Principal Life Insurance Company v. Jones et al

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
GALVESTON DIVISION
PRINCIPAL LIFE INSURANCE
COMPANY,
Plaintiff.
V.
KATHLEEN ANNE JONES, et al.,
Defendants.
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CIVIL ACTION NO. 3:25-cv-00221
MEMORANDUM AND RECOMMENDATION
This is an interpleader action concerning the proceeds of a life insurance
policy on Kenneth N. Ellis. Pending before me are two cross-motions for summary
judgment. The first motion is filed by Defendant Katelyn A. Mathis, Independent
Administrator of the Estate of Kenneth N. Ellis. See Dkt. 24. The second motion is
filed by Defendant Kathleen Anne Jones. See Dkt. 25.
BACKGROUND
The material facts of this case are not in dispute. On or around February 1,
2001, Ellis purchased a Flexible Premium Variable Universal Life Insurance
Policy, 	No. 	5058438 	(the 	“Policy”) 	from 	Plaintiff 	Principal 	Life 	Insurance
Company with a face amount of $2,000,000. Ellis was the sole owner of the Policy.
Ellis and Jones married on November 11, 2022. On October 8, 2023, Ellis
designated Jones as the Policy’s sole beneficiary.
On March 11, 2024, Jones initiated divorce proceedings, filing her Original
Petition of Divorce in the County Court at Law No. 3, Galveston County, Texas. A
little over a year later, on May 14, 2025, Ellis and Jones entered into a Binding
Informal Settlement Agreement Pursuant to § 6.604 of the Texas Family Code and
Texas Rule of Civil Procedure 11 (the “Agreement”). The Agreement was filed on
the state court’s docket that same day. The Agreement stipulates, among other
things, that: (i) each party would be awarded all policies of life insurance, including
United States District Court
Southern District of Texas
ENTERED
May 27, 2026
Nathan Ochsner, Clerk
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the cash values, insuring their own lives; (ii) the parties mutually release all claims,
demands, and causes of action each may have against the other; (iii) the Agreement
was irrevocable; and (iv) the Agreement was effective immediately. See Dkt. 24-1.
Both parties, along with Ellis’s counsel, signed the Agreement. Both parties also
signed an Agreed Final Divorce Decree (the “Decree”), which incorporated the
terms of the Agreement, included express language divesting each party of all right,
title, interest, or claim in any property awarded to the other, and stipulated that
the Decree is enforceable as a contract. See Dkt. 24-2.
On May 27, 2025, before the judge signed the Decree, Ellis died. Ellis did not
remove Jones as the Policy’s designated beneficiary before his death. On May 28,
2025, the day after Ellis’s death, Jones filed a Revocation of Agreement in the
divorce proceedings, purporting to revoke her agreement to the Decree. That same
day, Jones contacted Principal Life seeking to collect the Policy’s proceeds as the
named beneficiary. On June 3, 2025, Sharon Ellis, as Temporary Administrator of
Ellis’s estate, sent a letter to Principal Life informing the company of the divorce
proceedings and the Agreement. 1 	Sharon Ellis asserted that the Agreement
divested Jones of her status as the Policy’s beneficiary and objected to Principal
Life paying Jones the life insurance proceeds.
On July 14, 2025, Principal Life instituted this complaint in interpleader. On
August 22, 2025, Principal Life deposited the Policy’s proceeds into the court
registry, was awarded its reasonable attorneys’ fees, and was dismissed from the
case. See Dkt. 18. On January 15, 2026, Mathis substituted for Sharon Ellis as
successor in interest as administrator of Ellis’s estate. 2 See Dkt. 23. Mathis and
Jones now move for summary judgment, each arguing that she is entitled to the
Policy’s proceeds.
1 Sharon Ellis is Ellis’s mother.
2 Mathis is Ellis’s daughter.
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LEGAL STANDARDS
A. 	I NTERPLEADER
In the Fifth Circuit, “interpleader statutes and rules are liberally construed
to protect the stakeholder from the expense of defending twice.” In re Bohart, 743
F.2d 313, 325 (5th Cir. 1984). As the Fifth Circuit has explained:
A district court has broad powers in an interpleader action. An
interpleader action typically involves two stages. In the first stage, the
district court decides whether the requirements for rule or statutory
interpleader action have been met by determining if there is a single
fund at issue and whether there are adverse claimants to that fund. If
the district court finds that the interpleader action has been properly
brought the district court will then make a determination of the
respective rights of the claimants. When there is no genuine issue of
material fact the second stage may be adjudicated at summary
judgment.
Rhoades v. Casey, 196 F.3d 592, 600 (5th Cir. 1999) (cleaned up).
B. 	S UMMARY JUDGMENT
Summary judgment is proper when “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). “A genuine issue of material fact exists when there is evidence
sufficient for a rational trier of fact to find for the non-moving party.” Schnell v.
State Farm Lloyds, 98 F.4th 150, 156 (5th Cir. 2024) (quotation omitted). “The
movant has the burden of showing that there is no genuine issue of fact.” Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). If the movant makes such a
showing, “the burden shifts to the non-movant to produce evidence of the existence
of such an issue for trial.” Brandon v. Sage Corp., 808 F.3d 266, 270 (5th Cir.
2015) (quotation omitted). The nonmoving party “must go beyond the pleadings
and come forward with specific facts indicating a genuine issue for trial to avoid
summary judgment.” Id. (quotation omitted). At this stage, I “view all facts, and
the inferences to be drawn from them, in the light most favorable to the
nonmovant.” Id. at 269 (quotation omitted). On cross-motions for summary
judgment, I “review each party’s motion independently, viewing the evidence and
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inferences in the light most favorable to the nonmoving party.” Ford Motor Co. v.
Tex. Dep’t of Transp., 264 F.3d 493, 498 (5th Cir. 2001).
ANALYSIS
A. 	THE POLICY I S NOT GOVERNED BY ERISA
The first issue I must address is whether the Policy constitutes an Employee
Retirement Income Security Act of 1974 (“ERISA”) plan. Jones contends that
“[d]istribution of the insurance settlement proceeds fall within the scope of
ERISA,” and that “ERISA requires the Court to distribute the life insurance
proceeds in accordance with the plan.” Dkt. 25 at 7. Typically, “an ERISA plan
administrator must distribute benefits to the beneficiary named in the plan,
regardless of any state-law waiver purporting to divest that beneficiary of his right
to the benefits.” Hennig v. Didyk, 438 S.W.3d 177, 183 (Tex. App.—Dallas 2014,
pet. denied). Thus, if the Policy is an ERISA plan, Jones posits that she would be
entitled to the proceeds notwithstanding the Agreement and the Decree. Mathis
argues that the Policy is not an ERISA plan because it “was not established by an
employer but was established by the Decedent individually” and because it does
not “cover the life of or provide death benefits for any person or persons other than
Decedent.” Dkt. 24 at 9.
ERISA preempts “any and all State laws insofar as they may now or hereafter
relate to any employee benefit plan.” 29 U.S.C. § 1144(a). “The term ‘employee
benefit plan’ or ‘plan’ means an employee welfare benefit plan or an employee
pension benefit plan or a plan which is both an employee welfare benefit plan and
an employee pension benefit plan.” 29 U.S.C. § 1002(3). An employee welfare
benefit plan is defined as:
any plan, fund, or program which was heretofore or is hereafter
established 	or 	maintained 	by 	an 	employer 	or 	by 	an 	employee
organization, or by both, to the extent that such plan, fund, or
program was established or is maintained for the purpose of providing
for its participants or their beneficiaries, through the purchase of
insurance or otherwise, . . . medical, surgical, or hospital care or
benefits, or benefits in the event of sickness, accident, disability, death
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or unemployment, or vacation benefits, apprenticeship or other
training programs, or day care centers, scholarship funds, or prepaid
legal services.
Id. § 1002(1).
The Policy resembles an employee welfare benefit plan in that it provides
benefits upon Ellis’s death. But that provision alone is insufficient. Determining
whether a plan falls within ERISA’s scope “requires a more probing inquiry” into
the plan’s structure and participants. Meredith v. Time Ins. Co., 980 F.2d 352, 355
(5th Cir. 1993).
The Department of Labor’s regulations state that “the term ‘employee
benefit 	plan’ 	shall 	not 	include 	any 	plan . . . under 	which 	no 	employees 	are
participants covered under the plan.” 29 C.F.R. § 2510.3-3(b). The regulations
further explain that “[a]n individual . . . shall not be deemed to be employees with
respect to a trade or business, whether incorporated or unincorporated, which is
wholly owned by the individual.” Id. § 2510.3-3(c)(1). In recognition of this
exception, the Supreme Court has stated that “[p]lans that cover only sole
owners . . . fall outside [ERISA]’s domain.” Raymond B. Yates, M.D., P.C. Profit
Sharing Plan v. Hendon, 541 U.S. 1, 21 (2004).
Here, the Policy is not governed by ERISA. An employee benefit plan is only
governed by ERISA if it covers, as participants, one or more common law
employees in addition to self-employed individuals. See id. at 20. Under the
regulations, Ellis is not considered an employee for ERISA purposes. See 29 C.F.R.
§ 2510.3-3(c)(1). The Policy lists Kenneth Ellis as the owner and does not cover any
other employees. See Dkt. 24-4 at 4. Thus, the Policy is excluded from ERISA.
Jones attaches to her summary judgment papers a $1,500 check issued by
Kenneth Ellis D.D.S., P.C. that was purportedly paid to Principal Life for the Policy.
See Dkt. 25-6. Relying on this check, Jones argues that “there is no dispute that
[Ellis] was an employee of [Kenneth Ellis D.D.S., P.C.]” Dkt. 25 at 7. Even if I
assume, for the sake of argument, that Kenneth Ellis D.D.S., P.C. was Ellis’s
employer, this argument fails to move the needle. Without another employee-
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participant in the Policy, the Policy covers only Ellis and fails to qualify as an
ERISA plan. See Meredith, 980 F.2d at 357–58.
B. 	PRINCIPAL L IFE WAS NOT REQUIRED TO PAY THE PROCEEDS TO JONES
U NDER TEXAS L AW
Having determined that ERISA does not govern the Policy, I must now
determine whether Texas state law required Principal Life to pay the Policy
proceeds to Jones as the named beneficiary of the Policy. The Texas Insurance
Code provides that:
Except as provided by Subsection (b) or (c), if an individual
obtains a policy insuring the individual’s life, designates in writing a
beneficiary to receive the proceeds of the policy, and files the written
designation with the company, the company shall pay the proceeds
that become due on the death of the insured to the designated
beneficiary.
Tex. 	Ins. 	Code 	§ 1103.102(a) 	(emphasis 	added). 	Jones 	argues 	that 	“Texas
Insurance Code § 1103.102 mandates that payment be made to the designated
beneficiary, Kathleen Jones.” Dkt. 25 at 8. Mathis retorts that because “Principal
Life received notice of an adverse claim to the Policy proceeds” and because
Mathis “has a bona fide legal claim to those proceeds,” the Texas Insurance Code
does not require Principal Life to pay the proceeds to Jones. Dkt. 26 at 7. Mathis is
correct.
It is true that the default circumstance under § 1103.102 would be for
Principal Life to pay the proceeds to Jones as the named beneficiary. But
subsection (b) provides:
A company that issues a life insurance policy is not required to pay the
proceeds of the policy to a designated beneficiary under Subsection
(a) if the company receives notice of an adverse claim to the proceeds
from a person who has a bona fide legal claim to all or part of the
proceeds.
Id. § 1103.102(b). The parties do not dispute that an adverse claim was made to
Principal Life on June 3, 2025, when the administrator of Ellis’s estate informed
Principal Life of the Agreement and the Decree. Nor does Jones dispute that
Mathis’s claim to the proceeds was bona fide, meaning that the claim was “[m]ade
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in good faith; without fraud or deceit.” Black’s Law Dictionary (11th ed. 2015).
Because Principal Life received notice of a bona fide adverse claim, Principal Life
was not required to distribute the proceeds to Jones under § 1103.102(a), and
summary judgment on that basis is inappropriate. 4
C. 	MATHIS I S E NTITLED TO S UMMARY JUDGMENT
Mathis moves for summary judgment, arguing that the Agreement is
enforceable and divests Jones of any interest in the Policy. Jones contends that the
Agreement is unenforceable because Ellis failed to perform, and that she is entitled
to the Policy’s proceeds as the designated beneficiary. I address each argument in
turn.
1. 	The Agreement Is Enforceable and Irrevocable
a. 	Texas Family Code § 6.604
The Texas Family Code provides that an agreement between divorcing
spouses is binding if it:
(1) provides, in a prominently displayed statement that is in boldfaced
type or in capital letters or underlined, that the agreement is not
subject to revocation;
(2) is signed by each party to the agreement; and
(3) is signed by the party’s attorney, if any, who is present at the time
the agreement is signed.
Id. § 6.604(b). “If a written settlement agreement meets the requirements of
Subsection (b), a party is entitled to judgment on the settlement agreement
4 In arguing that § 1103.102(a) mandates payment to her, Jones analogies this case
to Gray v. Nash, 259 S.W.3d 286 (Tex. App—Fort Worth 2008, pet. denied). As Mathis
points out: “the facts of Gray are vastly different from the facts of this case.” Dkt. 26 at 7.
Jones’s reliance on Gray “is misplaced because that case dealt with a life insurance policy
where the Decedent re-named his ex-wife as a beneficiary after the final decree of divorce
was signed. . . . Here, [Ellis] did not re-name Jones as beneficiary after a final decree of
divorce was entered.” Id. Additionally, Gray involved Texas Family Code § 9.301, a
statute nullifying beneficiary designations of an ex-spouse by operation of law that has no
application to the instant matter.
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notwithstanding Rule 11, Texas Rules of Civil Procedure, or another rule of law.”
Id. § 6.604(c).
Mathis argues that the Agreement “is an informal settlement agreement
which comports with the requirements of Texas Family Code 6.604(b) making it
binding and irrevocable. Thus, Jones’s attempt to revoke the Agreement in no way
renders it void or unenforceable.” Dkt. 24 at 8. In response, Jones contends that
“§ 6.604(c) applies [only] to parties that are alive at the time the decree is signed.”
Dkt. 25 at 11.
Certain settlement agreements under the Texas Family Code are effective
immediately upon their signing and irrevocable. See Spiegel v. KLRU Endowment
Fund, 228 S.W.3d 237, 242 (Tex. App.—Austin 2007, pet. denied). In Spiegel, a
husband and wife entered into a mediated settlement agreement before they were
divorced. The wife died before the divorce was finalized. The husband sought a
declaratory judgment that the mediated settlement agreement was unenforceable
because the wife’s death prior to the agreement’s incorporation into the final
divorce decree invalidated the agreement. The Austin Court of Appeals rejected the
husband’s argument, holding that “[i]f a mediated settlement agreement meets the
statute’s requirements, it must be enforced.” Id.
As in Spiegel, the 	Agreement is enforceable because it meets § 6.604(b)’s
requirements. First, the Agreement states, in bold and capital letters: “THIS
AGREEMENT IS NOT SUBJECT TO REVOCATION.” Dkt. 24-1 at 6. Second,
both parties signed the agreement on May 14, 2025. See id. at 7. Third, Ellis’s
attorney, Teal A. de la Garza, signed the agreement. 5 See id. Thus, the agreement
meets the requirements of Texas Family Code § 6.604(b) and “must be enforced”
irrespective of whether the court enters a final divorce decree. Spiegel, 228 S.W.3d
5 Mathis argues that when “the agreement was signed, Ms. Jones was not represented by
counsel, so no attorney was present and no additional attorney signature was required.”
Dkt. 24 at 7. This comports with the language of § 6.604(b)(3), which provides that if a
person is represented by counsel, the lawyer must sign the agreement for it to be effective.
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at 242. This renders Jones’s attempted revocation the day after signing the
Agreement ineffective. As articulated in Spiegel:
[Jones] could have made an agreement under section 7.006 6 of the
family code if [s]he desired to enter into a settlement agreement that
could be rescinded and would not be enforceable until approved by
the court. Instead [s]he chose to make an agreement under section
6.6027 that became binding immediately after it was signed.
Id. at 243. While Spiegel was decided under § 6.602 instead of § 6.604, its
reasoning applies with equal force to the facts of this case. See In re M.A.H., 365
S.W.3d 	814, 	820 	(Tex. 	App.—Dallas 	2012, 	no 	pet.) 	(holding 	that 	informal
settlement agreement under § 6.604 is irrevocable when it complies with the
statute’s requirements); see also Kramer v. Kastleman, No. 03-13-00133-CV, 2017
WL 5119211, at *3 (Tex. App.—Austin Nov. 3, 2017, pet. denied) (observing that
§§ 6.602(b) and 6.604(b) “are identical except for the references to [the type of
settlement agreement]”).
Similar to the settlement agreement in Spiegel, the plain language of the
Agreement indicates that the Ellis and Jones intended that it become immediately
binding and effective. The title of the agreement reads “BINDING INFORMAL
SETTLEMENT AGREEMENT PURSUANT TO § 6.604 OF THE TEXAS
FAMILY CODE,” and first line states that “[t]he following is a full and final
settlement between the parties pursuant to Rule 11 of the Texas Rules of Civil
Procedure and §6.604 of the Texas Family Code.” Dkt. 24-1 at 2 (emphasis added).
6 Section 7.006(a) provides:
To promote amicable settlement of disputes in a suit for divorce or
annulment, the spouses may enter into a written agreement concerning the
division of the property and the liabilities of the spouses and maintenance
of either spouse. The agreement may be revised or repudiated before
rendition of the divorce or annulment unless the agreement is binding
under another rule of law.
Tex. Fam. Code § 7.006(a).
7 Section 6.602 sets forth the requirements for an agreement reached between divorcing
spouses at a mediated settlement conference to be effective.
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The Agreement also states that it “shall be effective immediately.” Id. at 5.
Everything about the Agreement suggests that the parties intended it to be
immediately effective.
Further, Jones provides no authority for the proposition that § 6.604(b)
applies only to parties that are alive at the time the decree is signed. Such an
argument is irreconcilable with Spiegel, where the parties’ agreement was enforced
after the wife had died and before the divorce decree was signed. The result should
be no different here.
b. 	Texas Rule of Civil Procedure 11
Alternatively, 	Mathis 	argues 	that 	“the 	Agreement 	is 	a 	binding 	and
enforceable Rule 11 settlement agreement.” Dkt. 24 at 6. Jones counters that Rule
11 does not apply “because this . . . lawsuit was not ‘pending’ a[t] the time the
[Agreement and Decree] were signed.” Dkt. 25 at 15.
“Rule 11 agreements have long been recognized in Texas as ‘an effective tool
for finalizing settlements by objective manifestation so that the agreements do not
themselves become sources of controversy.’” Young v. Ershick, 617 F. Supp. 3d
563, 575 (E.D. Tex. 2022) (quoting Knapp Med. Ctr. v. De La Garza, 238 S.W.3d
767, 768 (Tex. 2007)) (cleaned up). Under Rule 11, “no agreement between
attorneys or parties touching any suit pending will be enforced unless it be in
writing, signed and filed with the papers as part of the record, or unless it be made
in open court and entered of record.” Tex. R. Civ. P. 11. A settlement agreement
that complies with Rule 11 “becomes a contract when executed, not when the trial
court attempts to enforce it.” Coale v. Scott, 331 S.W.3d 829, 832 (Tex. App.—
Amarillo 2011, no pet.). “Courts construe Rule 11 settlement agreements just as
they would any contract.” MKM Eng’rs, Inc. v. Guzder, 476 S.W.3d 770, 778 (Tex.
App.—Houston [14th Dist.] 2015, no pet.).
Here, Mathis has shown that the Agreement is in writing, signed by both
parties, and was filed as part of the state court record. Additionally, there is no
dispute that the Agreement was executed while the original state court divorce
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action was pending. Thus, the Agreement complies with Texas Rule of Civil
Procedure 11.
Jones cites Cunningham v. Zurich American Insurance Co., 352 S.W.3d
519, 526 (Tex. App.—Fort Worth, 2011, pet. denied), to argue that “[b]ecause this
lawsuit was not pending at the time the documents were filed, they are not
enforceable under Texas Rule of Civil Procedure.” Dkt. 25 at 16 (emphasis added).
This argument is meritless. Jones offers no authority for her assertion that “the
documents must be signed during time when this [federal] lawsuit was pending.”
Id. at 15–16. The fact that this case was not yet pending at the time the parties made
the Agreement does not render the Agreement unenforceable here.
Moreover, Cunningham is factually dissimilar to this case. The parties in
Cunningham strongly disputed whether a settlement agreement was ever formed,
which is not the crux of the dispute here. But even the court in Cunningham
recognized that a Rule 11 agreement may be enforced outside of the trial court from
which it originated. See 352 S.W.3d at 525 (“Rule 11 does not specify that it applies
only to suits pending only in the trial court.”). Cunningham cuts against Jones’s
argument.
Jones’s theory is also at odds with the fact that a settlement agreement
complying with Rule 11 “becomes a contract when executed, not when the trial
court attempts to enforce it.” Coale, 331 S.W.3d at 832. The parties executed the
Agreement on May 14, 2025. Even if the Agreement could not be enforced as a Rule
11 agreed judgment in the state court divorce action, it is still a binding contract
that can be enforced in this court. 8 Accordingly, the Agreement is binding under
the Texas Family Code and under Rule 11 as a standalone contract. 9
8 Even if the Agreement was not enforceable under Rule 11, it remains enforceable as an
informal settlement agreement under Tex. Fam. Code § 6.604, which entitles Mathis to
judgment “notwithstanding Rule 11, Texas Rules of Civil Procedure, or another rule of
law.” See Tex. Fam. Code § 6.604(c) (emphasis added).
9 Aside from the points addressed above, Jones does not dispute any other aspects of the
Agreement’s validity. Thus, I need not walk through an analysis as to whether every aspect
of a valid contract has been satisfied. That Jones filed a Revocation of Agreement in the
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2. 	Mathis Is Capable of Performing the Estate’s Obligations
Under the Agreement
Having established that the Agreement is enforceable, the next issue
concerns whether Ellis’s death precludes his estate’s ability to perform the
Agreement. Jones argues that Mathis cannot “prove that Ellis performed under the
agreement.” Dkt. 25 at 15. Mathis insists that the estate is entitled to summary
judgment “because the owed performance was not yet due at the time of [Ellis]’s
passing,” and that Ellis “has not refused to tender performance and is capable of
doing such.” Dkt. 26 at 10, 11.
“The law of contracts applies to settlement agreements and releases.”
Advanced Pers. Care, LLC v. Churchill, 437 S.W.3d 41, 44 (Tex. App.—Houston
[14th Dist.] 2014, no pet.). The general rule is that “a cause of action founded on a
contract survives the death of either party.” Hutchings v. Bates, 393 S.W.2d 338,
343–44 (Tex. App.—Corpus Christi 1965), aff’d, 406 S.W.2d 419 (Tex. 1966); see
also Gray v. Bush, 430 S.W.2d 258, 263 (Tex. App.—Fort Worth 1968, writ ref’d
n.r.e.).
Jones 	argues 	that 	“[p]erformance 	under 	the 	mediated 	settlement
agreement, required (1) the Court grant the divorce; (2) Ellis pay Ms. Jones the
sum of $30,000.00 cash, and (3) enter orders dividing the property. Performance
never occurred, . . . and therefore Defendant Administrator cannot recover under
a contract theory.” Dkt. 25 at 15. I disagree.
First, the Agreement’s enforceability does not hinge on the court granting a
divorce, or entering orders dividing the property. Notably absent from the
Agreement is any language suggesting that the Agreement’s validity is conditioned
on any future actions. To the contrary, the Agreement determines the rights of each
party and states that it “shall be effective immediately.” Dkt. 24-1 at 5.
state court divorce action demonstrates that the Agreement was valid and that, at its
execution, the parties intended to be bound by it. See Dkt. 24-3.
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Second, Jones presupposes that Ellis was required to pay her $30,000
during his life to have performed under the Agreement. Such an assumption does
not comport with Texas law. “Under principles of contract law, contractual
obligations generally . . . bind [a decedent’s] estate if the contract is capable of
being performed by the estate representative.” Cardwell v. Sicola-Cardwell, 978
S.W.2d 722, 726 (Tex. App.—Austin 1998, pet. denied). The representative of
Ellis’s estate, Mathis, can pay Jones any amounts owed under the Agreement. See
Dkt. 26 at 10–11. Thus, Ellis’s obligations survive his death and bind his estate.
Jones offers no exceptions to this rule that would preclude Ellis’s estate from
paying the amounts owed under the Agreement.
Third, although the Agreement does require Ellis to pay Jones $30,000,
performance was not yet due at the time of Ellis’s passing. The Agreement provides
the payment be made “on or before the date of Divorce.” Dkt. 24-1 at 3. Because
the Decree had not been entered, Ellis’s deadline to perform had not been
triggered. See Young, 617 F. Supp. 3d at 593 (“[T]hough [Ellis] never tendered
$[30],000 to [Jones] . . . under the Rule 11 Agreement, this does not preclude
[Ellis’s estate from prevailing] since [his] obligations were not due under the Rule
11 Agreement until later.”).
Jones also contends that Ellis’s death renders Ellis’s estate’s performance
“impossible” and the agreement unenforceable. Dkt. 27 at 2. This argument holds
no water.
“[I]f it is clear the parties intend that time is of the essence to a contract,
timely performance is essential to a party’s right to require performance by the
other party.” Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 196
(Tex. 2004). Texas intermediate courts consistently recognize, however, that
“[o]rdinarily, time is not of the essence,” and “a date stated for performance does
not mean time is of the essence.” Kennedy Ship & Repair, L.P. v. Pham, 210 S.W.3d
11, 19 (Tex. App.—Houston [14th Dist.] 2006, no pet.) (“Instead, the contract must
expressly make time of the essence or there must be something in the nature or
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purpose of the contract and the circumstances surrounding it making it apparent
that the parties intended that time be of the essence.”); see also Laredo Hides Co.
v. H & H Meat Prods. Co., 513 S.W.2d 210, 217 (Tex. App.—Corpus Christi 1974,
writ ref’d n.r.e.) (“As a general rule, a stipulation for the payment of money at a
particular time will not be regarded as an essential part of the agreement, in the
sense that a breach thereof wholly destroys the contract.” (quotation omitted)).
As noted, the Agreement requires Ellis to pay Jones $30,000 “on or before
the date of Divorce.” Dkt. 24-1 at 3. Although the payment itself is an essential
term, the timing of that payment is not. Nothing in the Agreement indicates that
payment by the date of the divorce was a material condition, nor does it provide
for default or termination in the event of delay. See Tex. Black Iron, Inc. v. Arawak
Energy Int’l Ltd., 566 S.W.3d 801, 815 (Tex. App.—Houston [14th Dist.] 2018, pet.
denied) (holding timing of payment to not be a material condition when the
contract did not include a default provision or indicate that late payment was
grounds for termination). Because the Agreement does not expressly or implicitly
make time of the essence, the law presumes performance within a reasonable time.
See Border Gateway, L.L.C. v. Gomez, No. 14-10-01266-CV, 2011 WL 4361485, at
*7 (Tex. App.—Houston [14th Dist.] Sept. 20, 2011, no pet.). Accordingly, Ellis’s
estate may satisfy the payment obligation within a reasonable time period. So long
as Ellis’s estate pays the $30,000 within seven days of the adoption of this
Memorandum 	and 	Recommendation, 	it 	has 	complied 	with 	its 	contractual
obligations.
3. 	The Agreement Divests Jones as the Policy’s Designated
Beneficiary
Having determined that the Agreement is enforceable, irrevocable, and may
be performed by Ellis’s estate, the last issue concerns whether the Agreement
effectively divests Jones from her status as the Policy’s named beneficiary. I find
that it does.
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Here, it is undisputed that Jones is the named beneficiary under the Policy,
and that Ellis did not provide written notice to Principal Life seeking to change the
Policy’s designated beneficiary. Even so, Mathis argues that the Agreement “has
divested Jones of her beneficiary status under the Policy. Thus, there is not a
named beneficiary under the Policy, and the [e]state . . . is entitled to the full
amount of the Policy proceeds.” Dkt. 24 at 9. Mathis also argues that the
Agreement “unequivocally establishes the parties’ intention to award, not just
ownership of all policies of life insurance, but all benefits obtained through such
policies” to each policyholder. Dkt. 26 at 9. In response, Jones contends that she
“is the designated beneficiary under the life insurance policy and neither the
mediated settlement agreement, nor the proposed final decree of divorce changes
that designation.” Dkt. 25 at 12.
An agreement in which both parties relinquish any claim to the other’s life
insurance proceeds is sufficient to divest a named beneficiary, even if the
beneficiary designation is never formally changed. See Novotny v. Wittner, 731
S.W.2d 103, 105 (Tex. App.—Houston [14th Dist.] 1987, writ ref’d n.r.e.). In
Novotny, the policyholder’s ex-wife remained the named beneficiary after their
divorce, but the divorce decree stated that each party was divested of all rights in
the other’s life insurance policies. After the policyholder died, the estate argued
that this language eliminated her right to the proceeds. Both the trial court and the
Fourteenth Court of Appeals agreed, holding that the decree’s express terms
terminated her beneficial interest. 10
10 Courts frequently reach this result when express language in the underlying agreements
divests the parties of their beneficial interests in the insurance policies. See Hennig, 438
S.W.3d at 188 (divesting policy beneficiary where language in divorce decree showed that
beneficiary surrendered both her rights in and claims to future insurance proceeds);
Spiegel, 228 S.W.3d at 245 (holding that divesting policy beneficiary, even before divorce
decree was entered, comports with common sense and the broad release contained in the
parties’ mediated settlement agreement); Gillespie v. Moore, 635 S.W.2d 927, 928 (Tex.
App.—Amarillo 1982, writ ref’d n.r.e.) (ex-wife agreed that “she will in no event ever claim
any interest in any of such policies or the proceeds thereof”).
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While Jones invites me to blindly apply the Policy’s terms, Ellis’s intent
controls over the Policy’s terms. See Beckham v. Beckham, 672 S.W.2d 41, 42 (Tex.
App.—Houston [14th Dist.] 1984, no writ). And “[w]hile [Ellis’s] failure to change
the policies creates a presumption that he intended [Jones] to be the beneficiary,
this presumption can be rebutted.” Id. I find that presumption rebutted—and
indeed conclusively overridden—by the record.
First, the Decree expressly divests Jones of “all right, title, interest, and
claim” in any life insurance policy insuring Ellis’s life. Dkt. 24-2 at 4–5. That
language demonstrates a clear intent to eliminate not only ownership rights in but
also any future claim to the Policy proceeds. Courts consistently hold that
materially identical language divests a named beneficiary of both ownership and
proceeds. See supra n.10.11 The Decree also awards Ellis, as his sole and separate
property, “[a]ll policies of life insurance (including cash values)” insuring his life.
Dkt. 24-2 at 5. Texas courts have treated such language as sufficient to divest a
beneficiary’s interest. See Hennig, 438 S.W.3d at 188.
Second, the Agreement’s broad, mutual release of “all claims, demands, and
causes of action each may have against the other” supports Ellis’s intent to divest
Jones as the beneficiary, as well as Jones’s intent to relinquish any right to the
proceeds. Dkt. 24-1 at 6. In Spiegel, the court held that the “broad release by each
party of any future claims or demands against the other party” supported
revocation of the ex-wife’s beneficiary designation. 228 S.W.3d at 245. That
reasoning applies here. Moreover, interpreting the Agreement to preserve Jones’s
beneficiary status would impermissibly render this release provision meaningless.
11 That the Decree was not signed and entered by the judge is immaterial, because both
parties stipulated to the Decree as being an enforceable contract. See Dkt. 24-2 at 3. Nor
is a judge’s signature on the decree a requirement; several courts have divested named
beneficiaries in the absence of the divorce decree being signed and entered. See Novotny,
731 S.W.2d at 105; Spiegel, 228 S.W.3d at 242.
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See Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323,
333 (Tex. 2011).
Finally, Ellis lacked a meaningful opportunity to change the beneficiary
designation. Ellis’s “death, just [13] days after the [Agreement], made it impossible
for him to have had an opportunity to finalize matters related to the divorce
including the changing of the beneficiary.” Novotny, 731 S.W.2d at 105 (cleaned
up); see also Beckham, 672 S.W.2d at 42 (“[W]here a man purchases insurance
policies and designates his wife as the beneficiary, later divorces that wife, and is
awarded the policies by the divorce decree and dies shortly after the divorce
without having changed the beneficiary, we hold that the intent of the decedent,
rather than the policies, determines the beneficiary.”); McDonald v. McDonald,
632 	S.W.2d 	636, 	637 	(Tex. 	App.—Dallas 	1982, 	writ 	ref’d 	n.r.e.) 	(divesting
beneficiary when policyholder died 25 days after divorce). Such a short interval
also lies in stark contrast with cases where courts declined to find divestment after
extended inaction by the policyholder. See Parker v. Parker, 683 S.W.2d 889, 891
(Tex. App.—Fort Worth 1985, writ ref’d) (declining to divest beneficiary after
repeated notices that beneficiary had not been changed).
All things considered, it is clear to me that the parties intended to “sever
their financial relationship” when entering into the Agreement and Decree.
Hennig, 438 S.W.3d at 189. As such, these documents operated to divest Jones as
the beneficiary of the Policy. Because Jones is divested, the Policy directs the life
insurance proceeds be awarded to Ellis’s estate. See Dkt. 24-4 at 35.
CONCLUSION
For 	the 	reasons 	explained 	above, 	I 	recommend 	Mathis’s 	motion 	for
summary 	judgment 	(Dkt. 24) 	be 	granted 	and 	Jones’s 	motion 	for 	summary
judgment (Dkt. 25) be denied. I further recommend that Ellis’s estate be ordered
to tender a lump-sum $30,000 payment to Jones in the form of a money order or
cashier’s check within seven days after this Memorandum and Recommendation
is adopted to finalize performance of the Agreement.
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The 	parties 	have 	14 	days 	from 	service 	of 	this 	Memorandum 	and
Recommendation to file written objections. See 28 U.S.C. § 636(b)(1)(C); Fed. R.
Civ. P. 72(b)(2). Failure to file timely objections will preclude appellate review of
factual findings and legal conclusions, except for plain error.
SIGNED this 	day of May 2026.
______________________________
ANDREW M. EDISON
UNITED STATES MAGISTRATE JUDGE
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