Summary
The United States District Court for the Eastern District of Wisconsin denied Jeannine M. Devroy’s motion for judgment on the pleadings in an interpleader action concerning life-insurance proceeds. The court held that it was plausible that James M. Busche intended to maintain his former wife, Cassandra Busche, as the policy beneficiary despite their divorce, potentially invoking an exception to Wisconsin’s automatic revocation statute. The court added Cassandra as a necessary party and ordered her to answer in her personal capacity.
Topics
Practice areas
Questions Presented
- Whether Devroy was entitled to judgment on the pleadings because Wisconsin's divorce-revocation statute revoked Cassandra Busche's designation as the life-insurance beneficiary.
- Whether the pleadings plausibly supported an exception based on James Busche's contrary intent under Wis. Stat. § 854.15(5)(bm).
- Whether Cassandra Busche was a necessary party who had to appear in her personal capacity under Federal Rules of Civil Procedure 19(a) and 22(a).
Holdings
- Devroy was not entitled to judgment on the pleadings because the pleadings plausibly supported a conclusion that James intended not to revoke Cassandra's designation as beneficiary.
- Wis. Stat. § 854.15(5)(bm) narrowly negates the presumption that divorce revoked the spouse's beneficiary designation; it does not broadly authorize a court to disregard beneficiary designations and distribute nonprobate assets according to the court's view of the decedent's wishes.
- Cassandra Busche was a necessary party under Federal Rules of Civil Procedure 19(a) and 22(a), and she was required to appear either to assert or disclaim a personal interest in the policy proceeds.
Key quotations
“The statute is narrow; it merely negates the presumption that, upon divorce, the decedent intended to revoke the designation of his spouse as the beneficiary.” (Section 3, Analysis)
“IT IS THEREFORE ORDERED that “Defendant Jeannine M. Devroy’s Motion for Judgment on the Pleadings Pursuant to F.R.C.P. 12(c)” is denied.” (Order)
Factual background
James M. Busche purchased a life-insurance policy in 2005 and designated his then-wife, Cassandra Busche, as primary beneficiary and his sister, Jeannine Devroy, as contingent beneficiary. James and Cassandra divorced in 2023, and their marital settlement agreement provided that a minor child or trust for the minor child would receive at least half of any life-insurance proceeds, although the agreement did not specifically identify Lincoln's policy. James died on April 24, 2024, leaving L.S.B. as his only minor child. Devroy contended that the divorce automatically revoked Cassandra's designation under Wisconsin law, while the Busches argued that the pleadings plausibly showed James had contrary intent.
Procedural history
Lincoln National filed an interpleader action under Federal Rule of Civil Procedure 22 to determine entitlement to James M. Busche's life-insurance proceeds. The court granted Lincoln National's motion to deposit the proceeds and dismissed Lincoln National as a party. Devroy then moved for judgment on the pleadings, seeking half the proceeds for herself and half for L.S.B.; the court denied that motion and ordered Cassandra Busche to appear personally as a necessary party.