Beltway Paving Co. v. Pruco Life Ins. Co.

• Decision Date: 13 April 2023
• Docket Number: Civil Action TDC-21-0264
• Parties: BELTWAY PAVING COMPANY, INC., Plaintiff, v. PRUCO LIFE INSURANCE COMPANY and LISA M. MOORE, Personal Representative of the Estate of Timothy S. Moore, Defendants.
• Court: U.S. District Court — District of Maryland

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BELTWAY PAVING COMPANY, INC., Plaintiff, v. PRUCO LIFE INSURANCE COMPANY and LISA M. MOORE, Personal Representative of the Estate of Timothy S. Moore, Defendants.

Civil Action No. TDC-21-0264

United States District Court, D. Maryland

April 13, 2023

MEMORANDUM OPINION

THEODORE D. CHUANG UNITED STATES DISTRICT JUDGE

Plaintiff Beltway Paving Company, Inc. (“Beltway”) filed this civil action against Defendants Lisa M. Moore, as personal representative of the Estate of Timothy S. Moore (“the Estate”), and Pruco Life Insurance Company (“Pruco”) seeking a declaratory judgment pursuant to 28 U.S.C. § 2201(a) that Beltway is the true owner and beneficiary of Timothy Moore's life insurance policy (“the Policy”). Presently pending before the Court are Pruco's Motion for Leave to File an Amended Answer and Cross-Claims and Pruco's Motion to Preserve the Status Quo and Enjoin Any Further Disbursement of the Death Benefit Proceeds. Having reviewed the submitted materials, the Court finds that no hearing is necessary. See D. Md. Local R. 105.6. Forthe reasons set forth below Pruco's Motion for Leave to File an Amended Answer and Cross-Claims will be . GRANTED IN PART and DENIED IN PART and Pruco's Motion to Preserve the Status Quo and Enjoin Any Further Disbursement of the Death Benefit Proceeds will be DENIED.

BACKGROUND

The Court (Grimm, J.) previously issued a memorandum opinion denying separate Motions to Dismiss filed by Pruco-and the Estate, which is incorporated herein by reference. Beltway Paving Co., Inc. v. Pruco Life Ins. Co., No PWG-21-0264, 2022 WL 4080312 (D. Md. Sept. 6, 2022). The Court therefore adopts the summary of the allegations in the Complaint set forth in that memorandum opinion and provides only the additional facts relevant to the resolution of the pending Motions.

On October 11, 2022, the Estate sent a letter to Pruco summarizing the status of the Policy proceeds which it had received. The letter stated that Pruco had paid proceeds to the Estate in the amount of $1,008,275.80 and that these funds had been placed in an Estate checking account. Since then, the proceeds were largely maintained except for withdrawals to pay legal fees, creditors, and estate expenses, such that the present balance of the account was $899,975.75. In a responsive letter, Pruco requested that the Estate refrain from disbursing the remaining proceeds during the pendency of this litigation. The Estate declined the request, in part because the funds were “in Florida probate[.]” 10/27/22 Emails at 1, Mot. to Preserve Ex. B, ECF No. 64-3.

DISCUSSION

I. Motion for Leave to File an Amended Answer and Cross-Claims

Pruco seeks leave to file an Amended Answer with two cross-claims against the Estate. Pruco contends that these cross-claims are necessary to protect it “from the possibility that after paying the Death Benefit Proceeds to the Estate, [it] might somehow also become obligated for double payment of the Death Benefit Proceeds to Beltway.” Mot. for Leave ¶ 13, ECF No. 63. The first cross-claim is for unjust enrichment. Pruco maintains that it paid the proceeds to the correct party under the terms of the Policy, but if the Court were to find in favor of Beltway on the grounds alleged in Beltway's Second Amended Complaint, “then the Estate would have been unjustly enriched by making a claim for the Death Benefit Proceeds [that] Moore intended and/or agreed the Estate was not entitled to.” Proposed Cross-Claims at 9, Mot. for Leave Ex. A, ECF No. 63-1. The second cross-claim is for contribution and indemnity. Pruco asserts that if the Court determines that Pruco is liable in any amount to Beltway, then Pruco is entitled to “contribution and/or indemnification” from the Estate. Id. at 10.

The Estate raises three arguments in opposition. First, it argues that Pruco's Motion was filed after the deadline for a motion to amend the pleadings as set forth in the Scheduling Order, and that Pruco cannot establish good cause as required for a modification of the scheduling order pursuant to Federal Rule of Civil Procedure 16(b)(4). Second, the Estate argues that the Court' lacks the authority to award Pruco the relief it seeks in its cross-claims because the Court lacks in rem jurisdiction. Third, the Estate contends that Pruco's Motion is futile because its cross-claims are not viable.

A. Timeliness

Rule 16 provides that “[a] schedule may be modified only for good cause and with the judge's consent.” Fed.R.Civ.P. 16(b)(4). The Estate argues that Pruco must show good cause under this rule because this Court's Scheduling Order set a deadline of November 9, 2022 for any party to move to amend the pleadings, but Pruco did not file its Motion for Leave to File an Amended Answer and Cross-Claims until December 22, 2022. This argument has no merit. On November 9, 2022, Pruco filed a Notice of Intent to File the Motion, in the form of a letter, in accordance with an Order issued by Judge Paul W. Grimm relating to the filing of motions. That Order states:

If the letter described above is filed within the time allowed by the Federal Rules' of Civil Procedure, Local Rules of Court, or any order issued by [the Court] in which to file the motion that the letter addresses, the time for filing the motion will be tolled to permit the scheduling of the telephone conference without the need to request an extension of time. .

Order at 1, ECF No. 3. Judge Grimm later set a deadline of December 23, 2023 for the filing of Motion. ECF No. 62. The plain language of the Order establishes that because Pruco's Notice was filed by the deadline in the Scheduling Order for filing a motion to amend the pleadings, that deadline was tolled, such that the Motion was not untimely when it was filed on December 22, 2022.

B. In Rem Jurisdiction

The Estate also argues that the Motion should be denied because the Court cannot award Pruco the relief sought in the proposed cross-claims because the Court, in its prior memorandum opinion, held that it lacks in rem jurisdiction over the Policy proceeds. Specifically, the Court concluded that: I

[T]he res in question is the proceeds of the Policy, which the parties do not dispute were paid to the Estate in Florida. Because the res at issue in this case i[s] not within the Court's territorial jurisdiction, the Court lacks in rem jurisdiction to adjudicate । the parties' rights with respect to the Policy proceeds.

Beltway Paving Co., Inc., 2022 WL 4080312, at *3.

The Court nevertheless found that it has specific personal jurisdiction over the Estate. Id. at *6. Fairly construed, the cross-claims seek recovery from the Estate, not necessarily from the Policy proceeds specifically. Accordingly, for the reasons discussed in its prior memorandum opinion, the Court's lack of in rem jurisdiction does not affect its authority to adjudicate claims asserted against the Estate itself. Id. at *5-6. The Court therefore will not deny the Motion on this basis.

C. Futility

Generally, a court should “freely give leave” to amend a pleading “when justice so, requires.” Fed.R.Civ.P. 15(a)(2); Courts deny leave to amend “when the amendment would be prejudicial to the opposing party, there has been bad faith on the part of the moving party, or the amendment would be futile.” Johnson v. Oroweat Foods Co., 785 F.2d 503, 509 (4th Cir. 1986). The standard for futility is the same as that for a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), Perkins v.. United States, 55 F,3d 910, 917 (4th Cir. 1995).

To defeat a motion to dismiss under Rule 12(b)(6), a pleading must allege enough facts to state a plausible claim for relief. Ashcroft v. Iqbal, 556 U.S. 662,678 (2009). A claim is plausible when the facts pleaded allow “the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Legal conclusions or conclusory statements do not suffice. Id. The Court must examine the complaint as a whole, consider the factual allegations in the complaint as true, and construe the factual allegations in the light most favorable to the plaintiff Albright v. Oliver, 510 U.S. 266, 268 (1994); Lambeth v. Bd. of Comm'rs of Davidson Cnty., 407 F.3d 266,268 (4th Cir. 2005).

The Court finds that Pruco has stated a plausible cross-claim for unjust enrichment. Under Maryland law, a plaintiff establishes unjust enrichment when: “(1) the plaintiff confers a benefit upon the defendant; (2) the defendant knows or appreciates the benefit; and (3) the defendant's acceptance or retention of the benefit under the circumstances is such that it would be inequitable to allow the defendant to retain the benefit without the paying of value in return.” Benson v. State, 887 A.2d 525, 546 (Md. 2005). Here, if the Court finds that Beltway was the true owner and beneficiary of the Policy, then the Estate, which received the Policy proceeds from Pruco, would not have been entitled to them. Under these circumstances, the Estate was aware of its receipt of this benefit, and if Beltway was actually entitled to the proceeds, then the Estate's retention of the proceeds arguably would be inequitable. '

The Estate contends that Pruco cannot state a valid claim for unjust enrichment because there is an express written contract, namely the Policy, covering the subject matter of the claim See Cnty. Comm 'rs of Caroline Cnty. v. J Roland Dashiell & Sons, Inc., 747 A.2d 600, 607 (Md. 2000) (stating that “a claim for unjust enrichment may not be brought where the subject matter of the claim is covered by an express contract between the parties”). This argument is unpersuasive. Although the Policy was a contract between Pruco and Moore, Beltway argues, in seeking a declaratory judgment, that in fact Beltway, not Moore, was the actual...