Occidental Life Ins. Co. of North America v. Ruby Benoit

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

07-1164

OCCIDENTAL LIFE INSURANCE
COMPANY OF NORTH AMERICA

VERSUS

RUBY BENOIT AND
DEAUNDRA L. FRANCIS

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT,
PARISH OF LAFAYETTE, 20043303, DIVISION I
HONORABLE THOMAS R. DUPLANTIER, DISTRICT JUDGE

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J. DAVID PAINTER
JUDGE

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Court composed of Billy Howard Ezell, J. David Painter, and James T. Genovese.

AFFIRMED.

Genovese, J., dissents in part, concurs in part, and assigns written reasons.

Lloyd Dangerfield
Attorney at Law
703 E. University Avenue
Lafayette, LA 70503
Counsel for Defendant-Appellant:
Ruby Benoit

Stan Gauthier, II
Kristi Husher Oubre
Jonathan D. Mayeaux
Stan Gauthier, II A Law Corporation
1405 West Pinhook Road, Suite 105
Lafayette, LA 70503
Counsel for Defendant-Appellant:
Deaundra L. Francis

Greg R. Mier
Onebane Law Firm
1200 Camellia Boulevard, Suite 300
Lafayette, LA 70508
Counsel for Plaintiff-Appellee:
Occidental Life Insurance Company of North America

PAINTER, Judge.

Occidental Life Insurance Company of North America (Occidental) instituted

this concursus proceeding by depositing the proceeds of a certain life insurance

policy into the registry of the court and made Ruby Benoit (Benoit) and Deaundra L.

Francis (Francis), both of whom claim to be the sole beneficiary of the policy,

defendants. Francis filed a reconventional demand seeking to reform the policy to

name her beneficiary or, in the alternative, seeking damages for negligence on the

part of Occidental. The trial court reformed the policy to name Francis as beneficiary,

dismissed the reconventional demand, and ordered that the balance of the funds in the

registry of the court, plus accrued interest but less court costs, be paid to Francis and

her attorney after all appellate delays had run. Benoit and Francis now appeal. For

the reasons that follow, we affirm the judgment of trial court in all respects.

FACTUAL AND PROCEDURAL BACKGROUND

In 1985, Debra Francis purchased an insurance policy from Occidental to

insure the life of her daughter, Deaundra Francis. The policy was numbered

230568313M (the M policy) and designated Debra as beneficiary. In 1987, Debra

purchased another insurance policy from Occidental to insure her own life. This

policy was numbered 230627324H (the H policy) and is the policy now at issue. The

H policy designated Benoit, Debra’s mother, as beneficiary. On December 11, 2003,

Debra executed a written change of beneficiary form to change the designated

beneficiary to her daughter. She referenced the M policy but listed herself as the

insured. However, in fact, Debra was the insured under the H policy, and Francis was

the insured under the M policy.

Debra died from recurring metastatic breast cancer on April 9, 2004. Benoit

then submitted a “Proofs of Death-Claimant’s Statement” to Occidental seeking the

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benefits from the H policy. Francis also submitted a “Proofs of Death-Claimant’s

Statement” claiming that she alone was entitled to the benefits from the H policy

because of a mistake made by her mother in changing the beneficiary on the M policy

rather than on the H policy. When attempts to resolve the dispute were unsuccessful,

Occidental deposited approximately $70,000.00, the benefits due under the H policy,

into the registry of the court pursuant to La.Code Civ.P. art. 4658 and filed a

concursus proceeding citing both Benoit and Francis as claimants. Benoit filed an

answer alleging that she alone was entitled to the proceeds of the H policy. Francis

filed a similar answer but also asserted, in the alternative, that if Benoit was entitled

to the proceeds, Occidental should pay the full amount to each concursus defendant

because of Occidental’s alleged mishandling of a change of beneficiary form.

The trial court found that Occidental was not negligent in its handling of the

change of beneficiary form but reformed the H policy to name Francis as the

beneficiary pursuant to the change of beneficiary form submitted by Debra.

Accordingly, the trial court ordered that the balance of the funds placed into the

registry of the court, plus accrued interest but minus court costs, be paid to Francis

and her attorney after the expiration of all appellate delays. Benoit now appeals.

Francis also appeals, arguing that the judgment should be affirmed; however, Francis

claims that if the judgment is reversed based on a finding that the trial court erred in

reforming the policy, then in that event, she claims that Occidental negligently

handled the change of beneficiary transaction such that she is entitled to judgment on

her reconventional demand against Occidental in the amount of the policy proceeds.

For the following reasons, we affirm the judgment of the trial court in its entirety.

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DISCUSSION

We first consider whether the trial court was correct in reforming the policy.

We review the trial court’s findings of fact in that regard under the manifest error

standard of review.

The trial court found that the change of beneficiary form was ambiguous

because it shows the M policy number but lists Debra as the insured when clearly she

was not the insured under that policy. We agree.

In determining the beneficiary of a life insurance policy, it is
necessary to ascertain the intention of the deceased. In this regard, the
courts are bound to give legal effect to all contracts and their terms,
including insurance policies, according to the true intent of the parties,
and the intent is to be determined by the words of the contract when they
are clear and explicit and lead to no absurd consequences. Joseph v.
Joseph, 537 So.2d 863 (La.App. 5 Cir.1989); Baker v. Life General
Security Insurance Company, 405 So.2d 1162 (La.App. 1 Cir.1981).

When the agreement is unclear, ambiguous, or will lead to absurd
consequences, the court should go beyond the written agreement to
gather the true intention. Dixie Campers, Inc. v. Vesely Company, 398
So.2d 1087 (La.1981); Joseph v. Joseph, supra; Baker v. Life General
Security Insurance Company, supra; Bohm v. CIT Financial Services,
Inc., 348 So.2d 132 (La.App. 1 Cir.1977), writ denied, 350 So.2d 673
(La.1977); Louisiana Sav. Ass’n, Inc. v. Bluebonnet Holding
Partnership, 546 So.2d 869 (La.App. 1 Cir.1989).

Commercial Life Ins. Co. v. Robinson, 95-186, pp. 5-6 (La.App. 5 Cir. 7/25/95), 662

So.2d 486, 488-89.

The trial court heard testimony from both Benoit and Francis, examined

Debra’s last will and testament and numerous other insurance documents, and also

received the deposition of Debra’s friend, Lisa Holmes. From these documents, it is

clear that Debra made several conscientious decisions regarding both the H and M

policies as well as other policies she held after she received her diagnosis of terminal

cancer, including making cash withdrawals from both the H and M policies. It is also

clear that Debra, in the months before her death, was primarily interested in settling

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her financial affairs and providing for the well-being of her daughter and

grandchildren. Her will, executed on November 25, 2003, left the entirety of her

estate to her daughter and grandchildren and set up a trust for the grandchildren.

Further, we note that it would be nonsensical to make Francis the beneficiary of a

policy on her own life and that there was no need to change the beneficiary on the M

policy since Francis would have become the owner of that policy upon her mother’s

death and would have been able to change the beneficiary herself. Thus, we find no

manifest error in the trial court’s decision. Having so found, we need not reach

Francis’ alternative arguments concerning the dismissal of her reconventional

demand.

Finally, we find that Benoit’s argument that the trial court erred in assessing

the court costs against the funds on deposit to be without merit. Louisiana Code of

Civil Procedure Article 4659 provides, in pertinent part, as follows:

When money has been deposited into the registry of the court by
the plaintiff, neither he nor any other party shall be required to pay any
of the costs of the proceeding as they accrue, but these shall be deducted
from the money on deposit.

As the provisions of this article mandate the deduction of the costs from the money

on deposit, we find no error in the trial court’s assessment of the costs against the

funds on deposit rather than against either Occidental or Francis.

DECREE

For the foregoing reasons, we affirm the judgment of the trial court in its

entirety. All costs of this appeal are assessed to Appellant, Ruby Benoit.

AFFIRMED.

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NUMBER 07-1164

COURT OF APPEAL, THIRD CIRCUIT

STATE OF LOUISIANA

OCCIDENTAL LIFE INSURANCE
COMPANY OF NORTH AMERICA

VERSUS

RUBY BENOIT and
DEAUNDRA L. FRANCIS

GENOVESE, J., concurs in part, dissents in part, and assigns the following
reasons:

I concur with the affirmation of the trial court’s assessment of costs; however,

I dissent from the majority in its affirmation of the trial court’s change of beneficiary

designation.

There was nothing in the record to support the trial court’s “reformation” of the

insurance contract. There was no ambiguity. The decedent was an educated, retired

military woman with twenty-four years of military service who had engaged in

several insurance transactions with Occidental Life just prior to her death and had

confected a last will and testament less than five months prior to her death. She had

terminal cancer and was aware of her impending death. She had strategically gotten

her affairs in order just prior to her death. On her own volition, she knowingly

executed a change of beneficiary on the appropriate insurance forms on one of her life

insurance policies which was designated by her as the “M” policy.

The trial court found ambiguity in the transaction, reformed the insurance

contract, and on its own changed the policy designation from the “M” policy to the

“H” policy, ignoring the signed declaration of the decedent. The end result is that the

trial court unilaterally changed the decedent’s designation of beneficiary.

In effect, the trial court and the majority of this court have superimposed what

they think was the intent of the decedent in changing the beneficiary designation on

one of her life insurance policies. There was no rational basis of fact in the record to

support such action. This sets a bad precedent and opens Pandora’s box. In the

future, a trial court will be able to delve into the intent of a decedent in his or her

change of beneficiary designation. This invites litigation by the living over the intent

of the dead and invades the sanctity of the decedent’s beneficiary designation when

he or she will no longer be around to defend same. That leads to absurd

consequences. In my opinion, the trial court was manifestly erroneous and clearly

and legally wrong in changing the decedent’s beneficiary designation on her life

insurance policy against the written declaration of the decedent without legal grounds

therefor. I would reverse the trial court and uphold the decedent’s beneficiary

designation on her life insurance policy.