Espat v. Espat
| Citation | 56 F.Supp.2d 1377 |
| Decision Date | 19 July 1999 |
| Docket Number | No. 98-2564-Civ-T-17F.,No. 98-1647-Civ-T-17B.,98-1647-Civ-T-17B.,98-2564-Civ-T-17F. |
| Parties | Nocif ESPAT, Plaintiff, v. Kay Ellen ESPAT, et al., Defendants. Federated Life Insurance Co., Plaintiff, v. Nocif Espat, et al., Defendants. |
| Court | U.S. District Court — Middle District of Florida |
Beach A. Brooks, Jr., Stephen K. Brooks, P.A., Winter Haven, FL, Laura P. Denault, Law Office of Laura P. Denault, Miami, FL, C. Richard Newsome & Schwerer, L.L.P., Orlando, FL, for Nocif Espat.
Arthur C. Fulmer, Arthur C. Fuler, P.A., Lakeland, FL, David P. Healy, Polston, Dean & Healy, P.A., Tallahassee, FL, Gregory A. Chaires, Katz, Kutter, Haigler, Alderman, Bryant & Yon, P.A., Orlando, FL, for Kay Ellen Espat.
David P. Healy, Polston, Dean & Healy, P.A., Tallahassee, FL, Gregory A. Chaires, Katz, Kutter, Haigler, Alderman, Bryant & Yon, P.A., Orlando, FL, for Federated Life Ins. Co.
John A.C. Guyton, III, Rywant, Alvarez, Jones, Russo & Guyton, P.A., Tampa, FL, Arthur C. Fulmer, Arthur C. Fuler, P.A., Lakeland, FL, David P. Healy, Polston, Dean & Healy, P.A., Tallahassee, FL, Gregory A. Chaires, Katz, Kutter, Haigler, Alderman, Bryant & Yon, P.A., Orlando, FL, for Randolph Richardson.
This cause comes before the Court on the following:
1. Plaintiff NOCIF ESPAT's motion to amend and for remand, (Docket No. 11 in Case No. 98-1647-CIV-T-17B); Defendant FEDERATED LIFE INSURANCE CO. [Federated]'s response (Docket No. 18); and Defendants KAY ELLEN ESPAT and RANDOLPH RICHARDSON's response (Docket No. 31);
2. Defendant Federated's suggestion of lack of subject matter jurisdiction and supporting memorandum, (Docket Nos. 22-23 in Case No. 98-1647-CIV-T-17B); and Plaintiff Nocif Espat's response (Docket No. 28);
3. Defendant Federated's motion to dismiss Kay Ellen Espat as a named party and supporting memorandum, (Docket Nos. 36-37 in Case No. 98-1647-CIV-T-17B); and Plaintiff Nocif Espat's response (Docket No. 38);
4. Defendant Nocif Espat's motion to dismiss (Docket No. 4 in Case No. 98-2564-CIV-T-17F); and Plaintiff Federated's response (Docket No. 7); and
5. Defendant Nocif Espat's motion to dismiss the amended complaint, or in the alternative, for abstention, supporting affidavit, and supporting documents, (Docket Nos. 11, 14, and 23 in Case No. 98-2564-CIV-T-17F); Defendant Federated's response (Docket No. 17); and Defendant Richardson's joinder in Defendant Federated's response (Docket No. 22).
In 1985, Nocif Espat obtained a whole life insurance policy from Federated on his wife Kay Ellen Espat [the Policy]. The Policy had a face value of $500,000.00. It listed as its "owner" Kay Ellen Espat. During their marriage, Nocif Espat paid the premiums on the Policy. The Espats were divorced in 1989. As part of the Stipulation and Agreement attached to the Final Dissolution of Marriage, Nocif Espat became the owner of the Policy. However, Kay Ellen Espat continued to be listed on the Policy itself as the Policy's owner.
After the Espat's divorce, Nocif Espat continued to pay the premiums on the Policy until 1997. In 1997, Kay Ellen Espat designated a new beneficiary of the Policy, Randolph Richardson. Nocif Espat objected to the designation of a new beneficiary. After the change in beneficiary, the premiums were deducted from the accumulated cash value of the Policy.
Kay Ellen Espat was diagnosed with cancer, which had metastasized and spread to several parts of her body. On July 22, 1998, before Kay Ellen Espat's death, Nocif Espat filed a complaint for declaratory relief in the Circuit Court of the Tenth Judicial Circuit in and for Polk County, Florida. The complaint seeks a declaration of his rights under the Policy. It names as defendants Federated, Kay Ellen Espat, and Richardson.
On August 12, 1998, Federated filed a notice of removal in the United States District Court for the Middle District of Florida. The case was given Case Number 98-1647-CIV-T-17B, and assigned to the undersigned. On August 13, 1998, Richardson filed an answer to the complaint for declaratory relief in state court. On August 14, 1998, Federated filed in state court notice that it had filed a notice of removal of the complaint in federal court. On August 17, 1998, this Court entered an Order on Removal, finding that the petition for removal had been timely, and ordering that the case be deemed removed.
Kay Ellen Espat died on November 9, 1998. On December 12, 1998, the attorney for Kay Ellen Espat filed a suggestion of the death of Kay Ellen Espat.
On December 15, 1998, Federated filed a complaint for interpleader in this Court, naming as defendants Nocif Espat and Richardson. Federated's interpleader action was given Case Number 98-2564-CIV-T-17F, and was assigned to Judge Adams. Federated's interpleader action involved both the $500,000.00 Policy and an additional $25,000.00 policy on the life of Kay Ellen Espat. Federated has since filed an amended complaint correcting procedural deficiencies in the original complaint and has deposited in the registry of the Court the proceeds of the two life insurance policies.
Judge Adams ordered that Case Number 98-2564-CIV-T-17F be transferred to the undersigned for consideration with Case Number 98-1647-CIV-T-17B. The two cases were thereafter consolidated under Case Number 98-1647-CIV-T-17B.
The two consolidated cases present essentially the same single factual issue: whether the proceeds of the Federated life insurance policy on the life of Kay Ellen Espat are owed to Nocif Espat or to Randolph Richardson. At this time, however, the factual issues in this case are not before the Court. Instead, the Court is faced with several complex procedural issues regarding the form in which this case will be litigated, and in what forum the case will be decided. Although presented in numerous motions, the procedural issues of the two consolidated cases are highly interrelated and will be considered together.
The Court will treat Federated's suggestion of a lack of subject matter jurisdiction as a motion to dismiss for lack of subject matter jurisdiction. Federated argues on two grounds that this Court lacks subject matter jurisdiction over Case Number 98-1647-CIV-T-17B (1) because Federated has already deposited the funds at issue in Case Number 98-1647-CIV-T-17B in the registry of the Court pursuant to its interpleader complaint in Case Number 98-2564-CIV-T-17F, implicating the doctrine of prior exclusive jurisdiction; and (2) because Kay Ellen Espat has since died, rendering Nocif Espat's request for a declaratory judgment regarding ownership of the Policy moot.
First, Federated argues that its having deposited the proceeds of the Policy in the registry of the Court in connection with its interpleader complaint deprives any other court of subject matter jurisdiction over a claim regarding those funds. Federated relies on the doctrine of prior exclusive jurisdiction, or in custodia legis, for its argument. This doctrine provides that where "two suits are in rem or quasi in rem, so that the court must have possession or control of the res in order to proceed with the cause and to grant the relief sought, the jurisdiction of one court must of necessity yield to that of the other." United States v. Bank of New York & Trust Co., 296 U.S. 463, 477, 56 S.Ct. 343, 80 L.Ed. 331 (1936). With respect to this Court's subject matter jurisdiction, the transfer of Case Number 98-2564-CIV-T-17F to this Court and the consolidation of the two cases renders Federated's argument moot.
In the event that Nocif Espat's motion to remand is granted, however, the Court must consider whether the deposit of the interpleader funds with this Court would bar the remand court from hearing Nocif Espat's complaint. It would not, because the doctrine of prior exclusive jurisdiction does not apply here. The doctrine on which Federated relies governs cases in which the two competing courts proceed under jurisdiction in rem. Here, neither of the two cases is in rem. While, as a procedural matter, interpleader requires that the stakeholder deposit the fund at issue in the registry of the court, see 28 U.S.C. § 1335, "interpleader is based on in personam jurisdiction," Humble Oil & Refining Co. v. Copeland, 398 F.2d 364, 368 (4th Cir.1968). Where one court holds property in its custody, another court may "adjudicate rights in that property" so long as it does not interfere with the custodial court's possession of the property except to the extent that the custodial court "is bound by the judgment to recognize the right adjudicated by the" non-custodial court. Harder v. Rafferty, 709 F.Supp. 1111, 1114 (M.D.Fla.1989) (quoting Markham v. Allen, 326 U.S. 490, 66 S.Ct. 296, 90 L.Ed. 256 (1946)). While this case is procedurally the converse of Harder, the principles discussed therein apply here.
Second, Federated argues that the death of Kay Ellen Espat renders Nocif Espat's claim moot. Federated states that the terms of the Policy provide that the owner of the Policy may change the beneficiary while the insured is alive, but that after the death of the insured, the owner's rights end and the death benefit is payable to the beneficiary. Federated argues that because Kay Ellen Espat has died, the question of who is the owner, and therefore who has the right to designate a beneficiary, is now moot. Federated's argument begs the question raised by Nocif Espat's complaint: whether Kay Ellen Espat was the owner of the policy, and therefore entitled to change the beneficiary. If she was not, then the change in beneficiary she made may be ineffective, and Nocif Espat may be entitled to the death benefit of the Policy. In any event, as will be discussed below, Nocif Espat will be allowed to amend his complaint to add claims. Federated's motion to dismiss for lack...
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