The opinion of the court was delivered by: David N. Hurd United States District Judge
MEMORANDUM-DECISION and ORDER
This action is the result of conflicting claims to the proceeds of two life insurance policies. James Patrick Straney ("James") maintained policies with two insurance companies at the time of his death, North American Company for Life and Health Insurance ("NACOLAH") and Life Insurance Company of North America ("LINA").*fn1 NACOLAH and LINA each have been dismissed from the action, with the proceeds of their policies currently held by the Clerk of the Court. The defendants have competing claims to these proceeds.
Defendants Joanne, Michael, and Rachel Straney, along with their mother Naomi Straney ("Naomi") as trustee and her son, Jeffrey*fn2 (collectively "Straney defendants") have moved for summary judgment pursuant to Rule 56(a) of the Federal Rules of Civil Procedure, seeking a declaration that defendant Jan Nesom ("Nesom") is not entitled to any of the insurance proceeds, and an order that the proceeds be distributed to the four children of Naomi (Joanne, Michael, Rachel and Jeffrey). Nesom filed a cross motion for summary judgment pursuant to Rule 56(b) of the Fed. R. Civ. P., seeking a declaration that the proceeds be distributed according to the designation within the insurance policies and opposing the Straney defendants' motion. Oral argument was heard on March 26, 2010, in Utica, N.Y. and decision was reserved.
James and Naomi Straney divorced in 1997, having been married since 1980. The couple had four children together: Rachel, born 1982; Joanne, born 1984; Michael, born 1985; and Jeffrey, born 1991. As part of the marriage dissolution process, James and Naomi entered into an Agreement and Stipulation ("Agreement") in the Commonwealth of Virginia on August 15, 1996, which detailed the future responsibilities of both parties to each other, and to their children. See Goldberg Decl. Ex. B. The Agreement included the disposition of the marital assets, child custody and support payments, life insurance, and spousal support payments. Id.
The life insurance section of the Agreement followed other clauses assigning parental responsibility for costs towards the general support, health insurance, and college education of the couple's children. Id. at 10-12. Likewise, the life insurance clause is directed towards the financial security of the children, who were between the ages of five and fourteen at the time the Agreement was executed. That clause reads as follows:
17. Life Insurance: The parties acknowledge that they currently have two $100,000 life insurance policies insuring the life of the Husband [James] and Wife [Naomi]. In addition, Husband has certain life insurance through his current employer. Husband agrees to keep in full force and effect all life insurance currently in force. In addition, should Husband obtain new employment and is eligible for life insurance through that employer, Husband agrees to keep said life insurance in full force and effect. Wife shall reciprocally agree to maintain in full force and effect the policies of life insurance on her life. Husband currently owns and shall continue to own the policies ensuring [sic] his life. Wife currently owns and shall continue to own the policies insuring her life. Both parties agree to designate the children as beneficiaries with the following trustees:
A. Trustees for policy insuring Husband's life shall be:
2. Charles Thomas Straney
B. Trustees for policy insuring Wife's life shall be:
These trustees must act by consensus and can only use the proceeds of these life insurance policies for the benefit of the parties' children. Life insurance coverages in favor of the children as beneficiaries may be ratably reduced by 25% as each child attains the age of twenty-three (23).
When James and Naomi prepared the Agreement in 1996, James maintained a $100,000 life insurance policy issued by NACOLAH, with Naomi and their children identified as beneficiaries in "equal shares or survivors." Id. at Ex. A, 18. James also held a $160,000 life insurance policy and a $160,000 ADD (accidental death or dismemberment) policy, both through the Paul Revere Life Insurance Co. Barbour Aff. Ex. B, 2. Each of the $160,000 policies was obtained through his then-current employer, with Naomi as the beneficiary prior to formation of the Agreement. See id. at 2-3.
The entire Agreement, including the life insurance clause, became incorporated into the divorce decree, with judgment for divorce ...