SCOVT reverses judgment that declined to enforce a life insurance provision in a divorce order and remands for further proceedings, holding that – because it was stipulated – the life insurance provision is valid and enforceable; Court divided on whether plaintiff entitled to judgment to proceeds of policy purchased after the divorce that named another beneficiary.

 diMonda v. LincolnNational Corp , 2025 VT 45  [8/8/2025]

REIBER, C.J.   This appeal concerns entitlement to the proceeds of two life insurance policies.  Plaintiff Victoria diMonda claims an equitable interest in a portion of the proceeds based on her stipulated divorce agreement with decedent, which was adopted as a final order by the family division.  The civil division denied plaintiff’s motion for summary judgment and granted defendants’ motions for summary judgment and judgment on the pleadings.  We affirm the judgment granting interpleader relief to defendant USAA Life Insurance Co., but otherwise reverse and remand for further proceedings. 

 

The primary issue on appeal is whether the trial court correctly held that the life-insurance provision in the 2011 divorce order was invalid and as an attempt to secure postmortem maintenance.

 

The 2011 stipulated order provided that “[Decedent] shall maintain in place his present life insurance policy with SGLI with a payable on death benefit of $400,000, or a policy which has the same minimum death benefit, at his option [and] shall name Plaintiff as primary, 100% beneficiary on this life insurance policy for at least the next fifteen (15) years…”

 

Decedent retired from the military in April 2021, making him ineligible for the SGLI policy, and he did not thereafter obtain a new policy with the same minimum death benefit that named plaintiff as sole beneficiary.

 

However, when decedent died in December 2023, he held two other policies. In 2015, he obtained a $400,000 life insurance policy from USAA Life Insurance Co. and named Barrows as the sole beneficiary on this policy.  In 2020, he obtained a $250,000 life insurance policy from Lincoln National Life Insurance Co. and also named Barrows as the primary beneficiary. 

 

In January 2024. plaintiff filed this action against Lincoln, USAA, and Barrows, seeking a declaration that she was entitled to be paid $400,000 under the terms of the final divorce order. 

 

Barrows moved for judgment on the pleadings.  She argued that the life-insurance provision in the final divorce order was invalid because it would violate this Court’s caselaw prohibiting courts from awarding postmortem spousal maintenance. Lincoln also moved for judgment on the pleadings. It argued that even if the provision were enforceable, the plain language of the order did not apply to Lincoln’s $250,000 policy.  USAA moved for interpleader relief in the form of an order requiring it to deposit its policy’s death benefit with the court and dismiss USAA from the action.  Finally, plaintiff moved for summary judgment, arguing that the life-insurance provision was enforceable both because it was not tied to the spousal-maintenance provision and because decedent agreed to it.

 

The civil division granted defendants’ motions and denied plaintiff’s motion.  The court agreed with defendants that the life-insurance provision in the final order was intended to secure spousal maintenance beyond death and was therefore invalid and unenforceable.  The court held that Barrows was entitled to retain the $250,000 death benefit paid by Lincoln.  It ordered USAA to pay the $400,000 death benefit on its policy into escrow.

 

Our decisions make clear the family division does not have authority to order spousal maintenance to continue beyond the obligor’s death or to require the obligor spouse to name the obligee as a beneficiary on a life insurance policy for the purpose of securing unpaid maintenance.

 

 However, these decisions do not support the trial court’s conclusion that the life insurance provision in this case was unenforceable, for two reasons. First, it is not clear that the life-insurance provision was actually intended to secure post-mortem maintenance. 

 

Second, the provision was not imposed sua sponte by the family division.  Rather, the parties agreed to it as part of their stipulated property settlement. Because, as  we acknowledged in Justis and Meier, the parties can agree to postmortem maintenance, it follows that they may agree to secure a maintenance obligation with life insurance. Justis v. Rist, 159 Vt. 240, 244  (1992) (“[T]he courts have no authority to order maintenance to continue beyond the life of the obligor spouse unless the parties have agreed otherwise.” (emphasis added)).; Meier v. Meier, 163 Vt. 608, 610 (1994) (mem.)(  “the parties may agree to maintenance following the death of the obligor.” )

We reverse the trial court’s judgment, except for the portion of the order granting interpleader relief to USAA. No party challenges the court’s award of interpleader relief to USAA and our holding does not affect this aspect of the judgment.   

We remand for the court to consider whether plaintiff is equitably entitled to recover $400,000 or some other amount from the proceeds of either of the policies at issue in this case, and whether her claim takes priority.

The court should also address defendants’ claims that the life insurance provision does not entitle plaintiff to the proceeds of either the USAA or Lincoln policies because neither existed at the time of the divorce.

 

Affirmed as to the judgment granting interpleader relief to defendant USAA Life Insurance Co.; otherwise, reversed and remanded for further proceedings consistent with this opinion.

TEACHOUT, Supr. J. (Ret.), Specially Assigned, joined by EATON, J., dissenting in part.   I dissent as to that portion of the instructions on remand concerning distribution of the $400,000 USAA insurance proceeds.  Equity is the basis for plaintiff’s entitlement to life insurance for the reasons set forth in the majority opinion, but once plaintiff is entitled to receive life insurance, enforcement of the parties’ negotiated stipulation calls for her to have the full USAA policy proceeds, as that $400,000 amount was specifically provided for in the stipulation.

 

 Under both the court order and the contract created by the stipulation, plaintiff was guaranteed to be the “100% beneficiary” of $400,000 in life insurance for fifteen years. Decedent died within fifteen years of the stipulation.  Equitable enforcement of the insurance provision does not extend to giving the trial court the discretion to divide up the funds between plaintiff and other parties whose claims arose later.

 

I would order the trial court on remand to award plaintiff the $400,000 proceeds of the USAA insurance policy, award Barrows the full amount of proceeds of the Lincoln policy.