Thrivent Financial For Lutherans v. Warpness
1:16-cv-01321
E.D. Wis.Jul 10, 2017Background
- Thrivent issued a life insurance policy in 1984 to Stephan Batchelder; at his 2015 death the policy proceeds (about $184,080 plus interest) were contested among his ex-wife Signe Warpness and sons Kurt and Erik.
- Stephan named Signe (then his wife) as primary beneficiary and his children as contingent beneficiaries; he never changed the designation after the 1997 Massachusetts divorce.
- The 1997 Separation Agreement (incorporated into the Massachusetts divorce decree) required Stephan to maintain $84,000 of life insurance naming Signe as trustee for the children until the youngest child turned 23, and required $100,000 payable to Signe while alimony obligations continued.
- At Stephan’s death he resided in Florida; Erik and Kurt are Florida residents; Signe is a Colorado resident; Thrivent interpleaded the proceeds into court and sought dismissal.
- Erik argued Florida law voided the ex-spouse beneficiary designation and sought an equal split to the sons (or at least $84,000 to them); Signe and Kurt argued Massachusetts law and the Separation Agreement preserved Signe’s beneficiary status.
- The court concluded Massachusetts law governs (most significant relationship) and held the Separation Agreement exempted the beneficiary designation from automatic revocation at divorce; it also found the alimony/insurance obligation had not terminated.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the ex-spouse beneficiary designation was voided by divorce | Thrivent (stakeholder) sought clarity by interpleader; effectively no argument on beneficiary substance | Erik: Florida law revokes ex-spouse beneficiary; designation void because Stephan’s post-divorce obligations ended | Court: Massachusetts law applies; designation not revoked because Separation Agreement preserved beneficiary status; Signe sole beneficiary |
| Choice of law — which state’s law governs construction of the policy and separation agreement | Erik urged application of Florida law to void the designation | Signe and Kurt urged Massachusetts law based on origination and divorce decree | Court: Massachusetts has most significant relationship; even under Florida choice rules Massachusetts would apply |
| Whether Separation Agreement’s insurance/alimony provisions terminated pre-death (thus freeing designation) | Erik: Alimony/insurance obligations ended when Signe cashed retirement award or at age 59½, so obligation to name her lapsed | Signe/Kurt: Agreement intended longer-term protection; parties’ conduct (continued payments) shows obligation persisted | Court: Agreement language ambiguous but parties’ practical construction controls; Stephan continued payments, so obligation had not terminated |
| Entitlement to proceeds: split to children vs. all to ex-wife | Erik: At least $84,000 (then split) belonged to children; remainder likewise not payable to Signe if obligations lapsed | Signe/Kurt: Agreement preserved Signe as beneficiary; contingents only if primary predeceased or barred | Court: Signe is sole beneficiary and entitled to all proceeds (interest), Erik’s motion denied; Signe and Kurt’s motions granted |
Key Cases Cited
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment standard)
- GATX Leasing Corp. v. Nat’l Union Fire Ins. Co., 64 F.3d 1112 (choice-of-law in diversity cases)
- State Farm Mut. Auto. Ins. Co. v. Gillette, 251 Wis. 2d 561 (Wisconsin grouping-of-contacts rule for contracts)
- R. H. Stearns Co. v. Anderson, 304 Mass. 138 (weight given to parties’ practical construction of ambiguous contract provisions)
- Glenclova Inv. Co. v. Trans-Resources, Inc., 874 F. Supp. 2d 292 (statutory interpleader jurisdiction explanation)