The Southern Company Employee Savings Plan v. Costa et al

Filing 62

ORDER denying without prejudice 47 Motion for Discharge, as set out. Signed by District Judge Kristi K. DuBose on 10/25/2024. (meh)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
THE SOUTHERN COMPANY
EMPLOYEE SAVINGS PLAN,
Plaintiff/Counter Defendant,
vs.
MARY ROBIN COSTA and
BRANDI COSTA NOLEN,
Defendants/ Counter Claimants,
BRANDI CHRISTINE NOLEN,
Third Party Plaintiff,
v.
SOUTHERN COMPANY EMPLOYEE
SAVINGS PLAN COMMITTEE,
Third Party Defendant.

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Civil Action No. 24-00040-KD-N

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ORDER

This action is before the Court on Motion for Discharge filed by Plaintiff The Southern
Company Employee Savings Plan (the Plan) (doc. 47), the Objection and Response filed by
Brandi Christine Nolen (doc. 56), and the Plan’s Reply (doc. 58).
The Plan filed a Complaint for Interpleader pursuant to Fed. R. Civ. P. Rule 22 after
uncertainty arose as to whether the second wife – Mary Robin Costa – or the daughter from the
first marriage - Brandi Christine Costa Nolen – was the proper beneficiary of the employee stock
plan (ESP) for deceased Plan Participant Joseph Costa, Jr. (doc. 1). The Plan moves the Court,
upon payment of the ESP funds into Court, to dismiss the Plan with prejudice, discharge it from
liability, and enjoin Defendants from commencing an action against the Plan related to the ESP.
(doc. 47). By separate motion, the Plan seeks leave to deposit the ESP funds (doc. 46).

As grounds, the Plan argues that as the Plaintiff in interpleader, it is a disinterested
stakeholder with no interest in the ESP proceeds, and that it is an innocent entity that has not
colluded with either of the claimant Defendants. The Plan also points out that both Nolen and
Mary Costa have counterclaimed against the Plan and requested the proceeds. The Plan states
that it has moved to dismiss Defendant Nolen’s counterclaim and that Defendant Costa’s
counterclaim is a demand for payment as the proper beneficiary and does not impede the Plan’s
discharge. The Plan also points out that if it is dismissed or discharged, Defendant Nolen’s thirdparty claim against the Plan Administrator, Southern Company Employee Savings Plan
Committee, will proceed unaffected, subject to the Plan Administrator’s motion to dismiss. The
Plan also points out that its dismissal or discharge will not limit Nolen’s ability to seek discovery
on disputed documents relevant to deciding the proper beneficiary.
Defendant Costa did not respond to the Motion. Defendant Nolen argues that the Motion
should be denied (doc. 56). She argues that the Motion is “based on disputed facts and lacks a
legal basis” (Id.). Nolen argues that the Plan is not an innocent stakeholder or entity because it is
operated by the Plan Administrator and cannot make decisions. She argues that the Plan’s filing
by itself “was clearly asserted to avoid liability by the Plan Administrator, given the Plan
Administrator was well aware of the breach of fiduciary duty allegations” (Id., p. 3-4). 1 She

Nolen asserts that the Plan “is not an entity that may file a lawsuit on its own” (doc. 56, p. 3)
and that the “Plan Administrator must be sued with the Plan.” (Id., p. 5). She argues that 29
U.S.C. § 1132(d)(1) “cannot be interpreted to allow the Plan to file an interpleader complaint.”
(Id., p. 7). Nolen relies on the decision in Hunt v. Hawthorne Associates, Inc., 119 F.3d 888, 908
(11th Cir. 1997). The Eleventh Circuit recognized that an ERISA “‘employee benefit plan may
sue or be sued … as an entity[.]’” 119 F. 3d at 908 (quoting 29 U.S.C. § 1132(d)(1)) but stated
that “nothing in ERISA permits the district court to issue an injunctive order solely against the
plan. Rather, the case law of this circuit demonstrates that an order enjoining the payment of
benefits from an ERISA plan must issue against a party capable of providing the relief
requested.” 119 F. 3d at 908 (citations omitted). The Eleventh Circuit rejected “the notion that
an injunctive order to pay benefits under section 502(a)(1)(B) of ERISA can issue solely against
1

also argues that the 2012 beneficiary designation is not the latest beneficiary designation, as the
Plan alleged in its Motion. She asserts that an employee of the Plan Administrator referenced a
2014 beneficiary form and spousal waiver form in telephone conversations, but the Plan
Administrator refused to produce the documents during the claims process.
Typically, when an interpleader plaintiff deposits funds with the Court, the plaintiff
would no longer be a necessary party to a determination of the proper beneficiary. Wells Fargo
Bank, N.A. v. Arnold, 2024 WL 3834803, at *5 (S.D. Fla. July 29, 2024), report and
recommendation adopted, No. 24-14078-CIV, 2024 WL 3829968 (S.D. Fla. Aug. 15, 2024)
(collecting cases). However, in this procedural posture, where Mary Costa’s and Nolen’s
counterclaims are pending against the Plan, the Court finds that discharge or dismissal is not
appropriate at this time. Accordingly, the Motion for Discharge is DENIED without prejudice.2
DONE and ORDERED this 25th day of October 2024.
s / Kristi K. DuBose
KRISTI K. DuBOSE
UNITED STATES DISTRICT JUDGE
an ERISA plan as an entity.” Id. This decision does not state that an ERISA plan cannot file an
interpleader action, i.e., “sue” on its own as an entity.
2

The Plan also moves the Court to enjoin Nolen and Mary Costa “from instituting or prosecuting
any other action, suit, or proceeding against the Plan …” (doc. 47, p. 3). The Court has inherent
authority over the parties before it, however, this sort of injunctive relief may not be appropriate
in a rule interpleader action. See Protective Life Ins. Co. v. Jacobs, 2023 WL 4145825, at *10
(M.D. Fla. June 23, 2023) (declining to “issue such an order” because “Protective has brought
this interpleader action under Rule 22 of the Federal Rules of Civil Procedure, rather than
statutory interpleader under 28 U.S.C. § 1335” and explaining that “[o]nly statutory interpleader
provides for the injunction that Protective requests.”) (Citing 28 U.S.C. § 2361 and Hallman v.
Hallman, No. 5:12-cv-4, 2012 WL 5879825, *2 (M.D. Ga. Nov. 21, 2012) (denying injunction in
a rule interpleader action), citing 7 Charles Alan Wright & Arthur R. Miller, Fed. Prac. & Proc.
Civ. § 1717 (3d ed.) (“Section 2361 only authorizes injunctions against other judicial
proceedings in statutory interpleader actions; it does not apply to rule interpleader.”); Sun Life
Assurance Co. of Canada v. McElroy, No. 2:10-CV-488, 2010 WL 11615016, *1 (N.D. Ala.
June 3, 2010) (same); Am. Gen. Ins. Co. v. Jones, No. CIV A 08-211, 2008 WL 4949847, *1-2
(S.D. Ala. Nov. 13, 2008) (same)). Accordingly, the motion to enjoin is DENIED.