COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-07-351-CV
BRENDA GRAY APPELLANT
V.
MARIA GLORIA NASH APPELLEE
------------
FROM THE 17TH DISTRICT COURT OF TARRANT COUNTY
------------
OPINION
------------
This is a life insurance case. The question before the court is whether a
disputed portion of the policy’s death benefit is payable to Appellant Brenda
Gray—the insured’s ex-wife and the policy’s designated beneficiary—or to
Appellee Maria Gloria Nash (“Gloria”)—the insured’s wife at the time of his
death. We reverse the trial court’s summary judgment in favor of Gloria and
render judgment in favor of Brenda.
Background
The following facts are not in dispute. The decedent, Brent Nash, and
Brenda were divorced in 1997. The divorce decree required Brent, as
“additional child support,” to purchase a life insurance policy with a death
benefit of at least $60,000 and naming Brenda as irrevocable beneficiary as
trustee for the benefit of Brent and Brenda’s daughter, Amanda.
In July 1997, Brent purchased a life insurance policy from Pan-American
Life Insurance Co. with a death benefit of $500,000 and designated Amanda
as the beneficiary.
Brent married Gloria in 1998. In June 1998, Brent submitted a change
of beneficiary form to Pan-American. The new beneficiary designation states
that “$60,000.00 shall be paid to [Brenda]. The balance of the net proceeds,
if any, shall be paid to [Gloria], wife.” It is undisputed that Brent never again
changed the beneficiary designation thereafter.
In July 2001, the divorce court issued its “Order in Suit to Modify Parent-
Child Relationship and Motion for Enforcement,” appointing Brent to serve as
Amanda’s primary joint managing conservator. The divorce court found that
Brent was “current in all child support and medical support payment
obligations” and ordered that Brent’s child support obligation was terminated.
2
Brent died on October 14, 2006, in a motor vehicle accident. Gloria
submitted his death certificate and a claim for payment of the full $500,000
death benefit to Pan-American in December 2006. Pan-American filed an
interpleader action and deposited $60,460.27 (the proceeds plus interest) into
the trial court’s registry. Pan-American paid the rest of the death benefit to
Gloria. By agreement of the parties, the trial court dismissed Pan-American
from the suit and awarded it costs of $1,500 out of the funds in the registry.
Brenda and Gloria filed traditional cross-motions for summary judgment.
The trial court denied Brenda’s motion and granted Gloria’s and awarded Gloria
the $58,960.27 remaining in the court’s registry. Brenda filed this appeal.
Standard of Review
In a summary judgment case, the issue on appeal is whether the movant
met the summary judgment burden by establishing that no genuine issue of
material fact exists and that the movant is entitled to judgment as a matter of
law. T EX. R. C IV. P. 166a(c); Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211,
215 (Tex. 2002); City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671,
678 (Tex. 1979). We review summary judgments de novo. Valence Operating
Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); Tex. Dep't of Transp. v.
Needham, 82 S.W.3d 314, 318 (Tex.2002). When both parties move for
summary judgment and the trial court grants one motion and denies the other,
3
the reviewing court should review both parties’ summary judgment evidence
and determine all questions presented. Valence Operating Co., 164 S.W.3d at
661. The reviewing court should render the judgment that the trial court should
have rendered. Id.
Discussion
Brenda argues that she is entitled to the disputed policy proceeds because
she is the policy’s designated beneficiary. Gloria argues that she is entitled to
the proceeds because the divorce court’s July 2001 order appointing Brent as
Amanda’s primary joint managing conservator was the equivalent of a divorce
decree and terminated Brenda’s rights to the policy proceeds under family code
section 9.301(a); Brenda had no insurable interest in Brent’s life; family code
section 154.015(f) imposes a constructive trust on the proceeds as excess
child support payments; and failure of consideration, unjust enrichment, and
estoppel preclude Brenda from collecting the proceeds.
1. Under the express terms of the policy, Brenda is entitled to the disputed
proceeds as the policy’s designated beneficiary.1
An insurance policy is a contract, and it is governed by the same rules of
construction applicable to all contracts. Balandran v. Safeco Ins. Co., 972
1
… Gloria does not argue otherwise; instead, she argues that other factors
preclude Brenda’s entitlement to the proceeds. Thus, we may curtail our
analysis of this threshold issue.
4
S.W.2d 738, 740–41 (Tex. 1998). The court’s primary goal is to give effect
to the written expression of the parties’ intent. Id. at 741.
In this case, the insurance contract provides as follows:
We will pay the life insurance proceeds upon proof the Insured died
prior to the Expiration Date. The proceeds will be paid to the
Beneficiary.
....
You may change any Beneficiary at any time during the Insured’s
lifetime unless otherwise provided in the previous designation. The
new designation must be made by a signed notice in satisfactory
form to our Home Office. The change will take effect on the date
the notice was signed subject to any action taken by us before
recording the change.
It is undisputed that Brenda was the designated beneficiary of $60,000 of the
policy proceeds at the time of Brent’s death. Thus, under its contract of
insurance, Pan-American was obligated to pay $60,000 to Brenda upon Brent’s
death.
The Texas Insurance Code compels the same result. Insurance code
section 1103.102, captioned “Payment to Designated Beneficiary,” mandates
that a life insurance company must pay a policy’s death benefit to the policy’s
designated beneficiary:
Except as provided by Subsection (b) or (c), if an individual obtains
a policy insuring the individual’s life, designates in writing a
beneficiary to receive the proceeds of the policy, and files the
written designation with the company, the company shall pay the
5
proceeds that become due on the death of the insured to the
designated beneficiary.
T EX . INS. C ODE . A NN. § 1103.102(a) (Vernon 2007). Subsection (b) provides
that the insurer is not required to pay the proceeds of the policy to a designated
beneficiary under subsection (a) if the company receives notice of an adverse
claim to the proceeds from a person who has a bona fide legal claim to all or
part of the proceeds. Id. § 1103.102(b).2 Thus, but for notice of Gloria’s
adverse claim to the proceeds, section 1103.102 obliged Pan-American to pay
the policy proceeds to Brenda.
We therefore hold that under the express terms of the insurance contract,
Brenda is entitled to the disputed proceeds.
2. Family code section 9.301.
Gloria argues that notwithstanding the plain language of the policy and
insurance code section 1103.102, Brenda is not entitled to the proceeds by
virtue of family code section 9.301(a). That section, captioned “Pre-Decree
Designation of Ex-Spouse as Beneficiary of Life Insurance,” provides in relevant
part as follows:
(a) If a decree of divorce or annulment is rendered after an insured
has designated the insured’s spouse as a beneficiary under a life
insurance policy in force at the time of rendition, a provision in the
2
… Subsection (c) involves private placement contracts and is not relevant
to this case. See id. § 1103.102(c).
6
policy in favor of the insured’s former spouse is not effective
unless:
(1) the decree designates the insured’s former spouse as the
beneficiary;
(2) the insured redesignates the former spouse as the
beneficiary after rendition of the decree; or
(3) the former spouse is designated to receive the proceeds
in trust for, on behalf of, or for the benefit of a child or a
dependent of either former spouse.
(b) If a designation is not effective under Subsection (a), the
proceeds of the policy are payable to the named alternative
beneficiary or, if there is not a named alternative beneficiary, to the
estate of the insured.
T EX. F AM. C ODE A NN. § 9.301 (Vernon 2006). Gloria contends that the divorce
court’s July 2001 order appointing Brent as Amanda’s primary managing
conservator was the equivalent of a divorce decree, thus triggering section
9.301 and nullifying Brent’s 1998 designation of Brenda as beneficiary, and
that the difference between “a decree of divorce or annulment” and an order
modifying the parent-child relationship is merely a matter of semantics.
When construing a statute, our goal is to ascertain and give effect to the
legislature’s intent as expressed by the plain and common meaning of the
statute’s words. T EX. G OV’T C ODE A NN. § 312.002 (Vernon 2005); F.F.P.
Operating Partners, L.P. v. Duenez, 237 S.W.3d 680, 683 (Tex. 2007); Tex.
Dep’t of Transp. v. City of Sunset Valley, 146 S.W.3d 637, 642 (Tex. 2004).
7
W e begin with the statute’s plain language because we assume that the
legislature tried to say what it meant and, thus, that its words are the surest
guide to its intent. Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996
S.W.2d 864, 865–66 (Tex. 1999). In ascertaining legislative intent, we do not
confine our review to isolated statutory words, phrases, or clauses, but we
instead examine the entire act. Meritor Auto., Inc. v. Ruan Leasing Co., 44
S.W.3d 86, 90 (Tex. 2001); Rodgers v. Comm’n for Lawyer Discipline, 151
S.W.3d 602, 614 (Tex. App.—Fort Worth 2004, pet. denied). It is a
well-settled rule of statutory construction that every word of a statute must be
presumed to have been used for a purpose. See Quick v. City of Austin, 7
S.W.3d 109, 123 (Tex. 1998); Laidlaw Waste Sys., Inc. v. City of Wilmer, 904
S.W.2d 656, 659 (Tex. 1995). Likewise, every word excluded from a statute
must also be presumed to have been excluded for a purpose. Quick, 7 S.W.3d
at 123; Laidlaw Waste Sys., Inc., 904 S.W.2d at 659.
The legislature specified that only divorce decrees and annulments nullify
beneficiary designations; we must presume that it included those instruments,
and excluded others, like orders modifying the parent-child relationship, for a
purpose. See T EX. F AM. C ODE A NN. § 9.301(a); Quick, 7 S.W.3d at 123;
Laidlaw Waste Sys., Inc., 904 S.W.2d at 659. Moreover, the legislature limited
section 9.301’s nullifying effect to designations made before the decree or
8
annulment, at a time when the insured and the designated beneficiary are still
married—a circumstance not present in this case.
Because the unambiguous language of section 9.301 limits its application
to life insurance policies issued before a trial court renders a decree of divorce
or an annulment, we hold that it does not apply in this case and does not nullify
Brent’s designation of Brenda as beneficiary of the disputed proceeds.
3. Insurable interest.
Gloria next argues that Brenda did not have an insurable interest in
Brent’s life at the time of his death. In a closely-related argument, she
contends that public policy prohibits Brenda from collecting the policy proceeds.
We recently addressed a similar question in Allen v. United of Omaha Life
Insurance Co., 236 S.W.3d 315, 322–23 (Tex. App.—Fort Worth 2007, pet.
denied). In Allen, the question was whether a limited partnership had a
continuing insurable interest in the life of its former CEO after his association
with the partnership ended. Id. at 319. We noted that under the common law,
the designated beneficiary of a life insurance policy must have an insurable
interest in the insured’s life when the policy is issued and when the insured
dies. Id. at 322 (citing Torrez v. Winn-Dixie Stores, Inc., 118 S.W.3d 817, 820
(Tex. App.—Fort Worth 2003, pet dism’d)). Two policies drive the common
law rule: A practice that encourages one to take another’s life should be
9
prohibited, and no one should be permitted to wager on the life of another. Id.
(citing Torrez, 118 S.W.3d at 820).
While the insurable-interest rule is still followed by Texas courts, the
legislature has enlarged the class of persons deemed to have an insurable
interest. Id. Under the insurance code, an individual may apply for a life
insurance policy on the individual’s own life and designate as beneficiary any
individual. T EX. INS. C ODE A NN. § 1103.054 (Vernon 2007); Allen, 236 S.W.3d
at 323. Insurance code section 1103.053 further provides that a beneficiary
of a life insurance policy who is designated in accordance with section
1103.054 has, at all times after the designation, an insurable interest in the life
of the individual who is insured under the policy. T EX. INS. C ODE A NN.
§ 1103.053; Allen, 236 S.W.3d at 323. Thus, the legislature has conferred an
insurable interest on those persons named by an insured as beneficiaries in a
policy on the insured’s own life. Allen, 236 S.W.3d at 323.
The cases cited by Gloria for the proposition that a beneficiary must have
a continuing insurable interest independent of the beneficiary designation
predate insurance code sections 1103.053 and 1103.054 and their
predecessor. See T EX. INS. C ODE A NN. §§ 1103.053, .054 (effective June 1,
2003); Act of April 30, 1953, 53rd Leg., R.S., ch. 113, § 1, 1953 Tex. Gen.
Laws 400, repealed by Act of May 22, 2001, 77 Leg., R.S., ch. 1419,
10
§ 31(a), 2001 Tex. Gen. Laws 4208; Cheeves v. Anders, 87 Tex. 287, 28
S.W. 274, 275 (Tex. 1894); McBride v. Clayton, 140 Tex. 71, 166 S.W.2d
125,128–29 (Tex. Comm’n App. 1942); Drane v. Jefferson Standard Life Ins.
Co., 139 Tex. 101, 161 S.W.2d 1057, 1059 (Tex. Comm’n App. 1942);
Whiteselle v. Nw. Mut. Life Ins. Co., 221 S.W. 575, 576 (Tex. Comm’n App.
1920), overruled in part on other grounds by Womack v. Womack, 141 Tex.
299, 172 S.W.2d 307, 308 (Tex. 1943). Gloria also cites Torrez as
fundamentally indistinguishable from this case. But in Torrez, the insured’s
employer—not the insured himself—took out a policy on the insured’s life.
Torrez, 118 S.W.3d at 819. Thus, unlike this case, Torrez did not implicate the
continuing-insurable-interest provisions of insurance code sections 1103.053
and 1103.054.
In Allen, we held that because the CEO, himself, applied for the life
insurance policy on his own life and designated the partnership as the
beneficiary, the partnership had, at the policy’s inception and at all times
thereafter, an insurable interest in the CEO’s life, even after the CEO’s
relationship with the partnership ended. Allen, 236 S.W.3d at 323. Likewise,
in this case, Brent, himself, applied for the life insurance policy on his own life
and designated Brenda as a beneficiary. Thus, we hold that Brenda had a
continuing insurable interest in Brent’s life.
11
4. Effect of termination of Brent’s child support obligation.
Gloria next argues that because the life insurance policy was security for
Brent’s child support obligation under the 1997 divorce decree, and the 2001
order modifying the parent-child relationship terminated his child support
obligation, the sole reason for designating Brenda as beneficiary was
extinguished. Gloria further argues that allowing Brenda to collect the disputed
proceeds is tantamount to an excess child support payment, which Brenda
would merely hold in constructive trust for Brent’s estate. See T EX. F AM. C ODE
A NN. § 154.015(f) (Vernon 2007) (“If money paid to the obligee for the benefit
of the child exceeds the amount of the unpaid child support obligation
remaining at the time of the obligor’s death, the obligee shall hold the excess
amount as constructive trustee for the benefit of the deceased obligor’s estate
until the obligee delivers the excess amount to the legal representative of the
deceased obligor’s estate.”).
Implicit in Gloria’s arguments are the notions that the only reason Brent
designated Brenda as beneficiary was to comply with the divorce decree—a
notion which Gloria calls an undisputed fact—and that he did not intend Brenda
to receive any portion of the policy proceeds after the 2001 modification order.
But Brenda does dispute these assertions, and the record is silent as to why
Brent (1) designated Brenda as beneficiary in her individual capacity rather than
12
“as trustee for the benefit of the child” as ordered by the divorce decree and
(2) never undesignated Brenda as beneficiary after the 2001 modification order
terminated his child support obligation. There is no evidence in the record that
Brent obtained life insurance coverage solely to comply with the divorce decree,
and the only evidence of his intent regarding the disputed proceeds is his
unconditional and unambiguous designation of Brenda as beneficiary.
Therefore, the record does not support Gloria’s argument that the policy
proceeds are solely a form of child support, excess or otherwise.
Nor do the foreign cases Gloria cites support her argument that a
beneficiary designation in favor of a former spouse is ineffective when the
insured’s child support obligation ends. In Caracansi v. Caracansi, the
Connecticut court of appeals held that a divorce court erred by ordering a father
to maintain a life insurance policy for the benefit of his children after they
reached the age of majority because the insurance policy served solely as a
means to secure payment of the father’s child support obligations. 496 A.2d
225, 227–28 (Conn. App. Ct. 1985). Likewise, in H.P.A. v. S.C.A., the
Supreme Court of Alaska held that a divorce court could not order a father to
maintain a life insurance policy for the benefit of his children past their ages of
majority. 704 P.2d 205, 211 (Alaska 1985). In Equitable Life Assurance
Society v. Flaherty, a federal district court in Alabama held that when a father
13
failed to obtain a divorce-court-ordered $10,000 life insurance policy for the
benefit of his minor child as security for child support payments, his ex-wife
was entitled to recover $10,000 for the benefit of the child from the only policy
the father had at the time of his death, even though it named his second wife
as beneficiary. 568 F. Supp. 610, 616 (D.C. Ala. 1983). In In re Marriage of
Weidner, the Iowa supreme court held that a divorce court had the power to
order a father to maintain an existing life insurance policy for the benefit of his
minor children. 338 N.W.2d 351, 360 (Iowa 1983). 3
Thus, all of the cases Gloria cites support a divorce court’s power to
order a parent to maintain life insurance for the benefit of the parent’s minor
children, and some of the cases recognize such insurance as security for the
parent’s support obligation. To this extent, they are consistent with Texas law.
See T EX. F AM. C ODE A NN. § 154.006(a) (recognizing trial court’s authority to
order that child support payments continue after obligor’s death); Miles v.
Peacock, 229 S.W.3d 384, 389 (Tex. App.—Houston [1st Dist.] 2007, no pet.)
(recognizing trial court’s authority to order parent to maintain life insurance for
benefit of minor children); Niskar v. Niskar, 136 S.W.3d 749, 759 (Tex.
3
… Gloria cites Weidner for the proposition that an order to maintain life
insurance may be invalid to the extent that the amount of insurance required
exceeds the insured’s alimony or child support obligation. The case does not
support or even discuss that proposition.
14
App.—Dallas 2004, no pet.) (same); Grayson v. Grayson, 103 S.W.3d 559,
563 (Tex. App.—San Antonio 2003, no pet.) (same). But none of the cases
hold that termination of a child support obligation during the child’s minority
overrides a life insurance policy’s beneficiary designation in favor of the
insured’s former spouse.
Finding no support for Gloria’s argument in the record or the law, we hold
that the termination of Brent’s child support obligation in 2001 does not
override his designation of Brenda, individually, as beneficiary of the disputed
proceeds or result in an excess child support payment.
5. Gloria’s remaining arguments.
Gloria—without citation to any authority—argues (1) that failure of
consideration and the doctrine of unjust enrichment preclude Brenda’s recovery
of the policy proceeds because the divorce decree was a contract between
Brent and Brenda and Brenda failed to hold up her end of the bargain by serving
as Amanda’s primary managing conservator after 2001; (2) that Brenda is
estopped from claiming the policy proceeds because she agreed in the divorce
decree that Brent was obligated to fund the life insurance policy only so long
as he was obligated to pay child support; and (3) that even if Brenda is entitled
to the disputed proceeds, Gloria is entitled to at least one-half of the value of
the policy premiums because Brent paid them with community property.
15
An appellate brief must contain appropriate citations to authorities. T EX.
R. A PP. P. 38.1(h), 38.2(a)(1). An argument may be waived if inadequately
briefed. Fredonia State Bank v. Gen. Am. Life Ins. Co. , 881 S.W.2d 279, 284
(Tex. 1994). Because Gloria cites no authority whatsoever in support of these
arguments, we hold that she has waived them.
6. Allocation of costs awarded to Pan-American.
Brenda argues that she is entitled to recover from Gloria the $1,500 in
costs the trial court awarded to Pan-American out of the disputed proceeds.
A party interpleading funds may be entitled to have his attorney’s fees
deducted from the funds. Foreman v. Graham, 693 S.W.2d 774, 778 (Tex.
App.—Fort Worth 1985, writ ref’d n.r.e.). Generally, the ultimate burden
between rival claimants should fall on the party whose unsuccessful claim
rendered the interpleader necessary. Id. (citing Monarch Tile Sales v. Frost
Nat'l Bank, 496 S.W.2d 254, 255–56 (Tex. Civ. App.—San Antonio 1973, no
writ); Givens v. Girard Life Ins. Co., 480 S.W.2d 421, 430 (Tex. Civ.
App.—Dallas 1972, writ ref’d n.r.e.) (op. on reh’g)). But in this case, Brenda
and Gloria specifically agreed in the “Joint Stipulations and Motion for Dismissal
with Prejudice Regarding [Pan-American]” that “[a]s a disinterested stakeholder,
Pan-American is entitled to recover its reasonable attorney[‘]s fees, costs, and
expenses, paid out of the interpleaded funds . . . in the amount of $1,500.00.”
16
Because Brenda agreed to pay Pan-American’s fees and costs out of the
interpleaded funds, we hold that the trial court did not err by so ordering.
Conclusion
We sustain Brenda’s sole issue. W e reverse the trial court’s judgment
and render judgment in favor of Brenda for the remaining policy proceeds on
deposit in the trial court’s registry.
ANNE GARDNER
JUSTICE
PANEL B: LIVINGSTON, HOLMAN, and GARDNER, JJ.
DELIVERED: June 19, 2008
17