Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_16-cv-00213/USCOURTS-almd-2_16-cv-00213-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Breach of Contract

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IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

JENNIFER DAVIS, )

 )

Plaintiff, )

 )

v. ) CIVIL ACTION NO. 2:16-CV-00213-WHA

 )

NORTH AMERICAN COMPANY FOR ) (wo)

LIFE AND HEALTH INSURANCE , )

 )

Defendant/Counterclaimant. )

 )

v. )

 )

JENNIFER DAVIS, )

 )

 Counterclaim Defendant, )

 )

J.D., a minor, and M.D., a minor, )

 )

Third Party Defendants. )

MEMORANDUM OPINION AND ORDER

I. Facts and Procedural History

This cause is before the court on a Motion to Dismiss the Plaintiff’s Complaint (Doc. #5),

a Motion to Pay Policy Proceeds into Court (Doc. #6), a Motion to Appoint Guardian Ad Litem 

(Doc. #14), and a Motion to Dismiss Counterclaim and Crossclaim/Third Party Complaint (Doc. 

#22). The 

The Plaintiff, Jennifer Davis, filed a Complaint in this case on February 17, 2016 in the 

Circuit Court of Montgomery County, Alabama. In the Complaint she brings claims for fraudulent 

misrepresentation (Count I), fraudulent suppression (Count II), negligent and/or wanton 

appointment, training, or monitoring of employees and/or agents (Count III), negligent and/or 

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wanton misrepresentation of material facts (Count IV), breach of contract (Count V), and bad faith 

failure to pay policy proceeds (Count VI). 

The Defendant, North American Company for Life and Health Insurance (“North 

American”), filed a notice of removal on March 29, 2016. This court exercises subject matter

jurisdiction pursuant to 28 U.S.C. §1332 and §1441. 

On April 4, 2016, the Defendant filed a Partial Answer and Counter Claim/Cross Claim 

Complaint of Interpleader.

The claims and counter and cross claims arise out of an insurance dispute. Matthew Davis 

was married to Jennifer Davis and had a $250,000 life insurance policy which named Jennifer 

Davis as beneficiary. Matthew Davis and Jennifer Davis divorced and the Final Decree of Divorce 

provided that the parties shall maintain life insurance in the amount of at least $500,000 with their 

minor children named as beneficiaries. After Matthew Davis’s death, Jennifer Davis requested 

that the life insurance proceeds be paid to her. The Defendant, North American, sent 

correspondence requesting information but did not pay the insurance proceeds. Jennifer Davis 

filed suit, and North American has requested that the court allow it to pay the policy proceeds into 

court, and appoint a Guardian ad Litem.

The Defendant, in its Motion to Dismiss, seeks to dismiss the Plaintiff’s claims, and the 

Plaintiff seeks to dismiss the Defendant’s Counter and Cross Claim and opposes the appointment 

of a Guardian ad Litem.

II. DISCUSSION 

Jennifer Davis takes the position that the Counterclaim and Crossclaim/Third Party 

Complaint should be dismissed because as a matter of Alabama law, a divorce decree cannot 

affect a beneficiary designation in an insurance policy. Jennifer Davis argues that North 

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American has refused in bad faith to pay the life insurance proceeds and its attempt at 

interpleader has no support under Alabama law, relying on Walden v. Walden, 686 So. 2d 345 

(Ala. Civ. App. 1969).

Under Alabama law, a beneficiary named in a life insurance policy is entitled to the 

proceeds of that policy, whether the beneficiary is a spouse, relative, or stranger. Walden, 686 

So. 2d at 346. If a former spouse is named as the sole beneficiary, a divorce alone will not strip 

the beneficiary of his or her rights to the proceeds. Id. However, a divorce decree may under 

certain facts, i.e. incorporating the policy or addressing the designation of beneficiaries, 

effectuate a change of beneficiary. See McKinnis v. McKinnis, 564 So. 2d 451, 452 (Ala. Civ. 

App. 1990) (the insured’s ex-wife, rather than the named beneficiary, was entitled to proceeds 

where the divorce decree incorporated the life insurance policy). 

In Posey v. Prudential Ins. Co. of Am., the insured at the time of his divorce had in effect 

the life insurance policy at issue in the case. 383 So. 2d 849, 850-51 (Ala. Civ. App.). The 

divorce decree required the insured to designate the insured’s son “as the irrevocable beneficiary 

of all of his life insurance.” Id. However, at the time of his death, the insured’s niece was the 

named beneficiary under the policy. Id. The court held the insured’s son, rather than the named 

beneficiary, was entitled to the proceeds, reasoning that the change in beneficiary after the 

divorce decree was in violation of the decree, and did not establish superior rights in the new 

beneficiary. Id. 

Based on the court’s review of Alabama law, the court does not find the issue presented 

regarding the interplay of the divorce decree and insurance beneficiary in this case to be as clear 

cut as Jennifer Davis has argued. Because the divorce decree contemplates life insurance 

beneficiaries who are minors, the court agrees that it is necessary to appoint a Guardian ad Litem 

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to represent the interest of the minors in this case. And, the court concludes that the insurance 

proceeds should be paid into court. See USAA Life Ins. Co. v. Culver, No. 2:15CV309-WHA, 

2015 WL 5918752, at *4 (M.D. Ala. Oct. 8, 2015) (finding an adequate showing of a bona fide 

fear of exposure to multiple claims by diverse claimants had been made for interpleader). The 

court declines to address at this time, however, what legal effect, if any, payment into court of 

the proceeds has on any claims against North American already asserted by Jennifer Davis.

Accordingly, it is hereby ORDERED as follows:

1. The Motion to Pay Policy Proceeds and Interest into Court (Doc. #10) is

GRANTED, and the Clerk of Court shall accept for deposit a check for the proceeds 

of the North American policy on the life of Matthew Davis, Policy #LW500005765, 

plus interest, to be tendered by North American Company for Life and Health 

Insurance within fourteen (14) days of this order, to be deposited and maintained in 

an interest-bearing account previously approved for such purposes, there to abide the 

judgment of this court.

2. The Motion to Appoint Guardian Ad Litem (Doc. # 14) is GRANTED and Ashley 

Penhale, Esq. of the firm Copeland, Franco, Screws & Gill, 444 S. Perry Street, 

Montgomery, AL 36104, is hereby appointed Guardian Ad Litem to represent J.D. 

and M.D., minors, and to defend the interests of the minors in this suit. The clerk is 

DIRECTED to serve a copy of this Order on Ms. Penhale and all parties and Ms. 

Penhale is DIRECTED to file a Notice of Appearance.

3. The Motion to Dismiss for Failure to State a Claim (Doc. #5) and a Motion to 

Dismiss Counterclaim and Crossclaim/Third Party Complaint (Doc. #22) are 

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DENIED without prejudice to being refiled after the Guardian Ad Litem files a 

Notice of Appearance in this case. 

Done this 3

rd day of June, 2016. 

/s/ W. Harold Albritton 

W. HAROLD ALBRITTON

SENIOR UNITED STATES DISTRICT JUDGE

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