Bremus v. Crofton Diving Corporation et al

Filing 10

MEMORANDUM OPINION AND ORDER granting 4 Motion to Dismiss to Complaint. Defendants' Motion to Dismiss (ECF No. 4) is GRANTED pursuant to Federal Rule of Civil Procedure 12(b)(6). The Complaint (ECF No. 1) is DISMISSED with prejudice. IT IS SO ORDERED. Signed by District Judge Arenda L. Wright Allen and filed on 9/22/17. (tbro)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Norfolk Division

ANN BREMUS,

Plaintiff,
V.

Civil No.2:16-cv-700

CROFTON DIVING CORPORATION, and
CAMILLE CROFTON GOBJIECHT,
Defendants.

MEMORANDUM OPINION AND ORDER

This matter comes before the Court on a Motion to Dismiss (ECF No. 4) filed by

Defendants Crofton Diving Corporation and Camille Gobrecht (hereinafter referred to singularly
as "Crofton Diving"). The Motion is granted, and this suit is dismissed with prejudice. Another

case is now the sole vehicle for determining entitlement to the fimds sought by Plaintiff Ann
Bremus.'
I.

BACKGROUND

Before the Court are two related cases: this action, Bremus v. Crofton Diving Corp., No.

2:16-cv-700 (E.D. Va. Dec. 7, 2016), and Crofton Diving Corp. v. Bremus, No. 2:16-cv-734

(E.D. Va. Dec. 21, 2016). Both cases concern an employee retirement ftind (a 40IK) worth

approximately $417,000, established by now-deceased Crofton Diving employee Michael
Bremus. After Michael Bremus's death, his second wife. Arm Bremus, and his daughter, Jordan

Bremus (Ann Bremus' stepdaughter) each claimed entitlement to his retirement ftmd. Jordan

' The Court will dispense with oral argument because the facts and legal contentions are adequately
presented in the materials before it, and oral argument would not materially aid in the decisional process. See E.D.
Va. Civ. R. 7(J).

Bremus anchors her claim in a 2003 beneficiary designation form, which names her as
beneficiary of the fund. However, Ann Bremus contends that the terms of the retirement plan
favor spousal beneficiaries, and that her 2011 marriage to Michael Bremus superseded the
beneficiary designation made in 2003.

On November 15, 2016, Ann Bremus filed this suit in Portsmouth Circuit Court, alleging

that Crofton Diving breached a fiduciary duty and violated the Employee Retirement Employee
Retirement Income Security Act of 1974 ("ERISA"), by failing to promptly release the disputed
funds to her. See Compl.

13-16 (ECF No. 1-1). Crofton Diving removed the action to this

Court. See Notice of Removal (ECF No. 1).

On December 21, 2016, Crofton Diving brought a separate interpleader action in this
Court, naming both Ann Bremus and Jordan Bremus as defendants. See Compl., Crofton Diving,
No. 2:16-cv-734 (E.D. Va. Dec. 21, 2016).

In the interpleader action, Crofton Diving moved to

deposit the disputed funds with the Court, be dismissed from the proceedings, and be relieved of
any liability. See Mot. for J. on the Pleadings, Crofton Diving, No. 2:16-cv-734 (E.D. Va. Mar.
2, 2017). The Court granted that Motion and advised that Crofton Diving would be dismissed
from the suit after depositing the funds. See Crofton Diving, No. 2:16-cv-734, slip op. at 1-3

(E.D. Va. May 17, 2017). On June 6, 2017, Crofton Diving deposited $446,844.77 with the

Court, which includes the retirement-fund principal plus interest. See Deposit Receipt, Crofton
Diving, No. 2:16-cv-734 (E.D. Va. June 6,2017).
II.

LEGAL STANDARD

When dismissing a complaint, federal district courts must decide whether to dismiss with

or without prejudice.

A dismissal with prejudice "is a complete adjudication of the issues

presented by the pleadings and is a bar to a further action between the parties." Harrison v.

Edison Bros. Apparel Stores, Inc., 924 F.2d 530, 534 (4th Cir. 1991). Conversely, a dismissal

without prejudice "operates to leave the parties as if no action had been brought at all." Dove v.

CODESCO, 569 F.2d 807, 809 n.3 (4th Cir. 1978). Despite this distinction, both types of
dismissal share one important characteristic: the termination of the specific action (or claim).
See Taylor v. Sturgell, 553 U.S. 880, 892 (2008); see also United States v. California, 507 U.S.
746, 756 (1993) ("A dismissal without prejudice terminates the action and concludes the rights
of the parties in that particular action.").

Whether to dismiss a claim with or without prejudice generally lies within the discretion
of the district court. See Carter v. Norfolk Comm. Hosp. Ass'n, 761 F.2d 970, 974 (4th Cir.
1985); see also Payne v. Brake, 439 F.3d 198, 204 (4th Cir. 2006).
incurable through amendment, dismissal with prejudice is proper.

When a complaint is

See Cozzarelli v. Inspire

Pharms., Inc., 549 F.3d 618, 630 (4th Cir. 2008); see also Gadda v. State Bar of Cal, 511 F.3d
933, 939 (9th Cir. 2007).
III.

ANALYSIS

In the case at hand, Ann Bremus alleges that Crofton Diving breached a fiduciary duty by

failing to promptly release the disputed funds to her. See Compl.

1-2. When faced with Ann

Bremus's pre-suit demands to remit the funds, Crofton Diving demurred out of concern over
legal propriety. See Surreply at 1 (ECF No. 9). The company observed that a recent Supreme
Court ruling raised the possibility that Jordan may be entitled to some of the disputed funds. See
id. at 1-2 (citing Hillman v. Maretta, 133 S. Ct. 1943, 1945 (2013) (holding that a federal statute
preempts a Virginia statute governing when an employee's marital status changes but he or she
fails to update his or her life insurance beneficiary designation prior to death)). Consequently,
Crofton Diving filed the interpleader action to resolve the dispute. See Compl., Crofton Diving,
No. 2:16-cv-734 (E.D. Va. Dec. 21, 2016).

"Interpleader is a form of joinder open to one who does not know to which of several
claimants he or she is liable .... It permits the person to bring the claimants into a single action,
and to require them to litigate among themselves to determine which, if any, has a valid claim."
Charles A. Wright & Mary Kay Kane, Federal Procedure Deskbook § 79 (2017). The
interpleader action was developed in common law to be "an equitable rather than a legal
procedure." Id.

In keeping with its equitable purpose, Federal Rule of Civil Procedure 22

permits an interpleader action "whenever there are multiple claimants whose claims are such that

the plaintiff—called the stakeholder—^is or may be exposed to double or multiple liability. . . ."
Id. "[T]he purpose is to protect against double vexation in respect to a single liability, rather
than to prevent a double liability ...." Id.

Crofton Diving inpled the disputed funds so that the parties claiming entitlement—^Ann

and Jordan Bremus—could litigate the issue without Crofton Diving's involvement. Crofton
Diving, slip op. at 1-3. After depositing the ftinds, Crofton was "discharged from all liability . ..
regarding the disposition of the deposited ftinds." Id. at 1. The Court enjoined Ann and Jordan

Bremus preliminarily and permanently from the "institution or prosecution" of "any other
proceedings in any other court against [Crofton Diving] with regard to the deposited ftmds or

their distribution." Id. The parties agree that this Court's injunction requires dismissal of the
instant suit.

However, contrary to Ann Bremus's assertions, it also precludes her from re

asserting a future breach of fiduciary duty claim. Therefore, her suit must be dismissed with
prejudice.

When a disinterested third party interpleads funds, courts will ordinarily bar a subsequent
suit for breach of fiduciary duty that is premised on failure to remit the disputed funds.

In

Prudential Ins. Co. ofAmerica v. Hovis, an insurer filed an interpleader complaint and one of the

potential beneficiaries counterclaimed, alleging the insurer acted negligently and in bad faith in
its handling of policy changes. 553 F.3d 258, 259 (3rd Cir. 2009). The district court below had
ruled that the insurer had properly brought an interpleader action against the defendants, and was

therefore shielded from further liability. The Third Circuit affirmed, holding that when "the
stakeholder bears no blame for the existence of the ownership controversy," it is not liable for
claims directly related to its failure to resolve the underlying dispute in a claimant's favor. Id.
Similarly, in CMFG Life Ins. Co. v. Schell, a life insurance company brought an

interpleader action seeking to resolve competing claims by potential beneficiaries. No. 13-3032,
2014 WL 7365802, at *1 (D. Md. Dec. 22, 2014). In that case, one of the potential beneficiaries

filed a counterclaim against the company for breach of fiduciary duty. Id. His claim was
premised on the company's failure to pay the life insurance funds. Id. The court held that
because "there [were] legitimately competing claims over the validity of the change in

beneficiary," the company was not liable for a counterclaim based upon its failure to pay the

funds inone beneficiary's favor. Id. at *3.^
In this case, Ann Bremus seeks to dismiss her breach of fiduciary duty claim without

prejudice, so that she may retain the right to sue Crofton Diving in the future. See Surreply at 3.
That claim would be premised on Crofton Diving's failure to resolve the funds controversy in
her favor and promptly disperse the funds,

Compl. ^^12-19. This is not permitted. The

Court granted Crofton Diving's Motion for Judgment on the Pleadings in the interpleader action,

finding interpleading to be proper. Crofton Diving, slip op. at 1, 3. Because of this, Crofton
^ See also, e.g., Commerce Funding Corp. v. S. Fin. Bank, 80 F. Supp. 2d 582, 586 (E.D. Va. 1999)
(dismissing counterclaim for breach of contract against stakeholder because party's argument that stakeholder
should have turned over the funds to the party was "precisely the issue to be decided in the claim for interpleader");
ReliaStar Life Ins. Co. v. Lormand, No. 3:10-cv-540, 2011 WL 900113 at *5 (E.D. Va. Mar. 11, 2011) (dismissing
counterclaim for breach of contract because stakeholder was protected from counterclaim based on the inpled
funds); J.G. Wentworth Origination, LLC v. Mobley, No. 11-1406, 2012 WL 4922862 at *7 (D. Md. Oct. 12, 2012)
(finding that counterclaim for promissory estoppel/detrimental reliance was a claim to the stake in disguise because
it was premised on the resolution of the interpleader in favor of another claimant).

Diving cannot be held liable for failing to remit the disputed fiinds to either claimant. See
Prudential Ins. Co. of America, 553 F.3d at 261; see also CMFG Life Ins. Co., 2014 WL
7365802 at *3.

Furthermore, allowing Arm Bremus to assert these claims against Crofton Diving is

inconsistent with the federal interpleader statute and undermines its equitable purpose.
Interpleader is a joinder device that "prevents the stakeholder from being obliged to determine at
his peril which claimant has the better claim." 7 Arthur R. Miller et al.. Federal Practice

AND Procedure § 1702 (3d ed.). Once the funds have been inpled, the interested parties "shall

fight it out at their own expense" rather than inflicting needless costs on the unlucky stakeholder

caught in the middle of the conflict.^ Evans v. Wright, (1865) 12 L.T. 11, 79 (Willes, J.) (Eng)).
"The mere statement of the principle shows its justice." Id.
Ann Bremus contends that Crofton Diving agrees that she is entitled to the funds. See

Surreply at 1. This assessment has no impact on whether the interpleader action provides

protection from a breach of fiduciary duty suit, "[interpleader will be allowed even though one
of the claims is not meritorious, so long as it is not . . . utterly baseless." Wright & Kane,
supra, § 79. Where competing claims exist, the stakeholder is entitled to invoke interpleader's
protection regardless of her assessment of the claims' merits. See Arthur R. Miller et al.,
supra, § 1702. This fulfills interpleader's purpose to protect the stakeholder "from the vexation

of multiple suits and the possibility of multiple liability that could result from adverse
determinations in different courts." Id. (emphasis added).

^ The Court notes that "interpleader can be employed to reach an early and effective determination of
disputed questions with a consequent saving of trouble and expense for the parties. As is true of the other liberal
joinder provisions in the federal rules, mterpleader also benefits the judicial system by condensing numerous
potential individual actions into a single comprehensive unit with a resulting savings in court time and energy."
Arthur R. Miller et al., supra, § 1702, Here, these benefits of interpleader were unfulfilled because Ann
Bremus prematurely filed the instant suit.

Having properly filed an interpleader action to resolve the retirement-fund dispute,

Crofton Diving cannot now be subject to liability for failing to resolve the dispute in one
claimant's favor. Ann Bremus's breach of fiduciary duty claim is incurably infirm. Therefore,
dismissal with prejudice is appropriate. See Cozzarelli v. Inspire Pharms., Inc., 549 F.3d 618,
630 (4th Cir. 2008).
IV.

CONLUSION

For the reasons set forth above, Defendants' Motion to Dismiss (ECF No. 4) is
GRANTED pursuant to Federal Rule of Civil Procedure 12(b)(6). The Complaint (ECF No. 1)
is DISMISSED with prejudice.
IT IS SO ORDERED.

Arenda L. Wright Allen
United States District Judge

September cr ^;2Q 17
Norfolk, Virginia