The opinion of the court was delivered by: Jacob P. Hart United States Magistrate Judge
This is an interpleader action filed by Monarch Life Insurance Co. to determine the proper beneficiary of an annuity upon the death of annuitant Robert Tarone, III, ("Tarone"). The claimants are the Estate of Robert J. Tarone, III, and James P. McEvilly as the executor of that estate, who are jointly represented ("the Estate"); and Laura Sipio, the sister of the deceased. As explained below, this determination turns on whether Tarone, who died on October 18, 2008, was not just the annuitant, but also the owner of the annuity policy.
Originally, this case was assigned to the Honorable Stewart Dalzell. On January 26, 2010, he denied the claimants' cross-motions for summary judgment. The case was later transferred to the undersigned pursuant to 28 U.S.C. § 636(c) and Fed. R. Civ. Pr. 73. Trial was scheduled for April 4, 2011. However, on March 29, 2011, the Estate moved for leave to file a second motion for summary judgment. Leave was granted. Sipio responded, and also filed a cross-motion for summary judgment. For the reasons set forth below, I will now grant summary judgment in favor of the Estate.
I. Factual and Procedural Background
A. The Settlement Agreement and the Annuity Policy On August 7, 1980, Tarone was involved in a motorcycle accident. Sipio's Pre-Trial Stipulation at ¶ 1. He sustained serious harm, including a traumatic brain injury. Id. Tarone retained James P. McEvilly, Jr., Esq., to represent him in his personal injury lawsuit against a number of defendants, including Better Materials, Inc. Id. at ¶ ¶ 2, 3.
On August 1, 1984, Tarone resolved the personal injury lawsuit by entering a written Settlement Agreement and Release ("SAR") with Transamerica Insurance Company, insurer for the defendants. Id. at ¶ 4. The SAR set forth Transamerica's obligations to Tarone, including monthly payments, which were to continue: "for the remainder of the life of Plaintiff, guaranteed for a minimum period of 360 consecutive months." SAR (Sipio's Exhibit 1) at ¶ 2(c).
The SAR further provided: "[I]n the event of the death of Plaintiff prior to the expiration of the said 360 months, the remaining monthly payments in the guaranteed period shall continue to be paid monthly to the estate of Plaintiff as they fall due and not in a lump sum." Id. The SAR also gave Transamerica the right to assign its liability to make the periodic payments, "within the meaning of § 130 of the Internal Revenue Code." Id. at ¶ 4.
Significantly for purposes of this decision, the SAR continued: The Transamerica Insurance Company and/or the assignee reserve the right to fund its liability to make periodic payments under paragraph 2(c) above through the purchase of an annuity policy from Monarch Life Insurance Co. The Transamerica Insurance Company and/or the assignee shall be the owner of any such annuity policy, may hold any such annuity policy and shall have all rights of ownership.
SAR at ¶ 5. (Bold supplied).
On the same day that the SAR was executed, Tarone entered a Qualified Assignment and Consent with Better Materials, Inc., defined there as "the Assignor", and Monarch Capital Corporation, defined there as "the Assignee." Qualified Assignment and Consent (Sipio's Exhibit 2). Tarone was defined as "the Obligee." Id. By means of this document, Better Materials, Inc., (and therefore its insurer, Transamerica) transferred to Monarch Capital Corporation its obligations to pay Tarone. Id.
The Qualified Assignment and Consent contained this language: Assignee may fund the liabilities it assumes hereby by purchasing a "qualified funding asset" within the meaning of Code Section 130(d). Any such "qualified funding asset" shall be the sole property of Assignee; Obligee shall have no right or interest therein.
Id. at ¶ 4. (Bold supplied).
Thus, these two documents, read together, provide that Monarch Capital Corporation ("Monarch Capital")-- as the assignee for the personal injury defendants -- was to fund its liability to pay Tarone by purchasing an annuity from Monarch Life Insurance Co. ("Monarch Life"). Monarch Capital would be the sole owner of the annuity, and Tarone would "have no right or interest therein."
The next day, an annuity was indeed purchased from Monarch Life. It is not clear who filled out the Annuity Application, dated August 2, 1984, but it was a standard Monarch Life form. Sipio's Exhibit 3. The first section is titled "Proposed Annuitant", and the name and information provided there belong to Tarone. Id.
The second section of the Annuity Application is left blank. Id. Unfortunately, it seeks the information which is the subject of this lawsuit. First, it asks for "Name and Address of Applicant If Other Than Proposed Annuitant." Id. This section is blank. Next, it asks for "Owner of Policy" and provides boxes to check by "Proposed Annuitant" and "Applicant." Id. Neither box is checked.
The third section, which is unimportant in this case, seeks information regarding retirement plans. The fourth section, however, is labeled "Beneficiary." Its first section reads: "Indicate beneficiary for any death benefits with ..........right reserved to change beneficiary." Id. The space in the middle of the section appears to give the applicant the opportunity to write "NO", in order to preclude the possibility of a change in beneficiary. In this case, the space is not filled in. The Primary Beneficiary box is filled in: "Estate of Annuitant -- Robert J. Tarone, III." Id.
Tarone's signature does not appear anywhere on this document, nor is his name filled into either of the two signature boxes provided; one labeled "Proposed Annuitant" and the other labeled "Applicant if Other Than Proposed Annuitant." Both of these boxes are blank. Immediately below the box labeled "Applicant if Other Than Proposed Annuitant", however, are the typed words "MONARCH CAPITAL CORPORATION." Immediately below that is another box, labeled: "If a Firm or Other Organization, Signature & Title of Authorized Person." That box is signed by an individual, whose last name is illegible, and has not been supplied by either claimant. Under that signature are typed the words: "Vice President and Treasurer."
The first page of the policy itself is entirely pre-printed, with no room to fill in individualized information. It states, in relevant part: "In this policy, the word you refers to the annuitant shown below [in this case, Tarone]. We refers to Monarch Life Insurance Company." Id. It then says: "We will pay income to the owner during your lifetime." Id. On the pre-printed page titled "Terms of This Policy", it is provided: "You are the owner of this policy unless another owner has been named in the application." Id. at 3. (Bold supplied). This suggests that Tarone was the owner of the policy.
The page labeled "Terms of This Policy" also states that the application is a part of the entire annuity contract. Id. Further, it says: "During your lifetime the owner can transfer ownership of this policy or change the beneficiary." Id. at 4.
B. The Change of Contract Form
On December 11, 2000, Monarch Life received a completed Contract Change Form signed by Tarone. Sipio's Exhibit 6. The form was one generated by Monarch Life, and had Monarch Life's name and address on its top lines. Id.
The Contract Change Form listed Robert J. Tarone as the owner of the "contract," i.e, the annuity policy. Joan A. Darlington, Tarone's mother, was listed as the Annuitant, followed by the parenthetical: "beneficiary." This was despite the fact that, as above, Mrs. Darlington was not listed as a beneficiary on the annuity contract. Tarone's estate ...