Life, Health, Disability & ERISA Litigation e-Alert
Group Co-chair
jhamilton@mirickoconnell.com
Group Co-chair
ccollins@mirickoconnell.com
LIFE, HEALTH, DISABILITY AND ERISA LITIGATION TEAM

Joseph M. Hamilton, Co-chair
Judy Southland, Paralegal
ABOUT US
Mirick O'Connell's Life, Health, Disability & ERISA Litigation Group represents clients throughout New England. With offices in Boston, Westborough and Worcester, our attorneys are within an hour of all the major courts in Massachusetts, Hartford, Connecticut, Rhode Island, and southern New Hampshire. In addition, our attorneys are admitted to practice not only in Massachusetts, but in Connecticut, New Hampshire and Rhode Island as well. We have repeatedly and successfully represented clients in each of these jurisdictions. So remember, we are not here for you just in Massachusetts - think New England!
FIRST CIRCUIT ADDRESSES REVOCATION ON DIVORCE STATUTE IN INTERPLEADER MATTER

Interpleader matters involving life insurance companies rarely make their way to the appellate courts, especially as to the liability of a life insurer. Under both Federal Rule of Civil Procedure 22 and statutory interpleader, insurance companies are disinterested stakeholders. That is, a life insurance claim is made under a valid policy and the benefits are clearly payable. The insurer is ready to pay the benefits, but the company is faced with competing beneficiaries. Interpleader provides a suitable mechanism to pay the benefits into the court, allow the court to determine who should be the rightful beneficiary, and protect the insurer from double exposure. After the funds are deposited with the court, the usual course is for the insurer to be dismissed from the action. But, from time to time these matters can get far more complicated.

In Sevelitte v. Guardian Life Insurance Company of America, 2022 WL 17485552 (1st Cir. 2022), the insured, Joseph Sevelitte, purchased a policy from Guardian in 1986. He named his spouse, Renee, as his primary beneficiary. No contingent beneficiary was named. Joseph and Renee divorced in 2013. Joseph died from Covid exposure in 2020. Renee made a claim for the benefits. However, when the claim investigation commenced it was quickly learned that Joseph and Renee were divorced and that Joseph had remarried. Massachusetts, like most states, has a Revocation on Divorce statute, M.G.L. c. 190B §2-804(b). These statutes provide that, upon divorce, spousal beneficiary designations are revoked unless there is express language preserving the spouse as beneficiary either in the policy itself, some other pre-divorce governing instrument, or in a post-divorce agreement.
When Guardian learned of the divorce, the company requested a copy of the divorce agreement to determine if there was express language preserving Renee as beneficiary. The language in the agreement was ambiguous and Guardian informed Renee the company could not simply pay her the benefits knowing the statute could mean that the Estate could make a valid claim for the benefits. Before Guardian could file its interpleader, Renee sued Guardian in state court for breach of contract and a violation of the Massachusetts Consumer Protection Act, Chapter 93A, alleging $1.6 million in damages. Guardian removed the case to federal court and responded, in part, by filing a counterclaim in interpleader against Renee and joined the Estate as a third-party defendant. The company moved to deposit the funds with the court, without objection. However, Renee refused to dismiss her claims against Guardian. The company filed a motion for judgment on the pleadings requesting to be dismissed, enjoining Renee and the Estate from bringing any further litigation, and for attorney’s fees. All of Guardian’s requests were granted. Additionally, the District Court awarded benefits to the Estate based on the lack of any clear language in the divorce agreement preserving Renee as beneficiary.

Renee appealed to the First Circuit. In a lengthy opinion the First Circuit reviewed the law pertaining to interpleader, analyzed the claim brought against Guardian and then addressed the award of benefits to the Estate. The court upheld the District Court’s judgment as to Guardian, dismissing it from the case, enjoining the parties from bringing any further litigation against the company, and confirming its claim for attorney’s fees. The court found Guardian had acted in good faith by filing the interpleader. The court held Renee failed to allege any plausible basis for breach of contract or a violation of Chapter 93A. Further, Guardian should not be punished for merely failing to choose among competing beneficiaries.

Interestingly, the court vacated the part of the District Court’s judgment awarding benefits to the Estate. The court found that even though the divorce agreement was ambiguous, Renee had made a plausible claim that the language could support her claim that she was preserved as the beneficiary. Therefore, the case was remanded so that Renee and the Estate could further litigate their rights to the policy benefits.

J. Christopher Collins represented The Guardian Life Insurance Company of America.


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