IN RE GAYLORD GENAW SR ESTATE
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STATE OF MICHIGAN
COURT OF APPEALS
GAYLORD GENAW, JR., Personal
Representative of the ESTATE OF GAYLORD
GENAW, SR.,
FOR PUBLICATION
October 6, 2009
9:00 a.m.
Plaintiff-Appellee,
v
No. 284214
St. Clair Probate Court
LC No. 2007-000069-CZ
CINDY GENAW,
Defendant,
Advance Sheets Version
and
UNUM LIFE INSURANCE COMPANY,
Defendant-Appellant.
Before: Talbot, P.J., and Fitzgerald and Hoekstra, JJ.
TALBOT, P.J.
Defendant Unum Life Insurance Company, appeals as of right the order granting
summary disposition in favor of plaintiff, Gaylord Genaw, Jr., as personal representative of the
Genaw Estate (the Estate). We affirm.
I. Factual and Procedural History
This action involves the erroneous payment of insurance proceeds to defendant Cindy
Genaw (Genaw), the ex-wife of plaintiff’s decedent. In 2001, the decedent obtained an
insurance policy with Unum valued at $111,000 and designated Genaw as his beneficiary. The
decedent and Genaw divorced on July 3, 2006. Their judgment of divorce specifically contained
a waiver provision, which extinguished both parties’ respective interests in any insurance policy
on the other’s life. Only days after the entry of the divorce judgment, the decedent was killed in
an automobile accident. His beneficiary designation on the life insurance policy with Unum had
not been changed.
On October 2, 2006, a loss report was completed that listed Genaw as the claimant and
designated her relationship to the decent as an “ex-spouse.” Approximately two weeks later,
Genaw filed a claim for benefits and indicated on the form that the decedent was divorced. A
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death certificate, which indicated decedent’s marital status as divorced, was also submitted with
a copy of the benefits claim. Upon receipt of the claim information, Unum conducted an
investigation and determined that benefits were payable pursuant to its policy. Shortly after
receiving a copy of the beneficiary designation form, which continued to list Genaw as the policy
beneficiary, Unum remitted payment to her in the full amount of the policy.
Approximately one month later, plaintiff was appointed the personal representative of the
decedent’s estate and became aware of the existence of the Unum policy. Plaintiff contacted
Unum on January 16, 2007, seeking to claim the policy benefits on behalf of the Estate. Unum
denied the claim on the ground that the policy had already been discharged. Plaintiff initiated
litigation against Genaw and Unum to recover the monies remitted by Unum for the Estate. The
trial court granted partial summary disposition in favor of plaintiff against Genaw in the amount
of $111,000. The trial court ordered that the funds remaining in Genaw’s bank account that
Unum had paid her, which amounted to $42,659.54, be seized and held in escrow in partial
satisfaction of the judgment.1 In addition, the trial court granted partial summary disposition in
favor of plaintiff against Unum in the amount of $111,000, with a setoff for $42,659.54, the
amount recovered from Genaw. This appeal focuses exclusively on the interpretation and
meaning of the statutory language comprising MCL 552.101(2).
II. Standard of Review
“The goal of statutory interpretation is to discern and give effect to the intent of the
Legislature from the statute’s plain language.” Houdek v Centerville Twp, 276 Mich App 568,
581; 741 NW2d 587 (2007). “If the meaning of a statute is clear and unambiguous, then judicial
construction to vary the statute’s plain meaning is not permitted.” Id. “The Legislature is
presumed to have intended the meaning it plainly expressed.” Watson v Bureau of State Lottery,
224 Mich App 639, 645; 569 NW2d 878 (1997). Further, “[a] court must look to the object of
the statute, the harm it is designed to remedy, and apply a reasonable construction that best
accomplishes the purpose of the statute. Statutory language should be construed reasonably,
keeping in mind the purpose of the act.” Id. (citation omitted). “[W]e are bound to interpret
plain statutory language as written.” Dawe v Dr Reuvan Bar-Levav & Assoc, PC, 279 Mich App
552, 569; 761 NW2d 318 (2008), lv gtd 483 Mich 999 (2009).
III. Analysis
MCL 552.101(2) states, in its entirety:
Each judgment of divorce or judgment of separate maintenance shall determine
all rights of the wife in and to the proceeds of any policy or contract of life
insurance, endowment, or annuity upon the life of the husband in which the wife
was named or designated as beneficiary, or to which the wife became entitled by
1
The trial court also awarded plaintiff $15,650 in damages against Genaw, finding her in
violation of MCL 700.1205(4) for wrongful conversion or embezzlement of property rightfully
belonging to the Estate.
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assignment or change of beneficiary during the marriage or in anticipation of
marriage. If the judgment of divorce or judgment of separate maintenance does
not determine the rights of the wife in and to a policy of life insurance,
endowment, or annuity, the policy shall be payable to the estate of the husband or
to the named beneficiary if the husband so designates. However, the company
issuing the policy shall be discharged of all liability on the policy by payment of
its proceeds in accordance with the terms of the policy unless before the payment
the company receives written notice, by or on behalf of the insured or the estate of
the insured, 1 of the heirs of the insured, or any other person having an interest in
the policy, of a claim under the policy and the divorce. [Emphasis added.]
As discussed by this Court in Metropolitan Life Ins Co v Church, 150 Mich App 539, 544-545;
389 NW2d 122 (1986):
The purpose of the 1939 amendment to MCL 552.101 . . . was to resolve the
situation where a divorced wife could inadvertently receive the proceeds of a
forgotten policy.
“Prior to the addition in 1939 of the above-quoted portion of the statute to MCLA
§ 552.101, the wife was entitled to the proceeds of the policy when she remained
the designated primary beneficiary after a divorce. Ancient Order of Hibernians
v Mahon (1922), 221 Mich 213 [190 NW 696] and Guarantee Fund Life
Association v Willett (1927), 241 Mich 132 [216 NW 369]. The effect of the
amendment, as stated in the title to the statute, in the judgment of divorce, and, in
the statute itself, was to affect the interest of the wife in the insurance policy and
thus cure the situation where a divorced wife could inadvertently receive the
proceeds of a perhaps forgotten policy. ‘Inadvertently receive’ should be stressed
for the statute does not prohibit the husband or divorce judgment itself from
retaining or renaming the wife as the primary beneficiary. It simply requires
affirmative action on the part of the court or husband to retain the divorced wife
as the primary beneficiary and thus eliminate what could be, and usually appears
to be, the inadvertent payment of the life insurance proceeds to a divorced wife.”
Starbuck v City Bank & Trust Co, 384 Mich 295, 299; 181 NW2d 904 (1970)
(emphasis in original).
Clearly, the purpose of the statute is to resolve inconsistencies and problems that originated in
family law when an ex-spouse waived his or her right to a policy of insurance (or other benefit)
but a change in beneficiary was not effectuated. This is evidenced by the language that precedes
the disputed portion of the statutory subsection imposing a requirement that all judgments of
divorce include provisions clarifying the rights of former spouses to retain an interest in certain
identified benefits or policies.
On appeal, it is the contention of Unum, which the dissent adopts, that the language of
MCL 552.101(2) does not encompass notice of a claim asserted by a beneficiary, and that the
information provided by Genaw, which merely alerted Unum to the existence of a divorce
without submission of an actual copy of the judgment or its explicit terms, was insufficient to
place the insurer on notice or to impose liability for a payment of the insurance proceeds that was
consistent with the policy’s beneficiary designation. However, such an interpretation is not
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consistent with the actual language of the statute because it improperly inserts wording that does
not exist into the statutory provision.
The statutory language absolves an insurance company from liability for payment of the
policy proceeds to the designated beneficiary unless it “receives written notice . . . of a claim
under the policy and the divorce.” The statute requires only notice “of a claim . . . and the
divorce.” The statutory requirement that notice of the existence of a divorce be provided does
not equate to a mandate that an actual copy of the document or detailed information regarding
the content of a judgment of divorce be submitted in conjunction with the filing of a claim. This
is consistent with the definition of “notice” provided in caselaw as
“whatever is sufficient to direct attention . . . to prior rights or equities of a third
party and to enable him to ascertain their nature by inquiry. Notice need only be
of the possibility of the rights of another, not positive knowledge of those rights.
Notice must be of such facts that would lead any honest man, using ordinary
caution, to make further inquiries in the possible rights of another in the
property.” [Royce v Duthler, 209 Mich App 682, 690; 531 NW2d 817 (1995),
quoting Schepke v Dep’t of Natural Resources, 186 Mich App 532, 535; 464
NW2d 713 (1990).]
Interpreting the statute as merely requiring the providing of notice of the existence of a divorce is
consistent with its language and fulfills the intended purpose of precluding the inadvertent
payment of benefits to the wrong person.
In addition, the statutory language allows such notice to be provided “by or on behalf of
the insured or the estate of the insured, 1 of the heirs of the insured, or any other person having
an interest in the policy.” (Emphasis added.) Through a strained path of reasoning, the dissent
and Unum contend that “any other person having an interest in the policy” excludes a named
beneficiary. However, that is inconsistent with the statutory language. The wording is not
restrictive, as denoted by the use of the word “any.” The statute is purposely broad and
encompassing and requires an inclusive definition of who may satisfy the definition of “any
other person having an interest in the policy.” It is difficult to comprehend how a designated
beneficiary would not be encompassed by such a definition. As indicated by the statutory
language, the insured, the insured’s estate, and an heir are specifically identified as having a
potential interest in a policy. Who, other than a designated beneficiary, could also be construed
as having an identifiable “interest” in the policy? Given the intent of the statutory provision to
preclude “inadvertent payment” of benefits to the wrong individual, it cannot be disputed that the
designated beneficiary, if unchanged following entry of a divorce judgment, is the most obvious
person the provision should target to prevent him or her from receiving the proceeds of the
policy and the most likely to assert a claim.
While factually distinguishable from the present case, our Supreme Court’s ruling in
Thom v Washington Nat’l Ins Co, 341 Mich 522; 67 NW2d 809 (1954), is instructive. In Thom,
a dispute existed regarding whether an estate administrator had provided the insurance company
with notice of the decedent’s divorce from the designated policy beneficiary. The Court
determined that the estate did not have a cause of action against the insurance company based on
the failure to provide notice to the insurer of the existence of a divorce. Id. at 523-525. The
Thom Court ruled in relevant part “that ‘giving plaintiff’s testimony its full weight and
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considering the alleged writing made by the woman clerk to be written notice, there is no
testimony that such notice or information advised the defendant insurance company that a
divorce decree had been entered.’” Id. at 526 (emphasis added). Notably, the Court merely
required notice of the entry of a divorce decree, not the actual submission of the judgment or a
detailed elucidation of its provisions.
In Thom, the Court determined that notice of a divorce had not been provided. Hence,
the insurance company could not be held liable given the language of MCL 552.101.
Accordingly, the Court’s ruling is reasonable:
The statute is explicit and we are not acquainted with any reason to depart
from its terms and in effect, in a case such as this, place upon the company the
onus of investigating all ramifications of a patently defective notice. We feel that
the statute is intended to do more than put the company “on guard.” It is intended
to be a conclusive determinant of liability if the prescribed procedure is followed.
[Id. at 526-527.]
In contrast, in the circumstances of this case, it is undisputed that Genaw reported her marital
status as that of an ex-wife and informed the insurance company of the existence of the divorce
from the decedent as part of her claim submission. Consistent with the holding in Thom, this
notice did more than merely place the insurance company “on guard”; it required them to
investigate further before remitting payment of the benefits to the designated beneficiary.
Further, the statute only implies that an insurance company may be liable if it pays the proceeds
of a policy to a designated beneficiary despite having received notice of a claim and the
existence of a divorce. The statute does not mandate the automatic imposition of liability
following the receipt of notice. In accordance with the statute, an insurance company is only
“discharged” from the imposition of liability if it pays the benefits in accordance with the policy
designation and does not receive written notice of a claim and a divorce.
Under the factual circumstances of this case, it is undisputed that Unum received a claim
from Genaw that specifically acknowledged both her status as the ex-wife of the decedent and
the existence of a divorce. Consequently, this information, submitted in conjunction with her
claim, was sufficient to meet the notice requirement imposed by the existing statutory language,
and the insurance company was not absolved of its liability for payment of the proceeds to the
designated beneficiary.
It is important to recognize that this statute may prove to be more confusing than helpful
to insurance companies given that the determination of the proper beneficiary for payment of
policy proceeds is highly dependent on factual circumstances unique to each case. For example,
a specific concern is the statute’s failure to indicate when it is preempted under ERISA, 29 USC
1001 et seq. Although these parties have stipulated that this policy is exempt from ERISA
because it was not issued as an employee-related benefit, in cases where MCL 552.101 is
preempted, irrespective of having received notice of a divorce, insurance companies are
mandated to pay insurance policy proceeds in accordance with the contractual beneficiary
designation. Sweebe v Sweebe, 474 Mich 151, 154-155; 712 NW2d 708 (2006), citing 29 USC
1104(a)(1)(D). Consistent with preemption, in cases falling within the purview of ERISA,
liability is typically assigned to the ex-spouse who engaged in the fraudulent or wrongful
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retention of the policy proceeds after having waived such benefits within a judgment of divorce.
Moore v Moore, 266 Mich App 96, 98; 700 NW2d 414 (2005).2
While the more logical and straightforward course would be to adopt the methodology
and procedure followed by cases preempted by ERISA, it is for the Legislature to determine
whether the statute should be modified. In the interim, the courts can only attempt to follow the
dictates of the current statutory language as it is written.
Affirmed.
HOEKSTRA, J., concurred.
2
See also Metropolitan Life Ins Co v Flusty, 545 F Supp 2d 624 (ED Mich, 2008); Brown v
Wright, 511 F Supp 2d 850 (ED Mich, 2007); Seaman v Johnson, 184 F Supp 2d 642 (ED Mich,
2002); Metropolitan Life Ins Co v Pressley, 82 F3d 126 (CA 6, 1996); Kennedy v Plan
Administrator for DuPont Savings and Investment Plan, ___ US ___; 129 S Ct 865; 172 L Ed 2d
662 (2009); Egelhoff v Egelhoff, 532 US 141; 121 S Ct 1322; 149 L Ed 2d 264 (2001).
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