Sun Life v. Plaisted, et al.

2009 DNH 114

• Court: District Court, D. New Hampshire
• Decided: July 27, 2009
• Docket: 09-CV-108-SM
• Status: Published

Opinion

Sun Life v. Plaisted, et a l . 09-CV-108-SM 07/27/09 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Sun Life Assurance Company of Canada, Plaintiff

v. Civil No. 09-cv-l08-SM Opinion No. 2009 DNH 114 Lara Plaisted; Sarah Plaisted; William L. Caron; and William L Caron Revocable Trust, Defendants

O R D E R

In 1993, James Plaisted purchased an annuity contract from

the plaintiff. Sun Life Assurance Company of Canada. At the

time, Plaisted designated one of the defendants, William L.

Caron, as the annuity's beneficiary. Approximately nine years

later, Plaisted changed the beneficiary to the William L. Caron

Revocable Trust. In January of 2009, Plaisted died, at which

time the annuity was valued at approximately $120,000. Caron

notified Sun Life of Plaisted's death and Sun Life sent Caron (on

behalf of the William L. Caron Revocable Trust) information

regarding settlement of the annuity. Subsequently, however, two

of Plaisted's granddaughters - defendants Lara and Sarah Plaisted

- notified Sun Life that they planned to challenge the

distribution of the annuity in the probate court. Faced with competing claims to the roughly $120,000 annuity.

Sun Life filed this interpleader action, noting that it is merely

a stakeholder and has no beneficial interest in the proceeds of

the annuity. Sun Life also seeks a declaratory judgment,

declaring the interest (if any) of each named defendant in the

proceeds of the annuity. The named defendants all move to

dismiss the interpleader suit or, in the alternative, to stay it.

Sun Life objects. For the reasons set forth below, defendants'

motion to dismiss or stay is denied.

Discussion

Based upon the papers filed by the parties, it appears that

there are at least three legal proceedings currently pending in

state court which relate in some way to the annuity at issue in

this case and/or the estate of Mr. Plaisted: (1) the probate

proceeding involving Mr. Plaisted's estate, currently pending in

the Strafford County Probate Court; (2) a declaratory judgment

action brought by defendant Caron in the Strafford County

Superior Court, seeking a declaration that the William L. Caron

Revocable Trust is the sole beneficiary of the annuity; and (3) a

petition to impose a constructive trust upon the proceeds of the

annuity, brought by the decedent's granddaughters, defendants

Lara and Sarah Plaisted, in the Strafford County Superior Court.

Although Caron and the decedent's granddaughters disagree as to

2 the proper distribution of the annuity, they do appear to agree

on one issue: they all would prefer to litigate their competing

claims to the asset in the state superior and probate courts.

Sun Life, however, prefers to resolve this matter in a single

(federal) forum, rather than in three state court proceedings.

Defendants move the court to abstain from exercising

jurisdiction over Sun Life's interpleader action, but fail to

articulate the legal basis for the relief they seek. Instead,

they simply suggest that Sun Life's decision to file this

interpleader action somehow constitutes "impermissible forum

shopping," Motion to Dismiss (document no. 12) at para. 5, and

say that Sun Life "insisted on federal Interpleader despite

having no real interest concerning the underlying claims or the

jurisdiction," j^d. at para. 9 (emphasis supplied). But, as Sun

Life readily concedes, its decision to interplead the funds was

motivated precisely by the fact that it has no interest in who

gets the annuity's proceeds. Sun Life is only interested in

depositing the disputed proceeds and obtaining a discharge from

its contractual obligation and exposure to potential liability.

See generally 28 U.S.C. § 2361. Sun Life presumably wishes to

minimize the time, effort, and attorneys' fees it must devote to

this matter - an interest defendants should share, since

stakeholders in interpleader actions are often awarded costs and

3 attorneys'’ fees. See, e.g.. Ferber Co. v. Ondrick. 310 F.2d 462,

467 n.5 (1st Cir. 1962) (suggesting that it is '■'customary" to

award fees to a disinterested stakeholder). See also Sun Life

Assur. Co. of Canada v. Sampson. 556 F.3d 6, 8 (1st Cir. 2009)

("It is settled that a federal court has discretion to award

costs and counsel fees to the stakeholder in an interpleader

action whenever it is fair and equitable to do so.") (citations

and internal punctuation omitted).

Although the legal basis for the relief defendants seek is

not readily apparent in their joint motion to dismiss, the

decedent's granddaughters' reply to Sun Life's objection is

instructive. In it, the granddaughters assert that the court

should dismiss this action under the "probate exception to this

court's diversity jurisdiction." Defendant Plaisteds' Reply

(document no. 18) at 3. They have, however, failed to

demonstrate that the probate exception is applicable in this

case, nor have they shown that this court otherwise lacks subject

matter jurisdiction.

I. Subject Matter Jurisdiction and Interpleader Actions.

Sun Life's complaint rests federal subject matter

jurisdiction upon the provisions of 28 U.S.C. §§ 1335

(interpleader) and 1332 (diversity of citizenship). Federal

4 jurisdiction over an interpleader action is premised on diversity

of citizenship, although complete diversity is not required. See

State Farm Fire & Casualty Co. v. Tashire. 386 U.S. 523, 530

(1967). The existence of diversity in an interpleader action is

determined without regard to the plaint if f-stakeholder''s

citizenship. Rather, there is sufficient diversity to support

federal jurisdiction if claims are adverse to the fund, the

claims are adverse to each other, and at least two of the

claimants to the fund are citizens of different states. Id.

Here, each of those factors appears to be present and the amount

in controversy meets the threshold requirement.1 Consequently,

barring the proper application of the probate exception, the

court has subject matter jurisdiction over this interpleader

action.

II. The Probate Exception.

In discussing the "probate exception" to federal subject

matter jurisdiction, the United States Supreme Court recently

noted that the exception is not compelled by the Constitution or

any federal statute. Rather, it is a "judicially created

1 The jurisdictional minimum for "statutory interpleader" under § 1335 differs from "rule interpleader" under Fed. R. Civ. P. 22 in that the jurisdictional minimum for the amount in controversy under the statutory version is $500, while the minimum for rule interpleader, which falls under the general rules of diversity jurisdiction, remains $75,000.

5 doctrine[] stemming in large measure from misty understandings of

English legal history." Marshall v. Marshall. 547 U.S. 293, 299

(2006). The Court also observed that, since the inception of the

probate exception (and the related "domestic relations

exception"), "courts have sometimes lost sight of [their

obligation to exercise jurisdiction over cases properly before

them] and have rendered decisions expansively interpreting the

two exceptions." Ici. Accordingly, the Court sought both to

clarify and to limit the scope of the probate exception, holding

that i t :

reserves to state probate courts the probate or annulment of a will and the administration of a decedent's estate; it also precludes federal courts from endeavoring to dispose of property that is in the custody of a state probate court. But it does not bar federal courts from adjudicating matters outside those confines and otherwise within federal jurisdiction.

I d . at 311-12 (emphasis supplied). See also Markham v. Allen.

326 U.S. 490, 494 (1946) ("[W]hile a federal court may not

exercise its jurisdiction to disturb or affect the possession of

property in the custody of a state court, ... it may exercise

its jurisdiction to adjudicate rights in such property where the

final judgment does not undertake to interfere with the state

court's possession save to the extent that the state court is

bound by the judgment to recognize the right adjudicated by the

federal court.") (citations omitted).

6 This case involves none of the three limited circumstances

in which the probate exception applies. Sun Life's interpleader

and declaratory judgment action does not involve the probate or

annulment of the decedent's will, nor does it involve the

administration of his estate, nor does it involve the disposition

of property in the custody of the state probate court. As the

decedent's granddaughters concede, only "if [they] prevail in the

pending petition to impose a constructive trust in the Strafford

County Superior Court" will the proceeds of the annuity be

included in the decedent's estate and, therefore, subject to the

probate court's jurisdiction. Defendant Plaisteds' Reply Brief

(document no. 18) at 4.

Viewed slightly differently, the annuity is not currently

within the decedent's estate and, therefore, is not subject to

the probate court's jurisdiction. See, e.g.. In re Estate of

McIntosh. 146 N.H. 474, 478 (2001) ("[T]he proceeds of these

types of accounts or policies [i.e., IRA accounts, life insurance

policies, joint bank accounts with a right of survivorship, and

annuities] are not a part of an originator's estate, but instead

pass automatically at death to the named beneficiary.")

(citations omitted).

7 Conclusion

The “probate exception" to the exercise of federal subject

matter jurisdiction is inapplicable in this case. And, as

discussed above, jurisdiction over Sun Life's interpleader and

declaratory judgment action properly lies in this court.

Defendants have, then, failed to carry their burden. The joint

motion to dismiss or, in the alternative, to stay these

proceedings (document no. 12), is denied.

The clerk shall schedule a pretrial status conference. Upon

payment of the annuity's proceeds into court, an order

discharging Sun Life Assurance Company of Canada will issue.

SO ORDERED.

Bceven J / M c Auliffe uhief Judge

July 27, 2009

cc: Byrne J. Decker, Esq. Michele E. Kenney, Esq. Michael E. Chubrich, Esq. Stephan P. Parks, Esq.