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Primerica Life Insurance Co. v. Purselley

United States District Court, N.D. Texas, Dallas Division

August 31, 2017

PRIMERICA LIFE INSURANCE COMPANY, Plaintiffs,
v.
SHERRY PURSELLEY, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          SIDNEY A. FITZWATER, UNITED STATES DISTRICT JUDGE

         In this interpleader action brought by plaintiff Primerica Life Insurance Company (“Primerica”) to determine ownership of life insurance proceeds, codefendants Henslee Purselley and Lee Purselley (collectively, the “Children”) and Sherry Purselley (“Sherry”) cross-move for summary judgment on all claims. For the reasons explained, the court grants Sherry's motion, denies the Children's motion, awards Sherry the interpleaded funds plus accrued interest, and dismisses the balance of this action by judgment filed today.

         I

         This interpleader action involves a dispute over a Primerica life insurance policy (“the Policy”) that insured the life of decedent Lee R. Purselley, Jr. (“Lee”), who died in 2015. In 1989 Lee purchased the Policy, which provided coverage of $300, 000. The Policy named Lee the owner, his then-wife Sherry the primary beneficiary, and the children of the marriage contingent beneficiaries. In August 1992 Lee executed a Multi-Purpose Change Form (“Change Form”) that designated Sherry the Policy owner. The Change Form transferred “ownership of said Policy, along with all right, title, and interest in said Policy to Sherry Keeton Purselley[.]” Jt. App. 40.[1] The name “Sherry Keeton Purselley” is handwritten in the blank on the form for the “Name of New Owner.” Id.

         Less than one year later, in May 1993, Sherry and Lee divorced. A state court entered a divorce decree, agreed to by both parties, that allocated to Lee “any and all policies of life insurance in his name, ” and to Sherry “any and all policies of life insurance in her name.” Jt. App. 248. Sherry continued to pay the Policy's monthly premiums until Lee's death in September 2015. After his death, she filed a claim under the Policy as owner and primary beneficiary. When Primerica processed the claim, it learned for the first time that Sherry and Lee had divorced. Primerica notified the Children of their status as contingency beneficiaries. After being notified, the Children then informed Primerica that they also intended to file a claim for Policy proceeds. Primerica then filed the instant interpleader action against, inter alia, Sherry and the Children. The court concluded that the interpleader action was proper, and it dismissed Primerica from the lawsuit. Sherry and the Children now cross-move for summary judgment, agreeing that only questions of law remain to be decided.[2]

         II

         The court “has broad powers in an interpleader action.” Rhodes v. Casey, 196 F.3d 592, 600 (5th Cir. 1999). Interpleader actions are decided through two stages.

First, the court determines whether the requirements for an interpleader action have been met by deciding if there is a single fund at issue and whether there are adverse claimants to that fund. Second, if the court determines that the requirements for interpleader are met, the court determines the rights of the claimants.

Jackson Nat'l Life Ins. Co. v. Dobbins, 2016 WL 4268770, at *2 (N.D. Tex. Aug. 15, 2016) (Fitzwater, J.) (citing Rhodes, 196 F.3d at 600). Absent special circumstances, this second stage “will proceed like any other action.” 7 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1714, at 628 (3d ed. 2001). Accordingly, if there is no genuine issue of material fact that requires proceeding to trial, the second stage may be adjudicated through summary judgment. Rhodes, 196 F.3d at 600. Because the court has already determined that interpleader is proper, it begins its analysis at the second stage.

         A movant's summary judgment burden depends on whether the motion for relief is on a claim for which the movant will have the burden of proof at trial. In an interpleader action, each claimant must prove his or her right to the fund by a preponderance of evidence. Id. To be entitled to summary judgment on a claim for which the movant will have the burden of proof, the moving party “must establish ‘beyond peradventure all of the essential elements of the claim or defense.'” Bank One, Tex. N.A. v. Prudential Co. Of Am., 878 F.Supp. 943, 962 (N.D. Tex. 1995) (Fitzwater, J.) (quoting Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986)). This means that the moving party must demonstrate that there are no genuine and material fact disputes and that the moving party is entitled to summary judgment as a matter of law. See Martin v. Alamo Cmy. Coll. Dist., 353 F.3d 409, 412 (5th Cir. 2003). “The court has noted that the ‘beyond peradventure' standard is ‘heavy.'” Carolina Cas. Ins. Co. v. Sowell, 603 F.Supp.2d 914, 923-24 (N.D. Tex. 2009) (Fitzwater, C.J.) (quoting Cont'l Cas. Co. v. St. Paul Fire & Marin Ins. Co., 2007 WL 2403656, at *10 (N.D. Tex. Aug. 23, 2007) (Fitzwater, J.)).

         III

         Sherry contends that she is the sole owner and primary beneficiary of the Policy after the 1992 transfer of ownership.[3] She maintains that her ownership survived the divorce, and that she is therefore entitled to all Policy proceeds. The Children maintain that ownership of the Policy never transferred from Lee to Sherry under Texas community property law; that the divorce decree's assignment of “all policies of life insurance in [Lee's] name” made him the sole owner of the Policy; and that because Texas law presumes a divorced spouse should not collect life insurance proceeds absent evidence of a contrary intention, the proceeds rightfully belong to the Children as contingent beneficiaries.

         A

          In Texas, property acquired during marriage is generally considered to be community property of the marriage. See Tex. Const. Art. XVI, § 15. Community property remains the joint property of both spouses during the marriage, and upon one spouse's death, the surviving spouse receives outright ownership of her one-half of the community estate. See Estate of Merkel v. United States, 2008 WL 3152986, at *3 (N.D. Tex. July 29, 2008) (Fitzwater, C.J.) (citing United States v. Stapf, 375 U.S. 118, 128 (1963)), vacated and dism'd on other grounds sub nom. Merkel v. Pollard, 354 Fed.Appx. 88 (5th Cir. 2009). The remaining one-half ...


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