Allen v. United of Omaha Life Insurance Co.

236 S.W.3d 315, 2007 WL 1441007
CourtCourt of Appeals of Texas
DecidedOctober 25, 2007
Docket2-06-187-CV
StatusPublished
Cited by56 cases

This text of 236 S.W.3d 315 (Allen v. United of Omaha Life Insurance Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Allen v. United of Omaha Life Insurance Co., 236 S.W.3d 315, 2007 WL 1441007 (Tex. Ct. App. 2007).

Opinion

*319 OPINION

ANNE GARDNER, Justice.

This is a dispute over the proceeds of a key man life insurance policy. The principal question before us is this: When a policy’s named beneficiary merges with another entity, and the other entity is the “surviving company,” are the policy proceeds payable to the surviving company? We answer in the affirmative, and we affirm the trial court’s judgment.

I. Background

Appellant Judy Allen is the widow of Marvin Fred Allen, and Appellants Michael Allen and Cory Allen are his sons. In 2001, Fred was the CEO of Credit-Watch Services, L.P. and the president of CreditWatch Services, L.P.’s general partner, Stoneleigh Financial L.L.C. Credit-Watch Services, L.P. purchased a “key man” life insurance policy on Fred’s life in the amount of $1 million from United of Omaha Life Insurance Company (“United”). Fred signed the application in his individual capacity as the proposed insured, and he signed it in his capacity as president of Stoneleigh as the policy’s applicant/owner. In the application, he designated CreditWatch Services, L.P. as the policy’s sole beneficiary.

In June 2002, CreditWatch Services, L.P. merged with CreditWatch Services, Ltd., an Ohio limited company. The merger agreement and certificate of merger specified that the surviving entity was Cre-ditWatch Services, Ltd. CreditWatch Services, Ltd. later changed its name to Cre-ditWatch Services LLC. The insurance policy’s beneficiary designation was never changed from CreditWatch Services, L.P.

Fred died of natural causes on December 25, 2002. In September 2003, United issued a check payable to “CreditWatch Services” for the policy proceeds. Credit-Watch Services LLC deposited the check into one of its accounts.

In December 2004, Judy Allen sued United; Thomas Pace, the insurance agent who sold the policy; Steven Anderson, the CEO of CreditWatch Services LLC; Richard Murphey, CreditWatch Services LLC’s attorney; Worldwide Resources, Inc., a firm that investigated Fred’s death for United; and Alan Curry, an employee of Worldwide. 1 Judy sued United for paying the policy proceeds to “CreditWatch Services,” Pace for negligence, and all of the defendants for tortious interference with an inheritance and conspiracy to commit fraud. Michael and Cory later intervened in the lawsuit as plaintiffs.

All defendants moved for summary judgment, and the trial court ultimately granted summary judgment on all causes of action. 2 Judy, Michael, and Cory (“Appellants”) filed this appeal. In ten issues, they complain that the trial court erred by granting summary judgment because the policy’s named beneficiary ceased to exist before Fred died and because the named beneficiary had no insurable interest in Fred’s life (issues 1, 2, and 3); the trial court abused its discretion by striking Judy’s summary judgment affidavit without allowing her an opportunity to correct any deficiencies in the affidavit (issues 4, 5, and 6); the trial court abused its discretion *320 by overruling Judy’s motion to compel discovery from Anderson, Murphey, Pace, and United (issue 7); the trial court abused its discretion by denying Judy’s motion for continuance (issue 8); the trial court abused its discretion by denying Judy’s motion for a discovery control plan (issue 9); and the trial court erred by denying Judy’s motion to disqualify counsel for Havens and Anderson (issue 10).

II. Discussion

A. Summary Judgment

In their first three issues, Appellants argue that the trial court erred by granting summary judgment in favor of Appel-lees. Appellants contend that United should have paid the insurance proceeds to Fred’s estate because the policy’s designated beneficiary, CreditWatch Services, L.P., ceased to exist after its merger with CreditWatch Services, Ltd. and because CreditWatch Services, Ltd. had no insurable interest in Fred’s life at the time of his death.

1. Standard of Review

A defendant who conclusively negates at least one essential element of a cause of action is entitled to summary judgment on that claim. IHS Cedars Treatment Ctr. of DeSoto, Tex., Inc. v. Mason, 143 S.W.3d 794, 798 (Tex.2004); see Tex.R. Civ. P. 166a(b), (c). When reviewing a summary judgment, we take as true all evidence favorable to the nonmovant, and we indulge every reasonable inference and resolve any doubts in the nonmovant’s favor. IHS Cedars Treatment Ctr., 143 S.W.3d at 798.

2. Effect of Merger on Beneficiary Designation

In their second issue, Appellants argue that after CreditWatch Services, L.P. merged with CreditWatch Services, Ltd., CreditWatch Services, L.P. ceased to exist. CreditWatch Services, L.P. was the policy’s designated beneficiary, and the designation was never changed. Appellants contend that because the policy’s designated beneficiary did not exist when Fred died, United should have paid the policy proceeds to Fred’s estate. Appellees argue that CreditWatch Services, L.P.’s rights as beneficiary were transferred to CreditWatch Services, Ltd. as a result of the merger, and no change in the beneficiary designation was required.

Some Texas cases describe a beneficiary’s right to receive life insurance proceeds payable at a future but uncertain date as “property” in the nature of an unmatured chose in action 3 that matures at the death of the insured. See Brown v. Lee, 371 S.W.2d 694, 696 (Tex.1963); Seaman v. Seaman, 686 S.W.2d 206, 211 (Tex.App.-Houston [1st Dist.] 1984, writ ref'd n.r.e.); Prudential Ins. Co. v. Burke, 614 S.W.2d 847, 849 (Tex.Civ.App.-Texarkana), writ ref'd n.r.e., 621 S.W.2d 596 (Tex.1981). Other cases describe the beneficiary’s interest as an expectancy that matures into a vested interest upon the death of the insured. See Hunt v. Jefferson-Pilot Life Ins. Co., 900 S.W.2d 453, 456 (Tex.App.-Fort Worth 1995, writ denied); see also Garabrant v. Burns, 130 Tex. 518, 111 S.W.2d 1100, 1103 (1938).

Both choses in action and expectancies are conveyable interests under Texas law. See PPG Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd. P’ship, 146 S.W.3d 79, 106 (Tex.2004) (tracing development of modern law allowing trans *321 fer of choses in action); Parker v. Blackmon, 553 S.W.2d 623, 624 (Tex.1977) (“[T]he effective conveyance of ...

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Cite This Page — Counsel Stack

Bluebook (online)
236 S.W.3d 315, 2007 WL 1441007, Counsel Stack Legal Research, https://law.counselstack.com/opinion/allen-v-united-of-omaha-life-insurance-co-texapp-2007.