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Globe Life & Accident Insurance Co. v. Sturrock

United States District Court, W.D. Virginia, Harrisonburg Division

March 30, 2018

SHERRY STURROCK, et al., Defendants.


          Joel C. Hoppe, United States Magistrate Judge.

         In November 1994, Peggy Phillips (“Phillips”) obtained a life insurance policy from Globe Life & Accident Insurance Company (“Globe”). She maintained this policy with Globe until her death in January 2016. The dispute in this case centers around two change-of-beneficiary letters signed by Phillips on November 5, 2015, one naming her children (Defendants Ken Biggs, Malinda Biggs, Frank Biggs, and Iva Biggs-Gordon, collectively the “Biggs Defendants”) as equal beneficiaries of the policy, and the other naming her former daughter-in-law (Defendant Sherry Sturrock (“Sturrock”)) as the sole beneficiary of the policy. Despite being mailed-and ostensibly received-together, Globe processed these letters on successive days, effectively creating the dispute between Sturrock and the Biggs Defendants. Rather than resolve the conflict, Globe filed this interpleader action, ECF No. 1, and asked the Court to determine who should receive the proceeds of Phillips's only life insurance policy with Globe. After receiving no objection, the Court granted Globe's request to deposit $20, 471.78 of insurance proceeds with the Court.

         Both Sturrock and the Biggs Defendants assert their entitlement to the entire proceeds of the policy. In a written opinion, the Court previously denied Sturrock's motion for summary judgment. See Globe Life & Accident Ins. Co. v. Sturrock, No. 5:16cv28 (W.D. Va. May 22, 2017), ECF No. 32 (“Summ. J. Mem. Op.”). The Court held a bench trial on the merits on August 3, 2017. This Memorandum Opinion constitutes the Court's findings of fact and conclusions of law, pursuant to Rule 52(a) of the Federal Rules of Civil Procedure. For the following reasons, the Court finds that Sturrock is entitled to $2, 500 of the policy proceeds and the four Biggs Defendants are entitled to divide equally the remaining proceeds of approximately $17, 971.78, with interest.

         I. Background

         A. Policy Documents and Related Writings

         Globe issued a twenty-year life insurance policy worth $10, 000, with the identification number 00-B641002, to Phillips on November 7, 1994, and Phillips named Frank Biggs (“Frank”) as the designated beneficiary. Globe Ex. 2, at 1-10, ECF No. 1-2; see also Ex. B14, ECF No. 59-3.[1] The policy gave Phillips the option to change the beneficiary of her policy by filing “a satisfactory written request with” Globe. Globe Ex. 2, at 4. On February 7, 1997, in response to Phillips's request to increase her coverage from $15, 000 to $20, 000, Globe issued a term life insurance rider in the amount of $5, 000.[2] Id. at 11-17.

         The first recorded change of beneficiary occurred on August 25, 2008, when Phillips named Ken Biggs (“Ken”) as the primary beneficiary of her policy and Malinda Biggs (“Malinda”) as the contingent beneficiary. Ex. B14-B. Next, on September 4, 2013, Globe issued a confirmation notice to Phillips that it had changed the beneficiary on her policy to Lisa Cashin (“Lisa”), Ex. B14-C, who was Frank's girlfriend at the time and is now his wife.

         On November 8, 2014, Phillips renewed her policy, which Globe assigned a different identification number (00-6R94321). Globe Ex. 5, ECF No. 1-5. Despite the new identification number, the policy was in all respects the same as the original policy in that it was a twenty-year policy worth $20, 000. See id.; see also Ex. S1, ECF No. 59-1; Ex. B14-E. Phillips named Sturrock as the primary beneficiary when she made this renewal. Ex. S4; Ex. B11; see also Globe Ex. 5, at 12. On February 17, 2015, Globe issued a confirmation notice to Phillips that it had changed the beneficiary on her policy, now with the identification number 00-6R94321, to Iva Biggs-Gordon (“Iva”). Ex. B14-F.

         On November 5, 2015, Phillips signed two change-of-beneficiary letters, one requesting that Globe change the beneficiaries on policy number 00-B641002 to the Biggs Defendants equally, Ex. S2; Ex. B2, at 1, and the other requesting that Globe change the beneficiary on policy number 00-6R94321 to Sherry Sturrock, Ex. S3; Ex. B2, at 2. Despite these letters being mailed together, Globe issued change-of-beneficiary notices on successive days-November 17 and November 18, 2015; the first notice reflected that the beneficiaries on policy number 00-6R94321 had been changed to the Biggs Defendants, Ex. B14-G, and the second notice reflected that the beneficiary on policy number 00-6R94321 had been changed to Sturrock, Ex. S4; Ex. B14-H. Phillips did not make any further changes to her policy before she died on January 8, 2016. Summ. J. Mem. Op. 3.

         B. Summary of Bench Trial & Competing Evidence

         1. Sturrock's Evidence & Witness Testimony

         Sturrock called five witnesses as part of her case in chief. First, Robert Workman (“Robert”), Sturrock's brother, testified that Phillips had lived with Iva and Brian Gordon (“Brian”) and that he retrieved Phillips's belongings on November 8, 2015, after Iva and Brian had placed them outside of their house. See Transcript (“Tr.”) 6-7. Robert noted that he did not retrieve everything, however, and that he left behind the furniture that Phillips did not want. Id. at 8. Photographs of Phillips's belongings before they were retrieved show furniture, boxes, and an oxygen tank outside of Iva and Brian's house. See Exs. S7, S8.

         Barbara Workman (“Barbara”), Sturrock's mother, testified that she had known Phillips for approximately thirty-five years and that Phillips and Sturrock were very close. Tr. 9-10. Barbara explained that during a conversation she had with Phillips around Thanksgiving 2015, Phillips stated that she was leaving the proceeds of her life insurance policy to Sturrock because Sturrock had been there for her whereas her family had not and she felt her family did not deserve the money. Id. at 10-11. Per Barbara, Phillips conveyed that she knew her first policy had expired, and she expressed her intention to leave the entirety of the second and only remaining policy to Sturrock. Id. at 11. Barbara had seen Phillips express frustration and anger with Iva and she complained of being left alone at times when she lived with Frank and Lisa, but Barbara had not heard Phillips say anything negative about Ken or Malinda. Id. at 11, 13.

         Sandra Stone (“Stone”) testified that she had known Phillips for about twenty years, Ken for about ten years, and Frank for about thirty years. Id. at 14. Stone asserted that she visited with Phillips after Iva had moved Phillips's belongings out of her house and onto the street. Stone expressed outrage at what Iva had done to Phillips, and Phillips responded that it was all right because “she'd get the last laugh.” Id. at 14-15. Stone claimed that she “knew exactly what [Phillips] was referring to, ” id., specifically, that Phillips meant that she planned to leave the insurance policy to Sturrock because Phillips had said that the money would go to the person who was willing to take care of her, id. at 20. On cross examination, Stone admitted that she did not speak to Phillips often and had never visited Phillips when she lived with Frank or when she lived with Iva and Brian. Id. at 16. Stone further explained that Phillips expressed displeasure with Iva, but not with any of her other children. Id. at 16-17.

         Kari Forrest (“Forrest”) then testified that she spoke with Phillips nearly every day while Phillips lived with Sturrock. Id. at 21. According to Forrest, on an unspecified day late in the fall of 2015 after Phillips had left the hospital, id. at 26-27, she was visibly upset because of difficulties with her previous living situation with Iva, and she noted how she felt much better living with Sturrock, id. at 21-22. Forrest said that Phillips told her it was for this reason that Sturrock would get the money from the policy, although Sturrock was to give Malinda $2, 500 of the proceeds. Id. at 22. Forrest stated that Phillips explained that there were two $20, 000 policies, but that she had stopped paying on the policy assigned to her children, so that policy was no longer valid. Id. Forrest testified that Phillips told her that the Biggs Defendants “shouldn't get [anything] from me.” Id. at 23. Forrest went on to explain that Phillips brought up her insurance policy frequently because it was “all [Phillips] had” in addition to her belongings, and Forrest noted that she heard Phillips discuss the policy on at least three or four occasions. Id. In sum, Forrest asserted that Phillips wanted to leave the policy to Sturrock because she felt betrayed by her children and that Sturrock was the only one who stepped up during the last few months of Phillips's life. Id. at 24. Forrest said she mostly heard Phillips express discontent with Iva and, on one or two occasions, Frank and his wife Lisa, but she never heard Phillips say anything negative about Ken or Malinda. Id.

         Last, Sturrock herself testified. She said that she had known Phillips for many years and had remained friends with Phillips even after divorcing Frank in January 2004. Id. at 28-29. Phillips had lived with her son Frank at various times, and he was her favorite child. Id. at 40-41. Sturrock noted that she helped Phillips with her bank account when her family had not. Id. at 29- 30. Sturrock stayed in touch with Phillips even when Phillips had moved out of state, and she frequently heard about Phillips changing the beneficiary on the policy. Id. at 30. When Phillips changed the beneficiary to Frank's wife, Lisa, Sturrock acknowledged that Phillips intended for the proceeds to be divided equally between the Biggs Defendants. Id. at 30-31. Sturrock testified that when Phillips renewed her policy in November 2014, she listed Sturrock as the beneficiary because Sturrock had always been there for her, but she changed the beneficiary to Iva in February 2015 with the understanding that Iva would help with Phillips's medication and medical paperwork. Id. at 31-32. Sturrock did not know what Phillips intended for Iva to do with the proceeds. See Id. at 32.

         As to the change-of-beneficiary letters, Sturrock claimed that she prepared the letters, but that Phillips had dictated them. Id. at 33. That same day Phillips also executed a “Do Not Resuscitate” letter granting Ken decision-making authority in the event her medical situation deteriorated. Ex. S5. Sturrock admitted that Phillips discussed her intentions regarding the policy with both Sturrock and Ken present, but that once Ken left, she told Sturrock that she was not going to leave the policy proceeds to her children. Tr. 33. This was in contrast to the discussion when Ken was present, during which Phillips agreed to list all her children on the policy, rather than just Ken, because Ken said he would prefer to have everyone named as beneficiaries. Id. at 36. Per Sturrock, Phillips intentionally put the original policy number (00-B641002) on the letter requesting that her children be named beneficiaries “knowing full well” that this policy had expired and was no longer valid; conversely, Phillips intentionally put the new policy number (00-6R94321) on the letter requesting that Sturrock be named the beneficiary to effectuate her desire for Sturrock to receive the policy proceeds. Id. at 33. To that end, Sturrock testified that “[u]nfortunately, she thought she would make things difficult on them and, you know, easy on me but that's not what happened.” Id.

         Sturrock also noted that Phillips did not think Malinda should be completely left out, so she prepared a letter, dated December 3, 2015, for Phillips to sign confirming that she would give Malinda $2, 500 out of the money she received from Phillips. Id. at 34-35; see Ex. S11. Sturrock explained that the letter was intended to be vague in that it did not mention the money was to come from an insurance policy because Phillips did not want her children to know of her true intentions should the letter ever fall into the wrong hands.[3] Tr. 35. Phillips later asked Sturrock to throw away the letter, but Sturrock refused because she wanted to abide by Phillips's earlier wishes. Id.

         2. The Biggs Defendants' Evidence & Witness Testimony

         The Biggs Defendants called seven witnesses as part of their case in chief. First, Brian, Iva's husband, testified that Phillips lived with him and Iva, during which time he heard Phillips mention two different insurance policies on a few occasions. Tr. 43. Brian explained that it was his understanding, based on what he heard from Phillips, that both policies-a $20, 000 policy and a $5, 000 policy-were to be divided equally among her four children. Id. at 43-44. Brian also noted how Phillips would neglect to use her oxygen and would get in arguments with Iva when pressed about her smoking habits. Id. at 45.

         Lisa, Frank's current wife, testified that she had known Phillips for approximately ten years and that Phillips lived with her and Frank most recently from June 2013 to August 2014. Id. at 47-48. Lisa confirmed that Phillips listed her as the beneficiary on her life insurance policy for tax purposes, but that the money was still supposed to go to Phillips's children. Id. at 48-49.

         Jessica Funk (“Jessica”), Frank and Sturrock's daughter, testified that she was close with her grandmother. Id. at 52. Jessica indicated that Phillips was generally happy, but she would “express[] certain feelings” whenever she was getting ready to move to the next house. Id. Malinda asked Jessica about a visit she had with Phillips at the hospital on January 4, 2016, shortly before Phillips died. Id. at 53-54. Jessica testified that her sister Kayla and Sturrock were also visiting Phillips. Id. Jessica said Phillips discussed her intention to split her $20, 000 policy between the four children. Id. Jessica memorialized her recollection of this conversation in an email dated May 17, 2016. Ex. B5. Additionally, Jessica explained that Phillips wanted Sturrock to write a letter to Iva expressing Phillips's belief that Iva did not deserve the money, but that she was going to give it to Iva anyway so as to keep her word. Tr. 54. Jessica understood Phillips to be referring to money from the $20, 000 policy. Id. at 55. Jessica also testified that her father, Frank, had expressed his intent to give his portion of the policy proceeds to her and her sister. Id. at 60-61.

         Frank testified that he had always maintained he did not want any money from his mother's life insurance policy, and he confirmed that if he were to receive it, he would give his share to his daughters. Id. at 61-62. Frank stated that Phillips lived with him multiple times, beginning when he was still married to Sturrock. Id. at 62. Frank explained that his mother had Chronic Obstructive Pulmonary Disease and was “very difficult” to live with. Id. at 63. He attributed some of this difficulty to Phillips's resistance to his attempts to limit her smoking. Id. at 63-64. He said that Phillips had lived with her sister in Florida on and off, and when they had problems, Phillips would move to back to Frank's house and later Iva's. Frank also noted that after Phillips moved out of his house and in with Iva and Brian, he did not talk to her for almost a year, and indeed did not speak with her again until the day she passed. Id. at 63, 67-68. As to the policy, Frank noted again that he was not in favor of Phillips having obtained it, but she was determined to leave something for her children because their father had not. Id. at 67.

         Iva testified that Phillips would bring up the insurance policy every time the two talked on the phone and that these conversations continued after Phillips moved in with Iva and Brian. Id. at 71. Iva stated that Phillips did not react well to Iva's attempts to get her to wear her oxygen and limit her smoking. Id. at 72-73. Iva also explained that initially, Phillips spoke of having only one policy and was concerned when it had been cancelled. Id. at 71. Phillips told Iva she would take care of it, which she did by renewing it, and within a few months, relayed to Iva that she had added an additional $5, 000 policy. Id. Iva stated that Phillips added the $5, 000 policy for her and Malinda so the girls could have something extra. Id. at 71-72. On cross examination, Iva admitted she did not have any proof that the $5, 000 policy ever existed, just Phillips's word. Id. at 76. As for the larger policy, Iva asserted that Phillips's intentions had remained the same for more than twenty years, specifically that the four children were to receive the proceeds and split them evenly. Id. at 72. Iva testified that this was still Phillips's intention when she listed Iva as the sole primary beneficiary in February 2015. Id. at 75.

         Ken testified that he talked with Phillips about her policy, which she had obtained because her first husband passed away with nothing to leave to the children, and Phillips did not think that was “right.” Id. at 76-77. Ken described his visit with Phillips at the hospital in November 2015, specifically that Phillips mentioned having two policies and that this was the first time he had heard of a second policy. Id. at 77. Ken explained that according to Phillips, the larger policy was to be split between the four children and the smaller policy, worth $5, 000, was to be put in Sturrock's name and be split between Sturrock and Malinda. Id. at 77-78; see also Id. at 80.

         Last, Malinda testified. Malinda said that Phillips purchased the policy after her first husband died so as to have something to leave her children and that she was very proud of this policy. Id. at 82. Malinda asserted that no matter who was listed as the primary beneficiary, Phillips intended for this policy to be split among her children. Id. at 86. Malinda said it was early 2015 when she first heard of the second policy, worth $5, 000 to be split between Malinda and Iva, id. at 83, although she admitted that she did not have any proof of this policy, id. at 89. Malinda explained that she thought Phillips was confused about the nature of her policy because she had told Malinda something was wrong with the policy sometime after November 7, 2014, when the policy was renewed with a different identification number. Id. at 85-86. Malinda offered to help, but Phillips declined and the next time they talked conveyed that the problem had been resolved. Id. at 86. Malinda stated that she spoke with Sturrock after Ken had visited the hospital on November 5 and learned from Sturrock that she had written the letters regarding Phillips's desired changes to the beneficiaries of her policies. Id. at 84. Malinda also spoke with Phillips the night of the hospital visit, at which time Phillips told Malinda that she had asked Sturrock to write a letter promising to give Malinda half of the $5, 000 policy. Id. at 87; see also Ex. B3.

         Malinda further testified that the family remained close with Sturrock even after she and Frank divorced and that there was “no doubt that [Sturrock] was close and a part of our family.” Tr. 83. Indeed, Malinda said that Phillips told her in November 2015 that she wanted the smaller policy to be split between Malinda and Sturrock, rather than Malinda and Iva. Id. at 87-88. Malinda explained that she spoke with Sturrock often as Phillips's health declined because she lived in Texas and Sturrock kept her apprised of her mother's condition. Id. at 84. Malinda described that during these conversations, Sturrock relayed that Globe had informed her that Phillips had two policies. Id. at 84-85. Malinda testified that Sturrock had told her that $63 would be coming out of Phillips's bank account to cover the second policy. Id. at 85; see also Ex. B4, at 8, ECF No. 59-3. Per Malinda, Sturrock maintained that there were two policies until around May 2016. Tr. 85. Malinda also explained that her mother would get tired of staying in one place, would suddenly complain about being treated poorly, and then would move, which resulted in her moving around a lot. Id. at 83. Likewise, Malinda stated that Phillips began expressing discontent while living at Sturrock's ...

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