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Thrivent Financial for Lutherans v. Warpness

United States District Court, E.D. Wisconsin

July 10, 2017



          William C. Griesbach, Chief Judge United States District Court.

         Plaintiff/Stakeholder Thrivent Financial for Lutherans (“Thrivent”) filed this interpleader action naming decedent Stephan Batchelder's ex-wife and two sons as defendants due to their conflicting claims for the proceeds due under a life insurance policy issued by Thrivent. Thrivent is a fraternal benefit society organized under the laws of the State of Wisconsin with its principal place of business in Appleton, Wisconsin. The decedent's ex-wife, Signe Warpness, is a citizen of the State of Colorado. His sons, Kurt and Erik Batchelder, are citizens of the State of Florida, and the proceeds of the policy exceed $500. Thus, this court has jurisdiction under 28 U.S.C. § 1335. See Glenclova Inv. Co. v. Trans-Resources, Inc., 874 F.Supp.2d 292, 301 (S.D. N.Y. 2012) (“Pursuant to this section, the district court has original jurisdiction over statutory interpleader cases where ‘[t]wo or more adverse claimants, of diverse citizenship . . . are claiming or may claim to be entitled' to money or property worth at least $500. Only minimal diversity-that is, diversity of citizenship between at least two claimants-is necessary.”).

         Presently before the Court are the defendants' cross-motions for summary judgment on their claims against the Policy. Specifically, both Signe Warpness and Kurt Batchelder seek summary judgment rulings that Warpness is the sole beneficiary of the Policy, while Erik Batchelder seeks a ruling that the proceeds are to be divided evenly between himself and his brother. To avoid confusion, the Court will refer to the parties by their first names. For the reasons stated herein, Erik's motion is denied and Signe's and Kurt's motions for summary judgment are granted.


         On May 8, 1984, Thrivent issued the life insurance policy that is the subject of this action to Stephan Batchelder. Stephan died on June 11, 2015, in Suzhou, China. Compl., ECF No. 1, at ¶ 14. At the time of Stephan's death, the policy had a face value of $184, 000. Id. at ¶ 8. The total death benefit under the policy is $184, 080.56, plus accrued interest in the amount of $10, 568.46 as of March 24, 2017, all of which, less the amount awarded to Thrivent for its attorney's fees and costs, has been deposited with the Court. Stephan originally designated his then wife, Signe Batchelder (now Signe Warpness), as the primary beneficiary, and designated the “children of the Insured” as contingent beneficiaries. Kurt and Erik Batchelder are Stephan and Signe's only children. Erik Batchelder's Stmt. of Facts (“SOF”), ECF No. 23, at ¶ 4. Stephan never changed his beneficiary designations after they were first recorded at the issuance of the Policy. Id. at ¶ 8.

         Stephan and Signe divorced in 1997 while living in Massachusetts. At that time, they entered into a Separation Agreement that was incorporated into the final judgment of divorce. Separation Agreement, ECF No. 25, at 8. The Separation Agreement contained two provisions bearing on Stephan's obligation to maintain life insurance. First, the Separation Agreement required Stephan to maintain $84, 000 of insurance on his life naming the wife, Signe, as trustee for the benefit of the children. The provision stated that the wife as trustee shall be the sole beneficiary until the youngest child attains the age of 23. Id. at 9-10.

         A second provision of the Separation Agreement required Stephan to maintain $100, 000 of life insurance payable to Signe as long as he was under any obligation to pay her alimony. Stephan was required to pay Signe alimony in the amount $500 twice a month, which obligation would terminate upon Signe's death or remarriage, or upon her attaining the age of eligibility for Stephan's Solutia SIP (Saving Investment Plan) and pension plan, portions of which Signe was awarded under the Separation Agreement. Id. at 8.

         At the time of his death, Stephan was a resident of Florida. Florida law statutorily voids a decedent's beneficiary designation of a former spouse for life insurance policies and other instruments subject to certain prescribed exceptions. Fla. Stat. § 732.703(2). Also at the time of Stephan's death, both Erik and Kurt were in their mid-thirties, and although Signe had cashed out the shares of Stephan's retirement plans that she received shortly after the divorce, Stephan was still paying her the alimony called for by the agreement. In addition, Stephan had remarried after the divorce, though his second wife has since waived any claim she may have had in the proceeds. Faced with the conflicting claims, Thrivent commenced this interpleader action and moved to deposit the proceeds with the court, less its fees and costs, and for dismissal of any claims against it. Having granted Thrivent's motion, the Court will now proceed to the merits of the case.


         Summary judgment is appropriate when a moving party shows “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). There is no genuine issue of material fact when the parties agree to all the facts. See Carter v. Buscher, 973 F.2d 1328, 1331 (7th Cir. 1992). Proposed findings of fact that go uncontroverted will be admitted and treated as agreed upon by all parties for the purpose of deciding summary judgment. See Civil L. R. 56(b)(4) (“The Court will deem unconvtroverted statements of material fact admitted solely for the purpose of deciding summary judgment.”); see also Fed. R. Civ. P. 56(e)(3).


         Erik claims that, as contingent beneficiaries of the Policy, the proceeds should be divided equally between himself and his brother. Conversely, Kurt and Signe contend that, as the Policy's sole beneficiary, Signe is entitled to the all of its proceeds.

         On its face, the Policy provides that the proceeds should be paid to Signe. She is listed as the sole beneficiary, with Erik and Kurt listed as contingent beneficiaries. Contingent beneficiaries are not entitled to the proceeds unless the primary beneficiary has predeceased the insured or is barred from receiving the proceeds for some other reason. Erik argues that Stephan's designation of Signe as primary beneficiary is void under Florida law by virtue of her divorce from Stephan. Pointing to the Separation Agreement, Erik contends that he and Kurt were the intended beneficiaries of at least $84, 000 of the proceeds, and since they are both over 23 years of age, this amount should be paid to them directly. As for the balance of the proceeds, Erik argues that Stephan's obligation to pay Signe alimony under the Separation Agreement terminated when Signe cashed out her interest in his SIP and pension plans shortly after the divorce, or at the latest, when she turned 59½, the age at which benefits were payable under Stephan's SIP. Since Signe was 62 years of age at the time of Stephan's death, Erik argues Stephan was no longer obligated to pay alimony under the Separation Agreement, and thus the requirement that he maintain $100, 000 of life insurance payable to Signe had lapsed. Given the fact that Stephan was no longer required to name Signe as beneficiary of the policy under the Separation Agreement, Erik argues that Florida law compels the conclusion that the designation of Signe as beneficiary is void and must be disregarded. Signe argues, on the other hand, that Massachusetts law applies. ECF No. 31 at 3.

         “A federal court sitting in diversity looks to the conflict-of-laws rules in the state jurisdiction in which it sits in order to choose the substantive law applicable to the case.” GATX Leasing Corp. v. Nat'l Union Fire Ins. Co., 64 F.3d 1112, 1114 (7th Cir. 1995). Wisconsin's choice of law statute governing transfers at death dictates that the state law selected by the transferor controls the meaning and effect of an insurance policy. Wis.Stat. § 854.10. Here, however, there is no evidence that Stephan, the transferor, selected the state law that was to control his beneficiary designation. I therefore turn to Wisconsin's general rule governing choice of law in contract cases. “In contractual disputes, Wisconsin courts apply the ‘grouping of contacts' rule, that is, that contract rights must be ‘determined by the law of the [jurisdiction] with which the contract has its most significant ...

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