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Prudential Insurance Company of America v. Herzog

United States District Court, E.D. Missouri, Eastern Division

April 25, 2017

MARY ANN HERZOG, Defendants.



         This matter is before the Court on the motion of defendant Mary Ann Herzog for summary judgment and plaintiff's motion for interpleader relief. The issues are fully briefed.

         I. Background

         On September 15, 1960, Kenneth J. Arnold purchased a life insurance policy from plaintiff. Six years later, in December 1966, Arnold married defendant Mary Ann Herzog. Arnold named defendant Herzog as the Class 1 beneficiary of the Policy on February 8, 1967. He designated the children born of his marriage to Herzog - defendants Jennifer Carpenter, William Arnold, and Richard Arnold - as Class 2 beneficiaries of the policy. In September 2003, Arnold and Herzog entered into a Marital Settlement and Separation Agreement. The couple was divorced on September 25, 2003. In 2009, Arnold changed his name and requested that the policy be re-issued in his new name, Karen J. Arnold. Arnold did not change the beneficiary designations. Arnold died on April 28, 2014.

         Plaintiff filed this interpleader action pursuant to 28 U.S.C. § 1335 to resolve potential competing claims between the Class 1 and Class 2 beneficiaries of the Policy. Herzog responded to the complaint, but the Class 2 beneficiaries did not. Accordingly, the Court entered default against the Class 2 beneficiaries pursuant to Federal Rule of Civil Procedure 55(a). On February 21, 2017, plaintiff deposited $12, 706.00, the insurance policy proceeds, into the registry of the Court.

         In her motion for summary judgment, Herzog argues that she is entitled to judgment as a matter of law as the Class 1 beneficiary. Plaintiff does not dispute Herzog's claim to the proceeds of the policy. In its motion, plaintiff asks that it be relieved from any further liability relating to the policy now that it has deposited the funds into the registry. Alternatively, plaintiff asks that default judgment be entered against the Class 2 beneficiaries and that plaintiff be ordered to pay the funds to Herzog.

         II. Legal Standard

         Rule 56(a) of the Federal Rules of Civil Procedure provides that summary judgment shall be entered if the moving party shows “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In ruling on a motion for summary judgment a court is required to view the facts in the light most favorable to the non-moving party and must give that party the benefit of all reasonable inferences to be drawn from the underlying facts. AgriStor Leasing v. Farrow, 826 F.2d 732, 734 (8th Cir. 1987). The moving party bears the burden of showing both the absence of a genuine issue of material fact and its entitlement to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). Once the moving party has met its burden, the non-moving party may not rest on the allegations of his pleadings but must set forth specific facts, by affidavit or other evidence, showing that a genuine issue of material fact exists. United of Omaha Life Ins. Co. v. Honea, 458 F.3d 788, 791 (8th Cir. 2006) (quoting Fed.R.Civ.P. 56(e)). Rule 56 “mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

         III. Discussion

         Plaintiff's Motion for Interpleader Relief

         In an interpleader action brought pursuant to 28 U.S.C. § 1335, the district court must first determine whether the requirements of the statute have been met and whether the stakeholder may be relieved from liability. During this first step, the court “determines whether the prerequisites to rule or statutory interpleader have been met by examining such things as the citizenship of the litigants, the merits of the asserted threat of multiple vexation, and, if interpleader is sought under the statute, the sufficiency of the stakeholder's deposit or bond . . .” Vanderlinden v. Metro. Life Ins. Co., 137 F.Supp.2d 1160, 1164 (D. Neb. 2001). If these requirements are met, the court may dismiss the disinterested stakeholder from the interpleader action, leaving the claimants to prosecute their conflicting claims. Id. Notably, the merits of the claims do not foreclose interpleader relief. See Hunter v. Fed. Life Ins. Co., 111 F.2d 551, 556 (8th Cir. 1940). After completing the first step, the court may then proceed to adjudicate the adverse claims to the interpleaded money or property. See NYLife Distrib. Inc. v. Adherence Group, Inc., 72 F.3d 371, 375 (3d Cir. 1995).

         The interpleader statute requires that the value of the money or property in the plaintiff's possession be in an amount of $500.00 or more and that there be at least two adverse claimants of diverse citizenship asserting claims to the money or property. 28 U.S.C. § 1335(a)(1). In the instant case, the requirements of the statute have been met. The record shows that there are potentially competing claims by minimally diverse parties on a single obligation.[1] See Id. (reasoning that “a stakeholder, acting in good faith, may maintain a suit in interpleader for the purpose of ridding himself of the vexation and expenses of resisting adverse claims, even though he believes that only one of them is meritorious”). The relevant parties have “not admitted that no such liability exists.” Dakota Livestock Co. v. Keim, 552 F.2d 1302, 1308 (8th Cir. 1977). Indeed, the evidence shows that Herzog's beneficiary status has been contested by defendants Jennifer Carpenter and William Arnold. [Doc. # 22 ¶ 8; Doc. #22-5]. Also, plaintiff disclaims any interest in the policy's funds, and is therefore a disinterested stakeholder. And finally, the value of the disputed property exceeds $500.00. See Gaines v. Sunray Oil Co., 539 F.2d 1136, 1141 (8th Cir. 1976) (stating that “[t]he subject matter of an interpleader action is defined by the fund deposited by the stakeholder.”)

         Accordingly, an interpleader action is appropriate here, and plaintiff's motion will be granted.

         Defendant Herzog's Motion for Summary Judgment

         In this diversity action, the Court is bound by the decisions of the Missouri Supreme Court regarding issues of substantive state law. Owners Ins. Co. v. Hughes, 712 F.3d 392, 393 (8th Cir. 2013). Decisions by the Missouri Court of Appeals may be used as “an indication of how the Missouri Supreme ...

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