At the time of Thomas’ death, Amber had reached the age of eighteen and had graduated
from high school. Abigail also had reached the age of eighteen, but had not graduated after
completing four years of high school. Abigail did not enroil in the term immediately following
Thomas’ death. Rather, Abigail enrolled for the second term of the 2000-2001 school year on
October 30, 2000. Abigail subsequently withdrew from the second term on January 11, 2001
without graduating.

After Thomas’ death, Brenda, Diane, Amber and Abigail asserted claims to the insurance
proceeds, Specifically, Brenda claimed she was entitled to the death benefits as the designated
beneficiary. Diane, on behalf of Abigail and Amber, claimed Abigail and Amber were designated
beneficiaries under the divorce decree. LINA, as the holder of the insurance proceeds, brought this
action to resolve the competing claims.

DISCUSSION
I. Jurisdiction

The court has an independent duty to determine whether subject matter jurisdiction exists
before deciding the merits of a case. Weaver v. Hollywood Casino-Aurora, Inc., 255 F.3d 279, 281
(7th Cir. 2001). Based on the parties’ pleadings, the court ordered the parties to file a jurisdictional
statement clarifying the basis for diversity jurisdiction under 28 U.S.C. § 1332.

According to the parties’ pleadings, LINA is a Pennsylvania corporation with its principal
place of business in Philadelphia, Pennsylvania. Brenda, Amber and Abigail are residents of Illinois.
Assuming the parties will confirm that each party’s citizenship is the same as their residency, there

is complete diversity of the parties.


decree to lapse. Perkins v. Stuemke, 223 Ill.App.3d 839, 585 N.E.2d 1125 (4th Dist. 1992). In either
case, a constructive trust will be imposed only for the amount stated in the divorce decree. See Id.
at 846, 585 N.E.2d at 1130.

Abigail is entitled to only her share of the constructive trust. Where the parent’s support
obligation treats the minor children equally, each child’s interest in the policy lapses upon his or her
emancipation and reverts back to the policyholder. Cohn v. Metropolitan Life Ins. Co., 202
IlLApp.3d 86, 91-92, 559 N.E.2d 790, 793-94 (Ist Dist. 1990), citing Estate of Comiskey, 125
IIL App.3d 30, 36-37, 465 N.E.2d 653, 658 (1st Dist. 1984). Amber and Abigail were treated equally
under the divorce decree. Upon her emancipation, Amber’s one-half interest reverted back to
Thomas, who designated Brenda as the sole beneficiary under the policy. Under the divorce decree,
Abigail was not emancipated at the time of Thomas’ death. Therefore, Abigail is entitled to an
equitable interest in one-half of the $100,000.00 policy amount contained in the divorce decree or
$50,000.00.

CONCLUSION

LINA is entitled to judgment as a matter of Jaw on its interpleader claim. LINA’s request
for other relief, including a permanent injunction and attorneys’ fees and costs, is denied. Brenda
is entitled to judgment as a matter of law in the amount of $349,000.00 plus interest, subject to a

constructive trust in Abigail’s favor in the amount of $50,000.00 plus interest.

May 6, 2002 ENTER:

ey B. Conlon

United States District Judge


A. Rule Interpleader

LINA brought this action under Federal Rule of Civil Procedure 22. Rule 22 provides in
relevant part:

[plersons 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.
Fed. R. Civ. P. 22(1). Under Rule 22, a stakeholder with no claim to the money, may “put the money
... in dispute into court, withdraw from the proceeding, and leave the claimants to litigate between
themselves the ownership of the fund in court.” Commercial National Bank of Chicago v. Demos,
18 F.3d 485, 487-88 (7th Cir. 1994). LINA does not have any claim to the contested insurance
proceeds. Therefore, the court grants LINA leave to deposit $349,000.00 plus applicable interest
with the court’s registry and withdraw from this proceeding.
B. Permanent Injunction

LINA also asks the court to enter a permanent injunction pursuant to 28 U.S.C. § 2361.
Section 2361 authorizes the issuance of an injunction when the requirements of the statutory
provision for interpleader are satisfied. General Railway Signal Co. v. Corcoran, 921 F.2d 700, 702
(7th Cir. 1991). Statutory interpleader requires complete diversity of at least two claimants in the
interpleader action. 28 U.S.C. § 1335. Assuming Brenda, Amber and Abigail maintain the same
citizenship as their residency, Brenda, Amber and Abigail are all Illinois citizens. Without complete

diversity between at least two claimants, the requirements of statutory interpleader are not satisfied

and the court may not issue an injunction.


In addition, the amount in controversy exceeds $75,000.00. If the amount in controversy is
uncontested, the court must accept the parties’ representation unless it “appears to a legal certainty
that the claim is really for less than the jurisdictional amount.” Target Market Publishing, Inc. v.
ADVO, Inc., 136 F.3d 1139, 1141-42 (7th Cir. 1998), quoting St. Paul Mercury Indemnity Co. v. Red
Cab Co., 303 U.S. 283, 289 (1938). The insurance proceeds in controversy amount to $349,000.00
plus applicable interest. Therefore, the jurisdictional minimum is satisfied.

iL. Standard of Review

Summary judgment is appropriate when the moving papers and affidavits show there is no
genuine issue of material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ.
P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once a moving party has met its
burden, the non-moving party must go beyond the pleadings and set forth specific facts showing
there is a genuine issue for trial. Fed. R. Civ. P. 56(e); Silk v. City of Chicago, 194 F.3d 788, 798
(7" Cir. 1999). A genuine issue of material fact exists when “the evidence is such that a reasonable
jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986).

Ill. | LINA’s Motion for Summary Judgment

Inits motion for summary judgment, LINA requests: (1) discharge from this case with leave
to deposit the contested insurance proceeds plus applicable interest with the court’s registry; (2) a
permanent injunction pursuant to 28 U.S.C. § 2361; and (3) attorneys’ fees and costs. Brenda,
Amber and Abigail do not contest LINA’s motion for summary judgment with the exception of

LINA’s request for attorneys’ fees and costs.


Under the divorce decree, Thomas was required to “maintain life insurance now in effect
with the children for whom he has responsibility to support as beneficiary.” Thomas’ obligation to
support Amber and Abigail extended only until they turned eighteen or left high school, whichever
occurred later. At the time of Thomas’ death, Amber was over the age of eighteen and had graduated
from high school. Therefore, Thomas was no longer required under the divorce decree to maintain
life insurance for Amber as a beneficiary. However, Abigail, who was eighteen, had not graduated
after completing four years of high school. Brenda contends Abigail left high school prior to her
father’s death. In support of her position, Brenda offers evidence that Abigail did not enroll in the
first term of the 2000-2001 school year which began around the time of Thomas’ death in August.
Instead, Abigail enrolled for the second term of the 2000-2001 school year on October 30, 2000.
Abigail subsequently withdrew from the second term on January 11, 2001 without graduating.
Contrary to Brenda’s position, Abigail’s enrollment in high school from October 30, 2000 through
January 11, 2001 establishes that Abigail did not leave high school until after Thomas’ death.
Therefore, Thomas was responsible for supporting Abigail at the time of his death. Based on
Thomas’ obligation under the divorce decree, Abigail has an equitable interest in the insurance
proceeds,

Under these circumstances, Brenda claims that Abigail is only entitled to a constructive trust
in the amount of $50,000.00. According to the divorce decree, Thomas had “in effect term life
insurance on his life in the amount of $100,000.00.” There is no evidence whether the policy at issue
is the same as the policy referenced in the divorce decree. In any event, the divorce decree may give
rise to a constructive trust on the proceeds of a subsequently issued life insurance policy naming a

different beneficiary where the decedent allows the life insurance policy identified in the divorce


Minute Ordes Form (06/97)

United States District Court, Northern District of Iinois

COFRCP4¢m) (General Rule21 OFRCP41(a)(1) © FRCP41(a)(2).

ao [Other docket entry] Plaintiff-counterdefendant’s motion for reconsideration [79-1] is granted, Cross-claimant Bri

in the amount of $50,000.00 plus interest. Plaintiff-counterdefendant’s motion for summary judgment [56-1] is granted. Plaintiff-co
Life Insurance Company of North America is dismissed from this action. Plaintiff-counterdefendant shall dep

Park with the court’s registry by May 15, 2002. Plaintiff-counterdefendant shall also submit to the court and the parties a settlement

the interest accrued. The clerk is ordered to distribute the designated funds upon receipt. Plait

Rame of Assigned Judge Suzanne B. Conlon Sitting Judge if Other
or Magistrate Judge than Assigned Judge
CASE NUMBER 01 C 2835 DATE 5/6/2002
CASE LIFE INSURANCE CO. OF NORTH AMERICA vs. DIANE PARK, et al.
TITLE
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.)
DOCKET ENTRY:
(aD) Oo Filed motion of [ use listing in “Motion” box above.]
(2) QO Brief in support of motion due
(3) oO Answer brief to motion due___. Reply to answer brief due___.
(4) ima) Ruling/Hearingon___set for__at :
(5) oO Status hearing[held/continued to] [set for/re-set for] on setfor at
(6) 0 Pretrial conference[held/continued to] [set for/re-set for] on setfor at
) Oo Trial[set for/re-set for]on at
(8) a [Bench/Jury trial] [Hearing] held/continuedto____at
(9) o This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to}

amended motion for summary judgment [76-1] is granted. Judgment is entered for cross-claimant Brenda Park and against cross-claimants Amber
Christine Park and Abigail Fawn Park in the amount of $349,000.00, plus interest, subject to a constructive trust for cross-claimant Abigail Fawn Park

jit one check for the sum of $299,000.00
plus interest payable to cross-claimant Brenda Park and one check for the sum of $50,000.00 plus applicable interest for cross-claimant Abigail Fawn

F-counterdefendant’s request for a permanent

injunction and attorneys’ fees and costs is denied, ENTER MEMORANDUM OPINION AND ORDER.
Ce | {For further detail see order attached to the original minute order.] ke Lrolr,

enda Park’s

unterdefendant

statement itemizing

No notices required, advised in open court.
No notices required. umber of notices
| Notices mailed by judge’s staff.
Y 0 6 2002
Notified counsel by telephone. Yose docketed
Docketing to mail notices.
av | Mail A0 450 form. fete Lehy initihs
Copy to judge/magistrate judge.
Si602
date nailed notice
courtroom
cB deputy’s ran
initials

mailing deputy initia



C Attorneys’ Fees and Costs

The court may award reasonable attorneys’ fees and costs in an interpleader action. Travelers
Ins. Co. v, Savage, No. 92 C 6510, 1993 WL 22685 at *2, citing Minnesota Mutual Life Ins. Co. v.
Gustafson, 415 F. Supp. 615, 617 (N.D. Ill. 1976). However, courts have declined to award
attorneys’ fees and costs in cases involving insurance policy proceeds because “it is unfair to transfer
the insurance company-stakeholder’s normal costs of doing business to the claimants, at least one
or more of whom is rightfully entitled to the stake.” See Id. The court finds it would be unfair to
transfer LINA’s costs of doing business to the rightful claimants. Therefore, the court declines to
award attorneys’ fees and costs.
IV. Brenda’s Motion for Summary Judgment

In her motion for summary judgment, Brenda claims she alone is entitled to the insurance
proceeds because Thomas’ obligation to support Amber and Abigail ended prior to his death. In
deciding who is entitled to the policy proceeds, the court must apply Illinois law. See Travelers Ins.
Co. v. Daniels, 667 F.2d 572, 573 (7th Cir. 1981). In Illinois, the named beneficiary of a life
insurance policy obtains a vested right to the proceeds upon the death of the insured. Jd. However,
the named beneficiary’s vested right may be subject to the rights of others who may have obtained
an equitable interest. Jd “Illinois courts have found that when a divorce decree orders a party to
name his children as beneficiaries of his life insurance policy, those children are entitled to receive
the proceeds, even if they were not the named beneficiaries at the time of the party’s death.” Jd. See
also Smithberg v. Illinois Municipal Retirement Fund, 192 11.24 291, 300-01, 735 N.E.2d 560, 566

(2000).


deemed to be admitted unless controverted by the statement of the opposing party.” Local Rule
56.1(b)(3)(B).

Brenda, Amber and Abigail failed to respond to LINA’s statement of facts. Pursuant to Local
Rule 56.1(b)(3)(B), LINA’s facts are deemed admitted. Amber and Abigail likewise failed to
respond to Brenda’s statement of facts. Pursuant to Local Rule 56.1(b)(3)(B), Brenda’s statement
of facts is deemed admitted by Amber and Abigail.

B. Facts

The following facts are undisputed. Thomas Park (“Thomas”) was an employee of Archer
Daniels Midland Company. During his employment, Thomas was covered by a group life insurance
policy issued by LINA. On August 15, 2000, Thomas died. Upon his death, death benefits in the
amount of $349,000.00 plus applicable interest became payable under the policy. At the time of his
death, Thomas was married to Brenda. Thomas designated Brenda as the beneficiary of the
insurance proceeds.

Thomas was previously married to Diane. During their marriage, Thomas and Diane had two
children: Amber, born on January 10, 1980, and Abigail, born on January 1, 1982. Thomas and
Diane were divorced on December 14, 1990. Under the divorce decree, Thomas was obligated to
support Amber and Abigail until they reached the age of eighteen or left high school, whichever
occurred later. Thomas also was required to “maintain life insurance now in effect with the children
for whom he has responsibility to support as beneficiary.” Brenda’s 56.1(a)(3) Amended Statement
of Undisputed Material Facts { 9, Ex. 3. According to the divorce decree, Thomas had “in effect

term life insurance on his life in the amount of $100,000.00.” Jd.


BACKGROUND

I. Motion for Reconsideration

On March 21, 2001, the court denied Brenda’s motion for leave to file a response to LINA’s
motion for summary judgment instanter as moot, believing the motion was filed by Amber and
Abigail, who had until April 16, 2002 to file a response. Indeed, the notice of motion identifies the
motion as “Amber Christine Park and Abigail Fawn Park’s motion to file response instanter.” In
any event, Rule 54(b) specifically provides:

any order or other form of decision, however designated, which adjudicates fewer

than all the claims. . . . shall not terminate the action as to any of the claims . . . and

the order or other form of decision is subject to revision at any time before the entry

of judgment adjudicating all the claims and the rights and liabilities of the parties.
Fed. R. Civ. P. 54(b). The court also has inherent authority to reconsider interlocutory orders before
entering final judgment. Wimberly v. General Motors Corp., No. 95 C 1318, 1997 WL 30960, at
*1 (N.D. IIL. Jan. 17, 1997). Therefore, the court grants LINA’s motion for reconsideration and will
consider Brenda’s response in addressing LINA’s motion for summary judgment.
Il. Motions for Summary Judgment
A. Local Rule 56.1

Local Rule 56.1 requires litigants to follow a detailed procedure in filing and responding to
summary judgment motions. In response to a motion for summary judgment, Local Rule 56.1
requires the non-moving party to submit a response “to each numbered paragraph in the moving
party’s statement [of material facts], including, in the case of any disagreement, specific references

to the affidavits, parts of the record, and other supporting materials relied upon.” Local Rule

56.1(b)(3)(A). “All material facts set forth in the statement required of the moving party will be


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
LIFE INSURANCE CO. OF )
NORTH AMERICA )
) No, 01 C2835
Plaintiff, )
) Suzanne B. Conlon, Judge
Vv. ) see
) Gael
DIANE PARK, et al. )
) MAY 66 2002
Defendants.

MEMORANDUM OPINION AND ORDER

Life Insurance Company of North America (“LINA”) brings this interpleader action against
Diane Park (“Diane”), Amber Christine Park (“Amber”), Abigail Fawn Park (“Abigail”) and Brenda
Park (“Brenda”) pursuant to Federal Rule of Civil Procedure 22. Specifically, LINA seeks an
adjudication of the competing claims to death benefits of the insured’s former wife, Diane, their
children, Amber and Abigail, and his widow, Brenda. Brenda counterclaimed against LINA and
cross-claimed against Amber and Abigail, claiming sole right to the insurance proceeds. Amber and
Abigail similarly counterclaimed against LINA and cross-claimed against Brenda, claiming partial
right to the insurance proceeds. The court previously entered default judgment against Diane. LINA
and Brenda move for summary judgment pursuant to Federal Rule of Civil Procedure 56. LINA also
moves for reconsideration of the court’s March 21, 2002 order denying Brenda’s motion for leave

to file a response to LINA’s motion for summary judgment instanter.