Rose Coleman v. Bryan Olson

This is the second time this dispute has been before this court. The appeal arises from a violation of Tenn. Code Ann. § 36-4-106(d)(2), which prohibits a divorcing party from “canceling, modifying, terminating, assigning, or allowing the lapse” of any insurance policy that provides coverage to either spouse or their children without the consent of the other spouse, a court order, or abatement of the action. In this case, the wife modified her life insurance policy by replacing her husband with her mother as the sole beneficiary of the policy during the pendency of a divorce action and without the husband’s consent or a court order. The wife died one week later, which caused an abatement of the divorce action. After the insurance company remitted the proceeds of approximately $393,000 to the wife’s mother, the husband commenced this action to recover the proceeds. Following the first trial, the trial court found the wife intended to remove the husband and substitute their minor child as the insurance beneficiary, and it awarded the proceeds to the child. Both parties appealed. In the first appeal, we reversed the trial court and, after applying an equitable-balancing test, awarded the proceeds to the husband. See Coleman v. Olson, No. M2015-00823-COA-R3-CV, 2016 WL 6135395, at *15 (Tenn. Ct. App. Oct. 20, 2016) [hereinafter Coleman I]. The Tennessee Supreme Court affirmed our use of an equitable-balancing test but determined there was insufficient evidence to decide the merits on appeal. Coleman v. Olson, 551 S.W.3d 686, 697 (Tenn. 2018) [hereinafter Coleman II]. Thus, the Supreme Court remanded the case to the trial court with instructions to hear additional evidence and, after considering the equities of the parties, “remedy the violation of the statutory injunction by awarding all or a portion of the life insurance benefits to either or both parties.” Id. at 688. However, the Court did not identify the equitable factors to consider. Following an evidentiary hearing on remand, the trial court found the equities weighed in favor of the husband receiving the insurance proceeds. The wife’s mother appeals, contending the trial court erred in determining that the equities between the parties weighed in favor of depriving her of the insurance proceeds. We have determined that the trial court’s ruling was based on the erroneous determination that the court was limited to two options, enforcing the policy based on the beneficiary designation when the statutory injunction went into effect or enforcing the policy based on the beneficiary designation when the divorce action abated, instead of having the discretion to award a portion of the proceeds to each party based on the equities. Recognizing that the purpose of the § 106(d)(2) injunction was merely to preserve the status quo, not to make the ultimate determination of the rights of the parties to the proceeds, we have determined that the husband was entitled to an amount necessary to prevent an “unjust result” due to the wife’s inability to assist in caring for the parties’ minor child or to provide financial support to care for and educate the child until he reaches the age of majority. Having considered the financial benefits and burdens resulting from the wife’s death, we modify the judgment to award the husband a lump sum based on a support payment of $500.00 a month calculated from the month of the wife’s death until the minor child turns eighteen. Because the husband has been receiving a monthly payment of $500.00 since the trial court ordered the clerk of the court to remit such monthly payments out of the insurance proceeds on deposit with the clerk, the aggregate sum the husband has received from the clerk shall be deducted from the lump sum awarded to the husband. The wife’s mother shall be awarded the balance of the insurance proceeds on deposit with the clerk. We also vacate the judgment awarded against the wife’s mother and the award of prejudgment interest to the husband. The case is remanded to the trial court for further proceedings consistent with this opinion.