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State Farm Life Insurance Co. v. Jefferson

United States District Court, S.D. Georgia, Augusta Division

May 18, 2017




         Plaintiff State Farm Life Insurance Co. (“State Farm”) filed this interpleader for resolution of adverse claims asserted by Defendants to a policy insuring the life of decedent Michael E. Turner. (Doc. no. 1.) Now that the Court has approved the interpleader and dismissed State Farm, Defendant Latasha Jefferson moves to designate herself as the sole defendant and realign the remaining three defendants as plaintiffs bearing the burden of proof. (Doc. no. 35.) The Court DENIES the motion because realignment is neither necessary nor appropriate.


         State Farm frames the background of this dispute as follows. On November 2, 1999, State Farm issued a life insurance policy to decedent in the amount of $100, 000. (Doc. no. 1, ¶ 9.) On the insurance application, the decedent designated his wife, Virginia Taylor, as the primary beneficiary, his mother, Julia Hankerson, as the successor beneficiary, and his sister, Beverly Turner, as the final beneficiary. (Id. at ¶¶ 11-12.)

         Five years later, on a Change of Beneficiary Form dated December 1, 2004, the decedent designated Kathy Harris and Joyce Johnson as the primary beneficiaries and Defendant David Turner as the successor beneficiary. (Id. at ¶ 14.) Approximately ten years later, on a Change of Beneficiary Form dated April 7, 2015, the decedent designated Defendant David Turner and Defendant Beverly Wilcher Whitaker, his sister and brother, as primary beneficiaries, and Valerie Smith (née Johnson), another sister, as successor beneficiary. (Id. at ¶ 17.)

         The decedent granted his daughter, Defendant Latasha Jefferson, a general power of attorney on February 29, 2016. (Id. at ¶ 20.) On a Change of Beneficiary Form dated March 1, 2016, Defendant Jefferson attempted to substitute herself as the primary beneficiary. (Id. at ¶¶ 22, 24.) By letter dated March 18, 2016, State Farm notified the decedent it would not process the change “due to lack of authority according to the Power of Attorney document and the appearance of self-dealing.” (Id. at ¶ 24.) State Farm explained that, if the decedent was “capable of signing the request himself, ” State Farm would “be able to make the requested change.” (Id.) Six days later on March 23, 2016, the decedent executed a Change of Beneficiary Form designating Defendant Jefferson as the primary beneficiary. (Id. at ¶ 26.) State Farm “confirmed that the requested change of beneficiary had been recorded” by notice dated April 5, 2016. (Id. at ¶ 27.)

         Decedent died five days later on April 11, 2016. Defendant Jefferson assigned $9, 510.00 of the policy proceeds to the funeral home and, on April 14, 2016, submitted a claim to State Farm for the remaining policy proceeds. (Id. at ¶¶ 33-34.) By letter to State Farm postmarked April 15, 2016, Defendants Whitaker, Turner, and Smith “requested that no monies be disbursed due to alleged fraudulent behavior by defendant Latasha Jefferson, and asserted that the decedent did not have the capacity to conduct any business due to a stroke.” (Id. at ¶ 36.) State Farm issued a check to Defendant Jefferson for the remaining life insurance proceeds of $90, 651.59, but “stopped payment on that check due to the adverse claims of the other defendants.” (Id. at ¶ 40.)

         After several months of attempting to resolve the adverse claims, State Farm filed this interpleader under 28 U.S.C. § 1335 and Federal Rule of Civil Procedure 22. (Id. at ¶¶ 6, 62-63.) On June 27, 2016, the Court approved State Farm's request to proceed with the interpleader and deposit the disputed funds into the Registry of the Court. (Doc. no. 6). On September 2, 2016, the Court dismissed State Farm. (Doc. no. 29).


         Defendant Jefferson contends it is proper to realign the parties and designate her as the sole defendant because Defendants Turner, Smith, and Whitaker bear the burden of proving the Change of Beneficiary Form dated March 23, 2016, is invalid and improper. (See doc. nos. 35, 37.) Defendants Turner, Smith, and Whitaker oppose realignment, arguing all parties should stand on equal footing because they each assert a claim to the life insurance proceeds. (See doc. no. 36.) The Court finds realignment of the parties is improper.

         A. Realignment Is Not Necessary.

         All parties cite City of Vestavia Hills v. Gen. Fid. Ins. Co. for the proposition “federal courts are required to realign the parties in an action to reflect their interests in the litigation.” 676 F.3d 1310, 1313 (11th Cir. 2012). However, the court in Vestavia Hills addressed realignment in the context of determining whether there was complete diversity of citizenship as required for removal under 28 U.S.C. §§ 1441 and 1332. See id.; see also 28 U.S.C. § 1441; 28 U.S.C. § 1332. Complete diversity requires every plaintiff to be diverse from every defendant. See Flintlock Const. Servs., LLC v. Well-Come Holdings, LLC, 710 F.3d 1221, 1224 (11th Cir. 2013). This complete diversity requirement cannot be waived and the parties cannot consent to federal jurisdiction in its absence. See Wisconsin Dep't of Corr. v. Schacht, 524 U.S. 381, 389 (1998). Furthermore, a court cannot ignore a diversity defect; it must raise the jurisdictional issue on its own. See id.

         Because “parties themselves cannot confer diversity jurisdiction upon the federal courts by their own designation of plaintiffs and defendants, ” courts must “‘look beyond the pleadings and arrange the parties according to their sides in the dispute'” to ensure the strict requirements of complete diversity are met. Vestavia Hills, 676 F.3d at 1313-14 (citing City of Indianapolis v. Chase Nat'l Bank, 314 U.S. 63, 69 (1941)) (quoting Northbrook Nat'l Ins. Co. v. Brewer, 493 U.S. 6, 16 n.5 (1989)); see also Eikel v. States Marine Lines, Inc., 473 F.2d 959, 963 (5th Cir. 1973)[1] (“in determining the status of the parties for diversity purposes, it is well established that the court must look beyond the pleadings to the matters actually in controversy”).

         Such strict jurisdictional requirements are not present in the context of either “statutory interpleader” under 28 U.S.C. § 1335 or “rule interpleader” under Federal Rule of Civil Procedure 22. Statutory interpleader under 28 U.S.C. § 1335 does not require complete diversity in order for a federal court to exercise jurisdiction, but rather requires “two or more adverse claimants[] of diverse citizenship.” 28 U.S.C. § 1335(a)(1). The “two or more adverse claimants” requirement “has been uniformly construed to require only ‘minimal diversity, ' that is, diversity of citizenship between two or more claimants, without regard to the circumstance that other rival claimants may be co-citizens.” State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 530 (1967)). As long as the property at issue is worth at least $500 and two of the claimants are of diverse citizenship, a federal court can properly exercise jurisdiction ...

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