Source: http://tx.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20180323_0000573.STX.htm/qx
Timestamp: 2019-04-24 06:39:43+00:00

Document:
Leslie A. Shyvers, et al., Defendants.
Pending before the court are (1) a motion to dismiss the complaint in intervention under Rules 12(b)(1) and 12(b)(6) filed by defendants Grist Mill Trust Welfare Benefit Plan (the “Plan”) and Kathleen Kehoe, in her capacity as Trustee of the Grist Mill Trust Welfare Benefit Plan (the “Trustee”) (collectively, the “Plan Defendants”) (Dkt. 11); (2) a motion to strike immaterial, impertinent, and scandalous statements in the amended counterclaims in rem and original crossclaims filed by the Plan Defendants (Dkt. 33); and (3) an amended motion to dismiss the amended counterclaims in rem and the original crossclaims filed by defendants Leslie A. Shyvers and Jo. M. Pollack, M.D., P.A. (the “Pollack Co.”) (Dkt. 34). After reviewing the motions, related filings, and the applicable law, the court is of the opinion that the motion to dismiss the complaint in intervention and the motion to strike should be DENIED, and the amended motion to dismiss the amended counterclaims in rem and the original crossclaims should be GRANTED IN PART AND DENIED IN PART.
This case was initiated as an interpleader action by Accordia Life and Annuity Company (“Accordia”). Dkt. 1. Accordia filed the interpleader against Shyvers, the Pollack Co., and the Plan Defendants. Id. It contends that the Pollack Co. adopted the Plan to provide benefits to its employees, including Shyvers, who obtained an adjustable premium life insurance policy with Indianapolis Life Insurance Company (the “Policy”) that named the Trustee as the owner and beneficiary. Id. After various acquisitions of insurance companies, Accordia eventually became the insurer and obligor for the Policy. Id. On November 17, 2016, the Plan, via the Trustee, requested that Accordia surrender the Policy for full surrender value. On December 21, 2016, Shyvers and the Pollack Co. made a formal claim on behalf of Shyvers to the rights and benefits of the Policy. Id. In light of the competing claims, Accordia did not surrender the Policy and instead filed this interpleader action in which it asks the court to resolve the dispute. Id.
The Plan Defendants filed a motion to dismiss on June 26, 2017. Dkt. 11. They argue that the court does not have jurisdiction because Accordia did not deposit the fund that is in dispute with the court. Id. Accordia has since remedied this issue. See Dkts. 14, 23, 25. The Plan Defendants also argue that the interpleader action should be dismissed because Accordia failed to state a claim under Federal Rule of Civil Procedure 12(b)(6). See Dkt. 11. Accordia responds that an interpleader action is not dependent on the merits of the adverse claims and is instead designed to protect the stakeholder. Dkt. 16. The Pollack Co. and Shyvers joined in Accordia's response to the Plan Defendants' motion to dismiss. Dkt. 18. The Plan Defendants filed a reply in which they point out that a state court of appeals held, in a case involving Jo Pollack individually as well as the Pollack Co. relating to the same type of plan, that the Plan was the owner of the Policy primarily because Pollack executed documents indicating that the Plan was the owner and beneficiary and Pollack had not presented any summary judgment evidence indicating that she was prevented from reading the documents by trick or artifice. Id. (citing Dkt. 21, Ex. E).
On June 30, 2017, Shyvers and the Pollack Co. filed an answer and a counterclaim in rem. Dkt. 12. The counterclaim alleges that while the Plan is named the owner of the Policy, it holds it in trust exclusively for the beneficial owner, in this case, Shyvers. Id. The counterclaim asserts that the insurance agents promoted and marketed the Plan as a way to save for retirement that would allow a tax deduction. Id. Shyvers and the Pollack Co. contend that they were supposed to be the equitable beneficiaries of the policies in the Plan. Id. Eventually, however, the Pollack Co. was audited and had to pay taxes and penalties for participating in the Plan. Id. Shyvers and the Pollack Co. assert claims against Accordia for negligent misrepresentation, fraudulent misrepresentation, negligence, unjust enrichment, and money had and received, and they seek a declaratory judgment. Id.
On July 18, 2017, the Plan Defendants filed a motion to dismiss Shyvers and the Pollack Co.'s counterclaim in rem. Dkt. 19. On August 3, 2017, Shyvers and the Pollack Co. amended their answer and counterclaim and added crossclaims against the Plan. Dkt. 24. The amended counterclaim notes the holding by the state appellate court in the case involving Pollack as an individual but states that the ruling was on a “limited issue.” Id. It asserts the same counterclaims against Accordia-negligent misrepresentation, fraudulent misrepresentation, negligence, unjust enrichment, and money had and received. Id. It also asserts these claims against the Plan and adds a breach of fiduciary duty and a breach of contract claim against the Plan. Id.
On August 18, 2017, the Plan Defendants moved to strike the amended answer, counterclaim, and cross claim. Dkt. 33. They also amended their July 18 motion to dismiss the counterclaims in rem. Dkt. 34. The current live motions are the Plan Defendants' motion to dismiss Accordia's complaint in intervention (Dkt. 11), the Plan Defendants' motion to strike Shyvers and the Pollack Co.'s amended counterclaim and original crossclaim (Dkt. 33), and the Plan Defendants' motion to dismiss Shyver and the Pollack Co.'s amended counterclaim and original crossclaims (Dkt. 34); these motions are all ripe for disposition.
First, the Plan Defendants argue that the court does not have jurisdiction because Accordia did not deposit the funds into the court's registry. Dkt. 11. Accordia deposited the funds on August 4, 2017. See Dkt. Entry (Aug. 4, 2017). Accordingly, to the extent the motion to dismiss relies on this argument, the motion to dismiss is DENIED AS MOOT.
The Plan Defendants also argue that (1) there is no colorable claim by Shyvers and the Pollack Co. because the Plan is the legal owner of the Policy; and (2) Accordia did not timely file its complaint in intervention. Dkt. 11. The Plan Defendants contend that the Declarations of Trust establishing the Plan, the documents Shyvers and the Pollack Co. executed adopting the Plan, and the application for the Policy all identify the Plan as the Owner and that Shyvers and the Pollack Co. thus have no claim. Id. With regard to timing, the Plan Defendants contend that Accordia failed to timely file its complaint in intervention because it waited five months after receiving competing claims to file its complaint in intervention. Id.
Accordia responds that its interpleader complaint alleges ample facts showing that it had a legitimate fear that the defendants' completing claims may expose it to liability or litigation with respect to the property at stake. Dkt. 16. It contends that it is “axiomatic that Accordia, the interpleader plaintiff, was not required to (and could not) decide the merits of the claims before filing the interpleader.” Id. It asserts that it was required only to have a good faith belief that there were multiple colorable claims to the fund, and this good faith can be established not only because there are competing assertions against the Policy but also because virtually similar claims were originally granted by a state district court in a similar state court interpleader filed by Penn Mutual Life Insurance Company involving the Trustee, the Pollack Co., and Jo Pollack as an individual. Id. (citing Kehoe v. Pollack, 526 S.W.3d 781 (Tex. App.-Houston [14th Dist.] 2017, no pet. h.). As far as the allegation that the complaint was not timely filed, Accordia contends that it was not contractually obligated to make payment under the initial surrender request until May 17, 2017, it was permitted time to determine if conflicting claims actually existed, and it was also entitled to explore settlement before filing to avoid costs. Id. Accordia contends that it acted in good faith while investigating whether there were colorable competing claims and that it had a reasonable good faith basis to believe the claimants might resolve the issue before it filed the interpleader complaint. Id.
Under 28 U.S.C. § 1335, district courts have original jurisdiction of any civil action in the nature of interpleader that is filed “by any person, firm, or corporation, association, or society having in his or its custody or possession money or property of the value of $500 or more” if there are two or more adverse claimants of diverse citizenship who are claiming or may claim to be entitled to the money or property and the plaintiff has deposited the money or property into the registry of the court. 28 U.S.C. § 1335(a). “The legislative purpose of an interpleader action is to remedy the problems posed by multiple claimants to a single fund, and to protect a stakeholder from the possibility of multiple claims on a single fund.” Rhoades v. Casey, 196 F.3d 592, 600 n.8 (5th Cir. 1999) (quoting Wausau Ins. Cos. v. Gifford, 954 F.2d 1098, 1100 (5th Cir. 1992)). “An interpleader action typically involves two stages. In the first stage, the district court decides whether the requirements for rule or statutory interpleader have been met by determining if there is a single fund at issue and whether there are adverse claimants to that fund.” Id. at 600 (citing Wright, Miller & Kane, Federal Practice & Procedure: Civil 2d § 1714 (1986)). If the requirements for interpleader have been met, then the district court must “make a determination of the respective rights of the claimants.” Id. If there is no issue of material fact regarding entitlement to the fund, the second stage may be adjudicated at summary judgment. Id.
“An interpleader action is designed to protect a stakeholder, as such, from the possibility of multiple claims upon a single fund.” In re Bohart, 743 F.2d 313, 324 (5th Cir. 1984). The interpleader statutes and rules are thus “‘liberally construed to protect the stakeholder from the expense of defending twice, as well as to protect [it] from double liability.'” Id. at 325 (quoting N.Y. Life Ins. Co. v. Welch, 297 F.2d 787, 790 (D.C. Cir. 1961)). A party seeking interpleader must demonstrate that it is entitled to interpleader. Dunbar v. United States, 502 F.2d 506, 511 (5th Cir. 1974). The party must show that it “has been or may be subjected to adverse claims.” Id. “Jurisdiction is not dependent on whether the claim for relief is meritorious; the federal courts lack jurisdiction only if the claims are plainly frivolous or ‘patently without merit.'” Evans v. Tubbe, 657 F.2d 661, 663 (5th Cir., Unit A, 1981) (quoting Duke Power Co. v. Carolina Envtl. Study Grp., 438 U.S. 59, 70-72, 98 S.Ct. 2620 (1978)).
Here, Accordia's complaint sets forth sufficient reason for it to have had a good faith belief that there were colorable competing claims to the Policy. And, Accordia's complaint was timely filed. Accordia was not contractually obligated to even process and make the payment on the demand for six months, and it filed its intervenor complaint before this time lapsed. See Dkt. 15-1, Ex. 1 at 14 (“We may delay payment, except to pay premiums on other policies with us, for up to six months after we receive the surrender request.”). The Plan Defendants' motion to dismiss the intervenor complaint (Dkt. 11) is DENIED.
The Plan Defendants also move, pursuant to Federal Rule of Civil Procedure 12(f), for the court to strike “offensive statements” in paragraphs 9, 17, 18, 40, 41, and 42 of the amended counterclaims in rem and original crossclaims filed by Shyvers and the Pollack Co. Dkt. 33. Shyvers and the Pollack Co. oppose the motion, arguing that the statements the Plan Defendants seek to have stricken are directly relevant to this case and “are true and they are blase, rather than scandalous.” Dkt. 35.
Under Federal Rule of Civil Procedure 12(f), a “court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter. The court may act: (1) on its own; or (2) on motion made by a party either before responding to the pleading or, if a response is not allowed, within 21 days after being served with the pleading.” Fed.R.Civ.P. 12(f). A matter is not considered “scandalous” under Rule 12(f) merely because it “offends the sensibilities of the objecting party if the challenged allegations describe acts or events that are relevant to the action . . . .” In re Gitto Global Corp., 422 F.3d 1, 12 (1st Cir. 2005); see also United States v. Coney, 689 F.3d 365, 379-80 (5th Cir. 2012) (“Although the disputed pleadings might ‘offend the sensibilities' of [the defendant] and her attorneys, those pleadings are not scandalous because they are directly relevant to the controversy at issue and are minimally supported in the record. (quoting In re Gitto Global Corp.)).
[I]t is well established that the action of striking a pleading should be sparingly used by the courts. . . . It is a drastic remedy to be resorted to only when required for the purposes of justice. . . . The motion to strike should be granted only when the pleading to be stricken has no possible relation to the controversy.
Brown & Williamson Tobacco Corp. v. United States, 201 F.2d 819, 822 (6th Cir. 1953); see Augustus v. Bd. of Pub. Instruction of Escambia Cnty., Fla., 306 F.2d 862, 868 (5th Cir. 1962) (quoting the same language from Brown). “Both because striking a portion of a pleading is a drastic remedy, and because it often is sought by the movant simply as a dilatory tactic, motions under Rule 12(f) are viewed with disfavor and are infrequently granted.” F.D.I.C. v. Niblo, 821 F.Supp. 441, 449 (N.D. Tex. 1993).

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