Tennessee Mandatory Injunction Law | Changing Life Insurance Beneficiaries, PART 1

What is a mandatory injunction Tennessee? Does changing life insurance beneficiaries violate the mandatory injunction?

Tennessee’s mandatory injunction law first went into effect in May 2001 and is found in T.C.A. § 36-4-106(d). What is a mandatory injunction Tennessee? This statutory injunction, or stay, is automatically invoked in divorce and legal separation cases. Three purposes for the injunction are:

“(1) to eliminate the need to address the judge about [how] to maintain the ‘status quo’ through the divorce, (2) to reduce the costs to the litigants in having to obtain a court order for the issuance of an injunction, and (3) to require the parties to act in a reasonable and rational manner throughout the proceedings.” Amy J. Amundsen, Mutual Temporary Injunctions in Divorce Cases, 11 Tenn. Bar Journal 17 (2001).

That was quite a while ago and laws do change. Including the statute which was amended, effective July 1, 2014.

How has implementation of the law worked out for Tennesseans? To answer that and related questions, here is Part One in a series of reflections on the mandatory injunction law.

After so many years, what have we learned from Tennessee’s mandatory injunction? Has it fulfilled its purposes? Has it caused problems or unforeseen consequences, beneficial or detrimental? How have courts interpreted the law when applying it to actual facts and circumstances? We will examine these and other concerns by reviewing how well the statutory injunction has held up to expectations in various cases.

In this initial segment, we discuss how the court remedied – after the divorce was dismissed – the consequences of one spouse’s injunction violation. Before we get to that, though, there’s need for a little background.

Enjoining Spouses in Every Divorce and Legal Separation

The mandatory injunction applies to every divorce or legal separation in Tennessee courts. When a spouse files the complaint, he or she is immediately enjoined. Shortly thereafter, when the respondent is served with the summons and complaint, that spouse is likewise enjoined. The temporary injunction becomes an order of the court with both spouses prohibited from acting unilaterally (beyond business in the ordinary course) with regard to any property in the marital estate, among other things. Before taking action, a spouse must first obtain court approval or the other spouse’s consent.

To learn more about what is allowed and what is prohibited, read the discussion on Tennessee’s Automatic Injunction: Throwing Water on Fiery Divorces.

Does Being First to File Matter with the Injunction?

As an aside, people sometimes ask if there is any advantage to being the first to file for divorce. With regard to the automatic injunction, maybe. For the responding party who has unofficial knowledge (before being served or waiving service) that the other spouse plans to file for divorce, a brief window of opportunity opens in which he or she can do things soon-to-be proscribed by the injunction. The complainant’s window of opportunity could be greater, though, by controlling the date of filing the complaint (the moment at which he or she submits to the court’s jurisdiction).

Serving the Injunction on the Other Party

What are the requirements for a mandatory injunction?

Ordinarily, attaching a copy of the injunction with the petition and serving it on the respondent-spouse transforms the injunction into an order of the court. Because the injunction is automatic, a judge’s signed order is redundant and unnecessary.

(The official form can be found on the court clerk’s website. In Shelby County, go to http://www.shelbycountytn.gov/DocumentCenter/View/572.)

Since T.C.A. § 36-4-106(d) was amended it now can be issued on all divorces (including irreconcilable differences divorces which was not the case previously) so long as it is served “upon personal service.” Presumably, that means the injunction applies to both parties to a divorce so long as it is included with service of the complaint. Some lawyers may argue that the injunction applies whether or not served because the statute is notice of the law. Until this issue is addressed by the courts, better to be safe than sorry. The better practice is to comply with the provisions of the injunction even if it was not served with the complaint.

Lifting the Mandatory Injunction

What are the requirements for a mandatory injunction? How long does the injunction remain in effect? The injunctive order is in effect against both spouses until one of four events lifts it, as follows:

1. The court enters a final decree of divorce or order of legal separation;
2. The petition for divorce or legal separation is dismissed (as in the Coleman case discussed below);
3. The spouses reach an agreement (or Marital Dissolution Agreement); or
4. The court modifies or dissolves the injunction.

See T.C.A. § 36-4-106(d).

What about consent orders on reconciliation? Amundsen also noted that “if the parties enter into a Consent Order on Reconciliation, then the injunctions remain in effect unless and until the parties agree or the court rules otherwise.”

Until Death Do Us Part, Coleman v. Olson

We often discuss the possible situation in which a divorce is filed and the mandatory injunction is lifted because the spouses reconciled and the divorce was dismissed. We rarely talk about the situation where one spouse passes away during pendency of the divorce. (Not meaning anything nefarious, that’s another discussion for another day. But an accidental death or serious illness coincident with divorce.)

With the death of a spouse, divorce proceedings must be dismissed, or abated, forthwith because the marriage ends with the spouse’s death. In this state, there is nothing remaining for the judge to dissolve by court order. This is indeed a marriage “until death do us part.”

In a Tennessee divorce, the complainant (Mrs. Olson) died from an illness about two weeks after filing. During the very brief pendency of the case, she changed the beneficiary on her $400,000.00 life insurance policy from Mr. Olson to her mother, a clear violation of the mandatory injunction.

The divorce was dismissed upon Mrs. Olson’s death. The decedent’s mother received the proceeds of the life insurance policy as constructive trustee for her grandchild. The husband was left financially responsible for all the marital debts. That inequitable result formed the basis for the Court of Appeal’s allowing the trial court after abatement to reach back and enforce the mandatory injunction and undo the changed beneficiary designation.

A separate civil action for grandparent visitation brought the life insurance proceeds before the appeals court. Coleman v. Olson, M2015000823-COA-R3-CV, 2016 WL 6135395 (Tenn. Ct. App. Oct. 20, 2016), appeal granted (Mar. 9, 2017). The grandmother who was the beneficiary of the insurance proceeds petitioned for visitation with her grandchild under Tennessee’s grandparent visitation law. See T.C.A. § 36-6-306(a).

Note that Isbell v. Hatchett had already been decided when Coleman v. Olson came before the Court of Appeals. The rule in Isbell, as applied to the instant case, is that “an action that was taken in violation of [the mandatory injunction] is not void per se, but is voidable depending upon the circumstances.” Isbell v. Hatchett, No. W2014-0063-COA-R3-CV, 2015 WL 756883 (Tenn. Ct. App. Feb 23, 2015).

Changing Life Insurance Beneficiaries Violated Injunction

Equitable balancing? Court has power to invalidate a party’s action taken in violation of the injunction.

During the brief divorce proceedings, Mrs. Olson did precisely what the injunction expressly prohibited. She changed the beneficiary of her $400,000.00 life insurance policy from her husband to her mother in what the trial court deemed a constructive trust for the child. During a pending divorce or legal separation, T.C.A. § 36-4-106(d)(2) specifically prohibits either party from changing life insurance beneficiaries, canceling a policy, or allowing a life insurance policy to lapse for nonpayment or other reason without prior court approval or the other spouse’s consent.

Abatement Divests the Court of Jurisdiction

In this case of first impression, the Tennessee Court of Appeals in Coleman faced a conundrum. Does the automatic injunction, an interlocutory order, survive abatement of divorce proceedings when a spouse dies?

Jurisdictions are split on this issue. In some states, death of a spouse divests the trial court of jurisdiction to enforce pre-abatement orders (Mr. Olson would not get the life insurance proceeds as a remedy). In Vermont and other jurisdictions, however, death of a spouse does not divest the trial court of jurisdiction to enforce its pre-abatement orders (Mr. Olson would get the proceeds as a remedy).

What is the proper remedy in Tennessee for violating the mandatory injunction in a divorce abated by death of the violating spouse? The Tennessee Court of Appeals applied the reasoning of the Vermont Supreme Court in a case on point: Aither v. Estate of Aither, 2006 VT 111, 913 A.2d 376 (Vt. 2006). Yes, death abates divorce proceedings and the court’s jurisdiction. But to not enforce the injunctive order post-abatement would “frustrate the larger purpose of ensuring that courts have the power to enforce their own valid orders to avoid unjust results,” citing Aither.

The Vermont Supreme Court adopted a rule of “equitable balancing” to give the court flexibility in crafting a remedy for the parties. In balancing the equities, it weighed three factors:

1. The purpose of the injunction in preserving the status quo pending final determination of the spouses’ rights to marital property;
2. The need for the trial court to have power to enforce its own orders; and
3. Because the injunction violation was a change a beneficiary designation on a life insurance policy, the only meaningful way for the trial court to enforce the injunction was to extend its jurisdiction post-abatement when equity requires.

In Coleman, the Tennessee appeals court held the trial court had authority to enforce its pre-abatement injunctive order so to provide an equitable remedy. The reasons being that:

• Death of a spouse abates the divorce action;
• Changing the life insurance beneficiary in violation of the injunctive order was voidable, but not void per se (citing Isbell v. Hatchett);
• Without regard to a spouse’s death, the trial court must have power to invalidate a party’s action taken in violation of the injunction “when justice requires”; and
• The Tennessee Assembly intended the courts to have power to enforce their own orders.

Death of a spouse always abates divorce, so to render the injunction on life insurance changes unenforceable after abatement would render the statute meaningless every time this situation arose. Courts would never have power to enforce the injunctive order or provide an equitable remedy.

Remedy Is a Return to the Status Quo

The appeals court held that the change in beneficiary designation warranted a return to the status quo. The grandmother must return the proceeds to Mr. Olson because Mrs. Olson violated the injunction before her death and before the divorce was dismissed. The equitable factors that favored return of the life insurance proceeds to the husband as a remedy were:

• Significant marital debts (home mortgage, two cars, and consolidation loan);
• In divorce, debts are equitably divided, but wife’s sudden death after changing her life insurance beneficiary deprived the husband of getting his wife’s share of the debts paid; and
• There was no evidence that the husband would not use the life insurance proceeds to provide for his child.

With the injunction upheld post-abatement, the next step is to determine whether enforcing the injunction is equitable under the circumstances. The trial court erred in not reinstating the husband as beneficiary to restore the status quo as it existed before the wife violated the injunction. Grandmother Coleman was taxed the costs of appeal.

The Tennessee Supreme Court has since granted appeal, so we don’t yet have the final word on Coleman v. Olson. If generally affirmed, hopefully the state supreme court will clarify the scope of the injunction and the court’s equitable powers as well as the factors to consider with like circumstances.

If you harbor plans to change your life insurance beneficiary during the divorce proceedings, then consult an attorney first. It may be possible to obtain court approval or the consent of the other spouse, depending upon the circumstances.

Part 1 of 4.  See Part Two.