Opinion
NO. 3-99-CV-2679-M
March 30, 2001
FINDINGS AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
Plaintiff Metropolitan Life Insurance Company ("MetLife") and has filed a motion for summary judgment on its claim for interpleader relief and Defendant Diana Bialik's counterclaims for breach of contract, negligence, negligent misrepresentation, and violations of the Texas Insurance Code. By separate motion, Third-Party Defendant Seabury Smith, Inc. f/k/a Johnson Higgins/Kirke-Van Orsdel, Inc. ("Seabury") seeks partial summary judgment on Diana's claims for violations of the Texas Insurance Code and Texas Deceptive Trade Practices Act. Both motions have been referred to United States Magistrate Judge Jeff Kaplan for recommendation pursuant to 28 U.S.C. § 636(b).
Diana Bialik also asserts claims against Seabury for breach of the common law duty of good faith and fair dealing, negligence, and negligent misrepresentation. Seabury filed a motion to dismiss those claims on November 16, 2000. The Court dismissed Diana's bad faith claim and negligence claim arising out of duties created by the MetLife policy. The motion was denied in all other respects. FINDINGS RECOMMENDATION OF MAGISTRATE JUDGE, 1/16/01 at 7-9, adopted as modified by ORDER, 2/6/01.
I.
James R. Bialik was a participant in a Group Universal Life Insurance Plan maintained by his employer, GTE Corporation. (Plf. Compl. ¶ 10). On November 4, 1987, James designated his wife, Marilyn R. Bialik, as the primary beneficiary under the policy and his sister-in-law, Margaret Seppamaki, as the contingent beneficiary. (Id. ¶ 12). James and Marilyn divorced on June 24, 1994. (Id. ¶ 13). Three years later, James married Diana Bialik. (Id. ¶ 15). However, he never filed a new beneficiary designation form with Seabury, the Plan administrator. (Id.). When James died on April 13, 1999, Seppamaki and Diana asserted competing claims to the life insurance proceeds. (Id. ¶¶ 11, 16).
MetLife filed this interpleader action and deposited the sum of $270,000, plus accrued interest, into the registry of the court. Diana then brought counterclaims against MetLife and Seabury for breach of the duty of good faith and fair dealing, negligence, negligent misrepresentation, and violations of the Texas Insurance Code. MetLife and Seabury now seek summary judgment as to some or all of those claims. The issues have been briefed by the parties and the motions are ripe for determination.
MetLife originally named Diana Bialik, Marilyn Bialik, and Margaret Seppamaki as parties to the interpleader action. Marilyn has since disclaimed any interest in the insurance proceeds. (Jt. Status Rep., 12/1/00 at 1-2).
II.
Summary judgment is proper when there is no genuine issue as to any 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, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). A dispute is "genuine" if the issue could be resolved in favor of either party. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). A fact is "material" if it might reasonably affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).
A movant who bears the burden of proof at trial must submit evidence to establish every essential element of its claim or affirmative defense. See Richmond Capital Corp. v. Federal Express Corp., 29 F. Supp.2d 737, 738 (M.D. La. 1998); Brenham Community Protective Association v. United States Department of Agriculture, 893 F. Supp. 665, 668 (W. D. Tex. 1995). Conversely, a movant who does not have the burden of proof at trial need only point to the absence of a genuine fact issue. Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995); Duffy v. Leading Edge Products, Inc., 44 F.3d 308, 312 (5th Cir. 1995). The burden then shifts to the non-movant to show that summary judgment is not proper. Duckett v. Cedar Park, 950 F.2d 272, 276 (5th Cir. 1992). The non-movant may satisfy this burden by tendering depositions, affidavits, and other competent evidence. Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir.), cert. denied, 113 S.Ct. 82 (1992). All evidence must be viewed in the light most favorable to the party opposing the motion. Rosado v. Deters, 5 F.3d 119, 122 (5th Cir. 1993); Reid v. State Farm Mutual Automobile Insurance Co., 784 F.2d 577, 578 (5th Cir. 1986). However, conclusory statements and testimony based merely on conjecture or subjective belief are not competent summary judgment evidence. Topalian, 954 F.2d at 1131.
III.
As a preliminary matter, the Court notes that MetLife and Seabury have submitted supplemental evidence in conjunction with their reply briefs. This is not permissible under the summary judgment rules or the briefing schedule established by the Court. Local Rule 56.6(a) provides that "[a] party who relies on affidavits, depositions, answers to interrogatories, or admissions on file to support or oppose a motion for summary judgment must include such evidence in an appendix." LR 56.6(a). An appendix may accompany a summary judgment motion or response. Id. 56.5(c). Although the rules permit a reply brief, additional summary judgment evidence may only be filed with leave of court. Id. 56.7 ("Except for the motions, responses, replies, briefs, and appendixes required by these rules, a party may not, without the permission of the presiding judge, file supplemental pleadings, briefs, authorities, or evidence.") (emphasis added). The summary judgment briefing schedule established by the Court contains the same prohibition. See ORDER, 1/22/01 ("No supplemental pleadings briefs, or summary judgment evidence will be allowed without leave of court.") (emphasis added).
The supplemental evidence submitted by MetLife and Seabury constitutes an impermissible attempt to introduce new matters at the reply stage. Therefore, the Court will not consider this supplemental evidence for any purpose. See Dickerson v. United Parcel Service, Inc., 1999 WL 966430 at *2 (N.D. Tex. Oct. 21, 1999), aff'd, 234 F.3d 707 (5th Cir. 2000) (Table).
IV.
MetLife seeks summary judgment on its claim for interpleader relief and Diana's counterclaims for breach of the duty of good faith and fair dealing, negligence, negligent misrepresentation, and violations of the Texas Insurance Code. The Court will address these issues in turn.
A.
A stakeholder may be discharged in an interpleader action if the requirements of the federal interpleader statute have been met. See 28 U.S.C. § 2361; Mendez v. Teachers Insurance and Annuity Association, 982 F.2d 783, 787 (2nd Cir. 1992). These requirements are: (1) the disputed fund is greater than $500; (2) there is complete diversity of citizenship among the claimants; (3) the fund has been deposited into the registry of the court; and (4) the stakeholder is disinterested in the outcome of the dispute. Mendez, 982 F.2d at 787. The only element at issue here is whether MetLife is a disinterested stakeholder. "[A] party seeking interpleader must be free from blame in causing the controversy, and where he stands as a wrongdoer with respect to the subject matter of the suit or any of the claimants, he cannot have relief by interpleader." Farmers Irrigating Ditch Reservoir Co. v. Kane, 845 F.2d 229, 232 (10th Cir. 1988) (citing cases).
Diana argues that MetLife is not an innocent stakeholder because it "actively supported the claim of Margaret Seppamaki" throughout this litigation. (Bialik Resp. ¶ 54). Despite this bold assertion, Diana has not cited to any evidence in the record which shows that MetLife has sided with Seppamaki. See Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998) (court is not required to comb record for evidence to support a party's claims); Abrens v. Perot Systems Corp., 39 F. Supp.2d 773, 782 n. 24 (N.D. Tex. 1999) (same). Nor has the Court found any such evidence. Although MetLife alleges in its complaint that Seppamaki "appears" to be entitled to insurance benefits as the contingent beneficiary, it also acknowledges Diana's claim to the proceeds. (Plf. Compl. ¶¶ 14, 16). There is absolutely no basis to conclude that MetLife has participated in the litigation as an adversary or ally to either claimant. See Rhoades v. Casey, 196 F.3d 592, 603 (5th Cir. 1999).
Diana also suggests that MetLife is not an innocent stakeholder because it created the controversy by failing to change beneficiaries as instructed and by notifying Seppamaki of her potential claim to the policy proceeds. (Bialik Resp. ¶ 52 n. 42). Neither argument bears on the issue of disinterest. The only relevant inquiry is whether MetLife has any interest in the interpleaded funds or the controversy between the claimants. MetLife does not claim any right of offset, credit, or other entitlement to the policy proceeds. Indeed, it would undermine the purpose of the interpleader statute if a party could prevent a discharge merely by arguing that the stakeholder breached its contract by not paying the disputed funds to one of the claimants. See Commerce Funding Corp. v. Southern Financial Bank, 80 F. Supp.2d 582, 585 (E.D. Va. 1999).
Alternatively, Diana maintains that MetLife waited too long to file this interpleader action. "A discharge under § 2361 may be delayed or denied if there are serious charges that the stakeholder commenced the action in bad faith." Mendez, 982 F.2d at 787 (citation omitted). There is no such evidence here. Contrary to Diana's assertion, this case is nothing like Mendez v. Teachers Insurance and Annuity Association, 982 F.2d 783 (2d Cir. 1992). The stakeholder in Mendez waited nearly a year and a half after the insured's death to tender the disputed funds into the registry of the court and seek interpleader relief. This occurred only after one of the claimants had filed suit to recover the policy proceeds. Moreover, the stakeholder had known for months that the competing claim was baseless. On these facts, the court determined that the "delay in commencing an interpleader action clearly was unreasonable and impliedly was commenced in bad faith." Id. at 788. By contrast, MetLife initiated this interpleader action at Diana's request just seven months after her husband died. (MetLife App. at 322). When it sought permission to deposit the disputed funds into the registry of the court, Diana opposed the request. Under these circumstances, MetLife did not commence the action in bad faith and is entitled to summary judgment on its claim for interpleader relief.
Although Diana did not necessarily object to the payment of the disputed proceeds into the registry of the court, she opposed the motion on the grounds that MetLife was not an innocent stakeholder and therefore not entitled to attorney's fees. This opposition prevented MetLife from depositing the funds for several months.
Diana also argues that MetLife is not entitled to attorney's fees even if interpleader relief is granted. (Bialik Resp. ¶¶ 63-65). The Court need not address this argument as MetLife has not yet filed an application for attorney's fees.
B.
MetLife also seeks summary judgment on Diana's counterclaims for breach of contract, negligence, negligent misrepresentation, and violations of the Texas Insurance Code. Most of these claims arise out of MetLife's refusal to pay benefits to Diana. (Bialik First Am. Countercl. and Third-Party Compl. ¶¶ 9-10, 11-12, 13-15, 25-26). Since the Court has already determined that MetLife is entitled to interpleader relief, it is not liable to Diana under any theory for failing to pay the disputed proceeds. See Daniels v. Equitable Life Assurance Society of the United States, 35 F.3d 210, 214-15 (5th Cir. 1994).The other claims against MetLife are based on representations allegedly made by the company about the requirements for changing beneficiaries. (Bialik First Am. Countercl. and Third-Party Compl. ¶¶ 16-19, 20-22, 23-24). The summary judgment evidence, viewed in the light most favorable to Diana, shows that James Bialik attempted to change his beneficiary designation a year before he died. On March 10, 1998, James sent a letter to Seabury. This letter states, in relevant part:
First, please officially remove my x-wife Marilyn Bialik from my GTE Group Universal Life policy.
* * * *
Last year I was remarried and requested that my new wife be added to the policy. It is obviously easier to add someone that [sic] to take someone off. I received another coverage update from you and it still showed Marilyn and not my new wife Diana as being covered. This concerned me so I called you and asked if Diana was added and covered (yes) and why Marilyn had not been removed.
Finally someone from your office called me and requested that I submit in writing a request to have Marilyn removed. This letter fulfills that requirement. However, after two years, this was the first time anyone asked for anything in writing from me.
* * * *
In conclusion, please remove Marilyn from my policy. Please make sure Diana is NOT removed. And please provide a refund to me for 24 months of coverage for Marilyn due to your error in handling from the beginning.
(Bialik App. at 13). Diana contends that MetLife has "repeatedly represented that Seabury would perform the tasks associated with changes in administration of the insurance policy made the basis of this suit." (Bialik Resp. ¶ 73). In addition, Diana trusted that MetLife would properly administer the policy and affect changes in beneficiaries in the manner stated by Seabury. (Id. ¶ 74). This trust was based, in part, on a document James Bialik received from his employer. The document states:
An insurance company and administrator you can count on . . .
* * * *
[Seabury] is the program administrator and is responsible for answering your questions, giving you prompt access to accurate records, processing any claims and providing assistance for updating your coverage as your life insurance needs change.
* * * *
Call [Seabury] at 1-800-336-9427 if you have any questions.
(Bialik App. at 7). Significantly, none of these representations were made by MetLife. Nor has Diana cited any authority or explained how MetLife is liable for actions of the Plan administrator.
For these reasons, MetLife is entitled to summary judgment on its claim for interpleader relief and the counterclaims brought by Diana Bialik.
V.
Seabury moves for partial summary judgment on Diana's third-party claims for violations of the Texas Insurance Code and Texas Deceptive Trade Practices Act. According to Seabury:
Diana does not allege any violations of the Texas Deceptive Trade Practices Act in the substantive paragraphs of her third-party complaint. The statute is mentioned only in her request for statutory damages and attorney's fees. (Bialik First Am. Countercl. and Third-Party Compl. ¶¶ 29, 32). Even under the liberal pleading standards of Rule 8, this does not constitute "a short, plain statement of the claim showing that the pleader is entitled to relief. FED. R. Civ. P. 8(a). The Court concludes that Diana has not sufficiently alleged a claim under the TDTPA.
The proper resolution of this Motion and this case revolves around a single factual failure of proof. In paragraphs 4 and 6 of Diana Bialik's Third-Party Complaint, she alleges that James Bialik requested Seabury to change a beneficiary designation which he had made for the Employee Policy on November 4, 1987. There simply is no admissible evidence that any such request was ever made.
(Seabury Br. at 3) (emphasis added). Diana points to the March 10, 1998 letter written by James as evidence of his attempt to change of beneficiaries under the policy. Seabury maintains that this letter did not mention the Group Universal Life Plan. Instead, it was a request to cancel a separate insurance policy for Marilyn Bialik and add coverage for Diana under a third policy. In support of this argument, Seabury notes that James never used the word "beneficiary" but spoke instead of "coverage." The letter itself refers to a request made two years earlier to have Marilyn removed. Such a request would have been made in approximately March of 1996 — more than a year before James married Diana. James further complains in the letter that "after seeing an update coverage from you about a year ago, I noted that Marilyn was still showing up as being covered." (Bialik App. at 13). This prompted James to once again ask that Marilyn be removed from the policy. Since James was not married to Diana at the time these purported requests were made, Seabury argues that he "could not have been requesting that she be added as the beneficiary of the Employee Policy." (Seabury Reply at 4-5).
Diana also refers to several conversations with her husband regarding his dealings with Seabury and his intent to change beneficiaries. (Bialik App. at 2-4, ¶¶ 7, 10, 11, 12, 14). Seabury objects to this testimony on the grounds of hearsay, hearsay within hearsay, and lack of competency. (Seabury Obj. to Bialik Aff. at 2). The Court need not consider these objections or Diana's affidavit testimony because the March 10, 1998 letter is sufficient to create a genuine issue of material fact for trial.
The March 10, 1998 letter certainly can be read in the manner suggested by Seabury. However, the Court is not prepared to hold that such an interpretation is required as matter of law. The letter is ambiguous enough to allow for the possibility that it was intended to substitute Diana as the beneficiary of the Group Universal Life Plan. Although James did not use the word "beneficiary," no legal significance should be attached to that oversight. Nor is the timing of any prior requests referenced in the letter outcome determinative. James and Diana may or may not have been married when those requests were made. However, they clearly were married when the March 10, 1998 letter was sent to Seabury. James expressed concern that a recent coverage update "still showed Marilyn and not my new wife Diana as being covered." (Bialik App. at 13) (emphasis added). He instructed Seabury to "remove Marilyn from my policy" and "make sure Diana is NOT removed." (Id.).
The Court agrees with Seabury that the seminal issue in this case is whether James Bialik requested that Diana be substituted as the beneficiary of the MetLife policy. The Court is unable to resolve that issue in favor of either party as a matter of law. Accordingly, summary judgment is not proper.
RECOMMENDATION
MetLife's motion for summary judgment should be granted in its entirety. Seabury's motion for partial summary judgment should be denied.
INSTRUCTIONS FOR SERVICE AND NOTICE OF RIGHT TO OBJECT
On this date the United States magistrate judge made written findings and a recommended disposition of MetLife's motion for summary judgment and Seabury's motion for partial summary judgment in the above styled and numbered cause. The United States district clerk shall serve a copy of these findings and recommendations on all parties by certified mail, return receipt requested. Pursuant to 28 U.S.C. § 636(b)(1), any party who desires to object to these findings and recommendations must file and serve written objections within ten (10) days after being served with a copy. A party filing objections must specifically identify those findings and recommendations to which objections are being made. The district court need not consider frivolous, conclusory or general objections. The failure to file such written objections to these proposed findings and recommendations shall bar that party from obtaining a de novo determination by the district court. Nettles v. Wainwright, 677 F.2d 404, 410 (5th Cir. 1982). See also Thomas v. Arn, 474 U.S. 140, 150 (1985). Additionally, the failure to file written objections to proposed findings and recommendations within ten (10) days after being served with a copy shall bar the aggrieved party from the factual findings and legal conclusions of the magistrate judge that are accepted or adopted by the district court, except upon grounds of plain error or manifest injustice. Douglass v. United Services Automobile Ass'n, 79 F.3d 1415, 1417 (5th Cir. 1996).