Mitchell et al v. Modern Woodmen of America

Filing 135

MEMORANDUM OPINION. Signed by Magistrate Judge John E Ott on 4/20/2015. (KAM, )

FILED
2015 Apr-20 PM 03:04
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
ESTATE OF TOM J. MITCHELL et al.,
Plaintiffs,
v.
MODERN WOODMEN OF AMERICA,
Defendant.

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Case No. 2:10-cv-00965-JEO

MEMORANDUM OPINION
This case involves claims against defendant Modern Woodmen of America (“Modern
Woodmen”) for breach of two insurance certificates insuring the life of Stephanie Mitchell.
Before the court is Modern Woodmen’s motion for summary judgment seeking (1) a dismissal
with prejudice of any remaining claims being asserted by Ryan and Tristan Allred against
Modern Woodmen, and (2) a declaration that Modern Woodmen owes Ryan and Tristan nothing
under the two insurance certificates. (Doc. 118). For the reasons set forth below, the court
concludes that the motion is due to be granted.
FACTUAL AND PROCEDURAL HISTORY
In 2008, Modern Woodmen issued two insurance certificates insuring Stephanie
Mitchell’s life. On April 22, 2008, Modern Woodmen issued Certificate No. 8227615 (the “First
Certificate”) providing Stephanie with $1 million in life insurance coverage.1 (Doc. 119 at p. 3, ¶
1). In her application for the First Certificate, Stephanie designated Tom James Mitchell (her

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The First Certificate also provided $350,000 in accidental death coverage. In an earlier opinion
on the parties’ initial summary judgment motions, the court ruled that Modern Woodmen was entitled to
summary judgment on the plaintiffs’ claim that it breached the First Certificate by failing to pay the
accidental death benefit. (Doc. 112).

husband) as the principal beneficiary and Brittany Renee Allred (her daughter) as the contingent
beneficiary. (Id. at pp. 3-4, ¶ 3). Although Stephanie subsequently designated Ryan and Tristan
Allred (her sons) as contingent beneficiaries on June 25, 2008, she restored the original
beneficiary designations on December 5, 2008, again designating Tom James Mitchell as the
principal beneficiary and Brittany Allred as the (sole) contingent beneficiary. (Id. at pp.4-5, ¶ 5).
She made no further changes to the beneficiary designations relating to the First Certificate. (Id.
at p. 5, ¶ 7).
On August 26, 2008, Modern Woodmen issued Certificate No. 8248403 (the “Second
Certificate”) providing Stephanie Mitchell with an additional $1 million in life insurance
coverage. (Id. at p.6, ¶ 8). In her application for the Second Certificate, Stephanie designated
Tom James Mitchell and Brittany Allred as principal beneficiaries and Ryan Keith Allred and
Tristan Lee Allred as contingent beneficiaries. (Id. at p. 6, ¶ 9). On December 5, 2008, Stephanie
changed the beneficiary designations, designating Tom James Mitchell as the sole principal
beneficiary and Brittany Allred as the sole contingent beneficiary. (Id. at pp. 6-7, ¶ 11). She
made no further changes to the beneficiary designations relating to the Second Certificate. (Id. at
p. 7, ¶ 13).
On March 28, 2009, Stephanie Mitchell died from gunshot wounds to the head. Tom
Mitchell submitted a claim for benefits under both the First Certificate and the Second
Certificate. Because Stephanie’s death occurred within two years of the issuance of the
certificates, Modern Woodmen conducted a claim review.
On April 14, 2010, after a year had passed with no payment of the claim, Tom Mitchell
and Brittany Allred filed this action against Modern Woodmen for breach of the First and Second
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Certificates.2 (Docs. 1, 4). Modern Woodmen answered the complaint and asserted a
counterclaim seeking a declaratory judgment as to whether benefits are payable under either
Certificate and, if so, to whom the benefits are owed. (Doc. 12).
By letter to Modern Woodmen dated July 1, 2011, counsel for Ryan and Tristan Allred
gave notice that they were making a claim on behalf of Ryan and Tristan to “any insurance policy
proceeds” related to the First and Second Certificates. (Doc. 28-1). After receiving the letter,
Modern Woodmen filed a motion to add Ryan and Tristan as parties to this action because they
were “claim[ing] an interest relating to the subject matter” of the action. (Doc. 28 at ¶ 2). The
court granted the motion and on August 8, 2011, Modern Woodmen filed an amended
counterclaim adding Ryan and Tristan as parties to the declaratory judgment claims.3 (Doc. 29).
In their answer to the amended counterclaim, Ryan and Tristan asserted that they were “the
rightful beneficiaries of the insurance policy proceeds at issue” in the case. (Doc. 30 at ¶ 2).
STANDARD OF REVIEW
Pursuant to Rule 56 of the FEDERAL RULES OF CIVIL PROCEDURE, Modern Woodmen has
moved for a summary judgment on any remaining claims being asserted by Ryan and Tristan
Allred in this action and on Modern Woodmen’s amended counterclaim insofar as it seeks a
declaration that Modern Woodmen owes nothing to Ryan and Tristan under the First and Second

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The complaint also included a claim for bad-faith refusal to pay benefits. In its prior opinion on
the parties’ initial summary judgment motions, the court ruled that Modern Woodmen was entitled to
summary judgment on that claim. (Doc. 112).
3

Although Ryan and Tristan Allred were never formally aligned as plaintiffs, they joined with
Tom Mitchell and Brittany Allred in filing “Plaintiffs’ Motion for Summary Judgment” on May 23,
2013. (See Doc. 83). They also joined with Tom Mitchell and Brittany Allred in opposing Modern
Woodmen’s initial motion for summary judgment. (See Doc. 95).

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Certificates. Under Rule 56, “[t]he court shall grant summary judgment if the movant shows that
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). The party moving for summary judgment “always bears
the initial responsibility of informing the district court of the basis for its motion,” relying on
submissions “which it believes demonstrate the absence of a genuine issue of material fact.”
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); see also Clark v. Coats & Clark, Inc., 929
F.2d 604, 608 (11th Cir. 1991); Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970). Once the
moving party has met its burden, the nonmoving party must “go beyond the pleadings” and show
that there is a genuine issue for trial. Celotex Corp., 477 U.S. at 324. In its review of the
evidence, the court views the evidence in the light most favorable to the non-movant. Stewart v.
Booker T. Washington Ins., 232 F.3d 844, 848 (11th Cir. 2000). At summary judgment, “the
judge’s function is not himself to weigh the evidence and determine the truth of the matter but to
determine whether there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 249 (1986).
ANALYSIS
The crux of Modern Woodmen’s motion for summary judgment is that the undisputed
evidence conclusively establishes that Ryan and Tristan Allred are not beneficiaries under either
the First Certificate or the Second Certificate. Modern Woodmen argues that because Ryan and
Tristan are not beneficiaries under either Certificate, they have no claims to assert against
Modern Woodmen, which owes them nothing as a matter of law. The court agrees.
In their opposition to Modern Woodmen’s motion for summary judgment, Ryan and
Tristan do not challenge Modern Woodmen’s evidence that they are not beneficiaries under the
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First and Second Certificates.4 Instead, Ryan and Tristan point to a General Release and
Common Interest Agreement (the “Common Interest Agreement”) they entered into with Tom
Mitchell and Brittany Allred in July 2012. (Doc. 123 at ¶ 1; Doc. 124).5 Under the Common
Interest Agreement, Tom Mitchell, Brittany Allred, Ryan Allred, and Tristan Allred agreed that
any proceeds recovered in this case would be divided among the four of them in a specified
manner. (Doc. 124 at 6). Ryan and Tristan argue that “this agreed-upon distribution standing
alone confers on [them] an interest in the proceeds of both policies and the proper standing to
participate in trial proceedings as a party in this case.” (Doc. 123 at ¶ 1).
In support of their argument, Ryan and Tristan cite Sprint Commc’ns Co., L.P. v. APCC
Servs., Inc., 554 U.S. 269, 285 (2008), for the proposition that “[l]awsuits by assignees, including
assignees for collection only, are ‘cases and controversies of the sort traditionally amenable to,
and resolved by, the judicial process.’” Ryan and Tristan, however, are not assignees of any
claims against Modern Woodmen. As Ryan and Tristan themselves acknowledge, the Common
Interest Agreement merely reflects an “agreed-upon distribution” of any proceeds recovered in
this action; there is no assignment of claims anywhere in the Common Interest Agreement. In
particular, neither Tom Mitchell nor Brittany Allred, the designated beneficiaries under the First
and Second Certificates, assigned any rights or claims against Modern Woodmen to Ryan and
Tristan.
Under settled Alabama law, “[a] third party has no rights under a contract between others

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Indeed, Ryan and Tristan do not dispute any of the Undisputed Material Facts in Modern
Woodmen’s brief in support of its motion for summary judgment.
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Doc. 124, the Common Interest Agreement, was filed under seal.

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unless the parties intend that the third person receive a direct benefit enforceable in court.”
Russell v. Birmingham Oxygen Serv., Inc., 408 So. 2d 90, 93 (Ala. 1981); see also Dunning v.
New England Life Ins. Co., 890 So. 2d 92, 97 (Ala. 2003) (noting that “one not a party to, or in
privity with a contract, cannot sue for its breach”) (citation omitted); Blake v. Bank of Am., N.A.,
845 F. Supp. 2d 1206, 1212 (M.D. Ala. 2012) (citing Dunning and Russell). Here, Ryan and
Tristan Allred are neither parties to the First and Second Certificates nor third-party beneficiaries
of those contracts. Indeed, the undisputed evidence establishes that Stephanie Mitchell changed
the beneficiary designations under both Certificates so as to remove Ryan and Tristan as
contingent beneficiaries. Therefore, Ryan and Tristan have no rights or claims to assert against
Modern Woodmen in this action. The Common Interest Agreement does nothing to change that
reality.
The other arguments advanced by Ryan and Tristan are equally unavailing. Ryan and
Tristan suggest that Rule 19(a)(1)(B) of the FEDERAL RULES OF CIVIL PROCEDURE somehow
requires their continued inclusion in this case.6 (Doc. 123 at ¶ 1). As Modern Woodmen notes,
Rule 19 is a procedural rule that does not enlarge or modify substantive rights. See 28 U.S.C. §
2072(a)-(b) (“The Supreme Court shall have the power to prescribe general rules of practice and
procedure ... for cases in the United States district courts,” but “[s]uch rules shall not abridge,
enlarge or modify any substantive right.”). As discussed above, Ryan and Tristan have no
substantive rights to assert against Modern Woodmen, and Rule 19 does not bestow any such

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Rule 19(a)(1)(B) provides that “[a] person ... must be joined as a party if ... that person claims
an interest relating to the subject of the action and is so situated that disposing of the action in the
person’s absence may: (i) as a practical matter impair or impede the person’s ability to protect the
interest; or (ii) leave an existing party subject to a substantial risk of incurring double, multiple, or
otherwise inconsistent obligations because of the interest.”). FED. R. CIV. P. 19(a)(1)(B).

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rights on them. Rather, Rule 19 is a procedural device that allowed Modern Woodmen to join
Ryan and Tristan as parties to this action because they claimed to be the rightful beneficiaries of
the insurance proceeds under the First and Second Certificates. Modern Woodmen has now
conclusively established that Ryan and Tristan are not beneficiaries under either Certificate, and
consequently they are due to be dismissed from this case.
Ryan and Tristan also argue that as to them, “the same genuine issues of fact that existed
when this case was first filed remain as they always have been.” (Doc. 123 at ¶ 2). That is simply
not accurate. When this case was filed, and when Ryan and Tristan were added as parties, there
were genuine issues of fact as to whom benefits would be owed if it were determined that
Modern Woodmen was obligated to pay the proceeds of either or both of the Certificates. As to
Ryan and Tristan, those issues have been resolved. No proceeds are payable to Ryan and Tristan
under either Certificate.
Ryan and Tristan further argue that “[b]oth the [Certificates] themselves and [Modern
Woodmen’s] bylaws expressly contemplate that the insured’s children participate in the
distribution of benefits should the named and contingent beneficiaries not recover benefits.”
(Doc. 123 at ¶ 3). As Modern Woodmen points out, however, the Certificates and the bylaws
expressly provide that a distribution to the insured’s children will occur only in the event that no
beneficiary survives the insured. (See Docs. 16-6 at 12; 16-7 at 12; 101-9 at 7). Here, Tom
Mitchell and Brittany Allred–the designated beneficiaries under the First and Second
Certificates–survived Stephanie Mitchell.7 Because they did, Ryan and Tristan have no

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Tom Mitchell died during the pendency of this litigation, and the representatives of his estate
have been substituted as plaintiffs in his place.

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expectancy in a distribution based on their status as Stephanie’s sons. Their argument that
Modern Woodmen has presented “nothing to foreclose” their expectancy in such a distribution is
simply not correct. (Doc. 123 at ¶ 3).
Finally, Ryan and Tristan assert that Modern Woodmen should be judicially estopped
from arguing that “the same insurance certificates and change of beneficiary forms by which it
impleaded Ryan and Tristan” into this action now entitle Modern Woodmen to summary
judgment. (Doc. 123 at ¶ 4). Ryan and Tristan proclaim that Modern Woodmen “should be
disallowed from reversing its position in this manner at this stage of the proceedings.” (Id.)
Modern Woodmen, however, has not reversed its position. Modern Woodmen sought leave to
amend its counterclaim and add Ryan and Tristan as parties because they–Ryan and Tristan–were
“making a claim for benefits” under the First and Second Certificates. (Doc. 28 at 1). In the
amended counterclaim, Modern Woodmen has simply asked for a declaratory judgment as to
whether it is obligated to pay benefits under either Certificate and, if so, to whom the proceeds
are payable. (Doc. 29 at ¶¶ 19-20, 25-26). Ryan and Tristan have pointed to no statement by
Modern Woodmen–whether in the amended counterclaim or in any other pleading or
submission–to the effect that Ryan and Tristan are beneficiaries under the Certificates with viable
claims for benefits. Judicial estoppel, which is “designed to prevent parties from making a
mockery of justice by inconsistent pleadings,” has no application here. McKinnon v. Blue Cross
& Blue Shield of Ala., 935 F.2d 1187, 1192 (11th Cir. 1991) (citation omitted).
In sum, the evidence is undisputed that Ryan and Tristan Allred are not beneficiaries
under either the First Certificate or the Second Certificate. Because they are not beneficiaries,
and have not been assigned any rights or claims by the true beneficiaries, they have no rights or
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claims to assert against Modern Woodmen in this action. As a matter of law, Modern Woodmen
owes nothing to Ryan and Tristan under the two Certificates.
CONCLUSION
For the foregoing reasons, Modern Woodmen’s motion for summary judgment as to Ryan
and Tristan Allred (doc. 118) is due to be GRANTED to the extent that any remaining claims
being asserted by Ryan and Tristan Allred against Modern Woodmen under the First and Second
Certificates are DISMISSED WITH PREJUDICE and the court FINDS that Modern
Woodmen owes Ryan and Tristan nothing under the two Certificates.8
DONE, this the 20th day of April, 2015.

___________________________
JOHN E. OTT
Chief United States Magistrate Judge

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The court’s finding regarding Modern Woodmen in no way impacts any rights or
interests Ryan and Tristan Allred have against the Estate of Tom James Mitchell or Brittany
Allred under the Common Interest Agreement referenced early in this opinion.
9