Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_07-cv-00216/USCOURTS-cand-5_07-cv-00216-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1335 Interpleader Action

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28 This disposition is not designated for publication and may not be cited. 1

Case No. C 07-216 JF (HRL)

ORDER GRANTING MOTION TO DISCHARGE

(JFLC1)

**E-Filed 5/14/2007**

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

AURORA NATIONAL LIFE ASSURANCE

COMPANY,

 Plaintiff,

 v.

MATTHEW C. JOHNSON, et al.,

 Defendants.

Case Number C 07-216 JF (HRL)

ORDER GRANTING MOTION TO 1

DISCHARGE

[re: docket no. 19]

AND RELATED CLAIMS.

I. BACKGROUND

On January 11, 2007, Plaintiff Aurora National Life Insurance Company (“Aurora”) filed

a complaint in interpleader. Aurora alleges the following: It is the stakeholder obligated under an

annuity contract. Complaint ¶ 5. On or about May 15, 1986, the parents of Matthew C. Johnson

(Johnson) entered into a settlement (“the Settlement”) with certain insureds of Progressive

Insurance Company in connection with the resolution of certain claims made on behalf of

Johnson. Complaint ¶ 7. Progressive was to purchase an annuity to fund the Settlement. 

Case 5:07-cv-00216-JF Document 26 Filed 05/14/07 Page 1 of 5
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Case No. C 07-216 JF (HRL)

ORDER GRANTING MOTION TO DISCHARGE

(JFLC1)

Complaint ¶ 8. Progressive made a qualified assignment to First Executive Corporation (“First

Executive”) to fund the settlement. Complaint ¶ 10. In turn, First Executive purchased an

annuity from Executive Life Insurance Company (“the ELIC Annuity”). Complaint ¶ 11. 

Pursuant to the terms of the annuity, Johnson was to receive the following payments:

March 5, 1994 $10,000.00

March 5, 1995 $10,000.00

March 5, 1996 $10,000.00.

March 5, 1997 $10,000.00

March 5, 2001 $55,000.00

March 5, 2006 $90,000.00

March 5, 2011 $135,550.00 

 

Complaint ¶ 12. Subsequently, Executive Life Insurance Company was placed into rehabilitation

and the ELIC Annuity was assumed and reinsured by Aurora as annuity contract number

C21403189A (“the Annuity”). Complaint ¶ 13. As a result, Aurora’s subsequent benefit

payments were to be made at 95.4775% of the original benefit amount. Id. The Annuity is

currently owned by FL Assignments. Id. The payments that remain due under the Annuity are

$85,929.75, due on March 5, 2006, and $129,419.75, due on March 5, 2011. Complaint ¶ 14.

Aurora also alleges the following: On or about March 5, 1998, Johnson entered into a

purported purchase agreement with J.G. Wentworth SSC Limited Partnership (“Wentworth”). 

Complaint ¶ 16. Under that agreement, Johnson purported to assign to Wentworth the payment

of $85,929.75, due on March 5, 2006. Id. On or about August 25, 2004, Aurora received notice

that 321 Henderson Receivables Limited Partnership (“Henderson”) had filed a petition for

approval for transfer of structured settlement payment rights by and between Johnson and

Henderson. Complaint ¶ 17. In light of the potentially competing claims to payment between

Wentworth and Johnson, Aurora suspended the payment due on March 5, 2006. Complaint ¶ 21. 

Aurora requested direction from FL Assignments with respect to the payment at issue. 

Complaint ¶ 22. FL Assignments has taken the position that Wentworth has no right to the

payment at issue absent a court order. Complaint ¶ 23. Aurora requests the Court to order

Wentworth and Johnson to interplead their respective claims to the payment at issue without

further involvement of Aurora.

On February 14, 2007, Wentworth filed a cross-claim and a counter-claim against Aurora,

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 That section provides that jurisdiction is proper where “(1) Two or more adverse

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claimants, of diverse citizenship as defined in subsection (a) or (d) of section 1332 of this title,

are claiming or may claim to be entitled to such money or property, or to any one or more of the

benefits arising by virtue of any note, bond, certificate, policy or other instrument, or arising by

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Case No. C 07-216 JF (HRL)

ORDER GRANTING MOTION TO DISCHARGE

(JFLC1)

asserting that Aurora is a stakeholder not knowing whom to pay without direction from the Court

or FL Assignments, and that Aurora should release the payment to Wentworth pursuant to the

terms of Wentworth’s purchase agreement with Johnson. On February 22, 2007, after motions

by Aurora, the clerk entered defaults as to FL Assignments and Johnson. On April 5, 2007,

Aurora moved for discharge from liability in connection with the payment at issue. Aurora

requests an order directing it as to whom it should forward the payment at issue or, alternatively,

permitting it to deposit the suspended payment into the registry of the Court. No opposition to

the motion was received. The Court heard oral argument on May 11, 2007. 

II. LEGAL STANDARD

Persons having claims against the plaintiff may be joined as defendants and

required to interplead when their claims are such that the plaintiff is or may be

exposed to double or multiple liability. It is not ground for objection to the joinder

that the claims of the several claimants or the titles on which their claims depend

do not have a common origin or are not identical but are adverse to and

independent of one another, or that the plaintiff avers that the plaintiff is not liable

in whole or in part to any or all of the claimants. A defendant exposed to similar

liability may obtain such interpleader by way of cross-claim or counterclaim. The

provisions of this rule supplement and do not in any way limit the joinder of

parties permitted in Rule 20.

Fed. R. Civ. P. 22(1).

[A district court hearing an action in interpleader] shall hear and determine the

case, and may discharge the plaintiff from further liability, make the injunction

permanent, and make all appropriate orders to enforce its judgment.

28 U.S.C. § 2361. 

III. DISCUSSION

The Court concludes that Aurora is or may be exposed to double or multiple liability. 

While Johnson has not appeared in this action to date, the proper disputants of this action are

Johnson and Wentworth. Johnson and Wentworth are diverse parties, so jurisdiction is proper. 

28 U.S.C. § 1335. The deposit of the disputed payment is a jurisdictional requirement. Id. 2

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virtue of any such obligation; and if (2) the plaintiff has deposited such money or property or has

paid the amount of or the loan or other value of such instrument or the amount due under such

obligation into the registry of the court, there to abide the judgment of the court, or has given

bond payable to the clerk of the court in such amount and with such surety as the court or judge

may deem proper, conditioned upon the compliance by the plaintiff with the future order or

judgment of the court with respect to the subject matter of the controversy.” 28 U.S.C. § 1395.

 Wentworth already has included Johnson and FL Assignments as cross-defendants to 3

its cross-claim. 

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Case No. C 07-216 JF (HRL)

ORDER GRANTING MOTION TO DISCHARGE

(JFLC1)

Accordingly, the Court will grant the unopposed motion on the condition that Aurora deposit the

contested payment with the clerk of the Court. 

IV. ORDER

Good cause therefor appearing, IT IS HEREBY ORDERED that:

a. The motion to discharge Aurora of liability for the disputed payment is

GRANTED on the condition that Aurora National Life Assurance Company

deposit $85,929.75 with the clerk of this Court within fourteen days of this order.

b. Defendants Johnson, Wentworth, and FL Assignments shall interplead their

claims to the disputed payment without further involvement of Aurora. 

3

DATED: May 14, 2007

 

JEREMY FOGEL

United States District Judge

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Case No. C 07-216 JF (HRL)

ORDER GRANTING MOTION TO DISCHARGE

(JFLC1)

This Order has been served upon the following persons:

James Richard Felton jfelton@greenbass.com, mtyndall@greenbass.com 

William Allen Hanssen william.hanssen@dbr.com 

Will S. Skinner Will.Skinner@dbr.com 

Case 5:07-cv-00216-JF Document 26 Filed 05/14/07 Page 5 of 5