Roseann Scott v. Donna Scott
2018 COA 25
Colo. Ct. App.2018Background
- Roseann Scott and Melvin Scott divorced in 1978; their separation agreement (incorporated into the court’s order) required Melvin to maintain Roseann as beneficiary of certain life insurance policies unless Roseann remarried.
- Melvin later married Donna Scott; Roseann did not remarry. Decades after the agreement, Melvin changed the beneficiary on a Prudential life policy to Donna.
- Melvin died in 2015; Prudential paid the proceeds to Donna, who ultimately placed the funds in her attorney’s trust account after Roseann demanded the proceeds be transferred.
- Roseann sued Donna in Colorado state court alleging civil theft, conversion, and unjust enrichment/constructive trust as to the Prudential proceeds; Donna removed earlier claims tied to federal veteran policies to federal court (those were dismissed there) and the Prudential claim remained in state court.
- Donna moved to dismiss under C.R.C.P. 12(b)(5) (failure to state a claim) and 12(b)(6) (failure to join a necessary party — Melvin’s estate). The district court granted dismissal on the grounds in Donna’s motion and later awarded attorney fees and costs to Donna.
- The Colorado Court of Appeals affirmed dismissal only as to civil theft, but reversed dismissal of conversion and unjust enrichment claims, held Melvin’s estate was not a necessary party, vacated the fee award, and remanded for further proceedings on conversion and unjust enrichment/constructive-trust claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the amended complaint plausibly alleged civil theft (requiring intent to permanently deprive) | Roseann alleged Donna knowingly obtained and intended to permanently deprive her of proceeds after learning of the separation agreement | Donna lacked the specific intent to permanently deprive; she was the named beneficiary and believed she was entitled to funds | Dismissal affirmed — plaintiff failed to plausibly plead the required specific intent for civil theft |
| Whether Roseann plausibly pleaded conversion against Donna | Roseann argued she had a vested, irrevocable interest under the separation agreement and Donna exercised unauthorized dominion by retaining proceeds after demand | Donna argued Melvin (who changed the beneficiary) was the converter and Roseann had only an expectancy, not a vested right | Dismissal reversed — conversion claim plausible because separation agreement vested Roseann’s interest and Donna, holding proceeds, could be liable even if she received funds in good faith |
| Whether unjust enrichment / constructive trust claims were plausible | Roseann claimed Donna was unjustly enriched by receiving proceeds promised to Roseann and asked for a constructive trust | Donna argued any wrongdoing was Melvin’s and that plaintiff’s remedy would be enforcement of the separation agreement | Dismissal reversed — unjust enrichment and constructive trust claims plausible; factfinder must determine equity and good faith questions |
| Whether Melvin’s estate was a necessary party under C.R.C.P. 19 | Roseann contended complete relief can be afforded by proceeding against Donna because Donna possesses the proceeds | Donna argued the estate must be joined to resolve competing rights to insurance proceeds | Reversed — Melvin’s estate not a necessary party because proceeds were paid directly to Donna (not estate) and complete relief can be accorded between Roseann and Donna |
Key Cases Cited
- Great American Reserve Ins. Co. v. Maxwell, 38 Colo. App. 305, 555 P.2d 988 (Colo. App. 1976) (divorce decree requiring insurer to maintain beneficiary can convert expectancy into an irrevocable vested right)
- Itin v. Ungar, 17 P.3d 129 (Colo. 2000) (conversion requires an intentional act of dominion but not wrongful intent; good-faith recipients may still be liable)
- Glenn Arms Associates v. Century Mortgage & Investment Corp., 680 P.2d 1315 (Colo. App. 1984) (conversion occurs when dominion over property belonging to another is exercised)
- Davis v. American National Bank of Denver, 367 P.2d 325 (Colo. 1961) (a lawful possessor may become a converter by refusing a lawful owner’s demand for return)
- Employers’ Fire Insurance Co. v. Western Guaranty Fund Services, 924 P.2d 1107 (Colo. App. 1996) (recognizing conversion by possessor who refuses a rightful owner’s demand for property)