Insurance policy/courtesy photo

In Woytas v. Greenwood Tree Experts, Inc., the New Jersey Supreme Court will be asked to decide a question that the Appellate Division noted was “an issue of first impression in New Jersey,” i.e. whether the decedent, by committing suicide, breached the marital settlement agreement that required him to maintain life insurance in favor of his ex-wife and three dependent children.

Questions of first impression are intellectually stimulating for judges and lawyers, but usually spell surprise and disappointment for clients who are at the losing end when the novel issue is resolved. This case may present an object lesson for lawyers that, whenever possible, they should try to avoid novel legal questions in favor of predictable ones.

When Timothy and Christina Woytas divorced in February 2013, the judgment of divorce incorporated their marital separation agreement (MSA), which required Mr. Woytas to maintain life insurance for her and their three children as beneficiaries. The MSA also included a handwritten, initialed provision stating: “In the event either party fails to maintain the life insurance … such party's estate shall be liable for any outstanding obligations owed under this agreement.”

Mr. Woytas duly obtained the required insurance policies. Soon thereafter, Timothy married Sandra, the second Mrs. Woytas (and also procured for her another life insurance policy, which she claimed was to support her and her two children from a prior marriage because she lost her right to lifetime alimony when she married him).

Mr. Woytas committed suicide on Aug. 26, 2014, age 45, and died intestate. Pursuant to a standard two-year suicide clause, however, the insurance company refused to pay the full benefits and simply remitted the premiums already paid, with interest. Christina Woytas, on her own behalf and as guardian for her three children, sued the estate, alleging that the act of suicide constituted a breach of the promise in the MSA to “maintain” the life insurance policies.

The Appellate Division agreed, finding that the obligation to “maintain” included not only the duty to procure and pay premiums on a life insurance policy, but also to avoid actions that rendered the policy nugatory, including the act of suicide within the first two years of its term. It therefore found that the decedent's children from the first marriage were entitled to the full face value of the benefits under the life insurance contract. In effect, this ruling gave all of what was left of the estate to the first Mrs. Woytas and her children, to the exclusion of Sandra Woytas' rights under intestate succession as the surviving spouse.

The Appellate Division relied heavily on N.J.S.A. 2A:34-25, which provides in part that “Nothing in this act [regarding termination of alimony upon remarriage] shall be construed to prohibit a court from ordering either spouse or partner to maintain life insurance for the protection of the former spouse, partner, or the children of the marriage or civil union in the event of the payer spouse's or partner's death.” Relying also on out-of-state decisions, the court found that “maintain” in this context went beyond an obligation to pay the premiums and keep the life insurance policy current, but also embraced a promise “not to do anything [that] would interfere with the benefits being paid thereunder.”

But whether suicide constituted a breach of the duty to “maintain” the life insurance contract is not so much a question of statutory interpretation or case law, but rather a factual question of contract interpretation that requires discerning the intent of these parties (the decedent and the first Mrs. Woytas) at the time the contract was made. Whether an unambiguous meaning can be extracted from the word “maintain” in this context, and what that unambiguous meaning is, could be the subject of intense debate. Moreover, with New Jersey's very permissive interpretation of the parol evidence rule, extrinsic evidence of the parties' intent would be admissible even if the words were facially unambiguous.

Therein lies the novelty but also the source of possible harsh results. To pose the provocative question of whether the parties could have or should have intended the act of suicide to constitute a breach of the duty to maintain the insurance policy tempts one to ponder the larger questions of mental illness and suicide, the voluntariness of acts caused by mental illness compared to physical disease, and perhaps the appropriateness of suicide clauses in life insurance policies generally, or those required under MSAs or court decrees specifically.

But in the end, it is the intent of the parties that decides this case, not abstract issues of public policy. Unfortunately, the likelihood that the parties actually contemplated this issue at the time the MSA was signed is virtually nil. This is no one's fault. Even the most experienced divorce lawyers would probably not have thought to raise the emotionally laden issue of future suicide at the time of the divorce, and determination of the parties' intent will therefore have to rest on the fiction that they intended the “reasonable” meaning of the word “maintain,” with the courts left to play the role of soothsayer of what a “reasonable” interpretation might be in this context.

But while the parties probably did not contemplate their shared understanding of whether the word “maintain” included a promise not to commit suicide, they did specifically contemplate the larger issue of what would happen if the promise to maintain were breached: “In the event either party fails to maintain the life insurance … such party's estate shall be liable for any outstanding obligations owed under this agreement.” This language is also arguably ambiguous, but it might reasonably be construed as referring to the alimony, child support and other promises made to Mr. Woytas's first family under the MSA, rather than the full face value of the life insurance contract. This interpretation might result in a more equitable distribution of the estate's assets, with the children receiving their expected child support and education expenses but the surviving widow not being left destitute. It is again a question of discerning the parties' intent, albeit over language that is much more mundane and less intellectually stimulating than the question of whether suicide can constitute a breach.

The lesson for lawyers is not that they must foresee the unforeseeable and advise their clients to negotiate over every remote contingency. That would be impossible. But a well-drafted liquidated damages clause or similar contractual provisions that, in effect, acknowledge that there are always future risks that cannot be fully discussed and negotiated, will go a long way to settling their expectations and allocating those risks in a mutually acceptable way, and thus avoid having one party be at the losing end of a question of first impression.

Editorial Board member George Kenny recused from this editorial.