The opinion of the court was delivered by: Judge Vanaskie
This interpleader action was brought by ReliaStar Life Insurance Company ("ReliaStar") against competing claimants to the proceeds of a life insurance policy held by Budd A. Moore. Kristi Hatfield-Bingaman, the deceased's niece, claims the proceeds as the named beneficiary on the policy. Fay Moore, the deceased's wife, is the second claimant to the proceeds. The claimants' disagreement stems from a disclaimer signed by Hatfield-Bingaman, the designated beneficiary on the policy, after her uncle's death, disclaiming her interest and directing the policy be payed to the deceased's estate.
The interpleader, ReliaStar, has been dismissed from the action and currently pending before the Court is Kristi Hatfield-Bingaman's Motion for Summary Judgment. (Dkt. 34.)*fn1
Because there are genuine issues of material fact as to whether the defenses of duress, fraudulent misrepresentation, or violation of Faye Moore's fiduciary duty void the otherwise valid disclaimer, the summary judgment motion will be denied.
Budd A. Moore ("Budd"), as an employee of the Board of Education of Washington County, was eligible to participate in the Board's employee welfare benefit plan and was eligible for basic life insurance benefits and supplemental life insurance benefits. (Comp., Dkt. 1, at ¶¶ 6-7.) Budd participated in the plan and on June 8, 1994, completed a Beneficiary Designation form naming his niece, Kristi Lynn Hatfield (n.k.a. Kristi Lynn Hatfield-Bingaman) ("Hatfield-Bingaman"), as the primary beneficiary of a life insurance policy. (Id. at ¶ 8.) Eight years later, in 2002, Budd married Faye Moore ("Moore"). (Hatfield-Bingaman's Statement of Undisputed Material Facts ("HBSUMF"), Dkt. 36, at ¶ 52.)
Budd died on April 21, 2008. Moore is the executrix of Budd's estate. (HBSUMF, Dkt. 36, at ¶ 1.) After Budd's death, Moore learned that Hatfield-Bingaman was the named beneficiary of the life insurance policy ("the Policy") and that Moore could only obtain the proceeds of the Policy if Hatfield-Bingaman signed a disclaimer. (Id. at ¶ 2.) On or about May 6, 2008, Moore asked Hatfield-Bingaman to go to Attorney Martha Walker's law office because there were papers that Moore wanted her to see. (Id. at ¶ 3.)
During the May 6, 2008 conversation, Moore did not tell Hatfield-Bingaman anything about the Policy, did not tell her that she was the named beneficiary of the Policy, did not describe the "papers" that she wanted her to see, and did not tell Hatfield-Bingaman that she was going to be asked to sign something at Attorney Walker's office. (Id. at ¶ 5.) Moore knew that Hatfield-Bingaman did not know she was the beneficiary of the Policy. (Id. at ¶ 6.) When Moore asked Hatfield-Bingaman to go to Attorney Walker's office, Hatfield-Bingaman responded along the lines of Budd "probably left the boys a trust fund or something for school." (Id. at ¶ 7.) Moore chose not to correct Hatfield-Bingaman's assumption, knowing that she would see her at Attorney Walker's office, where she would explain everything, and she stated she felt awkward that Budd had not left anything to the boys. (Moore's Statement of Undisputed Material Facts ("MSUMF"), Dkt. 42, at ¶ 7.)
Moore wanted Hatfield-Bingaman to go to Attorney Walker's office to ask her to sign a disclaimer of her rights to the Policy. (HBSUMF, Dkt. 36, at ¶ 9.) Prior to the May 8, 2008 meeting, Moore had met with Attorney Walker regarding Hatfield-Bingaman's potential receipt of the Policy proceeds. (Id. at ¶ 9.)
Attorney Walker is the attorney for Budd's estate and has served as Moore's personal attorney. (Id. at ¶ 4.) She has practiced law for over 35 years, and has done estate work. (Id. at ¶ 48.) Hatfield-Bingaman is a high school graduate. (Id. at ¶ 46.) Moore is a teacher and has a Master's Degree. (Id. at ¶ 47.)
At the May 8, 2008 meeting, Attorney Walker told Hatfield-Bingaman "that Moore wanted to talk to her about 'something that would prevent them from having to take legal action'." (Id. at ¶ 13.) During the course of the meeting, Moore indicated that she needed the money from the Policy to "[t]ake care of [her son] and take care of the home, take care of the life that we had together that I need to financially take care of...." (Moore Dep., Dkt. 43-3, at 14.) She also indicated that she needed the money to pay Budd's bills and to pay for funeral expenses. (Id.) Accordingly, she asked Hatfield-Bingaman to sign a disclaimer to her rights under the Policy ("the Disclaimer").
"At the meeting, Moore gave [Hatfield-Bingaman] an unsecured note in the total amount of $24,000 and told [her] it was a 'gift.'" (HBSUMF, Dkt. 36, at ¶ 49.) Moore believed that by making the note it was "a way" to make the Disclaimer binding, "like a contract." (Id. at ¶ 50.)
Hatfield-Bingaman was legally entitled to the Policy proceeds as the named beneficiary of the Policy prior to her execution of the Disclaimer. (Id. at ¶ 16.) At the meeting, Attorney Walker did not tell her that she was legally entitled to the Policy proceeds, and neither Moore nor Attorney Walker told her that she had an absolute right to the Policy proceeds. (Id. at ¶ 18, ¶ 20.) Neither Moore nor Attorney Walker told Hatfield-Bingaman that "she had an absolute right to the Policy proceeds and no litigation could be brought against her if she didn't sign" the Disclaimer. (Id. at ¶ 19.) The May 8, 2008 meeting lasted approximately one-half (1/2 hour.
(Id. at ¶ 27.) "Hatfield-Bingaman was not told that she could not consult with an attorney or advisor before signing the disclaimer." (MSUMF, Dkt. 42, at ¶ 30.) During the meeting, Hatfield-Bingaman did not ask Attorney Walker any questions. (HBSUMF, Dkt. 36, at ¶ 29.)
Attorney Walker did tell Hatfield-Bingaman that the Policy was a "$74,000 double indemnity policy." (Id. at ¶ 10.) She also expressed relief when Hatfield-Bingaman agreed to sign the Disclaimer and indicated that the signing of the Disclaimer would make legal action unnecessary. Attorney Walker, however, did not indicate who would be parties to any litigation or the basis for any potential litigation. (See Kilbride Dep., Dkt. 34-7, at 5; Walker Dep., Dkt. 43-6, at 7; Hatfield-Bingaman Dep., Dkt. 34-6, at 4, 7.)
The Policy was not a double-indemnity policy of $74,000. Instead, the proceeds actually totaled $148,000. (HBSUMF, Dkt. 36, at ¶ 11.) Neither Attorney Walker nor Moore told Hatfield-Bingaman that the Policy had a value of $148,000. (Id. at ¶ 12.)
The Disclaimer was sent to ReliaStar. By letter dated June 5, 2008, ReliaStar returned the disclaimer to Hatfield-Bingaman. The ReliaStar letter, however, was addressed to Hatfield-Bingaman "c/o" Attorney Walker because ReliaStar did not have Hatfield-Bingaman's address or phone number. (Id. at ¶ 36.) "Moore provided Walker's address when asked to give an address to receive communications from ReliaStar; she knew [Hatfield-Bingaman's] address at the time, but didn't provide it because she 'didn't have it with her'. Moore told [Attorney] Walker she didn't know [Hatfield-Bingaman's] address." (Id. at ¶ 37.) The letter stated that Hatfield- Bingaman could not use the Disclaimer to direct that the Policy benefits be paid to Budd Moore's Estate. (June 5, 2008 Letter, Dkt. 1-7, at 2.) The letter advised her that if she still wished to disclaim her interest she would need to sign the disclaimer form enclosed with the letter, notarize it, and return it to ReliaStar. (Id.)
"On June 10, 2008, Moore told [Hatfield-Bingaman] she was to return to Walker's office to sign a new disclaimer form. [Hatfield-Bingaman] refused and told Moore she didn't feel comfortable dealing with Walker, who made her feel bad." (HBSUMF, Dkt. 36, at ¶ 40.) On June 11 and June 12, 2008, Hatfield-Bingaman contacted a ReliaStar representative and stated that she had been pressured into signing the Disclaimer at Walker's office. (Id. at ¶ 41.) She advised ReliaStar that she did not wish to disclaim her interest in the Policy. On June 12, 2008, she filed a claim for the Policy proceeds. (Id. at ¶ 44.) It was only when Hatfield-Bingaman spoke with a ReliaStar representative and read the ReliaStar Disclaimer on June 12, 2008, that she discovered the Policy proceeds totaled $148,000. (Id. at ¶ 42.)
In a letter dated June 24, 2008, Attorney Walker sent Hatfield-Bingaman a letter that stated litigation would be filed against her if she did not sign the ReliaStar Disclaimer, and again warned her that she would incur attorneys fees and court costs in the event of litigation. (Id. at ¶ 45.) Hatfield-Bingaman returned the $24,000 promissory note signed by Moore, and refused to sign a new disclaimer.
On October 23, 2008, ReliaStar initiated the current action. (Comp., Dkt. 1.) On December 19, 2008, ReliaStar filed a Motion for Leave to Deposit Interpleader Funds into the Registry of the Court. (Dkt. 7.) By order dated January 13, 2009, this Court granted the motion and ordered the Policy proceeds deposited in the Court's registry. (Dkt. 13.) On January 22, 2009, ReliaStar deposited a check in the amount of $150,503.88 ($74,000 in standard life benefits, $74,000 in supplemental life benefits, and $2,503.88 in interest) into the Court's registry. (Id.) On June 23, 2009, ReliaStar filed a Motion for Dismissal and Fees. (Dkt. 25.) This Court granted ReliaStar's Motion for Dismissal, but denied the Motion for Costs and Fees on March 1, 2010. (Dkt. 49.)
On August 21, 2009, Hatfield-Bingaman filed a motion for summary judgment as to her cross-claim against Moore. (Dkt. 34.) The motion has been fully briefed and is ripe for review.
Summary judgment should be granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and... the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). A fact is "material" if proof of its existence or non-existence might affect the outcome of the suit under applicable law. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248 (1986). "Facts that could alter the outcome are material facts." Charlton v. Paramus Bd. of Educ., 25 F.3d 194, 197 (3d Cir. 1994). "[S]ummary judgment will not lie if the dispute about a material fact is 'genuine,' that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248.
Initially, the moving party must show the absence of a genuine issue concerning any material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). All doubts as to the existence of a genuine issue of material fact must be resolved against the moving party, and the entire record must be examined in the light most favorable to the nonmoving party. White v. Westinghouse Elec. Co., 862 F.2d 56, 59 (3d Cir. 1988), abrogated on other grounds, Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993). Once the moving party satisfies its burden, the nonmoving party "must present affirmative evidence in order to defeat a properly supported motion for summary judgment." Anderson, 477 U.S. at 257. Mere conclusory allegations or denials taken from the pleadings are insufficient to withstand a motion for summary judgment once the moving party has presented evidentiary materials. Schoch v. First Fidelity Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990). Rule 56 requires the entry of summary judgment if there was adequate time for discovery and a party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party" bears the burden of proof at trial. Celotex, 477 U.S. at 322.
B. Validity of Disclaimer
Hatfield-Bingaman contends that the Disclaimer is unenforceable based on 1) lack of consideration, and 2) rejection of the Disclaimer by ReliaStar. Section 6201 of Title 20 of the Pennsylvania Consolidated Statutes, in pertinent part, provides:
A person to whom an interest in property would have devolved by whatever means, including... a donee under a third-party beneficiary contract (including beneficiaries of life insurance and annuity policies and pension, profit-sharing and other employee benefit plans), may disclaim it in whole or in part by a written disclaimer which shall: (1) describe the interest disclaimed; (2) declare the disclaimer and extent thereof; and (3) be signed by the disclaimant.
20 Pa. C.S.A. § 6201. Section 6204(b.1) provides:
If the interest would have devolved to the disclaimant by a third-party beneficiary contract (including life insurance and annuity policies and pension, profit-sharing and other employee benefit plans), the disclaimer or copy thereof shall be delivered to the insurance company, employer or other obligor, as the case may be, and to the person who is entitled to the interest by reason of the disclaimer.
20 Pa C.S.A. § 6204(b.1).
The Disclaimer signed by Hatfield-Bingaman was entitled "Disclaimer" and stated: I, Kristi Lynn Hatfield-Bingaman, beneficiary of life insurance under the life insurance policy of the Board of Education of Washington County Employee Benefit Fund, Group Policy No: 26257-9GAT, do hereby disclaim any and all of my rights under the aforesaid policy as primary beneficiary, and do direct that the policy benefits be paid to the Estate of Budd A. Moore, c/o Martha B. Walker, Esquire, at the above address.
(Disclaimer, Dkt. 1-5, at 2.)The Disclaimer was signed by Hatfield-Bingaman and witnessed by Attorney Walker on May 8, 2008. (Id.) The Disclaimer was also notarized by Stacey A. Shark. (Id.)
Hatfield-Bingaman's argument that the Disclaimer is void based on lack of consideration is meritless. "The most fundamental rule used when determining the meaning of a statute or rule is to begin with the plain meaning of the language used in the statute or rule." In re Ciaffoni, 787 A.2d 971, 974 (Pa. Super. Ct. 2001). The Pennsylvania legislature did not require consideration to create a valid disclaimer. See 20 Pa. C.S.A. § 6201; In re Pedrick's Estate, No. 67-91-653, 1993 WL 313179, at *4 (Pa. Com. Pl. June 4, 1993) ("consideration is required to support a contractual promise, not a disclaimer of a testamentary devise").
Hatfield-Bingaman's second ground for arguing that the Disclaimer is unenforceable is that ReliaStar's rejection of the Disclaimer renders it a nullity. Hatfield-Bingaman cites no case law in support of her assertion. Hatfiled-Bingaman claims that ReliaStar rejected the Disclaimer "because it failed to meet their requirements and failed to comply with the terms of the policy." (Mt. S.J., Dkt. 35, at 23.) The Policy, however, does not include requirements on how a beneficiary can disclaim an interest, but instead only indicates what will happen with the proceeds if there is no eligible beneficiary. (Policy, Dkt. 1-2, at 14.) The validity of the Disclaimer is thus governed by 20 Pa. C.S.A. § 6201. The Disclaimer described the interest Hatfield-Bingaman was disclaiming, declared the disclaimer and extent of the disclaimer, and was signed by Hatfield-Bingaman. See id. It is thus clear that, unless rendered voidable by virtue of having been procured by fraud, duress, or a violation of a fiduciary duty, the Disclaimer is enforceable
C. Violation of Fiduciary Duty
Hatfield-Bingaman's first contention in support of her argument that the Disclaimer is voidable is that Moore violated the fiduciary duties she owed to Hatfield-Bingaman as a beneficiary of Budd's estate and by virtue of a "confidential relationship" created between the two claimants at the time that Moore solicited the Disclaimer. (Mt. S.J., Dkt. 35, at 13-15.) Moore counters that she owed no fiduciary duty to Hatfield-Bingaman since Hatfield-Bingaman was not a ...