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
of
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