Changing a Life Insurance Beneficiary in Violation of an Injunction

September 1, 2018

Posted by in In the News.

As it appeared in the Tennessee Bar Association

By Marlene Moses and Manuel Russ

In the recent Tennessee Supreme Court opinion issued in June 2018, Coleman v. Olson, the court dealt with the issue of an alteration of the beneficiary of a life insurance policy during the pendency of a divorce. Family law practitioners should take note of this case as it provides the clearest guidance available when dealing with a similar issue going well beyond the mere statutory language in its analysis of such situations.

The Tennessee Code provides that, once a divorce complaint is filed, the parties are generally prohibited from, among other things, making major financial alterations to the marital estate.[1] The Code contains a section specifically prohibiting either party from making a change to any insurance policy stating both are enjoined “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.”[2]

In the Coleman case, this exact scenario occurred. After the parties filed for divorce, Ms. Olson was diagnosed with a serious illness. Upon learning her diagnosis, Ms. Olson changed the beneficiary of her life insurance policy from that of her current husband, Mr. Olson, to her mother Ms. Coleman. Prior to the disposition of the divorce, Ms. Olson died and, subsequently, Mr. Olson sued Ms. Coleman for the life insurance proceeds from Ms. Olson’s policy. Prior to making its way to the Tennessee Supreme Court, the trial court determined that Ms. Olson had intended to make her child, who was the contingent beneficiary of the policy, the primary beneficiary and had inadvertently made her mother the primary beneficiary.[3] Based on that finding and the determination that the primary purpose of the statutory injunction is to maintain the status quo of the parties until the disposition of the divorce, Ms. Olson’s decision to change the beneficiary to her child was proper despite violating the injunction since her decision to do so was not contemptuous of the order.[4] Further, citing its equitable power, the trial court determined that it was in the best interest of the Olson’s minor child for Ms. Coleman to be awarded the proceeds of the insurance policy and to have these funds deposited with the court for the future benefit of the child.[5]

On appeal, the Court of Appeals determined that it had the equitable power to “remedy the violation of an injunction after the abatement of a divorce action by considering the equities of the parties” and, based on this reasoning, determined that Mr. Olson should have been entitled to the proceeds of the life insurance policy as an equitable remedy to Ms. Olson’s violation of the statutory injunction.[6]

The Tennessee Supreme Court, in addressing the case, first determined that the factual determination of the trial court that Ms. Olson intended to name her child as the beneficiary of the insurance policy was not supported by the evidence presented, nor was it relief that either party to the suit was seeking.[7] The Supreme Court further determined that, while Ms. Olson clearly violated the statutory injunction, it was equally clear that, upon her death, the pending divorce action was then abated leaving the question of what remedy was then available, if any, to Mr. Olson against Ms. Coleman in a separate action.[8] Though this presented a case of first impression for Tennessee, the Supreme Court cited numerous sister jurisdictions for the proposition that even after abatement of a divorce action, the trial court could, when crafting a remedy to a violation such as the one Ms. Olson committed, exercise its powers to consider the equities of the parties.[9] The court did note that there were several jurisdictions that adopted the position that abatement of the divorce action ended the jurisdiction of the court, but Tennessee elected to take a flexible approach and determined the Court of Appeals was correct in determining that trial court could craft an equitable remedy to rectify the harm done by the violation of the statutory injunction.[10] The matter was remanded for further consideration of the equitable positions of Mr. Olson and Ms. Coleman based on further presentation of relevant evidence on the matter by the parties before the trial court.

Though this situation may seem like a very narrow ruling on a narrow issue, violations of the statutory injunction are far from uncommon. It is worthwhile for a practitioner to be aware that, if such a violation occurs and there is an abatement of the divorce, one ought to be prepared to defend the position of their client, on either side of the violation, against an equitable remedy favoring the other party. However, this ruling could have further implications regarding the purpose of the statutory injunction in general.

While not yet knowing the outcome of the Coleman matter upon remand, it is not hard to see that permitting equitable redress of these types of violations might take the sting out of powers of the court to curb such behavior as a trial court may determine, from an equitable viewpoint, that the interests of the estate of the violator demand consideration where before there would have been none. Also, there is nothing in this line of reasoning by the Supreme Court that limits its applications to life insurance proceeds only, or even to Tenn. Code Ann. § 36-4-106(d)(2). A trial court now seems justified in dealing with a party in violation of the statutory injunction upon equitable lines regardless of the willfulness of their conduct. Further, a question arises of whether the ruling in Coleman requires the consideration of equitable positions when remedying a violation. A close reading of the case seems to indicate the court’s entire purpose in taking up this issue is to vest a trial court with “the authority to ‘right a wrong’ and remedy an injustice based on equitable considerations”,[11] but there is nothing that requires the trial court to determine that the “wronged” party deserves, in equity, to have relief. In the Coleman matter, the trial court may determine, in equity, Ms. Coleman as the representative of Ms. Olson’s estate is entitled to some of the proceeds based on a need related to the minor child despite the clear violation of the injunction by Ms. Olson. Still, based on the approach of other states, Mr. Olson would have had no remedy at all and, based on this decision, he now does.

Despite the fact that these situations arise infrequently, it is certainly a facet of the law of which a family law practitioner should be aware. If presented with a situation where there has been a violation of the statutory injunction and then the divorce is abated by the death of the party in violation, you are not without remedy. You can and should proceed against the estate of the deceased party to have the trial court remedy the violation.


[1] Tenn. Code Ann. § 36-4-106(d).
[2] Tenn. Code Ann. § 36-4-106(d)(2).
[3] Coleman v. Olson, P. 7 (Tenn. 2018).
[4] Id., page 7.
[5] Id., page 7.
[6] Id., page 8
[7] Id., page 10.
[8] Id., page 11; see Blackburn v. Blackburn, 270 S.W.3d 42, 47 (Tenn. 2008).
[9] Id., page 12.
[10] Id., pages 12-13.
[11] Id., page 12.

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