Life Insurance Company of North America v. Ard et al
Filing
71
ORDER denying 40 Motion for Summary Judgment; denying 54 Motion for Summary Judgment; granting in part and denying in part 62 Motion for Sanctions. Signed by Honorable David C. Bramlette, III on April 27, 2015. (AA)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
WESTERN DIVISION
LIFE INSURANCE COMPANY OF NORTH
AMERICA
VS.
PLAINTIFF
CIVIL ACTION NO: 5:14-cv-18-DCB-MTP
AMBER ARD, DIAMOND ARD, a minor,
DESTINY ARD, a minor, HEAVEN ARD,
a minor, JERRY ARD, and LAGWEN ARD
DEFENDANTS
AND
JERRY ARD and LAGWEN ARD
CROSS-PLAINTIFFS/CROSSCOUNTER DEFENDANTS
VS.
AMBER ARD, DIAMOND ARD, a minor,
DESTINY ARD, a minor, and HEAVEN
ARD, a minor
CROSS-DEFENDANTS/CROSSCOUNTER PLAINTIFFS
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SANCTIONS
AND DENYING MOTIONS FOR SUMMARY JUDGMENT
This cause is before the Court on Cross-Plaintiff/CrossCounter Defendant’s, Jerry Ard, Motion for Summary Judgment [docket
entry no. 40] and Motion for Sanctions [docket entry no. 62] and
Cross-Defendant/Cross-Counter
Plaintiff’s,
Amber
Ard,
Counter
Motion for Summary Judgment [docket entry no. 54]. Having reviewed
the motions and responses, applicable statutory and case law, and
being otherwise fully informed in the premises, the Court finds as
1
follows:
I. Factual and Procedural Background
This dispute concerns the proceeds of two group life insurance
policies for Bobby Ard. On October 15, 2013, Bobby was killed in a
car crash, leaving behind his three minor children, Diamond,
Destiny, and Heaven Ard, their mother and his wife Amber Ard, and
his parents Jerry and LaGwen Ard. At the time of his death, Bobby
had named Amber and the children as beneficiaries of the policies,
but
he
had
previously
requested,
but
not
filed,
an
Enrollment/Change form from his employer. Jerry contends that Bobby
wanted to change the beneficiaries of the policy to Jerry and
LaGwen because Amber had initiated divorce proceedings against
Bobby and in order to provide for the future of his daughters. In
fact, after Bobby’s death, Bobby’s brother found a completed and
signed Enrollment/Change form in Bobby’s truck where Bobby had told
his brother it would be. The unfiled form indicated that Bobby
wished to change his beneficiary to Jerry. The form was dated
September
30,
2013.
Life
Insurance
Company
of
North
America
(“LINA”) rejected the form stating that it could not posthumously
accept a change of beneficiary.
Thereafter on March 4, 2014, LINA filed this interpleader
action to determine the appropriate beneficiary of the proceeds. By
order of the Court, LINA deposited the contested proceeds into the
Court’s Registry. On January 29, 2015, the Court entered an agreed
2
judgment dismissing LINA from this action finding that “[t]he
remaining dispute is solely between the claimants, . . . regarding
proper disposition of the proceeds.” Agreed J. 2, ECF No. 44.
At the close of discovery, Jerry and LaGwen filed a motion to
compel related to Amber’s failure to propound any discovery. Amber
did not respond to the motion. On January 26, Jerry filed his
motion for summary judgment. On February 2, 2015, the Magistrate
Judge granted the motion to compel and ordered Amber to respond to
Jerry and LaGwen’s requests for discovery by February 9, 2015. On
February 9, 2015, Amber filed a motion to reconsider related to the
order granting the motion to compel in addition to responses to
some of Jerry’s discovery. Amber filed her counter motion and
response to Jerry’s motion for summary judgment on February 13,
2015. On February 20, 2015, Amber supplemented her response and
motion. Jerry filed his motion for sanctions on February 27, 2015.
On
March
3,
the
Magistrate
Judge
denied
Amber’s
motion
to
reconsider and ordered her to fully comply with the discovery
requests by March 13, 2015. Amber timely submitted supplemental
responses to Jerry’s discovery requests.
II. Analysis
A. Motion for Sanctions
Because of the nature of the relief requested in the motion
for sanctions, the Court will resolve it before reaching the
motions for summary judgment. Further, Amber has not responded to
3
the motion within the time allowed by the Local Uniform Civil
Rules, and, in lieu of entering a Show Cause Order, the Court will
rule on the motion because the pretrial conference in this case is
imminent.
In summary of his arguments, Jerry contends that Amber has
violated a discovery order, filed a vexatious pleading, entered a
bad faith declaration, and relied on information not propounded
during discovery. Specifically, Jerry asserts that he is entitled
to sanctions against Amber under Federal Rules of Civil Procedure
26(a), 37(b)(2), 37(c)(1), and 56(h) and 28 U.S.C. Section 1927.
Mot. Sanctions 1, ECF No. 62.
A trial court generally has wide discretion to award sanctions
related to violations of its orders and inappropriate conduct by
attorneys or parties. These sanctions stem from both the court’s
inherent equitable power and the authority codified in the Federal
Rules of Civil Procedure and federal statutes. But where conduct
can be “adequately sanctioned under the Rules [or a statute], the
Court ordinarily should rely on the Rules [or statute] rather than
the inherent power.” Chambers v. NASCO, Inc., 501 U.S. 32, 50
(1991); Yelton v. PHI, Inc., 279 F.R.D. 377, 384 (E.D. La. 2011).
The Court turns now to those sources of authority cited by Jerry.
First,
although
Rule1
26(a)
does
1
not
provide
for
sanctions
All references in this opinion are to the Federal Rules of
Civil Procedure unless otherwise noted.
4
directly, a court may impose sanctions for violations of Rule 26
through Rule 37. Related to discovery, a court may impose sanctions
for not obeying a discovery order including: (1) establishing
facts, (2) precluding defenses or claims, (3) striking pleadings,
(4) staying the proceedings, (5) dismissal, (6) default judgment,
and (7) a finding of contempt. Fed. R. Civ. P. 37(b)(2). Further,
a court may impose sanctions where a party does not comply with the
required disclosures in Rule 26 including: (1) excluding later
supplied
information,
(2)
reasonable
expenses
caused
by
the
failure, (3) informing the jury of the party’s failure, and (4) the
same sanctions listed above, as appropriate. Fed. R. Civ. P.
37(c)(1). Next, related to summary judgment evidence, a court may
impose sanctions if it finds that “an affidavit or declaration . .
. [i]s submitted in bad faith or solely for delay” including: (1)
reasonable expenses, (2) a finding of contempt, or (3) other
appropriate sanctions. Fed. R. Civ. P. 56(h). Lastly, where an
attorney “multiplies the proceedings in any case unreasonably and
vexatiously,” a court may order the attorney personally to pay
reasonable costs associated with the vexatious proceedings. 28
U.S.C. § 1927 (1980).
1. Rule 37 Sanctions
Jerry argues multiple specific discovery violations that can
be sanctioned under Rule 37:
17. In violation of the Court’s Order these responses
were prefaced with a “General Objection and Reservation,”
5
and failed to provide much of the information requested.
. .
18. Each response to Interrogatories, with the exception
of Nos. 1, 11, 12, and 13 were answered with additional
objections and failed to provide the information
requested. . .
19. In her responses to Interrogatory Nos. 6 and 12,
Amber refused to provide the substance or factual basis
of any potential witness testimony, declaring that “Amber
Ard would likewise state that the Cross-Plaintiffs are
equally capable of obtaining any statement or other
information from any witness identified above.” . . .
20. In her response to Interrogatory Nos. 14, 15, 16, 17,
[and] 18, Amber refused to provide the factual basis for
any of her claims, allegations, and affirmative defenses,
stating that she “incorporates by reference the facts set
forth in the Complaint in Interpleader.” . . .
21. Not a single page of documents have been produced in
response to the Requests for Production. . .
22. Responses to Requests for Production Nos. 1, 2, and
4 were answered with additional objections. . .
23. In response to Request for Production No. 5,
requesting a copy of any statement of any possible
witness concerning the facts or circumstances of this
case, Amber has refused to produce any documents in
response to this request, including the emails on which
she now attempts to rely as attachments to the Affidavit
of Stephanie Moore. . .
25. The response to Request No. 8, requesting “any
documentary or tangible evidence that you intend to use
at trial and/or a pre-trial hearing in this matter,”
declared that “Amber Ard has not yet determined what
documents she expects to use at the trial of this matter.
She will produce promptly and offers to meet and confer
with counsel for such purposes.” . . .
26. Having affirmatively relied on the facts as stated in
the Complaint in Interpleader, and having further refused
to produce any additional information or documentary
evidence, Amber should be bound by those responses and
limited to only those facts on which she relied in her
6
responses to discovery. . .
34. The information contained in the Response to Motion
for Summary Judgment and Counter-Motion for Summary
Judgment, Memoranda in Support, and Exhibits D-I thereto
have not been produced in response to discovery. . .
40. The information contained in the Supplementation to
Response
to
Motion
for
Summary
Judgment
and
Supplementation to Counter-Motion for Summary Judgment
and Exhibit 1 thereto have not been produced in response
to discovery and pursuant to the Court’s Order of
February 2, 2015. . .
41. These supplementary pleadings incorporate the
affidavit of Stephanie Moore, Employee Benefits Manager
for James Construction Group, LLC. This affidavit, signed
February 17, 2015, has not been produced in response to
discovery and pursuant to the Court’s Order of February
2, 2015, nor have any of the documents which it
incorporates by reference.
Mot. Sanctions 4-8, ECF No. 62 (internal citations omitted). These
specific instances can be distilled into three categories of
complaint: (1) that Amber objected to Jerry’s discovery requests,
(2) that Amber did not produce what was requested, either in
responses or documentation, and (3) that Amber now relies on some
information and documentation in her motion and responses that was
not produced during discovery.
As to the first category, the Court has previously ruled that
by “fail[ing] to respond to the Motion to Compel or otherwise
present good cause for her failure to respond to discovery requests
. . ., Amber Ard has waived her objections to the discovery
requests.” Order 2, ECF No. 45. Therefore, the Court now expressly
overrules whatever objections Amber has raised in response to
7
Jerry’s discovery requests. No further sanction is necessary.
As to the second category, the failure to propound requested
discovery frustrates the purpose of our adversarial system. It
inhibits the access to justice that the legal system provides by
occulting the truth. The Rules provide that
If a party fails to provide information or identify a
witness as required by Rule 26(a) or (e), the party is
not allowed to use that information or witness to supply
evidence on a motion, at a hearing, or at a trial, unless
the failure was substantially justified or is harmless.
In addition to or instead of this sanction, the court, on
motion and after giving an opportunity to be heard . . .
may impose other appropriate sanctions.
Fed. R. Civ. P. 37(c)(1). The Court notes that discovery in this
case closed on January 12, 2015. Case Management Order, ECF No. 20.
Jerry filed his motion to compel on this same day. Mot. Compel, ECF
No. 37. The Court granted the motion and ordered Amber to propound
discovery. Order, ECF No. 45. Thereafter, Amber filed a motion for
reconsideration and some discovery responses. See Mot. Recons., ECF
No. 48. The Court denied her motion and ordered Amber to respond to
discovery in full by March 13, 2015. Order 3, ECF No. 66. And
according to the docket, Amber has now complied with the Court’s
order to propound discovery. See Notice Service Resp. Interrogs.,
ECF No. 46; Notice Service Resp. Req. Produc., ECF No. 47; Notice
Service Supplemental Resp. Interrogs., ECF No. 67; Notice Service
Supplemental Resp. Req. Produc., ECF No. 68. Jerry has not informed
the
Court
that
these
responses
were
in
any
way
inadequate.
Therefore, the Court finds that Amber has complied with the Court’s
8
orders and propounded all discovery requested by Jerry, and the
Court will not exclude any of her discovery responses. However, it
cannot be argued that Amber met her original obligations under Rule
26 to respond to discovery in a timely manner. The Court will,
therefore, award Jerry his reasonable expenses incurred related to
his motion to compel and Amber’s motion to reconsider.
As to the third category, because the Court found above that
Amber had fully propounded discovery in response to orders from
this Court, albeit not within the timeline originally set in the
Case Management Order nor before the motions for summary judgment
were filed, the Court finds that Amber may rely on the information
she has propounded. The Court further notes that the information
relied on by Amber in her responses to Jerry’s motion for summary
judgment and
in
her
counter
motion was
submitted
before
the
deadlines as reset by the Court for Amber to fully respond to
Jerry’s request for discovery.
2. Rule 56 Sanctions
Jerry argues that Amber submitted “a bad faith declaration
subject to sanctions pursuant to” Rule 56. Mot. Sanctions 7.
Specifically,
Both the Response and the Counter-Motion were accompanied
by “Exhibit I.” which is a note dated January 2, 2015,
written in handwriting drastically different than that of
its signatory, Sharee Nations-Ard, and signed and
notarized on a different page with a date of January 29,
2015. Likewise, this document was not heretofore
produced. This note possesses very little, if any
evidentiary value[ and] is extremely inflammatory and
9
defamatory. . . .
Mot. Sanctions 7 (internal citations omitted). Generally a bad
faith
or
sham
affidavit
is
proven
by
pointing
out
the
contradictions between the affidavit and deposition testimony of
the affiant. See e.g., Turner v. Baylor Richardson Medical Cntr.,
476 F.3d 337, 349 (5th Cir. 2007). Jerry does not allege any
inconsistencies
but
rather
attacks
the
credibility
of
the
affidavit, which a court will not do at summary judgment. See id.,
at 343 (“[W]e consider all of the evidence in the record but
refrain from making credibility determinations or weighing the
evidence.”). As to the lack of production argument, the Court
applies the same reasoning it did above to find that no sanction is
necessary. As to what appears to be an argument related to Federal
Rule of Evidence 403—that a court may exclude certain relevant
evidence if its probative value is outweighed by prejudice—, the
Court finds that this is not the case. See F. R. E. 403.
3. Section 1927 Sanctions
Lastly, the Court considers Jerry’s arguments related to
unnecessary proceedings. Specifically, Jerry states that
31. The Counter-Motion for Summary Judgment is a
frivolous pleading which has unreasonably and vexatiously
multiplied the proceedings in this case, in that it was
filed 18 days after the deadline for motions other than
in limine under the Case Management Order. . .
32. The Counter-Motion for Summary Judgment is a
frivolous pleading in that neither the Local Uniform
Civil Rules, nor the Federal Rules of Civil Procedure
provide for a “Counter-Motion for Summary Judgment.” This
10
appears to be a bad-faith attempt to “back-door in” a
dispositive motion well after the motion deadline has
passed . . . .
38. Neither the Local Uniform Civil Rules, nor the
Federal
Rules
of
Civil
Procedure
provide
for
“supplementation” of a Response to Motion for Summary
Judgment or a Motion for Summary Judgment without leave
of court.
Mot. Sanctions 7-8.
To award sanctions under this statute, a court must make
“detailed factual findings” of “bad faith, improper motive, or
reckless disregard of the duty owed to the court.” Lawyers Title
Ins. Corp. v. Doubletree Partners, L.P., 739 F.3d 848, 871 (5th
Cir. 2014). Specifically, a court must “(1) identify sanctionable
conduct and distinguish it from the reasons for deciding the case
on the merits, (2) link the sanctionable conduct to the size of the
sanctions, and (3) differentiate between sanctions awarded under
different statutes.” Cambridge Toxicology Grp., Inc. v. Exnicios,
495 F.3d 169, 180-81 (5th Cir. 2007). Sanctions must be supported
by clear and convincing evidence and should be applied sparingly.
Lawyers Title Ins., 739 F.3d at 872. “Section 1927 sanctions should
be employed ‘only in instances evidencing a serious and standard
disregard for the orderly process of justice,’ lest ‘the legitimate
zeal of an attorney in representing a client be dampened.’” Id.
(quoting FDIC v. Conner, 20 F.3d 1376, 1384 (5th Cir. 1994)).
Ultimately,
Jerry
asserts
that
Amber
filed
motions
and
supplemental information either out of time or without leave of
11
court. Jerry also points out in his motion, not quoted above, that
some documents docketed by Amber were docketed more than once. None
of this behavior rises to the level required to find section 1927
sanctions as appropriate.
Having found that Jerry should receive his reasonable expenses
related to the motion to compel and the motion to reconsider, the
Court will grant in part and deny in part the motion for sanctions
and consider the motions for summary judgment.
B. Summary Judgment Standard
Summary judgment is appropriate “if the movant shows that
there is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
“A fact is ‘material’ if its resolution in favor of one party might
affect the outcome of the lawsuit under governing law. An issue is
‘genuine’ if the evidence is sufficient for a reasonable jury to
return a verdict for the non-moving party.” Ginsberg 1985 Real
Estate P’ship v. Cadle Co., 39 F.3d 528, 531 (5th Cir. 1994)
(citations
omitted).
The
moving
party
bears
the
initial
responsibility of apprising the district court of the basis for its
motion and the parts of the record which indicate the absence of a
genuine issue of material fact. Celotex Corp. V. Catrett, 477 U.S.
317, 323 (1986).
“Once the moving party presents the district court with a
properly supported summary judgment motion, the burden shifts to
12
the
non-moving
party
to
show
that
summary
judgment
is
inappropriate.” Morris v. Covan World Wide Moving, Inc., 144 F.3d
377, 380 (5th Cir. 1998). “The evidence of the non-movant is to be
believed, and all justifiable inferences are to be drawn in his
favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
But the nonmovant must meet his burden with more than metaphysical
doubt, conclusory allegations, unsubstantiated assertions, or a
mere scintilla of evidence. Little v. Liquid Air Corp., 37 F.3d
1069, 1075 (5th Cir. 1994). A party asserting a fact is “genuinely
disputed must support the assertion by: (A) citing to particular
parts of materials in the record, including depositions, documents,
electronically stored information, affidavits or declarations,
stipulations . . . admissions, interrogatory answers, or other
materials . . . .” Fed. R. Civ. P. 56(c)(1)(A).
Summary judgment must be rendered when the nonmovant “fails to
make a showing sufficient to establish the existence of an element
essential to that party’s case, and on which that party will bear
the burden of proof at trial.” Celotex, 477 U.S. at 322.
C. Jerry’s Motion for Summary Judgment
Jerry argues that Bobby substantially complied with the change
of beneficiary provisions in his life insurance plans and that this
substantial compliance is sufficient. Mem. Supp. 10, ECF No. 10.
Amber argues instead that LINA made a factual determination of who
the beneficiaries under the policies are when it rejected the
13
posthumous form and that the form itself is a forgery. Mem. Opp.
13-14, ECF No. 53. Jerry counters that LINA did not make any
determination of beneficiaries and that Amber has not met the high
burden imposed on allegations of fraud, including forgery. Reply 3,
11, ECF No. 61.
1. Forgery
“The fact of forgery, by definition a form of fraud, must also
be proved by clear and convincing evidence.” Cotton v. McConnell,
435 So. 2d 683, 686 (Miss. 1983). The burden to show fraud is on
the party asserting it. McMahon v. McMahon, 157 So. 2d 494, 501
(Miss.
1963).
Applying
a
clear
and
convincing
evidentiary
requirement, a “trial judge’s summary judgment inquiry as to
whether a
genuine
issue
exists
will
be
whether
the
evidence
presented is such that a jury applying that evidentiary standard
could reasonably find for either the plaintiff or the defendant.”
Anderson, 477 U.S. at 255. The elements of fraud are:
(1) a representation, (2) its falsity, (3) its
materiality, (4) the speaker’s knowledge of its falsity
or ignorance of its truth, (5) his intent that it should
be acted upon by the person and in the manner reasonably
contemplated, (6) the hearer’s ignorance of its falsity,
(7) his reliance on its truth, (8) his right to rely
thereon, and (9) his consequent and proximate injury.
Martin v. Winfield, 455 So.2d 762, 764 (Miss. 1984). Although Amber
would not be the party defrauded in this case, she must still prove
the elements of the claim to assert it as a defense.
In support of this defense, Amber puts forth a sworn affidavit
14
from Bobby’s ex-wife Sharee Nations-Ard (“Nations”). Nations avers
that LaGwen “offered [her] $65,000.00 to testify that [Sharee]
forged Bobby
William
Ard’s
signature
on
the
policy
that was
submitted after his death.” Counter Mot. Summary J. Ex. I (Nations
Aff.) 1, ECF No. 54-9. Further, she states that “[t]he life
insurance was forged, Bobby left that to [Amber] and her children
and they are just trying to steal it!” Nations Aff. 6. Jerry does
not rebut this affidavit but rather attacks its credibility. At
summary judgment, a trial court “consider[s] all of the evidence in
the record but refrain[s] from making credibility determinations or
weighing the evidence.” Turner, 476 F.3d at 349. Further, Amber
finds support for her position in the evidence submitted by Jerry.
The Employee Benefits Manager at Bobby’s place of employment, in
charge of accepting change of beneficiary forms, stated in an
affidavit that she rejected the posthumous form “because it was
presented after Bobby’s death and [she] ha[d] reservations about
the signature.” Reply Ex. 2 2, ECF No. 61-2. Jerry has presented
his own evidence that the signature on the change of beneficiary
form was genuine, including verified handwriting samples of Bobby’s
signature. See Mot. Summary J. Ex. 1 42-50, ECF No. 40-1.
The only questions before the Court on the question of forgery
are whether Nations’s and Moore’s affidavits combined with Amber’s
briefing adequately plead fraud and create a genuine issue of
material fact on this defense. As to the first question, the Court
15
finds that Amber has adequately pled the elements of the defense of
fraud. As to the second question, the Court also finds that Amber
has demonstrated a genuine issue of material fact to preclude
summary judgment in favor of Jerry. Therefore, the Court will deny
summary judgment and proceed to trial to resolve this fact issue.
2. Factual Findings and Substantial Compliance
Because the Court found a genuine issue of material fact
related to the forgery defense, the Court does not reach the issues
of whether LINA made a factual finding of beneficiaries or whether
Bobby
substantially
complied
with
the
change
of
beneficiary
requirements.
D. Amber’s Counter Motion for Summary Judgment
Jerry made several arguments that Amber’s counter motion was
improper which Amber argued against. Because the Court determined
above that a genuine issue of material facts exists to preclude
summary judgment in favor of Jerry, the Court finds that summary
judgment in favor of Amber is also precluded, regardless of whether
her motion was properly before this Court. Therefore, her motion
will also be denied.
III. Order
IT IS HEREBY ORDERED that the cross-plaintiff/cross-counter
defendant’s Motion for Sanctions is GRANTED IN PART and DENIED IN
PART.
FURTHER
ORDERED
that
the
16
cross-plaintiff/cross-counter
defendant shall submit to the Court within one week of the date of
entry of this order a Bill of Costs for the Motion to Compel
[docket entry no. 37] and the Motion for Reconsideration [docket
entry no. 48]. The Court will issue an order for the crossdefendant/cross-counter plaintiff to pay these costs after they are
received.
FURTHER
ORDERED
that
the
cross-plaintiff/cross-counter
defendant’s Motion for Summary Judgment is DENIED.
FURTHER
ORDERED
that
the
cross-defendant/cross-counter
plaintiff’s Motion for Summary Judgment is DENIED.
SO ORDERED this the 27th day of April 2015.
/s/ David Bramlette
UNITED STATES DISTRICT JUDGE
17
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