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State Farm Life and Accident Assurance Co. v. Goecks

United States District Court, W.D. Wisconsin

April 28, 2016

STATE FARM LIFE AND ACCIDENT ASSURANCE COMPANY, Plaintiff,
v.
JEFFREY S. GOECKS and DONNA GOECKS, Defendants. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Plaintiff,
v.
JEFFREY S. GOECKS and DONNA GOECKS, Defendants.

OPINION AND ORDER

WILLIAM M. CONLEY District Judge

Plaintiffs State Farm Life and Accident Assurance Company and Prudential Insurance Company of America initiated these interpleader actions under 28 U.S.C. § 1335 to resolve a dispute over the proceeds from three of their policies held by and insuring the life of Gary Goecks. As principal claimants, the insurance companies named as defendants Donna Goecks, Gary’s surviving wife, and Jeffrey Goecks, Gary’s son from his former wife.[1] At the time of Gary’s death, Donna was a named beneficiary under each of the policies, but Jeffrey claims he is entitled to all of the policy proceeds based on a provision in the judgment entered in connection with Gary’s divorce from his first wife. After the suit was filed, Jeffrey also filed a cross-claim against Donna for proceeds from a fourth life insurance policy, issued by Met Life.[2] Both sides have filed motions for summary judgment, which are ready for review.

UNDISPUTED FACTS[3]

Gary and Sharon Goecks divorced on October 15, 1998. At the time of their divorce, Gary had multiple life insurance policies, 5 of which are relevant to this case: (1) Prudential Policy Number 36066690; (2) Prudential Policy Number 77467219; (3) State Farm Policy Number 195846; (4) State Farm Policy 2786899; and (5) a Met Life policy that was part of Gary’s pension from General Motors Life and Disability Program, Group Plan Number 0122357.

The judgment of divorce was drafted by Sharon’s attorney. Paragraph 14(d) of the judgment states:

The respondent [Gary] shall be required to maintain the petitioner [Sharon] as the primary, irrevocable beneficiary on one third of the face value of all his life insurance policies in effect as of the date of the final hearing or in the amount of Seventy Five Thousand Dollars ($75, 000) of the face value of said policies, whichever sum is greater. Respondent shall provide the petitioner proof of said insurance and beneficiary designations. Petitioner shall pay the respondent the sum of Twenty Five Dollars ($25.00) per month toward the cost of said insurance. The parties further agree to designate the children as primary beneficiaries of all life insurance policies except as set forth above.

(Dkt. #29-1.)[4] The proposed “division of property” was also incorporated into the judgment of divorce, which identified all four Prudential and State Farm policies, but did not reference the Met Life policy.

In the fall of 1998, around the time of the divorce, Gary designated the couple’s two adult sons -- Jeffrey and Christopher Goecks -- as primary beneficiaries under the Prudential and one of the State Farm policies, leaving Sharon as the beneficiary of the other State Farm policy. Around that same time, in November of 1998, Gary also completed a “Designation of Beneficiaries” form for the Met Life policy, which stated that the beneficiaries would be determined in accordance with the provisions of the divorce decree, with any “excess amount” going to his sons, Jeffrey and Christopher. (Dkt. #22-1.)

On July 12, 2003, one of the sons -- Christopher Goecks -- died, and on February 7, 2004, Gary married Donna. While married to Donna, Gary changed the primary beneficiary designation on both Prudential policies to Donna, removing Jeffrey and Christopher as beneficiaries. He also changed the beneficiary designation on the Met Life policy from his sons to Donna. Finally, he designated Donna and Jeffrey as co-beneficiaries on one of the State Farm policies, with Sharon remaining the beneficiary of the other one.

After Gary died on August 18, 2014, the proceeds of one State Farm policy with benefits of $75, 000 was paid out in full to Sharon. Although both Donna and Jeffrey submitted claims to the proceeds of the Met Life policy, Met Life paid Donna the full proceeds in the amount of $60, 737.41 consistent with Gary’s designation. In a letter addressed to Sharon Goecks, dated February 12, 2015, Met Life explained that it was rejecting her (really her son Jeffrey’s) claim because the General Motors Life and Disability Program was an employee welfare plan regulated by ERISA. (Dkt. #29-6.) According to Met Life, ERISA required the plan administrator to pay the beneficiary designated by the plan participant unless there was a “qualified domestic relations order” that superseded the participant’s designation. Met Life opined that the 1998 divorce judgment was not a valid qualified domestic relations order under Seventh Circuit law because it failed to “identify the payment of insurance benefits from a specific plan.” Met Life concluded, therefore, that “the beneficiary designation on file with the plan controls pursuant to federal law and the terms of the plan.” (Id.).

Finally, both Gary’s present wife Donna and son Jeffrey made claims to his two Prudential and the other State Farm policies.[5] Prudential deposited the proceeds from its two policies in the amount of $39, 536.54 with the court. State Farm likewise deposited the proceeds of its remaining policy in the amount of $22, 003.34 with the court.

OPINION

I. The Prudential and State Farm ...


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