Blansfield v. Alumni Association of Arizona State University

• Court: Court of Chancery of Delaware
• Decided: July 31, 2015
• Docket: CA 9435-VCP
• Status: Published

Opinion

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

DOROTHY BLANSFIELD, ) ) Plaintiff, ) ) v. ) C.A. No. 9435-VCP ) ALUMNI ASSOCIATION OF ARIZONA ) STATE UNIVERSITY, ALUMNI ) ASSOCIATION OF TEMPLE ) UNIVERSITY and ROMAN CATHOLIC ) DIOCESE OF WILMINGTON, ) ) Defendants. )

MEMORANDUM OPINION

Date Submitted: April 20, 2015 Date Decided: July 31, 2015

Jeffrey M. Weiner, Esq., LAW OFFICES OF JEFFREY M. WEINER, P.A., Wilmington, Delaware; Attorneys for Plaintiff, Dorothy Blansfield.

W. Donald Sparks, II, Esq., Chad M. Shandler, Esq., Janice M. Matier, Esq., RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; Attorneys for Defendants Arizona State University Alumni Association and Temple University Alumni Association.

Anthony G. Flynn, Esq., Jennifer M. Kinkus, Esq., YOUNG CONAWAY STARGATT & TAYLOR, LLP, Wilmington, Delaware; Attorneys for Defendant Catholic Diocese of Wilmington, Inc.

PARSONS, Vice Chancellor. This is a dispute about who is entitled to the proceeds of an individual retirement

account or “IRA” owned by the decedent. Prior to his death, the decedent allegedly

attempted to name the plaintiff as the new beneficiary of this account by requesting a

copy of the requisite change of beneficiary form from the bank. He did not sign or return

the form, however, and died roughly three months later. The defendants, who are

residual beneficiaries named in the decedent‟s will, contend that the IRA change of

beneficiary form was ineffective because the decedent did not comply with the requisite

formalities.

After limited discovery, the defendants moved for summary judgment. The

plaintiff asserts that the defendants are not entitled to such judgment, contending that the

unsigned change of beneficiary form was effective to change the IRA beneficiary under

either the common law doctrine of substantial compliance or the “clearly expressed

intent” standard. The plaintiff also argues that there are disputed issues of material fact.

In this regard, she avers that the decedent was incapacitated from shortly after the time he

requested the change of beneficiary form until his death, and therefore could not have

signed and returned the form, but that his intent to change the IRA beneficiary

nevertheless should be honored.

As discussed herein, I deny the defendants‟ motion for summary judgment,

because material issues of fact remain in dispute.

1 I. BACKGROUND1

A. Parties

Plaintiff, Dorothy Blansfield, was a cousin of the decedent, John J. Egyed, Jr. (the

“Decedent”). Blansfield is one of the alternative residual beneficiaries designated by

Decedent in his last will and testament. Defendants, the Alumni Association of Arizona

State University (“Arizona State”), the Alumni Association of Temple University

(“Temple”), and the Roman Catholic Diocese of Wilmington (the “Diocese”)

(collectively, the “Defendants”), are charities named as alternative residuary beneficiaries

of Decedent‟s estate.

B. Facts

1. Natural objects of Decedent’s bounty

Decedent never married nor had any children. His family apparently included only

his parents and his cousin, Blansfield. Decedent‟s father died on April 8, 1984, and his

mother died on November 20, 2007. After his mother died, Decedent allegedly became

like a member of Blansfield‟s immediate family. Blansfield avers that, during that

period, Decedent spent almost all holidays with Blansfield and her family, took vacations

1 The facts recited herein are drawn from affidavits and exhibits attached to Defendants‟ Joint Opening Brief in Support of their Motion for Summary Judgment (“Defs.‟ Opening Br.”), and Plaintiff‟s Answering Brief in Opposition to the motion (“Pl.‟s Answering Br.”).

2 with her family at the beach, and visited her mother, i.e., Decedent‟s aunt, when she was

in a nursing home.2 Decedent apparently considered Blansfield to be like a sister.3

2. Decedent’s health problems

In April 2010, Egyed became ill. Blansfield asserts that she convinced him to see

her doctor, who later examined Decedent and had him admitted to the hospital, where he

was diagnosed with kidney failure and hospitalized for more than one week. With

Blansfield‟s assistance, Egyed explored kidney transplant opportunities. Blansfield avers

that, in order to determine Egyed‟s eligibility for transplant, she traveled with him to the

University of Kentucky Hospital for additional tests. On April 24, 2013, Decedent

underwent kidney transplant surgery in Kentucky. Blansfield and her husband drove

there the following day and stayed for approximately twenty days to care for Egyed.

A few months following the surgery, Decedent started experiencing “low grade

fevers, malaise and … altered mental status.” He ultimately was admitted to the

emergency room at the Hospital of the University of Pennsylvania where he was

diagnosed with post-transplant lymphoproliferative disease, which is cancerous, on

August 15, 2013.4 Blansfield and her husband again stayed near the hospital to provide

care for Decedent. The hospital‟s records revealed that Egyed was “confused,”

2 Compl. ¶ 10; Blansfield Aff. ¶ 2. 3 Compl. ¶ 5. 4 Pl.‟s Answering Br. App. 238.

3 cognitively impaired, “disoriented,” with his speech garbled, and that he exhibited poor

reasoning, a lack of clarity, and forgetfulness.5

Decedent was discharged on September 3, 2013. He continued to suffer from

various physical ailments. Egyed was readmitted to the hospital on October 20, 2013 and

diagnosed with an infection. He was released on October 25, 2013, but was readmitted

on October 28 and thereafter put on life support. He died on November 12, 2013.

Decedent‟s medical records for both hospitalization periods indicate that his cognitive

status was impaired, causing him to be intubated, deeply sedated, and restrained.6

3. Decedent’s Last Will and Testament

Decedent executed his Last Will and Testament on September 16, 1989 (the

“Will”).7 He bequeathed certain articles of his personal tangible property and devised

“all the rest, residue and remainder of his property and estate” to his mother. The Will

further provided that, if Decedent‟s mother predeceased him, the remainder of his estate

then would be distributed to alternative beneficiaries as follows: a general bequest in the

amount of $50,000 to Blansfield, with the remaining balance to the three Defendant

charitable organizations in varying percentages, i.e., 60% to Arizona State, 30% to

Temple, and 10% to the Diocese. Furthermore, Decedent appointed Blansfield as his

Executrix. Blansfield alleges that, after Egyed received his kidney transplant, he advised

5 Id. at 62-66. 6 Id. at 181-82. 7 Sparks Aff. Ex. C (the Will).

4 her on one or more occasions that he intended to change his Will. Because Decedent

apparently was a “private person,” however, he did not tell Blansfield how he intended to

modify his Will other than expressing the thought that he “had given enough to the

Alumni Associations.”8

Blansfield also submitted evidence that over the last few years, Decedent

gradually transferred portions of his property interests to her, or at least accorded her

control over those interests. Some illustrative examples of Decedent‟s transfers in this

regard are: (1) in 2007, Egyed executed an Advanced Healthcare Directive and appointed

Blansfield as his power of attorney for healthcare; (2) in 2011, he named Blansfield as a

co-owner and an authorized signer on his checking account at PNC Bank; (3) in 2012,

Decedent named Blansfield as a co-owner and authorized signer on his banking account

and Absolute Money Market Account at WSFS Bank, and authorized a debit card for her

to use for his WSFS Plus Free Interest Account; (4) on June 26, 2012, Egyed designated

Blansfield as a co-lessee on his safe deposit box at PNC Bank; (5) on July 9, 2012, he

retitled his CD account with Bank of America as ITF or “In Trust For” Blansfield; and

(6) on February 22, 2013, unbeknownst to Blansfield, he designated her as a beneficiary

to his Natiowide Annuity.9

8 Blansfield Aff. ¶ 10. 9 Id. ¶¶ 4-8, 10.

5 4. Decedent’s Individual Retirement Account

At the time of his death, Decedent owned, among other assets, an IRA worth

approximately $1.3 million that was administered by PNC Investments (“PNC”).10

Thomas J. Cooney, the PNC broker for the IRA, testified that at the time of Decedent‟s

death, the PNC records identified Decedent‟s mother, Marion Egyed, as the sole

beneficiary of the IRA.11

According to Blansfield, however, the evidence suggests that Decedent contacted

PNC shortly before July 25, 2013, and intended to substitute her as the new beneficiary

of the IRA. A few days after Decedent‟s death, Blansfield discovered a letter from a

PNC representative, Julie A. Iocono, along with a change of beneficiary designation form

on Decedent‟s desk at his residence.12 The letter from Iocono, dated July 25, 2013,

advised Decedent to sign and return the attached change of beneficiary designation form

(the “Form”). The Form listed Dorothy Blansfield as the new and sole beneficiary of the

IRA.13 Blansfield‟s name, date of birth and social security number were typed on the

Form. Iocono could not recall, however, how she obtained that information, nor could

she remember sending the letter to Decedent.14

10 Compl. ¶ 16. 11 Sparks Aff. Ex. D (Cooney Dep. 16). 12 Compl. ¶ 25. 13 Pl.‟s Answering Br. App. 41. 14 Sparks Aff. Ex. E (Iocono Dep. 15).

6 The Form provides that any change in beneficiary becomes effective when the

Form is received and accepted by NFS, an agent for PNC, and “will remain in effect until

NFS receives and accepts another designation with a later date.”15 Decedent never signed

the Form or mailed it to PNC.

C. Procedural History

On March 11, 2014, Blansfield commenced this action, seeking a declaration that

she is the beneficiary of Decedent‟s PNC IRA. On April 30, 2014, all Defendants jointly

filed their Answers to the Complaint. Thereafter, the parties engaged in limited

discovery. On December 22, 2014, all Defendants filed a joint motion for summary

judgment pursuant to Court of Chancery Rule 56 (the “Motion”). After full briefing, I

heard argument on the Motion on April 20, 2015.

D. Parties’ Contentions

Blansfield asserts that she is entitled to be the sole beneficiary of Decedent‟s IRA

under the doctrine of substantial compliance. She argues that Decedent intended to

designate her as the new beneficiary by contacting PNC and requesting a change of

beneficiary designation form, and that although Egyed failed to comply with the strict

requirements of signing and returning the Form, he did everything he reasonably could

have done under the circumstances to formalize this change. Blansfield further contends

that this Court should adopt a different standard in the circumstances of this case—i.e.,

15 Pl.‟s Answering Br. App. 43.

7 the clearly expressed intent standard. Under that standard, Blansfield asserts that it is

even more clear that Defendants‟ Motion should be denied.

Defendants contend that the beneficiary designation form was not effective

because Decedent never signed or returned the Form to PNC. They therefore assert that

they are entitled to judgment in their favor, and that proceeds of the IRA should be

distributed in accordance with the beneficiary designation form that PNC had on file,

which named Decedent‟s mother as the beneficiary. In that circumstance, because

Decedent‟s mother predeceased him, the IRA proceeds would default to his estate and be

distributed pursuant to his Will, under which Defendants are named as alternative

beneficiaries and entitled to receive Decedent‟s residuary estate. Defendants make that

argument under the substantial compliance test, which they contend is the correct legal

standard in this situation. They further urge this Court to reject as a matter of law the less

onerous clearly expressed intent standard for which Blansfield argues.

II. ANALYSIS

A. Legal Standard

“Summary judgment is granted if the pleadings, depositions, answers to

interrogatories and admissions on file, together with the affidavits, show that there is no

genuine issue as to any material fact and that the moving party is entitled to a judgment

as a matter of law.”16 When considering a motion for summary judgment, the evidence

16 Twin Bridges Ltd. P’ship v. Draper, 2007 WL 2744609, at *8 (Del. Ch. Sept. 14, 2007) (citing Ct. Ch. R. 56(c)).

8 and the inferences drawn from the evidence are to be viewed in the light most favorable

to the nonmoving party.17 Summary judgment will be denied when the legal question

presented needs to be assessed in the “more highly textured factual setting of a trial.”18

The Court also “maintains the discretion to deny summary judgment if it decides that a

more thorough development of the record would clarify the law or its application.”19

B. Applicable Legal Principles

In the context of beneficiary designations, Delaware recognizes the common law

doctrine of substantial compliance. Under that doctrine, an intended change of

beneficiary designation can be given effect “„despite a failure to comply strictly with the

formalities usually required for such a change,‟” if the account owner intended for the

change of beneficiary designation to be given effect, and the account owner has done all

that is reasonably possible or necessary for him to change the beneficiary. 20 The purpose

of the substantial compliance doctrine is to relax the requirement of strict compliance in

17 Judah v. Del. Trust Co., 378 A.2d 624, 632 (Del. 1977). 18 Schick Inc. v. Amalgamated Clothing & Textile Workers Union, 533 A.2d 1235, 1239 n.3 (Del. Ch. 1987) (citing Kennedy v. Silas Mason Co., 334 U.S. 249, 257 (1948)). 19 Tunnell v. Stokley, 2006 WL 452780, at *2 (Del. Ch. Feb. 15, 2006) (quoting Cooke v. Oolie, 2000 WL 710199, at *11 (Del. Ch. May 24, 2000)). 20 Travelers Life & Annuity Co. v. Desiderio, 2007 WL 2019795, at *2 (Del. Ch. July 3, 2007) (quoting Greene v. Conn. Mut. Life Ins. Co., 1977 WL 5189, at *3 (Del. Ch. May 25, 1977)).

9 order to effectuate a decedent‟s intent, in recognition of the fact that “strict enforcement

of the requirement for a duly processed writing may work an inequity.”21

I note that, in opposing Defendants‟ motion, one argument Plaintiff raised was that

I should employ a less onerous standard than the substantial compliance test, such as the

“clearly expressed intent” test that other states apparently have adopted in analogous

circumstances.22 As discussed infra, I find that Defendants are not entitled to summary

judgment under either the substantial compliance standard that they advance or the more

plaintiff-friendly “clearly expressed intent” standard.23 Thus, I do not reach the legal

question of whether Delaware recognizes or should adopt the clearly expressed intent

standard.

C. Summary Judgment is Not Appropriate Here

The substantive issue before the Court is whether Decedent effectively changed

the beneficiary on his IRA to Blansfield. Defendants argue that, based on the undisputed

facts of this case, the answer is “no,” because the terms of the beneficiary designation

form made it clear that a change in beneficiary is not effective until PNC receives the

21 Id. 22 PAB 27-32 (citing, inter alia, LeBlanc v. Wells Fargo Advisors, L.L.C., 981 N.E.2d 839, 847 (Ohio 2012)). 23 This does not mean, however, that Blansfield might be entitled to summary judgment, although she has not moved for it, on either of those standards. The reason is that both the substantial compliance standard and the clearly expressed intent standard require proof that the decedent intended to name a new beneficiary. As discussed infra, there are genuine issues of material fact on that question that preclude summary judgment for Plaintiff or Defendants.

10 signed beneficiary designation form, and, because Decedent did not sign or return the

Form.

I disagree. For the following reasons, I conclude that Blansfield has met her

burden of showing that an issue of material fact exists, and I therefore deny Defendants‟

motion for summary judgment. In particular, two material facts remain at issue in this

case: (1) whether Decedent intended to change his IRA beneficiary to Blansfield; and (2)

whether Decedent did everything he reasonably could have done to effectuate that change

under the circumstances.

1. Whether Decedent had the requisite intent

It is undisputed that Decedent never signed or returned a beneficiary designation

form as seemingly required. Days after Decedent‟s death, however, the Form designating

Blansfield as the new beneficiary was discovered. Blansfield‟s name, date of birth, and

social security number were typed on the Form, which was accompanied by a letter sent

by PNC. It is possible that someone other than Decedent called PNC and provided

Blansfield‟s information to PNC, but Iocono could not recall how she obtained that

information. It is also reasonable to infer, however, that Decedent himself called to

request a change of beneficiary and provided the information regarding Blansfield. If so,

that would support a finding that Decedent did intend to effect the change of beneficiary

in favor of Blansfield. At this procedural stage, Plaintiff is entitled to have the Court

draw such a reasonable inference in her favor.

Furthermore, the inference of Decedent‟s intent to leave greater portions of his

estate to Blansfield might be supported by the interactions he had with Blansfield over

11 the years. From early 2011 to the time of his death, Decedent repeatedly transferred

other non-probate assets he owned to Blansfield, such as naming her as a co-owner and

an authorized signer of his various checking accounts, designating her as a co-lessee on

his safe deposit box, naming her as ITF for his CD account, and naming her as the

beneficiary of his annuity account. These actions arguably support an inference that

Decedent also intended to name Blansfield as the beneficiary of his IRA account.

Admittedly, another inference that could be drawn from Decedent‟s actions in this regard

is that he believed he had already done enough for Blansfield without also giving her the

entire proceeds of his IRA. On a motion for summary judgment, however, I must review

the evidence in the light most favorable to the nonmoving party. Drawing all reasonable

inferences in favor of Blansfield, I conclude that there is a genuine dispute about whether

Decedent intended to designate Blansfield as the beneficiary of his IRA.

2. Whether Decedent substantially complied

Defendants also assert that no factual disputes exist as to whether Decedent did all

that was “reasonably possible or necessary” for him to effectively change the beneficiary

of the IRA. In particular, Defendants argue that all Decedent had to do was to sign and

date the change of beneficiary form and mail it back to PNC. Defendants further assert

that Decedent had many opportunities to complete this simple task from the time he

received the letter on or about July 25, 2013, until his death over three months later.

Blansfield counters that Decedent was disoriented and extremely ill during this time

period and was in and out of the hospital, effectively making it impossible for him to sign

and return the beneficiary designation form.

12 Plaintiff primarily relies on this Court‟s decision in Travelers Life & Annuity Co.

v. Desiderio as support for her position.24 In that case, the decedent contacted his life

insurance agent to change the beneficiary of his annuity contract. He left a voicemail

stating his intent but died the following day, before he could execute the necessary

paperwork.25 This Court applied the doctrine of substantial compliance and determined

that, by making the call and leaving the voicemail, the decedent demonstrated his intent

to change the beneficiary and that he did all he reasonably could under the circumstances

to effectuate that change.

One distinction between Travelers Life and this case is that, here, the beneficiary

designation form was sent to Decedent on July 25, 2013, and he died on November 12,

2013. Thus, he had more than three months to comply with PNC‟s requirement of

signing and returning the Form, but he failed to do so. There is evidence in the record,

however, that Decedent was disoriented and extremely ill during much of this time,

which could have prevented him from signing the Form and returning it to PNC.

According to Decedent‟s hospitalization record, he was admitted to the hospital on

August 15, 2013 due to an altered mental status.26 His medical records show that

Decedent was confused, cognitively impaired, and generally disoriented. Decedent was

readmitted on October 20, 2013, and again on October 28. He then was put on life

24 2007 WL 2019795 (Del. Ch. July 3, 2007). 25 Id. at *2. 26 Compl. ¶ 18.

13 support before dying on November 12. The records from these hospitalizations again

indicate that he was confused and forgetful and that his cognitive status required him to

be sedated and restrained.27

Thus, there is evidence that Decedent suffered from disorientation and physical or

cognitive impairments during significant portions of the time period between his receipt

of the change of beneficiary form in late July 2013 and his death in November. But, the

record is not clear as to whether Decedent was incapacitated continuously during that

period, or only intermittently. A more developed factual record may lead the Court to

find that Blansfield has failed to satisfy her burden of proof on this aspect of the

substantial compliance test. Granting a motion for summary judgment in favor of

Defendants, however, would be improper, because there is a genuine issue of material

fact regarding Decedent‟s mental status, which could have prevented him from

complying with PNC‟s requirements for changing the beneficiary designation on his IRA.

Based on the existence of that dispute and the dispute discussed above regarding

Decedent‟s intent, I must deny Defendants‟ Motion.

III. CONCLUSION

For the foregoing reasons, Defendants‟ motion for summary judgment is denied.

IT IS SO ORDERED.

27 Pl.‟s Answering Br. App. 181-82.