Amex Assur. Co. v. Caripides

• Decision Date: 03 January 2002
• Docket Number: No. 99 Civ. 3577 CBM.,99 Civ. 3577 CBM.
• Citation: 179 F.Supp.2d 309
• Parties: AMEX ASSURANCE CO., Plaintiff, v. CARIPIDES, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

179 F.Supp.2d 309

AMEX ASSURANCE CO., Plaintiff, v. CARIPIDES, et al., Defendants.

No. 99 Civ. 3577 CBM.

United States District Court, S.D. New York.

January 3, 2002.

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Charles Locke, Locke & Herbert, New York City, for AMEX Assurance Co.

Gary Rubin, Stanley L. Meyer, Mazur, Carp & Rubin, P.C., New York City, for Cristina Caripides.

Allen Wasserman, Owen & Davis, PC, New York City, for Estates.

Robert A. Cohen, Debra D. O'Gorman, Dechert, Price & Rhoads, New York City, for Helen Agabides, Ted Caripides, Rita Catar, and Vera Grozdav.

OPINION

MOTLEY, District Judge.

I. INTRODUCTION

William and Gabriella Caripides met an untimely death aboard Swissair flight 111 when it crashed near Nova Scotia, Canada, on September 2, 1998. At the time of the tragic event, Mr. and Mrs. Caripides were each covered by two group accidental death insurance policies: one for $100,000 and one for $1,000,000. The couple's surviving relatives are now before this court in an unfortunate and acrimonious dispute over the proceeds of those policies. By stipulation entered into on August 21, 2001, all of the claimants in this interpleader action agreed that the proceeds of the two $100,000 policies should be paid Mr. and Mrs. Caripides's estranged daughter, Cristina. Still at issue, however, are the proceeds of the two $1,000,000 policies.

For the reasons stated in this opinion, this court will order that the net proceeds of Mr. Caripides's $1,000,000 policy be divided equally among his surviving siblings, Ted Caripides, Helen Agabides, and Vera Grozdav. The net proceeds of Mrs. Caripides's $1,000,000 policy are to be divided equally between her mother Rita Catar and the estate of her deceased father Peter Catar.¹ The counterclaims and cross-claims raised by Cristina are without merit and must be dismissed.

II. BACKGROUND

A. Procedural History

AMEX Assurance Company ("AMEX") commenced this interpleader action in May 1999 pursuant to 28 U.S.C. § 1335 to determine the rightful beneficiaries of four accidental death insurance policies. In its amended interpleader complaint, AMEX stated that Mr. and Mrs. Caripides were each covered by (1) an AMEX accidental death policy (number AX0948) for $100,000, and (2) an AMEX automatic flight insurance policy (number AX0950) for $1,000,000. See Am. Interpleader Compl. ¶¶ 12, 14, 19, 21. The amended interpleader complaint named as defendants/claimants Mr. and Mrs. Caripides' sole surviving child, Cristina, and Mr. and Mrs. Caripides's estates ("the Estates").

AMEX deposited the policies' total proceeds of $2,200,000 with the Clerk of the Court, and on August 3, 1999, the court ordered the funds placed into an interest-bearing account. A stipulation and order entered on November 9, 1999, discharged plaintiff/stakeholder AMEX from any liability to the defendants/claimants.

In February 2000, through an affidavit of AMEX Vice President and General Counsel Eric Marhoun, AMEX informed the court that its policy number AX0950 covered only non-New York residents and that it had mistakenly referenced that policy in its amended interpleader complaint. Mr. Marhoun stated that the policy covering New York residents at the time of Mr. and Mrs. Caripides's death was actually AMEX policy number AX0910. Since Mr. and Mrs. Caripides were New York residents at the time of their deaths, they were therefore covered by the AX0910 policy rather than the AX0950 policy. See Marhoun 2/17/00 Aff. ¶¶ 2-11.

In June 2000 the court became aware of other potential claimants who had yet to be joined as interpleader defendants. At the time of his death, Mr. Caripides had three siblings — Ted Caripides, Helen Agabides, and Vera Grozdav ("the Siblings"). Mrs. Caripides had no siblings, but she was survived by her parents Rita and Peter Catar ("the Parents").² The Siblings and Parents joined this action as pro se litigants in August 2000. The court repeatedly advised the Siblings and Parents that they would be best served by retaining counsel. The Siblings and Parents declined to follow the court's advice.

In November 2000 the court appointed Mr. Alexander Chernoff, a nonlawyer from the benefits advisory firm Chernoff Diamond & Co., to serve as an expert in the field of insurance and advise the court as to policies at issue in this case. In a Memorandum Opinion and Order dated December 18, 2000, the court confirmed the appointment of Mr. Chernoff, advised the parties of their right to employ their own expert(s), and set a schedule for the submission of expert reports. Mr. Chernoff submitted his report to the court on January 30, 2001. Cristina submitted a report by her own expert, Mr. Martin Minkowitz, Esq., on April 30, 2001. Cristina was also permitted, at her request, to depose Mr. Chernoff. No other parties have submitted an expert report. At a hearing on June 28, 2001, the court heard arguments on the expert reports and allowed the parties to submit replies to Minkowitz's report.

In February 2001 the court granted Cristina's request to conduct limited discovery as to how and why certain provisions of the policies were drafted. In March 2001 the Siblings finally retained counsel — Robert A. Cohen, Esq., of Dechert Price & Rhoads. In July 2001 the court issued an order directing Mr. Cohen to represent Ms. Catar as well.

In July 2001 Cristina filed an amended answer which asserted various counterclaims and cross-claims, though it is not entirely clear from the enumerated counts the bases for these counterclaims and cross-claims. Count I concerns the proceeds of the two $100,000 policies — an issue rendered moot by the Stipulation and Order entered into by the parties on August 21, 2001. Count II asserts that Cristina is entitled to the proceeds of the $1,000,000 policies if they were AMEX's AX0950 policies. Count III states that if the $1,000,000 policies were AMEX's AX0910 policies, then they are unenforceable under N.Y.Est. Powers & Trusts Law § 13-3.2 and violate New York public policy as expressed in N.Y.Est. Powers & Trusts Law § 4-1.1. Count IV seeks reformation of the policies under various theories, including the doctrines of mistake and unjust enrichment. Count V seeks reformation of the policies under a theory of "constructive fraud." Count VI seeks reformation of the policies, apparently under the same doctrine of mistake articulated in Count IV.

On October 9, 2001, the court, upon its own motion, issued an Order directing the parties to show cause why an order should or should not be issued pursuant to Rule 56 of the Federal Rules of Civil Procedure:

(1) granting summary judgment to AMEX, the Siblings, the Parents, and the Estates on all of Cristina's counterclaims and cross-claims;

(2) awarding the net proceeds of Mr. Caripides's $1,000,000 policy to the Siblings in equal shares;

(3) awarding the net proceeds of Mrs. Caripides's $1,000,000 policy to the Parents in equal shares;

(4) awarding AMEX its taxable costs in this action;

(5) taxing the costs of Mr. Chernoff to the proceeds of the two policies prior to their disbursement; and,

(6) discharging AMEX from further liability to the defendants/claimants in this action.

The Order set a briefing schedule and the court heard oral argument on its motion on November 16, 2001. The court reaches its conclusions below based on the complaint, answers, expert reports and oppositions thereto, letter briefs, oral arguments, and affidavits submitted by the parties to the court.

B. Factual Background

The background facts are largely undisputed. As indicated above, Mr. and Mrs. William and Gabriella Caripides died in the crash of a Swissair aircraft off the coast of Nova Scotia in September 1998. The plane tickets for the Swissair flight were purchased by Mr. Caripides and charged to his corporate American Express Card.

At the time of their death, Mr. and Mrs. Caripides had two adopted children — Peter, who also died on the Swissair flight, and Cristina, their sole surviving child. Mr. Caripides was also survived by three siblings — Ted Caripides, Vera Grozdav, and Helen Agabides — but his parents predeceased him. Gabriella had no siblings, but she was survived by her parents — Peter and Rita Catar.

At the time of the accident, Cristina was twenty-eight years old and estranged from her parents. The validly executed wills of Mr. and Mrs. Caripides had expressly disinherited Cristina apart from a nominal sum of $10,000. The third article of each will stated: "I intentionally make no provisions, other than those set forth in this subparagraph, for my daughter, CRISTINA CARIPIDES."

C. The Policies at Issue

Since Mr. Caripides purchased his and his wife's tickets with his American Express card, both of them were covered by the policies at issue in this case. The parties do not dispute that Mr. and Mrs Caripides were both covered by AMEX group policy number AX0948 for $100,000 each, nor do they dispute that Cristina is entitled to the proceeds from that policy. There was, however, some initial confusion as to whether the two $1,000,000 policies were AMEX group policy number AX910 or AX0950. As indicated above, when AMEX filed its amended interpleader complaint, it stated that Mr. and Mrs. Caripides were each covered by the AX0950 policy. See Am. Interpleader Compl. ¶¶ 14, 21. AMEX later informed the court (and the parties) that the policy in effect at the time of Mr. and Mrs. Caripides death was actually the AX0910 policy. See Marhoun 2/17/00 Aff. ¶¶ 3, 8.

Both the AX0910 and AX0950 policies were for $1,000,000, but the two policies differed materially in two ways. First, AX0950 covered only non-New York residents whereas AX0910 covered New York residents. See id. ¶¶ 3, 10.

Second, and critically, AX0910 and AX0950 differed as to default beneficiary classes. While both policies permitted the insured to designate a beneficiary, in the absence of such a designation, the policies...