Ruben Saenz and his late wife purchased a credit life insurance policy through Transamerica. The sole beneficiary was the lender on a truck they purchased. After the wife died, Transamerica denied payment on the policy due to the cause of death being excluded. Saenz then filed a lawsuit against Transamerica.
Transamerica filed a motion to dismiss the lawsuit, claiming that Saenz did not have individual standing to bring the lawsuit. He was not a beneficiary of the policy, nor did he establish an estate for his late wife. Transamerica claimed the only parties who had standing to bring suit were the lender, as the designated beneficiary, or an appointed executor of the late wife's estate.
Saenz raised two arguments in support of standing. First, he argued standing because he was liable on the car loan and any insurance payout in excess of the amount still owed would go to him. Judge Miller, of the Houston Division of the Southern District of Texas, rejected that argument, finding that premise was speculative.
Saenz also argued that the life insurance property was community property, since it was purchased during marriage. Texas Estates Code Section 453.003 provides:
“If there is no qualified executor or administrator of a deceased spouse's estate, the surviving spouse, as the surviving partner of the marital partnership, may... sue and be sued to recover community property.”
The Court noted that a surviving spouse has the power to sue to collect claims due to the community estate. Also, in Texas even though the insured has designated a beneficiary, the surviving spouse has a claim to up to half the insurance proceeds if the policy was community property. Therefore, Saenz had standing to sue Transamerica for its denial because he had a community property claim to any payment of proceeds.
Spousal rights to community property policies is a complex issue that turns on a number of factors, including whether Texas or federal law applies. Anyone facing a claim pertaining to spousal rights in a policy should contact a Texas lawyer experienced in evaluating such claims.