The dispute centres on a conflict between the terms of a life insurance policy and the details of a separation agreement.
According to the appeal court’s decision, in 2014, Richard Garrett purchased a $450,000 life insurance policy from Ivari and designated his daughter, then a child, as the irrevocable beneficiary.
In 2019, after separating from his spouse, Garrett sought to change the beneficiary designation to his former spouse. The separation agreement required him to maintain a $450,000 life insurance policy with her as the beneficiary to cover potential child support obligations.
According to the court, the insurer confirmed the change in beneficiary had been completed. However, that was incorrect, as Garrett didn’t obtain a court order authorizing the switch, which was required because the original irrevocable beneficiary was a child who couldn’t consent to the change.
“Although he had not obtained a court order, Ivari told him the change had been made,” the court said.
After Garrett’s death in 2022, the company refused to pay the proceeds of the policy to the former spouse, arguing the daughter’s designation as beneficiary had not been properly revoked.
The former spouse then asked the court to allow the proceeds to be paid to her in trust for the daughter.
The trustee of the estate, Heritage Trust Company Inc., opposed the request, arguing that the proceeds should go to the former spouse under the terms of the separation agreement and that the daughter would be “unjustly enriched” if she received the payout, potentially leaving the estate responsible for the child support costs the policy was meant to cover.
The trustee argued, among other things, that allowing the insurance to be paid to the daughter while requiring the estate to pay child support under the separation agreement “would result in double recovery.”
The lower court rejected the trustee’s position in a 2024 decision and granted the former spouse’s request.
The trustee appealed, arguing the lower court erred in dismissing its argument that the daughter would be unjustly enriched by receiving the payout.
On appeal, the court sided with the trustee, finding the lower court judge “erred in law by dismissing Heritage’s unjust enrichment claim as she did.”
The appeal court said there was “no basis for finding the separation agreement provided a [justification] for [the daughter’s] enrichment.” It allowed the appeal, set aside the lower court’s finding and returned the case to that court “to determine the evidentiary and factual issues and whether there is a juristic reason for [the daughter’s] enrichment.”