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The Prudential Insurance Co. v. Lee

United States District Court, D. Nevada

July 10, 2018

FAITH LEE, et al., Defendants.


         Presently before the court is defendant Petra Wilson's motion for summary judgment. (ECF No. 61). Defendant Faith Lee filed a response (ECF No. 62), to which Wilson replied (ECF No. 64).

         Also before the court is Lee's motion for summary judgment. (ECF No. 66). Wilson filed a response (ECF No. 68), to which Lee replied (ECF No. 70).

         I. Background

         The instant case arises from competing claims to Rex Wilson's (“the decedent”) life insurance policy for $125, 000 (“the death benefit”). (ECF No. 1). The claimants are Faith Lee, the decedent's mother, and Petra Wilson, the decedent's wife.[1] Id.

         a. The decedent's Veterans Group Life Insurance (“VGLI”) coverage

         Prudential Insurance Company of America (“Prudential”) is a private insurance carrier that provided Group Life insurance benefits pursuant to 38 U.S.C. § 1965 et seq., the Servicemembers' Group Life Insurance statute (“the SGLI statute”), to the United States Department of Veterans Affairs (“the SGLI plan”). Id. As a member of the United States Marine Corps, the decedent was eligible for coverage under the SGLI plan, which later provided him with VGLI coverage. Id.

         A VGLI beneficiary designation or change is subject to the provisions of 38 U.S.C. §§ 1970 and 1977 as well as 38 C.F.R. § 9.4. Under 38 U.S.C. § 1977(d), “[a]ny amount of [VGLI] in force on any person on the date of such person's death shall be paid, upon the establishment of a valid claim therefor, pursuant to the provisions of section 1970 of this title.” According to 38 U.S.C. § 1970(a), “[a]ny amount of insurance under this subchapter in force . . . on the date of the insured's death shall be paid, upon the establishment of a valid claim therefor, to the person or persons surviving at the date of the insured's death, ” starting with “the beneficiary or beneficiaries as the member or former member may have designated by a writing received prior to death . . . in the administrative office.”

         This statutory language comports with the SGLI statute's requirement that “any designation of beneficiary or beneficiaries for [VGLI] to be effective must be a writing signed by the insured and received prior to death by the administrative office.” 38 U.S.C. § 1977(d). While “[a] change of beneficiary may be made at any time and without the knowledge or consent of the previous beneficiary, ” “[a]ny designation of beneficiary . . . will remain in effect until properly changed by the member or canceled automatically.” 38 C.F.R. § 9.4.

         b. Factual background

         On or about December 29, 2005, the decedent designated Wilson as the sole primary VGLI beneficiary via the VGLI website (“the first designation”). Id.

         In February of 2016, after twenty-eight years of marriage, the decedent and Wilson separated. (ECF Nos. 61, 62). Wilson alleges that after their separation, the decedent “began spiraling out of control.” (ECF No. 68). She claims that he exhibited “drastic changes and uncharacteristic behaviors, ” including losing weight due to an antihistamine addiction; falling asleep during conversations; speaking with invisible people; telling his boss and neighbors he had a terminal illness when he did not; losing his job and living out of his car; using the water hose in her front yard to shower; ringing her doorbell and texting or calling her at all hours and leaving incoherent voicemails; defecating in her driveway and throwing a bag of feces from his car into the street in front of her house; stealing and pawning personal and family items; and “prostituting himself on Craigslist to other men and transsexuals.” (ECF No. 68 at 5-6). Wilson alleges that the decedent was addicted to drugs, alcohol, and gambling. Id. at 6.

         Following the marital separation, Lee supported her son, the decedent, financially. (ECF No. 62 at Ex. A, Ex. F). Lee alleges that based on discussions with the decedent, she came to understand that he would pay her back for the money loaned to him during this time. (ECF No. 62 at Ex. A). Lee further alleges that in September of 2017, the decedent contacted her to verify her social security number so that he could designate her as a beneficiary under his VGLI coverage. Id.

         On October 4, 2016, the decedent contacted Prudential via phone to inquire about adding his mother as a beneficiary under his VGLI coverage. (ECF No. 66, Ex. B at 14). During this conversation, the decedent inquired as to whether this change would be effective immediately. Id. at 16. In response, the Prudential representative indicated that the beneficiary change can take up to five days to process and that Prudential “go[es] by the date that the signature is on it. So by the date that you sign the document is the date that [Prudential] go[es] by.” Id. As a result of this phone conversation, Prudential e-mailed the decedent a VGLI beneficiary designation/change form (“the beneficiary change form”). (ECF Nos. 61, 62).

         The decedent completed the beneficiary change form, allegedly designating Lee as the primary beneficiary of 50% of the VGLI coverage and Wilson as the primary beneficiary of the remaining 50% of the VGLI coverage[2] (“the second designation”). (ECF Nos. 1 at Ex. A, 61, 62). The bolded language immediately underneath the signature line advised that “[t]he signature date must be the date the Veteran actually signed the form.” (ECF No. 1, Ex. A). Nonetheless, the decedent post-dated the beneficiary change form for October 1, 2016. Id. On October 6, 2017, the decedent mailed the form to Prudential. (ECF Nos. 61, 62). Prudential received the form five days later, on October 11, 2016, and changed the decedent's beneficiaries accordingly. (ECF Nos. 1 at Ex. A, 61).

         The decedent became the primary suspect in a series of sixteen robberies that spanned from October 3, 2016 through October 12, 2016. (ECF No. 61, Ex. 4). On October 8, 2016, the decedent sent Wilson a text message reading: “Goodbye [Petra]. You and the kids were the best things that ever happened to me. I will always love you.” Id. at 7. Understanding the decedent to be suicidal, Wilson filed a missing person report. Id.

         On October 12, 2016, Las Vegas Metropolitan Police Department officers attempted to make a felony car stop on a stolen vehicle driven by the decedent. (ECF No. 61, Ex. 4). A high speed chase ensued. Id. After approximately twenty minutes, the officers were able to stop the decedent and position three patrol cars to keep him from fleeing. Id. As the officers exited their vehicles, the decedent raised and pointed what appeared to be a firearm at them. Id. Four officers opened fire. Id. When they approached the vehicle, the officers observed what appeared to be a firearm[3] in the decedent's right hand and the word “sorry” written in blood on the vehicle's center console. Id. The decedent died from multiple gunshot wounds at the scene. Id. The autopsy revealed that he was intoxicated via cocaine at the time of the incident.[4] Id.

         The decedent's certificate of death lists his date of death as October 13, 2016. (ECF No. 1, Ex. B). As a result of his death, death benefits in the amount of $125, 000 became payable under the decedent's VGLI coverage. (ECF No. 1).

         On October 31, 2016, Wilson, through her counsel, sent a letter to Prudential contesting the second designation and requesting that Prudential withhold the death benefit. Id. On December 9, 2016, Lee made a claim to the death benefit by mailing a claim for death benefits form to Prudential. Id. On January 23, 2017, Wilson also made a claim to the death benefit by submitting a claim for death benefits form via email. Id.

         c. Procedural background

         On March 30, 2017, Prudential filed its complaint in interpleader, alleging an inability to resolve the competing claims to the death benefit. Id.

         On August 14, 2017, Magistrate Judge Ferenbach filed a report and recommendation wherein he recommended that (1) Prudential pay into the court $125, 000 plus interest accrued and less $6, 000 in attorney fees and costs; (2) defendants be enjoined from instituting or prosecuting any proceeding in any state of United States court affecting the death benefit or relevant insurance plan upon Prudential's payment into the court; (3) Prudential be discharged from any and all further liability to defendants relating to the death benefit ...

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