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Farmers New World Life Insurance Co. v. Adams

United States District Court, District of Montana, Butte Division

June 19, 2014

FARMERS NEW WORLD LIFE INSURANCE COMPANY, a Washington corporation, Plaintiff,
v.
CHRISTOPHER G. ADAMS, an individual, STEPHEN MONGILLO, an individual, and ANNA MONGILLO, an individual Defendants.

FINDINGS & RECOMMENDATION

JEREMIAH C. LYNCH, UNITED STATES MAGISTRATE JUDGE

This life insurance interpleader action comes before the Court on Plaintiff Farmers New World Life Insurance Company’s (“Farmers”) motions for default judgment, discharge and dismissal, and attorney fees. Farmers’ motions should be granted as set forth below.

I. Background [1]

Effective August 16, 2007, Farmers issued a life insurance policy (“the Policy”) with a $250, 000 death benefit to Christine Adams (“Christine”). (Doc. 4-2). On the Policy application, Christine designated her then-husband, Defendant Christopher Adams (“Christopher”) as the primary beneficiary and her parents, Defendants Stephen and Anna Mongillo (“the Mongillos”) as contingent beneficiaries, with each to receive 50% of the proceeds . (Doc. 4-2).

On November 28, 2012, the state court entered a Final Decree of Dissolution, dissolving the marriage between Christine and Christopher. (Doc. 15-1, at 5). Approximately four months later, on March 18, 2013, Christine died in a car accident. (Doc. 4, ¶ 9). The Policy was still in effect at the time of Christine’s death. Christine had never updated her original beneficiary designation, leaving Christopher as the primary beneficiary and the Mongillos as contingent beneficiaries.

In a letter dated March 26, 2013, counsel for the Mongillos advised Farmers that Christine and Christopher had divorced, and asked Farmers to make no payment to Christopher because his status as the primary beneficiary had been automatically revoked pursuant to Montana’s revocation-upon-divorce statute, Mont. Code Ann. § 72-8-214(2). (Doc. 15-1). Counsel attached a copy of Christine’s death certificate to the letter, along with a copy of the Final Decree of Dissolution. (Doc. 15-1).

On April 13, 2013, Christopher executed a Statement for Insurance Proceeds. (Doc. 21-1). Two weeks later, the Mongillos formally requested payment of the insurance proceeds. (Doc. 21-2). On April 30, 2013, Farmers sent separate letters to Christopher and the Mongillos advising them that if they were not able to resolve their dispute over the insurance proceeds, Farmers might find it necessary to file an interpleader action to determine the rightful beneficiary. (Doc. 21-3). The Mongillos responded on May 10, 2013, asking for immediate payment of the insurance proceeds and stating their position that payment to anyone else would be a breach of the insurance policy. (Doc. 21-4).

Approximately six months later, in November 2013, Farmers commenced this interpleader action to determine the rightful beneficiary under the Policy. (Doc. 1, 4). The Mongillos waived service and answered on January 13, 2014. (Doc. 6, 7, 8). Christopher was personally served but failed to appear or answer, and on March 5, 2014, the Clerk entered default against him pursuant to Fed.R.Civ.P. 55(a). (Doc. 13). With leave of Court, Farmers deposited the $250, 000 Policy proceeds and accrued interest into the Court’s registry fund on April 11, 2014. (Doc. 17, and 04/11/2014 Docket Remark).

Farmers now moves for entry of default judgment against Christopher pursuant to Rule 55(b), for discharge and dismissal, and for an award of its attorney fees and costs.

II. Discussion

A. Default Judgment

Farmers seeks a default judgment declaring that it is not liable to Christopher for the Policy proceeds and permanently enjoining Christopher from bringing any claim against it relating to the Policy.[2] Before addressing Farmers’ motion on the merits, the Court must assure itself both that it has subject matter jurisdiction over this action and personal jurisdiction over Christopher. See Fed. R. Civ. P. 12(h)(3); In re Tuli, 172 F.3d 707, 712 (9th Cir. 1990) (explaining that where a plaintiff seeks default judgment, the court may not assume the existence of personal jurisdiction).

Farmers alleges subject matter jurisdiction based on the Federal Interpleader Act, 28 U.S.C. § 1335, which gives the district court original jurisdiction over an interpleader action filed by a party having custody or possession of “money or property of the value of $500 or more, ” if two or more adverse claimants of diverse citizenship are “claiming or may claim” entitlement to the property and the property has been deposited into the registry of the Court. 28 U.S.C. § 1335(a).

All of these jurisdictional requirements are satisfied here. First, Farmers filed this action because it had possession of the $250, 000 in life insurance policy proceeds. Second, Christopher is a citizen of Montana (doc. 4, ¶ 2) and the Mongillos are citizens of Connecticut (doc 4, ¶ 3), which means they are “adverse claimants of diverse citizenship” for purposes of satisfying § 1335's minimal diversity requirement. See e.g State Farm Fire & Casualty Co. v. Tashire, 386 U.S. 523, 530-31 (1967); Cripps v. Life Ins. Co., 980 F.2d 1261, 1265 (9th Cir. 1992). Finally, Farmers deposited the $250, 000 at issue into the Court’s registry on ...


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