In Lawrence v. Bailey, a June 15, 2021 opinion from the Texas First District Court of Appeals, the Court addressed whether a relative had standing under the Texas Insurance Code’s Slayer Statute to obtain a declaratory judgment as to the disposition of life insurance proceeds.
The Facts Of Lawrence v. Bailey
Steven Lawrence was issued a life insurance policy by Hartford in January 2008. Steven’s wife, LaQuita, was named the primary beneficiary. Their son Ross was named the contingent beneficiary.
Steven and La Quita were killed at their home in October 2013. Ross was indicted for capital murder for killing them.
Hartford filed an interpleader petition and named Ross, Robert (Steven’s brother), LaQuita’s mother, the administrator of Steven and LaQuita’s estates, and the heirs of Steven’s estate. Hartford sought direction as to what to do with the life insurance funds. Hartford pointed out that the contingent beneficiary under the life-insurance policy, Ross, had been charged with murdering both the insured, Steven, and the policy’s primary beneficiary, LaQuita. Hartford stated that the criminal case against Ross was pending.
Hartford deposited the insurance proceeds with the registry of the court.
Robert (Steven’s brother) filed a traditional motion for summary judgment. He argued that based on the Texas slayer statute, he was entitled to the life insurance proceeds as a matter of law. Steven’s unknown heirs and Ross, through their ad litem attorneys, filed special exceptions to Robert’s motion.
After hearing, the trial court ruled that it was granting the special exceptions and denying Robert’s motion for summary judgment. The court set trial for March of 2020.
One month later, on August 16, 2019, the administrator of Steven’s Estate filed a “Motion to Close and Distribute Funds in Registry of the Court to the Estate of Steven Ross Lawrence, Deceased.” The one-page motion contained no legal argument to support awarding the life-insurance proceeds to the estate nor did it contain any citation to legal authority. The motion simply requested the trial court to grant the motion and to sign an order authorizing the court’s clerk “to pay the balance” of the life-insurance proceeds remaining in the court’s registry to the administrator of Steven’s Estate.
On September 25, 2019, the trial court signed an “Order on Motion to Close and Distribute Funds in Registry of the Court to the Estate of Steven Ross Lawrence, Deceased,” granting the administrator’s motion.
Robert filed a motion for new trial. He alleged that the trial court “spontaneously granted” the motion to distribute the interpleaded funds to Steven’s Estate, “without a hearing or notice” to him. Robert asserted that “[t]his was a fundamental violation of Robert’s right to due process.” He asked the trial court to vacate the order awarding the interpleaded insurance proceeds to Steven’s Estate and grant him a new trial. The trial court denied Robert’s motion.
Robert appealed the order.
Forfeiture of Life Insurance Beneficiary’s Rights Under the Texas Slayer Statute
Under the Texas slayer statute applicable to life insurance, Tex. Ins. Code § 1103.151:
A beneficiary of a life insurance policy or contract forfeits the beneficiary’s interest in the policy or contract if the beneficiary is a principal or an accomplice in willfully bringing about the death of the insured.
Section 1103.152 provides for the payment of the insurance proceeds to the contingent beneficiary or relative and states:
a) Except as provided by Subsection (b), if a beneficiary of a life insurance policy or contract forfeits an interest in the policy or contract under Section 151, a contingent beneficiary named by the insured in the policy or contract is entitled to receive the proceeds of the policy or contract.
(b) A contingent beneficiary is not entitled to receive the proceeds of a life insurance policy or contract if the contingent beneficiary forfeits an interest in the policy or contract under Section 1103.151.
(c) If there is not a contingent beneficiary entitled to receive the proceeds of a life insurance policy or contract under Subsection (a), the nearest relative of the insured is entitled to receive those proceeds.
Who Has Standing To Bring a Declaratory Judgment Claim Under the Texas Slayer Statute?
Under the Uniform Declaratory Judgments Act (UDJA), a person interested under a written contract or “whose rights, status, or other legal relations are affected by a statute . . . may have determined any question of construction or validity arising under the . . . statute . . . and obtain a declaration of rights, status, or other legal relations thereunder.” TEX. CIV. PRAC. & REM. CODE § 37.004(a). A declaratory judgment is appropriate only if a justiciable controversy exists concerning the rights and status of the parties, and the controversy will be resolved by the declaration sought.
In his pleading for declaratory relief, Robert cited the Texas Slayer Statute.
Robert alleged the following underlying facts:
(1) Steven had a life insurance policy, which paid $640,000 upon his death; (2) Steven had named his wife, LaQuita, as the primary beneficiary under the policy and had named their adult son, Ross, as the contingent beneficiary; (3) “Ross killed Steven and then Laquita,” as confirmed by eyewitnesses testimony “that Ross beat Steven to death with a sledgehammer and then beat LaQuita to death in the same manner”; (4) Steven’s and LaQuita’s deaths were ruled homicides caused by blunt force trauma; (5) “Ross was indicted for capital murder for killing Steven and LaQuita”; (6) “Hartford initiated this interpleader action to resolve ownership of the Life Insurance Proceeds”; (7) Hartford paid the insurance proceeds into the court’s registry; (8) the trial court “granted Hartford’s interpleader, discharging it from the lawsuit with prejudice” and “ordered that this case shall continue on the merits between Claimants-Defendants [including Robert] to determine their respective rights to the Life Insurance Proceeds”; (9) “Robert is Steven’s brother”; (10) “Steven has no other siblings or children”; (11) “Steven’s parents are deceased”; and (12) “Robert is Steven’s nearest living relative except for Ross.”
Robert requested that the trial court declare that Robert was the insured’s nearest relative, and was entitled to receive the insurance proceeds.
The Texas appeals court determined that Robert had standing to obtain declaratory relief under the Texas slayer statute:
Viewing the record liberally and resolving any doubt in Robert’s favor as we must, we hold that Robert has standing to obtain the declaratory relief he seeks. Robert alleged a legally protected interest in the life-insurance proceeds based on the provisions of the Slayer Statute, as applied to the pleaded facts. Cf. Save Our Springs Alliance, 304 S.W.3d at 882. Robert has also alleged facts showing that he is “aggrieved” because he has not received the insurance proceeds to which he claims he is entitled under the Slayer Statute.
The court determined that the record also demonstrated that a real controversy exists between the parties regarding the insurance proceeds, since Hartford interpled the funds indicating it anticipated rival claims to the funds.
Does the Texas Slayer Statute Require That Any Criminal Case First Be Resolved?
No, the Texas Slayer Statute does not require that any criminal case relating to whether the beneficiary willfully brought about the insured’s death be resolved before the willfulness determination is made.
The administrator of Steven’s estate asserted that Robert lacked standing because he is not a beneficiary under the life insurance policy. Ross (the alleged murderer) was the contingent beneficiary, and the murder case against him remained pending. The court rejected the argument and reversed the trial court’s order ordering that the life insurance proceeds be paid to Steven’s estate. The case was remanded for further proceedings.