Court: District Court, M.D. Pennsylvania; July 31, 2017; Federal District Court
MONY Life Insurance Company initiated an interpleader action to determine the rightful recipient of an insurance policy's proceeds following the death of Steven Eckert. The defendants are Carol Snyder, the Insured's ex-wife and named beneficiary, and Pamela Eckert, the Insured's widow. Snyder became the policy's owner after a transfer by the Insured in September 2014, shortly before his death. The court is considering three motions: MONY's motion for summary judgment to resolve Eckert's counterclaims and obtain discharge upon payment of the policy proceeds; Snyder's motion for summary judgment on Eckert's crossclaims to receive the policy proceeds; and Eckert's motion for partial summary judgment asserting that the Insured had a weakened intellect and a confidential relationship with Snyder at the time of the ownership transfer. The standard for summary judgment under Federal Rule of Civil Procedure 56 requires the moving party to demonstrate no genuine dispute of material fact exists, necessitating substantial evidence beyond mere allegations for the non-moving party to survive the motion.
The background indicates that the Insured applied for a life insurance policy with MONY on July 30, 1985, naming Carol Eckert (now Snyder) as the beneficiary, and the policy was issued with a face amount of $127,000.
Snyder and the Insured divorced on March 9, 1989, with a property settlement agreement dated January 12, 1989, which did not address the insurance policy. The Insured did not change the beneficiary designation following the divorce. In 2011, the Insured married Eckert and wrote a will naming her as the primary beneficiary. Despite maintaining a cordial relationship with Snyder post-divorce, her involvement in the Insured’s health care and financial affairs diminished after Eckert entered the picture around 2010. Snyder managed the Insured’s financial matters intermittently until Eckert’s marriage to him.
Snyder was granted a power of attorney in 2006 and again in 2013, allowing her to act on the Insured’s behalf. She also obtained a release from his health insurance company and facilitated communication between his physician and herself. Snyder documented the Insured’s medical history, noting periods of confusion from 2002 to 2006, and had regular interactions with the Insured regarding his legal and financial matters.
On July 29, 2014, a neuropsychologist evaluated the Insured and found no clear evidence of dementia. During the evaluation, the Insured indicated that Eckert managed his bills and medical appointments, and he expressed uncertainty about carrying a portable oxygen tank for an extended period.
The Insured was reliant on others for medication management and medical consultations, exhibiting a lack of concern regarding his memory decline. Dr. McCloskey's evaluation revealed that the Insured was a poor historian concerning his medical history but articulated other information clearly. He demonstrated selective memory retention, recalling specific details about his wife's plans while struggling with his medical background. Dr. McCloskey noted the Insured's dismissive attitude toward testing, which raised doubts about the trustworthiness of the evaluation results. Eckert indicated that the Insured's memory had been progressively deteriorating over two years, evidenced by frequent forgetfulness, misplaced items, and confusion over financial matters, including oversight of a bank account with $150,000. Despite these issues, both the Insured and Eckert agreed that a prior evaluation was fair, and Eckert never sought a declaration of the Insured's incapacity.
The MONY life insurance policy was transferred to AXA Advisors before September 2014. Advisors Andrew Goetz and Patrick Wilbert managed orphan MONY policies, ensuring that policy owners were informed of necessary changes without unnecessary alterations. They operated on a commission basis, focusing on building trust with clients, which encouraged the sale of additional insurance products. Meetings with policy owners were primarily for information gathering and could require multiple sessions before an application was completed.
On August 30, 2014, Goetz contacted Snyder at her home for approximately eleven minutes, stating he was trying to reach the Insured and only had her number. Snyder provided the Insured's phone number but could not recall the details of their conversation. Goetz did not remember the call or how he obtained Snyder's number. Before September 4, 2014, Goetz called the Insured to arrange a meeting, which took place on September 4, with Goetz, the Insured, and Wilbert present; Snyder was absent. Wilbert had only met the Insured once before and was perceived as a stranger by him. Upon arrival, the Insured was using oxygen, indicating he was not a suitable candidate for life insurance products. During the meeting, the Insured expressed concern that Snyder might not receive the proceeds from the MONY policy. Wilbert proposed changing the policy's ownership to Snyder, a suggestion that originated from him, not the Insured. They also attempted to sell the Insured an annuity with Snyder as the beneficiary, but he never signed the application. After the meeting, Wilbert made a few follow-up calls to Snyder, but interest waned, leading him to cease contact. Neither Wilbert nor Goetz sold MONY life insurance products, as MONY did not offer such products. They assessed that the Insured did not have any cognitive impairments, though he exhibited physical difficulties. They did not investigate the Insured's financial or medical conditions at the meeting. Following the meeting, either Wilbert or Goetz informed Snyder that the Insured wished to transfer the MONY policy ownership to her, and Wilbert prepared the necessary ownership transfer form, which he sent to Snyder.
The Insured requested that Wilbert and Goetz communicate directly with Snyder regarding a policy change to avoid alerting Eckert about the transfer of ownership to Snyder. Despite having a fax at his used-car lot, the Insured insisted on this arrangement while Eckert was out of town. On September 5, 2014, the Insured met with Snyder and her sister, Kathy Frigm, at a restaurant to execute the change form, which the Insured signed in their presence. Snyder then transmitted the executed form to Wilbert and Goetz, who faxed it to MONY on September 9, 2014. Frigm observed no signs of mental impairment in the Insured, although he was using oxygen at the time. Neither Wilbert nor Goetz received compensation related to this change, and Wilbert believed the Insured wanted the transfer and had no reason to suggest otherwise.
Eckert was vacationing out of the country during the meetings, and she acknowledged that she was aware Snyder was the beneficiary of the MONY policy, though she had not pressed the Insured on this matter in recent years. The Insured had previously changed beneficiaries on other policies, including Prudential. On May 23, 2014, he executed a will naming Eckert as executrix and beneficiary of 50% of his estate, and also signed a power of attorney naming her as his agent. Eckert indicated that the Insured had little trust for others aside from a long-time Prudential agent.
Steve McLane, a friend of the Insured, testified that the Insured expressed his intent to transfer the policy ownership to Snyder after a meeting on September 4, 2014, citing concerns about Eckert's power of attorney. McLane noted that the Insured had occasional seizures and memory issues but remained mentally sharp and aware of his actions. The excerpt also includes details of telephone calls between Snyder and the Insured on September 2 and September 4, 2014, discussing their dinner plans.
On September 5, 2014, AXA Advisors initiated three calls to Snyder, totaling twenty-four minutes, to communicate the Insured’s intention to designate her as the policy owner and annuity beneficiary. The reason for the three calls was unclear to Snyder. Subsequent communications included a call from Snyder to Goetz, which Wilbert could not identify, and a follow-up call from AXA to Snyder regarding a change form Wilbert had faxed. On September 8, 2014, there were multiple calls from AXA to Snyder, including a twelve-minute call likely discussing the annuity, followed by Snyder sending a fax, details of which were unknown to Wilbert. Additional calls occurred on September 9, with Wilbert following up on the annuity, and Snyder sending another fax shortly after. On September 15, Snyder called Goetz, and there was another brief AXA call to Snyder that Wilbert could not specify. Further calls from AXA on September 16 included a three-minute conversation before AXA faxed a document, which Wilbert believed was related to the annuity application. The communication continued with follow-up calls on September 25 and 26, likely regarding the annuity, and another call on September 29, regarding which Wilbert had no specific information.
On September 29, 2014, a phone call was made from Goetz’s cell phone to Snyder’s home, which Wilbert was unaware of. The following day, a call from AXA Advisors to Snyder’s home likely involved Wilbert following up on an annuity. On November 5, 2014, Snyder's cell phone called Goetz, who returned the call, with Wilbert again not knowing the content of the conversation. Between August and September 2014, nine calls occurred between Snyder’s and McLane’s phones, with an additional ten calls in November 2014; some of these calls involved Eckert and the Insured, though McLane was uncertain about the exact details.
Testimonies from the Insured’s sister, Suzanne Eckert, and brother, Richard Eckert, indicated that the Insured did not have memory loss in September 2014 and was capable of understanding conversations and managing affairs, despite physical limitations. Richard noted that while the Insured struggled with reading, he remained sharp and was aware of his financial decisions, including wanting to make Snyder a beneficiary on a policy, although they agreed that ownership of the policy should be retained for potential cash needs in the future.
The Insured’s federal income tax returns from 2007 to 2015 revealed fluctuating income and notable losses, particularly in the years leading up to 2015. In September 2015, during a discussion about funds for purchasing condominiums, the Insured mentioned the MONY policy. Upon contacting MONY, Eckert discovered a change in ownership of the policy. On September 9, 2015, Eckert communicated that the Insured did not remember signing over the account to Snyder and was suffering from dementia. Subsequently, on September 17, 2015, the Insured sent a fax contesting the ownership transfer, asserting he would not have transferred it, as he was considering cashing it in after recently purchasing a home in an over-55 community.
On September 28, 2015, the Eckerts' attorney communicated with MONY, claiming that the Insured did not recall signing a change form and that the signature appeared inconsistent. Suzanne Eckert testified that upon learning of the ownership change, the Insured expressed he had signed the policy over to Snyder to ensure benefits were directed to her, preventing Eckert from using her power of attorney to alter the beneficiary. McLane indicated that the Insured requested a notification to Snyder about their intention to discuss the policy, without indicating a desire to reclaim it. Conversely, Richard Eckert reported the Insured was upset and claimed not to have changed the policy's ownership, asserting that Snyder had stolen it. The Insured passed away on October 18, 2015.
In response to MONY's motion for summary judgment, Eckert's counterclaims include breach of the duty of good faith and fair dealing and breach of fiduciary duty, with damages claimed for the death benefit, estimated at $170,000. MONY argues that these claims are not viable as the estate seeks only policy proceeds and provides no evidence of the Insured's intent to change the beneficiary. Additionally, it argues that the breach of good faith claim is unfounded as it lacks connection to specific policy provisions, and the fiduciary duty claim fails due to the absence of a fiduciary relationship with the Insured. The court concluded that MONY is entitled to summary judgment on both counterclaims, determining that the claims were improperly based on implied duties not linked to actual policy provisions and that no fiduciary breach occurred.
The counterclaim for breach of the contractual duty of good faith and fair dealing is recognized under Pennsylvania law, as established in Hanaway v. Parkesburg Group LP. This cause of action is treated as a breach of contract claim rather than an independent claim and pertains to the implied covenant that enhances the performance of existing contractual obligations without imposing new duties. Eckert’s assertion that MONY breached the implied duty, independent of any specific contractual provision, is deemed improper under Pennsylvania law, as she fails to connect her claim to MONY’s contractual performance, leading to the dismissal of her claim.
Regarding the counterclaim for breach of fiduciary duty, the court emphasizes that such claims are fact-specific and dependent on whether a party has ceded decision-making control to another, resulting in a relationship characterized by overmastering influence or justified dependence. In this case, the relationship between the Insured and Wilbert and Goetz does not indicate any such influence or trust, as they only met once and the Insured did not exhibit trust in them. Although Wilbert recommended transferring ownership of the policy, the Insured ultimately made that decision, negating any claim of ceding control. Furthermore, even if a fiduciary relationship existed, there is insufficient evidence of a breach, as the recommendation was in response to the Insured's concern about policy proceeds, suggesting no breach occurred.
Wilbert and Goetz assisted the Insured by preventing Eckert from changing the policy beneficiary to herself, as the Insured requested direct communication with Snyder to keep this change confidential. Eckert contends that her claims can proceed if she proves the Insured trusted Wilbert and Goetz to act in his best interests; however, she fails to demonstrate that they held a position of advisor or counselor, which is necessary for establishing a confidential relationship under Pennsylvania law. Consequently, summary judgment is granted in favor of MONY against Eckert on her counterclaims.
Regarding the validity of the gift of the policy, Eckert seeks partial summary judgment claiming that the Insured had a weakened intellect in September 2014 and was in a confidential relationship with Snyder. Conversely, Snyder argues that the gift was valid and that Eckert's claims do not pertain to the determination of gift validity. Both parties agree that the transfer was an inter vivos gift, but they dispute the legal analysis required for validity. Eckert asserts that if Snyder had a confidential relationship with the Insured, she must prove the Insured's intellect was not weakened; if not, the gift should be nullified. Snyder counters that weakened intellect is irrelevant to gift validity and claims Eckert misapplies legal principles from cases involving will contests, where the burden of proof shifts to the challenger once a will is shown to be valid.
In Owens, the court characterized a financial arrangement as a "poor man's will" and analyzed the estate's challenge to a bank account as a testamentary gift. Snyder contends that the current case involves an inter vivos gift, as the Insured transferred the policy during their lifetime, and asserts that challenges to such gifts do not consider weakened intellect. Instead, the donee must establish a prima facie case for the gift's validity, creating a presumption that it is valid. The burden then shifts to the challenger to provide clear, precise, and convincing evidence to rebut this presumption, particularly by demonstrating a confidential relationship between the donor and donee at the time of the gift. If such a relationship is shown, the donee must prove that the gift was made freely and voluntarily without undue influence. Snyder argues she is entitled to summary judgment based on the inter vivos gift framework, claiming that the transfer of the policy establishes a prima facie case. Eckert bears the burden of rebutting this presumption but is unable to demonstrate the existence of a confidential relationship. Even if Eckert could show such a relationship, Snyder argues she can prove the gift was free from undue influence. The determination of a confidential relationship is fact-specific and cannot be reduced to a strict set of circumstances, with Snyder asserting that no such relationship existed with the Insured at the time of the gift.
Snyder contends that Eckert's assertion of a confidential relationship is based on Snyder's management of financial affairs prior to their marriage, which Snyder argues does not constitute overmastering influence. She points out that any potential confidential relationship ended when the Insured married Eckert in 2011, prior to a financial transfer in September 2014. Snyder acknowledges that such a relationship requires either overmastering influence or a position of trust, but she incorrectly believes that merely showing the Insured's trust in her is sufficient. Citing the Basile case, she is required to demonstrate that she occupied a role as an advisor or counselor to the Insured. In support of her claim, Snyder lists various instances of her involvement in the Insured's life, including accompanying him to medical visits, writing checks, and obtaining powers of attorney. She highlights moments indicating the Insured's cognitive decline, such as memory loss as early as 2006 and a car accident in 2013 that impacted his memory. Additionally, she references her communications with the Insured regarding his medical care and the safekeeping of his confidential documents, along with personal notes expressing her commitment to him. Ultimately, Snyder's argument hinges on establishing her role as a trusted advisor, which requires more than the trust the Insured placed in her.
The Insured relied on his wife for managing his bills, medications, and medical appointments, expressing uncertainty about his need for a portable oxygen tank. He exhibited significant memory decline over two years, frequently repeating himself, forgetting names and appointments, and misplacing items, including forgetting about a bank account with $150,000. During evaluations, it was noted that he struggled to understand bills and had reduced interest in social activities. Eckert contended that the Insured did not recall transferring insurance policy ownership in September 2015 and did not recognize his signature on the transfer form. She emphasized prior phone calls made by Snyder to the Insured around the time of the transfer, suggesting the Insured was not in a competent state to make such decisions. However, Snyder argued that Eckert failed to demonstrate a confidential relationship at the time of the transfer, asserting that her involvement ended in 2010, with a power of attorney shift to Eckert in 2014. Snyder maintained that evidence only indicated a close personal relationship, not a confidential one, and cited case law to support this distinction. Ultimately, it was concluded that Eckert did not provide clear and convincing evidence of a confidential relationship at the time of the gift, as Snyder had ceased involvement in the Insured's affairs prior to that date.
Snyder provided various medical visits to the Insured from 2000 to 2010. However, communications between Snyder and the Insured, including phone calls, notes, and personal papers, do not indicate a confidential relationship; they suggest only a personal connection. The circumstances surrounding a change in ownership of the MONY policy do not demonstrate that Snyder acted in an advisory capacity. A meeting arranged by Goetz on September 4, 2014, was the first and only contact between Goetz, Wilbert, and the Insured, during which the Insured expressed concern about Snyder receiving policy proceeds, but did not mention a change of ownership. Wilbert recommended the ownership change, and Snyder merely facilitated the request from the Insured to communicate with Goetz and Wilbert regarding the change, done to keep it from Eckert.
Eckert's assertion that the Insured did not understand the change form and would not have transferred the policy for financial reasons is countered by Richard Eckert’s testimony. Although Richard noted his brother struggled with reading, he stated the Insured was sharp and understood his actions, even if he had someone else fill out the change form. Additionally, the Insured expressed intentions to leave money to Snyder. The MONY policy, issued in 1985, designated Snyder as the beneficiary from the start, and Eckert acknowledged that she was aware of this designation and had not challenged it in the years leading to the Insured's death. Ultimately, Eckert failed to provide clear evidence of a confidential relationship or that Snyder exerted undue influence over the Insured, nor was there proof of Snyder acting as an advisor.
Snyder contends that even if a confidential relationship existed between Eckert and the Insured at the time of the gift, she can demonstrate that the transfer was free from undue influence. Once a confidential relationship is established, the burden shifts to the donee to prove the gift was a voluntary and intelligent act of the donor. Snyder argues she meets this burden by noting that during a meeting on September 4, 2014, it was Wilbert who suggested the transfer after the Insured expressed concerns about Snyder receiving proceeds from the MONY policy. The Insured also communicated his intent to transfer ownership to Snyder to McLane and explained that this was to prevent Eckert, who held power of attorney, from altering the beneficiary designation. Evidence indicates that the Insured was competent to make this transfer, as there is no clear evidence contradicting his competency, and he was never adjudicated incompetent. Competency is presumed, and the challenger must provide compelling evidence of incompetence. Observations from witnesses on the day of the transfer indicate the Insured was coherent and displayed no cognitive impairment. Mere age-related mental decline does not invalidate a contract if the individual retains sufficient understanding of the transaction and if no undue influence is present.
McLane testified that the Insured expressed intent to transfer ownership of a life insurance policy to Snyder, citing a desire to prevent changes to the beneficiary designation due to Eckert's power of attorney. Suzanne Eckert corroborated that the Insured aimed to ensure Snyder received the policy benefits without interference from Eckert. The court concluded that the Insured understood the transaction and was competent to execute it. Eckert's argument that the Insured's intellect was weakened does not affect the validity of an inter vivos gift. Further, Snyder's divorce from the Insured does not invalidate her beneficiary designation under 20 Pa. Cons. Stat. Ann. § 6111.2, which addresses how life insurance proceeds are distributed when a beneficiary is divorced at the time of the individual's death. Since Snyder was named the beneficiary in 1985 and the statute was enacted in 1992, Snyder argued that the statute does not retroactively apply to her designation. Citing Parsonese v. Midland Nat’l Ins. Co., Snyder maintained that applying the statute retroactively would violate constitutional contract clauses. Eckert referenced In re Estate of Hoffman to argue the opposite, but the court found Hoffman distinguishable based on its specific facts regarding beneficiary changes.
Following Robert Hoffman’s death, the insurance company informed Hoffman that it would not pay her the policy proceeds, citing section 6111.2, which nullifies her rights to the policy. Hoffman contended that applying this statute retroactively violated her rights since the policy was purchased before the statute's effective date. The Pennsylvania Superior Court rejected this argument, clarifying that the critical date for assessing retroactivity is the date of beneficiary designation, which in Hoffman's case was December 21, 2003—after the statute's effective date. Conversely, Snyder was designated as the beneficiary before the statute came into effect, thus Hoffman’s case did not apply.
The court noted that the property settlement agreement did not revoke Snyder's beneficiary status because it lacked explicit language waiving Snyder’s interest in the policy proceeds. Sections 6111.2(b)(1) and (3) outline that spousal designations can survive divorce if the agreement explicitly states so. Absent such language, the former spouse is treated as predeceased under section 6111.2. Prior to this statute, agreements had to expressly waive interest in life insurance proceeds for a spouse to be divested of that interest. Since section 6111.2 does not apply and the property settlement agreement does not mention the policy, Eckert cannot utilize it to eliminate Snyder's interest.
The conclusion reached is that MONY will receive summary judgment against Eckert on her counterclaims, while Snyder will also receive summary judgment on Eckert's crossclaim. Eckert's motion for partial summary judgment against Snyder will be denied. MONY is ordered to pay the policy proceeds directly to Snyder rather than into the court registry. Eckert’s claims are pursued solely on behalf of the estate, and her arguments regarding the Insured's intentions regarding ownership transfer lack merit based on her own admissions.
Basile's case involves a confidential relationship, with "fiduciary relationship" and "confidential relationship" being interchangeable terms, as noted in Yenchi. Eckert references the Estate of Frisina, which considered an inter vivos gift under a testamentary framework, but Frisina is an unpublished decision and not pertinent here. Eckert incorrectly asserts there were six phone calls between August 30 and September 6, 2014. In evaluating the summary judgment motion, the evidentiary standard must align with that of a trial, meaning Eckert must establish the existence of a confidential relationship by clear and convincing evidence. Conversely, Snyder can succeed by demonstrating that the evidence is insufficiently clear and convincing. Eckert claims a confidential relationship exists because Snyder "completed the paperwork" for the transfer, but this argument is rejected, as other factors were considered in Heyser, and it was Wilbert who completed the paperwork, not Snyder, although Snyder signed the change form. Eckert also argues that the power of attorney given to Snyder in May 2013 indicates a confidential relationship; however, this was superseded by a power of attorney given to Eckert in May 2014. Snyder notes that witnesses McLane and Suzanne Eckert, beneficiaries under the Insured’s will, testified in favor of Snyder against their interests. The excerpt references the current version of section 6111.2, which has not materially changed since its original enactment.
