PaineWebber Inc. v. East

LAWRENCE F. RODOWSKY, Judge (Retired, Specially Assigned). This interpleader action involves the interpretation of a separation agreement. The issue is whether, by the separation agreement, the former wife waived her right as the named beneficiary to the proceeds of an individual retirement account (IRA) maintained by her ex-husband, now deceased. The respondent, Carol S. East (Carol), and her former husband, Dewey F. East, Jr. (Dewey), were married in 1985.

In April 1986, Dewey opened an IRA account (the East IRA) ■with PaineWebber, Inc. (PaineWebber), by completing and executing a form entitled “Adoption Agreement and New Account Form for PaineWebber IRAs.” Dewey named Carol the beneficiary of the East IRA, but, under the terms of the account as set forth in the agreement between Dewey and PaineWebber, Dewey reserved the power to change the named beneficiary. On March 14, 1990, Carol and Dewey entered into the subject separation agreement (the Agree ⁴¹² ment). They were divorced, a vinculo, by the Circuit Court for Prince George’s County on May 8, 1991. Dewey married Deborah East (Deborah) in 1993.

He died on December 10,1996. In October 1997 Carol sued PaineWebber in the Circuit Court for Prince George’s County claiming the East IRA as named beneficiary. PaineWebber counterclaimed in inter-pleader, joining Deborah and the Estate of Dewey (the Estate) as additional counterclaim defendants under Maryland Rule 2-331(c). 1 PaineWebber averred that claims to the East IRA had been asserted against it by Deborah and also by the Estate. The two newly joined parties moved for summary judgment on two grounds.

First, they argued that Carol, in the Agreement, had waived any right as the named beneficiary to the East IRA. The movants further argued, inter alia, that Dewey, by signing in May 1996 a form headed, “Adoption Agreement and New Account Form for PaineWebber IRAs,” on which the spaces for designation of a primary and a contingent beneficiary were left blank, had designated the Estate as beneficiary under the terms of the East IRA and in accordance with PaineWebber’s internal operating procedures. The circuit court granted summary judgment in favor of the Estate, concluding that Carol had effectively waived, in the Agreement, any right, including that of a named beneficiary, to the proceeds of the East IRA. 2 The trial court did not address whether Dewey had effected a change of beneficiary. Carol appealed to the Court of Special Appeals.

In East v. PaineWebber, Inc., 131 Md.App. 302 , 748 A.2d 1082 (2000), the Court of Special Appeals reversed. It held ⁴¹³ that “the Agreement, by itself, [did] not operate as a waiver of Carol’s rights as the named beneficiary of the East IRA.” Id. at 316 , 748 A.2d at 1089 . The Court of Special Appeals addressed the provisions of the Agreement on which the appellees based their waiver argument, specifically the provisions entitled “Pension Waiver,” “Waiver of Estate Claim,” and “Property Division” which we shall discuss below. Thereafter, we granted the Estate’s petition for a writ of certiorari.

PaineWebber, Inc. v. East, 359 Md. 668 , 755 A.2d 1139 (2000). I Maryland Rule 2-501 provides that summary judgment may be granted where “there is no genuine dispute as to any material fact and ... the party is entitled to judgment as a matter of law.” Under Maryland’s summary judgment rule, a trial court determines issues of law and makes rulings as a matter of law. Beatty v. Trailmaster Prods., Inc., 330 Md. 726, 737 , 625 A.2d 1005, 1011 (1993); Heat & Power Corp. v. Air Prods. & Chems., Inc., 320 Md. 584, 591 , 578 A.2d 1202, 1205 (1990). Where there are disputed issues of material fact a trial court shall not grant summary judgment.

Pittman v. Atlantic Realty Co., 359 Md. 513, 537 , 754 A.2d 1030, 1043 (2000); Goodwich v. Sinai Hosp. of Baltimore, Inc., 343 Md. 185, 205-06 , 680 A.2d 1067, 1077-78 (1996). Thus, the standard for reviewing a trial court’s grant of summary judgment is “whether the trial [court] was legally correct.” Okwa v. Harper, 360 Md. 161, 178 , 757 A.2d 118, 127 (2000); Sheets v. Brethren Mut. Ins. Co., 342 Md. 634, 638-39 , 679 A.2d 540, 542 (1996); Heat & Power Corp., 320 Md. at 592 , 578 A.2d at 1206 . “In reviewing a summary judgment, an appellate court has the same information from the record and decides the same issues of law as the trial court.” Heat & Power Corp., 320 Md. at 591-92 , 578 A.2d at 1206 .

Interpretation of the unambiguous separation agreement presented in the instant case is a question of law for the court and, therefore, is subject to de novo review. Auction & ⁴¹⁴ Estate Reps., Inc. v. Ashton, 354 Md. 333, 341 , 731 A.2d 441, 445 (1999); Calomiris v. Woods, 353 Md. 425, 434 , 727 A.2d 358, 362 (1999); Kendall v. Nationwide Ins. Co., 348 Md. 157, 170-71 , 702 A.2d 767, 773 (1997); JBG/Twinbrook Metro Ltd. Partnership v. Wheeler, 346 Md. 601, 625 , 697 A.2d 898, 911 (1997); Suburban Hosp., Inc. v. Dwiggins, 324 Md. 294, 306 , 596 A.2d 1069, 1075 (1991). As we explained in Goldberg v. Goldberg, 290 Md. 204 , 428 A.2d 469 (1981): “Property settlement agreements, as all other contracts scrutinized under the law of this State, are subject to interpretation in light of the settled and oft-repeated principles of objective construction.

Orkin v. Jacobson, 274 Md. 124, 128 , 332 A.2d 901, 903 (1975). ‘The written language embodying the terms of an agreement will govern the rights and liabilities of the parties, irrespective of the intent of the parties at the time they entered into the contract, unless the -written language is not susceptible of a clear and definite understanding....’ Slice v. Carozza Prop., Inc., 215 Md. 357, 368 , 137 A.2d 687, 693 (1958). ‘[W]here a contract is plain and unambiguous, there is no room for construction, and it must be presumed that the parties meant what they expressed.’ Kasten Constr. [Co.] v. Rod Enterprises, [Inc.], 268 Md. 318, 328 , 301 A.2d 12, 18 (1973); Little v. First Federated Life [Ins. Co.], 267 Md. 1, 6 , 296 A.2d 372, 375 (1972); Devereux v. Berger, 253 Md. 264, 269 , 252 A.2d 469, 471 (1969). Thus, when interpreting a separation agreement, this Court is ‘bound to give effect to the plain meaning of the language used.’ Woodham v. Woodham, [ 235 Md. 356 ,] 360, 201 A.2d [674,] 676 [(1964)]; Sands v. Sands, 252 Md. 137 , [142-43,] 249 A.2d 187 [, 190-91] (1969).” Id. at 212 , 428 A.2d at 474-75 . See also Feick v. Thrutchley, 322 Md. 111, 114 , 586 A.2d 3, 4 (1991); Bruce v. Dyer, 309 Md. 421, 433 , 524 A.2d 777, 783 (1987).

We turn then to the three provisions of the Agreement which the Estate contends constitute a waiver by Carol of any claim to the East IRA as a named beneficiary. ⁴¹⁵ II The “Pension Waiver” provision reads as follows: “Each of the parties hereby expressly waives any legal right either may have under any Federal or State law as a spouse to participate as a payee or beneficiary regarding any interests the other may have in any pension plan, profit-sharing plan, or any other form of retirement or deferred income plan including, but not limited to, the right either spouse may have to receive any benefit, in the form of a lump-sum death benefit, joint or survivor annuity, or preretirement survivor annuity pursuant to any State or Federal law, and each of the parties hereby expressly consents to any election made by the other, now or at any time hereafter, with respect to the recipient and the form of payment of any benefit upon retirement or death under any such pension plan, profit-sharing plan, or other form of retirement or deferred income plan.” From this language, the Estate constructs the following argument: “Thus, under the plain language of the ‘pension waiver clause’ quoted above, Carol East has ‘expressly consented] to any election made by [Dewey East] ... at any time ... with respect to the recipient ... of the IRA. By consenting in advance to any election made by Dewey East at any time with respect to the recipient of the IRA, Carol East has expressly, contractually waived any right even to challenge the change of beneficiary made by Dewey East. By doing so, Carol East agreed that the election she now challenges is valid and unassailable. Given this specific waiver (of the right to challenge any change in beneficiary), Carol East is barred from objecting to any change of beneficiary made by Dewey East.” The argument would be logically unassailable were the facts as the Estate presents them.

It has not been determined, however, who the named beneficiary is. If no change of beneficiary was effected by Dewey, then Carol’s consent to a change is simply irrelevant. The Estate’s consent argument ⁴¹⁶ improperly assumes that the named beneficiary of the East IRA was validly and effectively changed. If the beneficiary has been effectively changed, it is pursuant to a power reserved in Dewey to which Carol’s consent was not required, as we explain in Part IV, infra.

Furthermore, Carol does not claim the East IRA based on status or relationship as a spouse; she claims under a contract right, as the named beneficiary. Thus, the language waiving “any legal right ... as a spouse to participate as a payee or beneficiary ... in any ... retirement or deferred income plan” does not defeat Carol’s claim. We agree with the conclusion of the Court of Special Appeals that “the ‘Pension Waiver’ provision of the Agreement does not support a finding that Carol waived her rights as beneficiary to the East IRA.” East, 131 Md.App. at 312 , 748 A.2d at 1087 . Ill The provision of the Agreement entitled, ‘Waiver of Estate Claim,” reads as follows: “Each party releases and relinquishes to the other party and to his or her heirs, executors, administrators, or assigns, any and all claims or rights which may now exist or may hereafter arise by reason of the marriage between the parties with respect to any property, whether real, personal, or mixed, belonging to such other party specifically including but not limited to any right arising under the Maryland Marital Property Act.

Without limiting the foregoing, each party waives and releases to the other party and to his or her heirs, executors, administrators, and assigns, all rights to share in any of the property or estate of the other party which has arisen or may hereafter arise, by operation of law or otherwise, and specifically including any right, title or interest wife may have in Dewey East Excavating Co., Inc. Specifically, each party waives and releases all right of dower or courtesy, all right to share in the estate of the other party under the intestacy laws of any jurisdiction, all right of election to take against any last will and testament ⁴¹⁷ of the other party whether executed before or after the execution of this Agreement, and all right to secure administration or to act as executor or administrator of the estate of the other party.” The Estate asserts that through the above-quoted portion of the Agreement Carol waived her right to assert a claim to the East IRA as the named beneficiary of that fund. The plain and unambiguous language of the Agreement did not have such an effect. This is because the proceeds of the East IRA, should it be determined on remand that Carol remained the named beneficiary of the fund at the time of Dewey’s death, would be paid directly to her as a third-party beneficiary of the Dewey-PaineWebber contract, without passing through Dewey’s probate estate. See Md.Code (1974, 1991 Repl.Vol., 2000 Cum.Supp.), § 1-401 of the Estates and Trusts Article; Md.Code (1980, 1998 Repl.Vol.), § 1-204 of the Financial Institutions Article.

Thus, the waiver in the Agreement of rights against the Estate is simply inapplicable. The Court of Special Appeals correctly so held. East, 131 Md.App. at 312-13 , 748 A.2d at 1087-88 . IV The “Property Division” section of the Agreement reads: “As of the date of this Agreement, Husband acknowledges that the Wife has now in her possession personal property which belongs to the Wife.

To the extent that Husband may have any interest in such property, the Husband for himself, his heirs, representatives and assigns quit claims any and all interest that the Husband may have in such property. “As of the date of this Agreement, Wife acknowledges that all personal property now in husband’s possession belongs to the Husband. To the extent that Wife may have any interest in such property, the Wife for herself, her heirs,