Jack Nelson Jones Professional Association

June 24-30, 2019

Locke v. Patrick Sinclair, State Farm Life Insurance Company, and Amy Locke, Jointly and Severally, 2019 Ark. App. 329 (June 5, 2019)


This case arose on appeal from Lonoke County Circuit Court, the Honorable Barbara Elmore presiding. It involved the grant of summary judgment to appellees State Farm Insurance Company and Patrick Sinclair, a State Farm agent (collectively “State Farm”) by Appellant Katelynn Locke (Katelynn). Katelynn’s father, James, died in May 2015, when Katelynn was fifteen years old. Katelynn’s mother was deceased, and her father had remarried.  On June 2, 2015, an order was entered appointing Amy Locke (Amy), Katelynn’s stepmother, as permanent guardian of the persons and estates of Katelynn and her brother, Brett, because they were incapacitated by reason of minority. 


 In that order, the circuit court found it was in Katelynn and Brett’s best interest to have Amy appointed, the minors preferred her to be appointed as their guardian, and she was qualified and suitable to act as guardian of the persons and estates of the minors. The order authorized Amy to serve without bond and directed the court clerk to issue permanent letters of guardianship to Amy, which occurred the same day the order was entered. James had a $50,000 insurance policy with State Farm, and his three children were designated as beneficiaries (one son was over the age of 18 at the time of James’ death and was not involved with Amy as a guardian). Shortly after receiving her letters of guardianship, Amy made claim as the guardian of Katelynn’s estate for Katelynn’s portion of the insurance proceeds. State Farm issued a check on Oct. 9, 2015, in the amount of $16,416.85 paid to “Amy Locke, Guardian of the Estate of Katelynn Locke.” 


When Katelynn turned eighteen in December 2017, she asked Sinclair about her portion of her father’s life-insurance proceeds and was told that her share of the proceeds had been disbursed to Amy as the guardian of her estate in October 2015. In January 2018, Katelynn filed a complaint against State Farm, Sinclair, and Amy alleging negligence, breach of contract, fraud, breach of fiduciary duty, and conspiracy. State Farm filed a motion for summary judgment alleging the life-insurance proceeds due Katelynn had been paid to Amy as the guardian of Katelynn’s estate pursuant to the permanent order of guardianship and the letters of guardianship. This motion was granted on Aug. 17, 2018. Katelynn was granted judgment against Amy in the sum of $19,066.93 on Oct. 18, 2018, and she filed her notice of appeal from the order granting summary judgment to State Farm on Oct. 23, 2018.


The Court of Appeals noted that summary judgment should be granted only when it is clear there are no issues of material fact to be litigated, and the party asking is entitled to judgment as a matter of law. Once a moving party establishes a prima facie entitlement to summary judgment, the opposing party must meet proof with proof and demonstrate the existence of a material issue of fact. Here, the Court reviewed the evidence in the light most favorable to Katelynn (since she was appealing the grant of summary judgment to State Farm), resolved all doubts and inferences against State Farm, and found that the record left no material fact unanswered.


Katelynn made three arguments on appeal, but the overarching argument was that State Farm improperly released her portion of the insurance proceeds to Amy, who had no legal authority to receive the funds. The Court found that summary judgment was proper because there were no issues of material fact to be litigated, and State Farm was entitled to judgment as a matter of law.  State Farm’s contract was with her father for $50,000 in life insurance. State Farm paid the portion of the proceeds due Katelynn to Amy as the permanent guardian of Katelynn’s estate. Katelynn’s argument was that Amy wrongly claimed guardianship because she never posted a bond or filed a written acceptance. However, the Court noted the order appointing Amy permanent guardian authorized Amy to serve without bond; therefore, no bond was necessary. No one disputed that Amy failed to file a written acceptance of her appointment. Nevertheless, letters of guardianship had been issued to Amy. 


Katelynn argued State Farm failed to comply with Arkansas law when it released her insurance proceeds to Amy without requiring proof that Amy was in fact legitimately and duly appointed as Katelynn’s guardian. She persisted in the argument that, because Amy did not file a written acceptance of the guardianship, Amy was not properly authorized by the circuit court to be Katelynn’s guardian, and that State Farm “had an affirmative duty to investigate whether the guardianship was valid and whether Amy Locke was fully authorized.” 


The Court of Appeals found, simply, that Katelynn was wrong. It noted that, even if the letters of guardianship were improvidently issued, they were, in fact, issued, and they were in effect at the time State Farm disbursed Katelynn’s insurance proceeds to Amy as her guardian. A few months after the disbursement was made to Amy as Katelynn’s guardian, the guardianship was changed to a grandmother. Unfortunately, the better late than never rule did not apply. Arkansas law protected State Farm here because Amy presented both the order appointing her permanent guardian and the letters of guardianship, both of which were in effect at that time, allowing State Farm to rely in good faith on them in releasing Katelynn’s funds to Amy.


For these reasons, the decision of the circuit court was affirmed.