The Prudential Insurance Company of America v. Hamilton et al

Filing 19

ORDER granting in part and denying in part 14 Motion for Default Judgment; granting 14 Motion to Appoint Guardian ad Litem, Appointed S. Frederick Winiker, III for David Hamilton ; granting 14 Motion to Deposit Fund s - within 21 days of this order, plaintiff to deposit funds as directed herein; Upon deposit of funds 14 Motion for Summary Judgment will be granted and plaintiff will be dismissed from this litigation. Signed by District Judge Max O. Cogburn, Jr on 8/30/12. (bsw)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
3:12cv214
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA,

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Plaintiff,
Vs.
DAVID HAMILTON; and EMILE
HAMILTON,
Defendants
_______________________________

ORDER

THIS MATTER is before the court on plaintiff’s Motion for Default Judgment, or,
In the Alternative, for Appointment of a Guardian Ad Litem, to Deposit Funds and for
Summary Judgment.
In moving for entry of default judgment in this interpleader matter, plaintiff has shown
that both potential beneficiaries have been properly served, that Emilie Hamilton has timely
answered and that David Hamilton has not answered. Further, plaintiff has shown that David
Hamilton has executed an affidavit, proper in form, waiving any interest in the res of this
interpleader action as well as any interest in the estate of his deceased parents. The only
hesitation the court has in granting the default and awarding the res to Emilie Hamilton is a
suggestion on the record that David Hamilton has been determined to be incapable of
assisting in his own criminal defense on state homicide charges relating to the death of the
insured, his mother, and in the death of his father.
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Under the common law of North Carolina as well as federal common law, a slayer
may not recover or benefit from a death he intentionally causes. Under North Carolina’s
Slayer Statute, defendant David Hamilton’s alleged criminal acts would disqualify him from
receiving benefits under the policy:
31A-4. Slayer barred from testate or intestate succession and other rights.
The slayer shall be deemed to have died immediately prior to the death of the
decedent and the following rules shall apply: (1) The slayer shall not acquire
any property or receive any benefit from the estate of the decedent by testate
or intestate succession or by common law or statutory right as surviving
spouse of the decedent.
***
N.C.Gen.Stat. § 31A-4. Normally, the court would accept a disclaimer or waiver of
beneficial interest submitted by an alleged slayer, as North Carolina law anticipates such a
result:
.

§ 31A-11. Insurance benefits. (a) Insurance and annuity proceeds payable to
the slayer: (1) As the beneficiary or assignee of any policy or certificate of
insurance on the life of the decedent, or (2) In any other manner payable to the
slayer by virtue of his surviving the decedent, shall be paid to the person or
persons who would have been entitled thereto as if the slayer had predeceased
the decedent. If no alternate beneficiary is named, insurance and annuity
proceeds shall be paid into the estate of the decedent.
***

N.C.Gen.Stat. § 31A-11. It is undisputed that a North Carolina Grand Jury has found
probable cause to believe David Hamilton was culpable in the death of this insured.
However, Rule 17 provides in relevant part, as follows:
(c) Minor or Incompetent Person.
***
(2) Without a Representative. A minor or an incompetent person
who does not have a duly appointed representative may sue by
a next friend or by a guardian ad litem. The court must appoint
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a guardian ad litem—or issue another appropriate order—to
protect a minor or incompetent person who is unrepresented in
an action.
Fed.R.Civ.P. 17(c).
The question squarely put to this court is whether a person, who has not been
adjudged civilly incompetent under state law, but who has been adjudged at least temporarily
unable to assist in his own criminal defense, has sufficient mental capacity to waive his
interests in insurance proceeds which are to be paid into this court. Admittedly, this
defendant’s potential interest in such res is marginal in light of the Slayer statute and the
finding of probable cause by the a state grand jury.
In Hudnall v. Sellner, 800 F.2d 377 (4th Cir.1986), the Court of Appeals for the
Fourth Circuit addressed the issue presented here, holding that what Rule 17
undoubtedly contemplates is that form of mental deficiency which—whether
or not accompanied by other forms of personality disorder—affects the
person's practical ability to manage his or her own affairs. This is the general
test applied by the civil law for making adjudications of “incompetency” for
a variety of purposes.
Id., at 385 (internal quotations omitted). As the Fourth Circuit further held:
[i]n common experience, there is of course no necessary relationship between
‘mental incompetence’ in this special sense and various forms of mental
derangement or personality disorder that may cause utterly bizarre and
destructive conduct in litigation as in other realms.
Id. Inasmuch as the affidavit at question here is akin to a forbearance of a contractual right,
the court has found guidance in Williston on Contracts, which provides in relevant part, as
follows:

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a person may be considered mentally incompetent for some purposes yet
competent for others. The law now recognizes a wide variety of types and
degrees of mental incompetency and distinctions among the various types of
mental illness. Among them are congenital deficiencies in intelligence, the
mental deterioration that accompanies old age, the effects of brain damage
caused by accident or organic disease and mental illnesses evidenced by such
symptoms as delusions, hallucinations, delirium, confusion, and depression.
A person is considered incompetent to contract in the vast majority of
jurisdictions if, under what is known as the cognitive test, she lacks sufficient
mental capacity to understand the nature and effect of a particular transaction
or her acts in relation to that transaction. Thus, the time for determining a
party's capacity is when the particular agreement is executed, and neither
before nor after the time, although the party's condition both before and after
execution of the agreement is relevant to his competency at that time.
WILLSTN-CN § 10:8. Likewise, the long-standing rule in North Carolina is that a person
has sufficient mental capacity to enter a contract if he is possessed of
the ability to understand the nature of the act in which he is engaged and its
scope and effect, or its nature and consequences, not that he should be able to
act wisely or discreetly, nor to drive a good bargain, but that he should be in
such possession of his faculties as to enable him to know at least what he is
doing and to contract understandingly.
Sprinkle v. Wellborn, 140 N.C. 163, 181 (1905).
While all persons are deemed competent unless determined otherwise, Fed.R.Civ.P.
601, the court believes that if it is to err, it should err on the side of caution and appoint
David Hamilton a guardian ad litem in this proceeding. Inasmuch as David Hamilton is
presently in the custody of the State of North Carolina and has counsel representing him on
the criminal charges, the court finds that appointing an attorney skilled in both criminal and
civil law as the guardian would be appropriate and provides for expeditious disposition of
this matter. The guardian ad litem shall take whatever steps he believes are necessary in

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executing his duty, but shall conduct the following inquiry:
(1)

(2)

(3)

meet with David Hamilton at Broughton Hospital and determine
what he desires to do in this matter and whether the affidavit he
has submitted was executed both knowingly and willfully;
meet with David Hamilton and determine whether, to the
satisfaction of such guardian, Mr. Hamilton has sufficient
mental capacity to execute such affidavit;
meet with David Hamilton’s treating physicians and
psychologists and determine what mental illnesses he suffers
from, the course of treatment, and what, if any, opinions such
doctors may have as to defendant’s practical ability to manage
his or her own civil affairs. Inquiry should, of course, not be
made into his ability to proceed in the state criminal matter.

The court will not, however, require the guardian to commission an independent psychiatric
examination as it is likely that the inquiry suggested above will provide the guardian with
sufficient information with which to make an informed decision.
It is an unusual situation that impels the grant of a psychiatric examination as
a precondition to a determination of competence. The practice of granting
psychiatric examinations of witnesses ‘must be engaged in with great care’ and
‘only upon a substantial showing of need and justification.’ ”
State v. R.W., 104 N.J. 14, 514 A.2d 1287, 1290 (1986) (citing State v. Butler, 27 N.J. 560,
143 A.2d 530, 556 (1958)). After conducting such inquiry, the guardian should report back
to the court and, in a pleading, either affirm the previously submitted affidavit of Mr.
Hamilton along with his supporting reasons, or move for leave to Answer or otherwise move
on behalf of Mr. Hamilton.
Having considered plaintiff’s motion and reviewed the pleadings, the court enters the
following Order.

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ORDER
IT IS, THEREFORE, ORDERED that plaintiff’s Motion for Default Judgment, or,
In the Alternative, for Appointment of a Guardian Ad Litem, to Deposit Funds and for
Summary Judgment Ad Litem, to Deposit Funds and for Summary Judgment is GRANTED
in part and DENIED in part as follows:
(1)

S. Frederick Winiker, III is appointed as guardian ad litem for defendant
David Hamilton with regard to the above captioned matter to represent his
interests in this civil matter. Mr Winiker shall keep a log of his time and
expenses and, at the conclusion of his work, submit to the court an application
for his fees at his customary and usual rate for professional services;

(2)

within 60 days Mr. Winiker shall make a report or otherwise move as provided
in this Order;

(3)

within 21 days, plaintiff shall pay into the registry of the Clerk of this Court
the Death Benefit of $550,000.00, together with any interest that may have
thereupon accrued, if any, and such Death Benefit shall remain on deposit with
the Clerk of this Court in an interest bearing account pending further Order of
this court;

(4)

the Clerk shall deduct a fee for handling the funds at or equal to 10% of the
income earned for deduction in the investment so held and without further
Order of the court, as authorized by the Judicial Conference of the United
States and as set by the Director of the Administrative Office of the Courts;
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(5)

the fees of the guardian ad litem, once approved by the court, shall be paid
from the interpleaded funds before such funds are dispersed;

(6)

upon deposit of the funds by plaintiff, plaintiff’s Motion for Summary
Judgment is GRANTED, and plaintiff is
(a)

DISCHARGED from any and all liability to David Hamilton and
Emilie Hamilton, and they are permanently enjoined from bringing any
action or proceeding in any forum or making any further actual or
implied claims, demands and causes of action, asserted or unasserted,
liquidated ir unliquidated, or bringing any action or proceeding in any
forum, arising out of or in connection with Prudential relating to the
Group Policy and/or Death Benefit;

(b)

all claims, rights, interests and actions that David Hamilton and Emilie
Hamilton might otherwise have held against plaintiff and its present
and

former

parents,

subsidiaries

and

affiliated

corporations,

predecessors, successors and assigns and their respective officers,
directors, agents, employees, representatives, attorneys, fiduciaries and
administrators, with respect to the Group Policy and/or Death Benefit
are hereby RELEASED; and
(c)

plaintiff is DISMISSED with prejudice from this litigation at such
time;

(7)

the court retains jurisdiction over defendants, who are compelled to litigate,
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adjust and/or settle among each other their respective and lawful entitlement
to the money to be paid into the court’s registry by plaintiff, or upon their
failure to do so, this court shall settle and adjust the claims and determine to
whom the within total funds shall be paid;
(8)

jurisdiction is retained over plaintiff for 14 days and plaintiff is directed to
submit its application, if any, for attorneys’ fees and costs within such time
period; and

(9)

plaintiff shall serve a copy of this Order upon all parties as well as the
guardian ad litem within seven days of receipt.

Signed: August 30, 2012

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