Mearns v. Scharbach

In 1993, the Washington state legislature enacted RCW 11.07.010, which applied to nonprobate assets such as term-life-insurance-policy proceeds. Under the statute, if a life-insurance policyholder named his spouse as the primary beneficiary of the policy and then divorced, the life-insurance proceeds would pass as if the beneficiary spouse died on the day of entry of the divorce decree. If a policyholder wished for his ex-spouse to remain as the primary beneficiary, he had to redesignate her as such after the entry of the divorce decree. Christine Scharbach (defendant) married Jerrold Mearns in 1982. Jerrold bought a term life-insurance policy from Guardian Life Insurance Company (Guardian) in 1992, naming Christine as the primary beneficiary and Jerrold’s two adult children from a prior marriage, Joel Mearns and Nanette Mearns (plaintiffs), as the contingent beneficiaries. Jerrold and Christine divorced in 1997, and the divorce decree did not address the distribution of the Guardian policy. After the divorce, Jerrold told a Guardian agent that he did not wish to change the beneficiary designation on the Guardian policy. Jerrold told his employer’s human-resources administrator that he was changing the beneficiary designation of some of the insurance policies he owned but not others. Jerrold died. Christine, Joel, and Nanette each filed claims on the Guardian policy proceeds. Joel and Nanette then sued Christine for payment of the proceeds and filed for summary judgment, and Guardian interpleaded the insurance proceeds. The trial court granted Joel and Nanette’s motion and awarded the proceeds to them. Christine filed a motion for reconsideration and lost. Christine appealed to the Washington Court of Appeals, arguing, among other things, that RCW 11.07.010 was inapplicable to the Guardian policy because, she claimed, Jerrold’s statements to the Guardian agent and to the human-resources administrator expressed his intent for Christine to remain as the primary beneficiary, and, she argued, the purpose of the statute was to effectuate a policyholder’s intent.