Bakkeby et al v. Prudential Insurance Company of America, The et al
Filing
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OPINION AND ORDER by Chief Judge Gregory K Frizzell Further directing deposit of funds ; granting in part and denying in part 27 Motion for Leave to File Document(s); granting in part and denying in part 24 Motion to Clarify (hbo, Dpty Clk)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
ALEXANDRA BAKKEBY; and
ELIZABETH BAKKEBY DAHL,
Next Friend to V.B. and G.B.,
Minor Children,
Plaintiffs,
v.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA; and
THERESA BAKKEBY,
Defendants.
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Case No. 13-CV-188-GKF-PJC
OPINION AND ORDER
Before the court are the Request for Instructions Regarding Cross-Claim [Dkt. #24] and
the Motion for Leave to Adopt Previously Filed Motion to Dismiss for Lack of Subject Matter
Jurisdiction, Personal Jurisdiction and Venue as her Response to the “Cross-Claim” of Defendant
The Prudential Insurance Company of America [Dkt. #27], both filed by defendant Theresa
Porter (f/k/a Bakkeby) (“Porter”). The Prudential Insurance Company of America (“Prudential”)
opposes the motions.
Background/Procedural History
Plaintiffs Alexandra Bakkeby and Elizabeth Bakkeby (“Bakkebys”) are, respectively, the
daughter and Next Friend to V.B. and G.B., minor children of decedent William Magness
Bakkeby, III, (the “Insured”). Porter is the ex-wife of the Insured. The Bakkebys and Porter are
rival claimants to proceeds of a life insurance policy procured by the Insured from Prudential
under the Veterans Group Life Insurance Program of 1965 (“VGLI”). The Bakkebys filed suit in
this court for declaratory judgment, seeking a determination that they, rather than Porter, are
entitled to the insurance proceeds. They asserted jurisdiction was proper pursuant to 28 U.S.C. §
1331 because distribution of the life insurance proceeds in question depends on federal statute 38
U.S.C. § 1965, et seq., the Servicemembers’ Group Life Insurance Act.
Porter filed a Motion to Dismiss, asserting the court lacked personal jurisdiction over her
and that venue was improper. [Dkt. #7]. Prudential filed an Answer, Affirmative Defenses, and
Counterclaim and Crossclaim for Interpleader. [Dkt. ##20-21]. The court granted Porter’s
motion to dismiss the Complaint, finding it lacked personal jurisdiction over her. [Dkt. #22]. In
the pending motions, Porter seeks dismissal of Prudential’s cross-claim based on lack of personal
and/or subject matter jurisdiction and improper venue.
Prudential, in its Counterclaim and Crossclaim, alleges the court has federal question
jurisdiction because the life insurance plan benefits were provided pursuant to 38 U.S.C. § 1965,
et seq.1 Additionally, it asserts venue is proper under 28 U.S.C. §§ 1391(b)(2) and 1397, because
a substantial portion of the events giving rise to the claims occurred in this district and one or
more of the claimants live in this district. [Dkt. #21, ¶7]. Prudential states it “will deposit into
the Court the Death Benefit, plus claim interest, if any, for disbursement in accordance with the
judgment of this Court.” [Id., ¶21]. It seeks judgment permitting it to deposit the death benefits,
plus interest, if any, into the court, discharging it from any further liability to the claimants,
enjoining them from instituting any proceeding affecting the Plan or Death Benefit and awarding
it attorneys’ fees and costs. [Id. at 5-6].
1
The Counterclaim and Crossclaim also alleges diversity jurisdiction exists. [Dkt. #21, ¶6]. However, in response to
Porter’s Motion to Dismiss, Prudential only asserts federal question jurisdiction. Porter contends diversity
jurisdiction is lacking because the claim at issue is not a state law claim.
2
After the court granted Porter’s Motion to Dismiss, it directed the parties to file a joint
status report. [Dkt. #23]. Porter subsequently filed her Request for Instructions Regarding
Cross-Claim, in which she states she ought not be required to incur additional attorney fees to
answer the cross-claim because the court had determined that jurisdiction and venue are not
proper. [Dkt. #24]. The following day, Porter filed her Motion for Leave to Adopt her
Previously Filed Motion to Dismiss. [Dkt. #27]. In her motion, she adopted the arguments made
in her earlier Motion to Dismiss.2
The court directed Prudential to respond to both the Request for Instructions Regarding
Cross-Claim and the Motion for Leave to Adopt. [Dkt. ##26, 30]. In its response, Prudential
asserted that since federal interpleader statutes were enacted to grant federal district courts both
subject matter and personal jurisdiction over all potential claimants, the interpleader remedy
should be liberally construed with respect to jurisdictional requirements and the court should
maintain jurisdiction over all parties to the action. It argued that even though the plaintiffs’
claim against Porter had been dismissed for lack of personal jurisdiction, the court has both
subject matter jurisdiction and personal jurisdiction over Porter under 28 U.S.C §§ 1335 and
2361. Additionally, it asserted Porter had waived her right to assert the defense of lack of
personal jurisdiction because she failed to answer, or move to dismiss, Prudential’s cross-claim.
Alternatively, Prudential asked that if the court refuses to maintain jurisdiction over Porter, the
case be dismissed without prejudice pursuant to Fed. R. Civ. P. 19(b) for failure to join a
necessary party.
2
Porter also asserted that the court had previously determined it lacked subject matter jurisdiction and that venue
was improper as to Porter. [Dkt. #27]. In the earlier motion, however, Porter asserted only lack of personal
jurisdiction and improper venue. [Dkt. #7]. The court, in its Opinion and Order granting Porter’s Motion to Dismiss,
held that it did not have personal jurisdiction with respect to plaintiffs’ claims against Porter. The court declined to
address the venue argument, and it did not render any ruling regarding subject matter jurisdiction. [Dkt. #22].
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Discussion
Interpleader may be sought pursuant to federal statute (28 U.S.C. §§ 1335, 2361) or Fed.
R. Civ. P. 22.
28 U.S.C. § 1335 provides, in pertinent part:
(a) The district courts shall have original jurisdiction of any civil action of
interpleader or in the nature of interpleader filed by any . . . corporation . . .
having issued a . . . policy of insurance, . . . [in the] amount of $500 or more, . . .
if
(1) Two or more adverse claimants, of diverse citizenship as defined in
subsection (a) or (d) of section 1332 of this title, are claiming or may
claim to be entitled to . . . any one or more of the benefits arising by
virtue of any . . . policy . . . or arising by virtue of any such obligation;
and if (2) the plaintiff has . . . paid the . . . value of such instrument or
the amount due under such obligation into the registry of the court,
there to abide the judgment of the court, or has given bond payable to
the clerk of the court in such amount and with such surety as the court
or judge may deem proper, conditioned upon the compliance by the
plaintiff with the future order or judgment of the court with respect to
the subject matter of the controversy.
28 U.S.C. § 1335(a). Section 2361 provides:
In any civil action of interpleader or in the nature of interpleader under section
1335 of this title, a district court may issue its process for all claimants and enter
its order restraining them from instituting or prosecuting any proceeding in any
State or United States court affecting the property, instrument or obligation
involved in the interpleader action until further order of the court . . . .
Such district court shall hear and determine the case, and may discharge the
plaintiff from further liability, make the injunction permanent, and make all
appropriate orders to enforce its judgment.
28 U.S.C. § 2361. Additionally, 28 U.S.C. § 1397 provides that an interpleader action may be
brought in the judicial district in which one or more of the claimants reside.
Fed. R. Civ. P. 22 provides:
Rule 22. Interpleader
(a) Grounds.
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(1) By a Plaintiff. Persons with claims that may expose a plaintiff to double
or multiple liability may be joined as defendants and required to
interplead. Joinder for interpleader is proper even though:
(A) the claims of the several claimants, or the titles on which their claims
depend, lack a common origin or are adverse and independent rather
than identical; or
(B) the plaintiff denies liability in whole or in part to any or all of the claimants.
(2) By a Defendant. A defendant exposed to similar liability may seek
interpleader through a crossclaim or counterclaim.
(b) Relation to Other Rules and Statutes. . . . .The remedy this rule provides is
in addition to—and does not supersede or limit—the remedy provided by 28
U.S.C. §§ 1335, 1397, and 2361. An action under those statutes must be
conducted under these rules.
Fed. R. Civ. P. 22.
Subject Matter Jurisdiction
Interpleader under Rule 22 is a procedural device that does not, by itself, serve as a basis
for federal jurisdiction. New York Life Ins. Co. v. Koscove, No. CV-07-1606-PHX-DGCPL,
2007 WL 2750665, at *1 n.1 (D. Ariz. Sept. 19, 2007). In contrast, statutory interpleader under
28 U.S.C. §§ 1335 and 2361 provides an independent basis for federal jurisdiction and allows for
nationwide service of process. Accordingly, Prudential relies on statutory interpleader as the
basis for both subject matter and personal jurisdiction.
Section 1335 imposes three prerequisites to a court’s exercise of jurisdiction over this
case: (1) The insurance policy must have a value of $500 or more; (2) two or more adverse
claimants of diverse citizenship must be claiming entitlement to the proceeds of the policy; and
(3) the insurer must have deposited the proceeds into the registry of the court. 28 U.S.C. §
1335(a). See also Miller & Miller Auctioneers, Inc. v. G.W. Murphy Indus., Inc., 472 F.2d 893,
895 (10th Cir. 1973).
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The death benefit at issue is $250,000. The Bakkebys are citizens of Oklahoma and
Porter is a citizen of Kentucky. Thus, the first two prerequisites for exercise of jurisdiction are
met. However, Prudential has not deposited the funds at issue into the court registry. Therefore,
the third prerequisite has not been met. As Porter correctly asserts, an action for interpleader
does not lie under the statute until the funds at issue or a bond has been deposited with the court.
See Id. (“[P]ayment of the entire sum into the registry of the court or the giving of a bond
meeting the requirements of the statute is a condition precedent to the jurisdiction of the court.”).
Moreover, Prudential has not requested that process be issued, nor has it attempted to
serve process, on Porter.3 And until the funds are deposited with the court, nationwide service of
process is not available and personal jurisdiction over Porter cannot be obtained. See Edner v.
Mass. Mut. Life Ins. Co., 138 F.2d 327, 330 (3d Cir. 1943) (“The making of the deposit or giving
of a bond is . . . a condition precedent to the acquisition by the court of jurisdiction to direct the
extra territorial service of process upon a nonresident defendant and to take further steps in the
cause.”). Further, the 120-day period for service of the cross-claim on Porter has expired. See
Fed. R. Civ. P. 4(m).
Although Prudential’s failure to deposit the disputed funds into the court registry creates
a jurisdictional infirmity, case law in this circuit suggests it is one that is easily cured. In AIG
Annuity Ins. Co. v. Law Offices of Theodore Coates, P.C., 2008 WL 4079982, at *8 (D. Colo.
Sept. 2, 2008), the district court found that subject matter jurisdiction over plaintiff’s interpleader
action was lacking because plaintiff had not deposited funds in the court registry. Nevertheless,
it concluded that, rather than dismissing the complaint, the proper remedy was to give plaintiff
the opportunity to deposit the disputed funds into the court’s registry because plaintiff had
3
Since Prudential has never served its cross-claim against Porter in compliance with 28 U.S.C. § 2361, the court
rejects Prudential’s arguments that Porter has waived the defense of lack of personal jurisdiction and/or is in default
for failing to file an answer to the cross claim.
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represented its unconditional willingness to do so and no party disputed plaintiff’s legal control
over the funds in controversy. Id. Similarly, in Prudential Ins. Co. of Am. v. Bank of Commerce,
857 F. Supp. 62, 65 (D. Kan. 1994), the court concluded it lacked jurisdiction of the
stakeholder’s interpleader claim because the proposed bond was inadequate, as the stakeholder
proposed to self-surety the bond. Rather than dismissing the action, the court gave the
stakeholder the opportunity to correct the deficiency by posting a bond with a surety other than
itself, or depositing the required sum in the court registry. Id.
The interpleader statute “is remedial and to be liberally construed.” State Farm Fire &
Cas. Co. v. Tashire, 386 U.S. 523, 533 (1967). With this admonition in mind, and in the interest
of judicial efficiency, the court concludes that Prudential should be given an opportunity to cure
its jurisdictional defects by (1) tendering the death benefit to the registry of the court; (2) seeking
leave, pursuant to Fed. R. Civ. P. 4(m), to extend the deadline for serving Porter; and (3) having
process issued and served on Porter pursuant to 28 U.S.C. § 2361.
Personal Jurisdiction and Venue
Because the court currently lacks subject matter jurisdiction of the interpleader claim,
Porter’s defenses of lack of personal jurisdiction and improper venue are not ripe.
Conclusion
Porter’s Request for Instructions Regarding Cross-Claim [Dkt. #24] and her Motion for
Leave to Adopt Previously Filed Motion to Dismiss for Lack of Subject Matter Jurisdiction,
Personal Jurisdiction and Venue as her Response to the “Cross-Claim” of Defendant The
Prudential Insurance Company of America [Dkt. #27] are granted in part and denied in part. The
court finds that Prudential has failed to properly invoke subject matter jurisdiction under 28
U.S.C. § 1335 because it has not deposited the death benefit, together with all interest accrued
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thereon, in the registry of the court, but grants Prudential leave to do so, and to seek further relief
as set forth above, on or before December 26, 2013. Upon its deposit of the death benefit in the
registry of the court, Prudential shall file an accounting of its calculation of interest.
ENTERED this 12th day of December, 2013.
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