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Alkhafaji v. TIAA-CREF Individual and Institutional Services, LLC

Supreme Court of Pennsylvania

June 17, 2013

FATIN ALKHAFAJI, ADMINISTRATOR C.T.A. OF THE ESTATE OF ABBASS ALKHAFAJI, DECEASED, INDIVIDUALLY AND AS NATURAL GUARDIAN OF HER MINOR CHILDREN, Appellant
v.
TIAA-CREF INDIVIDUAL AND INSTITUTIONAL SERVICES, LLC, AHMED ALKHAFAJI, ALLIAH ALKHAFAJI AND SHEAMEH ALKHAFAJI-ALDUALISI, Appellees FATIN ALKHAFAJI, ADMINISTRATOR C.T.A. OF THE ESTATE OF ABBASS ALKHAFAJI, DECEASED, INDIVIDUALLY AND AS NATURAL GUARDIAN OF HER MINOR CHILDREN, Appellant
v.
TIAA-CREF INDIVIDUAL AND INSTITUTIONAL SERVICES, LLC, AHMED ALKHAFAJI, ALLIAH ALKHAFAJI AND SHEAMEH ALKHAFAJI-ALDUALISI, Appellees

ARGUED: April 11, 2012

Appeal from the Order of the Superior Court entered February 14, 2011 at Nos. 287 WDA 2010, 363 WDA 2010reversing the order of the Court of Common Pleas of Lawrence County, entered January 15, 2010 at No. 5 of 2008 O.C., and remanding.

OPINION IN SUPPORT OF REVERSAL

TODD MADAME JUSTICE

Appellant Fatin Alkhafaji challenges the order of the Superior Court which awards proceeds of annuities, issued by Appellee TIAA-CREF[1] and owned by her deceased husband, Abbass Alkhafaji ("decedent"), to the beneficiaries listed in the annuities and not to the beneficiaries decedent designated in his will. As the plain language of the change of beneficiary provisions of the annuities permitted the beneficiaries to be changed via written notice received by TIAA-CREF after decedent's death, and did not expressly prohibit the use of a will as a valid and acceptable form of such written notice, I conclude the Superior Court's determination that decedent's will could not, as a matter of law, change his beneficiaries was in error. Consequently, I would reverse the order of the Superior Court and remand this matter to that court for further consideration.

The following is a brief review of the relevant facts and procedural history which brought this matter before our Court. Decedent was employed as a professor at Slippery Rock University, and had, prior to his marriage to Appellant, been married twice before. In his first marriage, decedent fathered two daughters - Appellees Alliah Alkhafaji and Sheameh Alkhafaji. During his second marriage, a son was born - Appellee Ahmed Alkhafaji. Decedent's third marriage to Appellant produced five sons, all of whom were minors at the time of the commencement of this litigation.

During the course of his employment at Slippery Rock University, decedent purchased six retirement annuities issued by TIAA-CREF.[2] Pursuant to a marital settlement agreement executed with his second wife at the conclusion of their marriage, and dated May 25, 1995, decedent named Alliah, Sheameh, and Ahmed as beneficiaries on four of the six annuities.[3] Although decedent did not designate a specific beneficiary for the remaining two annuities, under TIAA-CREF plan administration procedures, decedent's naming of Alliah, Sheameh, and Ahmed as beneficiaries in his other four annuities was deemed effective for these two annuities as well.

In March 2007, while studying in Qatar on a Fulbright Scholarship, decedent was involved in a horrific car accident which left him a quadriplegic. Upon his return to the United States, decedent was hospitalized at Presbyterian University Hospital in Pittsburgh, and then transferred to Johns Hopkins Hospital in Maryland. While at Johns Hopkins, decedent was discovered to have spinal cancer, treatment of which proved unavailing, and his health quickly declined.

In July 2007, while hospitalized, decedent dictated a will to one of his students and a friend, who subsequently put it into typewritten form. Once typed, decedent signed it, with his student and friend acting as witnesses. In this will, the authenticity of which was not contested, he named all of his children from his three marriages, along with his current wife, as beneficiaries of the six annuities. The relevant provision of the will designating decedent's new choice of beneficiaries provided, as follows:

(4) About my pension, the beneficiaries are all my biological children and my current wife Fatin, after reducing all cost (sic) associated with the house . . . .

Will of Dr. Abbass Alkhafaji, 7/16/2007 (Exhibit A attached to Petition to Enjoin Distribution of Pensions, filed 1/24/08) at 2.

After decedent passed away in September 2007, Appellant, as executor of decedent's estate, sent the will to TIAA-CREF, along with a copy of the 1995 marital settlement agreement, to the New York City offices of TIAA-CREF which had not yet distributed any funds from the annuities. Trial Court Opinion, 1/15/10, at 4. The trial court, the Honorable John W. Hodge, found the will was "to act as notice of [decedent's] change of beneficiary designation." Trial Court Opinion, 1/15/10, at 5. TIAA-CREF refused to make the change, or to pay the proceeds due under the annuities to Appellant and, instead, interpleaded this money into the Court of Common Pleas of Lawrence County for distribution. Appellant, on her own behalf, and on behalf of her five minor children, subsequently filed a petition to enjoin distribution of the annuities.

The trial court granted Appellant's petition and ordered the proceeds of the annuities distributed in the manner established by decedent's will. Trial Court Order, 1/15/10. In its opinion filed in support of its order, the trial court observed that the change of beneficiary provisions in the annuities at issue merely required that written notice of the change be provided to TIAA-CREF in order for the change to be effective, and further found that TIAA-CREF was provided with such notice when it received the copy of decedent's will. Noting the decedent's deteriorating physical condition, and the fact that he was hospitalized so far from home, in pain, and under heavy sedation, the court concluded that "Decedent did all that he reasonably could under the circumstances of his illness to notify the insurer of his beneficiary change." Trial Court Opinion, 1/15/10, at 14-15. Appellees appealed, and Appellant cross-appealed.

The Superior Court reversed in an unpublished panel decision. Alkhafaji v. TIAA-CREF, Nos. 287 and 363 WDA 2010, unpublished memorandum (Pa. Super. filed February 14, 2011). The court concluded the facts of this case were "factually indistinguishable" from Carruthers v. New York Life, 434 A.2d 125 (Pa. Super. 1981). Alkhafaji, at 7. The court reasoned that, in the instant matter, like in Carruthers, the decedent attempted to change the beneficiaries via his will; however, the court interpreted Carruthers as establishing that a beneficiary change could not be made in this fashion, ruling that, "under Carruthers, the will could not operate to change beneficiary status, nor could it be deemed as substantial compliance with the policy company's notice requirements." Alkhafaji, at 7. The court found that decedent had previously changed the beneficiaries on these annuities in compliance with the marital settlement agreement and, thus, was aware of the procedures ostensibly required by the annuities for changing beneficiaries. Further, the court observed that more than two months elapsed from the time decedent executed his will until the time of his death, which it deemed sufficient time to inform TIAA-CREF of his desire to change his beneficiaries, but he had not done so. The court found no evidence that decedent's hospitalization or condition had impeded him from making such contact with TIAA-CREF. Thus, the court concluded, "[i]n the absence of any evidence that Decedent ...


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