367 P.3d 378
Mont.2016Background
- Roy and Pamela Volk divorced in December 2011 after a dissolution started June 25, 2010; a statutorily‑mandated restraining order (prohibiting changing beneficiaries) was in effect during the proceedings.
- The Marital Settlement Agreement (MSA) required Roy to execute a will naming his son RBV as beneficiary of his estate; life insurance was listed as an asset for Roy in the MSA but no specific beneficiary provisions for policies were included.
- While the TRO was in effect, Roy changed beneficiary designations on two New York Life term policies (Policy 799, $1.5M undisclosed; Policy 936, $1.0M disclosed) to his sister Valerie Goeser; Roy later died in April 2012 without a will.
- Because Roy had changed beneficiaries during the dissolution, Valerie received $2,306,103.13 in life‑insurance proceeds and invested them in California real property; Pamela (on behalf of RBV) sued to impose a constructive trust on the proceeds.
- The District Court granted summary judgment to Valerie, finding no unjust enrichment and concluding the TRO violation did not require voiding the changes because Roy died after the divorce was final; Montana Supreme Court reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether beneficiary changes made during the dissolution TRO are voidable and should be set aside | Roy violated the TRO; changes were invalid and must be set aside to restore the status quo for RBV | Changes were effective at death because the divorce was final when Roy died and he could lawfully change beneficiaries after dissolution | Court: Changes made while TRO was in effect are invalid; court has equitable power to set them aside and must return status quo |
| Effect of undisclosed Policy 799 (failure to list in MSA) | Non‑disclosure violated the MSA and supports awarding proceeds (or trust) for RBV | Policy had no cash value at divorce; nondisclosure did not affect marital estate valuation so no reallocation warranted | Court: Dispositive issue is TRO violation; nondisclosure does not defeat setting aside the improper change—proceeds must be treated consistent with status quo prior to change |
| Whether Valerie was unjustly enriched and constructive trust is appropriate | Valerie received a benefit caused by an improper TRO‑violation change; unjust enrichment elements met; constructive trust should be imposed for RBV | Valerie received contractually payable proceeds; she did nothing wrong and was not a party to the dissolution, so equity shouldn’t impose constructive trust | Court: All three unjust‑enrichment elements met; constructive trust on proceeds (or appropriate equitable remedy) is proper |
| Remedy and scope on remand (disgorgement, property purchased with proceeds, third‑party/co‑beneficiary claims) | Seek full recoupment to estate or trust for RBV (subject to Saraya agreement) | Argues district court has discretion to fashion relief considering Valerie’s reliance, investments, and other equities | Court: Remand to district court to fashion equitable relief (impose constructive trust or otherwise), consider co‑beneficiary claims, Saraya agreement, Valerie’s circumstances, and disgorgement practicality |
Key Cases Cited
- Briese v. Montana Public Employees Retirement Board, 285 P.3d 550 (Mont. 2012) (TRO beneficiary changes may be set aside; courts have equitable power to restore status quo when violator dies)
- Northern Cheyenne Tribe v. Roman Catholic Church, 296 P.3d 450 (Mont. 2013) (constructive trust and unjust enrichment elements; restitution measured by defendant’s gain)
- Thrivent Financial for Lutherans v. Andronescu, 300 P.3d 117 (Mont. 2013) (revocation‑upon‑divorce statute operates at time governing instrument is given effect; life‑insurance beneficiary designations treated as will substitutes)
- LeMond v. Yellowstone Dev., LLC, 336 P.3d 345 (Mont. 2014) (equitable courts may impose constructive trusts on substituted or converted assets and must shape remedies to achieve justice)