METROPOLITAN LIFE INSURANCE COMPANY v. SARTO et al
OPINION. Signed by Judge Kevin McNulty on 9/8/17. (DD, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
METROPOLITAN LIFE INSURANCE
Civ. No. 16-07486 (KM) (JBC)
JANET TEIXEIRA, through her legal
guardian KAREN SARTO and
HEWN MCNULTY. U.S.D.J.:
The plaintiff, Metropolitan Life Insurance Co (“MetLife”), owes either
Karen Sarto or Gabriela Ramirez life insurance benefits payable as a result of
the death of John J. Tebceira. Sarto is Teixeira’s daughter and co-guardian of
Teixeira’s spouse, Janet Teixeira.’ Ramirez was Teixeira’s girlfriend. Each has
submitted a claim for the benefits—Sarto on behalf of Janet, and Ramirez on
her own behalf. MetLife says it can’t determine which should receive them;
stuck in the middle, MetLife has sought interpleader relief.2
References herein to “Teixera” mean John J. Teixera. To avoid confusion, I refer
to Janet Teixera as “Janet.”
Before proceeding any further, the Court is obligated to establish its subject
matter jurisdiction. This is an interpleader case under Fed. R. Civ. p. 22, not the
interpleader statute, 28 U.S.C. § 1335. The difference between statutory’ interpleader
and rule interpleader is this; Section 1335 confers jurisdiction based on only “minimal
diversity” between two or more adverse claimants and an amount in controversy of
$500 or more. Rule 22 is merely a procedural device which assumes that the court
has subject matter jurisdiction over the case; that is in keeping with the bedrock
principle that only Congress can confer jurisdiction on the lower federal courts.
To proceed under Rule 22, then, an interpleader plaintiff must establish one of
the usual bases for federal jurisdiction—generally, federal question jurisdiction under
28 U.S.C. § 1331 or diversity jurisdiction under 28 U.S.C. § 1332. (To this extent, Rule
MetLife requests an order (1) restraining Sarto and Ramirez from suing
MetLife in any other action for recovery of the Plan benefits plus interest; (2)
permitting MetLife to deposit $39,250 less $4,572.40 in attorneys’ fees and
costs with the court with the Clerk of Court; (3) forcing Sarto and Ramirez to
litigate or settle their claims to the benefits; and (4) dismissing MetLife from
this action “with prejudice and without further liability in connection with the
Plan.” I will grant (1), (2), and (3), but not (4). Because Sarto or Teixeira may
have counterclaims against MetLife, I will not dismiss MetLife from this case.
The motion will be granted in all other respects.
Tebceira had an ERESA-regulated life insurance coverage policy (the
“Plan”), which was sponsored by his former employer, Public Service Enterprise
Group (“PSEG”) and issued by MetLife. The Plan provided that, upon Teixera’s
death, his beneficiaries would be entitled to $39,250.00 (the “Benefits”).
The Plan provided that Teixeira could choose anyone he wanted as his
beneficiary—so long as the decision was in writing:
The “Beneficiary” is the person or persons you choose to
receive any benefits payable because of your death.
You must make your choice in writing on a form approved by
us. This form must be filed with the records for This Plan.
You may change the Beneficiary at any time by filing a new
form with the Employer. You do not need the consent of the
22 interpleader operates in much the same procedural manner as the declaratory
Both claimants here seem to be citizens of New Jersey; as between them, even
minimal diversity is absent. Subject matter jurisdiction, then, must be found
elsewhere. While “federal question interpleader [is] a rarity,” Metropolitan L(fe Ins., 501
F.3d at 275, many courts, including the Third Circuit, “have recognized that an
interpleader ‘arises under’ federal law when brought by an ERISA fiduciary against
competing claimants to plan benefits.” Id. at 276. This is such a case. The Court
therefore possesses federal-question subject matter jurisdiction over this ERISA-based
Beneficiary to make a change. When the Employer receives a
form changing the Beneficiary, the change will take effect as
of the date you signed it. The change of Beneficiary will take
effect even if you are not alive when it is received.
A change of Beneficiary will not apply to any payment made
by us prior to the date the form was received by the
Your choice of a Beneficiary for a personal policy issued
under Right to Obtain a Personal Policy of Life Insurance on
Your Life will be effective for This Plan.
15, Ex. A pp. 33-34)
Initially, Teixeira designated Janet Teixeira, his spouse, as the sole
beneficiary of the Plan. MetLife’s records state that he did this, not in writing,
but by telephone on March 21, 2003. (Knepper Cert.
9 & Ex. D)
Years later, on July 22, 2015, Tebceira named Ramirez as the sole
beneficiary. Again, MetLife’s records state that he did this by telephone.
8 & Ex. C)
About nine months later, on April 1, 2016, Teixeira died. (Id.
8, Ex. C)
Sarto as guardian claimed the Benefits on Janet’s behalf. On May 13, 2016,
Sarto submitted to MetLife a copy of a Certificate of Death for Teixera, as well
as a copy of a Judgment of Legal Incapacity, dated January 26, 2016,
appointing Sarto as co-guardian of Janet. (Knepper Cert.
10 & Ex. E)
At some point, Sarto, acting as Janet Teixeira’s co-guardian, learned of
the July 2015 designation change, naming Ramirez, and not Janet, as the
beneficiary of Teixera’s policy. On June 18, 2016, Sarto sent MetLife a letter
stating that Teixeira was incompetent at the time he made the July 2015
designation of Ramirez as beneficiary. As support, Sarto enclosed a copy of
Tebceira’s Last Will and Testament, dated August 25, 2003; a Testamentary
Certificate, dated May 4, 2016; a General Durable Power of Attorney, dated
June 14, 2012; and a Department of Veteran Affairs Examination for
Housebound Status or Permanent Need for Regular Aid and Attendance report,
dated October 25, 2014. These documents tend to establish that (1) Tebceira, as
of August 25, 2003, appointed Sarto as the Executrix of his estate and
intended to give Janet the “rest, residue, and remainder” of the estate upon his
death; (2) Teixeira, in June 2012, designated Sarto as his attorney-in-fact and
agent; (3) Tebceira, as of October 2014, was mildly cognitively impaired as the
result of a stroke; and (4) on May 4, 2016, Sarto submitted Teixeira’s Last Will
and Testament to probate. (Knepper Cert.
& Ex. F)
Shortly thereafter, on June 27, 2016, Ramirez sent MetLife a competing
claim for the Benefits. Ramirez’s statement identified her as Teixeira’s
“girlfriend.” (Knepper Cert. ¶12 & Ex. 0)
Faced with competing claims, MetLife attempted to spur Sarto and
Ramirez into settling the dispute. On July 15, 2017, it notified each by letter
that their claims were adverse and that it was “required by law to initiate what
is called an interpleader action to permit a court to decide between the claims.”
“Before doing so,” MerLife advised, it would give Sarto and Ramirez “the
opportunity to try and resolve the matter amicably in order to preserve the
benefits from litigation costs and fees.” (Id.
13, Ex. H.)
Five days later, on July 20, 2016, MetLife received a copy of a Revocation
of Power of Attorney signed and certified by Teixeira. It purports to revoke
Sarto’s status as attorney-in-fact and agent as of March 9, 2015. That date
falls after the October 2014 Veteran Affairs examination indicating that Teixera
was cognitively impaired, but before the July 2015 designation change.3
14, Ex. I)
As of October 18, 2016, Ramirez and Sarto had not settled or adjusted
their claims, so MetLife filed this action for interpleader. (Compl., ECF No. 1)
MetLife alleges that it cannot determine on its own whether Teixeira was
competent at the time he named Ramirez the beneficiary of the Plan; to do so
would risk exposure of itself, the Plan, and PSEG to multiple liabilities. MetLife
It isn’t clear from the papers who sent this document to MetLife.
is, however, willing and able to pay the benefits to whichever claimant, Sarto or
Ramirez, is entitled to them.
As relief, MetLife’s Complaint requests an order (1) restraining Sarto and
Ramirez from suing MetLife, the Plan, or PSEG for recovery of the Plan benefits
plus interest; (2) permitting MetLife to deposit $39,250 less $4,572.40 in
attorneys’ fees and costs with the Clerk of Court; (3) compelling Sarto and
Ramirez to litigate or settle their claims to as the deposited Benefits; and (4)
dismissing MetLife, the Plan, and PSEG, from this case. (Compi. ¶T 18-26)
Neither Sarto nor Ramirez has answered MetLife’s complaint.
On February 23, 2017, MetLife filed a motion for interpleader and other
relief, seeking an order granting the four forms of relief demanded in the
Complaint. (ECF No. 5) Neither defendant has answered or otherwise opposed
Interpleader relief is equitable but also procedural. As the Third Circuit
has put it:
The equitable remedy of interpleader allows “a person
holding property to join in a single suit two or more persons
asserting claims to that property.” NYLife Distrth., Inc. v.
Adherence Group, Inc., 72 F.3d 371, 372 n. 1 (3d Cir.1995).
The plaintiff in an interpleader action is a stakeholder that
admits it is liable to one of the claimants, but fears the
prospect of multiple liability. Interpleader allows the
stakeholder to file suit, deposit the property with the court,
and withdraw from the proceedings. The competing
claimants are left to litigate between themselves. See
Zechariah Chaffee, Jr., The Federal Interpleader Act of 1936:
1, 45 Yale L.J. 963, 963 (1936). The result is a win-win
situation. The stakeholder avoids multiple liability. The
claimants settle their dispute in a single proceeding, without
having to sue the stakeholder first and then face “the
Both waived formal service of the complaint. Sarto and Ramirez were served
with MetLife’s motion for interpleader and other relief by regular mail.
difficulties of finding assets and levying execution.” Id. at
Metropolitan Life Ins. Co. v. Price, 501 F.3d 271, 275 (3d Cir. 1995).
There are no codified procedures or rules governing interpleader actions,
but the case law has coalesced around a few principles. “[T]ypically,” an
interpleader action “involves two steps: during the first, the district court
determines whether the requirements of the statute have been met and
whether the stakeholder may be relieved from liability; during the second, it
actually adjudicates the defendants’ adverse claims to the interpleaded fund.”
NY Life, 72 F.3d at 374. The key inquiry in the first step—the step we are at
now—is “whether the stakeholder legitimately fears multiple vexation directed
against a single fund.” 7 Charles A. Wright & Arthur R. Miller & Man’ Kane
Kay, Fed. Prac. & Proc. Civ.
§ 1704 (3d ed. April 2017 update); accord Lexington
Ins. Co. v. Jacobs Indus. Maintenance Co., 435 Fed. Appx. 144, 146 (3d Cir.
2011) (“[Tjnterpleader allows a stakeholder who ‘admits it is liable to one of the
claimants, but fears prospect of multiple liability
to file suit, deposit the
property with the court, and withdraw from the proceedings.”) (quoting
Prudential Ins. Co. of Am. v. Hovis, 553 F.3d 258, 262 (3d Cir. 2009)). “LTjhe
classic interpleader scenario involves a neutral stakeholder, such as an
insurance company, faced with competing claims over the rights of the res—
e.g., the proceeds of a life insurance policy where the beneficiaries dispute their
relative distributions.” New Jersey Sports Prods., Inc., v. Don King Prods. Inc.,
15 F. Supp. 2d 534, 539 (D.N.J. 1988).
For the most part, this case presents the “classic” scenario. MetLife, an
insurance company, concedes that somebody is entitled to the Tebceira’s life
insurance benefits. As a neutral stakeholder, it is ready and willing to pay out
those benefits to the rightful beneficiary. Sarto, acting on behalf of Janet, and
Ramirez have claimed the Benefits. If the 2015 beneficiary change was valid,
then Ramirez may be entitled to the Benefits; if not, then Sarto (for Janet) may
be entitled. MetLife states that it cannot designate either claim as superior
without opening itself to double liability.
MetLife’s concern is legitimate. MetLife “[should] not [be] obliged at [its]
peril to determine which claimant has the better claim.” Prudential Ins. Co. of
Am. u. Hovis, 553 F.3d 258, 265 (3d Cir. 2009). MetLife is thus entitled to some
equitable interpleader protection, including an order (1) permitting it to deposit
the Benefits with the Court; (2) compelling Sarto and Ramirez to make claims
to those deposited Benefits; and (3) restraining Sarto and Ramirez from
initiating any other action to recover the Benefits from MetLife.
In the “classic” scenario, MetLife might also be entitled to (4) dismissal
from this case. This case has an atypical feature, however, which weighs
against granting dismissal, at least at present.
That atypical feature is the possibility that the claimants, once in court,
will assert independent counterclaims—i.e., not counterclaims against the
fund, but against MetLife itself A claimant might assert, for example, that
some sort of negligence by Me Wife “created the circumstances in which there
were competing claims to the proceeds.” Hovis, 553 F.3d at 263; see also Lee v.
West Coast Life Ins. Co., 668 F.3d 1004, 1012 (9th Cir. 2021). 1 do not say that
such a counterclaim would succeed, but it is simply too early to say that it
If Sarto and Ramirez choose to assert counterclaims against MetLife, for
example, they must explain why those counterclaims should be regarded as timely.
See, e.g., Fed. R. Civ. P. 6(b)(l)(B), Drippe v. Tobelinski, 604 F.3d 778, 784 (3d Cir.
2010) (“[T]here is no discretion to grant a post-deadline extension absent a motion and
showing of excusable neglect.”). And any counterclaim against MetLife cannot be just
an alternative version of the claim for benefits; rather, it must be “truly independent of
who was entitled to the life insurance proceeds.” Hovis, 553 F.3d. at 264-66
(upholding district court’s dismissal of counterclaimant’s allegation that insurer
negligently “failed to resolve its investigation in his favor and pay our the life insurance
proceeds to him” because an insurer’s “failure to choose between adverse claimants
(rather than bringing an interpleader action) cannot itself be a breach of a legal duty”);
but see Lee u. West Coast Life Ins. Co., 668 F.3d 1004, 112 (9th Cir. 2012) (holding
that counterclaimant’s allegation that insurer “negligent[lyj fail[edj to correctly
execute” beneficiary designation forms survived interpleader liability protection).
To be sure, no one has yet asserted a counterclaim against MetLife, and
it is not certain that they will do so. But neither Sarto nor Ramirez has
answered the complaint or opposed MetLife’s motion for interpleader, so it is
too soon to tell. For now, suffice it to say that it dismissal of MetLife would be
My decision rests on the limited function of interpleader and the
desirability of disposing of related claims in a single proceeding. A blanket
dismissal of the stakeholder risks being overbroad if it encompasses claims
beyond the legitimate scope of interpleader. To put it another way, a
stakeholder cannot use interpleader to rid itself of other, related claims that
would not necessarily be paid out of the interpleaded funds. “[Ijnterpleader
protection does not extend to counterclaims that are not claims to the
interpleaded funds.” Hovis, 553 F.3d. at 264 (citing and quoting State Farm
Fire & Cas. Co. v. Tashire, 386 U.S. 523, 535 (1967) (cautioning that
‘interpleader was never intended
modern approach [to interpleader]
to be an all-purpose ‘bill of peace”)). “The
is that, where a claimant brings an
independent counterclaim against the stakeholder, the stakeholder is kept in
litigation to defend against the counterclaim, rather than being dismissed after
I do not, by the way, view the mere possibility of a counterclaim as an equitable
circumstance that would weigh against permitting an interpleader action. See, e.g.,
United States Fire Ins. Co. v. Abestospray, Inc., 182 F. 3d 201, 208 (3d Cir. 1999)
(“Because interpleader is an equitable proceeding, it is subject to dismissal based on
equitable doctrines.”); Wright & Miller, Fed. Prac. & Proc. Civ. § 1709 (“[F]ederal courts
occasionally have accepted the argument that interpleader should not be allowed
when it might reward inequitable conduct or improper conduct. This has been true
where the stakeholder was guilty of laches or has contributed to the development of
the adverse claims or should be estopped from seeking interpleader relief for some
other reason.”) This is not a case, for example, where an admitted tortfeasor is seeking
to limit its liability. To all appearances, MetLife acknowledges liability and initiated
this action in good faith to sort out the competing claims. Indeed, even where a
stakeholder’s conduct is questionable, “courts are reluctant to refuse interpleader on
[equitable grounds since the inconvenience to the stakeholder and the courts that
would result if multiple litigation, and possibly multiple liability, came to pass are at
least as troublesome as rewarding the stakeholder’s questionable conduct.” Wright &
Miller, § 1709. So the practical course is not to bar interpleader altogether, but to do
what I do here: Grant interpleader relief but hold the stakeholder in to permit the
joinder of any counterclaims.
depositing the disputed funds with the court.” Id. So the equitable relief I grant
here does not go beyond what is necessary to fulfill the legitimate purpose of
interpleader: to protect MetLife from the risk of multiple liability with respect to
the interpleaded funds, i.e., the Benefits themselves.
Also persuasive is the lack of prejudice to MetLife at this early stage.
After the deposit of the Benefits into court, Sarto and Ramirez will be required
to make their claims, and the picture as to potential counterclaims will be
clearer. If none appear, MetLife will have lost nothing. If any counterclaims are
asserted, MetLife will have a full and fair opportunity to defend against them in
a single, consolidated proceeding.
To sum up: MetLife may deposit the disputed Benefits with the Court.
Sarto and Ramirez will be compelled to make claims to those deposited Benefits
and will be restrained from initiating any other action against MetLife to
recover the Benefits. As to the interpleaded funds, MetLife is discharged from
any further liability. It will remain in this case, however, to defend itself against
any independent counterclaims, should they be asserted.
That leaves a final issue: attorneys’ fees and costs. “A court has
discretion to aware an interpleader plaintiff attorneys fees and costs if the
plaintiff is (1) a disinterested stakeholder, (2) who had conceded liability, (3)
has deposited the disputed funds with the court, and (4) has sought a
discharge of liability.” Metropolitan Life Ins. Co. v. Kubichek, 83 F. App’x 425,
431 (3d Cir. 2013). “Since the stakeholder ‘is considered to be helping multiple
parties to an efficient resolution of the dispute in a single court,’ courts usually
find that the stakeholder’s attorneys’ fees are justified.” U.S. Life. Ins. Co. In the
City of New York v. Holtzman, Civ. Action No. 14-00113 (FLW), 2014 WL
5149707, at *7 (D.N.J. Oct. 14, 2014) (quoting Banner Life Ins. Co. v. Lukacin,
No. 13-6589, 2014 WL 4724902 (D.N.J. Sept. 22, 2014)). Because “the work
required to bring an interpleader suit is minimal,” “the fee should not seriously
deplete the fund.” Id.
MetLife is a disinterested stakeholder which has conceded liability and
sought a discharge of liability as to the interpleaded funds. It did not officiously
instigate this litigation, but gave the claimants ample opportunity to settle the
matter informally.7 Once MetLife has deposited the disputed Benefits with the
Court, all four elements will be satisfied. As to reasonableness, MetLife is
seeking $4,572.40 in fees and costs. That sum represents the fees of one
partner, who billed $207/hour for about 6 hours, and one associate, who billed
$201/hour for about 15 hours. All services billed were performed for the
purpose of seeking interpleader relief. The fees are reasonable. MetLife will be
awarded $4,570.40 in fees and costs.
For the reasons set forth above, MetLife’s motion for interpleader and
other relief is for the most part GRANTED, but DENIED IN PART. MetLife shall
deposit the disputed Benefits with the Court. Upon deposit, MetLife is released
from any liability as to the interpleaded funds. Sarto and Ramirez are
restrained from instituting any other action against MetLife seeking payment of
the Benefits and are compelled to litigate or settle among each other their
claims to the Benefits in this Court. Upon a proper showing, the Court will
consider whether Sarto or Ramirez is entitled to assert independent
Some courts have declined to award attorneys’ fees and costs when the
stakeholder bears some responsibility for the dispute. E.g., Prudential Ins. Co. of Am. u.
Richmond, Civ. Action No. 06-525 (PSO), 2007 WL 1959252, at *45 (D.N.J. July 2,
2007) (denying an award of attorneys’ fees and costs where insurer requested
interpleader relief “only after it created the commotion that it filed this suit in order to
absolve itself of liability”). Here, however, this is no evidence that MetLife brought this
case in bad faith or to absolve itself of liability. See Wright & Miller, § 1719 (“The test
should the interpleading party be required to
for awarding costs and fees is
The test is not
assume the risk of multiplicity of actions and erroneous election.
for interpleader by acting in
satisfied if the stakeholder has contributed to the need
bad faith or by unduly delaying in seeking relief.”). MetLife advised Sarto and Ramirez
that, if they did not compose their differences, it would initiate an interpleader action
that could entitle MetLife to costs and fees. MetLife is not seeking to reduce its
liability, but only to recoup fees and costs associated with the interpleader itself.
Under the circumstances, then, I find that equitable considerations do not weigh
against an award of fees and costs.
counterclaims that are not claims to the interpleaded funds. From the Benefits,
MetLife may deduct $4,572.40 in attorneys’ fees and costs.
A separate order will issue.
Dated: September 8, 2017
United States District Judge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?