Violation of Automatic Injunction Doesn’t Mean Windfall
- At March 23, 2020
- By Miles Mason
- In Divorce Process
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Tennessee case summary on mandatory injunctions in divorce.
Under Tennessee law, a party in a divorce case is not allowed to modify an insurance policy without the consent of the other spouse or the court. The wife in this Montgomery County, Tennessee, changed the beneficiary of her life insurance policy from her husband to her mother while the divorce was pending. She died a week later. The insurance company paid the benefit to the mother, and the husband sued. The trial court awarded the policy proceeds to the parties’ child. Both parties appealed. The Tennessee Court of Appeals, in a 2016 decision, instead awarded the proceeds to the husband. The Tennessee Supreme Court, in a 2018 decision, held that the lower court’s ruling was erroneous, but also held that there was insufficient evidence to decide the case on appeal. Therefore, it remanded the case to hear additional evidence.
On remand, the trial court, Judge Ross H. Hicks, held that the equities weighed in favor of the husband and awarded him the insurance proceeds. The wife’s mother then brought another appeal to the Tennessee Court of Appeals.
The trial court had based its decision, in part, upon a finding that the wife’s intent in changing beneficiaries was to make her son the ultimate beneficiary. It found that she never intended the mother to be the ultimate beneficiary. However, the legal effect of the documents the wife signed was to make the mother the legal beneficiary. The court also noted that the mother had referred to the insurance proceeds as “her money.”
Based upon this evidence, the trial court concluded that the equities favored returning the insurance money to the husband, since this put back into place the status quo before the wife violated the automatic injunction.
The Tennessee Supreme Court had not identified the equitable factors that the trial court should apply. Reviewing the decision, the appellate court came to the conclusion that the trial court had not considered all options.
The appeals court noted that the injunction applied by Tennessee law is a temporary injunction, and its purpose is to maintain the status quo in the case until the court can adjudicate it. In other words, the court might ultimately award the insurance policy to a different beneficiary. The temporary injunction is designed to make it easier for the court to do so.
In this case, the appeals court found that the husband could very well be in a better position because the wife violated the injunction. If the case had gone to trial, he might not have been awarded the policy, even though he was the named beneficiary.
The appeals court then went on to review other equitable factors influencing the case. For example, it noted that the husband was receiving social security payments. Since these would have been taken into account in the final property award, the appeals court felt that it was proper to consider them in the context of the case.
The appeals court also found that the wife’s intent was an important factor, and that the wife did not want the husband to receive the benefits. Again, after the divorce was final, the wife would have been free to change the beneficiary, unless specifically ordered not to do so.
After examining the husband’s post-divorce financial situation, the appeals court held that the receipt of the insurance money would have been a windfall.
After examining the evidence, the appeals court concluded that the husband was entitled to an amount that would compensate for child support he would otherwise receive, and calculated this to be $500 per month until the child reached 18. It therefore modified the trial court’s judgment to reflect that amount, and not the full amount of the insurance proceeds.
For these reasons, the judgment was modified and the case remanded.
No. M2019-00176-COA-R3-CV (Tenn. Ct. App. Jan. 21, 2020).
See original opinion for exact language. Legal citations omitted.
To learn more, see The Tennessee Divorce Process: How Divorces Work Start to Finish.
