Aetna Life Ins. Co. v. Hager, 95-C-155.

• Decision Date: 15 April 1996
• Docket Number: No. 95-C-155.,95-C-155.
• Parties: AETNA LIFE INSURANCE COMPANY, Plaintiff, v. Alicia HAGER, Bobbie Jean Blake, Fred Charles Blake, Jr. and Tammy Lynn Blake by Carolyn J. Flannery, her guardian ad litem, Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

930 F. Supp. 343

AETNA LIFE INSURANCE COMPANY, Plaintiff, v. Alicia HAGER, Bobbie Jean Blake, Fred Charles Blake, Jr. and Tammy Lynn Blake by Carolyn J. Flannery, her guardian ad litem, Defendants.

No. 95-C-155.

United States District Court, E.D. Wisconsin.

April 15, 1996.

Maile E. Buell, Borgelt, Powell, Peterson & Frauen, Milwaukee, WI, for Plaintiff.

Dennis R. Lynch, Lloyd, Phenicie, Lynch & Kelly, Burlington, WI, for Defendant Alicia Hager.

James F. Kracmer, Kracmer Law Offices, Kenosha, WI, for Defendants Bobbie Jean Blake, Fred Charles Blake and Tammy Lynn Blake.

DECISION AND ORDER

GOODSTEIN, United States Magistrate Judge.

On February 9, 1995, Aetna Life Insurance Company (hereinafter "Aetna") brought this interpleader action in the United States District Court, Eastern District of Wisconsin to determine the conflicting claims to the proceeds of a life insurance policy on the life of Fred C. Blake. This case was randomly assigned to this court and the parties have consented to the full jurisdiction of this court pursuant to 28 U.S.C. § 636(c). Venue is proper in the Eastern District of Wisconsin. Pursuant the stipulation between the parties and order of the court, Aetna was dismissed from this action on November 15, 1995. Currently pending before the court are Bobbie Jean Blake, Fred Charles Blake Jr. and Tammy Lynn Blake's motion for summary judgment which is fully briefed and ready for resolution.

I. Subject Matter Jurisdiction

Although the parties have not raised the issue, the court must first determine whether there is federal subject matter jurisdiction over this action. Aetna claims jurisdiction under the Federal Interpleader Act, 28 U.S.C. § 1335 and alternatively, under the Employee Retirement Income Security Act (ERISA) of 1974, 29 U.S.C. §§ 1001 et seq. Aetna has brought this action in the nature of interpleader and has deposited the proceeds of the insurance policy in issue of $20,000, which exceeds the statutory minimum of $500 for jurisdiction, as required by 28 U.S.C. § 1335(a) and (a)(2). However, the adverse claimants are all residents of the State of Wisconsin. 28 U.S.C. § 1335(a)(1) requires adverse claimants of diverse citizenship, so this interpleader requirement has not been satisfied. Thus the court may not maintain jurisdiction under 28 U.S.C. § 1335(a)(1).

Aetna alternately claims jurisdiction under ERISA. The court accepts Aetna's representation that the plan is governed by ERISA. Pursuant to 29 U.S.C. § 1132(a)(3)(B)(ii), a fiduciary of a plan may seek obtain equitable relief to enforce the terms of the plan. The Seventh Circuit has broadly defined the ERISA definition of fiduciary, 29 U.S.C. § 1002(21), to include "a person who exercises any power of control, management or disposition with respect to monies or other property of an employee benefit fund, or has the authority and responsibility to do so." Farm King Supply, Inc. Integrated Profit Sharing Plan & Trust v. Edward D. Jones & Co., 884 F.2d 288, 292 (7th Cir.1989) (quoting Forys v. United Food & Commercial Workers Int'l Union, 829 F.2d 603, 607 (7th Cir.1987)). This broad definition is in accord with congressional intent to safeguard the interests of participants and their beneficiaries. See e.g., Mutual Life Ins. Co. v. Yampol, 840 F.2d 421, 425 (7th Cir.1988); Leigh v. Engle, 727 F.2d 113, 133-34 (7th Cir.1984). In Buehler Ltd. v. Home Life Ins. Co., 722 F.Supp. 1554, 1563 (N.D.Ill. 1989), the court held that when the essence of a complaint was a wrongful denial of a life insurance policy benefit, the insurance company "is a `fiduciary' within the meaning of ERISA, since it exercised at least some (indeed, most likely complete) authority to grant or deny benefits." Because Aetna exercises at least some authority to grant or deny benefits, as is evidenced by its initiation of this suit, the court finds that Aetna is a fiduciary within the meaning of ERISA.

The only jurisdictional issue that remains is whether this action is an equitable one for purposes of ERISA. The Ninth and Eleventh Circuits have held that an insurance company could not maintain federal jurisdiction over a suit for declaratory judgment seeking a declaration of its liability under a policy because these suits did not seek equitable relief for purposes of ERISA. Transamerica Occidental Life Ins. Co. v. DiGregorio, 811 F.2d 1249, 1251 (9th Cir.1987); Gulf Life Ins. Co. v. Arnold, 809 F.2d 1520, 1523 (11th Cir.1987). However, in Metropolitan Life Ins. Co. v. Northern Trust Co. of Chicago, 94-C-2850, 1996 WL 145974, at *5 (N.D.Ill. March 27, 1996), the court held that the plaintiff insurance companies could invoke federal question jurisdiction under ERISA in a suit for interpleader to determine the proper beneficiaries of insurance proceeds. In so holding, the court distinguished Transamerica and Gulf on the ground that, unlike declaratory judgment, the rule interpleader is fundamentally equitable in nature. Id. (citing Commercial Union Ins. Co. v. United States, 999 F.2d 581, 588-89 (D.C.Cir.1993); Rogers, Historical Origins of Interpleader, 51 Yale L.J. 924 (1951)). The court also noted that ERISA's main purpose is as "a comprehensive remedial act designed to provide federal forums and uniform substantive law to safeguard the interests of employees and their beneficiaries" and thus a judicial rule permitting insurance companies to fulfill their fiduciary duties by bringing an interpleader action in a contested insurance benefits case furthers this intent. Id. at *7 (citing Mutual Life Ins. Co. of N.Y. v. Yampol, 840 F.2d 421, 425 (7th Cir.1987)). The court concurs with the rationale of the court in Northern Trust and holds that Aetna may maintain federal question jurisdiction pursuant to 29 U.S.C. § 1132(a)(3)(B) and 28 U.S.C. § 1331.

II. Motion for Summary Judgment

A. Background

Fred C. Blake (hereinafter "Decedent") and Carolyn Jean Blake were the parties to a Kenosha County divorce proceeding in which judgment was entered on June 7, 1988. The judgment of divorce (hereinafter "Judgment") incorporated the terms of the Marital Settlement Agreement (hereinafter "Agreement") between the parties. Section V, titled "Life Insurance" provides:

The respondent shall maintain in full force and effect, if available life insurance that is provided through his employment with the parties sic minor children named as sole and irrevocable primary beneficiaries until the youngest minor child reaches the age of majority or until said child has reached the age of nineteen (19) so long as the child is pursuing and sic accredited course of instruction leading to the acquisition of a High School Diploma or its equivelent sic. During the term of such obligation, the respondent shall furnish the petitioner with copies of such policies or evidence of their being such insurance in force and proof of beneficiaries designation upon request.

The respondent shall not borrow against any such policy or use any such policy as collateral or impair its value in any manner without the express written consent of the petitioner or order of the court.

If the respondent fails for any reason to maintain any of the insurance required under this article, there shall be a valid sic and provable lien against his estate in favor of the specified beneficiaries to the extent of the difference between the insurance required and the actual death benefits received.

An insurance form Designation of Beneficiary, executed on July 19, 1993, named defendant Alicia Hager, Decedent's second wife. Fred C. Blake died on May 13, 1994. At the time of his death, he was insured by group life insurance policy number 500000, in the amount of $20,000 which was provided to him through his employment.

B. Analysis

A motion for summary judgment will be granted when there are no genuine issues as to material fact and the movant is entitled to judgment as a matter of law. Rule 56(c), Fed.R.Civ.P. As provided under Rule 56(c), only "genuine" issues of "material" fact will defeat an otherwise "proper" motion for summary judgment. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). "Material" facts are those facts which, under the governing substantive law, "might affect the outcome of the suit." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A dispute over such material facts is "genuine" if the evidence is such that a reasonable trier of fact could find in favor of the nonmoving party. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510.

The movant bears the burden of establishing that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. Rule 56(c) Fed.R.Civ.P.; see Adickes v. S.H. Kress & Co., 398 U.S. 144, 159, 90 S.Ct. 1598, 1609, 26 L.Ed.2d 142 (1970); see also Celotex Corp. v. Catrett, 477 U.S. at 323, 106 S.Ct. at 2552-53 (holding that the moving party has the responsibility of informing the court of portions of the record or affidavits that demonstrate the absence of a triable issue). In addition, the moving party may meet its burden of showing an absence of a material issue by demonstrating "that there is an absence of evidence to support the nonmoving party's case." Celotex Corp., 477 U.S. at 325, 106 S.Ct. at 2554. Any doubt as to the existence of a genuine issue for trial is resolved against the moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. at 255, 106 S.Ct. at 2513-14; Cain v. Lane, 857 F.2d 1139, 1142 (7th Cir.1988); Spring v. Sheboygan Area School Dist., 865 F.2d 883, 886 (7th Cir.1989). If the moving party meets its burden, the nonmoving party then has the burden of presenting specific facts to show that there is a genuine issue of material fact. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986).

The Blake defendants move for summary judgment claiming that they had a vested...