Supreme Court finds appellate court 'jumped the gun' in lawsuit over MSA provision.

 
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Byline: Michaela Paukner, mpaukner@wislawjournal.com

The Wisconsin Supreme Court has found the Court of Appeals"short-circuited" a circuit courtby issuing a constructive trust in the absence of fact-finding.

The high court issued a decision in Pulkkila v. Pulkkila on Tuesday. The case assessedhow life-insurance payments should be distributed in cases when a provision is breached in a marital-settlement agreement.

James and Joan Pulkkila divorced in 2009. As part of their MSA, the two had to maintain life insurance and have their two children listed as beneficiaries. If either party breached the provision, there would be a lien against the violator's estate in favor of the specified beneficiary. The lien would be for an amount equal to the difference between the insurance required and the actual death benefits received.

Before his divorce, James had named Joan as a primary beneficiary of a $250,000 life-insurance policy.He remarried in 2013 and named his new wife, Lynnea Pulkkila, the sole beneficiary of the policy.

After James' death in 2015, Lynnea received the proceeds of the life-insurance policy. Joan then filed a motion in the divorce action,asking the court to require Lynnea to return the proceeds paid to her in violation of the divorce agreement and to establish a constructive trust for the children's benefit.

The circuit court denied Joan's motion for a constructive trust, reasoning that the MSA had unambiguously provided that a lien on James' estate was the exclusive remedy for breaches of the life-insurance provision.

Joan appealed, and the Court of Appeals reversed and remanded the lower court's decision. The appellate court said the lien was not exclusive and was "meaningless" in this case because James' estate hadn't enough money to provide for his children in the way the life-insurance proceeds would have been able to do. The Court of Appeals mandated the establishment of a constructive trust in favor of the children.

Lynnea petitioned the state Supreme Court for review, saying aconstructive trust couldn't be applied to the life insurance proceeds because the MSA provided that a lien on James' estate was the exclusive remedy for any breach of the life insurance provision.

The majority disagreed.Justice Ann Walsh Bradley delivered the majority opinion, joined by Chief Justice Pat Roggensack and justices Dan Kelly and Annette Ziegler.

Thejustices said the MSAprovides that a lien is aremedy in case of a breach, but the language...

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