Ann received her spousal support after
                      Alan's death, there is not clear evidence that Alan intended the remaining
                      life insurance proceeds to go to his estate instead of the Family Trust.   See
                      Commercial Credit Corp. u. Matthews, 77 Nev. 377, 386, 365 P.2d 303, 307
                      (1961) (requiring clear intention to create an equitable lien). Thus, the
                      district court abused its discretion to the extent it concluded that Alan's
                      estate had an equitable lien over the remaining proceeds and we reverse
                      the district court's decision. Am. Sterling Bank, 126 Nev. at 428, 245 P.3d
                      at 538.
                                  Therefore, the remaining proceeds must be distributed in
                      accordance with the Family Trust's distribution provisions.         See NRS
                      687B.260(1) (providing that the lawful beneficiary of a life insurance
                      policy is entitled to the proceeds from that policy and "avails against the
                      creditors and representatives of the insured"). Generally, after divorce,
                      trust provisions take effect as if the spouse had predeceased the settlor of
                      the trust, and thus, Ann is not entitled to the remaining proceeds.        See
                      NRS 163.565 (providing that the divorce of a settlor of a revocable inter
                      vivos trust "revokes every devise, beneficial interest or designation to
                      serve as trustee given by the settlor to the former spouse" unless

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                 otherwise ordered by the district court); Cal. Prob. Code § 5600(c) (West
                 2002). Accordingly, we
                               ORDER the judgment of the district court REVERSED AND
                 REMAND this matter to the district court for proceedings consistent with
                 this order.

                                                                                        J.
                                                            Saitta

                                                                 Piekodtu,
                                                            Pickering

                 cc: Hon. Robert Teuton, District Judge, Family Court Division
                      Moran Brandon Bendavid Moran
                      The Abrams & Mayo Law Firm
                      Eighth District Court Clerk

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