Opinion
02 Civ. 0141 (HB)
September 13, 2002
OPINION AND ORDER
Following the death of the insured, plaintiff American International Life Assurance Company of New York ("American International") commenced this action for interpleader under 28 U.S.C. § 1335 and Fed.R.Civ.P. 22 against defendants Melissa Vazquez and Nancy Vasquez to determine the rightful beneficiary of decedent's accidental death insurance policy. American International, after depositing the policy's proceeds of $500,000 with the Court on January 7, 2002, moves for an order to dismiss itself as a necessary party. Melissa Vasquez opposes the motion. Additionally., Nancy Vasquez moves for summary judgment seeking the proceeds of the insurance policy. Oral argument on the summary judgment motion was held on September 12, 2002. For the following reasons, plaintiff's motion is GRANTED, and defendant Nancy Vasquez's motion is DENIED.
I. BACKGROUND
Arcangel Vasquez was killed in the attack on the World Trade Center on September 11, 2001. At the time of his death, he was employed by Fiduciary Trust Company ("FTC") where he had an employee welfare benefit plan that provided an accidental death insurance policy governed by the Employee Retirement Income Security Act of 1974 ("ERISA"). Plaintiff American International issued the accidental death policy to FTC. American International claims that the beneficiary designation records were destroyed in the September 11 attacks and that it possesses no other records reflecting a designation. Melissa Vasquez, Arcangel Vasquez's daughter, and Nancy Vasquez, his wife, both claim to be the beneficiary of the proceeds.
On January 7, 2002, American International deposited the proceeds — $500,000 — with the Clerk of the Court. Subsequently, American International filed a notice of motion to dismiss itself as a necessary party. A pretrial conference was held on April 4, 2002, during which it was agreed that prior to setting a briefing schedule for the instant motion, the plaintiff would use its best efforts to investigate the insurance beneficiary designation, assuming one had been made. Accordingly, American International submitted several letters to the court reporting on the extent of its investigation. While in my view not an overwhelming effort by any means, American International's investigation consisted of contacting Franklin Templeton Investments to inquire about records. Franklin Templeton Investments was in the process of acquiring FTC around the time of September 11. In a letter dated May 13, 2002, FTC advised the plaintiff that neither it nor Franklin Templeton Investments had any knowledge with respect to the decedent policy's beneficiary designation. American International forwarded the letter to the defendants and requested that they inform the plaintiff whether they sought further efforts. The defendants never responded to the plaintiff.
On June 17, 2002, the court held a conference call with the parties in which the defendants indicated they would oppose plaintiffs motion to dismiss. However, only defendant Melissa Vazquez submitted papers in opposition.
II. DISCUSSION
An interpleader action is generally concluded in two stages, the first stage determining that the requirements of 28 U.S.C. § 1335 are met and relieving the plaintiff stakeholder from liability, and the second stage adjudicating the adverse claims of the defendant claimants, in this instance, Melissa and Nancy Vasquez. See New York Life Insurance Co. v.Connecticut Development Authority, 700 F.2d 91, 95 (2d Cir. 1983).
The district court has jurisdiction over "any civil action of interpleader involving money or property worth $500 or more where two or more adverse claimants, of diverse citizenship as defined in 28 U.S.C. § 1332, are claiming or may claim to be entitled to such money or property, if the plaintiff has deposited the money or property with the court." Id. "In such an action, the court is to hear and determine the case, and may discharge the plaintiff from further liability, may enter a permanent injunction restraining the claimants from proceeding in any state or United States court in a suit to affect the property, and may make all appropriate orders to enforce its judgment." Id. (citing 28 U.S.C. § 2361).
While diversity is lacking in this case — both adverse claimants reside in New York City — federal subject matter jurisdiction exists pursuant to 28 U.S.C. § 1331 and 29 U.S.C. § 1132 for a federal question that arises under ERISA. See Metropolitan Life Ins. Co. v. Bigelow, 283 F.3d 436, 439-40 (2d Cir. 2002) (stating that ERISA provides an independent basis for subject matter jurisdiction in an interpleader action arising under ERISA). The requirements of 28 U.S.C. § 1335 are therefore satisfied.
While a "[j]udgment discharging the stakeholder in an interpleader action may, of course, be delayed or denied if there are serious charges that the stakeholder commenced the action in bad faith," New York Life Insurance Co. v. Conn. Dev. Auth., 700 F.2d 91, 96 (2d Cir. 1983), neither defendant has set forth any evidence of bad faith, serious or otherwise, on the part of American International.
Instead, Melissa Vazquez opposes plaintiff's motion on the ground that American International breached its fiduciary duty under ERISA — an allegation asserted in her counterclaim — by failing to "thoroughly investigate the beneficiary rights" of the defendants and failing to "provide the benefits owed to her." Melissa Vasquez, however, is only at this stage potentially entitled to the policy proceeds and is therefore without standing to assert her claim against the insurance company. See Bourget v. Government Emp. Ins. Co., 456 F.2d 282, 287 (2d Cir. 1972) ("The excess liability of company arises out of the relationship between insured and company. Claimant is a stranger to that relationship."). As one court noted:
[T]here is no sound basis in law or logic for holding that a prospective claimant has a right in the insurance proceeds of a prospective defendant's liability policy by virtue of the filing of an interpleader action by the insurer. [The stakeholder's] resort to interpleader merely afforded the prospective claimants a means of jointly asserting their claims against the policy proceeds . . . By offering to permit the court to allocate the res among the claims, [the stakeholder] did not create a right in [the claimant] or any other prospective claimant to any part of the res. If the res were deposited, the court could adjudicate the claims and pay out the res in accordance with the adjudications. Adjudication of a claim thus includes a determination of the right, if any, of a claimant to any part of the res. To argue that the bringing of an interpleader action vests any claimant with a right or interest in the policy proceeds put the cart before the horse. It presumes a favorable adjudication before such has occurred. It disregards the necessity that a claimant prove his claim. Until she proves her claim, [the claimant] cannot have a right in the proceeds even if the proceeds had been deposited in court.General Accident Group v. Gagliaradi, et al., 593 F. Supp. 1080, 1088-89 (D.Conn. 1984) (Dorsey, J.) (emphasis added).
As for Nancy Vasquez's motion for summary judgment against Melissa Vasquez, a myriad of issues of fact abound, as evidenced in the papers and at oral argument. For instance, Nancy Vasquez asserts that she is due the policy proceeds under a provision that directs the payment of such proceeds, "[i]n the absence of [a designation]," to the insured person's widow. (Nancy Vasquez Mem. Ex. F). The provision, however, is hardly clear as to whether it applies to the situation at hand, i.e., where the absence of a designation is the result of the records being destroyed or lost. The motion must therefore be denied.
III. CONCLUSION
For the above reasons, plaintiff's motion is GRANTED and defendant's summary judgment motion is DENIED. The pretrial scheduling order remains in full force and effect. This matter remains on the trailing trial calender for November 2002.