Standard Insurance Company v. Harnett et al

Filing 17

OPINION - IT IS HEREBY ORDERED:(1) Plaintiff's Motion for Discharge (d/e 10 ) is GRANTED; (2) Plaintiff is discharged and dismissed with prejudice from this action; (3) Plaintiff, having deposited with the Court the $29,000 Life Benefit pa yable due to the death of Vesta Harnett under Group Life Insurance Policy, No. 645746-C, has paid the full amount it could owe to any Defendant or any other person or entity under the Policy or otherwise and is therefore not liable and cannot be furt her liable to any of the Defendants or any other person or entity beyond the $29,000 it has deposited with the registry of the court; (4) Defendants are restrained and enjoined from instituting any action or proceeding in any state or federal co urt against Plaintiff for recovery of the Life Benefit, including any interest or claims related thereto; and (5) Defendants and all other persons claiming any interest in any amount deposited shall be and are required to litigate, interplead, and settle as among themselves their respective rights to the entire interpleaded sum of the Life Benefit deposited with the Court. SEE WRITTEN OPINION. Entered by Judge Sue E. Myerscough on 10/16/2017. (ME, ilcd)

E-FILED

Monday, 16 October, 2017 05:19:44 PM
Clerk, U.S. District Court, ILCD

IN THE UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
STANDARD INSURANCE COMPANY,
Plaintiff,
v.
MICHAEL J. HARNETT, BROOKE
KLETZLI, KELLEN KLETZLI,
CHRISTINA WEIPRECHT, and
MARQUITA L. HARNETT,
Defendants.

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No. 3:17-CV-03060

OPINION
SUE E. MYERSCOUGH, U.S. District Judge.
This cause is before the Court on Plaintiff Standard Insurance
Company’s Motion for Discharge (d/e 9). The Motion is GRANTED.
I. BACKGROUND
In March 2017, Plaintiff filed this statutory interpleader action
pursuant to 28 U.S.C. § 1335. The Complaint for Interpleader
names as defendants Michael J. Harnett, Brooke Kletzli, Kellen
Kletzli, Christina Weiprecht, and Marquita L. Harnett. Because
many of the parties have the same last name, the Court will refer to
the individuals by their first names.
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The Complaint for Interpleader contains the following
allegations. Plaintiff issued a Group Life Insurance Policy to the
Albuquerque Public Schools on January 1, 2012. The Policy
provided life insurance coverage to eligible employees of the
Albuquerque Public Schools, including the decedent, Vesta Harnett.
Vesta retired from employment with the Albuquerque Public
Schools in 1991, 24 years before her death on September 17, 2015.
Several years prior to her death, Vesta moved from Albuquerque to
Springfield, Illinois. Upon Vesta’s death, her lawful beneficiary or
beneficiaries were eligible for life insurance benefits, which included
a basic life insurance benefit of $4,000 and an additional life
insurance benefit of $25,000. The total benefit of $29,000 is
referred to as the “Life Benefit.”
In December 2015, the Albuquerque Public Schools advised
Plaintiff of Vesta’s death. As a result of Vesta’s death, the Life
Benefit under the Policy became due and payable upon Plaintiff’s
receipt of proof of loss and proof of those designated to be the lawful
beneficiaries of the Life Benefit.
Defendant Michael J. Harnett, Vesta’s son, made a claim for
100% of the Life Benefit. Michael claimed he was entitled to 100%
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based on the most recent beneficiary designation. Specifically, on
July 22, 2015, Vesta named Michael as her agent in an Illinois
Statutory Short Form Power of Attorney For Property. Within three
days, and pursuant to the power of attorney, Michael changed
Vesta’s prior beneficiary designation to provide Michael with 100%
of the Life Benefit.
Plaintiff asserts that the Retiree Life Insurance Change Form
is ambiguous in that the form suggests that the beneficiary change
is only with respect to the $25,000 benefit. However, near the
bottom of the page, in the area of the form titled “BASIC LIFE
BENEFICIARY (if applicable),” Michael purports to also designate
himself as the beneficiary of 100% of Vesta’s Basic Life Insurance—
the $4,000 benefit.
Plaintiff rejected Michael’s claim to 100% of the Life Benefit on
the ground that the power of attorney did not, under Illinois law,
authorize Michael to change the beneficiaries of the Life Benefit. If
Michael is not entitled to 100% of the Life Benefit, Vesta’s
beneficiary designation of June 15, 2011 applies. The June 2011
designation divides the $4,000 benefit equally between Michael and
Marquita, Vesta’s daughter. The 2011 beneficiary designation
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divides the $25,000 benefit between Michael and Marquita (onethird each) and between Vesta’s four grandchildren (one-twelfth
each). The grandchildren are Christina, Kellen, Brooke, and Sean
Kletzli. Plaintiff did not name Sean Kletzli as a defendant in this
case because, upon Plaintiff’s information and belief, Sean died in a
motorcycle accident in 2014. Under the June 15, 2011 beneficiary
designation, upon the death of Sean, his one-twelfth would be
apportioned equally among the remaining three living grandchildren
Vesta designated as beneficiaries at the same time she designated
Sean. Compl. ¶ 24; but see Policy at 28 (d/e 53) (applying the
following where two or more beneficiaries are named in a class: “If
you provide for unequal shares in a class, and two or more
Beneficiaries in that class survive, we will pay each surviving
Beneficiary his or her designated Share. Unless you provide
otherwise, we will then pay the share(s) otherwise due to any
deceased Beneficiary(ies) to the surviving Beneficiaries pro rata
based on the relationship that the designated percentage or
fractional share of each surviving Beneficiary bears to the total
shares of all surviving Beneficiaries.”).

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Plaintiff alleges that it faces multiple liabilities due to the
competing claims. Plaintiff asked Defendants to settle and resolve
their controversies regarding the Life Benefit and advised that it
would abide by any decision they might reach on the division of the
Life Benefit of $29,000. Defendants have not settled their disputes,
necessitating the filing of this action.
After the Court granted Plaintiff’s motion to deposit funds,
Plaintiff deposited $29,000 with the Clerk of the Court (d/e 4).
Michael, Christina, and Kellen executed waivers of service (see
docket entries 5, 6, and 7) and their answers were due in May
2017. No answers or other responses were filed.
Brooke was served with summons on April 20, 2017. See d/e
11. In letters dated April 24, 2017, both Marquita and Brooke
acknowledge receipt of the Summons and the Complaint. The
letters, which are notarized, also state: “Please consider this my
formal, written notice of non-participation in pursuit of and
confirmation that I do relinquish my monetary benefit from the life
insurance policy[.]” See Letters (d/e 10-2, 10-3).
On August 4, 2017, Plaintiff filed a Motion for Discharge (d/e
9) asking that Plaintiff be discharged from liability and dismissed
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from this lawsuit with prejudice. Plaintiff waives its claim for
attorney’s fees and costs.
On August 23, 2017, this Court entered a text order advising
Defendants that the failure to file an answer or otherwise respond
to the Complaint for Interpleader would result in an entry of default
judgment against him or her. The Court directed the Defendants to
file an answer or otherwise respond to the Complaint on or before
September 22, 2017. The Court also advised the Defendants that
they could appear in court without counsel. The Court stayed
ruling on Plaintiff’s Motion for Discharge until after September 22,
2017. The Clerk of the Court mailed copies of the Text Order to
Defendants. No answers or responses were filed, but the mailing to
Kellan was returned as undeliverable.
On October 13, 2017, the Court held a telephone status
conference. Marquita and Plaintiff’s attorney participated. In
addition, Vicky McCoy participated as the agent for Christina
pursuant to a power of attorney.
II. JURISDICTION
Pursuant to 28 U.S.C. § 1335, federal courts have original
jurisdiction over interpleader actions when the amount in
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controversy is $500 or more and the case involves two or more
adverse claimants of diverse citizenship. 28 U.S.C. § 1335; Gen.
Ry. Signal Co. v. Corcoran, 921 F.2d 700, 703 (7th Cir. 1991). The
plaintiff must also deposit the money into the registry of the court
for the court to have jurisdiction. 28 U.S.C. § 1335(a)(1).
Nationwide service of process is authorized for interpleader actions
under § 1335. 28 U.S.C. § 2361; Mut. Life Ins. Co. of N.Y. v.
McKnight, 642 F. Supp. 1432, 1434 (N.D. Ill. 1986).
In this case, more than $500 is at issue and Defendants are
adverse. Additionally, minimal diversity among competing
claimants to the life insurance benefit exists. The Complaint alleges
that Michael is a citizen of Illinois, Brooke is a citizen of Colorado,
Christina is a citizen of Virginia, and Marquita is a citizen of New
Mexico. Kellen is a U.S. citizen abroad in the People’s Republic of
China who previously lived in Denver, Colorado. See Am. Family
Mut. Ins. Co. v. Roche, 830 F. Supp. 1241, 1245 (E.D.Wis.1993)
(the minimal diversity required by § 1335 does not require
consideration of the citizenship of the plaintiff stakeholder). Finally,
Plaintiff deposited the funds in the registry of the court. Therefore,
the Court has jurisdiction.
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Venue is proper because Michael resides in Springfield,
Illinois. See 28 U.S.C. § 1397 (providing that an action for civil
interpleader “under section 1335 of this title may be brought in the
judicial district in which one or more of the claimants reside”).
III. ANALYSIS
An interpleader action generally proceeds in two stages. First,
the Court determines whether interpleader is warranted. Second,
the Court resolves the merits of the claims. Aaron v. Mahl, 550
F.3d 659, 663 (7th Cir. 2008). The Court will not address the
second stage at this time.
Interpleader is warranted where the stakeholder has a
reasonable fear of double liability or conflicting claims. Here,
Michael claims he is entitled to 100% of the benefit under the July
2015 beneficiary designation. However, the July 2015 beneficiary
designation may have been made by Michael without authorization,
in which case the beneficiary designation of June 2011 would
apply. Because Plaintiff has a real and reasonable fear of double
liability or conflicting claims, interpleader is warranted in this case.
Plaintiff has turned over the assets to the registry of the court.
Once the stakeholder turns the assets over to the registry of the
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court, the stakeholder’s legal obligations to the claimants are
satisfied, and the stakeholder is discharged. See In re Mandalay
Shores Coop. Hous. Ass’n, Inc., 21 F.3d 380, 383 (11th Cir. 1994);
Lutheran Bhd. v. Comyne, 216 F. Supp. 2d 859, 863 (E.D. Wis.
2002) (discharging the stakeholder where the stakeholder properly
sought interpleader relief); Exec. Risk Indem. Inc. v. Speltz & Weis,
LLC, No. 09 C 2750, 2009 WL 3380972, at *2 (N.D. Ill. Oct. 16,
2009). Therefore, Plaintiff is entitled to discharge.
IT IS HEREBY ORDERED:
(1) Plaintiff’s Motion for Discharge (d/e 10) is GRANTED;
(2) Plaintiff is discharged and dismissed with prejudice
from this action;
(3) Plaintiff, having deposited with the Court the $29,000
Life Benefit payable due to the death of Vesta Harnett under
Group Life Insurance Policy, No. 645746-C, has paid the full
amount it could owe to any Defendant or any other person or
entity under the Policy or otherwise and is therefore not liable
and cannot be further liable to any of the Defendants or any
other person or entity beyond the $29,000 it has deposited
with the registry of the court;
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(4) Defendants are restrained and enjoined from
instituting any action or proceeding in any state or federal
court against Plaintiff for recovery of the Life Benefit, including
any interest or claims related thereto; and
(5) Defendants and all other persons claiming any interest
in any amount deposited shall be and are required to litigate,
interplead, and settle as among themselves their respective
rights to the entire interpleaded sum of the Life Benefit
deposited with the Court.
ENTER: October 16, 2017
FOR THE COURT:
s/Sue E. Myerscough
SUE E. MYERSCOUGH
UNITED STATES DISTRICT JUDGE

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