Family Law Case Review: Hardy vs Hardy

Case: Phyllis Hardy, Alax Keith Furnish and Megan Jessica Furnish, by next friend Phyllis Hardy v. Mary Jo Hardy

by Mike Kohlhaas, Bingham Greenebaum Doll  

HELD:
Indiana Supreme Court rules that an Indiana state court may impose a constructive trust upon life insurance proceeds arising from a Federal Employees’ Group Life Insurance Act where the insured failed to maintain a beneficiary designation required by a divorce decree. There is no preemption issue.

FACTS AND PROCEDURAL HISTORY:
Husband and Wife divorced in 1998. Husband, a civilian employee at Crane, had a life insurance policy with the Federal Employees’ Group Life Insurance (“FEGLI”). Per the Decree, Husband was ordered to maintain Wife and the parties’ grandchildren as beneficiaries of the policy.

Husband remarried in 2000, and changed the beneficiary designation of the policy to his new spouse. Husband died in 2008.

Wife and the grandchildren filed suit seeking a constructive trust over the proceeds. The trial court granted summary judgment in favor of Husband’s second wife, agreeing with her federal preemption argument. The Indiana Court of Appeals subsequently affirmed.

On transfer, the Indiana Supreme Court reviewed the requirements for preemption, and found no evidence of congressional intent in the FEGLI Act. Further, case law around the country is divided, but the majority of courts have found no preemption issue arising from FEGLI.

The trial court’s summary judgment in favor of the second wife was reversed.

To view the text of this opinion in its entirety, click below:
Phyllis Hardy, Alax Keith Furnish and Megan Jessica Furnish, by next friend Phyllis Hardy v. Mary Jo Hardy

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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