NYLIFE Insurance Company of Arizona v. Johnson et al
Filing
31
RULING granting in part and denying in part 25 Motion for Interpleader and Dismissal. Judgment shall be entered accordingly . Signed by Judge Shelly D. Dick on 9/21/2016. (LLH) Modified on 9/22/2016 to edit text (LLH).
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
NYLIFE INSURANCE
COMPANY OF ARIZONA
CIVIL ACTION
VERSUS
15-810-SDD-RLB
DAVID LEE JOHNSON,
CHARLES BUTLER, JR.,
CHAZZ JOHNSON, and
C.J., a minor, by and through her
Legal guardian SABRINA SCOTT
RULING
This interpleader action is before the Court on the Motion for Interpleader and
Dismissal1 by Plaintiff, New York Life Insurance Company of Arizona (“Plaintiff” or “NY
Life”). No opposition or response has been filed by any Defendant.2 Plaintiff moves this
Court for an order granting relief as follows: appointing Sabrina Scott as C.J.’s guardian
ad litem; permitting NY Life to interplead a death benefit in the amount of $375,000, plus
applicable interest, payable as a result of the death of Monica Johnson and in connection
with the individual life insurance policy number 76 205 903; dismissing all claims against
NY Life and dismiss NY Life from this action with prejudice following the deposit of the
death benefit into the registry of the Court; and permanently enjoining the Defendants
1
Rec. Doc. No. 25.
The Court did receive correspondence from some Defendants stating that they acknowledge that they are
contingent beneficiaries under the policy and would like to receive their portion if David Johnson is
disqualified. See Rec. Doc. Nos. 26 & 28. These letters do not contain factual or legal opposition to the
relief requested by NY Life in the present motion.
2
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Finance
from commencing any other actions or proceedings seeking payment of the death benefit
in connection with this policy.
I.
FACTUAL BACKGROUND
On or about August 17, 2006, NY Life issued a life insurance policy to the insured,
Monica Johnson (“the Insured”), bearing policy number 76 205 903, which provided
coverage on the life of the Insured. On the policy application, the designated primary
beneficiary is David Johnson, who was the Insured’s spouse. Listed as co-Contingent
beneficiaries entitled to equal shares of the death benefits are the Insured’s son, Charles
Butler, her step-son, Chazz Johnson, and her step-daughter, C.J., a minor.
The Insured died on August 9, 2015, which resulted in death benefits in the amount
of $375,000.00 being payable to a beneficiary or beneficiaries. NY Life concedes this
liability. However, on or about October 9, 2015, David Johnson was indicted for the
criminal charge of first degree murder of the Insured in the Twenty-third Judicial District,
State of Louisiana, Parish of Ascension. Under the “Louisiana Slayer Statute,”3 NY Life
contends that, if it is determined that David Johnson intentionally and unjustifiably caused
the death of the Insured, he would forfeit any right to the death benefits. If David Johnson’s
right to the death benefits is forfeited, pursuant to the terms of the policy, Charles Butler,
Chazz Johnson, and C.J., in equal shares, would be eligible to receive the death benefits
as contingent beneficiaries.
Under these circumstances, NY Life contends it cannot factually or legally
determine who is entitled to the death benefits. Thus, although it is ready and willing to
3
La. R.S. 22:901(D).
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pay the death benefits in accordance with the policy terms, NY Life contends it is, or may
be, exposed to multiple liability and seeks the Court’s determination of the proper
beneficiaries. As such, NY Life seeks to deposit the death benefits, plus applicable claim
interest, into the registry of the Court for disbursement in accordance with the Court’s
ultimate judgment.
The record reflects that NY Life filed its Complaint4 on December 1, 2015, and a
First Amended Complaint5 was filed on February 3, 2016. At the time of the filing of this
motion, summonses to all Defendants were issued by the Court and served upon the
Defendants. Defendant, Charles Butler, filed an Answer;6 however, at the time this motion
was filed, the other Defendants had not formally appeared in this action.
Both
Defendants, Chazz Johnson and C.J., through her guardian Sabrina Scott, submitted
letters7 to the Court indicating their status as contingent beneficiaries to the policy at
issue. NY Life contends that, based on its communications with Charles Butler, Chazz
Johnson, and Sabrina Scott on behalf of C.J., these Defendants have no objection to NY
Life’s request for interpleader deposit and dismissal.8 NY Life admits it has been unable
to contact Defendant, David Lee Johnson. The Court notes that, subsequent to the filing
of this motion, the Court conducted a telephone status conference, which David Lee
Johnson appeared for pro se by telephone.9 At this status conference, the Court informed
Defendants, David Johnson and Sabrina Scott on behalf of C.J., that they needed to file
4
Rec. Doc. No. 1.
Rec. Doc. No. 9.
6
Rec. Doc. No. 17.
7
Rec. Doc. Nos. 26 & 28.
8
Rec. Doc. No. 25-1, p. 4.
9
Rec. Doc. No. 27.
5
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an Answer to the Complaint within two weeks.10 Scott submitted correspondence to the
Court on behalf of C.J. and joined with Defendant, Chazz Johnson, in filing an Answer11
on June 2, 2016. No Answer has ever been filed by Defendant, David Lee Johnson, and
no oppositions have been filed to NY Life’s present motion.
II.
LAW AND ANALYSIS
A. Appointment of Guardian ad litem for Minor Beneficiary
Pursuant to Rule 17(c)(2) of the Federal Rules of Civil Procedure, NY Life requests
that the Court appoint Sabrina Scott as Guardian ad litem to C.J., the minor beneficiary
under the policy. NY Life contends that Scott, as the natural mother and legal guardian
of C.J., has consented in communications with NY Life to this appointment.
The Court finds it unnecessary to appoint Sabrina Scott as guardian ad litem
because she is competent to represent C.J.’s interests in this matter as C.J.’s legal
guardian under Rule 17(c)(a). Indeed, Scott has filed an Answer in this matter on C.J.’s
behalf. The Court finds that C.J. is properly and adequately represented by her legal
guardian and natural mother, Sabrina Scott.
B. Interpleader and the Louisiana Slayer Statute
A traditional interpleader suit is an equitable action involving a disinterested
plaintiff-stakeholder who either is, or may be, exposed to multiple liability or multiple
litigation over an identifiable fund to which there are two or more mutually inconsistent
claims.12
The purpose of interpleader is to enable the plaintiff, who is also the
10
Id.
Rec. Doc. No. 29.
12
Hussain v. Boston Old Colony Ins. Co., 311 F.3d 623, 631 (5th Cir. 2002).
11
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stakeholder, to avoid “the burden of unnecessary litigation or the risk of loss by the
establishment of multiple liability when only a single obligation is owing.”13
Courts possess broad discretion in interpleader actions.14 A court has jurisdiction
over a Rule 22 interpleader action when there is: “(1) complete diversity of citizenship,
which is met when the stakeholder is diverse from all the claimants, even if citizenship of
the claimants is not diverse; and [there is] (2) an amount-in-controversy that exceeds
$75,000 exclusive of interests and costs.”15 In this case, NY Life alleges that it is a citizen
of New York and all defendants-in-interpleader are citizens of Louisiana.16 The amount
in controversy is asserted to be $375,000.00, plus applicable interest.17 Accordingly, the
Court finds that it has subject matter jurisdiction over the interpleader action.
In a true interpleader action, the stakeholder is dismissed from the suit after the
Court determines that interpleader is appropriate, and only the parties asserting an
interest in the fund remain.18
process.19
Interpleader actions are decided through a two-step
The first step is for the Court to determine whether a proper case for
interpleader is presented.20 In this regard, the Court must determine that there is a single
fund with adverse claimants to that fund.21 If the Court determines that the requirements
13
Id. at 631 (citing Texas v. Florida, 306 U.S. 398, 412 (1939)); White v. FDIC, 19 F.3d 249, 251 (5th
Cir.1994) (defining interpleader as a “procedural device which entitles a person holding money or property,
concededly belonging at least in part to another, to join in a single suit two or more persons asserting
mutually exclusive claims to the fund”).
14
Rhoades v. Casey, 196 F.3d 592, 600–601 (5th Cir.1999).
15
Hussain v. Boston Old Colony Ins. Co., 311 F.3d 623, 635 n. 46 (5th Cir. 2002).
16
Rec. Doc. No. 23.
17
Rec. Doc. No. 1.
18
Fresh America Corp. v. Wal-Mart Stores, Inc., 393 F.Supp.2d 411, 414 (N.D. Tex. 2005).
19
Id. at 415.
20
Id.
21
Id., citing Rhoades v. Casey, et al, 196 F.3d 592, 600 (5th Cir.1999).
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for interpleader are met, the next stage of the litigation is to determine the rights of the
claimants.22
On the first issue, “the real question is whether the claims arise from a ‘single right
or obligation.’”23 In this matter, there is no opposition to NY Life’s claim that there is a
single fund – the death benefits. There is, likewise, no doubt that NY Life has established
that there are adverse claimants to the fund. “Claimants are adverse when they expose
[the] plaintiff to double payment on a single liability.”24 Based on the application in this
case of the Louisiana Slayer Statute, NY Life has established that there are adverse
claimants to the death benefits at issue.
The Supreme Court has upheld several states’ so-called “slayer” statutes: “[A]
murdering heir is not entitled to receive property as a result of the killing.”25 The Fifth
Circuit holds that, “[c]onsistent with this principle, a murderous beneficiary is generally
barred from recovering insurance proceeds: at federal common law, and as codified by
most states, one who willfully causes the death of an insured is ineligible to collect life
insurance proceeds as a beneficiary.”26
Endorsing this principle, Louisiana law forbids a beneficiary from receiving
insurance benefits when the beneficiary's intentional acts caused the benefits to accrue.
Specifically, La.R.S. 22:901(D) provides:
22
Id., citing Rhoades, 196 F.3d at 600.
Id., quoting Bradley v. Kochenash, 44 F.3d 166, 168 (2d Cir. 1995).
24
Id., quoting Hartford Life & Accident Ins. Co. v. Eterna Benefits L.L.C., et al, No. 3:96–CV–3065–D, 1997
WL 726441 at *2, 1997 U.S. Dist. LEXIS 18670, at *4 (N.D.Tex. Nov. 17, 1997) (internal quotations omitted).
25
See Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141 (2001) (acknowledging in dicta that states have
fashioned so-called slayer statutes).
26
Metropolitan Life Ins. Co. v. Scott, No. 15-362, 2015 WL 5165556 at*3 (E.D. La. Sep. 2, 2015)(citing
Metropolitan Life Ins. Co. v. White, 972 F.2d 122, 124 (5th Cir.1992).
23
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(1) No beneficiary, assignee, or other payee under any personal insurance
contract shall receive from the insurer any benefits under the contract
accruing upon the death, disablement, or injury of the individual insured
when the beneficiary, assignee, or other payee is either:
(a) Held by a final judgment of a court of competent jurisdiction to be
criminally responsible for the death, disablement, or injury of the individual
insured.
(b) Judicially determined to have participated in the intentional, unjustified
killing of the individual insured.
(2) Where such a disqualification exists, the policy proceeds shall be
payable to the secondary or contingent beneficiary, unless similarly
disqualified .... Nothing contained in this Section shall prohibit payment
pursuant to an assignment of the policy proceeds where such payment
defrays the cost and expenses of the insured's funeral or expense incurred
in connection with medical treatment of the insured. Nothing contained in
this Section shall prohibit payment of insurance proceeds pursuant to a
facility of payment clause, so long as such payment is not made to a
beneficiary, assignee, or other payee disqualified by this Section.27
Based on the Louisiana Slayer Statute, NY Life contends that, considering that the
primary beneficiary David Johnson stands accused of the murder of the Insured, NY Life
is faced with competing claims and cannot factually or legally determine to whom the
death benefits are due.
The court in UNUM Insurance Company of America v. Locke was faced with a
similar situation.28 In UNUM, the sole beneficiary to the proceeds of a life insurance policy
was accused of murdering the insured. UNUM filed an interpleader action to deposit the
proceeds of the life insurance policy into the registry of the court and be dismissed.29 The
court granted UNUM’s motion and held:
There is no question in this case that Louisiana's “Slayer statute” would
prohibit anyone found criminally responsible for the death of the insured
27
La. R.S. 22:901(D).
No. 2:06CV0861, 2006 WL 2457106 (W.D. La. Aug. 22, 2006).
29
Id.
28
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from collecting the proceeds under the policy. The amount of the policies is
not in dispute. Wilson Locke, Jr. has been accused of murder, but the trial
is pending. UNUM placed the disputed monies in the registry of the court.
UNUM is a disinterested stakeholder and is not in substantial controversy
with one of the claimants, therefore they are entitled to reasonable
attorneys’ fees and costs for the filing of the interpleader and for answering
the counter-claim. UNUM's Motion to Dismiss will be granted and UNUM
may submit an accounting to the court.30
Because the same circumstances are present in the case before the Court, the
Court finds that NY Life’s motion for interpleader should be granted and NY Life shall be
dismissed from this case. NY Life also requests that the Court permanently enjoin any
adverse claimants from commencing any future actions against it in connection with this
policy. Because all of the adverse claimants have appeared in this case, and none have
opposed NY Life’s motion, the Court finds that NY Life is entitled to injunctive relief.
Therefore, upon NY Life’s dismissal from this matter, the adverse claimants shall be
permanently enjoined from commencing any action against NY Life for payment of the
death benefits in connection with the policy in any forum.
C. Attorneys’ Fees and Costs
NY Life also moves for an award of reasonable costs and attorneys’ fees
associated with bringing this action. However, NY Life states in its memorandum:
At this time, the Company is not requesting an award of its attorneys’ fees
and costs due to the prior verbal consent of Defendants Charles Butler, Jr.,
Chazz Johnson, and Sabrina Scott, as legal guardian of C.J., a minor, to
the relief requested by this motion. The Company reserves its right to
amend its Motion for Interpleader and Dismissal in order to seek attorneys’
fees and costs in the event the Company receives opposition to the present
motion.31
30
31
Id. at *2.
Rec. Doc. No. 25-1, p. 9.
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Because no opposition was ever filed by any Defendant in this case, the Court will
assume that NY Life is not seeking attorneys’ fees and costs. Therefore, an award for
attorneys’ fees and costs shall be denied without prejudice subject to NY Life’s right to
request such fees and costs in the future if warranted by the facts and the law.32
III.
CONCLUSION
For the reasons set forth above, the unopposed Motion for Interpleader and
Dismissal33 filed by Plaintiff, New York Life Insurance Company of Arizona, is GRANTED
in part and DENIED in part. NY Life’s motion to appoint a guardian ad litem for the minor
Defendant is denied. NY Life’s motion for an award of attorneys’ fees and costs is denied
without prejudice. NY Life’s motion for interpleader is granted, and NY Life shall be
allowed to deposit the death benefits associated with the Insured’s policy into the registry
of the Court subject to a determination of the proper beneficiaries. NY Life is hereby
dismissed from this case with prejudice, and the adverse claimants shall be permanently
enjoined from commencing any action against NY Life for payment of the death benefits
in connection with the policy in any forum.
Judgment shall be entered accordingly.
Signed in Baton Rouge, Louisiana on September 21, 2016.
S
JUDGE SHELLY D. DICK
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
32
The Court notes that “[j]urisdiction to award attorneys' fees to an interpleader is given by 28 USC § 2361
and is within the discretion of the court. Attorney's fees are available when the interpleader is a
disinterested stakeholder and is not in substantial controversy with one of the claimants. 28 USC §
1335September 22, 2016 makes no mention of allowance of expenses for insurance companies bringing
an interpleader, leaving the award to the discretion of the District Court.” UNUM, 2006 WL 2457106 at *1
(citations omitted).
33
Rec. Doc. No. 25.
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