Bumler v. Armed Forces Benefit Association et al

Filing 24

MEMORANDUM AND ORDER IT IS HEREBY ORDERED that the individual Defendants' motions to dismiss Plaintiff's complaint for failure to state a claim are GRANTED. (Docs. Nos. 15, 17, 19, 21.) IT IS FURTHER ORDERED that on the Courts own motion, Defendant Armed Forces Benefit Association is DISMISSED with prejudice from this lawsuit. IT IS FURTHER ORDERED that this cause of action is DISMISSED in its entirety, with no further action to be taken. A separate Order of Dismissal shall accompany this Memorandum & Order. Signed by District Judge Audrey G. Fleissig on 7/15/2013. (NCL)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
NANCY BUMLER, Personal
Representative of the Estate of
John Malcolm Bulmer,
Plaintiff,
v.
ARMED FORCES BENEFIT
ASSOCIATION, BARBARA HYDE,
HEATHER CRAWFORD, JILLIAN
BUMLER, and KAITLYN ZUBER,
Defendants.

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Case No. 4:13CV00702 AGF

MEMORANDUM AND ORDER
Plaintiff Nancy Bumler brings this suit against Defendants seeking the proceeds of her
late husband’s Servicemembers’ Group Life Insurance (“SGLI”) policy. Now before the Court
are the identical motions of Barbara Hyde, Heather Crawford, Jillian Bumler and Kaitlyn Zuber
to dismiss the matter for various reasons, including for failure to state a claim. For the reasons
set forth below, these motions will be granted.
BACKGROUND
Plaintiff is the widow of John Malcolm Bumler (“Decedent”) and Personal
Representative of the Estate of Decedent pursuant to Letters Testamentary issued on January 16,
2013 by the Probate Division of the Circuit Court of Phelps County, Missouri. On February 25,
2013, Plaintiff brought this suit in that division of the state court against Defendants seeking
both declaratory judgment that she had the only interest in Decedent’s SGLI policy and the

proceeds of that policy in the amount of $150,000. Plaintiff is the sole devisee under Decedent’s
last will and testament. The SGLI policy named Barbara Hyde, ex-wife of Decedent, as the
beneficiary of the policy and listed Crawford, Bumler, and Zuber, all daughters of Decedent, as
contingent beneficiaries.
Plaintiff claims that as part of a Virginia divorce agreement in 1998, Hyde released and
relinquished any claim, right, or interest as a surviving spouse to any marital property or claims
to any property of Decedent. Furthermore, Plaintiff asserts that state law – Missouri Revised
Statutes § 461.051 – removed Hyde’s status as a beneficiary, following her divorce from
Decedent. Plaintiff also named Armed Forces Benefit Association (“AFBA”), the issuer of the
SGLI policy, as a Defendant.
On April 15, 2013, AFBA removed this case to federal court citing diversity jurisdiction.1
On May 10, 2013, the four individual Defendants filed their identical motions to dismiss and
memoranda in support, now under consideration. They argue that the case should be dismissed
because (1) Plaintiff has failed to state a claim upon which relief can be granted, as federal law
specifies that SGLI policies benefit the named beneficiaries, regardless of state law or state court
rulings that others are entitled to the benefits; (2) none of the four individual Defendants are
within this Court’s jurisdiction because they do not have minimum contacts with Missouri; (3)
this Court does not have subject matter jurisdiction over the case because under Missouri law,
the proceeds of life insurance policies payable to designated beneficiaries are not subject to
probate administration; (4) this Court does not have in rem jurisdiction because the res of the
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The amount in controversy is met and there is complete diversity as Plaintiff is a citizen of
Missouri, Hayes is a citizen of Illinois, Bumler and Zuber are citizens of California, and
Crawford and AFBA are citizens of Virginia.
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cause – the policy itself – is not located in Missouri; (5) none of the four individual Defendants
received sufficient service of process because they were outside the reach of the Missouri longarm statute; and (6) Plaintiff’s complaint was only notarized when it should have been verified.
Plaintiff has not responded to these motions within the allotted time. AFBA has not filed
a motion to dismiss.
DISCUSSION
On a motion to dismiss, the Court accepts as true the factual allegations contained in the
complaint and grants the plaintiff the benefit of all reasonable inferences that can be drawn from
those allegations. Lustgraaf v. Behrens, 619 F.3d 867, 872-73 (8th Cir. 2010). “To survive a
motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim has facial plausibility,
“‘when the plaintiff [has pleaded] factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged. A pleading that offers labels
and conclusions or a formulaic recitation of the elements of a cause of action will not do.’” Cox
v. Mortg. Elec. Registration Sys., Inc., 685 F.3d 663, 668 (8th Cir. 2012) (quoting Iqbal, 556
U.S. at 678).
SGLI policies are governed by the provisions of the Servicemembers’ Group Life
Insurance Act (“SGLIA”), 38 U.S.C. § 1965, et seq. The hierarchy of distribution is detailed in
38 U.S.C. § 1970(a), which provides that the claims of the named beneficiary or beneficiaries
take precedence over all other claims. The federal laws and regulations that govern SGLI
policies preempt state law. Ridgway v. Ridgway, 454 U.S. 46, 60 (1981) (holding that “the
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controlling provisions of the SGLIA prevail over and displace inconsistent state law”). These
laws and regulations confer upon the insured service member the right to freely “designate the
beneficiary and to alter that choice at any time by communicating the decision in writing to the
proper office.” Id. at 56. (finding that a decedent’s first wife, as named beneficiary of the
decedent’s SGLI policy, was entitled to the benefits of the policy despite a state court ruling that
the decedent’s second wife was the proper beneficiary under state law); see also Hillman v.
Maretta, 133 S. Ct. 1943, 1951-52 (2013) (holding that like SGLIA, the Federal Employees
Group Life Insurance Act “creates a scheme that gives highest priority to an insured’s
designated beneficiary,” and “require[s] that the insurance proceeds be paid first to the named
beneficiary ahead of any other potential recipient”). Furthermore, “the only way to change a
beneficiary under the SGLIA is to communicate that decision in writing to the proper office.”
Prudential Ins. Co. v. Hinkel, 121 F.3d 364, 367 (8th Cir. 1997).
Plaintiff bases her claim to the proceeds of Decedent’s SGLI policy upon Missouri law,
which removes any interest a former spouse may have in an insurance policy to which he or she
is a named beneficiary, upon dissolution of the marriage. Plaintiff also bases her claim upon the
terms of Decedent’s divorce from Hyde in Virginia state court, which also removed Hyde’s
interest in any of Decedent’s insurance policies. Plaintiff did not base any portion of her claim
upon SGLIA.
The Court concludes that Plaintiff has failed to state a claim for the proceeds of
Decedent’s SGLI policy. See Mills v. Prudential Ins. Co. of Am., 856 F. Supp. 2d 1218, 122224 (D. Colo. 2012) (granting motion to dismiss the claim of a decedent’s wife for declaratory
judgment against the decedent’s brother, where the decedent had changed the beneficiary of his
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SGLI policy from his wife to his brother in violation of a state court restraining order
prohibiting decedent from changing the beneficiaries of his insurance policies). As noted above,
under federal law, Hyde is entitled to the benefits of the SGLI insurance policy at issue as the
named beneficiary.
The Court will exercise its power under Rule 12(b)(6) to dismiss sua sponte the
complaint as to Defendant AFBA for failure to state a claim. See Smith v. Boyd, 945 F.2d 1041,
1042–43 (8th Cir. 1991) (affirming a court’s sua sponte dismissal of a complaint under Rule
12(b)(6) for failure to state a claim).
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that the individual Defendants’ motions to dismiss
Plaintiff’s complaint for failure to state a claim are GRANTED. (Docs. Nos. 15, 17, 19, 21.)
IT IS FURTHER ORDERED that on the Court’s own motion, Defendant Armed
Forces Benefit Association is DISMISSED with prejudice from this lawsuit.
IT IS FURTHER ORDERED that this cause of action is DISMISSED in its entirety,
with no further action to be taken.
A separate Order of Dismissal shall accompany this Memorandum & Order.

AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE
Dated this 15th day of July, 2013.
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