Esco Emp. Sav. Inv. Plan v. Walsh
| Decision Date | 14 April 2020 |
| Docket Number | Case No. 4:19CV77 HEA |
| Parties | THE ESCO EMPLOYEE SAVINGS INVESTMENT PLAN, Plaintiffs, v. AIMEE WALSH, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
Following the death of Patrick Walsh ("Walsh"), Plaintiff Esco Employee Savings Investment Plan ("ESIP") filed this action to interplead some $77,420.57, the balance of Walsh's retirement savings under the plan. The Complaint in Interpleader names as Defendants the competing claimants to these retirement savings: (1) Walsh's daughters, Aimee Walsh, Erin Walsh, and Rachel Verdugo ("Daughters"), and (2) his Spouse, Kerry Johnson Walsh ("Spouse").
Subsequently, Daughters filed crossclaims against Spouse alleging state law tortious interference and fraud. Similarly, Spouse filed crossclaims against Daughters alleging tortious interference with a contract and civil conspiracy to commit the same.
This matter is before the Court on the opposing Motions to Dismiss of Co-defendants Spouse and Daughters [Doc. No. 39 and 44, respectively] Both Spouse and Daughters argue pursuant to Fed. R. Civ. P. 12(b)(1) that the court lacks subject matter jurisdiction over the other co-defendant's state law claims. Similarly, the parties argue that the other co-defendant fails to state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6). Co-Defendants have each responded in opposition to these Motions and subsequently replied. For the reasons set forth below, Spouse's Motion is Denied with respect to Daughters' Count I and Granted with respect to Daughters' Counts II and III, and Daughters' Motion is Denied. The Court addresses each motion in turn.
In her motion to dismiss, Spouse argues that the Court should dismiss Daughters' amended crossclaims for three reasons. First, she claims that Daughters' crossclaims all expand the factual and legal issues beyond the case or controversy of the underlying interpleader action. Therefore, she argues that the Court lacks original jurisdiction over the claims and lacks supplemental jurisdiction over the state law claims under 28 U.S.C. § 1367(a). She claims in the alternative that the Court should exercise its discretion under 28 U.S.C. § 1367(c) and decline to exercise supplemental jurisdiction over Daughters' crossclaims. Spouse finally claims that Daughters' state law causes of action fail to state a claimupon which relief can be granted, and they should be dismissed pursuant to Fed. R. Civ. P. 12(b)(6) and 9(b).
For the purposes of this motion, Daughters' factual allegations are taken as true. Daughters allege:
Walsh and Spouse executed a beneficiary change authorization form in connection with Walsh's Employee Savings Investment Program ("ESIP") account, designating Spouse and the three Daughters as equal beneficiaries each entitled to 25% of the funds. In early October 2018, Daughters learned that Walsh had not submitted effective beneficiary designation forms for the ESIP funds, for his disability insurance policy, for his IRA, and for a life insurance policy. Daughters obtained these designation forms and consulted with Spouse and Walsh about Walsh's intention as to the ESIP fund and his other benefits. Before his death, Walsh made clear to Spouse and Daughters that he intended they all receive equal 25% shares of each of his benefits. Daughters provided Spouse with designation forms concerning the ESIP funds, insurance, and disability on or about October 2, 2018.
Spouse assured Daughters that she would help Walsh submit forms designating the four of them as equal 25% beneficiaries of his ESIP funds, his life insurance, and his rollover IRA. Spouse procured Walsh's signature, but she intentionally failed to effectuate Walsh's will by altering aspects of the beneficiarydesignation forms for the ESIP funds, life insurance policy, and IRA. These alterations rendered the designations of beneficiaries invalid or provided Spouse a larger share of the benefits from these accounts. Spouse concealed these beneficiary designation forms from Daughters until after Walsh's death, subsequently claimed they were forged by Daughters, and communicated with the plan administrators in attempts to procure 100% of the benefits for herself. As a result of Spouse's actions, she obtained 52% of Walsh's life insurance policy and 100% of his IRA, which contained roughly $297,000.
Daughters claim that the court has supplemental jurisdiction under 28 U.S.C. § 1367(a) to adjudicate their state law crossclaims of tortious interference and fraud in addition to its original jurisdiction over this case under 28 U.S.C. § 1331 and the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq.
In their motion to dismiss, Daughters claim that the Court lacks supplemental jurisdiction over Spouse's state law claims because those claims do not form part of the same case or controversy as the underlying interpleader action. Alternatively, Daughters argue that if the Court exercises jurisdiction over Spouse's crossclaims, the Court must adjudicate Daughters' state law claims as compulsory counterclaims. Daughters further argue that the Court should notexercise supplemental jurisdiction because Spouse's state law claims substantially predominate over Spouse's claim for the ESIP funds. Finally, Daughters argue that Spouse has failed to state a claim under Fed. R. Civ. P. 12(b)(6), because no statute or contract under Missouri law provides for Spouse's recovery of attorneys' fees.
For the purposes of this Motion, Spouse' factual allegations are taken as true. Spouse alleges:
Walsh, Spouse, and ESIP had a valid contract which created an expectancy in Spouse. Daughters knew that Spouse expected and was entitled to receive the money in Walsh's ESIP account upon Walsh's death, and one or more of the daughters intentionally interfered with her expectancy. That interference caused ESIP not to pay her the balance of Walsh's ESIP account. One or more of the daughters used improper means to procure Spouse' signature on a change of beneficiary form.
A motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1) may be either a "facial" challenge based on the face of the pleadings, or a "factual" challenge, in which the court considers matters outside the pleadings. See Titus v. Sullivan, 4 F.3d 590, 593 (8th Cir. 1993); Osborn v. United States, 918 F.2d 724, 729, n. 6 (8th Cir. 1990); C.S. ex rel. Scott v. Mo. State Bd. of Educ., 656 F. Supp. 2d 1007, 1011 (E.D. Mo. 2009).
Spouse brings a facial challenge to the Court's subject matter jurisdiction based on the information in the pleadings. See Doc. No. 39 at 5. Daughters also bring a facial challenge. See Doc. No. 44 at 4. As such, the court "must accept all factual allegations in the pleadings as true and view them in the light most favorable to the nonmoving party," the same as in a Fed. R. Civ. P. 12(b)(6) motion. Hastings v. Wilson, 516 F.3d 1055, 1058 (8th Cir. 2008).
In considering a motion to dismiss under Fed.R.Civ.P. 12(b)(6), "the complaint should be read as a whole, not parsed piece by piece to determine whether each allegation, in isolation, is plausible." Braden v. Wal-Mart Stores, 588 F.3d 585, 594 (8th Cir. 2009). The purpose of a motion to dismiss is to test the sufficiency of the complaint. When ruling on a motion to dismiss for failure to state a claim, the Court must take as true the alleged facts and determine whether they are sufficient to raise more than a speculative right to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007). The Court does not accept as true allegations which amount to a legal conclusion. Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. The issue in considering such a motion is not whether the plaintiff will ultimately prevail, butwhether the plaintiff is entitled to present evidence in support of the claim. See Neitzke v. Williams, 490 U.S. 319, 327 (1989).
No party disputes that the Court has original jurisdiction under 28 U.S.C. §1331 and ERISA over the interpleaded funds. Nor does any party dispute that the Court lacks original jurisdiction over the parties' various state law crossclaims. Daughters' Count I of their Amended Cross-Claims and Spouse' Count I of her Crossclaims are limited in scope to the interpleaded ESIP funds, and the Court finds that it has original federal question jurisdiction over these claims. See Doc. No. 38 at 1-2, Doc. No. 28 at 6-7. Spouse' Motion to Dismiss is therefore Denied with respect to Daughters' Count I.
The only question with regard to jurisdiction, then, is whether the Court may appropriately exercise supplemental jurisdiction over any of Daughters' or Spouse' state law crossclaims. Title 28 U.S.C. § 1367(a) provides that when a district court has original jurisdiction over a claim, that court shall also have supplemental jurisdiction over "all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." Federal courts' jurisdiction extendsto state law claims which "derive from a common nucleus of operative fact," such that the state law claims "would ordinarily be expected to [be tried] all in one judicial proceeding" along with the claims over which the court has original jurisdiction. OnePoint Solutions, LLC v. Borchert, 486 F.3d 342, 350 (8th Cir. 2007).
Narrowing the requirements for subject matter jurisdiction in this case further, the Supreme Court has long held that an interpleader action "cannot be used to...
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