Farmers New World Life Insurance Company v. Gathright et al
Filing
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OPINION AND ORDER GRANTING 57 MOTION for Default Judgment as to Carl D. Gathright filed by C G, K G. It is ORDERED that judgment be entered declaring that interpleader defendant Carl D. Gathright has defaulted in this interpleader action and has thereby waived any claim he has to the proceeds of the Farmers Policy No. 008215459. Signed by Judge Jon E DeGuilio on 9/12/19. (ksp)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
FARMERS NEW WORLD LIFE
INSURANCE COMPANY,
Plaintiff,
v.
CARL D. GATHRIGHT, K.G., a minor
by Guardian Chirrikka Kirk, C.G., a
minor by Guardian Chirrikka Kirk,
QUANTREL STEWART, and
CHARLES STEWART, III,
Defendants.
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Case No. 3:18-CV-176-JD-MGG
OPINION AND ORDER
This is a case about the distribution of life insurance proceeds and the allegation that
interpleader defendant Carl D. Gathright is disqualified from receiving the death benefit of his
deceased wife’s life insurance policy because he murdered her. On March 9, 2018, Plaintiff
Farmers New World Life Insurance Company filed this interpleader action pursuant to Federal
Rule of Civil Procedure 22. Mr. Gathright has not answered the complaint or otherwise defended
this action, and the Clerk of Court entered a default against him under Federal Rule of Civil
procedure 55(a). Before the Court is a Motion for Default Judgment against Mr. Gathright,
brought under Federal Rule of Civil Procedure 55(b) by interpleader defendants K.G. and C.G.
For the reasons set forth below, the motion is granted.
I. BACKGROUND
Argusta S. Gathright was the owner of and insured under Farmers Policy No. 008215459
(Farmers Policy) in the amount of $250,000. Am. Compl. ¶ 9, ECF No. 4. She named Carl D.
Gathright the primary beneficiary of the Farmers Policy, and she named her four surviving
children—K.G., C.G., Quantrel Stewart, and Charles Stewart, III—the contingent beneficiaries.
Id. ¶¶ 10–11.
Argusta S. Gathright died on April 23, 2017. Id. ¶¶ 8, 25. After Ms. Gathright’s death,
Charles Stewart, III submitted a claim for the proceeds of the Farmers Policy. Id. ¶ 12. During its
investigation of the claim, Farmers obtained a copy of Ms. Gathright’s death certificate, which
stated that the cause of death was pending. Id. ¶ 13. Farmers learned that Mr. Gathright was
charged with the murder of Ms. Gathright, and, at the time the Complaint was filed, the murder
charge was pending in the St. Joseph County Superior Court. Id. ¶ 15.
In the Complaint filed on March 9, 2018, and the Amended Complaint filed on March 20,
2018, Farmers alleges that, if Mr. Gathright was involved in the death of Ms. Gathright, he may
not be entitled to receive benefits under the Farmers Policy based on relevant Indiana statutory
and common law, including Indiana Code § 29-1-2-12.1. Id. ¶ 16. Farmers further alleges that
one or more of the contingent beneficiaries may be entitled to receive benefits under the policy.
Id. Farmers alleges that it undertook a good faith effort to investigate the claim and to determine
to whom to distribute the proceeds if the facts, circumstances, or law were not in dispute. Id. ¶
27. However, because the murder charge was pending at the time, Farmers was unable to
determine the proper beneficiary, and Farmers sought to interplead the funds due under the
Farmers Policy. Id. ¶ 28. On March 22, 2018, the Court granted Farmers’ Motion for Leave to
Deposit Funds in the Registry of the Court, and Farmers deposited $257,982.50 (Deposited
Funds) with the Clerk of Court on April 2, 2018.
On June 6, 2018, the contingent beneficiaries filed a motion for default judgment against
Mr. Gathright, and, on July 12, 2018, the Plaintiff filed an agreed motion for the entry of an
agreed order that would result in the final resolution of the interpleader complaint with
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distribution of the insurance proceeds to the contingent beneficiaries. In a November 13, 2018
Opinion and Order, the Court denied the motion for default judgment because the movants had
not shown that Mr. Gathright was properly served with the summons and complaint and because
the movants had not certified or otherwise established that Mr. Gathright was not an incompetent
person. ECF No. 35. Consequently, the Court denied the motion for the entry of an agreed order
distributing the insurance proceeds because the motion was contingent on a default judgment
against Mr. Gathright.
On March 14, 2019, a summons was reissued as to Mr. Gathright, and on March 29,
2019, Farmers effectuated service on Mr. Gathright by delivering a copy of the summons and
complaint to him at the St. Joseph County Jail. ECF. Nos. 43, 45. On May 17, 2019, Farmers
filed an application for clerk’s entry of default against Mr. Gathright. ECF No. 49. And, on May
21, 2019, the Clerk of Court entered a Clerk’s Entry of Default against Mr. Gathright pursuant to
Federal Rule of Civil Procedure 55(a). ECF No. 50.
On May 16, 2019, Carl D. Gathright was convicted of Argusta S. Gathright’s murder.
Defendants K.G. and C.G., minor children, represented herein by their legal guardian
Chirrikka Kirk, filed the instant motion for default judgment, and the motion was served on Mr.
Gathright. The movants attach the Declaration of William Perry, their attorney, which avers that
Gathright is neither a minor, incompetent, nor subject to the Servicemembers Civil Relief Act
(50 U.S.C. § 3931).
II. ANALYSIS
Federal Rule of Civil Procedure 55 governs the entry of defaults and default judgments.
See Lowe v. McGraw-Hill Cos., Inc., 361 F.3d 335, 339 (7th Cir. 2004). Prior to obtaining a
default judgment under Rule 55(b)(2), there must be an entry of default as provided by Rule
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55(a). See Wolf Lake Terminals, Inc. v. Mut. Marine Ins. Co., 433 F. Supp. 2d 933, 941 (N.D.
Ind. 2005). Under Rule 55(a), the clerk is to enter the default of a party against whom a judgment
is sought when that party has failed to plead or otherwise defend. Yong-Qian Sun v. Bd. of Trs.,
473 F.3d 799, 811 (7th Cir. 2007).
In this case, Mr. Gathright, who was imprisoned, was properly served with the summons
and complaint but has failed to plead or otherwise defend. The Federal Rules of Civil Procedure
allow a party to serve a summons on an individual pursuant to the state law governing service in
the state where the district court is located. Fed. R. Civ. P. 4(e)(1). Indiana Trial Rule 4.3
governs the service of summons upon institutionalized persons:
Service of summons upon a person who is imprisoned or restrained in an
institution shall be made by delivering or mailing a copy of the summons and
complaint to the official in charge of the institution. It shall be the duty of said
official to immediately deliver the summons and complaint to the person being
served and allow him to make provisions for adequate representation by counsel.
The official shall indicate upon the return whether the person has received the
summons and been allowed an opportunity to retain counsel.
Ind. R. Trial P. 4.3. In this case, Farmers filed a copy of the return of summons showing actual
delivery on Mr. Gathright at the St. Joseph County Jail on March 29, 2019, with the return
showing that Mr. Gathright was advised by the official who delivered the summons and
complaint of his right to retain counsel with respect to this lawsuit. ECF No. 45. The deadline for
Mr. Gathright to respond to Farmer’s Complaint was April 19, 2019. The entry of default was
entered by the Clerk of Court on May 21, 2019, upon motion of the Plaintiff. ECF No. 50.
Accordingly, the Court may now enter a default judgment under Rule 55(b)(2). However,
“a default judgment is a harsh sanction,” C.K.S. Eng’rs, Inc. v. White Mountain Gypsum Co., 726
F.2d 1202, 1209 (7th Cir. 1984), and the Court must exercise its discretion in ordering default
judgment. O’Brien v. R.J. O’Brien & Assocs., Inc., 998 F.2d 1394, 1398 (7th Cir. 1993). A
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default judgment is justified when “the defaulting party has exhibited a willful refusal to litigate
the case properly,” as evinced by “a party’s continuing disregard for the litigation and for the
procedures of the court” and a “willful choice not to exercise even a minimal level of diligence.”
Davis v. Hutchins, 321 F.3d 641, 646 (7th Cir. 2003).
Although default judgment is most commonly sought by a plaintiff, a defendant in an
interpleader action may do so as well. See Am. Nat’l Bank & Tr. Co. of Chi. v. Alps Elec. Co.,
No. 99 C 6990, 2002 WL 484845, at *1 (N.D. Ill. Mar. 29, 2002). A party seeking default
judgment against another under Rule 55(b)(2) must establish: (1) when and against what party
the default was entered; (2) identification of the pleading to which default was entered; (3)
whether the defaulting party is a minor or incompetent person; (4) that the defendant is not in
military service such that the Soldiers’ and Sailors’ Civil Relief Act of 1940 does not apply; and
(5) that notice has been served on the defaulting party, if required by Rule 55(b)(2). See, e.g.,
UMG Recordings, Inc. v. Stewart, 461 F. Supp. 2d 837, 841 (S.D. Ill. 2006). The movants have
now satisfied all of the requirements. The default was entered on May 21, 2019, on the Plaintiff’s
interpleader complaint. The Declaration attached to the motion establishes that Mr. Gathright is
not a minor, incompetent, or in the military service. And, because Mr. Gathright has not
appeared in this proceeding, the notice requirement of Rule 55(b)(2) does not apply.
When a named interpleader defendant fails to answer an interpleader complaint and assert
a claim to the res, he forfeits any claim of entitlement that he may have asserted. See Combined
Ins. Co. of Am. v. Glass, No. 14-CV-01458, 2015 WL 996172, at *9 (D. Colo. Mar. 3, 2015)
(quoting Amoco Prod. Co. v. Aspen Grp., 59 F. Supp. 2d 1112, 1116 (D. Colo. 1999)); Sun Life
Assurance Co. of Canada v. Conroy, 431 F. Supp. 2d 220, 226 (D.R.I. 2006). Mr. Gathright,
having defaulted by failing to answer or otherwise respond to the Plaintiff’s Complaint, has
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forfeited any claim he may have had to the Deposited Funds. He has not obtained counsel. He
has made no effort to rectify the default or otherwise seek relief from the Court. And, he has not
responded to the instant motion for default judgment. Accordingly, the Court finds that default
judgment against Mr. Gathright is appropriate. See, e.g., Protective Life Ins. Co. v. Tinney, No.
2:14-CV-02251, 2015 WL 1402464, at *4 (N.D. Ala. Mar. 25, 2015) (recognizing that the court
may enter a default judgment against any defendant who fails to respond to an interpleader
complaint).
Finally, in the conclusion of their memorandum, K.G. and C.G. ask for disbursement to
them of 50% of the death benefit, plus applicable interest, if any, and termination of this
litigation with prejudice. This request is not properly before the Court on this motion. The
motion only seeks default judgment against Mr. Gathright, and the memorandum does not set
forth a legal or factual basis for the distribution of the death benefit as requested. Nevertheless,
the remaining parties are granted leave to renew their agreed motion for entry of an agreed
disposition or otherwise seek the distribution of the insurance policy proceeds.
III. CONCLUSION
Accordingly, the Court GRANTS the motion for default judgment [DE 57].
IT IS THEREFORE ORDERED THAT judgment be entered declaring that interpleader
defendant Carl D. Gathright has defaulted in this interpleader action and has thereby waived any
claim he had to the proceeds of the Farmers Policy No. 008215459.
SO ORDERED.
ENTERED: September 12, 2019.
/s/ JON E. DEGUILIO
Judge
United States District Court
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