United States District Court, D. Vermont
OPINION AND ORDER DENYING DEFENDANT ASHWORTH'S MOTION FOR SUMMARY JUDGMENT AND DENYING THE LEAVITT ESTATE'S CROSS-MOTION FOR SUMMARY JUDGMENT
(Docs. 41, 45)
CHRISTINA REISS, Chief District Judge.
Plaintiff New York Life Insurance Annuity Corporation ("New York Life") commenced this interpleader action to resolve competing claims to the proceeds of an annuity life insurance policy (the "Policy"). Defendant David C. Ashworth, pursuant to a power of attorney, and Defendant Lori Leavitt, as ancillary administratrix of the Estate of Kathleen A. Leavitt (the "Leavitt Estate"), each claim to be the Policy's sole beneficiary. The court previously granted New York Life's motion to deposit the policy proceeds into the court's registry and discharged New York Life from this matter. (Doc. 64.) Presently before the court are Mr. Ashworth's and the Leavitt Estate's cross-motions for summary judgment. (Docs. 41, 45.) Oral argument was held on January 7, 2014.
Mr. Ashworth is represented by John L. Franco, Jr., Esq. The Leavitt Estate is represented by Joshua L. Simonds, Esq.
I. Factual Background.
A. Undisputed Facts.
On June 5, 2012, New York Life issued the Policy to Ellen Flanagan with a fixed death benefit in the amount of $129, 751.82. The Policy designated Ms. Flanagan's sister, Kathleen Leavitt, as the sole beneficiary and did not include a contingent beneficiary.
On June 4, 2012, the day before the Policy was issued, Ms. Flanagan executed a power of attorney (the "POA") naming Mr. Ashworth as her attorney-in-fact. The POA provides that "[t]his instrument is to be construed and interpreted as a General Power of Attorney" and "authorize[s] [the] attorney-in-fact generally to do and perform all matters and things in [Ms. Flanagan's] name with the same powers and to all intents and purposes with the same validity as [she] could if personally present." (Doc. 24-3 at 1.) The POA authorizes the attorney-in-fact "[s]ign, execute, acknowledge and deliver on [Ms. Flanagan's] behalf any deed of transfer or conveyance covering personal property or real estate wherever situated... owned by [Ms. Flanagan] alone, as well as any owned by [Ms. Flanagan] and [her] spouse jointly, " id. 3, and to "[e]xecute, deliver and perform in [Ms. Flanagan's] behalf any contract, agreement or instrument of any nature or kind." Id. ¶ 18. In addition to the enumerated powers, the POA states that:
In general, I give to my said attorney-in-fact full power to act in the management and disposition of all my estate, affairs and property of every kind and wherever situated in such manner and with such authority as I myself might exercise if personally present.
Id. ¶ 21.
Mr. Ashworth accepted the POA by signing an "AGENT ATTESTATION" form four days prior to the date on which the POA was executed by Ms. Flanagan.
On June 5, 2012, Mr. Ashworth, acting pursuant to the POA, applied for a Vermont License and Certificate of Civil Marriage on Ms. Flanagan's behalf. He also signed the marriage license on her behalf. Five days later, on June 10, 2012, Ms. Flanagan and Mr. Ashworth were married in a civil ceremony by a justice of the peace in Burlington, Vermont. Following their marriage, on June 16, 2012, Mr. Ashworth submitted a change of beneficiary request to New York Life with a copy of the POA. Mr. Ashworth requested that he be deemed the primary beneficiary under the Policy, dividing the proceeds as follows: 77% to him and 23% to Kathleen Leavitt. Ms. Flanagan died shortly thereafter on June 19, 2012.
On or about June 26, 2012, New York Life accepted Mr. Ashworth as Ms. Flanagan's attorney-in-fact, but denied his change of beneficiary request, citing 14 V.S.A. § 3504(f). Section 3504(f) prohibits the holder of a power of attorney from making a gift to himself or herself of property belonging to the principal unless the terms of the power of attorney explicitly grant the authority to make such a gift.
In this case, the POA addresses gifts of the principal's property as follows:
My attorney-in-fact may make gifts of my property to my spouse, my descendants, or any persons named as a beneficiary under my Will. All gifts to my spouse must qualify for the unlimited marital deduction under Section 2523 of the Code. All other gifts must qualify for the annual gift tax exclusion under Section 2503(b) and 2503(e) of the Internal Revenue Code (Code), and shall not exceed the amounts allowed as exclusions thereunder. Gifts pursuant to this power may be made outright or in trust, to a legal guardian or to a custodian of a custodial account. My attorney-in-fact may also make transfers to any plans authorized by Section 529 of the Code. My attorney-in-fact may not make gifts to himself or otherwise expend or utilize my property for his own benefit except for his health, education, support or maintenance. My attorney-in-fact may satisfy any charitable pledges I may have made and make gifts on my behalf to any charitable organization that would qualify as income and gift tax charitable deductions. My attorney-in-fact may transfer my property to any revocable trust that I have established and may withdraw assets from my revocable trust for any purpose authorized under this power of attorney.
(Doc. 24-3 ¶ 20) (emphasis supplied). In rejecting Mr. Ashworth's change of beneficiary request, New York Life represented that its "position is that the grant of authority in the [POA] creates an ambiguity that does not satisfy the requirements of 14 V.S.A. § 3504(f) that the authority to make self-gifts be explicit." (Doc. 24 ¶ 15.)
On July 5, 2012, Kathleen Leavitt submitted a beneficiary claim to New York Life, requesting the Policy proceeds. New York Life began processing her request "as it viewed Kathleen Leavitt as the current beneficiary of record under the [P]olicy." Id. ¶ 17. Ms. Leavitt died on July 11, 2012, before New York Life completed her claim request.
On July 24, 2012, Mr. Ashworth submitted a second change of beneficiary request, seeking to designate himself as the sole beneficiary under the Policy. He also requested that New York Life reconsider its denial of his first request. Mr. Ashworth asserted that the POA was created in "anticipation of our marriage." (Doc. 24-5.) Both requests were subsequently denied, in part because the terms of the Policy prohibited retroactive changes of beneficiaries after the policyholder dies.
On October 1, 2013, Mr. Ashworth moved for summary judgment, arguing New York Life wrongfully denied his request to make himself the Policy's primary beneficiary. (Doc. 41.) On October 31, 2014, the Leavitt Estate cross-moved for summary judgment, contending that Mr. Ashworth lacked authority to change the Policy's beneficiary. (Doc. 45.)
B. Disputed Facts.
The Leavitt Estate asserts that "due execution" of the POA has not been established because Mr. Ashworth accepted it prematurely and in violation of its preparer's alleged directions. The Leavitt Estate further claims that Ms. Flanagan's signature on the POA "differs markedly" from that which appears on the application for the Policy. (Doc. 45-1 ¶ 4.) The Leavitt Estate points out that if the POA is invalid, so is the marriage certificate and license which Mr. Ashworth signed on Ms. Flanagan's behalf by virtue of the POA. They ask that Mr. Ashworth be dismissed from this case because he has no right to claim the Policy proceeds.
Mr. Ashworth contends that the POA was properly executed, but he does not respond to the assertion concerning Ms. Flanagan's signature. He argues that once New York Life accepted him as Ms. Flanagan's attorney-in-fact under the POA, ...