New York Life Insurance Company v. Garey et al

Filing 30

ORDER Approving Settlement. Signed by Judge Samuel H. Mays, Jr on 06/27/2013.

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION

NEW YORK LIFE INSURANCE
COMPANY,

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Plaintiff,
v.
MICHELLE L. GAREY, as Parent
and Guardian of CMG, a minor,
and LISA A. GAREY, as Parent
and Guardian of BAG and SNG,
Defendants.

No. 13-2036

ORDER APPROVING SETTLEMENT

On

January

17,

Company

(“New

against

Defendants

2013,

York

Plaintiff

Life”)

filed

Michelle

a

L.

New

York

Complaint

Garey

Life
in

Insurance

Interpleader

(“Michelle

Garey”)

as

Parent and Guardian of CMG, and Lisa A. Garey (“Lisa Garey”), as
Parent

and

Guardian

of

BAG

collectively, the “Minors”).
28,

2013,

$200,000,

the

Court

and

(CMG,

BAG,

(Compl., ECF No. 1.)

ordered

representing

SNG

death

the

Clerk

benefits

of

from

SNG,

On February

Court
a

and

life

to

deposit

insurance

policy (the “Policy”) owned by the Minors’ deceased father, into
an interest-bearing account.
and

Investment,

ECF

No.

21.)

(Order Granting Mot. For Deposit
On

March

6,

2013,

the

Court

entered an order appointing Guardians Ad Litem to submit written
report

and

recommendations

“Settlement”).

(Order

about

a

Granting

Guardians Ad Litem, ECF No. 23.)

proposed
Mot.

settlement

for

(the

Appointment

of

For the following reasons, the

Settlement is APPROVED.
Robert Garey (“Robert Garey”) was the Minors’ biological
father.

When Robert Garey died in 2010, he was divorced from

Michelle

Garey

and

Lisa

Garey.

Stipulations

in

marital

dissolution agreements executed in each divorce required Robert
Garey to maintain minimum life insurance coverage of $100,000
per

child,

or

$300,000.

Robert

Garey’s

Policy

had

a

death

benefit of $200,000.
Robert Garey was underinsured by $100,000.

New York Life

interpled to facilitate the payment of death benefits to the
appropriate beneficiaries.

Under the Settlement, Michelle Garey

and Lisa Garey agree that each Minor will receive a one-third
share (or $66,666.66), plus an equal share of accrued interest.
New York Life asks the Court to review the Settlement and decide
if it is in the best interest of each Minor.
Interpleader
party

who

fears

is

an

being

equitable
exposed

to

proceeding
the

that

vexation

of

“affords

a

defending

multiple claims to a limited fund or property that is under his
control a procedure to settle the controversy and satisfy his
obligation in a single proceeding.”
2

United States v. High Tech.

Prods.,

Inc.,

citation

and

proceed

in

497

quotation
two

determines

F.3d

637,
marks

stages.

whether

the

641

(6th

Cir.

omitted).

In

the

(internal

Interpleader

first

stakeholder

2007)

stage,

has

actions

“the

properly

court
invoked

interpleader, including whether the court has jurisdiction over
the suit, whether the stakeholder is actually threatened with
double or multiple liability, and whether any equitable concerns
prevent the use of interpleader.”
quotation marks omitted).

Id. (internal citation and

“During the second stage, the court

determines the respective rights of the claimants to the fund or
property
pleading,

at

stake

via

discovery,

normal

litigation

motions,

and

processes,

trial.”

citation and quotation marks omitted).

Id.

including
(internal

When a court decides

that interpleader is available, which typically occurs at the
first

stage,

the

court

“may

issue

an

order

discharging

the

stakeholder, if the stakeholder is disinterested, enjoining the
parties from prosecuting any other proceeding related to the
same subject matter, and directing the claimants to interplead.
. . .”

Id. (internal citation and quotation marks omitted).

New York Life is organized and existing under the laws of
the State of New York and has its principal place of business in
the State of New York.

(Compl. ¶ 1.)

are citizens of the State of Tennessee.

Michelle Garey and CMG
(Id. ¶ 3.)

Lisa Garey,

SNG, and BAG are citizens of the State of Mississippi.
3

(Id. ¶

5.)
8.)

This dispute addresses a $200,000 death benefit.
The

parties

are

completely

controversy exceeds $500.

diverse

and

the

28 U.S.C. 1335(a)(1).

(Id. ¶

amount

in

Jurisdiction

is appropriate.
New York Life will be threatened with double or multiple
liability if its obligations under the Policy are not resolved.
“If it paid such proceeds to the wrong beneficiary, it could
conceivably be compelled to pay the sum twice. By obtaining a
court adjudication, it negates this risk.”

W. Life Ins. Co. v.

Nanney, 290 F. Supp. 687, 688 (E.D. Tenn. 1968).
concerns prevent the use of interpleader.

No equitable

New York Life has

properly invoked interpleader.
At the second stage, the Court addresses the Settlement.
On June 16, 2013, the Guardian Ad Litem for CMG filed a report
under seal, in which he recommends that the proposed Settlement
is reasonable and in CMG’s best interest and that an irrevocable
educational

trust

be

Litem 6, ECF No. 26.)

created.

(Report

of

CMG’s

Guardian

Ad

On June 17, 2013, the Guardian Ad Litem

for SNG filed a report under seal, in which he recommends that
the Settlement is in SNG’s best interest and that SNG’s share be
disbursed to the Chancery Court of DeSoto County, Mississippi.
(Report of SNG’s Guardian Ad Litem 5, ECF No. 27.)

On June 20,

2013, the Guardian Ad Litem for BAG filed a report under seal,
in which he recommends that the Settlement is in BAG’s best
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interest and that BAG’s share be placed with the Chancery Court
of DeSoto County, Mississippi.

(Reprot of BAG’s Guardian Ad

Litem 5, ECF No. 28.)
After reviewing the entire record, the Court concludes that
the Settlement is fair, reasonable, and in the best interest of
the Minors.

In deciding whether a settlement is in the best

interest of a minor, courts consider “the amount of the fund in
its totality, as well as the amount offered these children.”
Nanney,

290

F.

Supp.

at

689.

The

Minors,

as

the

sole

beneficiaries under the Policy, share one-third of the $200,000
death

benefit,

plus

accrued

interest.

The

Policy’s

death

benefit cannot satisfy the Minors’ separate rights to $100,000
under Robert Garey’s marital dissolution agreements.

To satisfy

each Minor’s “equitable interest in the designated policy” would
require at least one minor receiving less than $100,000.
Holt v. Holt, 995 S.W.2d 68, 72 (Tenn. 1999).

See

Dividing the

death benefit into equal amounts maximizes the amount paid to
each beneficiary and is in the best interest of the Minors.

The

Settlement is APPROVED.
The Court approves the proposal to appoint Michelle Garey
as guardian of CMG and Lisa Garey as guardian of SNG and BAG.
Michelle Garey is the biological parent of CMG.
the

biological

parent

of

SNG

and

BAG.

Lisa Garey is

The

report

and

recommendations and the record as a whole demonstrate that they
5

are fit and proper people.

The Court has met with each of the

proposed guardians and is satisfied that they are aware of their
responsibilities,

willing

to

assume

them,

and

capable

of

performing them.
Michelle Garey and Lisa Garey must be appointed guardians
by

courts

Minors’

of

funds

the

jurisdictions

will

be

in

disbursed

which
when

they
the

reside.
Court

The

receives

documents showing that Michelle Garey and Lisa Garey have been
appointed guardians.
New York Life will be discharged after all funds have been
disbursed to the guardians.
So ordered this 27th day of June, 2013.

s/ Samuel H. Mays, Jr.______
SAMUEL H. MAYS, JR.
UNITED STATES DISTRICT JUDGE

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