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Court Unable to Determine Whether POA Grants Authority to Change Beneficiary – D.Md.

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  • Court Unable to Determine Whether POA Grants Authority to Change Beneficiary – D.Md.

    Court Unable to Determine Whether POA Grants Authority to Change Beneficiary – D.Md.
    Attached hereto is a case out of the District of Maryland, Sun Life Assurance Company of Canada v. Horn, et. al. This case involves an interpleader action filed by plaintiff regarding ERISA governed life insurance benefits. The dispute arises between the decedent’s husband and mother. Decedent’s husband was the named beneficiary under the policy. The decedent suffered significant medical conditions, and she appointed her sister as POA. After the appointment, the POA changed the beneficiary from decedent’s husband to her mother, stating the decedent no longer wanted her husband to be beneficiary under the policy. Decedent’s husband and mother made competing claim for the life insurance benefits, and plaintiff instituted the interpleader action. The husband filed a motion for partial summary judgment asserting that the POA did not grant authority to change a beneficiary designation. The relevant language from the POA was:
    Insurance and annuities – With respect to this subject, I authorize my agent to: continue, pay the premium or make a contribution on, modify, exchange, rescind, release, or terminate a contract procured by or on behalf of the principal that insures or provides an annuity to either the principal or another person, whether or not the principal is a beneficiary under the contract; . . . .
    The court denied the husband’s motion.
    The Form covers contracts that are “procured by or on behalf of the principal.” ECF 23-3 at 5. Ms. Simmons procured the Policy, a group term life insurance policy, as a benefit of her employment with Christiana Care Health Systems. ECF 1, ¶¶ 7, 8; ECF 1-1 at 1-47. Additionally, the Form applies to a contract that “insures.” ECF 23-3 at 5. In the context of the heading, “Insurance and annuities”, the scope of the power of attorney appears to apply to insurance policies generally, regardless of “whether or not the principal is a beneficiary under the contract.” Id.

    Under E.T. § 17-103, the principal’s spouse, parent, or an individual named as a beneficiary to receive property on the principal’s death “may petition a court to construe a power of attorney or the agent’s conduct.” Id. There is no indication that Mr. Simmons has filed such an action.

    Like Parker and Horn, Mr. Simmons relies on King v. Bankerd, supra, 303 Md. 98, 492 A.2d 608. He argues that King supports his position that the power of attorney did not authorize a change of beneficiary. See ECF 22-2 at 8-16.

    In King, a husband and wife owned a Maryland home as tenants by the entirety. Id. at 102, 492 A.2d at 610. Before leaving Maryland to live in another state, the husband executed a power of attorney authorizing Mr. King, an attorney, “to ‘convey, grant, bargain and/or sell’” the husband’s property. Id. at 101-02, 492 A.2d at 609-10. Although the husband moved out of state, his wife remained in their Maryland home. Id. at 103, 492 A.2d at 610. After approximately ten years without receiving word from the husband, the agent came to believe that the husband was either deceased or had abandoned his interest in the home. Id. at 103, 492 A.2d at 610. The agent subsequently conveyed the husband’s interest in the home, without consideration, to the wife. Id. at 103, 492 A.2d at 610. Three years later, the husband filed suit against the agent, arguing the power of attorney did not authorize the agent to make a “gratuitous transfer” of the husband’s property. Id. at 101, 492 A.2d at 609-10.

    The trial court granted summary judgment in favor of the husband, finding that King exceeded the authority granted to him by the power of attorney. Id. at 104, 492 A.2d at 611. The Maryland Court of Appeals affirmed. Id. at 104, 113, 492 A.2d at 611, 615. The Maryland Court of Appeals stated:

    [O]ne “well settled” rule is that powers of attorney are “strictly construed as a general rule and [are] held to grant only those powers which are clearly delineated[.]” Although our predecessors recognized this rule over a century ago in Posner v. Bayless, 59 Md. 56 (1882), they were careful to note that the rule of strict construction “cannot override the general and cardinal rule” that the court determine the intention of the parties. Id. at 60. To ascertain this intent, the Posner Court emphasized that the language used in the instrument and the object to be accomplished be viewed in light of the surrounding circumstances.

    Id. at 105, 492 A.2d at 611 (citations omitted).

    Applying this two-part rule to the facts before it, the court determined that a “strict construction” of the “general power of attorney executed by [the principal] authorized [the agent] to ‘convey, grant, bargain and/or sell’ the subject property ‘on such terms as to him may seem best,’” but “did not expressly authorize a gratuitous transfer of property.” Id. at 112, 492 A.2d at 615. Looking to the “facts and surrounding circumstances” relating to the power of attorney at issue, the court noted that the agent’s “beliefs” that the husband was either deceased or had abandoned his interest in the home did not show the husband “intended” for the agent to “give the property away.” Id. at 112, 492 A.2d at 615. The court also considered a letter sent from the husband to the agent, indicating that the husband “anticipated maintaining his interest in the property.” Id. at 13, 492 A.2d at 615. Therefore, based on the surrounding circumstances, the court was unable to identify any facts or inferences showing that the agent was authorized to make a gift of the principal’s real property. Id. at 112-13, 492 A.2d at 615.

    Mr. Simmons is correct that the words “‘change the beneficiary’” do not appear in the Form. ECF 22-2 at 5. But, the terms of the power of attorney expressly authorize the agent to “continue, pay the premium or make a contribution on, modify, exchange, rescind, release, or terminate . . .” an insurance policy. ECF 23-3 at 5 (emphasis added). Title 17 of the Maryland Estates and Trusts Article of the Code does not define the word “modify.” See E.T. § 17-101, et seq. The parties have provided little guidance as to the meaning of the word “modify”, as used in the Form, or how to construe it. 16

    In King, the power of attorney was not a creation of statute. The court did not employ contract or statutory principles of construction to aid in its analysis. But, the power of attorney form used here is one that was enacted by the Maryland General Assembly.
    Assuming that a form enacted by a legislature is tantamount to a statute, “[t]he cardinal rule of statutory interpretation is to ascertain and effectuate the real and actual intent of the Legislature.” Lockshin v. Semsker, 412 Md. 257, 274, 987 A.2d 18 (2010). Our analysis is guided by the plain language of the statute. Id. Ordinarily, if the language of a statute is unambiguous, our inquiry as to legislative intent comes to an end. Lockshin, 412 Md. at 275, 987 A.2d 18. If a statute is ambiguous, however, we look to the “legislative intent in other indicia, including the history of the legislation or other relevant sources intrinsic and extrinsic to the legislative process.” Id. at 276, 987 A.2d 18. Maryland courts often use dictionary definitions when construing ambiguous statutory language. See James McHugh Constr. Co. v. Travelers Prop. Cas. Co. of Am., 223 F. Supp. 3d 462, 468 (D. Md. 2016) (citing Bottini v. Dep’t of Fin., 450 Md. 177, 195, 147 A.3d 371, 382 (2016), and Cole v. State Farm Mut. Ins. Co., 359 Md. 298, 305, 753 A.2d 533, 538 (2000)). The word “modify,” as used in the power of attorney Form, is one that appears to have an ordinary meaning.

    The word “modify” connotes an alteration or a change. The Supreme Court has stated that the word “modify . . . connotes moderate change.” MCI Telecomm.’s Corp. v. Am. Tel. & Tel. Co., 512 U.S. 218, 228 (1994) (citations omitted). However, in the posture of this case, I am unable to determine, as a matter of law, whether the word “modify” permits or precludes a change in beneficiary.

    As the Maryland Court of Appeals explained in King, a court must be “careful to note” the “general and cardinal rule” that requires the determination of the parties’ intentions as to the scope of the power of attorney agreement. King, 303 Md. at 105, 492 A.2d at 611 (citation omitted). Accordingly, the power of attorney and “the object to be accomplished” by it must “be viewed in light of the surrounding circumstances.” Id. at 105, 492 A.2d at 611 (citation omitted).

    Parker and Margery Horn have presented evidence that Ms. Simmons intended to authorize the change in beneficiary. They point to the incident of July 29, 2016. See ECF 23-2 at 8-10. They also submitted numerous affidavits suggesting Ann feared and disliked Mr. Simmons, particularly after the incident of July 29, 2016. For example, Snider avers that, after the events of July 29, 2016, she “noticed on several occasions that [Ms. Simmons] seemed to be afraid of John Simmons.” ECF 23-3 at 28, ¶ 6; see also ECF 23-3 at 26 (Affidavit of Dorthy Carroll), ¶ 9. Parker avers that, while Ms. Simmons was in the hospital, Parker observed her pull her arm away from Mr. Simmons, as if she were afraid of him. Id. at 31, ¶ 7. Moreover, Cathey Fischbein, the Unit Nursing Supervisor at Bridge Park, avers that “it was made known to [her] by Ms. Simmons and others that [Ms. Simmons] wanted to have nothing to do with her husband, John Simmons.” Id. at 33, ¶ 3. And, Vandella Mossenburg-Bey, the Director of Social Services at Bridge Park, avers that “Ms. Simmons made it clear that she did not want to have her husband near her and all indications were that she was afraid of him.” Id. at 34, ¶ 4. Similarly, Gary Ratliff, a longtime friend of Ms. Simmons, states in his Affidavit that it was “obvious” to him that “there was substantial friction between Ann and her husband.” Id. at 35, ¶ 7.

    However, given the prediscovery posture of the case, Mr. Simmons has not yet had an opportunity to explore the “surrounding circumstances.”17 Summary judgment is ordinarily inappropriate “where the parties have not had an opportunity for reasonable discovery.” E.I. du Pont De Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 448-49 (4th Cir. 2012); see Putney v. Likin, 656 F. App’x 632, 638 (4th Cir. 2016); McCray v. Md. Dep’t of Transp., 741 F.3d 480, 483 (4th Cir. 2015). As the Fourth Circuit stated in McCray, 741 F.3d at 483, “[s]ummary judgment before discovery forces the non-moving party into a fencing match without a sword or mask.” A party “needs an ‘adequate opportunity’ to present its case and ‘demonstrate a genuine issue of material fact.’” Adams Housing, LLC, 2016 WL 6958439, at *2.

    To be sure, as the movant, Mr. Simmons has not argued that he is in need of discovery. But, this is understandable, given his contention that, as a matter of law, the power of attorney did not authorize a change of beneficiary.
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