Veach v. Chuchanis

2014 Ohio 2949

• Court: Ohio Court of Appeals
• Decided: June 30, 2014
• Docket: 2014CA00026
• Status: Published

Opinion

[Cite as Veach v. Chuchanis, 2014-Ohio-2949.]

COURT OF APPEALS STARK COUNTY, OHIO FIFTH APPELLATE DISTRICT

JUDGES: CHRISTINE VEACH : Hon. William B. Hoffman, P.J. : Hon. W. Scott Gwin, J. Plaintiff-Appellant : Hon. John W. Wise, J. : -vs- : : Case No. 2014CA00026 ANDREW CHUCHANIS, ET AL : : Defendant-Appellee : OPINION

CHARACTER OF PROCEEDING: Civil appeal from the Stark County Court of Common Pleas, Case No. 2013CV01591

JUDGMENT: Reversed and Remanded

DATE OF JUDGMENT ENTRY: June 30, 2014

APPEARANCES:

For Defendant-Appellee For Plaintiff-Appellant

EDMOND MACK JAMES L. DYE Tzangas, Plakas & Mannos Box 161 220 Market Avenue south Pickerington, OH 43147 Canton, OH 44702 [Cite as Veach v. Chuchanis, 2014-Ohio-2949.]

Gwin, J.

{¶1} Plaintiff-appellant, Christine Veach [“Veach”] appeals the Stark County

Court of Common Pleas Judgment Entry filed February 3, 2014 that granted appellee

Andrew Chuchanis’ [“Chuchanis”] motion for summary judgment.

Facts and Procedural History

{¶2} The facts of the case are not in dispute and have been stipulated to by the

parties.

{¶3} Sentry Life Insurance company ("Sentry") issued life insurance policy

number 73-05927-71 (the "Policy") to Tracy Veach Lytle Brown ("Tracy") in 1991. In

1991, at the time Sentry issued the Policy to Tracy, she selected Chuchanis as the

Policy's beneficiary and Veach as the contingent beneficiary. In October 1998, seven

years after obtaining the Policy, Tracy sent Sentry a letter indicating that she had gotten

married, she had a name change, and she wanted to change her primary beneficiary

from Chuchanis to her new husband, Richard Lytle. That same letter requested that

Sentry send her confirmation of the changes.

{¶4} Later that month, Sentry responded to Tracy's letter, in pertinent part, as

follows: "Enclosed is the form that is needed to change the beneficiary designations on

your life insurance policy." The letter enclosed a change of beneficiary form that

required Tracy to list the name and address of her beneficiaries, sign in front of a

witness who is not a beneficiary of the Policy, and provide the witness's signature. The

Sentry letter and form were sent to Tracy at her then-current address—the same

address where she received the quarterly premium invoices that she paid,

{¶5} The Policy provision regarding change of beneficiaries reads as follows: Stark County, Case No. 2014CA00026 3

Change of Beneficiary- You may change the beneficiary during

the insured's lifetime, The change requires satisfactory written notice to

us. After we record it, the change is effective from the date you signed the

notice. The insured does not have to be living at the time we record the

change for it to be effective. We will not be responsible for any payment

we make or other action we take before we record the change.

{¶6} Tracy never completed the change of beneficiary form Sentry sent to her

in October 1998. Richard Lytle (the person Tracy named in her letter to Sentry) died in

2000. In 2001, Tracy married John Brown. Later that year, Tracy sent a request to

change her name because of that marriage. In response, Sentry mailed Tracy another

change of beneficiary form. This form was also sent to Tracy's then-current address,

Again, Tracy did not respond.

{¶7} On at least two occasions after the paperwork at issue in this case-once in

2009 and once in 2011- Tracy told her good friend that she still loved Chuchanis and

that she intended him to have the Policy proceeds in the event of her death.

{¶8} In March 2013 Tracy died, thus giving rise to a $100,000 payout under

the Policy. After Tracy died, both Chuchanis and Veach sent letters to Sentry claiming

entitlement to the Policy proceeds.

{¶9} In June 2013, because two different people claimed entitlement to the

proceeds, Sentry filed an interpleader action, obtained approval to deposit the funds

and deposited $102,161.36 with the Court. Stark County, Case No. 2014CA00026 4

{¶10} Chuchanis and Veach filed cross Motions for Summary Judgment. By

Judgment Entry filed February 3, 2014, the trial court granted summary judgment to

Chuchanis.

Assignment of Error

{¶11} Veach raises one assignment of error,

{¶12} “I. THE TRIAL COURT ERRED AND FAILED TO FOLLOW THE CLEAR

RULE SET FORTH BY THE OHIO SUPREME COURT IN GRANTING SUMMARY

JUDGMENT FOR THE APPELLEE.”

Standard of Review

{¶13} This matter reaches us upon a grant of summary judgment. Summary

judgment proceedings present the appellate court with the unique opportunity of

reviewing the evidence in the same manner as the trial court. Smiddy v. The Wedding

Party, Inc., 30 Ohio St.3d 35, 36, 506 N.E.2d 212(1987). As such, we must refer to

Civ.R. 56(C).

{¶14} Civ.R. 56(C) states that summary judgment shall be rendered forthwith if,

The pleadings, depositions, answers to interrogatories, written

admissions, affidavits, transcripts of evidence, and written stipulations of

fact, if any, timely filed in the action, show that there is no genuine issue

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

a matter of law.

{¶15} Summary judgment is a procedural device to terminate litigation, so it

must be awarded cautiously with any doubts resolved in favor of the nonmoving party.

Murphy v. Reynoldsburg, 65 Ohio St.3d 356, 358-359, 604 N.E.2d 138(1992). Stark County, Case No. 2014CA00026 5

{¶16} Accordingly, summary judgment is appropriate only where: (1) no genuine

issue of material fact remains to be litigated; (2) the moving party is entitled to judgment

as a matter of law; and (3) viewing the evidence most strongly in favor of the nonmoving

party, reasonable minds can come to but one conclusion and that conclusion is adverse

to the nonmoving party. Tokles & Son, Inc. v. Midwestern Indemn. Co., 65 Ohio St.3d

621, 629, 605 N.E.2d 936(1992), citing Harless v. Willis Day Warehousing Co., 54 Ohio

St.2d 64, 65-66, 375 N.E.2d 46(1978).

{¶17} In deciding whether there exists a genuine issue of fact, the evidence

must be viewed in the nonmovant's favor. Civ.R. 56(C). Even the inferences to be

drawn from the underlying facts contained in the evidentiary materials, such as affidavits

and depositions, must be construed in a light most favorable to the party opposing the

motion. Turner v. Turner, 67 Ohio St.3d 337, 341, 617 N.E.2d 1123, 1127(1993).

{¶18} Appellate review of summary judgments is de novo. Grafton v. Ohio

Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241(1996); Smiddy v. The Wedding

Party, Inc., 30 Ohio St.3d 35,506 N.E.2d 212(1987). We stand in the shoes of the trial

court and conduct an independent review of the record. As such, we must affirm the trial

court's judgment if any of the grounds raised by the movant at the trial court is found to

support it, even if the trial court failed to consider those grounds. See Dresher, supra;

Coventry Twp. v. Ecker, 101 Ohio App.3d 38, 41-42, 654 N.E.2d 1327(9th Dist. 1995).

Analysis

{¶19} Veach argues Tracy’s failure to complete and return Sentry’s change of

beneficiary form was waived because Tracy expressed her intent to remove Chuchanis

as the primary beneficiary of the Policy in a letter to Sentry Life dated October 7, 1998. Stark County, Case No. 2014CA00026 6

Further, Veach maintains that because Sentry has interpleaded and deposited the

policy proceeds in court, Tracy’s intention is determinative of the rights of the contesting

claimants to the policy proceeds, notwithstanding the absence of the written approval by

Tracy required by the provisions of Sentry’s policy.

{¶20} In 1963, the Ohio Supreme Court of Ohio had held that by filing an

interpleader action, an insurance company waives all of the insurance policy's

requirements. Rindlaub v. Traveler's Ins. Co., 175 Ohio St. 303, 194 N.E.2d 577 (1963).

{¶21} In 2012, the Supreme Court of Ohio re-affirmed its decision in Rindlaub,

articulating that the only factor to be considered in an interpleader beneficiary action is

the clear intent of the decedent. LeBlanc v. Wells Fargo Advisors, L.L.C., 134 Ohio

St.3d 250, 2012-Ohio-5458, 81 N.E.2d 839 (2012). [Hereinafter “LeBlanc”]

{¶22} LeBlanc concerned a dispute over money that Wells Fargo Advisors,

L.L.C., was holding in two IRAs for John F. Burchfield when he committed suicide on

December 16, 2009. In 2002, John designated his mother, appellant Gloria Welch, and

his stepfather, Bruce Leland, as beneficiaries, 75 percent and 25 percent respectively.

LeBlanc, ¶2. On May 5, 2007, John married appellee Cynthia Burchfield. Shortly before

the marriage, John designated Cynthia as the sole beneficiary on both accounts.

{¶23} On October 28, 2009, John sent an e-mail to his Wells Fargo advisor,

Aaron Michael, stating that he and Cynthia were getting divorced and requesting

paperwork to remove Cynthia as the beneficiary on his IRAs. Thereafter, by telephone,

John gave Michael specifics regarding a change in the beneficiary designation for the

IRAs. Michael prepared change-of-beneficiary forms that again designated Welch and

Leland as the beneficiaries, 75 percent and 25 percent respectively. In addition, John’s Stark County, Case No. 2014CA00026 7

sister, appellant Lori LeBlanc, was listed as the contingent beneficiary. Michael

predated the forms “November 2, 2009” and mailed them to John, along with a self-

addressed, stamped envelope. LeBlanc, ¶5. On November 2, 2009, Cynthia filed a

divorce complaint against John. Around the same time, John spoke with Michael and

informed him that the change-of-beneficiary forms were “already taken care of.”

Approximately six weeks later, John committed suicide. He left a note that contained a

postscript in which he expressed his love for Cynthia.

{¶24} After John’s death, Leland and LeBlanc asked Michael to look through

John’s financial documents to wind up John’s affairs. Around January 25, 2010, Michael

and one of John’s co-workers discovered the signed change-of-beneficiary forms in an

envelope among John’s papers. That same morning, Michael gave the forms to his

manager at Wells Fargo. Cynthia, LeBlanc, and Welch made conflicting demands of

Wells Fargo for the IRA proceeds. LeBlanc, ¶7 (Footnote omitted). In response, Wells

Fargo filed an action in interpleader against LeBlanc, Welch, and Cynthia, in which it

represented that it was “unable to determine the validity of the conflicting demands.”

Wells Fargo disclaimed any interest in the proceeds of John’s IRA accounts and offered

to deposit the funds with the court’s clerk or to maintain the account until the dispute

was resolved. The trial court granted summary judgment to Cynthia, the beneficiary

designated on the form in Wells Fargo’s possession at the time of John’s death.

{¶25} The Second District Court of Appeals affirmed. LeBlanc v. Wells Fargo

Advisors, L.L.C., 196 Ohio App.3d 213, 2011-Ohio-5553, 962 N.E.2d 872. In doing so, it

emphasized that John had not complied with the Wells Fargo policy, which required that

change-of-beneficiary forms be returned to the company. Id. at ¶ 12. The Second Stark County, Case No. 2014CA00026 8

District further concluded that Wells Fargo had not waived compliance with its change-

of-beneficiary procedure by filing an action in interpleader against the claimants. Id. at ¶

11.

{¶26} The Court in LeBlanc noted that in reaching that conclusion, the Second

District rejected the Ninth District Court of Appeals’ decision in Kelly v. May Assoc. Fed.

Credit Union, 9th Dist. No. 23423, 2008-Ohio-1507, 2008 WL 836014, which held that

an IRA custodian waives compliance with its change-of-beneficiary procedures when it

interpleads disputed funds.

{¶27} As is true in the case at bar, the Second District concluded that John’s

failure to return the forms to Wells Fargo before his death constituted a failure to

substantially comply with Wells Fargo’s procedure and that that failure was fatal to

Welch and LeBlanc’s claims, without regard to John’s actual intent. It affirmed summary

judgment in favor of Cynthia. LeBlanc, ¶13.

{¶28} The Ninth District came to the opposite conclusion on similar facts. In

Kelly v. May Assoc. Fed. Credit Union, 9th Dist. Summit No. 23423, 2008-Ohio-1507,

the Court acknowledged that Barbara had not complied with the May Associates’

procedures, which required that changes to beneficiaries “be made by completing and

signing an IRA beneficiary designation form.” Id. at ¶ 5. But it concluded that May

Associates waived the signature requirement when it filed the interpleader action. Id. at

¶ 13. In LeBlanc, the Supreme Court noted,

To reach that conclusion, the Kelly court applied our holdings in

cases dealing with life-insurance-policy proceeds and justified doing so

because life-insurance policies and individual retirement accounts share a Stark County, Case No. 2014CA00026 9

salient feature—they both “typically include a procedure for designating

and changing beneficiaries.” Id. The court then explained that “[i]t has long

been the rule in Ohio that those procedures are intended to protect the

insurer from duplicate liability and the insurer is free to waive them.” Id.,

citing Rindlaub v. Travelers Ins. Co., 175 Ohio St. 303, 305, 194 N.E.2d

577 (1963), and Atkinson v. Metro. Life Ins. Co., 114 Ohio St. 109, 150

N.E. 748 (1926), paragraph four of the syllabus.

Indeed, “if, in the face of conflicting claims to insurance proceeds,

the insurer interpleads those proceeds, it has waived any interest in the

resolution of the claims, including enforcement of the procedure set forth

in its policy for designating and changing beneficiaries.” Id., citing

Rindlaub and Atkinson. “In such a case, if the insured communicated to

the insurer her ‘clearly expressed intent’ to change beneficiaries, the

proceeds will be paid to the newly designated beneficiary rather than the

originally designated beneficiary * * *.” Id., citing Rindlaub at paragraph

two of the syllabus.

There was no question that Barbara had telephoned May

Associates and told a teller to change her beneficiary designation. “Based

on [the teller’s] testimony, coupled with the change of beneficiary form

completed by the teller,” the Ninth District concluded that there was no

genuine issue of fact whether Barbara had clearly expressed to May

Associates her intent to change her beneficiary. Kelly, 2008-Ohio-1507, Stark County, Case No. 2014CA00026 10

2008 WL 836014, at ¶ 27. Accordingly, it affirmed summary judgment in

favor of Janice. Id. at ¶ 32.

LeBlanc v. Wells Fargo Advisors, L.L.C., 134 Ohio St.3d 250, 2012-Ohio-5458, 81

N.E.2d 839, ¶¶24-27.

{¶29} The Supreme Court granted LeBlanc’ and Welch’s discretionary appeal

and certified a conflict between the decisions of the Ninth District Court of Appeals and

the Second District Court of Appeals concerning the effect of an individual retirement

account (“IRA”) custodian’s filing of an interpleader action against competing claimants.

{¶30} In LeBlanc, the Supreme Court agreed that the case is analogous to

cases in which an insurer brings an interpleader action asking the court to determine the

rightful beneficiary of a life-insurance policy when there is evidence of an insured's

intent to change the beneficiary coupled with substantial, but not strict, compliance with

beneficiary-change procedures contained in the policy. LeBlanc, ¶43.

{¶31} In LeBlanc, the Supreme Court of Ohio re-affirmed its earlier decision in

Rindlaub and emphasized that the only factor to be considered in an interpleader

beneficiary action is the clear intent of the decedent. Specifically, the Court stated,

We hold that when the custodian of an individual retirement

account files an interpleader action against the parties claiming to be the

beneficiaries of the account, the custodian waives its contractual change-

of-beneficiary procedures, and a person who proves that the owner of the

account clearly intended to designate him or her as the beneficiary does

not also need to prove that the owner substantially complied with the Stark County, Case No. 2014CA00026 11

change-of-beneficiary procedures in order to recover. Instead, the account

owner’s clearly expressed intent controls.

LeBlanc v. Wells Fargo Advisors, L.L.C., 134 Ohio St.3d 250, 2012-Ohio-5458, 81

N.E.2d 839, ¶1. The Court reasserted this position applies to insurance cases,

We also adopt the “clearly expressed intent” test from our

insurance cases. See Rindlaub at paragraph two of the syllabus.

Therefore, if an IRA custodian files an interpleader action, and the account

owner’s intent to change beneficiaries was clearly communicated to the

custodian, the proceeds will be paid to the newly designated beneficiary

rather than to the original beneficiary. Id. In such a case, proof of

substantial compliance with the custodian’s procedures for changing the

beneficiary is not required.

LeBlanc, ¶46.

{¶32} In the case at bar, the trial court found a genuine issue of material fact

exists concerning whether Tracy manifested a clear intent to change the named

beneficiary. The trial court then found, “Tracy received but failed to execute the forms

needed to effectuate the change in beneficiaries. Accordingly...the Court finds that

Tracy fails to meet the substantial compliance standard.”

{¶33} As set forth above, the Ohio Supreme Court has made clear that in a

change-of beneficiary case where the insurer files an interpleader action, the trial court

should apply the “[c]learly expressed intent” test. In such a case, proof of substantial

compliance for changing beneficiaries is not required. Stark County, Case No. 2014CA00026 12

{¶34} Because there is a genuine issue of fact as to the intent of Tracy, we

reverse the decision of the Stark County Court of Common Pleas that granted summary

judgment in favor of Chuchanis and remand this case to the trial court for further

proceedings in accordance with this decision.

By Gwin, J.,

Hoffman, P.J., and

Wise, J., concur