American General Life Insurance Company v. Hart et al

Filing 47

ORDER by Judge Laurel Beeler denying 37 Motion to Dismiss. The court sets a case-management conference for January 19, 2017 at 11 a.m. The parties must confer and submit a joint statement by January 12. See the order for more detailed instructions. (lblc3S, COURT STAFF) (Filed on 12/27/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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San Francisco Division

United States District Court
Northern District of California

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AMERICAN GENERAL LIFE
INSURANCE COMPANY,

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Case No. 16-cv-03904-LB

Plaintiff,

ORDER DENYING MOTION TO
DISMISS

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v.
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Re: ECF No. 37
GAYLE HART, et al.,

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Defendants.
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INTRODUCTION

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This is a statutory interpleader case. See 28 U.S.C. § 1335.1 The insurance proceeds at issue

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are $5,000, which meets the $500 amount-in-controversy threshold. Id. § 1335(a). The issue is

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whether the claimants are diverse.2 The court holds that they are. The court otherwise denies

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claimant Gayle Hart’s motion to dismiss.3
STATEMENT

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American General Life Insurance Company filed the interpleader complaint naming

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omp .
o. . itations refer to materia in the ectronic ase i e
citations are to the ECF-generated page numbers at the top of documents.

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otion

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pinpoint

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The court finds that it can decide the motion without oral argument. See Civ. L. R. 7-1(b).

ORDER — No. 16-cv-03904-LB

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defendants Gayle Hart (a resident of East Palo Alto, California) and defendant David L. Lewis (a

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resident of Georgia) as Trustee of the Cora Lewis Management Trust.4 The life insurance policy

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was ora Lewis’s she purchased it in 2005, named fami y members in beneficiary designations

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then and in 2010 and 2011, and in 2012, named Gayle Hart.5 She died in 2016.6
American General filed the complaint after the Trust’s attorney — pro bono counsel Arnold &

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Porter, which was enlisted by the Legal Aid Society to help Ms. Lewis — informed American

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General that Ms. Hart and her husband allegedly abused Ms. Lewis.7 Arnold & Porter created the

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trust to hold

s. Lewis’s assets.8

The Trust answered the complaint and brought cross claims and counterclaims against Ms.

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Hart stemming from the alleged elder abuse, including undue influence, breach of contract,

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United States District Court
Northern District of California

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financial abuse, breach of financial responsibility, fraud, constructive trust, accounting,

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conversion, conspiracy, and negligence.9
Ms. Hart moves to dismiss the interpleader complaint on the grounds that (1) the Trust’s

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citizenship is the same as the decedent Cora Lewis, (2) only the state probate court can decide

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disputes about trusts, and (3) the cross claims and counterclaims are not plausible.10

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ANALYSIS

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Federal courts have jurisdiction over statutory interpleader actions under 28 U.S.C. § 1335

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when the amount in controversy is $500 or more and diversity of citizenship exists between any

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two claimants. 28 U.S.C. § 1335. Minimal diversity is all that it is needed; it makes no difference

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that the plaintiff or other claimants are non-diverse. State Farm Fire & Cas. Ins. Co. v. Tashire,

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omp .

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Id.

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Id. ¶ 12.

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Id. ¶ 16.

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Id.

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nswer and ross- aims
otion

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- at

ORDER — No. 16-cv-03904-LB

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386 U.S. 523 (1967).
Ms. Hart disputes diversity on the ground that under 28 U.S.C. § 1332(c)(2), a legal

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representative of the estate of a decedent has the same residency as the decedent.11 That is true, but

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as the Trust and the insurance company point out in their oppositions, the Trustee — an

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undisputed resident of Georgia — was sued in his capacity as trustee, not as the representative of

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s. Lewis’s estate.12 The court adopts their analysis as persuasive. Resolving the entitlement to

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the funds will not involve the internal affairs of the trust because the interpleader issue is only

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whether the Trust or Ms. Hart is entitled to the proceeds.
The Trust otherwise pleads its claims plausibly. The court has supplemental jurisdiction over

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them. See 28 U.S.C. § 1367(a); Fed. R. Civ. P. 13(g), 14.
That said, Ms. Hart has a point. The ancillary issues really do not belong in federal court for

United States District Court
Northern District of California

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the reasons that she advances. The court suggests that the parties try to work out something to

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preserve their arguments to entitlement to the $5,000 without doing so in federal court. The court

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sets a case-management conference for January 19, 2017, at 11 a.m. and imposes a stay until then

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on any responsive pleadings.

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CONCLUSION

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The court denies the motion to dismiss and sets a case-management conference for January 19,

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2017 at 11 a.m. The parties must confer and submit a joint statement by January 12 with their

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proposals going forward. This disposes of ECF No. 37.

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IT IS SO ORDERED.

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Dated: December 27, 2016
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LAUREL BEELER
United States Magistrate Judge

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Id. at 4.

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Trust pposition

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ORDER — No. 16-cv-03904-LB

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merican enera
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pposition

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