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Mahi v. The Variable Annuity Life Insurance Co.

Intermediate Court of Appeals of Hawaii

May 24, 2013

PATRICIA MAHI, Plaintiff-Appellant,
v.
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, Defendant-Appellee

NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT KONA DIVISION (CIVIL NO. 09-1-187K)

Mark Van Pernis and Gary W.Vancil, (VanPernis-Vancil, Attorneys at Law) for Plaintiff-Appellant.

Associate Judge Lennes N. Omuro (Goodsill Anderson Quinn & Stifel) for Defendant-Appellee.

Fujise, Presiding Judge, Leonard and Reifurth, JJ.

SUMMARY DISPOSITION ORDER

Plaintiff-Appellant Patricia Mahi ("Mahi") appeals from the Order Granting Defendant The Variable Annuity Life Insurance Company's Motion for Summary Judgment, filed on December 7, 2009, and the Final Judgment in favor of Defendant-Appellee The Variable Annuity Life Insurance Company ("VALIC"), filed on April 28, 2010, in the Circuit Court of the Third Circuit.[1]

Mahi and her then-husband, Dennis E. Arms ("Arms"), entered into an Agreement Incident to and in Contemplation of Divorce ("AICD"), filed August 10, 1998, in anticipation of their divorce which was finalized on December 17, 1998. This appeal centers around the interaction between the AICD and Hawaii Revised Statutes ("HRS") § 560:2-804(b) and the effect the statute has on Arms's tax-sheltered annuity 403(b) account ("VALIC Account").

On appeal, Mahi argues that the Circuit Court erred in granting VALIC's motion for summary judgment ("MSJ") because (1) an express term in the AICD precluded application of HRS § 560:2-804(b), which the Circuit Court applied to revoke Mahi's rights as a beneficiary of the VALIC Account; and (2) Mahi presented proof that she and Arms did not have an adversarial relationship and that they had used Mahi's inheritance during their marriage, creating a dispute of material fact. Additionally, Mahi argues that the Circuit Court erred (3) by applying HRS § 560:2-804(b) retroactively.

Upon careful review of the record and the briefs submitted by the parties, and having given due consideration to the arguments advanced and the issues raised by the parties, we resolve Mahi's points of error as follows:

(1) Section 2-804 of the 1993 Uniform Probate Code ("UPC") was adopted by the Hawai'i Legislature in 1996 and codified, in whole, as HRS § 560:2-804. Generally, enactment of section 2-804 of the UPC "reflects a legislative judgment that when the insured leaves unaltered a will, trust, or insurance-beneficiary designation in favor of an ex-spouse, the insured's failure to designate substitute takers more likely than not represents inattention rather than intention." Lawrence W. Waggoner, Spousal Rights in our Multiple-Marriage Society: The Revised Uniform Probate Code, 26 Real Prop. Prob. & Tr. J. 683, 699-700 (1992) (commenting on a substantially similar Oklahoma statute).

HRS § 560:2-804(b) adopts the aforementioned principle as a rebuttable presumption, stating, in pertinent part:

(b) Revocation upon divorce or termination. Except as provided by the express terms of a governing instrument, a court order, or a contract relating to the division of the estate made between the divorced individuals before or after the marriage, divorce, annulment, between two former reciprocal beneficiaries before the termination of a reciprocal beneficiary relationship, the divorce or annulment of a marriage or the termination of a reciprocal beneficiary relationship:
(1) Revokes any revocable:
(A) Disposition or appointment of property made by a divorced individual or a former reciprocal beneficiary to the individual's former spouse or reciprocal beneficiary in a governing instrument and any disposition or appointment created by law or in a governing instrument to a ...

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