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Sun Life Assurance Company of Canada v. O'Connor

United States District Court, W.D. Washington, Seattle

April 16, 2018

MARYANNAH O'CONNOR and THERESA WYSONG, Defendants-in-Interpleader.



         This matter comes before the Court on Defendant-in-Interpleader Theresa Wysong's motion for summary judgment (Dkt. No. 44) and motion to strike (Dkt. No. 46). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby GRANTS in part and DENIES in part both motions for the reasons explained herein.

         I. BACKGROUND

         This is an interpleader action concerning the proceeds of a life insurance policy on David O'Connor (“Decedent”), who passed away on July 22, 2015. (See Dkt. No. 1.) At the time of his death, Decedent's daughter Maryannah O'Connor (“O'Connor”) was the named beneficiary of the policy. (Dkt. No. 1-1 at 27.) Decedent's wife, Theresa Wysong (“Wysong”), claims that she is entitled to the insurance proceeds because the policy was purchased with community property and O'Connor exploited Decedent into naming her the beneficiary. (See generally Dkt. No. 44.) The policy's insurer, Sun Life Assurance Company of Canada (“Sun Life”), filed this interpleader action, deposited $150, 000 in the Court's registry, and has since been dismissed from the lawsuit. (See generally Dkt. No. 27.)

         After dating for three years, Decedent and Wysong were married in April 2015. (Dkt. No. 46-2 at 1.) Decedent suffered from pulmonary fibrosis, which required Wysong to take care of him. (Id. at 2.) Shortly after they married, Decedent provided Wysong with a durable power of attorney to conduct his affairs. (Id.) Initially, the couple lived together at Wysong's home, but on May 14, 2015, Decedent left the house and began living with his adult children John and Rafael O'Connor. (Id.)

         The parties dispute the circumstances under which Decedent left the home. Wysong asserts that Decedent's daughter Rose “came to our house and took David away while I was working.” (Id.) Wysong further alleges that “[she] was not allowed to [] see my husband because his children prevented me from visiting him . . . .” (Id.) O'Connor, on the other hand, states that Decedent wanted to leave Wysong because she was mistreating him. (See generally Dkt. Nos. 45-2, 45-3, 45-4.) According to Decedent's children, Wysong had been verbally and physically abusive to their father, and Decedent chose to voluntarily live apart from her. (Id.)

         It is undisputed, however, that Decedent and Wysong did not reside together from May 14, 2015 until his death a little over two months later. (Dkt. No. 46-2 at 2.) Decedent had a group life insurance policy through Sun Life that was paid for by his former employer and that initially named Wysong as the sole beneficiary. (Id. at 2.) When Decedent turned 65 in late May, the life insurance policy converted from a group to individual plan, which required him to begin paying the monthly premiums. (Id. at 2-3; Dkt. No. 1-1 at 23-26.) On July 2, 2018, Decedent renewed the Sun Life policy for $150, 000 of coverage, and named O'Connor, not Wysong, as the sole primary beneficiary.[1] (Dkt. No. 1-1 at 23-26.) Decedent included a check for the first premium with his renewal application. (Id.)

         Decedent was taken to the hospital on July 20, 2018 for complications related to his pulmonary fibrosis. (Dkt. No. 45-4 at 3.) Decedent passed away at the hospital two days later. (Id.) On the day he died, Decedent signed, and had notarized, a document that both revoked Wysong's power of attorney regarding the Sun Life insurance policy, and reiterated that O'Connor was the primary beneficiary. (Dkt. No. 44-4 at 26.) Wysong and O'Connor filed claims on the Sun Life policy following Decedent's death. (Dkt. No. 1-1 at 27-35.)


         A. Interpleader

         Cases brought in interpleader are resolved in two stages. See First Interstate Bank of Or., N.A. v. U.S. By & Through I.R.S., 891 F.Supp. 543, 546 (D. Or. 1995). First, the Court must determine whether the interpleader device is appropriate to relieve a plaintiff stakeholder from liability. Id. Second, the Court addresses the merits of the dispute between the defendant claimants. Id. Here, the Court concluded the first stage of interpleader when it dismissed Sun Life from the lawsuit. (See Dkt. No. 27). The Court must now address Wysong's motion for summary judgment regarding her claim to Decedent's insurance proceeds. Since this action is based on diversity jurisdiction, Washington law controls the parties' dispute. See Ins. Co. N. Am. v. Fed. Express Corp., 189 F.3d 914, 919 (9th Cir. 1999).

         B. Summary Judgment Standard

         “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In making such a determination, the Court must view the facts and justifiable inferences to be drawn therefrom in the light most favorable to the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Once a motion for summary judgment is properly made and supported, the opposing party “must come forward with ‘specific facts showing that there is a genuine issue for trial.'” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (emphasis in original) (quoting Fed.R.Civ.P. 56(e)). When the party moving for summary judgment also bears the burden of persuasion at trial, “to prevail on summary judgment it must show that the evidence is so powerful that no reasonable jury would be free to disbelieve it.” Shakur v. Schriro, 514 F.3d 878, 890 (9th Cir. 2008).

         C. Wysong's Motion for Summary Judgment

         Wysong makes two overarching claims for summary judgment. First, she asserts that Washington's community property laws entitle her to no less than one half of Decedent's insurance proceeds. (Dkt. No. 44 at 5-6.) Second, she asserts that she is entitled to the entire policy because O'Connor and her siblings exploited Decedent into removing Wysong as the sole beneficiary. (Id. at 7-8.)

         1. Community Property Claim

         Wysong argues that since Decedent's life insurance policy was paid with community funds, as a surviving spouse, she is entitled to no less than one half of the proceeds.[2] (Dkt. No. 44 at 4-5.) Under Washington law, “[a] surviving spouse has a community property interest in a life insurance policy only to the extent that community funds were used to purchase the policy.” Aetna Life Ins. Co. v. Bunt, 754 P.2d 993, 995 (Wash. 1988) (citing Francis, 573 P.2d at 372). Courts determine a spouse's entitlement to insurance proceeds by looking to “the character of the funds used to pay the [insurance] premium for the most recent term.” Aetna Life Ins. Co. v. Wadsworth, 689 P.2d 46 at 50 (Wash. 1984); see also Bunt, 754 P.2d at 995 (“if community funds were not used to pay the last premium, there is no community interest in the policy.”)

         The undisputed evidence supports Wysong's assertion that the final policy premiums were paid from the couple's joint bank account. (Dkt. No. 44-2 at 1.) There is no dispute that the couple was legally married when Decedent made the final premium payment on July 2, 2015. (Dkt. Nos. 44-4 at 28-30; 44-1 at 1.) The evidence also shows that the premium was paid to Sun Life from a joint bank account Decedent and Wysong had at Skagit Bank. (Id.)

         O'Connor provides testimony from Decedent's son Israel who asserts that he and his siblings agreed to pay Decedent's insurance premiums once he made O'Connor the beneficiary. (Dkt. No. 45-5 at 3.) Notwithstanding this alleged agreement, Israel's own testimony demonstrates that the last premium was paid by Decedent: “[t]he month before we started paying, my dad paid with a check to set up the account with his banking route number and account number to set up the automatic withdrawal.” (Id.) Decedent submitted the final payment via check on July 2, 2015, and passed away about ...

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