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Lori Leblanc, et al. v. Wells Fargo Advisors

October 28, 2011

LORI LEBLANC, ET AL. PLAINTIFF-APPELLANTS
v.
WELLS FARGO ADVISORS, LLC, ET AL.
DEFENDANT-APPELLEES



Civil Appeal from : (Common Pleas Court) Trial Court Case No. 10-CV-1926

The opinion of the court was delivered by: Hall, J.

Cite as LeBlanc v. Wells Fargo Advisors, L.L.C.,

OPINION

{¶1} Lori LeBlanc and Gloria Welch appeal from the trial court's decision and entry sustaining a cross motion for summary judgment filed by appellee Cynthia Burchfield. The motion concerned, among other things, the disposition of individual retirement accounts ("IRAs") held in the name of John Burchfield by the custodian, Wells Fargo.

{¶2} LeBlanc and Welch advance two assignments of error on appeal. First, they contend the trial court erred in declaring John's two IRAs to be marital property when, they argue, one of them was separate property and the other one was, at most, commingled property.*fn1 Second, they claim the trial court erred in refusing to find that IRA custodian Wells Fargo Advisers waived compliance with its change-of-beneficiary procedure by interpleading the disputed funds to the court.

{¶3} The record reflects that John married Cynthia on May 5, 2007. Prior to the marriage, John maintained two IRA accounts. A few days before the marriage, the first account had a closing value of $250,313.33, and the second account had a closing value of $15,334.98. When John originally opened the accounts, he designated Gloria Welch, his mother, and Bruce Leland, his stepfather, as beneficiaries. Shortly before his marriage, however, John named Cynthia as the beneficiary on both IRAs.

{¶4} On October 28, 2009, John sent his Wells Fargo financial adviser, Aaron Michael, an e-mail stating that he and Cynthia were getting divorced and requesting paperwork to change his IRAs. Michael responded by e-mail, asking John to let him know who John wanted as the beneficiary. John subsequently spoke to Michael by phone and explained who he wanted to be the new beneficiaries. Michael had the forms completed with Welch and Leland as primary beneficiaries, in the amounts of 75 percent and 25 percent respectively.*fn2 Lori LeBlanc, John's sister, was listed as the contingent beneficiary. Michael proceeded to send John these necessary change-of-beneficiary forms. Before doing so, Michael pre-dated them November 2, 2009, as he believed John would return them to him by then.

{¶5} Cynthia served John with a complaint for divorce and a restraining order on November 5, 2009. The restraining order prohibited John from, inter alia, transferring any accounts or any other interest in any asset. Around the same time, John spoke to Michael again and advised him that the change-of-beneficiary forms were "taken care of." Michael assumed this meant John had mailed the forms back to Wells Fargo.

{¶6} John committed suicide on December 16, 2009. After his death, Michael and one of John's co-workers, Jeff Miller, discovered the signed and completed change-of-beneficiary forms in an envelope among John's personal papers. Michael gave the forms to his manager at Wells Fargo. A dispute then arose regarding the beneficiary of the IRAs.

{¶7} Welch filed the present action in March 2010. Joining her as a plaintiff was LeBlanc, who was acting as executor of John's estate. In their complaint, LeBlanc and Welch sought, among other things, a declaratory judgment enforcing the change-of-beneficiary forms. Cynthia filed a counterclaim, seeking a determination that she was the proper beneficiary of the IRAs. Wells Fargo, which also had been named a party, originally filed its answer. Shortly thereafter, Wells Fargo was granted leave to file an amended answer. It filed an answer and a counterclaim and cross-claim for interpleader on May 27, 2010. Therein, Wells Fargo asserted no interest in the dispute and offered to hold the IRA funds in trust or to turn them over to the court pending resolution of the matter.

{¶8} LeBlanc and Welch moved for partial summary judgment in July 2010. Their motion addressed only the proper beneficiary of the IRAs. Cynthia responded with a September 2010 cross motion for summary judgment on all issues, including the beneficiary of the IRAs. On November 16, 2010, the trial court filed separate entries denying the motion filed by LeBlanc and Welch and sustaining the motion filed by Cynthia.*fn3 With regard to the two IRAs, the trial court held that Cynthia was the sole beneficiary of them. (Doc. #57 at 8). In reaching this conclusion, the trial court found that John's change-of-beneficiary forms were of no legal effect because he had failed to comply with Wells Fargo's written policy, which required them to be returned to the company.*fn4 Furthermore, with regard to the larger of the two IRAs, the trial court held that it qualified as marital property because John had deposited $74,062.47 into it during the marriage. Based on its determination that the larger IRA was marital property, the trial court reasoned that Wells Fargo could not waive compliance with its change-of-beneficiary procedure or actually change the beneficiary without Cynthia's consent, which did not exist. (Id. at 8-11). This timely appeal followed.

{¶9} In their first assignment of error, LeBlanc and Welch contend the trial court erred in declaring the IRAs to be marital property when the smaller one was separate property and the larger one was, at most, commingled property.

{¶10} Upon review, we find that characterization of the IRA accounts as marital or non-marital property is applicable only in domestic-relations cases, which the present case is not. First, if a death of either party occurs before a decision is made in a divorce action, the action abates. State ex rel. Litty v. Leskovyansky (1996), 77 Ohio St.3d 97, 99, and Porter v. Lerch (1934), 129 Ohio St. 47, 56. Therefore, there is no active domestic-relations case. Second, the statute that defines what is marital and separate property is limited by its terms to domestic-relations courts and their proceedings. R.C. 3105.171, entitled "Division of marital property; separate property," is prefaced, "(A) As used in this section," thereby limiting applicability to domestic-relations matters. The statute further provides: "(B) In divorce proceedings, the court shall, and in legal separation proceedings * * *, the court may, determine what constitutes marital property and what constitutes separate property." Id. Nothing in the domestic-relations statutory scheme indicates that it would be applicable to determination of marital or separate property outside the domestic-relations context. We, therefore, determine that those statutes are inapplicable to the dispute before us. To the extent that the appellants' first assignment of error asserts that the trial court erred by determining that the IRA accounts were partially marital property, we agree, not because the court should have decided differently that the accounts were separate property, but because R.C. 3105.171 does not apply. Nevertheless, to determine the correct beneficiaries to receive John's property following his death, it is unnecessary to decide whether the IRA funds were his separate or marital property. Therefore, any error made by analyzing the IRAs as marital property is not dispositive of this appeal. The first assignment of error is overruled.

{ΒΆ11} In their second assignment of error, LeBlanc and Welch claim the trial court erred in refusing to find that Wells Fargo waived compliance with its change-of-beneficiary procedure ...


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