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The Prudential Insurance Company of America v. Bailey

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

July 24, 2018

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Plaintiff,
v.
SHERRY BAILEY, Counterclaimant/Defendant
v.
SHARMON HOWARD, KENNETH MOON, JR., JAMES BAILEY and RANDALL BAILERY, Defendants.

          ORDER

          J. RANDAL HALL, CHIEF JUDGE UNITED STATES DISTRICT COURT.

         Before the Court is: (1) Prudential's "Motion to Re-Deposit Accidental Death Benefits and for Clarification and/or Preliminary Injunction Regarding Life Insurance Benefits" (doc. 32) (the "Motion to Deposit"); and (2) Prudential, Sherry Bailey, and James and Randall Bailey's "Joint Motion to Dismiss Defendants Sharmon Howard and Kenneth Moon, Jr." (doc. 40} (the "Motion to Dismiss"). The Court GRANTS IN PART and DENIES IN PART the Motion to Deposit and it GRANTS the Motion to Dismiss.

         I. MOTION TO DISMISS

         Prudential, Sherry Bailey, and James and Randall Bailey move to dismiss Defendants Sharmon Howard and Kenneth Moon, Jr. The movants state that Prudential previously received information indicating that Howard and Moon were children of Russell Bailey, but that Prudential subsequently learned that Howard and Moon are not children of Russell Bailey. Furthermore, they assert that "there is no factual scenario under which [Howard and Moon] could be entitled to any of the Plan benefits at issue in this matter." (Doc. 40, at 2.) Howard and Moon concede that "[i]n full candor to the Court and counsel, despite a diligent search, [they] can assert no factual, contractual, regulatory, statutory, decisional, equitable or other opposition to the Motion." (Doc. 42.) Accordingly, the Court GRANTS the Motion to Dismiss (doc. 40), and the Clerk SHALL TERMINATE Defendants Howard and Moon as parties to this case.

         II. MOTION TO DEPOSIT

         After this Court's previous ruling returning to Prudential the disputed accidental death benefits and life insurance benefits it improperly sought to deposit into this Court's Registry (doc. 31), Sherry Bailey sent a letter to Prudential demanding that Prudential pay her "the full amount of the life insurance proceeds of $279, 465.70 plus the interest that has accrued since Prudential unlawfully withdrew the money from her [Alliance Account (the "Account")]." (Doc. 32-5.) In response, Prudential seeks the following relief from this Court: (1) authority to re-deposit the $332, 000.00 of accidental death benefits into the Court's Registry; (2) an Order "clarify[ing]" its previous Order (doc. 31) and telling Prudential what to do with the $279, 465.70 of life insurance benefits; and (3) a preliminary injunction enjoining "Sherry Bailey from depleting Plan benefits to which she may not be entitled . . . ." (Doc. 32, at 11.)

         A. Request to Re-Deposit the Accidental Death Benefits

         Prudential seeks to deposit $332, 000.00 of undistributed accidental death benefits in light of "the Court's determination of the propriety of interpleader relief for the accidental death benefit." (Doc. 32, at 8.) Defendants James Bailey and Randall Bailey support Prudential's request and ask the Court to "permit [Prudential] to tender the proceeds of both insurance policies into the Registry of this Court." (Doc 35, at 9.) James and Randall Bailey argue that if the Court does not permit Prudential to deposit the accidental death benefits, James and Randall Bailey risk being "deprived of their rightful interest in such funds" and the public policy of the slayer statute will be thwarted. (Id. at 10.)

         Sherry Bailey, however, objects to the deposit of the accidental death benefits. She argues that because "the life insurance policy and the accidental death policy are governed by the same ERISA Plan terms, the beneficiary will necessarily be the same. Having determined that Sherry Bailey is the proper beneficiary of the life insurance benefits, Prudential waived its right to select another beneficiary and it is estopped from contending that anyone other than Sherry Bailey is the proper beneficiary of the accidental death benefits." (Doc. 38, at 2.)

         The Court finds Sherry Bailey's arguments unpersuasive. Federal Rule of Civil Procedure 67 states that "[i]f any part of the relief sought is . the disposition of a sum of money . . . a party - on notice to every other party and by leave of the court - may deposit with the court all or part of the money . . . ." Fed.R.Civ.P. 67(a). Prudential provided notice to all the parties of its desire to deposit the accidental death benefits. Additionally, Prudential established good cause to deposit the disputed funds in this Court's Registry. Unlike the life insurance benefits, the accidental death benefits were never actually distributed. Furthermore, the Court has granted Prudential's interpleader action with respect to the accidental death benefits. Accordingly, the Court GRANTS Prudential's request to deposit the accidental death benefits and ORDERS the Clerk to ACCEPT the accidental death benefits into the Court's Registry.

         B. Request for Clarification Regarding the Remaining Life Insurance Benefits

         Next, the Court addresses Prudential's request to clarify its previous order. Prudential states that it does not know what to do with the life insurance benefits the Court returned to it last September. According to Prudential "[a]fter careful review of the Court's order, Prudential is uncertain as to how to proceed once the life insurance benefits are refunded. The benefits are indisputably due to an eligible beneficiary(ies), but the correct beneficiary(ies) cannot be determined until Sherry Bailey is either convicted or acquitted of the insured's murder and, if convicted, given the opportunity to appeal." (Doc. 32, at 9.)

         First, the Court finds that no clarification is needed. The Court's Order stated that it prematurely granted Prudential's request to deposit funds because Prudential did not give notice to the other parties "and this Court gave the other parties no opportunity to respond to Prudential's motion." (Doc. 31.) Thus, the Court found that Prudential's request to deposit funds under Federal Rule of Civil Procedure 67 was procedurally improper, and the Court returned both the life insurance benefits and the accidental death benefits to Prudential.

         Second, the Court will not advise Prudential on what it should do with the life insurance benefits. The Court rejected Prudential's attempt to deposit money because it failed to comply with Rule 67, and Prudential has not requested to re-deposit the life insurance benefits under Rule 67. If Prudential desires further action from this Court, it must request that action in the form of a motion stating the relief requested and the rule or statute supporting its requested relief. Fed.R.Civ.P. 7(b) ("A request for Court order must be made by motion. The motion must: (B) state with particularity the grounds for seeking the ...


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