Wesley McDivitt v. Sue McDivitt
42 N.E.3d 115
| Ind. Ct. App. | 2015Background
- Wesley and Sue McDivitt signed a prenuptial agreement before marrying that designated Wesley’s 401(k), IRA, and other retirement benefits as his separate property and waived Sue’s spousal rights to those benefits.
- Prior to marriage Wesley worked for Indianapolis Life; upon retirement in 2000 he executed a severance agreement electing a “joint with 100% to survivor” annuity and began receiving monthly checks payable to him alone.
- In 2014 Wesley filed for dissolution; the parties agreed on all issues except distribution of Wesley’s pension payments received during his lifetime.
- The trial court concluded the severance agreement made Sue a co-annuitant (sharing payments during Wesley’s life) despite her being listed as beneficiary, and ordered Wesley to pay Sue one-half of future monthly annuity payments.
- The pension administrator’s contemporaneous letter stated Sue was a named beneficiary entitled to survivor benefits after Wesley’s death, not an owner or co-annuitant; checks had historically been payable to Wesley alone.
- The Court of Appeals reversed, holding the severance agreement (and extrinsic evidence) did not show Wesley transferred an ownership interest in payments made during his life, so the payments remained his separate property under the prenup.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether election of a joint-and-survivor annuity made Sue a co-annuitant with ownership of payments during Wesley’s life | Sue: The joint-and-survivor election (regardless of label) created a life ownership interest; listing her as beneficiary was a mistake | Wesley: The agreement lists Sue as beneficiary, checks were payable to him alone, and the agreement does not make beneficiary a co-annuitant | Held: No — the contract and extrinsic evidence show Sue is beneficiary (survivor after death), not co-annuitant sharing payments during Wesley’s life |
| Whether the trial court properly interpreted the severance agreement to give Sue an ownership interest that overrides the prenup | Sue: Perdue controls — a spouse can acquire a vested interest under a beneficiary designation, which the prenup allows | Wesley: Perdue is inapplicable because here the agreement does not show a vested right to payments during Wesley’s life; any vested interest would be post-death only | Held: Perdue inapplicable — even if beneficiary designation were irrevocable, it would only secure post-death survivor benefits, not present ownership of payments |
| Whether extrinsic evidence (checks payable to Wesley; administrator letter) may be used to interpret the agreement | Sue: The form’s labeling error should be corrected based on other contract language | Wesley: Extrinsic evidence shows parties’ reasonable expectations that payments during life remain Wesley’s | Held: Extrinsic evidence supports Wesley — checks and administrator statement refute co-annuitant status |
| Whether the prenup’s waiver of spousal retirement rights was overridden by the severance agreement | Sue: Election of joint annuity effectively transferred an interest to her, consistent with prenup permitting voluntary transfers | Wesley: No voluntary transfer of ownership occurred; prenup therefore keeps payments as his separate property | Held: The severance agreement did not effect a transfer of ownership during Wesley’s life; prenup controls and payments remain Wesley’s separate property |
Key Cases Cited
- Magee v. Garry-Magee, 833 N.E.2d 1083 (Ind. Ct. App. 2005) (standard of review and contract-interpretation principles)
- Metro Holdings One, LLC v. Flynn Creek Partner, LLC, 25 N.E.3d 141 (Ind. Ct. App. 2014) (contract interpretation—read plain language to determine parties’ intent)
- Four Seasons Mfg., Inc. v. 1001 Coliseum, LLC, 870 N.E.2d 494 (Ind. Ct. App. 2007) (definition and treatment of ambiguous contract terms)
- Bicknell Minerals, Inc. v. Tilly, 570 N.E.2d 1307 (Ind. Ct. App. 1991) (use of extrinsic evidence when contract ambiguous)
- Perdue v. American Express Travel Related Servs. Co., Inc., 609 N.E.2d 1141 (Ind. Ct. App. 1993) (life-insurance beneficiary can acquire a vested right where policy reserves no power of disposition)
- Duran v. Duran, 585 N.E.2d 1373 (Ind. Ct. App. 1992) (federal ERISA requirement that surviving spouse consent in writing to non–joint-and-survivor form)