The opinion of the court was delivered by: Spatt, District Judge.
MEMORANDUM OF DECISION AND ORDER
This case pits a surviving niece of the decedent against her brother and sister in a dispute over the proceeds of a life insurance policy. The key issue presented is whether a signed but undated Change of Beneficiary form constituted "substantial compliance" with the requirements for changing the beneficiaries of the policy.
This case began as a federal interpleader action, filed pursuant to 28 U.S.C. § 1335, in which the plaintiff Hartford Life Insurance Company ("Hartford") sought to deposit with the Court the proceeds of a group life insurance policy ("the Policy") issued to Swiss Re America Holding Corporation ("Swiss Re"). The policy afforded life insurance coverage to eligible employees of Swiss Re. The decedent Claire A. Mehring ("the decedent" or "Claire") was such an employee until her retirement on June 30, 1995.
After her retirement, the amount of the life insurance policy was reduced from $200,000 to $50,000. It soon became apparent that this fund was subject to the competing claims of the various defendants in this case. On September 19, 2006, the Court granted Hartford's motion for summary judgment on its interpleader cause of action, and directed that it deposit the sum of $50,000 with the Court registry in an interest bearing account within twenty days of the date of that order. Hartford complied with the Court's order and deposited the disputed funds with the Court. At that time, Hartford was released from any further liability to any party in this action with regard to the subject life insurance policy.
The original Designation form signed by the decedent and dated December 12, 1991 states that each of the decedent's nieces and nephews, Kathryn Mehring Einhorn ("Kathryn"), Christopher T. Mehring ("Christopher"), Edmond P. Mehring ("Edmond"), and Maureen Mehring Curran ("Maureen") are twenty-five percent beneficiaries of the Policy. Thus, under the original designation each of the four beneficiaries including the three pro se defendants would receive $12,500 of the Policy proceeds.
However, under the undated, apparently later executed beneficiary change, the proceeds would be paid to the Estate of the decedent. According to the decedent's will, the $50,000 proceeds of the Policy would, after being placed in Claire's estate, be divided as follows: Kathryn Mehring Einhorn, 50% or $25,000; Christopher T. Mehring 30% or $15,000; Edmond P. Mehring 10% or $5,000; and Maureen Mehring Curran 10% or $5,000.
Also, in a subsequent order of this Court dated June 29, 2007, the Court denied a motion for summary judgment by the defendant Kathryn Einhorn, as Executrix of the Estate of Claire A. Mehring ("the Estate"). In its motion, the Estate asserted that it is entitled to one-hundred percent of the proceeds of the policy pursuant to the subsequently executed, although undated, change of beneficiary form ("the Beneficiary Change"). If the proceeds of the policy are paid to the Estate, the decedent's will would dictate that the monies would be divided differently from the percentages delineated in the original beneficiary designation, as stated above.
In the Court's prior September 19, 2006 order it was determined that the decedent's signature does appear in the Beneficiary Change. In the Court's June 29, 2007 order, the following determinations were made -- which form the basis for the bench trial which subsequently was held:
As indicated above, the Court previously found that the signature on the Beneficiary Change form is the signature of the decedent Claire Mehring.
The Court is not willing to hold, as a matter of law, that this evidence sufficiently establishes the decedent's intent to make the beneficiary change... Also, although the pro se defendants' papers consist largely of statements of unsupported speculation, they have presented evidence that could be interpreted as casting doubt on the decedent's intent to change her beneficiary to the Estate.
Jean Hegler is the attorney who states in an affidavit that her firm represented the decedent at the time she changed her beneficiary to her Estate. The Beneficiary Change is not dated, but the Estate presented evidence that it was mailed to Swiss Re from Hegler's law firm on January 10, 2003. However, the individual defendants presented a letter, dated September 16, 2002, from Hegler to Howard Einhorn, who is the husband of Kathryn Einhorn, the executor of the Estate.... In the letter, Hegler indicates that Howard Einhorn had access to certain of the decedent's accounts, and used that access to inappropriately transfer approximately $400,000 in stocks and bonds to his wife Kathryn Einhorn without the decedent's knowledge. These monies were returned to the decedent's account after approximately three months of requests and demands from the decedent's counsel.
Considering the individual defendants' pro se status, and granting them every favorable inference as the non-moving party, the Court finds that this evidence is sufficient to establish a genuine issue of material fact for trial regarding the decedent's intent to change her beneficiary and also as to the date of the change of beneficiary. A reasonable juror could conclude that the decedent would not have intended to change her beneficiary in a manner that would benefit an individual whose husband was thought to have recently attempted to misappropriate a substantial sum of money from her. In addition, the issue of the undated change of beneficiary requires an evidentiary hearing.
The questions regarding the allegedly inappropriate asset transfers are exacerbated by the fact that Hegler's law firm mailed the Beneficiary Change form to Swiss Re at a time when, according to Hegler's own letter, the firm no longer represented the decedent. Accordingly, the Estate's motion for summary judgment is denied.
A. The case of Kathryn Einhorn as Executrix of the Estate of Claire A. Mehring, Deceased and Kathryn Einhorn, individually Jean Hegler is an attorney who specializes in Trusts and Estate law and Elder law. In the fall of 2001, the decedent Claire A. Mehring consulted with her on four or five occasions. Ms. Hegler was retained to prepare a will and a power of attorney for the decedent. She also did estate planning for the decedent. In September or October 2002, Ms. Hegler prepared a second will for the decedent. However, prior to this time, in August 2002, she took steps to withdraw as the decedent's attorney. She did this because of difficulties in dealing with the decedent's financial advisors and her beneficiaries, including vulgarities spoken to her by Christopher Mehring. In August 2002, Ms. Hegler gave the decedent a letter withdrawing as her counsel. However, because of difficulty in obtaining new counsel, Ms. Hegler agreed to draw her second will, which was signed by the decedent in October 2002.
At that time, Ms. Hegler also discussed a change of beneficiary for the Swiss Re Policy. The decedent apparently had concerns that some of her beneficiaries were giving trouble to her executrix, Kathryn Einhorn. The decedent wanted to avoid such "trouble" after her death. The decedent decided to distribute her estate in the following manner: Kathryn 50%; Christopher 30%; Edmond 10%; and Maureen 10%. At that time Ms. Hegler suggested that an In Terrorem Clause be inserted in the will, which would provide that if anyone contested the will he or she would lose his or her share in the estate. Ms. Hegler also recommended a change in the beneficiaries of the Policy to make the Estate the sole beneficiary, so as to effectuate the In Terrorem provision for that money as well as the other assets of the estate. Apparently, the decedent agreed with those proposed changes.
Ms. Hegler took steps to effectuate the change of beneficiary of the Policy. She contacted Swiss Re and obtained a change of beneficiary form. She completed the form with the newly designated beneficiary being the decedent's Estate. Ms. Hegler prepared two change of beneficiary forms. One was for the Savings Plan (Ex. 2) and the other was for the Life Insurance Policy (Ex. 3). Ms. Hegler prepared both change of beneficiary forms in December 2002 or January 2003. She apparently mailed both forms to the decedent to be signed and returned. When Ms. Hegler received both forms from the decedent, they were both signed and both were undated. When the change of beneficiary forms were received by Ms. Hegler she did not date the forms.
The Court notes that the Swiss Re change of beneficiary form is a large printed form with the printed words "Beneficiary Information - Life Insurance Change Form" on the top. Typed on the form is the decedent's social security number, the name "Claire Mehring" and the words "My Estate" in the space for beneficiary's name. Under the column (believed to state "percentage of proceeds") is the figure 100%. At the bottom is the signature of Claire A. Mehring.
Significantly, the Court notes that unlike the beneficiary designation for the Savings Plan, the Policy change of beneficiary form does not have a space designated for the date.
Joseph S. Vona, Esq., an attorney in Ms. Hegler's office, sent the undated form to Swiss Re on January 10, 2003 with a cover letter (Ex.1) certified mail, return receipt requested. The transmittal letter stated: VIA CERTIFIED MAIL January 10, 2003 RETURN RECEIPT REQUESTED Swiss Re-America 175 King Street Armonk, New York 10504
Social Security No. 116-05-0349
Participant's Beneficiary Designation Dear Sir or Madam:
We are the attorneys for Claire A. Mehring ("Ms. Mehring") in connection with the above referenced matter. I have enclosed for your review and records a Participant's Beneficiary Designation Form executed by Ms. Mehring. Please adjust your records in accordance with Ms. Mehring's wishes.
Thank you for your attention to this matter. If you have any questions, please call me.
JSV:kd enclosures cc: Jean A. Hegler, Esq.
Also received in evidence is a United States Postal Service Certified Mail Receipt (Ex. 4), indicating that the transmittal letter and the Change of Beneficiary form were received by Swiss Re in Garden City on January 13, 2003. Ms. Hegler concluded her direct examination by stating that she never received any word from the decedent that she did not want the Estate to be the beneficiary of the Policy.
On cross-examination, Ms. Hegler testified that she met the decedent through the Einhorns, who live near her and are acquaintances. However, she stated that she had no business dealings with the Einhorns. The decedent had her financial account with a firm called Montauk Financial Group in Red Bank, New Jersey. The decedent had sent letters to each sibling saying that she was going to give cash and gifts to each one. In December 2001, Ms. Hegler requested the social security numbers and addresses from the beneficiaries.
On April 18, 2002, Ms. Hegler wrote to Edmond Mehring at the request of Kathryn Einhorn "who is the agent-in-fact for Claire Mehring," stating that she has been "directed to cease all work on Ms. Mehring's matters" (Ex. A). While at one time the decedent contemplated forming trusts for each beneficiary, by January 18, 2003 she discarded this idea. Instead, the decedent decided to set up individual accounts for each beneficiary. In this regard, the decedent expressed repeated concern to Ms. Hegler that she wanted Montauk Financial to move her assets and set up individual accounts for her beneficiaries.
Ultimately, accounts were set up in four unequal shares, designed to parallel the percentages of the beneficiaries of her Estate, as follows:
Christopher Mehring - 30%
Ms. Hegler related that, in 2001, there were prior Swiss Re change of beneficiary forms, both for the Policy and for the Savings Plan, in the same percentages as stated above. On December 21, 2001, Ms. Hegler's associate Joseph S. Vona sent a letter to Swiss Re enclosing a "Beneficiary Information Life Insurance Change Form and an Employee Pension Plan Participant's Beneficiary Designation," executed by Ms. Mehring (Ex.5). The letter further requested that Swiss Re adjust its records "in accordance with Ms. Mehring's wishes." Enclosed in this letter were two change of beneficiary forms signed by Claire A. Mehring. The first was entitled "Beneficiary Information Life Insurance Change Form (Ex. 6) and the employee's name was Claire A. Mehring. The designated beneficiaries were the decedent's four nieces and nephews. Their names and addresses and relationship was typed on the document. Under the column "Percent of Proceeds" was written in handwriting the following percentages and initials:
Kathryn Einhorn - 50% CAM
Christopher Mehring - 30% CAM Edmond Mehring - 10% CAM Maureen Curran - 10% CAM The change of beneficiary form at issue in this case was signed by the decedent and was undated. Also, apparently enclosed in this transmittal letter of December 21, 2001, was a second change of beneficiary form for the Savings Plan. The four named beneficiaries and the percentage of proceeds for the Savings Plan was the same as in the change of beneficiary for the Life Insurance policy. The Court notes that both of these changes of beneficiary forms were undated. The Court further notes that the change of beneficiary form for the Savings Plan had a place for the date with the printed word "Date". However, the change of beneficiary form for the Policy had no similar word "Date" on the form. There was no designated place for a date on the change of beneficiary form at issue in this case.
On October 24, 2001, Ms. Hegler's associate Joseph S. Vona sent a letter to Kathryn Einhorn (Ex. C) enclosing three duplicate original power of attorney forms for the decedent to execute "in order for you to carry out the wishes of your aunt, Claire Mehring". Five days after this letter was sent to Ms. Einhorn, the decedent confirmed to Ms. Hegler that she had signed the three power of attorney forms.
On November 29, 2001, Ms. Hegler sent a letter addressed to the four heirs (Ex. D). The letter stated that in late 2001 and early 2002, the decedent intends to make gifts of stocks and bonds to be maintained at the Montauk Financial Group in Cold Spring Harbor. The letter further stated that the assets should not be used during the decedent's lifetime "but rather left intact in the event that she needs the funds for any reason at any time." The letter also asked for the personal and employment information for each of the beneficiaries. It was contemplated that individual joint accounts would be set up by Montauk Financial. Ms. Hegler assumes she received the information requested by each of the heirs and she forwarded it to Howard Einhorn of Montauk Financial.
Ms. Hegler followed up this situation with a letter to the four beneficiaries dated December 7, 2002 (Ex. E). In this letter she enclosed Form W-9s, "in order to open your new accounts at Montauk Financial Group." Again, Ms. Hegler assumes she received and forwarded the W-9 forms to Howard Einhorn at Montauk Financial. Ms. Hegler had "tremendous difficulty" with Montauk Financial but, by June 2002, the four accounts were set up and fully funded.
Also in evidence is a letter to the decedent from attorney Vona dated June 28, 2002 (Ex. F) in which is enclosed a letter dated December 26, 2001 (Ex. G) with instructions from the decedent to the Montauk Financial Group. This letter instructed Montauk Financial to "transfer all funds/securities" in her account to the four beneficiaries in the unequal amounts: the greater amounts were to Kathryn and Christopher and the lesser amounts to Maureen and Edmond.
It is noted that each of the three accounts for the three siblings of Kathryn Einhorn also included her name. The letter further noted that Montauk was directed to "transfer any remaining assets to the account of Kathryn Einhorn". Ms. Hegler testified that this letter and Exhibit P, to be discussed later, were drafted by her office.
As stated above, there is in evidence another letter similar to Exhibit G, from the decedent to Montauk Financial Group, also dated December 26, 2001 (Ex. P). This letter, also drafted by Ms. Hegler, was similar in many respects to Exhibit G except that it also directed Montauk Financial to "Issue a check in the amount of $87,000 payable to Kathryn Einhorn and forward same to my niece Kathryn Einhorn". Ms. Hegler doesn't recall if she saw the decedent Claire Mehring sign the letters dated December 26, 2001 (Exhs. G&P). However, Ms. Hegler testified that only one letter of authorization signed by the decedent was sent to Montauk Financial. She doesn't know which letter (Ex. G or P) was sent.
Howard Einhorn, the husband of Kathryn Einhorn, was the decedent's broker with Montauk Financial. It is presumed that he received the authorization to set up the four accounts. According to Ms. Hegler, the four accounts were set up by Montauk Financial between February and August 2001. This is somewhat strange, because the decedent's authorization to set up the accounts is dated December 26, 2001.
When Ms. Hegler reviewed the statements from Montauk Financial, it was revealed that the sum of $440,000 was placed in the account of Kathryn Einhorn without authorization from the decedent. After she ascertained this troubling problem, Ms. Hegler called Montauk Financial and "screamed and yelled". Finally, after a two month delay, Montauk Financial restored the $440,000 to the decedent's account.
In addition to this problem, Ms. Hegler testified that some of the newly formed accounts were missing funds. On May 31, 2002, Ms. Hegler wrote a four page letter to an attorney for Montauk Financial (Ex. R). Among other matters, this letter stated:
Upon our review of the statements for the above referenced accounts, we have discovered that certain Treasury Notes, specifically, cusip numbers 912827609, 912827683 and 9128275S7 were not transferred from Ms. Mehring's account in accordance with ms. Mehring's letter of authorization.
Upon transfer of the Treasury notes, please forward to our office documentation evidencing proof of transfer.
As we have discussed on numerous occasions, we believe that certain equities and securities, with an estimated value of approximately $443,350.25, were transferred from Ms. Mehring's account to Kathryn Einhorn without Ms. Mehring's knowledge, authorization and/or approval. Upon our review of the statements, we have verified that the following securities have been transferred to Kathryn Einhorn without Ms. Mehring's knowledge.
Both Howard Einhorn, the broker/representative assigned to Ms. Mehring's account, and Kathryn Einhorn, have informed us that the above-mentioned securities were mistakenly transferred from Ms. Mehring's account and would immediately be subsequently re-deposited into Ms. Mehring's account. However, despite our numerous requests, we have not yet received verification that the equities have been returned to Ms. Mehring's account in their entirety.
We are both concerned and troubled with regard to such transfer of Ms. Mehring's assets and the delay we have encountered in trying to rectify this situation with Montauk Financial Services. If required, we are prepared to use all legal remedies available to ensure the return of Ms. Mehring's assets. Therefore, we hope that this matter can be resolved quickly and without further delay.
Thank you for your attention to this matter. If you have any questions, please call me.
JAH:kd cc: Ms. Claire Mehring
Some eight days later, on June 8, 2002, Ms. Hegler wrote another letter (Ex. S) to Paul Lieberman Esq., at Montauk Financial in which the following statements were made:
Let me begin by saying that I am bewildered that you were not aware of our concerns regarding the transfer of assets from Ms. Mehring's account without Ms. Mehring's knowledge, authorization and/or approval.
Over the past three weeks we informed you on numerous occasions by telephone, and by letter dated May 31, 2002 (copy enclosed), that approximately $443,350.25 of various securities were transferred from Ms. Mehring's account to Kathryn Einhorn without Ms. Mehring's knowledge, authorization and/or approval. Additionally, we demanded that such securities be immediately returned to Ms. Mehring's account. In response to our demands, you had informed us that the securities were re-deposited into Ms. Mehring's account. However, upon our review of Ms. Mehring's Account statement for May 31, 2002 we discovered that Ms. Mehring's account had a $0.00 balance. As we discussed, we are upset and displeased with regard to the delay in the return of the securities to Ms. Mehring's account and the various misrepresentations that the securities had been returned.
I am in receipt of your fax dated June 7, 2002, which indicates that Ms. Mehring's account currently has a balance of $316,603.90. However, the statement/printouts you provided only set forth securities totaling $169,257.70. As per your request and upon receipt of your fax, Joseph Vona of my office spoke with Howard Einhorn who indicated that three-quarters (3/4) of the securities had been returned to Ms. Mehring's account and that the balance of the securities would be returned to Ms. Mehring's account this week.
Accordingly, we request that by the end of business on Monday, June 10, 2001 you, and/or Howard Einhorn, provide us with an updated account statement for Ms. Mehring's account, as of the date hereof, together with a list of all securities that have yet to be transferred into Ms. Mehring's account. Additionally, as we previously requested, please provide us with and any and all documentation relating to the securities returned to Ms. Mehring's account including, without limitation, (1) the date of the return transfer of each security (2) the value of the transferred security on the original date of transfer and the value of each security on the return date of transfer, and (3) all trade confirmations and/or trade orders made in connection with the above-referenced securities. Further, please confirm to us that all dividends and interest on such assets earned during the time they were incorrectly in Ms. Einhorn's account were also refunded to Ms. Mehring's account.
We hope that this matter can finally be resoled without any further delay.
Jean A. Hegler cc: Ms. ...