Banner Life Insurance Company v. Bonney et al
Filing
125
MEMORANDUM OPINION that Defendant the Estate's Partial Motion to Dismiss is DENIED and Defendant Gale Beasley's Partial Motion to Dismiss is DENIED. Signed by District Judge Robert G. Doumar and filed on 10/21/2011. (rsim)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Norfolk Division
OCT 2 1
2011
Cu:h.k. u.s
BANNER LIFE INSURANCE COMPANY,
Plaintiff,
v.
Civil Action No. 2:llcvl98
JOHN W. BONNEY
as Administrator of
the ESTATE OF CLYDE B. PITCHFORD, JR., et al.
Defendants.
OPINION AND ORDER
This matter comes before the Court upon the Partial Motions to Dismiss of Defendants
John W. Bonney, as Administrator of the Estate of Clyde B. Pitchford, Jr. ("the Estate")1, and
Gale Beasley ("Defendant Beasley"), filed with this Court on July 18, 2011. For the reasons
stated herein the Partial Motion to Dismiss by the Estate is DENIED and the Partial Motion to
Dismiss by Gale Beasley is DENIED.
Clyde B. Pitchford, Jr. ("Mr. Pitchford") was a citizen of Virginia and the principal and
director of a corporation called 20-20 Recruiting, Incorporated. Plaintiff Banner Life Insurance
Company ("Plaintiff) is a corporation existing under the laws of Maryland with its principal
place of business in Maryland. Plaintiffs Complaint for Interpleader, filed April 5, 2011, names
as Defendants John W. Bonney2, as Administrator of the Estate, Gale Beasley, as the original
1 Following an Order entered by the Circuit Court of Southampton County disqualifying Attorney John
Bonney as the Administrator of the Estate, this Court, by Order dated October 18, 2011, granted Mr. Bonney's
Motion for Leave to Withdraw as Counsel. For the purposes of this Order, the Court reads the Partial Motion to
Dismiss filed by Defendant John W. Bonney, as Administrator of the Estate of Clyde B. Pitchford as a Motion filed
on behalf of the Estate. Thus, Mr. Bonney's withdrawal as Counsel has no effect on the disposition of this Motion.
Plaintiffs initial Complaint for Interpleader names "John M. Bonney" as the Administrator of the Estate.
However, this Court takes it under advisement that the correct name is "John W. Bonney," as has been stated on all
subsequent pleadings.
beneficiary under the insurance Policy, twenty-six additional individuals and John and Jane Does
1-50.
Plaintiffs Amended Complaint for Interpleader, filed May 31, 2011, adds an additional
fourteen defendants, and removes Clyde B. Pitchford, Sr., as a named defendant.
The
individuals listed as defendants in the Amended Complaint for Interpleader are citizens of
Georgia, Virginia, New Mexico, New York, Tennessee, Washington, Florida, South Dakota,
Ohio and Texas. None of the defendants is a citizen of Maryland. This Court has subject matter
jurisdiction over Plaintiffs Amended Complaint for Interpleader based on the diversity of the
parties, pursuant to 28 U.S.C. § 1332.
As the face amount of the policy in question is
$1,000,000, the amount in controversy exceeds $75,000, as required by § 1332.
By its Amended Complaint for Interpleader, Plaintiff seeks to interplead the proceeds of
the life insurance policy of Clyde B. Pitchford, Jr. and to determine the proper beneficiary or
beneficiaries under the policy.
I.
FACTUAL AND PROCEDURAL HISTORY
On November 16, 2005, Plaintiff issued a life insurance policy ("the Policy") to insure
the life of Clyde B. Pitchford, Jr. The Policy had a "face amount" of approximately $1,000,000,
which Plaintiff promised to pay to the beneficiary or beneficiaries of the Policy upon Mr.
Pitchford's death, assuming the Policy was still in force at such time.
Interpleader 14.)
(PL's Am. Compl.
In his insurance application, Mr. Pitchford named his sister, Gale Pitchford
Wagner3, as the primary beneficiary of the Policy, granting her one-hundred percent (100%) of
the Policy proceeds. (Id. at 15.) Mr. Pitchford named his father, Clyde B. Pitchford, Sr. as the
3 Gale Pitchford Wagner is hereafter referred to as Gale Beasley in light of other documents submitted to Plaintiff by
Mr. Pitchford referring to his sister as "Gale Beasley" and in light of documents filed by "Gale Beasley" to this
Court.
contingent beneficiary, granting him one-hundred percent (100%) of the Policy proceeds in the
event the primary beneficiary pre-deceased the insured. (Id.)
The Policy contained the following provisions relating to the insured's right to name
beneficiaries:
Beneficiary
Unless otherwise provided by written notice to us, the beneficiaries are named in the
application.
Change in Beneficiary
During the insured's lifetime, the owner may change the beneficiary designation unless
he or she has waived the right to do so. No beneficiary change will take effect until a
written notice is received at our administrative office.
Such changes will become
effective on the date written notice is received by us. All changes will be subject to any
payment made by us before notice was received.
(Id at 14.)
On April 9, 2009, Denise Vaughan from Innovative Underwriters sent to
Plaintiff via facsimile a document ("List of Beneficiaries") allegedly signed by Mr. Pitchford
which purported to change the beneficiaries of the Policy. (Id at 15.) The List of Beneficiaries
named, in addition to Gale Beasley in the amount of $100,000, twelve additional intended
beneficiaries in amounts ranging from $10,000 to $327,025. (Id at 15-16.) In response, Plaintiff
sent a letter to Mr. Pitchford advising that it could not process the beneficiary changes he
submitted until he included percentage amounts for each beneficiary. (Id at 16.) Mr. Pitchford
never resubmitted a beneficiary change form listing the percentage amounts. (Id.) However, on
June 14, 2010, Plaintiff received via facsimile an additional beneficiary designation for Equity
Trust Company in the amount of "$900,000 - .09 percent." (Id) Plaintiff promptly sent a letter
to Mr. Pitchford advising that in order to process his beneficiary change request, the percentages
of all beneficiaries under the Policy must add up to 100%. Mr. Pitchford never submitted such a
beneficiary change form. (Id.')
On January 26, 2011, Mr. Pitchford died in his home.
Plaintiff received notice of Mr.
Pitchford's death on January 31, 2011. (Id) Beginning on February 16, 2011, Plaintiff began
receiving letters from certain individuals and entities whom Mr. Pitchford had named in the "List
of Beneficiaries" asserting claims against the Policy. (Id. at 17.) As the bases for these claims,
each of these individuals cited a Promissory Note and a factoring contract or series of factoring
contracts for various amounts purportedly entered into by Mr. Pitchford and/or 20-20 Recruiting,
Inc. or by Mr. Pitchford on behalf of the same.
(Id at 17-26.)
The contracts cited by these
claimants purport to assign the principal amounts on the respective contracts to the respective
claimants from the Policy proceeds. (See id)
In order to resolve these claims and to determine the proper beneficiary or beneficiaries
under the Policy, Plaintiff filed an Amended Complaint for Interpleader to request that this Court
enter an Order demanding that Defendants interplead to resolve any dispute about the proper
beneficiaries of the Policy. In its Amended Complaint, Plaintiff further requested that this Court
allow Plaintiff to pay the proceeds of the Policy into the Court's registry to be disbursed by the
Court upon resolution of this matter, and that it enjoin Defendants from commencing any action
against Plaintiff with reference to the proceeds of the Policy. (Id at 27.)
Several of the Defendants named in Plaintiffs Complaint for Interpleader filed Answers
to the Complaint and staked claims to the interpleaded funds.
Defendant John Bonney, as
Administrator of the Estate ("Defendant the Estate"), and Defendant Gale Beasley ("Defendant
Beasley") timely filed their Answers to the Complaint.
After Plaintiff filed its Amended
Complaint for Interpleader as a matter of course, Defendant the Estate and Defendant Beasley
again timely filed Answers and Claims to the interpleaded funds.
In response to the Answers filed by Defendants the Estate and Beasley, Defendants
Howard Lewin, Barbara Lewin, Scott M. Lewin, Barbara Chambers, Leanne F. Eben, Samuel
Gerstein, Barry L. Kahn, Yolanda Kahn, Sunwest Trust, Inc. FO Barry L. Kahn Roth IRA,
Sunwest Trust, Inc. FBO Barbara Lewin IRA, Sunwest Trust, Inc. FBO Scott M. Lewin IRA,
and Donald Thrailkill ("collective Defendants") filed a joint responsive pleading which included
crossclaims against Defendants the Estate and Beasley. The Crossclaim contains six separate
counts. Count I alleges a state-law claim for fraud and civil conspiracy against the Estate and
Gale Beasley. Count II alleges a state-law claim for negligent misrepresentation against the
Estate. Count III of the Crossclaim alleges breach of contract against the Estate. Count IV of the
Crossclaim alleges unfair business practices against the Estate under the New Mexico Unfair
Practices Act, NMSA 1978, Section 57-12-1, et. seq..
Count V alleges fraudulent transfer
against Gale Beasley. Finally, Count VI requests creation of a constructive trust against the
interpleaded funds.
On July 18, 2011, Defendants the Estate and Beasley each filed separate Partial Motions
to Dismiss the collective Defendants' Crossclaim. In support of its Partial Motion to Dismiss,
Defendant the Estate contends that Counts I, II, III and IV of the Crossclaim should be dismissed
under Federal Rule of Civil Procedure 12(b)(l) for lack of subject matter jurisdiction or, in the
alternative, under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon
which relief can be granted. Specifically, the Estate argues that the Crossclaim does not satisfy
Federal Rules of Civil Procedure 8(a)(l) or 13(g).
Defendant Beasley similarly advocates
dismissal of Counts I and V under Rule 12(b)(l) for lack of subject matter jurisdiction or, in the
alternative, under Rule 12(b)(6) for failure to state a claim upon which relief can be granted.4
4 In the "Summary of the Argument" segment of her Memorandum in Support of Defendant's Partial Motion to
Dismiss, Defendant Beasley erroneously argues in favor of dismissal of Counts I and IV of the collective
II.
ANALYSIS
A. Defendants' Partial Motion to Dismiss Under Rule 12(b)(l)for Lack ofSubject
Matter Jurisdiction
1.
Standard of Review
A federal court sitting in diversity must apply the substantive law of the forum state,
including its choice of law rules. Colean Air. Inc. v. Ravtheon Aircraft Co.. 507 F.3d 270, 275
(4th Cir. 2007) (citing Klaxon Co. v. Stentor Elec. Mfg. Co.. 313 U.S. 487, 496-97 (1941)).
However, procedural matters are determined according to federal law. Erie R. Co. v. Tompkins.
304 U.S. 64, 91 (1938); Hottle v. Beech Aircraft Corp.. 47 F.3d 106, 109 (4th Cir. 1995)
(reciting the "general rule that a federal court is to apply state substantive law and federal
procedural law in diversity cases"). Because the legal standard governing a motion to dismiss
pursuant to Rule 12(b)(l) is a procedural matter, it is governed by federal law.
A defendant may challenge subject matter jurisdiction under Rule 12(b)(l) either by
contending that the complaint fails to allege sufficient facts upon which subject matter
jurisdiction can be based or by alleging that the jurisdictional allegations of the complaint are not
true. Kerns v. U.S., 585 F.3d 187, 192 (4th Cir. 2009). Where the defendant challenges the
actual existence of subject matter jurisdiction, the Court may "look beyond the jurisdictional
allegations of the complaint and view whatever evidence has been submitted on the issue to
determine whether in fact subject matter jurisdiction exists." Capitol Leasing Co. v. FDTC. 999
F.2d 188,191 (7th Cir. 1993). The burden of proving subject matter jurisdiction always lies with
the plaintiff. McNutt v. Gen. Motors Acceptance Corp.. 298 U.S. 178, 189 (1936).
Defendants' crossclaims. (Def. Beasley's Mem. in Supp. of Partial Mot. Dismiss 3.) As is noted elsewhere in the
Motion itself and in the supporting memorandum, Defendant Beasley is named only in Counts I and V of the
collective Defendants' crossclaim. Thus, this Court finds that Defendant Beasley's Partial Motion for Dismissal
challenges Counts I and V - and not Count IV - under Rules 12(b)(l) and 12(b)(6).
This Court's subject matter jurisdiction over crossclaims is governed by Federal Rule of
Civil Procedure 13(g), which states, in pertinent part, "A pleading may state as a crossclaim any
claim by one party against a coparty if the claim arises out of the transaction or occurrence that is
the subject matter of the original action." Fed. R. Civ. P. 13(g). For crossclaims to be proper,
they must either carry an independent basis for subject matter jurisdiction or must fall under the
Court's supplemental jurisdiction. See 28 U.S.C. §§ 1331, 1332, 1367; Capital One v. Arabia.
No. 5:10-cv-619-Oc-10KRS, 2011 WL 4346577, *2 (M.D. Fla. Sept. 16, 2011); Amco Constr.
Co. v. Miss. State Bide. Comm'n. 602 F.2d 730, 732-33 (5th Cir. 1979) (Rule 13(g) permits
courts to exercise supplemental jurisdiction over crossclaims as under 28 U.S.C. § 1367(a)).
2.
Discussion
This Court has subject matter jurisdiction over Plaintiff Banner Life Insurance
Company's original Complaint for Interpleader, filed pursuant to Federal Rule of Civil
Procedure 22(a)(l), based on the complete diversity of the parties under 28 U.S.C. § 1332. The
collective Defendants thus contend that "[t]his Court, having diversity jurisdiction and venue at
the inception of this case, continues to have jurisdiction over all claims to the stake herein."
(Collective Def.'s Crossclaim 17.) They further argue that, "[t]o the extent that the Crossclaims
asserted herein do not relate directly to the rights to the interpleaded funds, this Court has
diversity jurisdiction, pendent jurisdiction, or supplemental jurisdiction over those Crossclaims."
(Collective Def.'s Crossclaim If 9.)
In order for this Court to properly entertain the collective Defendants' Crossclaim, there
must be not only subject matter jurisdiction - either on an independent ground or through
supplemental jurisdiction - but the claims must also arise out of the same transaction or
occurrence which forms the basis of Plaintiff s Complaint for Interpleader. 28 U.S.C. §§1331,
1332, 1367; Fed. R. Civ. P. 13(g). Indeed, Federal Rule of Civil Procedure 13(g) states that a
crossclaim is proper only if it "arises out of the same transaction or occurrence that is the subject
matter of the original action or of a counterclaim, or if the claim relates to any property that is the
subject matter of the original action." Fed. R. Civ. P. 13(g). Because no federal cause of action
is alleged in this case, the sole plausible bases for jurisdiction are through diversity jurisdiction
under 28 U.S.C. § 1332 and supplemental jurisdiction under 28 U.S.C. § 1367.
In their Crossclaim, the collective Defendants state that Crossclaimants Barbara
Chambers and Donald Thrailkill are citizens of Texas, that Crossclaimants Leann F. Eben and
Scott Lewin are citizens of Illinois, that Crossclaimants Gerstein, Kahn, and Lewin are citizens
of New Mexico, and that Crossclaimants Sunwest Trust, Inc., the IRA custodian for the benefit
of Barry L. Kahn Roth IRA, Barbara G. Lewin IRA, and Scott M. Lewin IRA, is a New Mexico
corporation. (Collective Def.'s Crossclaim fflf 1-4.) Moreover, the collective Defendants assert
that Defendants the Estate and Beasley are citizens of Virginia. (Id. at ^ 6.)
It is "well-established" that in cases based solely on diversity of citizenship, no plaintiff
may be a citizen of any state of which any defendant is also a citizen. Strawbridge v. Curtiss. 7
U.S. 267 (1806). It is equally well-established that complete diversity must be apparent from the
pleadings. John Birch Soc'v v. Nat'l Broad. Co.. 377 F.2d 194,197 (2d Cir. 1967). For
purposes of assessing diversity, "a corporation shall be deemed to be a citizen of any state in
which it is incorporated and of the State where it has its principal place of business." 28 U.S.C.
§ 1332(c)(l) (emphasis added). "If a complaint fails to allege a corporation's principal place of
business, and if there is a possibility that a party's citizenship, through its principal place of
business, might destroy diversity, then the pleading is insufficient to establish diversity." Neat-
N-Tidv Co.. Inc. v. Tradepower (Holdings^ Ltd.. 777 F. Supp. 1153, 1156 (S.D.N.Y. 1991)
(citing John Birch Soc'v. 377 F.2d at 198).
In their Crossclaim, the collective Defendants nowhere allege the principal place of
business of Sunwest Trust, Inc.. Their pleading of diversity is thus "patently deficient" because
"it shelters the possibility that [Sunwest Trust, Inc.] may have its principal place of business in
the same jurisdiction" as Defendant the Estate or Defendant Beasley. Neat-N-Tidv Co.. 777 F.
Supp. 1153, 1157. Therefore, the only possible way that this Court can properly exercise
jurisdiction over collective Defendants' Crossclaim is through supplemental jurisdiction.
28 U.S.C. § 1367 states that, "[i]n any civil action of which the district courts have
original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims
that are so related to claims in the action within such original jurisdiction that they form part of
the same case or controversy." 28 U.S.C. § 1367(a). The collective Defendants argue that their
claims "go directly to the issue of the equities under which the Court must decide what portion of
the policy proceeds goes to each party in this interpleader action," and that this provides an
adequate basis for supplemental jurisdiction. (Mem. in Resp. to Def. Bonney's Partial Mot.
Dismiss 3.) As noted, the Crossclaim must also satisfy the requirements of Rule 13(g), which
supplies a stricter standard than does § 1367. Rather than requiring that the supplemental claims
simply "relate" to the original cause of action, Rule 13(g) requires that such claims arise out of
the same transaction or occurrence as the original claim. Fed. R. Civ. P. 13(g). Defendants the
Estate and Beasley argue that the collective Defendants fail to allege how the Crossclaims arise
from the transaction or occurrence of the original interpleader claim filed by Plaintiff Banner.
(Mem. in Supp. Def. Estate's Partial Mot. Dismiss 7.)
The Interpleader action which forms the basis of this case is a request for determination
of how to disburse Policy funds. Each claim in the Crossclaim alleges misconduct on the part of
either or both the Estate or Gale Beasley relating to statements allegedly made by Mr. Pitchford
to the respective claimants that he was assigning Policy benefits to such claimants in satisfaction
of certain factoring contracts. If the claims alleged in the Crossclaim - including fraud and civil
conspiracy against the Estate and GaleBeasley (Count I), negligent misrepresentation against the
Estate (Count II), breach of contract against the Estate (Count III), unfair practices under New
Mexico law against the Estate (Count IV), and fraudulent transfer against Gale Beasley (Count
V) - are proved, such a finding would undoubtedly bear upon the appropriate distribution of
Policy funds. It is true, as Defendants the Estate and Beasley argue, that the Interpleader action
and the Crossclaim arise from separate contracts. However, if the collective Defendants could
prove their claims, this may entitle some or all of them to collect under the Policy, and thus are
substantially related to Plaintiffs Interpleader action. We thus find that these claims "relate" to
the original Complaint for Interpleader and that they arise out of the same transaction or
occurrence - namely, Mr. Pitchford's allegedly unlawful conduct in assigning Policy benefits as the initial Complaint.
This Court has discretion not to exercise supplemental jurisdiction over claims under 28
U.S.C. § 1367(a) if (1) the claim raises a novel or complex issue of state law, (2) the claim
substantially predominates over the claim or claims over which the district court has original
jurisdiction, (3) the district court has dismissed all claims over which it has original jurisdiction,
or (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.
28 U.S.C. § 1367(c). Indeed, it is well established that supplemental jurisdiction "is a doctrine of
discretion, not of right." United Mine Workers v. Gibbs. 383 U.S. 715, 726: see also Jordahl v.
Democratic Party of Virginia. 122 F.3d 192,203 (4th Cir. 1997) ("The doctrine of supplemental
jurisdiction... 'is a doctrine of flexibility, designed to allow courts to deal with cases involving
pendent claims in a manner that most sensibly accommodates a range of concerns and values.'").
Defendants the Estate and Beasley urge the Court to decline to exercise supplemental
jurisdiction over the Crossclaim on the grounds that to do so would substantially predominate the
Interpleader Action and confuse the issues present therein. In support of these contentions, they
state that the collective Defendants are ten individuals, each of whom has alleged four or five
claims against either or both the Estate and Gale Beasley, each of which asserts a separate state
law cause of action. Moreover, they argue that, because the events giving rise to each of the
collective Defendants' claims occurred, in some instances, in different jurisdictions, the choice
of law analysis alone would add substantial confusion to this suit. Indeed, it is conceivable that
the trier of fact would have to apply Virginia law to a particular claim between one of the
collective Defendants and Defendants the Estate and Beasley, and New Mexico law to the same
claim between another one of the collective Defendants and Defendants the Estate and Beasley.
This Court shares these concerns about the risk of confusion for any potential jury.
However, the other factors which this court must consider in determining whether it is
appropriate to exercise supplemental jurisdiction - "judicial economy, convenience and fairness
to litigants" - substantially outweigh any such concerns. Indeed, a concern for judicial economy
alone counsels heavily in favor of trying all of the issues that have arisen out of Mr. Pitchford's
Policy in a single, consolidated action.
Defendants the Estate and Beasley assert that "[t]he ten
[collective Defendants] are all certainly subject to depositions and each of them reside outside of
this Court's territorial jurisdiction" as a grounds for dismissal. (Def. Estate's Reply to Collective
Def.'s Opp. to Mot. Dismiss 7.) However, this fact weighs in favor of retaining jurisdiction, not
declining it. Each of these parties will likely be subject to depositions in the Interpleader action
itself, and each of the claims they allege against Defendants the Estate and Beasley will surely be
broached during their testimony. Separating the Interpleader action from the collective
Defendants' Crossclaims would generate a need for additional depositions to be taken and
motions to be filed on much of the same material that will be covered in the present suit. This
Court can find no reason why it should allow such duplicative litigation.
Moreover, the very purpose of Plaintiff s Interpleader action is to definitively decide the
appropriate manner in which to disburse Policy proceeds. Failing to try all of the issues together
would undoubtedly and indefinitely prolong resolution of this core issue.
B. Defendants* Partial Motion to Dismiss Under Rule 12(b)(6)for Failure to State a
Claim Upon which Relief Can be Granted
1.
Standard of Review
Federal Rule of Civil Procedure 8(a)(2) mandates that a pleading contain "a short and
plain statement of the claim showing that the pleader is entitled to relief." This directive has not
been interpreted to require "detailed factual allegations." Ashcroft v. Iabal. 129 S. Ct. 1937,1949
(2009). It does require, however, a plaintiff to plead "factual content that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct alleged." Id (citing
Bell Atlantic Corn, v. Twomblv, 550 U.S. 544, 556 (2007)).
"Threadbare recitals of the
elements of a cause of action, supported by mere conclusory statements" are insufficient to allow
such an inference. Id (citing Twomblv. 550 U.S. at 555).
Where a plaintiff fails to state a claim upon which relief can be granted, or otherwise fails
to meet the requirements of Rule 8(a)(2), Federal Rule of Civil Procedure 12(b)(6) permits a
party to move the court to dismiss an action. The function of a motion to dismiss under Rule
12(b)(6) is to test the legal sufficiency of the complaint. Neitzke v. Williams, 409 U.S. 319, 32627 (1989). The Fourth Circuit has held that a motion to dismiss under Rule 12(b)(6) should be
granted only in "very limited circumstances." Rogers v. Jefferson-Pilot Life Ins. Co., 883 F.2d
324, 325 (4th Cir. 1989). However, dismissal is appropriate if it appears that the plaintiff is not
"entitled to relief under any legal theory which might plausibly be suggested by the facts
alleged." Harrison v. United States Postal Serv.. 840 F.2d 1149,1152 (4th Cir. 1988) (citation
omitted); Davis v. Hudeins, 896 F. Supp. 561, 566 (E.D. Va. 1995) (citing Conley v. Gibson,
355 U.S. 41,45-46 (1957)); Schatz v. Rosenberg. 943 F.2d 485,489 (4th Cir. 1991). When
reviewing the legal sufficiency of a complaint, the Court must construe the factual allegations "in
the light most favorable to plaintiff." Schatz. 943 F.2d at 489 (quotation omitted); Davis, 896 F.
Supp. at 566 (citing Martin Marietta Corp. v. Int'l Telecomm. Satellite Ore., 991 F.2d 94,97 (4th
Cir. 1992)).
2.
Discussion
In their Crossclaim, the collective Defendants have set forth in detail the factual
allegations giving rise to their claims. (Collective Def.'s Crossclaim |H 10-19,25-26,50-52.)
Defendants the Estate and Beasley assert that Virginia law governs the Crossclaim and that
certain of the collective Defendants' claims do not exist under Virginia law. (Mem. in Supp.
Def. Estate's Partial Mot. Dismiss 8-9.) The collective Defendants respond that this choice of
law analysis is premature. (Mem. in Resp. to Def. Estate's Partial Mot. Dismiss 5.) We agree.
Conducting a choice of law analysis "is fact-intensive and context specific. Due to the
complexity of this analysis when confronted with a choice of law issue at the motion to dismiss
stage, courts ... have concluded that it is more appropriate to address the issue at a later stage in
the proceedings." North American Technical Svcs.. Inc. v. V.J. Techs, Inc., No. 10 CV
1384(AWT), 2011 WL 4538069, *2 (D. Conn. Sept. 29,2011); see also Clean Earth of
Maryland. Inc. v. Total Safety. Inc., No. 2:10cvl 19, 2011 WL 1627995, *2 (N.D. W. Va. Apr.
28,2011). The question of what state's substantive law will apply to the Crossclaims cannot be
determined at this stage of the litigation, before any discovery has been conducted.
At this phase of the proceedings, the only relevant inquiry is whether the collective
Defendants have pled sufficient facts that would entitle them to relief. Medina-Claudio v.
Rodrieuez-Mateo. 292 F.3d 31,34 (1st Cir. 2002). We find that they have. Certainly, it may
become clear later in this litigation after the parties commence discovery and/or once this Court
engages in choice of law analysis that the claims asserted in the Crossclaim are not supported by
the relevant state law to be applied. However, at this early stage, and construing the facts in
favor of the collective Defendants, as we are bound to do, we simply cannot say that they have
alleged insufficient facts to survive a motion to dismiss under Rule 12(b)(6).
III.
CONCLUSION
For the reasons stated herein, Defendant the Estate's Partial Motion to Dismiss is
DENIED and Defendant Gale Beasley's Partial Motion to Dismiss is DENIED.
The Clerk is DIRECTED to transmit a copy of this Order to the all Counsel of Record.
IT IS SO ORDERED.
Norfolk, Virginia
October 0/, 2011
Robert G. Dot
Senior United/ftiftes 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?