The Prudential Insurance Company of America v. Bailey et al

Filing 51

ORDER granting 32 Motion to Deposit Funds. The Clerk is directed to accept the accidental death benefits into the Court's Registry. Prudential's 32 Motion for Clarification and Motion for Preliminary Injunction are denied. Further, the Court grants 40 Motion to Dismiss Defendants Sharmon Howard and Kenneth Moon, Jr. Signed by Chief Judge J. Randal Hall on 7/24/2018. (pts) Modified on 7/24/2018 (wwp).

.FILED

IN THE UNITED STATES DISTRICT COURT Fori-Spfii^TRICl COURT
Avmj. ;■ i J; D'\.

SOUTHERN DISTRICT OF GEORGIA
STATEBORO DIVISION

THE

PRUDENTIAL

2OI8JUL2I4 AH 9:09
CLERK

INSURANCE

so.d;^

COMPANY OF AMERICA,
CV

Plaintiff,

616-060

V.

SHERRY BAILEY,

Counterclaimant/Defendant
V .

SHARMON HOWARD, KENNETH MOON,
JR. , JAMES BAILEY and RANDALL
BAILERY,
Defendants.

ORDER

Before the Court is:
Accidental

Death

(1)

Benefits

Prudential's "Motion to Re-Deposit
and

for

Clarification

and/or

Preliminary Injunction Regarding Life Insurance Benefits"
32)

(the

Bailey,

to

Deposit");

and

(2)

Prudential,

Sherry

and James and Randall Bailey's "Joint Motion to Dismiss

Defendants

"Motion

"Motion

(doc.

to

Sharmon

Howard

Dismiss") .

and

The

Kenneth Moon,

Court

GRANTS

IN

Jr."

PART

(doc.

40)

(the

and DENIES

PART the Motion to Deposit and it GRANTS the Motion to Dismiss.

IN

I. MOTION TO DISMISS

Prudential,
move to dismiss

The

state

that

indicating

Russell

Bailey,

Howard

and

Furthermore,

Bailey,

and

Defendants Sharmon

movants

information

Sherry

that

but that

Moon

they

are

assert

James

and

Howard and

Prudential

Howard

and

Randall

Bailey

Kenneth Moon,

previously

Moon

were

Jr.

received

children

of

Prudential subsequently learned that
not

children

that "there

of

is

Russell

factual

no

Bailey.

scenario

under which [Howard and Moon] could be entitled to any of the
Plan

benefits

at

issue

in

this

matter."

(Doc.

40,

at

2.)

Howard and Moon concede that "[i]n full candor to the Court and

counsel,

despite

a

diligent

factual,

contractual,

equitable

or

other

search,

regulatory,

opposition

to

the

[they]

can

statutory,

assert

no

decisional,

Motion."

(Doc.

42.)

Accordingly, the Court GRANTS the Motion to Dismiss (doc. 40),
and

the

Clerk

SHALL

TERMINATE

Defendants

Howard

and

Moon

as

parties to this case.

II. MOTION TO DEPOSIT

After this Court's previous ruling returning to Prudential
the

disputed

benefits

it

accidental

improperly

death

sought

benefits

to

and

deposit

life

into

insurance

this

Court's

Registry (doc. 31), Sherry Bailey sent a letter to Prudential
demanding that Prudential pay her "the full amount of the life
insurance

proceeds

of

$279,465.70

plus

the

interest

that

has

accrued since Prudential unlawfully withdrew the money from her
[Alliance Account (the ^"Account")]."

Prudential

authority

seeks

to

the

following

re-deposit

the

(Doc. 32-5.)

relief

from

$332,000.00

of

In response,

this

Court:

accidental

(1)

death

benefits into the Court's Registry; (2) an Order ^""clarify[ing]"

its previous Order (doc. 31) and telling Prudential what to do
with

the

$279,465.70

of

life

insurance

benefits;

and

(3)

a

preliminary injunction enjoining ''Sherry Bailey from depleting
Plan benefits to which she may not be entitled . . . ."

(Doc.

32, at 11.)

A. Request to Re-Depos±t the Accidental Death Benefits

Prudential

seeks

to

deposit

$332,000.00

of

undistributed

accidental death benefits in light of "the Court's determination

of the propriety of interpleader relief for the accidental death
benefit."

(Doc. 32, at 8.)

Defendants James Bailey and Randall

Bailey support Prudential's request and ask the Court to "permit
[Prudential] to tender the proceeds of both insurance policies

into the Registry of this Court."
Randall

Bailey

argue

that

if

(Doc 35, at 9.)
the

Court

does

James and
not

permit

Prudential to deposit the accidental death benefits, James and

Randall Bailey risk being "deprived of their rightful interest
in such funds" and the public policy of the slayer statute will
be thwarted.

(Id. at 10.)

Sherry

Bailey,

accidental death

however,

benefits.

objects

to

the

deposit

of

She argues that because ^'the

the
life

insurance policy and the accidental death policy are governed by
the same ERISA Plan terms, the beneficiary will necessarily be
the same.

Having determined that Sherry Bailey is the proper

beneficiary

of the

life

insurance

benefits.

Prudential

waived

its right to select another beneficiary and it is estopped from
contending that anyone other than Sherry Bailey is the proper

beneficiary of the accidental death benefits."
The

Court

finds

Sherry

Bailey's

{Doc. 38, at 2.)

arguments

unpersuasive.

Federal Rule of Civil Procedure 67 states that 'Mi]f any part of

the relief sought is . . . the disposition of a sum of money

. . . a party — on notice to every other party and by leave of
the court — may deposit with the court all or part of the money
. . . ."

Fed. R. Civ. P. 67(a).

Prudential provided notice to

all the parties of its desire to deposit the accidental death
benefits.

Additionally, Prudential established good cause to

deposit the disputed funds in this Court's Registry.
life

insurance

benefits,

never actually distributed.

the

accidental

death

Unlike the

benefits

were

Furthermore, the Court has granted

Prudential's interpleader action with respect to the accidental
death

benefits.

Accordingly,

the

Court

GRANTS

Prudential's

request to deposit the accidental death benefits and ORDERS the
Clerk to ACCEPT

Registry.

the

accidental

death

benefits

into

the

Court's

B.

Requesli

for

ClarlfIca'bion

Regarding

"bhe

Remaining

Life

Insurance Benefits

Next, the Court addresses Prudential's request to clarify
its previous order.
what to do

Prudential states that it does not know

with the life insurance benefits the Court returned

to it last September.

According to Prudential ^'[a]fter careful

review of the Court's order. Prudential is uncertain as to how

to proceed once the life insurance benefits are refunded. The
benefits are indisputably due to an eligible beneficiary(ies),
but

the

correct

beneficiary(ies)

cannot

be

determined

until

Sherry Bailey is either convicted or acquitted of the insured's
murder

and,

if

convicted,

given

the

opportunity

to

no

clarification

appeal."

(Doc. 32, at 9.)

First,
The

the

Court's

Court

finds

Order

that

stated

that

it

is

prematurely

needed.
granted

Prudential's request to deposit funds because Prudential did not
give notice to the other parties ^^and this Court gave the other
parties

no

opportunity

(Doc. 31.)

deposit

respond

to

Prudential's

motion."

Thus, the Court found that Prudential's request to

funds

procedurally
insurance

to

under

Federal

improper,

benefits

and

and

Rule

the

the

of

Civil

Court

Procedure

returned

accidental

both

death

67

the

was
life

benefits

to

Prudential.

Second,

the

Court

will

not

advise

Prudential

should do with the life insurance benefits.

on

what

it

The Court rejected

Prudential's

attempt

to

deposit

money

because

it

failed

to

comply with Rule 67, and Prudential has not requested to re-

deposit

the

Prudential

life

insurance

desires

further

benefits
action

under

from

this

Rule

67.

Court,

it

If
must

request that action in the form of a motion stating the relief
requested
relief.

and

the

rule

or

statute

Fed. R. Civ. P. 7(b)

be made by motion.

supporting

its

requested

V'A request for Court order must

The motion must: . . . (B) state with

particularity the grounds for seeking the order; and (C) state

the relief sought.").
motions

making

The Court's role is to rule upon specific

specific

requests.

It

cannot

give

advisory

opinions.

C. Request for Preliminary Injunction

Prudential requests a preliminary injunction pursuant to 29
U.S.C. § 1132(a)(3) and Federal Rule of Civil Procedure 65.
i. 29 U.S.C. § 1132(a)(3)

29 U.S.C. § 1132(a)(3) states that:

a civil action may be brought . . . by a participant,
beneficiary, or fiduciary (A) to enjoin any act or
practice which violates any provision of this subchapter
or

the

terms

appropriate
violations

of

the

equitable
or

(ii)

to

plan,

or

(B)

relief

(i)

enforce

any

to

to

obtain

other

redress

such

provisions

of

this

subchapter or the terms of the plan.

Prudential

argues

that

it

is

a

^^fiduciary" for

purposes

of

§ 1132(a)(3) and is therefore entitled to the "equitable relief"

of

a

preliminary

injunction

enjoining

Sherry

Bailey

from

spending any of the disputed insurance proceeds.
Under ERISA,

a

person is a fiduciary with

extent

(i)

he

exercises

any

respect to a
discretionary

plan to the
authority

or

discretionary control respecting management of such plan
or
exercises
any
authority
or
control
respecting
management or disposition of its assets, . . . or (iii) he
has
any
discretionary
authority
or
discretionary
responsibility in the administration of such plan.
29 U.S.C. § 1002(21)(A).
similar

to

Prudential's

Courts

which

Alliance

have examined accounts

Accounts

have

found

that

whether a company remains a fiduciary after distributing money
into such an account depends upon whether the payment of money

into such an account completes the company's obligations under

the terms of the governing policy.

See Huffman v. Prudential

Ins. Co. of Am., No. 2:lO-CV-05135, 2016 WL 5724293, *4-*6 (E.D.

Pa. Sept. 30, 2016).

Thus, ''whether Prudential was acting as a

fiduciary when it decided to make payment through its Alliance
Accounts . . .

will depend in large

part on

whether making

payment in that manner fulfilled Prudential's obligations to the
beneficiaries under the plan documents."
words.

Prudential

discharged

is

no

longer

its obligations

a

Id. at *6.

fiduciary

if

under the terms of the

making payment through an Alliance Account."

In other

"Prudential

plan[] by

Id. at *8.

The Court finds that, based on the arguments presented to
the

Court at this

time.

Prudential discharged

its

obligations

once it deposited the entirety of the life insurance benefits
into the Account.

According to the Policy:

Insurance payable on account of [Russell Bailey's] death
is normally paid to the Beneficiary in one sum.
Subject
to applicable law, where the amount of the benefit meets
Prudential's current minimum requirement, payment in one
sum will be made by establishing a retained asset account
in the Beneficiary's name, unless the Beneficiary elects
another settlement or payment option available at the time
of the claim, and the benefit distribution will be deemed
complete when the account is established.
The retained
asset account is an interest-bearing draft account backed

by the financial strength of Prudential. Funds are held in
Prudential's general account or elsewhere as Prudential
may direct and an account in the Beneficiary's name is
credited
interest
at
a
rate
set
by
Prudential's
discretion, subject to a minimum rate that will change no

more than once every 90 days on advance notice to the
Beneficiary.
The Beneficiary is provided a draftbook and
has

immediate

access

to

the

entire

amount

drafts for any amount up to the balance.

by

writing

The retained

asset account is not a bank account and is not insured by

the Federal Deposit Insurance Corporation;
contractual
undertaking
between
Prudential

it is a
and
the

Beneficiary.

(Doc. 32-1, at 52 (emphasis added).)

The Policy clearly states

that Prudential discharges it obligations once it establishes an
Alliance Account for the Beneficiary.

to be

a fiduciary once it established the Account in Sherry

Bailey's
§

Thus, Prudential ceased

name,

1132(a)(3).

and

it

may

not

Accordingly,

seek

the

equitable

Court

DENIES

relief

under

Prudential's

request for an injunction pursuant to 29 U.S.C. § 1132(a)(3).
ii. Rule 65

""'A

district court may grant injunctive

relief [under

Rule

65] if the movant shows the following: (1) substantial likelihood
of success on the merits; (2) irreparable injury will be suffered

8

unless the injunction issues; (3) the threatened injury to the
movant

outweighs

whatever

damage

the

proposed

injunction

may

cause the opposing party; and (4) if issued, the injunction would
not be adverse to the public interest.

In this Circuit, [a]

preliminary injunction is an extraordinary and drastic remedy not
to be granted unless the movant clearly established the burden of
persuasion

as

to

the

four

requisites."

McDonald^s

Corp.

v.

Robertson, 147 F.3d 1301, 1329 (11th Cir. 2002) (citations and

quotations omitted).

Prudential failed to articulate the above

standard, much less articulate any reasons why it meets the above
standard.

Accordingly, the Court finds that Prudential has not

met its burden of persuasion with respect to the four requisites

for a preliminary injunction and DENIES Prudential's request for
a preliminary injunction pursuant to Rule 65.
III. CONCLUSION

To conclude, the Court GRANTS the Motion to Dismiss (doc.
40) and ORDERS the Clerk to TERMINATE Defendants Sharmon Howard

and Kenneth Moon, Jr. as parties to this case.
IN

PART

and

(Doc. 32).

to

DENIES

IN

PART

Prudential's

The Court GRANTS

Motion

to

Deposit.

Specifically, the Court GRANTS Prudential's request

re-deposit

the

accidental

death

benefits

into

the

Court's

Registry (doc. 32) and ORDERS the Clerk to ACCEPT the accidental
death

benefits

Prudential's

into

the

request to

Court's

Registry.

clarify its

previous

The

Court

order

DENIES

and DENIES

Prudential's motion for a preliminary injunction under both 29
U.S.C. §

1132(a)(3)

and

Federal

Rule

of

Civil

Procedure

65.

(Doc. 32.)

O^ER

ENTERED

at

Augusta,

Georgia,

this

day

, 2018.

J. RANDAL HALL, CHIEF JUDGE
tl^TTTEtrSTATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA

10

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