Transamerica Annuity Service Corporation v. Symetra Life Insurance Company et al
OPINION AND ORDER granting 9 MOTION for Partial Summary Judgment. (Signed by Judge Melinda Harmon) Parties notified.(rhawkins)
United States District Court
Southern District of Texas
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
February 03, 2017
David J. Bradley, Clerk
TRANSAMERICA ANNUITY SERVICE
SYMETRA LIFE INSURANCE CO.,
A.M.Y. PROPERTY & CASUALTY
INSURANCE COMPANY, FINSERV
CASUALTY CORP., and LIQUIDATING§
MARKETING, LTD. f/k/a RAPID
Civ. A. H-16-1426
OPINION AND ORDER
Pending before the Court, in the above referenced,
Plaintiff and allegedly disinterested stakeholder Transamerica
partial summary judgment (instruments #9 and 10).
Transamerica seeks (1) an order granting it leave to deposit the
current and future payments of structured settlement funds in the
Court’s registry to be held in an interest-bearing account for
future disbursement according to the judgment of this Court, (2)
an order enjoining the Claimants and anyone acting directly or
indirectly on their behalf from commencing or prosecuting any
proceeding in any State or federal court affecting the property,
instrument or obligation involved in this interpleader action
until further order of the Court, (3) a dismissal with prejudice
and the discharge of Transamerica as a disinterested stakeholder,
and (4) an award of fees and costs for its services rendered in
prosecuting this interpleader.
Standard of Review
Summary judgment under Federal Rule of Civil Procedure
56(c) is appropriate when, viewing the evidence in the light most
pleadings, depositions, answers to interrogatories and admissions
on file, together with the affidavits, show that there is no
genuine issue as to any material fact and that the moving party is
entitled to judgment as a matter of law.”
A dispute of material
fact is “genuine” if the evidence would allow a reasonable jury to
find in favor of the nonmovant. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986).
Where the nonmovant bears the burden of proof at
nonmovant’s claim or point out the absence of evidence supporting
essential elements of the nonmovant’s claim; the movant may, but
does not have to, negate the elements of the nonmovant’s case to
prevail on summary judgment.”
Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986); Lujan v. National Wildlife Federation, 497 U.S.
871, 885 (1990); Edwards v. Your Credit, Inc., 148 F.3d 427, 431
(5th Cir. 1998).
“A complete failure of proof concerning an
renders all other facts immaterial.”
Celotex, 477 U.S. at 323.
If the movant meets its burden and points out an absence
of evidence to prove an essential element of the nonmovant’s case
on which the nonmovant bears the burden of proof at trial, the
nonmovant must then present competent summary judgment evidence to
support the essential elements of its claim and to demonstrate
that there is a genuine issue of material fact for trial.
National Ass’n of Gov’t Employees v. City Pub. Serv. Board, 40
F.3d 698, 712 (5th Cir. 1994).
“[A] complete failure of proof
concerning an essential element of the nonmoving party’s case
renders all other facts immaterial.”
Celotex, 477 U.S. at 323.
The nonmovant may not rely merely on allegations, denials in a
pleading or unsubstantiated assertions that a fact issue exists,
but must set forth specific facts showing the existence of a
genuine issue of material fact concerning every element of its
cause(s) of action.
Morris v. Covan World Wide Moving, Inc., 144
F.3d 377, 380 (5th Cir. 1998).
Conclusory allegations unsupported by evidence will not
preclude summary judgment.
National Ass’n of Gov’t Employees v.
City Pub. Serv. Board, 40 F.3d at 713; Eason v. Thaler, 73 F.3d
1322, 1325 (5th Cir. 1996). “‘[T]he mere existence of some alleged
factual dispute between the parties will not defeat an otherwise
properly supported motion for summary judgment . . . .’”
Farm Life Ins. Co. v. Gutterman, 896 F.2d 116, 118 (5th Cir. 1990),
quoting Anderson v. Liberty Lobby, Inc.. 477 U.S. 242, 247-48
“Nor is the ‘mere scintilla of evidence’ sufficient;
‘there must be evidence on which the jury could reasonably find
for the plaintiff.’” Id., quoting Liberty Lobby, 477 U.S. at 252.
The Fifth Circuit requires the nonmovant to submit “‘significant
probative evidence.’” Id., quoting In re Municipal Bond Reporting
Antitrust Litig., 672 F.2d 436, 440 (5th Cir. 1978), and citing
Fischbach & Moore, Inc. v. Cajun Electric Power Co-Op., 799 F.2d
194, 197 (5th Cir. 1986).
“If the evidence is merely colorable,
Thomas v. Barton Lodge II, Ltd., 174 F.3d 636, 644 (5th
Cir. 1999), citing Celotex, 477 U.S.
at 322, and Liberty Lobby,
477 U.S. at 249-50.
Allegations in a plaintiff’s complaint are not evidence.
1996)(“[P]leadings are not summary judgment evidence.”); Johnston
v. City of Houston, Tex., 14 F.3d 1056, 1060 (5th Cir. 1995)(for
evidence-–not argument, not facts in the complaint--will satisfy’
the burden.”), citing Solo Serve Corp. v. Westown Assoc., 929 F.2d
160, 164 (5th Cir. 1991).
The nonmovant must “go beyond the
pleadings and by [his] own affidavits, or by depositions, answers
to interrogatories and admissions on file, designate specific
facts showing that there is a genuine issue of material fact for
Giles v. General Elec. Co., 245 F.3d 474, 493 (5th Cir.
2001), citing Celotex, 477 U.S. at 324.
The court must consider all evidence and draw all
inferences from the factual record in the light most favorable to
Matsushita Elec. Indus. Co. v. Zenith Radio, 475
U.S. 574, 587 (1986); National Ass’n of Gov’t Employees v. City
Pub. Serv. Board, 40 F.3d at 712-13.
The Court may not make
Deville v. Marcantel, 567 F.3d 156,
164 (5th Cir. 2009), citing Turner v. Baylor Richardson Medical
Center, 476 F.3d 337, 343 (5th Cir. 2007).
dispute may exist to the rightful ownership of the fund, that
dispute does not preclude the granting of summary judgment in
interpleader action that two or more parties claim rights to
certain money or property.’”
Underwriters Group, Inc. v. Clear
Creek Independent School Dist., Civ. A. No. G-050334, 2006 WL
1852254, at *5 (S.D. Tex. June 30, 2006), quoting Commerce Funding
Corp. v. Southern Financial Bank, 80 F. Supp. 2d 582, 285 (E.D.
Va. 1999); Allstate Assignment Co. v. Cevera, Civ. A. No. 2:13-CV096-AM-CW. 2014 WL 12496902, at *4 (W.D. Tex. Dec. 8, 2014),
report and recommendation adopted, Civ. A. No. DR-13-cv-096-AM/CW
2015 WL 1170561 (W.D. Tex. Mar. 23, 2015).
Title 28 U.S.C. § 1335 provides a district court with
jurisdiction over an action in interpleader if (1) the plaintiffstakeholder files an action regarding a single, identifiable fund
in an amount of at least $500, (2) the plaintiff-stakeholder
deposits the money in the district court’s registry,
(3) two or
more parties claim entitlement to the funds, and (4) the claimants
are minimally diverse, i.e., “diversity of citizenship between two
or more claimants without regard to the circumstance that other
rival claimants may be co-citizens.” Auto Parts Mfg. Mississippi,
Inc. v. King Const. of Houston, LLC, 782 F.3d 186, 192-93 (5th Cir.
Mfg. Mississippi, Inc., 136 S. Ct. 330 (2015); Rhoades v. Casey,
193 F.3d 592, 194 (5th Cir. 1999).
The claims of the adverse
claimants need not have a common origin nor be identical, but may
be adverse to, and independent of, each other.
Auto Parts, 782
at 193, citing 28 U.S.C. § 1334(b).
Venue for a statutory
interpleader is in any district where any claimant resides, and
nationwide service of process is provided under 28 U.S.C. §§ 1335,
Id. at 683.
In the first stage of the interpleader, the court
determines whether these requirements have been met.
If so, the
litigation continues to determine the respective rights of the
claimants to the fund.
“‘[I]nterpleader jurisdiction is
determined at the time suit is filed and subsequent events will
not divest the court of jurisdiction.’”
Id. at 194, quoting
Walker v. Pritzker, 705 F.2d 942, 944 (7th Cir. 1983).
stage of interpleader only is concerned with whether multiple
disinterested stakeholder, not whether those claims have merit.”
Id. at 194.
As for the second stage of the interpleader, ”’in the
usual case at least one of the claims will be quite tenuous. . .
. [N]othing more is implied than the claims alleged must meet a
minimal threshold level of substantiality.”
Id., citing 7
Charles Alan Wright, et al., Federal Practice & Proc. § 1704 (3d
ed. 2016 update).
“‘[E]ven the mere ‘threat of multiple vexation
Id., quoting Tittle v. Enron, 463 F.3d 410, 424
n.10 (5th Cir. 2006), quoting Corrigan Dispatch Co. v. Casa Guzman,
S.A., 696 F.2d 359, 364 (5th Cir. 1983).
The court must then
determine the respective rights of the claimants and the priority
of claims as of the time the interpleader action was commenced,
i.e., the date when the interpleader fund is deposited with the
Avant Petroleum, Inc. v. Banque Paribas, 853 F.2d 140,
143, 144 (2d Cir. 1988).
If there is no genuine issue of material
fact in the second stage, the interpleader may be resolved by
Rhoades, 193 F.3d at 600.
Otherwise, if the
facts are disputed, each claimant must prove its entitlement to
the funds by a preponderance of the evidence.
available, the stakeholder may be discharged from any or all
liability if Defendants do not oppose its motion for discharge and
General Elec. Capital Assur. v. Van Norman, 209 F.
Supp. 2d 668, 670 (S.D. Tex. 2002).
Under 28 U.S.C. § 2361, if
the stakeholder is disinterested and the court finds interpleader
is available, a “district court . . . may discharge the plaintiff
from further liability . . . and make all appropriate orders to
enforce its judgment.”
Id.; 7 Charles Alan Wright, et al.,
disinterested stakeholder who is willing to tender the disputed
funds ‘is not obliged to be at the expense and risk of defending
an action; but, on giving up the thing, . . . he is to be
relieved, and the Court directs that the persons between whom the
dispute really exists shall fight it out at their own expense.’”
Auto Parts, 782 F.3d at 195, citing Tittle, 463 F.3d at 423,
quoting 7 Wright, et al., Federal Practice and Proc. § 1702.
Title 28 U.S.C. § 2361 authorizes the district court to
prosecuting any proceeding in any State or United States court
affecting the property . . . involved in the interpleader action
until further order of the court.”
Auto Parts, 782 F.3d at 195.
The permanent injunction can restrain the interpleader defendants
from prosecuting any action against the plaintiff that survives a
final order of dismissal.
Auto Parts, 782 F.3d at 191-92 (Title
28 U.S.C. § 2361 “authorizes a district court to issue a permanent
plaintiff from further liability” thus “enabling ‘the plaintiffstakeholder to avoid the burden of unnecessary litigation or the
risk of loss by the establishment of multiple liability when only
a single obligation is owing.’”). Imposing a temporary injunction
inconsistent with the interpleader’s purpose of ‘enabling the
litigation or the risk of loss by the establishment of multiple
liability when only a single obligation is owing.”
Id. at 192,
quoting Hussain v. Bos. Old Colony Ins. Co., 311 F.3d 623, 631 (5th
1984)(“[I]nterpleader statutes and rules are liberally construed
to protect the stakeholder from the expense of defending twice, as
well as to protect him from double liability.”).
discharge and to encourage interpleader actions.” Auto Parts, 782
F.3d at 192.
Nevertheless, in State Farm Fire and Casualty Co. v.
Tashire, 386 U.S. 523, 535 (1967), the Supreme Court held that
while injunctive relief is available to enjoin actions affecting
the fund, it is not available to restrain prosecution of actions
outside the bounds of the interpleader proceeding, including
actions against the insured. “The stake marks the outer limits of
claimants’ entitlement to the stake is the sole contested issue;
however, where the stakeholder may be independently liable to one
or more claimants, interpleader does not shield the stakeholder
from tort liability, nor from liability in excess of the stake.”
Jackson National Life Ins. Co. v. Dobbins, 2016 WL 4268770, at *2
(N.D. Tex. Aug. 15, 2016), citing Tashire, 386 U.S. at 535.
even if the Court enters a permanent injunction and dismisses
Transamerica that are unrelated to the Chung Annuity Payments.
The district court has the authority and may use its
discretion to decide to award reasonable attorneys’ fees whenever
it is fair and equitable to do so1 and when the stakeholder is
7 Charles Alan Wright et al., Federal Practice &
Procedure § 1719, quoting Louisiana State Lottery Co. v. Clark, 16
Fed. 20, 21 (C.C.E.D. La. 1983):
In the case before us a mere stakeholder,
without fault himself, in possession of a
fund claimed entirely by contending parties,
(but, as the result shows, with equal rights
and claims thereto) brings the same into
court, thereby promoting the litigation and
securing the due application of the party.
From the nature of the contending claims and
the circumstances of the case he incurs
expense and counsel fees in bringing the fund
There is no equity compelling
him to bear these charges. On the contrary,
the parties who have benefited thereby should
disinterested and is not in substantial controversy with one of
Rhoades, 196 F.3d at 603.
personal injuries, on or about January 31, 1986 they entered into
Transamerica Insurance Services to resolve claims related to their
injuries. Under the Settlement Agreement, in exchange for release
of liability in the underlying personal injury action, Harrison
Chung was to receive, among other payments, $2,750.00 per month
for life, with 30 years guaranteed starting on February 1, 1968
and with a payment increase of 3% per annum.
To fund those
payments, Transamerica Insurance Services assigned its liability
purchased an annuity policy to fund the monthly payments to
Generally the amount will reflect the nature of the attorney’s
work and the hours devoted to it. Id. Moreover, “in the usual
case the fee will be relatively modest, inasmuch as all that is
necessary is the preparation of a petition, the deposit in court
or posting of a bond in its stead, service on the claimants, and
the preparation of an order discharging the stakeholder. Id.
Factors the court may consider include “1) whether the case is
simple or involved; 2) whether the stakeholder performed any
unique services for the claimants or the court; 3) whether the
stakeholder acted in good faith and with diligence; 4) whether the
services rendered benefited the stakeholder; and 5) whether the
claimants improperly protracted the proceedings.” Id. Normally
the costs and fees will be taxed against the losing claimant,
although sometimes they are divided. Id.
The context of an action like this one is explained by
the Honorable Lee H. Rosenthal in Symetra Life Ins. v. Rapid
Settlements, Ltd., 657 F. Supp. 2d 795, 799-801 (S.D. Tex.
2009)(footnotes omitted)(opinion withdrawn on other grounds, Civ.
A, No. H-05-3167, 2012 WL 12893482 (S.D. Tex. May 1, 2012)):
In the secondary market in structured
settlements, tort claimants have settled
their claims by entering into structured
settlements paid through an annuity transfer
some or all of their future-payment rights to
a “factoring company” in exchange for a
discounted lump sum paid in the present. The
legislatures of forty-six states, including
Texas, have enacted similar versions of a
model statute to regulate these secondarymarket transactions.
(“SSPAs”), typically require the factoring
company to disclose fully the effects of the
proposed transfer and require a state-court
judge to decide whether to approve the
transfer as in the best interests of the
annuitant. The purpose of the SSPAs is to
protect annuitants from overreaching by
factoring companies and to ensure that the
decision to give up future-payment streams in
exchange for a present discounted lump-sum
payment is informed and voluntary.
The state SSPAs typically require a
hearing and court approval of any “direct or
indirect transfer of structured settlement
payment rights” before the proposed transfer
of such rights has any legal effect.
e.g., Tex. Civ. Prac. & Rem. Code § 141.004.
“Structured settlement payment rights” are
often defined as “rights to receive periodic
payments under a structured settlement.” Id.
§ 141.002(6). “Transfer” is defined as:
hypothecation, or other alienation
settlement payment rights made by a
payee for consideration, except
that the term does not include the
security interest in structured
settlement payment rights under a
blanket security agreement entered
in with an insured depository
institution, in the absence of any
action to redirect the structured
settlement payments to the insured
depository institution, or its
agent or successor in interest, or
On or about March 26, 2007 Harrison Chung transferred
the following portion of the periodic payments, called the “Chung
Annuity Payments,” to Defendant Rapid Settlements, Ltd. (“Rapid”),
a citizen of Texas, which subsequently became known as Liquidating
One hundred seven (107) monthly payments each
in the amount of $6,624.97 out of $6,574.97,
amount subject to a 3% annual increase each
February 1st, beginning on February 1, 2016
through and including December 1, 2024,
ultimately increasing to $8,405.65 out of
$8,455.65 per month.
to enforce the blanket security
interest against the structured
settlement payment rights.
Id. § 141.002(8). . . .
A court order approving a transfer under an
SSPA typically must make “express findings”
(1) the transfer is in the best
interests of the payee, taking into
account the welfare and support of
the payee’s dependants;
(2) the payee has been advised in
writing by the transferee to seek
independent professional advice
regarding the transfer and has
either received the advice or
knowingly waived the advice in
contravene any applicable statute
or an order of any court or other
See, e.g., id. § 141.004.
For simplicity and clarity, the Court refers to this
entity as Rapid throughout this opinion,
The Superior Court in Snohomish County, Washington approved the
transfer of the Chung Annuity Payments from Harrison Chung to
Rapid on November 2, 2007 by an agreed order that included a
anything to the contrary in the Application or elsewhere, it has
not transferred or assigned and shall not transfer or assign the
Transferred Payments . . . to any other entity or person.”
order also stated that Rapid was the only person or entity with
authority to change the address for where the payments were to be
Subsequently on November 4, 2015, Symetra Life Insurance
Company (“Symetra”), a citizen of Washington and Iowa,4 obtained
an award of attorney’s fees in the amount of $881,299.30 and of
costs in the amount of $19,998.33 against Rapid in Texas in
Symetra Life Ins. Co., et al. v. Rapid Settlements, Ltd., Civ. A.
Nos. H-05-3167, H-06-2933, 2015 WL 6739022 (S.D. Tex.)(Rosenthal,
On January 6, 2016 Symetra domesticated its judgment in the
Superior Court of Washington for Benton County under Case No. 162-00030-1, appeal dismissed, 16-20075 (5th Cir. April 12, 2016).
Symetra represents that in a different action, pursuant
to Symetra’s request, the Sheriff of Snohomish County, Washington
sold the Chung Annuity Payments to Symetra at a public auction on
April 20, 2016 under a writ of execution issued in Cause No. 16-200030-1 in the Superior Court of Washington for Benton County and
the Sheriff’s Bill of Sale on Personal Property arising from it.
Symetra Assigned Benefit Services Company is a citizen
Symetra claims ownership of the Chung Annuity Payments and has
demanded that Transamerica now make them to Symetra.
injunction enjoining it from commencing or prosecuting any suits
affecting the Chung Annuity Payments because it would enjoin
Symetra from continuing to prosecute its claims in the Snohomish
County Court and the Fraudulent Transfer Litigation in this
district before Judge Hittner, in which it
has already suffered
a loss of $1,000,000, a grave injustice which would unfairly
prejudice Symetra and subject it to further injury or damage.
Alternatively the Court could narrowly fashion an injunction to
not bar its two suits nor enforcement of any judgment that the
payments be payable to Symetra.
Two other parties, A.M.Y. Property & Casualty Insurance
(“FinServ”), both citizens of Anguilla, on April 15, 2016 claimed
ownership of the Chung Annuity Payments pursuant to an April 7,
2016 U.C.C. foreclosure sale and demanded that Transamerica begin
to make payments to them.
Defendants’ Responses to Transamerica’s Motion
In its response (#11) and supplement (#15), Symetra
states that it does not oppose Transamerica’s request to deposit
the Chung Annuity Payments in the registry nor Transamerica’s
discharge without prejudice5 from this action and from any further
Symetra explains the discharge should be without
prejudice because Transamerica’s duty to pay the annuity payments
is ongoing until 2024.
action, deposits all annuity payments that have become due since
June 1, 2016 and that will become due during this litigation, and
that Transamerica agrees to be bound by an any Final Order and/or
Judgment of this Court ordering payment of the annuities from the
date of the Final Order and/or Judgment though the date on which
the final payment is due in December 2024.
Symetra does object to any injunctive relief barring it
payments because these payments are currently, in whole or in
part, the subject of the two concurrent, pending suits brought by
Symetra in this district in Texas and in the Superior Court of
Snohomish County, Washington.
Injunctive relief would also bar
enforcement of this Court’s Final order and/or Judgment in the
On March 24, 2016, Symetra with its affiliate, Symetra
Assigned Benefits Services Company (“Symetra Assigned”), sued RSL
and its owners and related entities for fraudulent transfers in H16-791, Symetra Life Insurance Company, et al. v. RSL-3B-IL, Ltd.,
et al. (“The Fraudulent Transfer Litigation”),6 presided over by
Judge David Hittner. Asking this Court to take judicial notice of
that suit, Plaintiffs allege that Rapid transferred assets with a
face value of more that $60 million to affiliated entities for no
or nominal consideration to defeat the collection rights of
First Amended Complaint, Ex. A.
Symetra and Symetra Assigned claim that the Chung
Annuity Payments constitute a portion of these assets that were
fraudulently transferred by Rapid to its affiliated entities.
They also claim that FinServ and A.M.Y. are related to, and under
Certificate of Interested Persons in the Fraudulent Transfer
Regarding the Washington state court case, by an agreed
order entered on November 5, 2007 in Snohomish County Superior
Court of Washington in Case No. 07-2-04430-1, Rapid was awarded
representations that Rapid made to the court and to the parties to
that action that Rapid had not, and would not, transfer or assign
the payments to any other entity or person.
#10 at 4, ¶ 2, and at
Rapid also warranted its representations.
#10 at 4, ¶ 2.
The Snohomish court then ordered all payments to which Rapid was
entitled would be paid to Rapid, and that Rapid would be the only
person or entity entitled to change the address for the payments
it was awarded.
Id. at 14, ¶ 6.
Moreover, such a transfer
required written notification to Transamerica, but Transamerica
did not receive such. At the Sheriff’s public auction pursuant to
a writ of execution, Symetra purchased and received any and all
rights, title, and interest that Rapid had to the annuity payments
at issue in this case.
Finally Symetra objects to an award of reasonable and
necessary attorneys’ fees and costs in so far as they might be
recovered from Symetra and/or from the annuity payments deposited
in the Court’s registry.
Instead, any such award of fees and
costs should be paid by Liquidating Marketing, Ltd. f/k/a Rapid,
A.M.Y., and/or FinServ.
In their response (#12), A.M.Y. and FinServ state that
they also do not oppose depositing the structured settlement
payment funds into the Court registry as that deposit is a
jurisdictional prerequisite for a statutory interpleader.
also do not object to summary judgment on the right to interplead,
but ask the Court to deny Transamerica’s request for attorney’s
Because Transamerica is a financial institution that files
interpleader actions as a regular event in its ordinary course of
business, it is a cost of doing business and in its self interest
to benefit from interpleader actions to avoid multiple liability.
Century National Bank of San Angelo v. Jones (In re Jones), 61
B.R. 48, 53-54 (Bankr. N.D. Tex. 1986)(“[B]anks and insurance
companies are to be distinguished from other stakeholders [because
for them] it is a cost of doing business and a matter of self
interest to use the salutary benefits of an interpleader action to
avoid multiple liability.
Moreover, fees should not be awarded
when the controversy surrounding the interplead fund is not
difficult to resolve.”), citing Prudential Prop. & Cas. Co. v.
Baton Rouge Bank & Trust, 537 F. Supp. 1147, 1150 (M.D. Ga.
1982)(“[A] number of courts have held that attorneys[‘] fees
should not be awarded to an insurance company in an interpleader
action where the claims to the fund are of the type that arise in
A.M.Y. and FinServe argue that Transamerica has not
provided any evidence that it filed this action outside of the
normal course of its business as an insurance company, annuity
owner, and obligor in a structured settlement.
The complaint and
litigation as a simple matter of lien priority, and the American
Rule that each party bears its own fees should control.
permanent injunction because they are engaged in related and
ongoing litigation with Symetra and Symetra Annuity in this
Transamerica’s Reply (#14)
To Rapid’s contention that Transamerica should not
receive an award of fees because this interpleader is in the
ordinary course of its business, Transamerica points to the
twelve-year history and multiple cases involving this set of
parties and a series of structured settlement transfers, initially
arising when Symetra sued Rapid for tortious interference and
injunctive relief in various Texas counties for using arbitration
to obtain a transfer of future payment rights without state-court
approval under SSPAs. These cases were eventually consolidated in
a suit before Judge Rosenthal that was ultimately resolved in 2015
by a judgment for $901,297.63 in fees and costs in Symetra’s
Washington for Benton County, Case No. 16-2-00030-1 on January 6,
Next Symetra went to the Snohomish County Court, where,
in an unrelated action, Rapid had obtained an order in 2007
allowing a transfer to Rapid of the Chung Annuity Payments that
Transamerica owed in cause number 07-2-04430-1 in the Superior
At Symetra’s request, the Sheriff of Snohomish County,
Washington sold the Chung Annuity Payments to Symetra under a writ
of execution on April 20, 2016,
Symetra then proceeded to file
a motion in the original Chung transfer case on May 12, 2016,
Payments directly to Symetra. A.M.Y. and FinServe are not parties
to that suit.
#10, Ex. 1.
On March 24, 2016 Symetra filed the Fraudulent Transfer
Case, H-16-cv-791, Symetra Life Insurance Company and Symetra
Assigned Benefit Services Company v. RSL-3B-IL, Ltd., RSL-2012-1,
LP, Liquidating Marketing, Ltd., Steward Feldman, Marla Matz
Feldman, and IberiaBank, N.A., in the Southern District of Texas,
alleging that Rapid and related companies fraudulently transferred
unidentified annuity rights totaling $60 million.
that FinServ and A.M.Y. are not parties in that case either and
would not be bound by any finding about Symetra’s right to the
While Symetra conclusorily asserts that the Chung Annuity
Payments are part of the $60 million of annuity rights at issue,
it has not submitted any evidence, nor referenced any evidence, in
support of its claim.
Casualty Corporation v. Symetra Life Insurance Company and Symetra
Assigned Benefits Services Company, also in the Southern District
of Texas regarding claims by A.M.Y. and FinServ to have a prior
perfected security interest in certain assets, allegedly including
foreclosed on those payments.
Symetra is a party to this action,
but Rapid is not.
The purpose of the instant interpleader is to protect
Transamerica from contradictory decisions and/or having to fight
Transamerica to file this interpleader by filing its motion in the
redirect the Chung Annuity Payments to Symetra.
included all the claimants to the Chung Annuity Payments, and
maintains that, as a disinterested stakeholder, Transamerica is
entitled to have the dispute over entitlement to the fund limited
to this interpleader.
Claimants here have all argued for an
exception to a permanent injunction based on the numerous actions.
While Symetra states that it does not anticipate Transamerica
being made a party to these suits, #11 ¶ 19, such a statement does
not protect Transamerica and ignores the fact that Symetra did
include Transamerica in filing its motion to redirect payments in
the Washington court proceeding.
#10, Ex. 1.
Symetra also argues that an injunction would be a “grave
injustice to Symetra, would be unfairly prejudicial, and would
subject Symetra to further injury and/or damage.”
#11 at p.6.
Rapid Defendants also assert they might be prejudiced if they are
enjoined from going forward in other litigation, but fail to
explain how and do not even claim that the Chung Annuity Payments
are at issue in other litigation.
The interpleader statute
expressly contemplates that the dispute will be resolved in one
court to protect the stakeholder.
Transamerica highlights the fact that except for the
case in Snohomish County, there is no evidence that the Chung
Transamerica seeks resolution of the dispute over the Chung
claimants from involving it in any other case, including the other
As for an award of fees and costs, Transamerica points
out that Symetra gives no reason for its argument that the fees
should be awarded only from the other claimants, not from Symetra.
While Rapid, A.M.Y. and FinServe object to any recovery of fees
based on the “ordinary course of business rule,” they do not cite
to any authority in the Fifth Circuit other than the In re Jones
Transamerica insists that neither the Fifth Circuit nor this Court
has ever applied or even referred to that rule.
The Court’s own
research as not found any that apply the ordinary course of
business rule to a request for fees and costs from stakeholder
banks or insurance companies.
Instead, typically the Fifth
Circuit awards disinterested stakeholders their attorneys’ fees,
even banks and insurance companies.
See, e.g., James Talcott,
1971)(awarding fees to a bank); Southern Farm Bureau Life Ins. Co.
v. Lusk, Civ. A. No. 4:13-CV-847, 2014 WL 897812, at *4 (S.D. Tex.
Mar. 6, 2014)(awarding fees to an insurance company in a case
involving claims by competing beneficiaries).
The Court agrees.
See, e.g., Massachusetts Mutual Life Ins. Co. v. Sanders, 787 F.
Supp. 2d 628 (S.D. Tex. 2011)(awarding insurer/disinterested
stakeholder, not in substantial controversy with one of the
claimants, fees and costs from the policy proceeds for services in
filing and investigating to determine which claimant was entitled
to the policy proceeds); Metropolitan Life Ins. Co. v. Barretto,
178 F. Supp. 2d 745, 751 (S.D. Tex. 2001)(same); Jackson National
Life Ins. Co. v. Dobbins, Civ. A. No. 3:16-cv-0854-D, 2016 WL
4268770, at *4 (N.D. Tex. Aug. 15, 2016).
Transamerica, the rule would not apply here because it was not a
routine dispute for an annuity company or for the holder of a
structured settlement annuity such as Transamerica.
typical and foreseeable dispute is between or among competing
beneficiaries of the annuitant.
Here, however, the dispute is a
complicated and unforeseeable contest in a number of different
courts, between courts who purportedly foreclosed on their sister
factoring company after it purchased a flow of annuity payments
from the annuitant, and another annuity company asserting that it
sold these annuity payments at a Sheriff’s sale to enforce its
judgment against the factoring company with which it had a
separate, independent dispute.
Chase Manhattan Bank v. Mandalay
Shores Coop. Housing Ass’n, Inc. (In re Mandalay Shores Coop.
Housing Ass’n, Inc.), 21 F.3d 380, 383 (11th Cir. 1993)(The normalcourse-of-business rule applies in a typical interpleader where
the costs are foreseeable and an insurance company can easily
allocate the costs of these suits to its customers or a bank
acting a the trustee of an estate may allocate costs where there
is a reasonable probability that various claimants will contest
ownership to the assets can plan for them as a regular course of
business, and is therefore undeserving of a fee award).
Symetra erroneously argues that Transamerica should not
be discharged with prejudice because it must still make future
Chung Annuity Payments.
A discharge with prejudice does not
relieve Transamerica from the Court’s previous order requiring it
to make future payments into the court’s registry, but only bars
any future dispute with Transamerica regarding which of these
claimants is entitled to the Chung Annuity Payments.
Transamerica finds there is precedent for an order discharging in
advance an interpleading party that is required to make future
See Fried v. U.S., 141 F. Supp. 385, 387 (E.D.N.Y.
1956)(“New York Life Insurance Company is directed to pay
the Registry of this Court all disability payments which have
accrued to date under the aforementioned policies, and all future
payments thereunder, as and when they shall accrue, all such
deposits to be subject to the further order of this Court as to
Insurance Company shall be discharged from any further liability
for the payment thereof.”); Powers v. Metro Life Ins. Co., 439
opposition to a discharge of the appellant insurance company, the
appellate court entered an order discharging the insurance company
from any further liability to the claimants and awarded it an
attorney’s fees of $500 from the deposited funds, dismissed the
action without costs as to the appellee, and provided for the
continuation of the action between the interpleaded claimants).
Before Symetra had been served and appeared, this Court
granted Transamerica’s motion to permit deposit of interpleader
discharge, without prejudice to being reurged when appropriate.
All the claimants have now appeared.
Having carefully reviewed
the record and the applicable law, the Court concludes that
Transamerica’s motion for partial summary judgment should be
granted for the reasons expressed below.
The Court concludes that Transamerica has properly
brought the instant interpleader action.
There is a single fund
of more than $500, comprised of past and future Chung Annuity
Payments, with those that have been paid to Transamerica deposited
in the Court’s Registry, for which the multiple adverse claimants
with minimal diverse citizenship7 among them are competing.
Parts, 782 F.3d at 192-93.
Therefore the Court has jurisdiction
over this action.
Transamerica is a citizen New Mexico and Iowa, while
FinServe and A.M.Y. are citizens of Anguilla. Rapid (and latter
Liquidating Marketing are citizens of Texas.
Venue is proper pursuant to 28 U.S.C. § 1397 because
Rapid/Liquid Marketing is a citizen of Texas with its principal
place of business in Houston.
disinterested stakeholder, with no claim to the Chung Annuity
Payments, it is entitled to a permanent injunction and dismissal
Transamerica has solved the problem of multiple
Payments, by successfully gathering them all in this interpleader
A permanent injunction in this suit to enjoin all other
preserved until the rightful owner is determined in this action.
The Court also finds that Transamerica is entitled to an
award of reasonable fees and costs for its services in preparing
and filing this interpleader action.
The Court has considered
various factors applied by the Fifth Circuit for determining the
amounts of those awards here.
See, e.g., New York Life Ins. &
Annuity Corp. v. Cannatella, 550 Fed. Appx. 211, 217 (5th Cir. Dec.
23, 2013)(“The district court may take into account a number of
factors when assessing whether attorney’s fees are appropriate:
‘1) whether the case is simple or involved; 2) whether the
stakeholder performed any unique services for the claimants or the
court; 3) whether the stakeholder acted in good faith and with
stakeholder and 5) whether the claimants improperly protracted the
proceedings.’”), citing 7 Charles Alan Wright, et al., Federal
Practice and Procedure § 1719, at 688-89 (3d ed. 2001). The Court
agrees with Transamerica that the claimants’ filing suits in
multiple courts without including all parties is what complicated
this action and protracted this litigation beyond the already
fighting in court.
Transamerica was not even part of these
actions until Symetra filed its motion in the original Chung
transfer case for a court order to redirect the Chung Annuity
Payments from Rapid to Symetra.
While Transamerica acted on good
faith in filing the proper and appropriate interpleader action,
the same cannot be said for the claimants who filed other kinds of
suits without necessary parties in an attempt to gain control of
the Chung Annuity payments as well as over other funds and delayed
resolution of the parties’ disputes.
Accordingly the Court concludes that Transamerica’s
motion for partial summary judgment should be granted, i.e.,
Transamerica should recover reasonable fees and costs and should
be dismissed without prejudice.
First however, the Court
ORDERS that Transamerica shall file within twenty days
an appropriate motion for fees and costs with supporting evidence.
Claimants shall file responses within twenty days of
SIGNED at Houston, Texas, this
UNITED STATES DISTRICT JUDGE
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