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Teachers Insurance and Annuity Association of America v. Bernardo

January 26, 2010

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, ET AL.
v.
THOMAS BERNARDO, ET AL.



The opinion of the court was delivered by: Dalzell, J.

MEMORANDUM

Defendants Thomas Bernardo and Pamela Turner each claim to be the sole beneficiary of three of decedent John L. Turner's Teachers Insurance and Annuity Association of American and College Retirement Equities Fund ("TIAA-CREF") annuity contracts. Plaintiff TIAA-CREF filed this rule interpleader action seeking this Court's determination of the claims and counter-claims.*fn1

All three parties have moved for partial summary judgment seeking a declaratory judgment regarding who is the beneficiary of the annuities.

I. Factual Background*fn2

In 1977, Dr. Turner was employed as a physician and professor at the University of Pennsylvania and was married to Pamela Turner. They had two children together. As an employee of the University of Pennsylvania, Dr. Turner was eligible to designate or direct contributions from his employer's basic retirement plan to fixed and variable annuity contracts issued by TIAA-CREF. Stip. at ¶ 12. On July 12, 1977 Dr. Turner executed an application form for a retirement annuity contract and certificate (the "July 12, 1977 Form"). Stip. at ¶ 13. TIAACREF issued contracts TIAA No. A825911-9 and CREF No. P825911-6 (the "A/P Contracts"), which became effective September 1, 1977. Stip. at ¶ 17. Dr. Turner listed his wife, Pamela Turner, as his primary beneficiary. Stip. at ¶ 15.

After a year-and-a-half of irreconcilable marital difficulties, on June 28, 1981, Dr. Turner moved out of the residence he shared with Pamela Turner and moved in with Thomas Bernardo. Stip. at ¶¶ 20-23. Dr. Turner and Mr. Bernardo lived together in Philadelphia until about 1995, when they moved to a jointly-owned home in New Jersey. Stip. at ¶ 82. Dr. Turner died on March 7, 2008 after living with Thomas Bernardo for twenty-seven years. Stip. at ¶¶ 23, 83.

Dr. Turner worked for the University of Pennsylvania until 1981. Stip. at ¶ 9. He was thereafter an Assistant Professor at Temple University Hospital from 1981 to 1985, and then worked for Lombard Medical Associates, an affiliate of Graduate Hospital, from 1985 until his retirement in 1997. Stip. at ¶¶ 10-11.

Section 18 of the A/P Contracts states that "[b]y filing written notice with TIAA[-CREF] in form and wording satisfactory to TIAA[-CREF], which may include the application for this contract, the Annuitant may...designate or change the Beneficiary." Stip. at ¶ 19. On July 1, 1981, Dr. Turner executed a TIAA-CREF annuity contract and certificate application form (the "July 1, 1981 Form") at Temple University, where his employment gave him continuing eligibility to participate in TIAA-CREF. Stip. at ¶ 24. TIAA-CREF provided the Human Resources Department at Temple with the TIAA-CREF forms, and the Human Resources Department was responsible for assisting its employees with their TIAA-CREF policies. Stip. at ¶¶ 26-27.

Dr. Turner designated Thomas J. Bernardo as his primary beneficiary in Section 8 of the July 1, 1981 Form, and wrote the correct contract and certificate numbers of his A/P Contracts at the top of the form. Stip. at ¶¶ 29-30. TIAA-CREF contends that the July 1, 1981 Form was only to be used to apply to new contracts, and was not the proper form it required to designate or change a beneficiary. Stip. at ¶ 31; Curran Dep. 110:18-110:23. In response to receiving the July 1, 1981 Form, TIAACREF sent Dr. Turner a January 21, 1982 letter (the "January 21, 1982 Letter"), that stated that the July 1, 1981 Form "has no force and effect and we are returning it to you for your records" and that "no changes will be made if we do not hear from you." Stip. at ¶¶ 33, 37. Nevertheless, in a move by TIAA-CREF that can at best be viewed as clerical error,*fn3 on that same letter a TIAA-CREF employee also checked off the box next to the statement that said, "The data in our records concurs with the information provided on this application," but did not check the box next to the statement that said, "If it was your intention to...Change your beneficiary designation, please complete and return the enclosed 'Designation of Beneficiary' form." Stip. at ¶¶ 38-9. TIAA-CREF agrees that it "communicated to Dr. Turner that the data in its records concurred with all of the information provided in the July 1, 1981 Form." Stip. at ¶ 40.

Divorce proceedings began on January 8, 1982, when Pamela Turner filed a Complaint in Divorce in the Philadelphia Court of Common Pleas. Stip. at ¶ 42. Over three years later, Dr. Turner and Pamela Turner entered into a Property Settlement Agreement. Stip. at ¶ 45. That Agreement contains a mutual release provision and states that: "It is the intention of Wife and Husband to give to each other, by the execution of this Agreement, a full, complete and general release with respect to any and all property of any kind or nature, real, personal or mixed, which the other now owns or may hereafter acquire."

Stip. at ¶¶ 46-7, Stip., Ex. 5. The divorce became final on October 18, 1985, when the Philadelphia Court of Common Pleas granted a Decree of Divorce to John and Pamela Turner on the ground of irretrievable breakdown. Stip. at ¶ 62. The June 26, 1985 Property Settlement Agreement was attached to, and incorporated by, the Decree. Stip. at ¶ 62. Pamela Turner proffers no evidence that she and Dr. Turner "ever entered into any agreement, contract or understanding, either explicit or implicit, written or oral, by which Dr. Turner agreed that Pamela Turner would remain the beneficiary of, or be entitled to, any portion of benefits from his TIAA-CREF annuity contracts." Stip. at ¶ 50.

On July 24, 1985, while the divorce remained pending, Dr. Turner executed an application for Supplemental Retirement Annuity Contracts (the "July 24, 1985 Form"). Stip. at ¶ 52.

Dr. Turner designated Thomas J. Bernardo as his primary beneficiary in section 8 of the July 24, 1985 Form, Stip. at ¶ 54, and also indicated on that Form that he intended to transfer funds from another 403(b) annuity contract by writing, in hand, "TIAA-CREF existing contracts" on that Form and included the A/P Contracts' numbers as the contracts out of which he would like to transfer funds. Stip. at ¶ 55. On September 1, 1985, TIAA-CREF issued the K/J Contracts pursuant to the July 24, 1985 Form, but the funds from the A/P Contracts were never transferred to the K/J Contracts. Although TIAA-CREF admits that Dr. Turner submitted this form "attempting to 'replace' the existing 'A' and 'P' contracts with the supplemental 'K' and 'J' contracts issued pursuant to graduate [sic] Hospital's supplement retirement plan," TIAA-CREF contends that it was unable to transfer the A/P Contracts to the K/J Contracts under the "applicable provisions of the Internal Revenue Code." TIAA-CREF Ans. to Countercl. ¶ 135, Stip. at ¶¶ 58-60.*fn4

On March 26, 1990, Dr. Turner received a letter from Robert A. Ippolito, an employee in Information Services at TIAACREF, regarding "Beneficiary Change" (the "Ippolito Letter"). Although Dr. Turner must have made some inquiry regarding the beneficiary of his funds to prompt such a response, TIAA-CREF has no record of it. Stip. at ΒΆΒΆ 65, 67. The Ippolito Letter enclosed a copy of the July 24, 1985 Form -- which named Thomas Bernardo as Dr. Turner's primary beneficiary -- and stated, "[e]nclosed is a copy of your current designation. If you ...


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