THE ESTATE OF VA VA IRVINE, Petitioner and Appellant, v. ERIK & DEBBIE OAAS, Co-Personal Representatives of The Estate of John Winkley Irvine, Jr., Respondents & Appellees, and MICHAEL DODGE, Interested Party and Appellee, and SHODAIR CRIPPLED CHILDREN‘S HOSPITAL, Interested Party and Appellee.
No. DA 12-0603.
Supreme Court of Montana
Decided September 17, 2013.
2013 MT 271 | 372 Mont. 49 | 309 P.3d 986
Submitted on Briefs April 24, 2013.
For Appellees: Jeffrey W. Dahood; Bernard J. “Ben” Everett; Knight, Dahood, Everett & Sievers, Anaconda (Attorneys for Erik and Debbie Oaas); Robert J. Whelan, Frank J. Joseph, Butte (Attorneys for Interested Party Michael Dodge); John F. Sullivan; Kate McGrath Ellis; Hughes, Kellner, Sullivan & Alke, PLLP, Helena (Attorneys for Interested Party Shodair Crippled Children‘s Hospital).
CHIEF JUSTICE MCGRATH delivered the Opinion of the Court.
¶1 The Estate of Va Va Irvine appeals from an order of the Second Judicial District Court, Silver Bow County, that granted summary judgment to Michael Dodge. We affirm.
¶2 We restate the dispositive issues on appeal:
¶3 Issue One: Whether the District Court correctly determined that the contracts could not be reformed.
¶4 Issue Two: Whether the District Court correctly determined that proceeds from the decedent‘s investment accounts were properly paid to his estate.
PROCEDURAL AND FACTUAL BACKGROUND
¶5 John Winkley Irvine, Jr. (John) married Deana Dodge (Deana) in 1979. When they got married, Deana had a son, Michael Dodge (Dodge), from a prior marriage. John had no other children. John and Deana executed wills in 1983 that included Dodge as a beneficiary. Many years later, John executed a number of written beneficiary designations for various investment accounts that he owned.
¶6 Three of John‘s accounts are relevant to the case at bar, a Hartford Director Annuity (Hartford Account), a Pacific Life Individual Retirement Account (Pacific Life Account), and a Northwestern Energy Retirement Account (Northwestern Account). John executed the written beneficiary designations for each of the accounts between 2003 and 2006. For the Hartford Account and Pacific Life Account, John named Deana as the primary beneficiary and the “estate of the annuitant” as the contingent beneficiary. John also listed Deana as the primary beneficiary for the Northwestern Account, but he
¶7 Deana died in August of 2008. Ten months later, John died on June 30, 2009. Upon John‘s death, the proceeds from all three accounts were paid to his estate. In 2011, we affirmed the validity of John‘s 1983 will in an unpublished opinion. See In re Est. of Irvine, 2011 MT 37N, 264 P.3d 127 (Table). John‘s mother, Va Va Irvine (Va Va), has since sought a declaratory judgment that she is the sole beneficiary of all three accounts, which Dodge has opposed.1 After conducting discovery, Va Va and Dodge both filed summary judgment motions.
¶8 Va Va argued that John had intended for her to be the contingent beneficiary for all three accounts. To support her contention, Va Va offered testimony from John‘s financial planner, Steven Daniel (Daniel). In a deposition on July 13, 2011, Daniel testified that he had helped John execute beneficiary designation forms for a number of accounts, including the Hartford Account and the Pacific Life Account. According to Daniel, John had told him that he wanted the proceeds of his accounts to pass to Deana or, if Deana died before he did, to Va Va or his brother, William. Daniel claimed that John clearly told him that he did not want Dodge to receive the proceeds of the accounts.
¶9 Daniel testified that he had asked John multiple times if he had a will. According to Daniel, John told him that he did not. Because Daniel did not know about John‘s 1983 will, Daniel advised John that if he designated his estate as the contingent beneficiary and Deana died before he did, then, under the laws of intestacy, the proceeds of his accounts would pass first to Va Va and then to William. Daniel testified that he had filled out the forms for John that designated John‘s estate as his contingent beneficiary and had watched him sign them.
¶10 Va Va argued to the District Court that Daniel‘s testimony proves that John had intended to benefit his estate under the laws of intestacy, not under the terms of his 1983 will, if Deana died before him. Because John thought that Va Va would inherit the proceeds through his estate under the laws of intestacy, Va Va argued that the court should determine that she is John‘s contingent beneficiary to fulfill John‘s intent. Va Va also argued that Daniel‘s testimony established John‘s intent regarding the Northwestern Account even though Daniel had not helped John with that account and John had not designated a contingent beneficiary. Alternatively, Va Va argued that the written contracts should be reformed for mutual mistake due to Daniel‘s erroneous belief that John did not have a will when he executed the beneficiary designation forms.
¶11 The District Court held a joint hearing on Va Va‘s and Dodge‘s competing motions for summary judgment on August 29, 2012. In an order issued on October 2, 2012, the District Court concluded that Dodge was entitled to summary judgment under the contract terms and that no legal basis exists to require reformation of the contested contracts. Va Va appeals from that order.
STANDARD OF REVIEW
¶12 We review de novo a district court‘s rulings on motions for summary judgment. Parish v. Morris, 2012 MT 116, ¶ 10, 365 Mont. 171, 278 P.3d 1015. Summary judgment is appropriate only when there are no disputed issues of material fact and the moving party is entitled to judgment as a matter of law.
DISCUSSION
¶13 Issue One: Whether the District Court correctly determined that the contracts could not be reformed.
¶14 A court‘s equitable power to reform a contract is codified at
¶15 While the mutual intent of the parties is the appropriate standard by which a contract may be reformed, a donative instrument is by its nature unilateral, and its terms depend only on the intent of the donor. Laundreville v. Mero, 86 Mont. 43, 56, 281 P. 749, 752 (1929) (allowing reformation of description of real property in deed based on unilateral mistake of donor). The Restatement (Third) of Property: Wills and Other Donative Transfers allows for the reformation of donative documents to correct unilateral mistakes by the donor:
A donative document, though unambiguous, may be reformed to conform the text to the donor‘s intention if it is established by clear and convincing evidence (1) that a mistake of fact or law, whether in expression or inducement, affected specific terms of the document; and (2) what the donor‘s intention was. In determining whether these elements have been established by clear and convincing evidence, direct evidence of intention contradicting the plain meaning of the text as well as other evidence of intention may be considered.
Restatement (Third) of Property: Wills and Other Donative Transfers § 12.1 (2003). Life insurance contracts are specifically included among those donative instruments that may be reformed even after the death of the donor. Restatement (Third) of Property: Wills and Other Donative Transfers § 12.1 cmt. c. Notably, Montana has recently adopted
¶16 This Court finds the Restatement to be persuasive and consistent with Montana law. We adopt the Restatement as it pertains to donative instruments other than wills.
¶17 Nevertheless, we find that reformation is not an appropriate remedy here. First, we find that there is not clear and convincing evidence of a mistake by the donor in this case. Second, we find that although a donative instrument may, in some circumstances, be subject to reformation after the death of the donor, permitting a
¶18 The evidence in this case does not show that any of the beneficiary designations are mistaken. Although the District Court did not consider Daniel‘s testimony when it concluded that the contracts could not be reformed, the remedy of reformation is not available even if Daniel‘s testimony is considered and believed. Daniel‘s testimony would have established that John decided to name his estate as contingent beneficiary of the Hartford and Pacific Life Accounts. After consultation with Daniel in which they discussed potential beneficiaries, John decided not to specifically name Va Va as a contingent beneficiary on either account, and instead to name his estate. The contracts correctly reflect that decision, and thus there is no evidence of mistake. Whether that decision was sound is not a matter for this Court to decide. Daniel‘s testimony does not address John‘s decision not to name a contingent beneficiary on the Northwestern Account. Even with all inferences drawn in favor of Va Va, she has not presented evidence sufficient to allow a reasonable fact-finder to return a verdict in her favor under the clear and convincing standard required to support an action for reformation.
¶19 Furthermore, we find that reformation to allow a third party to alter a beneficiary designation in her favor is not appropriate. The circumstances in which this and other courts have permitted reformation of a donative instrument are markedly different from the present case. Reformation has been granted to correct mistaken property descriptions, Pullum, 58 So. 3d at 754-55; Laundreville, 86 Mont. at 48-49, 281 P. at 749; Dowding v. Dowding, 40 N.W.2d 245, 246 (Neb. 1949), or mistakes in the estate or tenancy conveyed, Yano v. Yano, 697 P.2d 1132, 1133 (Ariz. App. Div. 1 1985); Tyler v. Larson, 235 P.2d 39, 40 (Cal. App. 2d Dist. 1951); Magnuson, 689 N.W.2d at 273. Reformation is most commonly granted at the request of the donor or his or her personal representative. Pullum, 58 So. 3d at 755; Yano, 697 P.2d at 1134; Tyler, 235 P.2d at 39; Clairmont, 831 N.W.2d at 389; Generaux, 134 P.3d at 984. Reformation may also be granted at the request of the donee if the error is not discovered until after the donor‘s death. Magnuson, 689 N.W.2d at 274; Laundreville, 86 Mont. at 55, 281 P. at 752; Dowding, 40 N.W.2d at 250. In cases where the donee was permitted to reform against the heirs of the donor, the donee was already clearly named in the document. Magnuson, 689 N.W.2d at 273-74; Laundreville, 86 Mont. at 49-50, 281 P. at 749; Dowding, 40 N.W.2d at 249.
¶20 The request for reformation presented in this case is of a different nature. Va Va is not a named beneficiary seeking to correct details of the contracts. Rather, she asks to name herself as an entirely new beneficiary. This is not an appropriate use of reformation. John executed two contracts naming his estate as beneficiary, and a third in which he declined to name any beneficiary. To insert Va Va as beneficiary would be to make a substantial addition resulting in a different contract, which a court may not do. Rogers, 184 Mont. at 10, 601 P.2d at 42. The District Court did not err when it concluded that the contracts could not be reformed.
¶21 Issue Two: Whether the District Court correctly determined that proceeds from John‘s accounts were properly paid to his estate under the terms of the contracts.
¶22 Having concluded that the District Court correctly determined that the written contracts should not be reformed, we now look at the terms of the contracts to determine if the District Court correctly determined that Dodge was entitled to summary judgment. The interpretation of a written contract is a question of law. King Resources, Inc. v. Oliver, 2002 MT 301, ¶ 18, 313 Mont. 17, 59 P.3d 1172. When a contract has been reduced to writing, the intention of the parties is to be ascertained, if possible, from the writing alone.
¶23 John‘s written beneficiary designations specifically designated his estate as the contingent beneficiary. The term “estate” in this context has only one meaning and requires no further interpretation or consideration of extrinsic evidence. Because John‘s designation was clear, Daniel‘s testimony is not admissible to create an ambiguity where none exists. The District Court correctly determined that the proceeds from the Hartford and Pacific Life Accounts were properly paid to John‘s estate according to the express terms of the contracts.
¶24 As an interested party, Shodair Crippled Children‘s Hospital asserts that the District Court should have applied
¶25 Moreover,
¶26 The District Court also correctly concluded that the proceeds from the Northwestern Account should be paid to John‘s estate. For the Northwestern Account, John designated Deana as the primary beneficiary but failed to designate a contingent beneficiary. The terms of the contract provide:
If no beneficiary is named, or if no named beneficiary survives You, We may, at Our option, pay:
1) the executors or administrators of Your estate; or
2) all to Your surviving Spouse; or
3) if Your Spouse does not survive You, in equal shares to Your surviving Children; or
4) if no child survives You, in equal shares to Your surviving parents.
(Emphasis added.) Like the other accounts, the terms of the contract for the Northwestern Account are clear and unambiguous. According to the plain language of the contract, the proceeds of John‘s Northwestern Account
¶27 For the reasons stated above, the District Court‘s order that denied Va Va‘s motion for summary judgment and granted Dodge‘s motion for summary judgment is affirmed. Dodge‘s request for sanctions is denied.
JUSTICES COTTER, WHEAT, McKINNON, BAKER and RICE concur.