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Hailey v. Waller

United States District Court, D. Maryland

February 4, 2019

CAROLYN HAILEY, Plaintiff,
v.
VANESSA WALLER, Defendant.

          MEMORANDUM OPINION

          PETER J. MESSITTE UNITED STATES DISTRICT JUDGE

         Barbara Miller was an employee of the Environmental Protection Agency who had a Federal Employees' Group Life Insurance Policy (the “FEGLI Policy”) issued by Metropolitan Life Insurance Company (MetLife) valued at approximately $153, 500. The originally named beneficiary of the policy was Vanessa Waller, Miller's daughter. ECF No. 15-2; ECF No. 1 at ¶¶ 6, 10.

         In late October 2013, roughly three years before her death in July 2016, Miller suffered a brain hemorrhage, which caused some cognitive impairment. ECF No. 15 at 1, 4. Even so, on August 27, 2014, ten months following her brain hemorrhage, Miller executed a form (“2014 Beneficiary Designation”), changing the designated beneficiary of her life insurance policy, her daughter Vanessa Waller, from 100% to 25% and naming her friend Carolyn Hailey as 75% beneficiary. ECF No. 1 at ¶ 11-12. Following Miller's death, Hailey and Waller filed competing claims to the proceeds of the life insurance policy with MetLife. ECF No. 1 at ¶ 14. Eventually, MetLife filed an interpleader in this Court, joining Hailey and Waller as Defendants, after which MetLife deposited the disputed insurance proceeds with the Court and was dismissed from the case. See ECF Nos. 13, 14. This Court recently repositioned the parties, designating Hailey as Plaintiff and Waller as Defendant. See 7 Fed. Prac. & Proc. Civ. § 1708 (3d ed.) (2018); Fed.R.Civ.P. 22. The case is now styled “Hailey v. Waller.”

         Events prior to the filing of the present suit are especially relevant. After Miller's death, her nephew Phillip Thornton filed her Last Will and Testament dated April 24, 2014 and a First Codicil dated February 12, 2015 with the Register of Wills for Prince George's County, Maryland. ECF No. 15-1 at 4. Waller filed a caveat to the Will and First Codicil. Id. Following a hearing, the Orphans' Court[1] credited testimony proffered by Waller to the effect that Miller lacked capacity to execute the Last Will and Testament and First Codicil in question and set both documents aside. ECF Nos. 15-12, 15-13. No. appeal was taken from that decision.

         The specific question before the Court in the present proceeding is whether the Orphans' Court's determination as to Miller's lack of capacity to execute the Last Will and Testament and Codicil of April 24, 2014, and February 12, 2015, respectively, has collateral estoppel or res judicata effect on the issue of Miller's capacity to execute the August 27, 2014 Change of Beneficiary Designation with respect to her life insurance proceeds.

         The Court holds that whatever the evidence may have shown in the proceeding before the Orphans' Court vis a vis Miller's mental capacity to execute a will or codicil, that decision cannot collaterally estop nor does it have any res judicata effect upon the present proceeding to determine the parties' entitlements to the insurance benefits, for the reason that the Orphans' Court lacked jurisdiction to decide any issue as between disputing claimants to the proceeds of an insurance policy, which are non-probate assets.

         Accordingly, the Court will DENY Waller's Motion for Summary Judgment (ECF No. 15) as well as Hailey's Cross-Motion for Summary Judgment (ECF No. 23).

         I. FACTUAL AND PROCEDURAL BACKGROUND

         In late October, 2013, Barbara Miller suffered a hemorrhage in her brain which, to at least some degree, caused speech and cognitive defects that diminished her cognitive capacity. Her neurologist, Andrew Stemer, M.D., [2] concluded that Miller suffered from aphasia as a result of the hemorrhage and had difficulty understanding and speaking, and was susceptible to others' ideas. In a note dated April 17, 2014, Dr. Stemer advised that Miller should not be left to independently manage her finances, stating further that Waller, Miller's daughter, should be consulted regarding all financial transactions. ECF No. 15-4. More specifically, in a deposition introduced in the Orphans' Court proceeding, Dr. Stemer opined that Miller lacked the capacity to execute a Last Will and Testament (and presumably a Codicil) at all relevant times after October 31, 2013. ECF No. 15-5 at 5.

         On August 27, 2014, Miller, with the assistance of her friend Carolyn Hailey, but without the knowledge or participation of Waller, visited the office of Miller's attorney, Benjamin Woolery, Esquire, in Upper Marlboro, Maryland. While there, Miller executed a Re-Designation of Beneficiary form for her FEGLI policy, disfavoring her existing beneficiary, Waller, and favoring her friend Hailey. Her signature was witnessed by Sharon Gordon, an Administrative Assistant in Woolery's office, and Kate Devlin, the firm's Office Manager. ECF No. 15-7. Gordon purportedly had a conversation with Miller in the waiting area of the office during which, according to Gordon, Miller demonstrated that she understood the implications of changing her beneficiary designation. ECF No. 23-3 at 2. Miller, says Gordon, never indicated she was under duress in any form, and specifically told Gordon that she wanted to change her designation to give most of the insurance benefits to Hailey because Waller had been so mean to Miller. Miller further stated that Waller never wanted Miller to do anything by herself, whereas Hailey was willing to take her places and was otherwise helpful to her. Id.

         Woolery drew up and witnessed the execution of Miller's Last Will and Testament dated April 24, 2014. Following their meeting, Woolery wrote a letter to the Prince George's County Chief of Police stating his view that Miller had been competent during their April meeting and that a police search for Miller at Woolery's office seemed to have been based solely on Waller's word that Miller was not supposed to be out by herself or presumably with anyone else, at least without Waller's permission. ECF No. 23-2 at 50-51. On February 9, 2015, Woolery sent Miller a First Codicil as to Miller, purportedly prepared at her request. ECF No. 23-2 at 2.[3]

         As indicated, when Miller's 2014 Will and the 2015 First Codicil were offered in the Prince George's County Orphans' Court, Waller filed a caveat. Following a hearing, the Orphans' Court held that Miller lacked capacity to execute either of those documents and set them both aside. See ECF Nos. 15-12, 15-13.

         II. ANALYSIS

         A. Waller argues before this Court that the Orphans' Court ruling regarding Miller's lack of testamentary capacity to execute the Will and First Codicil has collateral estoppel and/or res judicata effect with respect to the attempted 2014 change of beneficiary under Miller's insurance policy, which was signed on a date following the date of the execution of the Will but before the date of the execution of the First Codicil. The core issue, as the Court sees it, which neither party has argued, is whether the Orphans' Court determination that a decedent lacks capacity to execute a Will or Codicil is binding in a subsequent proceeding involving the issue of whether the decedent as insured had the capacity to change a beneficiary under a life insurance policy. Waller argues that the Orphans' Court decision is binding; Hailey's primary argument in this Court is that Hailey was not a party to the probate proceeding and therefore could not be bound by its decision. The latter argument might in a sense be true, if in fact the Orphans' ...


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