Court Opinion

ID: 3187101
Source: CourtListenerOpinion
Date Created: 2016-03-19 04:09:11.666596+00
Date Added: 2024-06-11T14:35:45.456833
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

In re Estate of JOHN IRVING LETT.

CRAIG LETT, Personal Representative,                                 FOR PUBLICATION
                                                                     March 17, 2016
               Appellee,                                             9:00 a.m.

v                                                                    No. 326657
                                                                     Kent Probate Court
NANCY HENSON, f/k/a, NANCY FOOTE,                                    LC No. 14-196021-DE

               Appellant.

Before: O’CONNELL, P.J., and MARKEY and MURRAY, JJ.

PER CURIAM.

        Appellant Nancy Henson (Nancy) is the former spouse of the decedent, John Lett (John).
At issue in this case is Nancy’s right to collect $120,000 as John’s sole named beneficiary of a
group life insurance policy provided as a benefit by John’s employer, Kent County. Appellee
Craig Lett (Craig) was appointed personal representative of John’s estate and filed a petition in
the probate court praying that the proceeds of John’s life insurance be paid to his estate. After
denying Nancy’s motion for summary disposition, the probate court conducted a trial, found in
favor of Craig’s petition, and entered an order on March 9, 2015, effectively voiding Nancy’s
interest in the insurance proceeds “pursuant to MCL 552.101 and in light of the specific waiver
language in the Judgment of Divorce” that ended John and Nancy’s marriage. For the reasons
discussed below, we vacate the probate court’s order of March 9, 2015, and remand for entry of
an order dismissing the petition and granting Nancy summary disposition.

                        I. SUMMARY OF FACTS AND PROCEEDINGS

         During their marriage John had designated Nancy as his sole named beneficiary on his
employer-provided life insurance policy. John and Nancy were granted a divorce by a judgment
entered on August 24, 2009 in Barry County Circuit Court. Consistent with MCL 552.101,
requiring the trial court to determine the rights of each spouse to any contract of life insurance on
the life of the other spouse, the judgment provided:

                                                -1-
       IT IS FURTHER ORDERED AND ADJUDGED that all interest of either party
       hereto, in and to the proceeds of any policy or contract of Life Insurance upon the
       life of the other, through any employer or otherwise, is hereby canceled.

        The judgment divided the marital property by simply assigning to each spouse the
property they possessed. The judgment further assigned the couple’s smaller debts to John. The
one large debt, a home equity line of credit (HELOC) in the amount of $57,000—secured by real
property owned and acquired by Nancy before the marriage—was divided equally with each
party responsible for paying $28,500. The judgment required John to pay Nancy his share of the
HELOC in monthly installments of $1,100, starting 30 days after entry of the judgment. The
judgment also required John to maintain a policy of life insurance of not less than $28,500 with
Nancy as the beneficiary. The following provision appears in the judgment immediately
following the provision for cancellation of each spouse’s interest in any existing life insurance:

       IT IS FURTHER ORDERED AND ADJUDGED that the Defendant shall
       name the Plaintiff as the beneficiary on a separate life insurance policy, the name
       and policy number of which must be provided to the Plaintiff within 60 days of
       the entry of this Judgment, in an amount not less than $28,500.00 until the
       obligation of the Defendant under the Debts paragraph of this Judgment is
       satisfied in full.

        It is undisputed that John never purchased a separate life insurance policy to secure his
obligation to Nancy for one-half of the HELOC. Nancy testified that she never initiated
enforcement action regarding this provision. When John initially failed to make his payments on
the HELOC as required by the judgment of divorce, Nancy initiated contempt proceedings in
Barry County Circuit Court by filing a petition on February 8, 2010. John commenced making
payments on his HELOC obligation at some point in April 2010. A transcript of a contempt
sentencing hearing held in Barry Circuit Court on April 29, 2010 shows that Nancy’s attorney, C.
Marcel Stoetzel, informed the trial court that John was then current in his obligations under the
judgment of divorce. The trial court stated it would dismiss the contempt citation:

              At this point I will dismiss the contempt citation and the—just remind
       everybody that the judgment of divorce remains in full force and effect. If there
       other—are other terms that need to be fulfilled they do need to be fulfilled
       otherwise there is the potential for contempt—or further contempt citations. . . .
       [TR, 04/29/2010, pp 3-4 (Barry Circuit Court Docket No. 08-327-DO).]

        On September 7, 2005, after his marriage to Nancy, John named her as his beneficiary to
a life insurance policy he had through Kent County, his employer. After the divorce, on
November 5, 2009, John removed Nancy as his beneficiary of any employer-provided benefits.
But, on April 6, 2010, contemporaneous with the contempt proceedings, John signed a Kent
County Life Insurance Beneficiary Form naming Nancy as the “100%” beneficiary of the basic
benefit and also of any supplemental benefit of the group basic life and accidental death and
indemnity policy. John paid off his HELOC obligation in July 2012. He did not, however,
change his beneficiary designation before he died on July 27, 2014.

                                               -2-
       Craig Lett was appointed personal representative of John’s estate. On September 3,
2014, Craig filed a petition in the probate court praying that the proceeds of John’s life insurance
be paid to his estate. Craig asserted his belief that John only added Nancy as his beneficiary
because of his obligation under the divorce judgment and the contemporaneous contempt
proceedings. Craig also asserted his belief that John did not intend Nancy to benefit from his life
insurance once John had satisfied his divorce obligations and that it would be unjust for Nancy
“to receive an additional windfall of $120,000 just because [John] failed to change his
beneficiary designation” after the debt was satisfied. Craig contended that if Nancy received the
insurance payment it would be “fraudulent or wrongful retention of the policy proceeds because
of her execution of a waiver . . . except as to her security for payment” of John’s debt, citing
Moore v Moore, 266 Mich. App. 96; 700 NW2d 414 (2005), and MacInnes v MacInnes, 260 Mich
App 280; 677 NW2d 889 (2004). Craig further alleged John’s April 6, 2010 beneficiary
designation was void pursuant to the judgment of divorce and MCL 552.101.

       After discovery by interrogatories and requests for admissions, Nancy moved on January
5, 2015 for summary disposition under MCR 2.116(C)(8) and (10). Nancy asserted that at best,
Craig’s petition alleged John forgot to change his beneficiary designation after satisfying his
divorce obligation, but Craig had produced no evidence that John intended someone other than
Nancy as his beneficiary. And, Nancy asserted, because Craig had not alleged or produced any
evidence of fraud or mutual mistake of fact, the life insurance policy could not be reformed. See
Casey v Auto Owners Ins Co, 273 Mich. App. 388, 398; 729 NW2d 277 (2006). Moore and
MacInnes were distinguished, Nancy argued, because the beneficiary designations in those cases
were made before the divorce judgments were entered.

        Craig responded to Nancy’s motion and also moved for summary disposition. Craig
asserted that John never intended Nancy to receive a “$120,000 windfall” that would render the
estate insolvent. Craig also argued that because John had fully paid the HELOC debt by July
2012, Nancy’s receipt of the insurance proceeds could be “fraudulent or wrongful retention”
because of her waiver of such benefits in the judgment of divorce. Craig argued that Moore and
MacInnes applied because the insurance policy at issue existed at the time of the divorce
judgment.

         The trial court denied both parties’ motions for summary disposition, and days later,
conducted a trial. Three witnesses testified: Mario Pena, a former co-worker of John’s, Nancy
Henson, and David Henson, Jr. The essence of Pena’s testimony was that at the time of the
divorce and while the 2010 contempt proceedings were pending, John expressed animosity
toward Nancy and feared the contempt proceedings might affect his employment. Pena also
testified that the county’s human resources department would annually send forms to employees
and request that employees update beneficiary designations. Employees were required to sign
and return the forms. John did not change his designation. Nancy denied taking enforcement
action regarding the insurance provision in the judgment of divorce, stated she never discussed
insurance with John, and only learned after his death that John had named her his beneficiary.
Nancy offered speculation as to why John not only named her his beneficiary, but also continued
to even after he no longer owed her money. Henson testified regarding an alleged statement
Craig made that suggested Craig believed Nancy was entitled to the insurance payment, and
provided, a post-divorce email from John expressing some kind sentiments toward Nancy.

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        At the conclusion of the one-day trial and without permitting oral argument, the court
made certain findings of fact. The court rejected Nancy’s speculation, found that John and
Nancy did not like one another, and found that John’s “purpose [in] adding Ms. Henson to the
beneficiary form was solely to avoid contempt of court” regarding the divorce judgment. The
court then reasoned that once “the [divorce] obligation was extinguished by full payment, that
[Nancy] had no other right to the proceeds from the insurance policy.”

        The probate court entered its order on March 9, 2015. It based its decision on the
allegations in the petition regarding MCL 552.101 and the language in the judgment of divorce.
The court’s order provided that none of the life insurance proceeds would “inure to the benefit of
Nancy (Foote) Henson.” Rather, the court ordered, the proceeds should be distributed according
to the terms of the policy to the first surviving class of beneficiaries, John’s children, Craig and
Marc Lett.

                                  II. STANDARD OF REVIEW

        This Court reviews de novo the trial court’s decision to grant or deny a motion for
summary disposition. Maiden v Rozwood, 461 Mich. 109, 118; 597 NW2d 817 (1999). A
motion under MCR 2.116(C)(10) tests the factual sufficiency of a claim and must be supported
by affidavits, depositions, admissions, or other documentary evidence, the substance or content
of which would be admissible at trial. Id. at 120-121; Corley v Detroit Bd of Ed, 470 Mich. 274,
278; 681 NW2d 342 (2004). The court must view the proffered evidence in the light most
favorable to the party opposing the motion. Maiden, 461 Mich. at 120. A court should grant the
motion when the submitted evidence fails to establish any genuine issue of material fact and the
moving party is entitled to judgment as a matter of law. Brown v Brown, 478 Mich. 545, 552;
739 NW2d 313 (2007). “A genuine issue of material fact exists when the record, giving the
benefit of reasonable doubt to the opposing party, leaves open an issue upon which reasonable
minds might differ.” West v Gen Motors Corp, 469 Mich. 177, 183; 665 NW2d 468 (2003).
Where undisputed evidence shows one party is entitled to judgment as a matter of law, the court
may enter judgment for that party. In re Baldwin Trust, 480 Mich. 915; 739 NW2d 868 (2007).

        Under MCR 2.116(C)(8), summary disposition may be granted on the ground that the
opposing party has failed to state a claim on which relief can be granted. Henry v Dow Chem
Co, 473 Mich. 63, 71; 701 NW2d 684 (2005). A motion under this rule tests the legal sufficiency
of a claim by the pleadings alone, with factual allegations accepted as true and viewed in a light
most favorable to the nonmoving party. Maiden, 461 Mich. at 119. The motion may be granted
only when a claim is so clearly unenforceable no factual development could justify recovery. Id.

        Issues of statutory interpretation are questions of law reviewed de novo on appeal.
Joseph v Auto Club Ins Ass’n, 491 Mich. 200, 205; 815 NW2d 412 (2012). And the
interpretation of clear contractual language is also an issue of law reviewed de novo on appeal.
Klapp v United Ins Group Agency, Inc, 468 Mich. 459, 463; 663 NW2d 447 (2003).

                                        III. DISCUSSION

       The only bases Craig alleged to “void” John’s post-divorce designation of Nancy as the
sole beneficiary of his life insurance policy are the language in the judgment of divorce and

                                                -4-
MCL 552.101. But the plain language of MCL 552.101 does not affect John’s post-judgment
actions, and the plain language of the judgment merely cancelled any interest Nancy may have
had in any insurance on John’s life at the time the judgment was entered. Because neither the
judgment of divorce nor MCL 552.101 prohibited John from naming Nancy as his beneficiary
after the judgment was entered1 and because Craig alleged no other basis to void John’s
beneficiary designation—such as fraud, severe stress, or mutual mistake of fact—the probate
court erred by not granting Nancy’s motion for summary disposition under MCR 2.116(C)(8).
Further, because a motion under this rule tests the legal sufficiency of a claim by the pleadings
alone, Craig’s argument that discovery was incomplete is unavailing. See Maiden, 461 Mich. at
119.

         The statute at issue in this case, MCL 552.101(2), 2 provides:

                 Each judgment of divorce or judgment of separate maintenance shall
         determine all rights of the wife in and to the proceeds of any policy or contract of
         life insurance, endowment, or annuity upon the life of the husband in which the
         wife was named or designated as beneficiary, or to which the wife became
         entitled by assignment or change of beneficiary during the marriage or in
         anticipation of marriage. If the judgment of divorce or judgment of separate
         maintenance does not determine the rights of the wife in and to a policy of life
         insurance, endowment, or annuity, the policy shall be payable to the estate of the
         husband or to the named beneficiary if the husband so designates. However, the
         company issuing the policy shall be discharged of all liability on the policy by
         payment of its proceeds in accordance with the terms of the policy unless before
         the payment the company receives written notice, by or on behalf of the insured
         or the estate of the insured, 1 of the heirs of the insured, or any other person
         having an interest in the policy, of a claim under the policy and the divorce.

       Our Supreme Court reiterated pertinent principles of statutory construction in Joseph, 491
Mich. at 205-206 (citations omitted):

         Our primary goal when interpreting statutes is to discern the intent of the
         Legislature. To do so, we focus on the best indicator of that intent, the language
         of the statute itself. The words used by the Legislature are given their common
         and ordinary meaning. If the statutory language is unambiguous, we presume that
         the Legislature intended the meaning that it clearly expressed, and further
         construction is neither required nor permitted.

1
  Moore and MacInnes, addressing forgotten pre-divorce beneficiary designations, are clearly
distinguished from the present case which unequivocally involves an affirmative post-divorce
beneficiary designation. See Starbuck v City Bank and Trust Co, 384 Mich. 295, 299; 181 NW2d
904 (1970).
2
    A mirror provision regarding the “rights of the husband” is found in MCL 552.101(3).

                                                 -5-
        The plain language of the first sentence of MCL 552.101(2) requires a trial court when
granting a judgment of divorce to determine the rights of a wife to the proceeds of any insurance
policy on the life of her husband where the “wife was named or designated as beneficiary . . .
during the marriage or in anticipation of marriage.” This sentence does not void the wife’s
interest in insurance on the life of her husband; it merely requires the trial court to “determine all
rights of the wife.” Thus, “MCL 552.101 does not revoke [beneficiary] designations by
operation of law but mandates that a trial court’s judgment of divorce contain some language that
disposes of the parties’ rights to such benefits.” Moore, 266 Mich. App. at 102. Second, and
pertinent to this case, the statute only operates by its plain language on beneficiary designations
executed before or during the marriage.

        Our Supreme Court discussed this last aspect of the statute’s similarly worded precursor
in Starbuck v City Bank and Trust Co, 384 Mich. 295, 299; 181 NW2d 904 (1970):

       The effect of [MCL 552.101], as stated in the title to the statute, in the judgment
       of divorce, and, in the statute itself, was to affect the interest of the wife in the
       insurance policy and thus cure the situation where a divorced wife could
       inadvertently receive the proceeds of a perhaps forgotten policy. “Inadvertently
       receive” should be stressed for the statute does not prohibit the husband or the
       divorce judgment itself from retaining or renaming the wife as the primary
       beneficiary. It simply requires affirmative action on the part of the court or
       husband to retain the divorced wife as the primary beneficiary and thus eliminate
       what could be, and usually appears to be, the inadvertent payment of the life
       insurance proceeds to a divorced wife. [Italics in original; bold added.]

        In this case, the judgment of divorce determined each spouse’s interest arising from any
beneficiary designation executed before entry of the judgment, i.e., before or during the
marriage. Specifically, the judgment provided that “all interest of either party hereto, in and to
the proceeds of any policy or contract of Life Insurance upon the life of the other, through any
employer or otherwise, is hereby canceled.” Consequently, the second sentence of MCL
552.101(2) providing that if the judgment “does not determine the rights of the wife in and to a
policy of life insurance . . . the policy shall be payable to the estate of the husband or to the
named beneficiary if the husband so designates,” does not apply. The third sentence of MCL
552.101(2), addressing the potential liability of an insurance company, also does not affect the
validity of a post-judgment beneficiary designation. In sum, nothing in MCL 552.101(2)
operates to invalidate John’s post-judgment beneficiary designation executed on April 6, 2010,
approximately eight months after the August 24, 2009 judgment of divorce. The judiciary may
not read anything into a clear statute that is not within the manifest intention of the Legislature as
derived from the language of the statute itself. Mich Ed Ass’n v Secretary of State (On
Rehearing), 489 Mich. 194, 218; 801 NW2d 35 (2011).

       The so-called “waiver” in the judgment of divorce also does not prohibit either party
from designating the other as the beneficiary of a life insurance policy after the divorce judgment
was entered. A settlement to end litigation, here placed on the record and embodied in a
judgment of divorce, becomes a contract between the parties. In re Draves Trust, 298 Mich. App.
745, 767; 828 NW2d 83 (2012). “A settlement agreement, such as a stipulation and property
settlement in a divorce, is construed as a contract.” MacInnes, 260 Mich. App. at 283. The same

                                                 -6-
legal principles that govern the construction and interpretation of contracts in general govern a
settlement agreement in a judgment of divorce. Myland v Myland, 290 Mich. App. 691, 700; 804
NW2d 124 (2010). Settlement contracts in divorce proceedings, like other contracts between
consenting adults, are enforced according to the terms to which the parties have agreed. Lentz v
Lentz, 271 Mich. App. 465, 471; 721 NW2d 861 (2006). Thus, a provision in a consent judgment
of divorce is a contract that must be interpreted according to the plain and ordinary meaning of
its terms; a court may not rewrite clear and unambiguous language of the judgment under the
guise of interpretation. Woodington v Shokoohi, 288 Mich. App. 352, 373-374; 792 NW2d 63
(2010). A court “cannot read words into the plain language of a contract.” Northline
Excavating, Inc v Livingston Co, 302 Mich. App. 621, 628; 839 NW2d 693 (2013).

        In this case, the first paragraph of the section in the divorce judgment that addresses the
parties’ life insurance merely cancels any then-existing interest of either party to the proceeds of
life insurance on the other party. While this provision affected any interest that existed at the
time the judgment was entered on August 24, 2009, there is nothing in the plain terms of this
provision that prohibits either party from naming the other party as the beneficiary of a life
insurance policy after the entry of the judgment of divorce. Nothing may be read into the
judgment that is not apparent from its plain terms. Id.; Woodington, 288 Mich. App. at 373-374.

        Indeed, the second paragraph of the insurance section of the judgment required John to
name Nancy as the beneficiary of a “separate life insurance policy” of “an amount not less than
$28,500” until John’s debt obligations under the judgment were satisfied. Clearly, the divorce
judgment not only permitted but also required John to name Nancy as the beneficiary of a life
insurance policy after the judgment was entered to at least ensure he fulfilled his obligation. The
plain terms of the first provision regarding life insurance must be read together as a whole with
the second provision. See Tenneco Inc v Amerisure Mut Ins Co, 281 Mich. App. 429, 444, 462;
761 NW2d 846 (2008). Additionally, nothing in the plain terms of the judgment required John
to revoke the beneficiary designation after his divorce obligation was satisfied. A court may not
read into John’s post-judgment beneficiary designation a sunset provision that John did not
clearly express or implement. Northline Excavating, 302 Mich. App. at 628; Woodington, 288
Mich. App. at 374. Nor may the court read into John’s beneficiary designation its termination by
merely concluding that John would have reasonably expected the designation to terminate after
he satisfied his divorce debt obligation. Westfield Ins Co, 295 Mich. App. at 615; Northline
Excavating, 302 Mich. App. at 628.

        The life insurance beneficiary form John signed on April 6, 2010 named Nancy his “Ex-
Wife” the “100%” beneficiary of the policy. The beneficiary designation form contains no
provision limiting its application and Nancy’s proceeds to $28,500, the amount of John’s debt
obligation under the divorce judgment, nor does it provide that it would terminate when John’s
debt was satisfied. We find it significant that John did not even provide for a contingent
beneficiary. Clearly, he could’ve easily crafted these terms. Moreover, while John could have
revoked Nancy’s designation as sole beneficiary after he fully satisfied his divorce obligations in
July 2012, and had several opportunities and reminders, and there was no longer any concern
about further circuit court enforcement action, he did not do so. This fact must be considered also
with the additional facts that he had the time and the opportunity to do so, was described as
“careful” and aware of money matters, and received annual reminders about his benefits from his
Kent County employer. In sum, Craig’s petition does not allege any facts that would support

                                                -7-
reforming the clear and unambiguous beneficiary designation on the basis of fraud, severe stress,
or mutual mistake. See Keyser v Keyser, 182 Mich. App. 268, 269-270; 451 NW2d 587 (1990)
(holding that a party will not be relieved of its contracts “in the absence of fraud, duress, mutual
mistake, or severe stress which prevented a party from understanding in a reasonable manner the
nature and effect of the act” of the party); Casey, 273 Mich. App. at 398 (while clear and
convincing evidence of a mutual mistake of fact will support reformation of a contract, unilateral
mistake will not).

        Reading the petition in this case in a light most favorable to Craig, we agree John was
under the stress of circuit court enforcement action for not making payments on his debt
obligation as required by the judgment of divorce when he designated Nancy as his sole
beneficiary. There is no allegation, however, that this stress was so severe that it rendered John
incapable of understanding in a reasonable manner the nature and effect of his act when naming
Nancy his sole life insurance beneficiary of the entire amount of the policy. Keyser, 182 Mich
App at 269-270. Viewed in a light most favorable to petitioner, we again agree that the stress of
enforcement action arising from the debt under the judgment of divorce could have been a
motivating factor for John’s naming Nancy his beneficiary in 2010. But this stress would have
ended after John had satisfied his divorce obligations in 2012. Nor does the stress explain why
he did not limit the extent to which Nancy would benefit nor did he name any contingent
beneficiaries. The petition itself shows that any stress from possible judgment enforcement
would have dissipated when, as alleged in the petition, John paid his debt in full two years before
his death.3 Moreover, the judgment provision requiring John to maintain insurance as security
for the debt would also have been inoperative for two years. Thus, stress from possible
enforcement action or simply the desire to comply with the judgment of divorce does not account
for John’s retaining Nancy as his sole beneficiary for an additional two years after his debt was
paid and until his death. Consequently, even assuming that John was initially motivated to name
Nancy as his sole beneficiary by the terms of the judgment of divorce or stress of judgment
enforcement action, we find the petition alleges no factual or legal basis to set aside the clear and
unambiguous beneficiary designation that John left in place for two full years after his divorce
debt was paid in full. Furthermore, even characterizing John’s failure to act as “inertia” and
viewing it in the light most favorable to petitioner, one could at best deem it a unilateral mistake
of some sort that will not justify granting petitioner relief. Casey, 273 Mich. App. at 398.

        In summary, Craig’s petition to void John’s post-divorce designation of Nancy as his life
insurance beneficiary on the basis of the language in the judgment of divorce and MCL 552.101
fails to state a claim for relief. Neither the judgment of divorce nor MCL 552.101 proscribed
John’s post-judgment action of naming Nancy the 100%-beneficiary of his life insurance. The
petition alleges no other basis to void John’s beneficiary designation, such as fraud, severe stress,
or mutual mistake of fact. Even viewed in a light most favorable to petitioner, the facts show
that the alleged stress of judgment enforcement action ended two years before John’s death and
provide no basis to reform his beneficiary designation. See Casey, 273 Mich. App. at 398;

3
 Paragraph 6 of the petition states that John’s divorce debt was “paid in full” and refers to
Exhibit F, John’s hand-written record showing the debt was paid in full on “7/1/12.”

                                                -8-
Keyser, 182 Mich. App. at 269-270. Further, because a motion under MCR 2.116(C)(8) tests the
legal sufficiency of a claim based on the pleadings alone and is properly granted only when a
claim is so clearly unenforceable that no factual development could justify recovery, Maiden,
461 Mich. at 119, Craig’s argument that discovery was incomplete is unavailing. The trial court
erred by not granting Nancy’s motion for summary disposition under MCR 2.116(C)(8).

                                       IV. CONCLUSION

        We vacate the probate court’s order of March 9, 2015 voiding John’s beneficiary
designation for the life insurance policy at issue, and we remand this case to the probate court for
entry of judgment in favor of respondent on the petition regarding life insurance proceeds. We
do not retain jurisdiction. As the prevailing party, respondent may tax costs under MCR 7.219.

                                                             /s/ Peter D. O'Connell
                                                             /s/ Jane E. Markey
                                                             /s/ Christopher M. Murray

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