What Is the Remedy When a Party Violates the Automatic Injunction?: Coleman v. Olson Presents a Case of First Impression in Tennessee

November 2, 2016 K.O. Herston 0 Comments

Facts: Mother and Father married in 2007. Their child was born the following year.

In the summer of 2012, they began having marital problems. This culminated in a physical altercation that resulted in Mother’s arrest. Upon her release from jail, Mother moved into the home of a friend.

Mother filed a complaint for divorce on July 5, 2012.

Four days later, Mother became ill. She was hospitalized the following day and diagnosed with a serious, sometimes fatal inflammatory disease.

knoxville divorceMother’s mother, i.e., Grandmother, came to the hospital. They discussed Mother’s desire that the proceeds of her $400,000 life insurance policy, for which Father was the beneficiary, be used to benefit the child. Grandmother created a handwritten document naming herself as the beneficiary of Mother’s life insurance policy, with the child named as a contingent beneficiary. Mother signed the document, it was submitted to the insurance company, and the beneficiary changed.

Mother’s symptoms progressed rapidly. Nine days after being admitted to the hospital, she died.

After Mother’s death, the proceeds from her life insurance policy were paid to Grandmother in accordance with the handwritten change of beneficiary.

Father brought an action against Grandmother to recover the proceeds from Mother’s life insurance policy.

The trial court found Mother changed the beneficiary of her life insurance policy in violation of the automatic injunction that went into effect when she filed her complaint for divorce. Regardless, the trial court concluded the appropriate remedy was to ensure that the insurance proceeds be utilized for Mother’s intended purpose, which was to benefit the child. The trial court ordered that the remaining insurance proceeds be deposited with the court for the use and benefit of the child.

Father appealed.

On Appeal: The Court of Appeals reversed the trial court.

When a complaint for divorce is filed, Tennessee Code Annotated § 36-4-106(d) requires that certain temporary injunctions automatically go into effect. Of the injunctions listed in the statute, subsection (2) is at issue in this case:

An injunction restraining and enjoining both parties from voluntarily canceling, modifying, terminating, assigning, or allowing to lapse for nonpayment of premiums, any insurance policy, including, but not limited to, life, health, disability, homeowners, renters, and automobile, where such insurance policy provides coverage to either of the parties or the children, or that names either of the parties or the children as beneficiaries without the consent of the other party or an order of the court. “Modifying” includes any change in beneficiary status.

Thus, upon the filing of a divorce complaint, a temporary injunction is automatically issued that prevents either party from changing the beneficiary on any insurance policy that involving either party or their children.

In this case, it was undisputed that Mother changed the beneficiary on her life insurance policy one week after filing for divorce. Her action clearly violated the plain language of the statutory injunction.

This raises the question: what is the proper remedy for violating the statutory injunction? Believe it or not, no Tennessee cases have directly addressed this issue.

The Court analyzed this case of first impression:

[T]he general purpose of temporary injunctive relief under Tennessee law, including the Section 36-4-106(d) injunction, has been described as an effort “to preserve the status quo.” Other sources have described the purpose of similar statutory injunctions as “to preserve the marital status quo and to prevent dissipation of marital assets during the pendency of a dissolution proceeding.”

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First, Tennessee law is clear that a divorce action is abated by the death of one party. Furthermore, . . . an action taken in violation of the Section 36-4-106(d) injunction is not void per se, but is voidable depending on the circumstances. Despite this fact, other Tennessee law leads us to the conclusion that the court must have the power to invalidate an action taken in violation of the automatic divorce injunction when justice requires, regardless of the death of one of the parties to a divorce. . . . [A]llowing the trial court to return the parties to the preexisting state of affairs when the Section 36-4-106(d) injunction is violated comports with the purpose of the statute to maintain the status quo throughout the divorce proceedings.

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The question then becomes whether the equities in this case balance in favor of returning the life insurance policy to its status before Mother violated the automatic statutory injunction. . . . [T]he record before us shows that the equities in this particular case favor a return of the insurance proceeds to Father.

Father testified at trial that the couple had accumulated a number of debts during the marriage, including a home mortgage, two cars, and a consolidation loan. Had the couple divorced prior to Mother’s death, those debts would have been equitably divided between the couple. Mother then would have presumably been free to change the beneficiary on her life insurance policy, absent further order from the divorce court. Because of Mother’s untimely and tragic death, however, Father testified that he was obligated to pay all of the couple’s accumulated marital debt. However, when Mother changed the beneficiary on her life insurance policy in clear violation of Section 36-4-106(d), she deprived Father of considerable funds from which to pay these marital debts that she helped to accumulate. Still, we cannot ignore Mother’s clear desire that the child remain financially secure in the event of her death. . . . [T]here are simply no facts in this case that would lead this Court to believe that Father will not adequately provide for the child if the life insurance proceeds are awarded to him. In this particular situation, we conclude that a return to the status quo prior to Mother’s improper change in beneficiary is warranted.

Based on the foregoing, we conclude that equity supports Father’s request that Grandmother be ordered to return the life insurance proceeds to him because Mother changed the beneficiary on her policy in violation of Tennessee Code Annotated § 36-4-106(d)(2). Accordingly, all of the life insurance proceeds that were realized from Mother’s life insurance policy should have been returned to Father.

Thus, the trial court’s judgment was reversed. Grandmother will have to return all of Mother’s life insurance proceeds to Father.

K.O.’s Comment: The opinion explains the source of the parties’ marital difficulties stemmed from Mother’s belief that Father was having an affair. At that time, Mother was pregnant with the couple’s second child. Father admitted that he told Mother her pregnancy was a “mistake.” Further, he admitted that when Mother informed him she was going to the hospital, his only response was, “Good luck with that.”

Although Father denied having an affair, he admitted to posting a picture with his now-girlfriend on social media the day before Mother’s memorial service that said the two could now make their relationship “Facebook official.”

Father wasn’t exactly a sympathetic character, to put it mildly. But the law protects both parties in a divorce, including the unsavory ones.

knoxville divorce

Coleman v. Olson (Tennessee Court of Appeals, Middle Section, October 20, 2016).

Information provided by K.O. Herston: Knoxville, Tennessee Divorce and Family-Law Attorney.

What Is the Remedy When a Party Violates the Automatic Injunction?: Coleman v. Olson Presents a Case of First Impression in Tennessee was last modified: November 2nd, 2016 by K.O. Herston

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