Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_14-cv-01104/USCOURTS-cand-3_14-cv-01104-7/pdf.json

Parties Involved:
Theodore J. Leonis
Defendant
Virginia L. Leonis
Defendant
Metropolitan Life Insurance Company
Plaintiff
Jodi A. Zugnoni
Defendant

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

METROPOLITAN LIFE INSURANCE 

COMPANY,

Plaintiffs,

v.

THEODORE J. LEONIS, et al.,

Defendants.

Case No. 14-cv-01104-JST 

ORDER DENYING MOTION FOR AN 

ORDER DISTRIBUTING FEDERAL 

GROUP LIFE INSURANCE POLICY 

BENEFITS TO DEFENDANT 

THEODORE J. LEONIS

Re: ECF No. 30

Before the Court is Defendant Theodore J. Leonis’s Motion for an Order Distributing 

Federal Group Life Insurance Policy Benefits to Defendant Theodore J. Leonis. ECF No. 30. For 

the reasons set forth below, the motion is DENIED.

I. BACKGROUND

In this interpleader action, the parties seek the distribution of life insurance benefits that 

became payable upon the death of James T. Leonis on October 7, 2011. ECF No. 1 ¶¶ 12-13. The 

decedent was covered under the Federal Employees’ Group Life Insurance Policy (the “FEGLI 

Policy”) issued by Metropolitan Life Insurance Company (“MetLife”) to the Office of Personnel 

Management pursuant to the Federal Employees’ Group Life Insurance Act (“FEGLIA”), 5 U.S.C. 

§§ 8701, et seq. ECF No. 1 ¶¶ 5, 7. Under federal law, on the establishment of a valid claim, the 

benefits must be paid to persons surviving at the date of his death, in the following order of 

precedence: 

First, to the beneficiary or beneficiaries designated by the employee 

in a signed and witnessed writing received before death in the 

employing office . . . .

Second, if there is no designated beneficiary, to the widow or 

widower of the employee.

Third, if none of the above, to the child or children of the employee 

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and descendants of deceased children by representation. . . .

5 U.S.C. § 8705(a); ECF No. 1 ¶ 10.

Defendant Theodore J. Leonis is a surviving son of the decedent and Defendant Virginia L. 

Leonis is a surviving daughter of the decedent. ECF No. 1 ¶¶ 2-3. The most recent beneficiary 

designation form on file, dated March 29, 2005, names Virginia L. Leonis and Jodi A. Zugnoni as 

co-equal beneficiaries of the FEGLI benefits.1 ECF No. 1 ¶ 11, Ex. A. However, Mr. Leonis 

provided to MetLife documentation in support of his claims that, prior to his death, the decedent 

was physically and financially abused by Ms. Leonis and Ms. Zugnoni and that the decedent’s 

decision-making capacity was compromised at the time he signed the 2005 beneficiary designation 

form. Id. ¶¶ 14-16. Mr. Leonis’s Claims for Death Benefits identify Mr. and Ms. Leonis as the 

decedent’s only children and state that the decedent did not leave a surviving spouse. Id. ¶ 17, 

Exs. D, E. 

Because MetLife could not determine whether a court would conclude that Ms. Leonis or 

Ms. Zugnoni should be disqualified from receiving some or all of the FEGLI benefits, it brought 

this interpleader action to permit the Court to determine the proper disposition of the benefits. 

ECF No. 1; see Fed. R. Civ. P. 22. MetLife has been dismissed from this action and the funds at 

issue have been deposited with the Court. ECF Nos. 34, 48. 

On November 7, 2014, Mr. Leonis filed a motion seeking an order distributing the FEGLI 

Policy benefits solely to him. ECF No. 30. Ms. Leonis opposes the motion. ECF No. 40. 

This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331. 

II. LEGAL STANDARD

The Court construes the motion to distribute the FEGLI benefits as a motion for summary 

judgment. “The court shall grant summary judgment if the movant shows that there is no genuine 

dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. 

Civ. P. 56(a). All reasonable inferences must be drawn in the light most favorable to the nonmoving party. Olsen v. Idaho State Bd. of Med., 363 F.3d 916, 922 (9th Cir. 2004). 

 

1

The Clerk entered default against Jodi Zugnoni on October 20, 2014. ECF No. 25. 

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III. DISCUSSION 

Mr. Leonis argues that the FEGLI benefits should be distributed solely to him because they 

are part of the decedent’s estate and California Probate Code section 259 bars Ms. Leonis from 

inheriting from the estate as a result of her 2011 conviction of the financial elder abuse of the 

decedent. ECF No. 30 at 3. This argument fails for three reasons. First, Mr. Leonis has not 

established that the FEGLI benefits are part of the decedent’s estate. Second, contrary to Mr. 

Leonis’s argument, California Probate Code section 259 does not bar Ms. Leonis from inheriting 

from the decedent’s estate. Third, even if section 259 did have this effect, it would be preempted 

by federal law. 

A. Inclusion of Benefits in Decedent’s Estate

Mr. Leonis argues that the FEGLI benefits are part of decedent’s estate. ECF No. 30 at 3-

4. He relies on 42 U.S.C. § 1396p(b)(4), which provides that 

For purposes of this subsection, the term “estate,” with respect to a 

deceased individual —

(A) shall include all real and personal property and other 

assets included within the individual's estate, as defined for 

purposes of State probate law; and 

(B) may include, at the option of the State (and shall include, 

in the case of an individual to whom paragraph (1)(C)(i) 

applies), any other real and personal property and other 

assets in which the individual had any legal title or interest at 

the time of death (to the extent of such interest), including 

such assets conveyed to a survivor, heir, or assign of the 

deceased individual through joint tenancy, tenancy in 

common, survivorship, life estate, living trust, or other 

arrangement [emphasis added].

Defendant contends that because “California utilizes the federal definition of ‘estate,’” the 

decedent’s FEGLI benefits are part of his estate. ECF No. 30 at 3; see Bontá v. Burke, 98 Cal. 

App. 4th 788, 790 (2002) (discussing California’s mandatory program to recover the costs for 

medical services from the estate of the former recipient). 

Mr. Leonis has failed to establish that the FEGLI benefits are part of the decedent’s estate

for probate purposes. First, his reliance on 42 U.S.C. § 1396p(b)(4) and Bontá is misplaced 

because section 1396p(b)(4) defines the term estate “for purposes of” subsection 1396p(b), which 

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concerns “[a]djustment or recovery of medical assistance correctly paid under a State plan.” Mr. 

Leonis does not explain why this definition should apply to the life insurance benefits at issue in 

this case. Second, California law excludes from probate property which has been disposed of by 

provision for nonprobate transfer in a written instrument, including through a life insurance policy

transferring benefits to named beneficiaries. See Cal. Prob. Code § 5000; Estate of Petersen v. 

Petersen, 28 Cal. App. 4th 1742, 1746 (1994); McDaniel v. GEICO Gen. Ins. Co., No. 1:12-cv2028 AWI JLT, 2014 WL 4792561, at *19 (E.D. Cal. Sept. 24, 2014). 

B. California Probate Code Section 259

Mr. Leonis also relies on California Probate Code section 259. ECF No. 30 at 4. He 

points to subsection 259(b), which provides that “[a]ny person shall be deemed to have 

predeceased a decedent to the extent provided in subdivision (c) if that person has been convicted 

of a violation of Section 236 of the Penal Code or any offense described in Section 368 of the 

Penal Code.” Subsection 259(c) provides that “any person found liable under subdivision (a) or

convicted under subdivision (b) shall not (1) receive any property, damages, or costs that are 

awarded to the decedent’s estate in an action described in subdivision (a) or (b), whether that 

person’s entitlement is under a will, a trust, or the laws of intestacy . . . .” Ms. Leonis was 

convicted of a violation of California Penal Code section 368(b)(1) in 2011. ECF No. 31 Ex. C. 

Therefore, Mr. Leonis contends, Ms. Leonis is deemed to have predeceased the decedent and is 

statutorily prohibited from inheriting anything from his estate. ECF No. 30 at 4. 

This argument is based on a misreading of section 259. The statute does not completely 

bar persons convicted of the offenses described in subsection 259(b) from inheriting from the 

decedent’s estate. Rather, it provides that a person convicted under the relevant criminal statutes 

shall not receive any property awarded to the estate in conjunction with those proceedings. In 

other words, it prohibits persons from inheriting funds that they caused to be added to the 

decedent’s estate as a result of their wrongdoing. “Section 259 does not necessarily eliminate the 

abuser’s entitlement to a share of the estate; it simply restricts the value of the estate to which the 

abuser’s percentage share is applied and prevents that person from benefiting from his or her own 

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wrongful conduct.” In re Estate of Dito, 198 Cal. App. 4th 791, 803-04 (2011).2 

As discussed above, Mr. Leonis has failed to establish that the FEGLI benefits are part of 

the decedent’s estate. But even if they were part of the estate, they were not “awarded to the 

decedent’s estate in an action described in [California Probate Code section 259] subdivision (a) or 

(b)” and therefore Ms. Leonis is not barred from inheriting them by section 259. 

C. Preemption 

Finally, the Federal Employees’ Group Life Insurance Act contains an express preemption 

provision:

The provisions of any contract under this chapter which relate to the 

nature or extent of coverage or benefits (including payments with 

respect to benefits) shall supersede and preempt any law of any State 

or political subdivision thereof, or any regulation issued thereunder, 

which relates to group life insurance to the extent that the law or 

regulation is inconsistent with the contractual provisions.

5 U.S.C. § 8709(d)(1). “[W]here a beneficiary has been duly named, the insurance proceeds she is 

owed under FEGLIA cannot be allocated to another person by operation of state law.” Hillman v. 

Maretta, 133 S. Ct. 1943, 1953 (2013). FEGLIA “evinces Congress’ decision to accord federal 

employees an unfettered ‘freedom of choice’ in selecting the beneficiary of the insurance proceeds 

and to ensure the proceeds would actually ‘belong’ to that beneficiary.” Id. at 1952. Accordingly, 

Mr. Leonis’s argument that Ms. Leonis, a beneficiary designated by the decedent, is barred from 

receiving any of the FEGLI benefits by California Probate Code section 259 must fail. 

IV. SCHEDULING ORDER

The Court now sets the following additional deadlines:

Discovery cut-off June 30, 2015

Pre-trial statement due September 1, 2015

Pre-trial conference September 11, 2015 at 2:00 p.m.

Trial October 5, 2015 at 8:30 a.m.

 

2 By contrast, a person who intentionally and feloniously kills the decedent “is deemed to have 

predeceased the decedent for purposes of any property, interests, or benefits the person would 

otherwise be entitled to receive by reason of the decedent’s death.” In re Estate of Dito, 198 Cal. 

App. 4th at 803 n.6 (emphasis added). 

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Trial will be to the Court. The parties are advised that, unless otherwise ordered, the pretrial conference will take place at the Oakland Courthouse, 1301 Clay Street, Oakland, California. 

All other proceedings, including trial, will take place in Courtroom 9, 450 Golden Gate Avenue, 

San Francisco, California. 

IV. CONCLUSION 

For the reasons set forth above, Mr. Leonis’s motion for an order distributing the FEGLI 

benefits solely to him is denied. The matter will proceed to trial. 

The Court sets a bench trial date on October 5, 2015. Ms. Leonis’s recently filed motion 

for a new trial date, ECF No. 54, is terminated as moot. 

Ms. Leonis is advised that her “notice[s] of new evidence,” ECF Nos. 56, 58, do not 

require further action by the Court. 

IT IS SO ORDERED.

Dated: March 18, 2015

______________________________________

JON S. TIGAR

United States District Judge

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