
    Sharon O’NEAL, Plaintiff, v. Constance GONZALEZ, individually and as personal representative of Daniel Bazo, deceased, Defendant.
    No. 86-1890-Civ.
    United States District Court, S.D. Florida.
    Feb. 10, 1987.
    
      John G. Admire, Coral Gables, Fla., for plaintiff.
    Herbert A. Warren, Miami, Fla., for defendant.
    Robert Major, Shutts & Bowen, Miami, Fla., for Ins. Co.
   ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

ATKINS, District Judge.

This case raises two issues concerning a Federal Employees’ Group Life Insurance (“FEGLI”) policy. First, I must determine whether the insured properly executed his Designation of Beneficiary Form. Second, I must determine whether the insured’s unrestricted right to change his beneficiary under the policy prohibits the imposition of a constructive trust on the proceeds of that policy.

In her motion for summary judgment, defendant asserts that the Designation of Beneficiary Form was signed by the insured and two witnesses who recognized his signature on the form. In addition, defendant asserts that an insured has an unrestricted right to change the beneficiary of his FEGLI policy. In response, plaintiff has moved for summary judgment arguing that the beneficiary form was not properly executed because the two witnesses did not sign the form at the same time and in the presence of each other and the decedent. Moreover, she urges that the unrestricted right to change a beneficiary does not prevent this court from imposing a constructive trust on the proceeds of the policy because the decedent orally promised to designate her as his beneficiary.

After carefully reviewing the motions, memoranda, the court file, the relevant case law, and having considered counsel’s oral arguments, it is

ORDERED AND ADJUDGED that defendant’s motion for summary judgment is GRANTED.

I. Statement of Facts

Daniel Bazo, decedent, was insured by Metropolitan Life Insurance Company (“Metropolitan”) under a FEGLI policy. On September 12, 1981, Bazo designated Sharon O’Neal as beneficiary of 75% of his Additional Option & Life Insurance coverage. Then, on June 20, 1985, Bazo executed a Designation of Beneficiary Form (attached as Appendix I) which designated O’Neal as beneficiary of 10% of the Option B coverage, and designated Constance Gonzalez as beneficiary of all Basic Life coverage and 90% of Option B coverage. The Designation of Beneficiary Form was signed by Daniel Bazo and two witnesses, David Riles and Joe Y. Calhoun, Jr., and received in Bazo’s employing office prior to his death.

Constance Gonzalez was Bazo’s aunt and is the duly appointed Personal Representative of his estate. O’Neal was Bazo's close friend for many years. In fact, during the last eight years of his life, O’Neal and Bazo lived together in a marital-type relationship in Dade County, Florida.

On July 17, 1981 Bazo and O’Neal purchased a home located at 13397 S.W. 11th Lane, Miami, Florida, as joint tenants with right of survivorship.

Apparently Bazo and O’Neal were concerned about the mortgage payments, because if one of them died the survivor might not be able to financially afford to maintain the home. To guard against this possibility, the parties developed a plan.

O’Neal and Bazo were federal employees insured by Metropolitan under a FEGLI policy. On September 12,1981, O’Neal prepared and filed her properly executed Life Insurance Designation of Beneficiary Form designating Bazo as the beneficiary to receive all of her Option A coverage and all of her Option B coverage. O’Neal maintained Bazo as her beneficiary through the date of his death. O’Neal claims that she designated Bazo as her beneficiary because he agreed to name her as his. In this manner, they ensured that the survivor would have sufficient funds to pay off the mortgage on the residence they had purchased.

At some point, Bazo decided to change the beneficiary of his policy. He obtained the proper form to accomplish his purpose. He completed the form, signed it, and obtained the signatures of two witnesses. The document, however, was not signed by the decedent and the two witnesses at the same time and in each other’s presence. Nevertheless, both witnesses signed and acknowledged that they were aware of Bazo’s signature.

II. Legal Discussion

A. Execution of the Designation of Beneficiary Form

Plaintiff asserts that the June 20, 1985 form changing Bazo’s beneficiary under his FEGLI policy is void because it was not properly witnessed. Plaintiff emphasizes that the evidence shows that the two witnesses did not sign the form at the same time, in the same place, and in the presence of each other and the decedent. Moreover, the record reveals that there is some confusion concerning the order in which the parties signed the form. Defendant counters by asserting that there is no requirement, either by statute, regulations, or case law that the Designation of Beneficiary Form must be signed by the insured in the presence of two witnesses who must also sign in his presence. Instead the language of the statute reads:

First, to the beneficiary or beneficiaries designated by the employee in a signed and witnessed writing received before death in the employing office____

5 U.S.C.A. § 8705(a) (Supp.1982) The statute does not impose the strict requirement that the insured actually sign in the presence of a witness. It is sufficient for an insured to present the form already completed and signed to a person with the request that he sign as a witness. When this is done, there is a “signed and witnessed writing” which meets the statutory requirements. After all, the primary reason for having a witness is to establish the intent of the insured and ensure that the act is voluntary. If Congress had wanted a more strict procedure, it would have discussed the witnessing requirement in more detail.

I believe plaintiff's position is untenable for another reason. This statute was amended because of the court’s ruling in Sears v. Austin, 292 F.2d 690 (9th Cir. 1961). Two reasons were advanced in favor of the amendment. First, Congress was concerned about any administrative difficulties for the Civil Service Commission and the insurance companies. Second, Congress wanted to avoid delays in paying the benefits to survivors. See Adams v. Macy, Jr., 314 F.Supp. 399, 400 (D.Md. 1970). If I adopted plaintiff’s position, I would be ignoring Congress’ stated goals in amending the statute.

B. Changing Beneficiaries Under a FEGLI Policy

On June 20, 1985, Bazo submitted a Designation of Beneficiary Form which reduced the amount of benefits O’Neal was to receive. Instead, Gonzalez was given a substantial share of the insurance proceeds. Bazo changed his beneficiaries under his FEGLI policy, although O’Neal claims they had agreed to designate each other as the beneficiaries on their respective FEGLI life insurance policies to enable the survivor to satisfy the purchase money mortgage on their home. O’Neal honored this agreement. Therefore, she claims that she is entitled to receive the insurance proceeds from Gonzalez pursuant to this court’s imposition of a constructive trust on these funds.

Both sides have cited legal authority which supports their conflicting positions. Yet, neither side has cited any controlling authority; therefore, this is a case of first impression for this court. Nevertheless, the federal courts have consistently held in favor of the defendant’s position. See Metropolitan Life Insurance Co. v. McShan, 577 F.Supp. 165 (N.D.Cal.1983); Knowles v. Metropolitan Life Insurance Co., 514 F.Supp. 515 (N.D.Ga.1981).

In Knowles, the decedent’s ex-wife sought to obtain the proceeds of a FEGLI policy based opom a marriage settlement agreement in which the insured agreed to maintain his ex-wife as beneficiary. Later, the insured named his second wife as the beneficiary. The court, ruling in favor of his second wife, pointed out that the insurance policy is not a private contract between the insured and the insurer, but federal policy administered under federal law. The court emphasized the provision of 5 C.F.R. § 870.901(3) to the effect that the right of the insured to change beneficiary cannot be waived or restricted. The court stated:

This provision, having the force and effect of law must control. The marriage settlement agreement thus cannot operate as a waiver of restriction of the insured’s right to change this beneficiary, and the named beneficiary, under the provisions of 5 U.S.C. § 8705(a), is entitled to the proceeds of the insurance policy at issue.

Id. at 516.

In McShan, decedent named his four children as beneficiaries in a Designation of Beneficiary form. Subsequently, a state judgment dissolving his marriage was entered which ordered the employee to maintain his children as beneficiaries. Nevertheless, the employee executed a second Designation of Beneficiary form in which he named his second wife as the sole beneficiary. The children argued that although the second wife was the legal owner of the proceeds, a constructive trust should be imposed on the proceeds because of the insured’s violation of the state court order. The court rejected this argument and held that the second wife was entitled to the proceeds of the insurance policy without restriction. The court emphasized the employee’s right to change his beneficiary at any time and noted that the federal statute and regulation pre-empts state law. The court stated:

It must be assumed that the federal provisions regarding designation of beneficiaries were intended to confer on the insured more than the right to do a meaningless act. If the proceeds are to go to someone other than the designated beneficiary the act of so designating serves no purpose.

Id. at 168.

After examining the cases discussing this issue, I find Judge Peckham’s reasoning in McShan to be persuasive. While the result is not completely satisfying, I cannot ignore the strong language of the statute. Thus, I find that Constance Gonzalez is entitled to receive all Basic Life Option A-Standard benefits and 90% of the Option B-Additional benefits under the FEGLI life insurance policy, and that Sharon O’Neal is entitled to 10% of the Option B-Additional benefits. 
      
      . After reviewing the motions for summary judgment, the memoranda discussing counsels’ positions, and the record, I issued a "Rule 56 Notice” so that the parties could fully develop the facts before I ruled on their motions. The affidavits, especially Mr. Mullen’s, indicated that an agreement existed between Mr. Bazo and Ms. O’Neal. Yet, this evidence may not be admissible because of the Florida "dead man’s statute.” See Florida Statutes § 90.602(1979). Because of my ruling on the preemption issue, I need not resolve the evidentiary problems surrounding the proof of an oral contract. For purposes of resolving the motions for summary judgment, I have assumed that there was a contract between Mr. Bazo and Ms. O’Neal.
     
      
      . Bazo appears to have increased the amount of his FEGLI insurance coverage to provide for the unpaid mortgage balance.
     
      
      . The exact method by which Bazo signed the form and obtained the signatures of two witnesses is not absolutely clear. However, after carefully reviewing the depositions of Riles and Calhoun, I do not believe that this conflict raises a genuine issue of material fact. See FedR. Civ.P. 56(c). Neither witness disputes that he signed the form. Moreover, both witnesses acknowledge that Bazo either signed in their presence or that they recognized his signature on the form. The minor discrepancy between witness’ statements is not sufficient to preclude summary judgment. The witness’ testimony reveals only that they were somewhat uncertain as to the manner in which Bazo obtained the other witness’ signature. Individually, each witness remembers signing the form, and each observed Bazo’s signature on the form.
     
      
      . In Adams v. Macy, Jr., 314 F.Supp. 399 (D.Md. 1970), the court indicated that two witnesses were required. However, the basis for this finding is not entirely clear.
     
      
      . The McShan court also critized the state court’s holding otherwise. See id. at 168.
     