The Variable Annuity Life Insurance Company v. Parrish

Filing 20

MEMORANDUM OPINION. Signed by Judge Virginia Emerson Hopkins on 2/21/2014. (JLC)

FILED
2014 Feb-21 AM 11:35
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
MIDDLE DIVISION
THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY,
Plaintiff,
v.
MARTHA LYNN PARRISH,
Defendant.

)
)
)
)
) Case No.: 4:13-CV-2041-VEH
)
)
)
)
)

MEMORANDUM OPINION
The plaintiff (“VALIC”) has filed a motion for default judgment (doc. 18) that
is presently before the court. Under Federal Rule of Civil Procedure 55, VALIC asks
that either the Clerk of Court or this court enter a default judgment against the
defendant (Ms. Parrish) in the amount of $383,326.68. For the following reasons, the
court will GRANT VALIC’s motion and TERM AS MOOT VALIC’s motion to
expedite default judgment (doc. 19). The court will enter a contemporaneous order
in accordance with this opinion.
STANDARD OF REVIEW
The Clerk has entered default against Ms. Parrish. Doc. 15. The court thus
accepts as true VALIC’s factual allegations and considers Ms. Parrish’s liability

established. See, e.g., AutoTec, L.L.C. v. Auction Access Auto, Inc., 2:12-cv-00896RDP, 2012 WL 2357951, at *2 (N.D. Ala. June 18, 2012) (“Upon default, the
well-pleaded allegations of a complaint are taken as true . . . Because Defendants
have previously been declared in default . . . their liability is established.”) (internal
citations omitted); 10A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane,
Federal Practice and Procedure § 2688 (3d ed. 1998) (“If the court determines that
defendant is in default, the factual allegations of the complaint, except those relating
to the amount of damages, will be taken as true.”).
STATEMENT OF THE CASE
I.

Factual Background
With this standard in mind, the court summarizes the following basic facts

regarding the case. Ms. Frances D. Campbell maintained three retirement accounts
with VALIC. Doc. 1 ¶ 5. At all relevant times to this case, her three accounts had a
total death benefit amount of at least $383,326.68. Id. The beneficiary listed on the
accounts was “Martha Parrish” – Ms. Campbell’s sister, whose full name was Martha
Elizabeth Parrish. Id. ¶ 6. Martha Elizabeth Parrish died on or about October 24,
1998. Id. ¶ 7. However, her name remained as the designated beneficiary on Ms.
Campbell’s VALIC accounts. Id. Ms. Campbell herself died on or about April 17,
2012. Id. ¶ 8.
2

Posing as the true beneficiary of the VALIC accounts, Ms. Parrish completed
a death claim form and returned it to VALIC for payment. Id. ¶ 10. Ms. Parrish had
no interest in or claim to the retirement accounts. Id. Based on the representations Ms.
Parrish made in her death claim form, VALIC paid her the proceeds from Ms.
Campbell’s accounts. Id. ¶ 11. Specifically, VALIC transferred her three separate
checks totaling $383,326.68. Id. ¶ 12. Some or all of these funds appear to have been
deposited with a Wells Fargo Bank, N.A., branch in Boaz, Alabama, where Ms.
Parrish resides. Id.
After VALIC paid Ms. Parrish the above funds, VALIC was contacted by a law
firm representing Katherine Parrish, who claims to be the sole surviving heir of Ms.
Campbell’s estate. Id. ¶ 13. The law firm informed VALIC that Martha Elizabeth
Parrish predeceased Ms. Campbell. Id. In response to this news, VALIC contacted
Ms. Parrish on multiple occasions in order to retrieve the funds it mistakenly
disbursed to her. Id. ¶ 14. However, she has not returned the money. Id.
II.

Procedural History
On November 7, 2013, VALIC simultaneously filed a Complaint against Ms.

Parrish and a motion for writ of seizure, writ of attachment, or temporary restraining
order. Docs. 1, 2. The court denied this motion on November 8, 2013. Doc. 9. On
December 6, 2013, the court ordered VALIC to show cause why the case should not
3

be dismissed for failure to prosecute. Doc. 12. In response, on December 12, 2013,
VALIC filed a motion (doc. 13) asking this court for permission to file its application
for entry of default and default judgment under seal – which the court granted on that
day (see margin entry dated 12/12/13). VALIC then filed a sealed motion for entry
of default on that day. Doc. 14. That motion was served on Ms. Parrish. Id. at 8. The
Clerk entered default against Ms. Parrish on December 13, 2013. Doc. 15. The
Clerk’s Entry of Default was served on Ms. Parrish on December 13, 2013, by
certified mail (see margin entry dated 12/13/13), which was returned as unclaimed
mail (see margin entry dated 1/9/14). VALIC filed a response to the court’s Show
Cause Order on December 18, 2013. Doc. 16. On December 20, VALIC filed the
present motion under seal. Doc. 17. That motion was served on Ms. Parrish. Id. at 9.
On January 17, 2014, VALIC filed a motion to expedite default judgment against Ms.
Parrish. Doc. 19. That motion was served on Ms. Parrish. Id. at 5.
DISCUSSION
I.

Introduction
Federal Rule of Civil Procedure 55 governs the entry of default and default

judgment. It provides, in pertinent part:
(a) Entering a Default. When a party against whom a judgment for
affirmative relief is sought has failed to plead or otherwise defend,
and that failure is shown by affidavit or otherwise, the clerk must
4

enter the party’s default.
(b) Entering a Default Judgment.
(1) By the Clerk. If the plaintiff’s claim is for a sum certain or a sum
that can be made certain by computation, the clerk – on the plaintiff’s request,
with an affidavit showing the amount due – must enter judgment for that
amount and costs against a defendant who has been defaulted for not appearing
and who is neither a minor nor an incompetent person.
(2) By the Court. In all other cases, the party must apply to the court for
a default judgment. A default judgment may be entered against a minor
or incompetent person only if represented by a general guardian,
conservator, or other like fiduciary who has appeared. If the party
against whom a default judgment is sought has appeared personally or
by a representative, that party or its representative must be served with
written notice of the application at least 7 days before the hearing. The
court may conduct hearings or make referrals — preserving any federal
statutory right to a jury trial — when, to enter or effectuate judgment, it
needs to:
(A) conduct an accounting;
(B) determine the amount of damages;
(C) establish the truth of any allegation by evidence; or
(D) investigate any other matter.
Fed. R. Civ. P. 55.
The court’s analysis of VALIC’s Motion involves two steps. The court must:
•

establish it has personal and subject matter jurisdiction; and then

•

ensure that VALIC has satisfied Rule 55 requirements and is thus
entitled to the default judgment it seeks.

See Univ. of South Ala. v. Am. Tobacco Co., 168 F.3d 405, 410 (11th Cir. 1999) (“[I]t

5

is well settled that a federal court is obligated to inquire into subject matter
jurisdiction sua sponte whenever it may be lacking.”) (citations omitted); Nishimatsu
Constr. Co., Ltd. v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)1
(explaining that “a defendant’s default does not in itself warrant the court entering a
default judgment” and that “[t]here must be a sufficient basis in the pleadings for the
judgment entered”) (footnote omitted).
II.

The Court Has Jurisdiction Over This Action.
A.

Personal Jurisdiction

The court must establish personal jurisdiction in every case before it has power
to render any judgment. Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee,
456 U.S. 694, 702 (1982). A court obtains personal jurisdiction over the parties when
the plaintiff properly serves the Complaint and Summons upon the defendant. Royal
Lace Paper Works v. Pest-Guard Prods., 240 F.2d 814, 816 (5th Cir. 1957)2. The
record shows that VALIC served Ms. Parrish with a Summons and copy of the
Complaint on or around November 13, 2013. Doc. 11. Accordingly, the court has
personal jurisdiction over the parties.
B.

Subject Matter Jurisdiction

1

This decision constitutes binding precedent within this Circuit. See Bonner v. City of
Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981).
2

This decision constitutes binding precedent within this Circuit. See note 1, supra.
6

Federal courts have subject matter jurisdiction over civil suits between
“citizens of different States” where “the matter in controversy exceeds the sum or
value of $75,000, exclusive of interest and costs . . .” 28 U.S.C. § 1332. VALIC is a
Texas company with its principal place of business in Houston, Texas. It is thus a
citizen of the State of Texas for jurisdictional purposes. Moreover, VALIC maintains
– upon information and belief – that Ms. Parrish is a resident of Boaz, Alabama. She
is thus a citizen of the State of Alabama for jurisdictional purposes. Finally, VALIC
provides documentary evidence in its motion that it paid Ms. Parrish a total amount
of $383,326.68. A sum exceeding $75,000 is therefore “in controversy.” In light of
all these facts, the court finds that it has subject matter jurisdiction over the case.
III.

The Clerk Properly Entered Default Against Ms. Parrish.
Rule 55(a) directs the Clerk of Court to enter a party’s default when that party

has “failed to plead or otherwise defend, and that failure is shown by affidavit or
otherwise .” Fed. R. Civ. P. 55(a). As noted, VALIC properly served Ms. Parrish on
November 13, 2013. Doc. 11. Ms. Parrish then failed to respond to the Complaint
within 21 days of service, as required by Rule 12(a). See Fed. R. Civ. P.
12(a)(1)(A)(I). VALIC affirmed this fact through an affidavit filed by its Thomas
Butler, its attorney. Doc. 17 at 12. The Clerk of Court thus properly entered default
against Ms. Parrish.
7

IV.

VALIC Is Entitled to a Default Judgment Against Ms. Parrish.
A.

Ms. Parrish is properly subject to default judgment.

Rule 55(b)(1) prohibits the Clerk from entering default judgment against a
defendant who is either a minor or an incompetent person. Fed. R. Civ. P. 55(b)(1).
Rule 55(b)(2) permits the court to enter such judgment only when the person is
represented by “a general guardian, conservator, or other like fiduciary who has
appeared.” Fed. R. Civ. P. 55(b)(2). VALIC maintains that Ms. Parrish is neither a
minor nor an incompetent. To this end, it submits an affidavit offered by Susan
Skaggs, whose title with the company is “Vice President, Operations for VALIC and
Western National Life Insurance Company.” Doc. 17 at 15. In her affidavit, Ms.
Skaggs affirms the following:
•

She is responsible for the “Death Claims” and “Contract Owner
Services” departments;

•

Ms. Parrish is not a minor; and

•

She has “no reason to believe” Ms. Parrish is incompetent.

Id. at 15-16. On the final point, Ms. Skaggs attests that she derives this conclusion
“[b]ased on [her] personal review of the relevant books and records, including the
claim form completed by [Ms. Parrish] and the checks endorsed by her and presented
to Wells Fargo Bank, N.A., as well as [her] experience in insurance claims and

8

contract owner services.” Id. at 16. Such an affirmation adequately establishes that
Ms. Parrish is neither a minor nor an incompetent for Rule 55 purposes. See
FirstBank P.R. v. Jaymo Props., LLC, 379 F. App’x 166, 170 (3d Cir. 2010)
(unpublished) (holding that an affidavit or affirmation from the party seeking default
judgment (or its attorney) claiming in good faith that the non-responsive defendant
is a competent adult satisfies Rule 55, despite being founded on “information and
belief” rather than personal knowledge).
B.

VALIC has stated a proper cause of action against Ms. Parrish.

Rule 55(b)(2) allows the court to enter a default judgment when the Clerk has
entered default and the party seeking judgment has applied to the court for a default
judgment. Fed. Riv. Civ. P. 55(b)(2). To determine whether the moving party is
actually entitled to a default judgment, the court must review the sufficiency of the
Complaint and its underlying merits. See Stegeman v. Georgia, 290 F. App’x 320,
323 (11th Cir. 2008) (unpublished) (citing Nishimatsu, 515 F.2d at 1206). "[A]
defaulted defendant is deemed to admit the plaintiff’s well-pleaded allegations of
fact.” Tyco Fire & Sec., LLC v. Alcocer, 218 F. App’x 860, 863 (11th Cir. 2007)
(unpublished) (internal quotation marks, citation, and footnote omitted). However,
the court has “an obligation to assure that there is a legitimate basis for any damage
award it enters . . .” and therefore cannot rotely accept the plaintiff’s legal
9

conclusions. Anheuser Busch, Inc. v. Philpot, 317 F.3d 1264, 1266 (11th Cir. 2003)
(citations omitted). Rather, “the district court must ensure that the well-pleaded
allegations in the complaint . . . actually state a substantive cause of action and that
there is a substantive, sufficient basis in the pleadings for the particular relief sought.”
Tyco Fire & Sec., 218 F. App’x at 863.
VALIC is entitled to a default judgment against Ms. Parrish. In its Complaint,
it claims that:
•

Ms. Parrish misrepresented (or fraudulently concealed) the fact that she
was not the true beneficiary of Ms. Campbell’s VALIC accounts;

•

VALIC justifiably relied on her misrepresentations and/or concealment;

•

Ms. Parrish unlawfully converted the funds VALIC erroneously sent
her; and

•

She unjustly enriched herself in the process.

Doc. 1 ¶¶ 15-32. Assuming the truth of VALIC’s well-pleaded factual allegations, it
has sufficiently corroborated these claims. The court will systematically review each
claim to illustrate this conclusion.
1.

Misrepresentation

In Alabama, a party alleging fraud by misrepresentation must prove that:
•

the defendant made a false representation concerning an existing
material fact;

10

•

the defendant made that misrepresentation while knowing that it was
false, or made it recklessly, or made it with no knowledge as to its truth
or falsity;

•

the plaintiff reasonably relied on the misrepresentation; and

•

the plaintiff incurred damage proximately caused by the reliance.

Luck v. Primus Auto. Fin. Servs., Inc., 763 So. 2d 243, 245-46 (Ala. 2000) (citing Ex
parte Gov’t Employees Ins. Co., 729 So. 2d 299, 304 (Ala.1999)). Assuming the truth
of VALIC’s well-pleaded factual allegations, Ms. Parrish fraudulently misrepresented
a material fact when she claimed to VALIC – in her death claim form, in phone calls,
and in other correspondence – that she was the true beneficiary of Ms. Campbell’s
accounts and entitled to the funds therein. Moreover, given the resemblance of Ms.
Parrish’s legal name (Martha Lynn Parrish) to that listed as the beneficiary on Ms.
Campbell’s accounts (Martha Elizabeth Parrish), VALIC justifiably relied on Ms.
Parrish’s misrepresentations. Finally, these misrepresentations proximately caused
damage to VALIC by inducing it to send Ms. Parrish three checks totaling
$383,326.68. The court will thus grant VALIC default judgment against Ms. Parrish
on this count.
2.

Suppression/Concealment

To establish a prima facie case of fraudulent concealment of a material fact, a
plaintiff must show that:
11

•

the defendant had a duty to disclose a material fact;

•

the defendant concealed or failed to disclose a material fact;

•

the defendant's concealment or failure to disclose the material fact
induced the plaintiff to act or to refrain from acting; and

•

the plaintiff suffered actual damage as a proximate result.

Soniat v. Johnson–Rast & Hays, 626 So. 2d 1256, 1258-59 (Ala. 1993) (citation
omitted). “A duty to disclose may arise from the particular circumstances of the case,
from a confidential relationship, or from a request for information.” Dodd v. Nelda
Stephenson Chevrolet, Inc., 626 So. 2d 1288, 1293 (Ala. 1993) (citations omitted).
One may also recover for fraudulent concealment by showing active concealment of
a material fact with an intent to deceive or mislead. Id. at 1293-94 (citations omitted).
Assuming the truth of VALIC’s well-pleaded factual allegations, Ms. Parrish
fraudulently concealed that she was not the true beneficiary of Ms. Campbell’s
accounts. Given that she knew she was not the true beneficiary, the court infers that
she had an intent to deceive or mislead VALIC. She thus had a duty to disclose her
true identity, which she failed to do. And, as noted, VALIC suffered actual damage
as a proximate result. The court will thus grant VALIC default judgment against Ms.
Parrish on this count.
3.

Unjust Enrichment

12

In order for a plaintiff to prevail on a claim of unjust enrichment, the plaintiff
must show that “the defendant holds money which, in equity and good conscience,
belongs to the plaintiff or holds money which was improperly paid to defendant
because of mistake or fraud.” Mantiply v. Mantiply, 951 So. 2d 638, 654 (Ala. 2006)
(quotations omitted) (emphasis in original). “The doctrine of unjust enrichment is an
old equitable remedy permitting the court in equity and good conscience to disallow
one to be unjustly enriched at the expense of another.” Id. (quotation omitted)
(emphasis in original).
“One is unjustly enriched if his retention of a benefit would be unjust.” Welch
v. Montgomery Eye Physicians, P.C., 891 So. 2d 837, 843 (Ala. 2004) (quotation
omitted). The retention of a benefit is unjust if:
•

the donor of the benefit acted under a mistake of fact or in misreliance
on a right or duty; or

•

the recipient of the benefit engaged in some unconscionable conduct,
such as fraud, coercion, or abuse of a confidential relationship.

Id. (quotation omitted). The success or failure of an unjust-enrichment claim depends
on the particular facts and circumstances of each case. Mantiply, 951 So. 2d at 655
(citation omitted).
Assuming the truth of VALIC’s well-pleaded factual allegations, Ms. Parrish
unjustly enriched herself at VALIC’s expense. In other words, she obtained (and
13

currently holds) money that VALIC paid to her because of her fraud. Allowing her
to retain these funds would be unjust because VALIC only gave them to her based on
its mistaken belief that it legally owed her the money under Ms. Campbell’s death
benefit policy. Given these facts, the court will grant VALIC default judgment against
Ms. Parrish on this count.
4.

Conversion

To sustain a claim of conversion in Alabama, a plaintiff must prove:
•

a wrongful taking;

•

an illegal assertion of ownership;

•

an illegal use or misuse of another's property; or

•

a wrongful detention or interference with another's property.

Drennen Land & Timber Co. v. Privett, 643 So. 2d 1347, 1349 (Ala. 1994) (citations
omitted). Once again assuming the truth of VALIC’s well-pleaded factual allegations,
Ms. Parrish unlawfully converted the funds from VALIC’s accounts when she
illegally obtained those funds by misrepresenting her identity to VALIC. And she
further refuses to return the funds – which rightly belong to VALIC. Given these
facts, the court will grant VALIC default judgment against Ms. Parrish on this count.
V.

The Court Will Grant VALIC $383,326.68 in Damages.
VALIC requests the sum certain amount of $383,326.68. Doc. 17 at 2. As
14

noted, it corroborates this amount by submitting (1) Ms. Skaggs’s affidavit, in which
she vouches that this was the amount of proceeds paid to Ms. Parrish by VALIC; and
(2) “true and correct” copies of the checks endorsed by Ms. Parrish. Doc. 17 at at 1524. These three checks denote the following amounts: $238,881.92; 112,539.04;
$31,905.72. Id. at 19, 21, 23. These amounts in turn total $383,326.68. The court
finds, therefore, that this is the amount Ms. Parrish justly owes VALIC. The court will
enter a default judgment order contemporaneously with this opinion reflecting these
awards.
DONE this the 21st day of February.

VIRGINIA EMERSON HOPKINS
United States District Judge

15