National Insurance Crime Bureau v. Wagner

• Court: District Court, W.D. Washington
• Decided: January 19, 2021
• Docket: 2:19-cv-00730
• Status: Unknown

Opinion

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3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 8 AT SEATTLE

9 10 NATIONAL INSURANCE CRIME CASE NO. C19-0730JLR BUREAU, 11 ORDER DENYING MOTION Plaintiff, FOR SUMMARY JUDGMENT 12 v.

13 DESSIE RENEE WAGNER, et al., 14 Defendants. 15 I. INTRODUCTION 16 Before the court is interpleader Plaintiff National Insurance Crime Bureau’s 17 (“NICB”) motion for summary judgment. (Mot. (Dkt. # 29).) Defendant Dessie Renee 18 Wagner (“Ms. D.R. Wagner”), the only Defendant who has appeared in this action, does 19 not oppose NICB’s motion. (Resp. (Dkt. # 31).) The court has considered the motion, 20 the parties’ submissions regarding the motion, the relevant portions of the record, and the 21 // 22 1 applicable law. Having been fully advised,1 the court DENIES NICB’s motion for 2 summary judgment.

3 II. BACKGROUND 4 This matter arises out of a dispute regarding the distribution of proceeds from an 5 employee savings plan administered by NICB following the death of Scott Laverne 6 Wagner (“Mr. Wagner”). The court recounts the background of this case below. 7 Mr. Wagner was employed by NICB from February 1, 2003, through September 9, 8 2016. (Kruse Decl. (Dkt. # 30) ¶ 5.) During his employment, he participated in NICB’s

9 Employee Savings Plan (“ESP”). (Id. ¶ 6.) He designated his wife, Ms. D.R. Wagner, as 10 the primary beneficiary of his ESP and his sons, Joseph Scott Wagner and Andrew 11 Wesley Wagner, as contingent beneficiaries. (Id.) 12 Mr. Wagner and Ms. D.R. Wagner divorced in November 2006. (Id. ¶ 7, Ex. A.) 13 On April 16, 2016, Mr. Wagner married Leslie Ann Wagner (“Ms. L.A. Wagner”).

14 (Id. ¶ 8, Ex. B.) Mr. Wagner died on July 23, 2017. (Id. ¶ 9.) As a result of his death, 15 his ESP benefits became payable, and both Ms. D.R. Wagner and Ms. L.A. Wagner 16 asserted rights to the proceeds of the ESP. (Id. ¶ 10.) 17 On September 11, 2018, Ms. L.A. Wagner, as administrator of Mr. Wagner’s 18 estate, filed a lawsuit in Snohomish County Superior Court challenging Ms. D.R.

19 Wagner’s right to the ESP proceeds. (See Resp. Ex. 1 (Summons and Complaint, Estate 20 of Scott Laverne Wagner v. Dessie Renee Wagner (“Estate of Wagner”), No. 18-2-08165- 21

1 No party requests oral argument (see Mot., Resp.), and the court does not consider oral 22 argument helpful to its disposition of the motion, see Local Rules W.D. Wash. LCR 7(b)(4). 1 31 (Snohomish Cty. Super. Sept. 11, 2018)).) Ms. L.A. Wagner alleged that Mr. 2 Wagner’s designation of Ms. D.R. Wagner as primary beneficiary was automatically

3 revoked under Washington state law following the dissolution of Mr. Wagner’s marriage 4 to Ms. D.R. Wagner, and that the proceeds of the ESP should therefore be paid to Mr. 5 Wagner’s estate. (Id. ¶¶ 8-11.) 6 Ms. D.R. Wagner moved to dismiss Ms. L.A. Wagner’s case. (Resp. Ex. 2 (Mot. 7 to Dismiss, Estate of Wagner (Jan. 3, 2019)).) She argued in relevant part that the 8 state-law provision upon which Ms. L.A. Wagner relied in her complaint was preempted

9 by the federal Employee Retirement Income Security Act (“ERISA”) and, as a result, the 10 ESP’s beneficiary designation controlled the distribution of proceeds. (Id. at 4-6 (citing 11 Kennedy v. Plan Adm’r. for Dupont Sav. and Inv. Plan, 555 U.S. 285 (2009)).) She also 12 argued that the estate lacked standing to proceed and that its claims were not viable even 13 if state law controlled because the ESP was not a probate asset; that Ms. L.A. Wagner did

14 not have standing to pursue the claims of Mr. Wagner’s sons; and that Mr. Wagner’s sons 15 were necessary and indispensable parties to the action. (Id. at 3-4, 7.) Ms. L.A. Wagner 16 and the estate subsequently conceded that Ms. D.R. Wagner’s position regarding the 17 beneficiary designation was correct and that it was appropriate for the lawsuit to be 18 dismissed. (See Resp. Ex. 3 (Reply, Estate of Wagner (Jan. 9, 2019)) at Ex. 2 (email

19 from Ms. L.A. Wagner’s attorney).) Before the parties could file an agreed order of 20 dismissal, however, the superior court granted Ms. D.R. Wagner’s motion and dismissed 21 the case with prejudice, without stating the grounds on which it found dismissal 22 appropriate. (Resp. Ex. 4 (Order, Estate of Wagner (Jan. 10, 2019)).) 1 NICB filed its complaint for interpleader and declaratory relief in this court on 2 May 15, 2019. (See generally Compl. (Dkt. #1).) It named Ms. D.R. Wagner, Leslie

3 Ann Wagner (in both her individual capacity and as the personal representative of Mr. 4 Wagner’s estate), Mr. Wagner’s estate, Joseph Wagner, and Andrew Wagner 5 (collectively, “Defendants”) as Defendants (see id. ¶¶ 2-7) and by May 28, 2019, it filed 6 affidavits that it had served all Defendants (see Affs. of Serv. (Dkt. ## 3 (Mr. Andrew 7 Wagner), 4 (Ms. L.A. Wagner as personal representative of the Estate of Mr. Scott 8 Wagner), 5 (Ms. L.A. Wagner), 6 (the Estate of Mr. Scott Wagner), 7 (Mr. Joseph

9 Wagner), 8 (Ms. D.R. Wagner))). Of these Defendants, only Ms. D.R. Wagner has 10 appeared in this case. (See generally Dkt.) 11 On August 7, 2019, NICB moved for interpleader and dismissal. (See generally 12 Interpleader Mot. (Dkt. # 16).) On October 30, 2019, the court granted NICB’s motion 13 for interpleader under Federal Rule of Civil Procedure 22 but denied its request to be

14 dismissed from the case because Ms. D.R Wagner had asserted that she intended to file 15 counterclaims against NICB. (10/30/19 Ord. (Dkt. # 20) at 10-15.) Ms. D.R. Wagner 16 filed her answer and a counterclaim against NICB for negligence in its administration of 17 the ESP funds on November 13, 2019. (Ans. (Dkt. # 23).) 18 NICB filed the instant motion for summary judgment on November 12, 2020.

19 (See generally Mot.) It asks the court to establish Ms. D.R. Wagner as the sole 20 beneficiary of the ESP and to dismiss NICB from the case as a disinterested stakeholder. 21 (Id.) NICB states that the parties reached an agreement under which Ms. D.R. Wagner 22 would file a motion for summary judgment seeking a determination of her status as ESP 1 beneficiary and in return neither party would seek fees against the other. (Kruse Decl. 2 ¶ 17.) “In the interest of disposing of this matter expeditiously,” however, NICB “took

3 the initiative” of filing the motion. (Id.) Aside from pointing out that Ms. D.R. Wagner 4 is the only Defendant who appeared in this action, NICB does not argue that it is entitled 5 to summary judgment on the merits of Ms. D.R. Wagner’s negligence counterclaim. (See 6 generally Mot.) It does, however, ask the court to dismiss “any and all potential and 7 actual claims against it by any and all Defendants.” (Mot. at 4.) In her response, Ms. 8 D.R. Wagner states that she “fully agrees with the relief” sought by NICB’s motion and

9 provides additional argument in support of a judgment that she is the sole beneficiary of 10 the ESP. (Resp. at 1.) No other Defendant has responded to NICB’s motion. (See 11 generally Dkt.) No party has moved for default or for default judgment against any 12 non-appearing Defendant. (Id.) 13 III. ANALYSIS

14 Because the parties have not followed certain procedural prerequisites for entry of 15 judgment against the non-appearing Defendants in this interpleader action, the court 16 denies NICB’s motion for summary judgment. The court first addresses the motion for 17 summary judgment regarding Ms. D.R. Wagner’s entitlement to the ESP proceeds before 18 turning to NICB’s request to be dismissed from this case.

19 A. Motion for Summary Judgment 20 “A named interpleader defendant who fails to answer the interpleader complaint 21 and assert a claim to the res forfeits any claim of entitlement that might have been 22 asserted” if service was properly effected upon that defendant. Standard Ins. Co. v. 1 Asuncion, 43 F. Supp. 3d 1154, 1156 (W.D. Wash. 2014) (quoting Sun Life Assur. Co. of 2 Canada, (U.S.) v. Conroy, 431 F. Supp. 2d 220, 226 (D.R.I. 2006) (internal quotation

3 marks omitted). Nevertheless, the court’s rules require that the appearing parties to the 4 interpleader action take certain steps in order to ensure the finality of the court’s 5 determination regarding the rights of those parties. See id. First, the non-appearing 6 defendants must be declared in default. See Fed. R. Civ. P. 55(a). Second, the appearing 7 parties must move for default judgment against the non-appearing defendants. See Fed. 8 R. Civ. P. 55(b). Without the entry of default judgment as to the non-appearing

9 defendants’ entitlement to the proceeds, the appearing defendants’ claims cannot be fully 10 resolved, and the judgment entered in the case cannot fully release the insurer from 11 liability. See Standard Ins. Co., 43 F. Supp. 3d at 1156 (citing W. Conference of 12 Teamsters Pension Plan v. Jennings, No. C10–3629 EDL, 2011 WL 2609858, at *3 13 (N.D. Cal. June 5, 2011)).

14 Although a district court can enter default against a non-appearing defendant on its 15 own motion, see Fed. R. Civ. P. 55(a), courts generally cannot enter default judgment 16 absent a motion from the parties, see id. 55(b). In rare cases, courts have entered default 17 judgment sua sponte against non-appearing defendants in interpleader cases. In these 18 cases, however, the appearing defendants were proceeding pro se. See, e.g., Metro. Life

19 Ins. Co. v. Jackson, No. 3:11-cv-967-J-34JRK, 2013 WL 3974674, at *5 (M.D. Fla. Aug. 20 1, 2013); Occidental Life Ins. Co. of N. Carolina v. Ligon, No. 1:17-CV-02403-ELR, 21 2018 WL 9814655, at *1 (N.D. Ga. July 24, 2018); BBVA USA Bancshares, Inc. v. 22 Bandy, No. 2:19-CV-01548-SGC, 2020 WL 3104594, at *3 (N.D. Ala. June 11, 2020). 1 In Metro. Life Ins. Co. and BBVA USA Bancshares, the courts expressly found the fact 2 that the appearing defendants were pro se to be an important factor in determining that it

3 was appropriate to enter default judgment sua sponte. SeeMetro. Life Ins. Co., 2013 WL 4 3974674, at *5; BBVA USA Bancshares, Inc., 2020 W L 31 04594, at *4. 5 In contrast, in Sun Life Assurance Co. v. Kimble, No. CIV-S-06-2041 EFB, 2007 6 WL 3313448, at *1 (E.D. Cal. Nov. 6, 2007), the appearing defendant was represented by 7 counsel. In that case, default against a non-appearing defendant was entered on the 8 interpleader plaintiff’s motion and the court then dismissed the interpleader plaintiff from

9 the action. Id. The court directed the appearing defendant, who was represented by 10 counsel, to move for entry of default judgment against the non-appearing defendant in 11 order to “ensure that no outstanding claims remain after judgment is entered in this 12 interpleader action.” See id. at *2. Similarly, in Standard Ins. Co., 43 F. Supp. 3d at 13 1156, the court did not enter default judgment sua sponte but instead directed the

14 appearing pro se defendants (who had applied for, and been granted, default) to file 15 motions for default judgment against the non-appearing defendants to establish their 16 entitlement to the disputed benefits. 17 Here, NICB’s motion for summary judgment regarding Ms. D.R. Wagner’s sole 18 entitlement to the ESP proceeds relies solely on the fact that no other Defendant has

19 appeared in this case. (See Mot. at 5.) Neither party, however, has moved for default or 20 for default judgment against the non-appearing Defendants. (See generally Dkt.) Absent 21 entry of default and default judgment against the non-appearing Defendants, NICB’s 22 motion for summary judgment will not satisfy the parties’ desire to fully and finally 1 adjudicate the rights of all parties. See Standard Ins. Co., 43 F. Supp. 3d at 1156. 2 Therefore, the court DENIES NICB’s motion for summary judgment.

3 In the interest of moving this case toward finality, the court will enter default 4 against the non-appearing Defendants for failure to plead or otherwise defend pursuant to 5 Federal Rule of Civil Procedure 55(a) and Local Rules W.D. Wash. LCR 55(a). (See 6 Affs. of Serv. (Dkt. ## 3-7); see generally Dkt.) Because Ms. D.R. Wagner is 7 represented by counsel, however, the court follows the approach of Sun Life Assurance 8 Co. and directs Ms. D.R. Wagner to file a motion for default judgment against the non-

9 appearing Defendants that establishes her right to the ESP proceeds pursuant to Federal 10 Rule of Civil Procedure 55(b) and Local Rules W.D. Wash. LCR 55(b). See 2007 WL 11 3313448, at *1. 12 B. NICB’s Request for Dismissal 13 The “primary purpose” of an interpleader action is to protect disinterested

14 stakeholders from multiple liability and the expense of several lawsuits. See Aetna Life 15 Ins. Co. v. Bayona, 223 F.3d 1030, 1034 (9th Cir. 2000). There are two steps to an 16 interpleader action. Lincoln Nat’l Life Ins. Co. v. Ridgway, 293 F. Supp. 3d 1254, 1260 17 (W.D. Wash. 2018). The first is to determine whether the requirements of interpleader 18 are met. Id. The second is to adjudicate the adverse claims of the defendant claimants.

19 Id. “Once the adverse parties are interpleaded to a single fund, disinterested stakeholders 20 may be dismissed, and courts may issue injunctions to protect stakeholders from 21 duplicative litigation from the adverse parties.” N.Y. Life Ins. Co. v. Bostwick, No. 22 C14-5931RJB, 2015 WL 4484305, at *2 (W.D. Wash. July 22, 2015). If the interpleader 1 action is brought under Federal Rule of Civil Procedure 22, the court may dismiss the 2 stakeholder subject to disposition of the property in the manner directed by the court.

3 Gelfgren v. Republic Nat’l Life Ins. Co., 680 F.2d 79, 81-82 (9th Cir. 1982). 4 In its prior order, the court determined that NICB met the interpleader 5 requirements of Rule 22 but declined to dismiss it from the case because Ms. D.R. 6 Wagner represented that she intended to assert counterclaims. (10/30/19 Ord. at 13-16.) 7 Ms. D.R. Wagner has since alleged a counterclaim for negligence against NICB. (See 8 Ans. ¶¶ 58-73.) Although Ms. D.R. Wagner states in her response to NICB’s motion that

9 she “fully agrees” with the relief NICB seeks, she does not expressly state that she seeks 10 to dismiss her counterclaim, and the court cannot determine from the parties’ briefing 11 whether or not Ms. D.R. Wagner’s agreement with NICB’s requested relief is contingent 12 upon the court granting NICB’s motion in its entirety. (See generally Mot., Resp.) As a 13 result, the court denies without prejudice NICB’s request to be dismissed from this case.

14 If Ms. D.R. Wagner seeks to voluntarily dismiss her counterclaim, she must follow the 15 procedures set forth in Federal Rule of Civil Procedure 41. 16 III. CONCLUSION 17 For the foregoing reasons, the court orders as follows: 18 1. The court DENIES NICB’s motion for summary judgment (Dkt. # 29).

19 2. The court DIRECTS the Clerk to enter default pursuant to Federal Rule of 20 Civil Procedure 55(a) and Local Rules W.D. Wash. LCR 55(a) against Defendants Leslie 21 Ann Wagner, the Estate of Scott Laverne Wagner, Joseph Scott Wagner, and Andrew 22 1 Wesley Wagner, for failure to plead or otherwise defend as provided by the Federal Rules 2 of Civil Procedure.

3 3. The court DIRECTS Ms. D.R. Wagner to file a motion for default 4 judgment establishing her right to the ESP proceeds as against the non-appearing 5 Defendants within ten (10) days of entry of this order. 6 Dated this 19th day of January, 2021. 7 A 8 9 JAMES L. ROBART United States District Judge 10 11 12 13 14 15 16 17 18

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