Ford v. Freemen
| Decision Date | 28 July 2020 |
| Docket Number | No. 3:18-cv-3095-B,3:18-cv-3095-B |
| Court | U.S. District Court — Northern District of Texas |
| Parties | RODNEY FORD, Plaintiff, v. OTIS NORMAN FREEMEN, Defendant. |
Plaintiff Rodney Ford has filed a motion for summary judgment against Defendant Otis Norman Freemen, see Dkt. No. 68, which United States District Judge Jane J. Boyle has referred to the undersigned United States magistrate judge for hearing, if necessary, and recommendation or determination, see Dkt. No. 75.
Originally, Defendant did not file a timely response, and Judge Boyle adopted the undersigned's Findings, Conclusions, and Recommendation ("FCR") on January 31, 2020. See Dkt. No. 90; Dkt. No. 91. The Court was later informed that Defendant's address was incorrect in the court system, resulting in a lack of notification, which prevented his timely response. See Dkt. No. 93. Judge Boyle vacated her order adopting the FCR and gave Defendant an opportunity to file a response. See id. Defendant timely did so, see Dkt. No. 102, and Plaintiff filed a reply, see Dkt. No. 104.
For the following reasons, the undersigned recommends that the Court grant the motion for summary judgment.
Plaintiff claims to be the common law, same-sex spouse of Norman David Freemen ("David"). Plaintiff and David cohabitated for 24 years and held themselves out to the public as spouses, including making a claim for spousal benefits on the death of David's stepmother. See Dkt. No. 69 at 4, 29-30, 33.
Defendant is David's father. See Dkt. No. 69 at 4.
David died on October 23, 2016. See id. at 4, 9.
Plaintiff is the executor/independent administrator and sole beneficiary under David's Last Will and Testament. See id. at 5, 10-16. The Probate Court approved the Inventory, Appraisement and List of Claims and recognized the community property interests of Plaintiff and David as spouses. See id. at 20-25.
Plaintiff is also the sole beneficiary of a Prudential life insurance policy, which was procured as a benefit of David's employment with MBNA. See id. at 5, 26. At the time of David's death, the policy payout amount was $726,200. See id. at 5, 76.
After David's death, Plaintiff called Prudential to make a claim under the policy. See id. at 9. Prudential informed him that it could not locate the beneficiary designation for the insurance policy or otherwise verify that Plaintiff was the beneficiary. See id. Because Plaintiff could not locate David's copy of the policy, Prudential suggested that Plaintiff contact MNBA's successor, Bank of America, which had MBNA's records. See id.
In November 2016, Plaintiff spoke with Bank of America representative Keisha Atkins and identified himself as David's spouse. Ms. Atkins told him she found David'semployment records on microfiche, but the records did not show him as David's beneficiary. See id.
Plaintiff called Prudential and advised its representative of what he had been told by Bank of America. Prudential advised Plaintiff that if no beneficiary form could be found, the policy proceeds would be paid to David's spouse or next of kin. See id.
Thereafter, Plaintiff called Defendant and told him about the conversations with Prudential and Bank of America in which he was told that he must prove his claim as David's common law spouse because he did not have the beneficiary designation form. See id. at 5-6.
The parties discussed Plaintiff's difficulty in claiming the insurance policy proceeds over the phone. See id. at 5-6, 37. They agreed that Defendant would claim the proceeds as David's next of kin and then pay those proceeds to Plaintiff. See id. at 10, 37-38, 40. Plaintiff - in reliance on their agreement - did not pursue his claim with Prudential. See id. at 6.
Both parties were concerned about potential tax consequences. Plaintiff consulted the IRS and told Defendant what he learned. He also told Defendant that either party could use a portion of the proceeds if taxes were incurred as a result of the verbal agreement. See id. at 6.
Defendant submitted a claim for the policy proceeds as David's next of kin, and Prudential paid Defendant the sum of $726,299.18. See id. at 38, 42-43. On December 3, 2016, Defendant wrote, signed, and mailed a check to Plaintiff. See id. at 17, 19, 38-40. The check was made payable to Plaintiff in the amount of $726,299.18 and had thenotation "For David Freemen." Id. at 17-19, 38, 40.
Sometime later in December 2016, Defendant called Plaintiff and told him not to cash the check. See Dkt. No. 102 at 6. Although Plaintiff had consulted the IRS about possible tax consequences shortly after the parties reached the agreement, Defendant continued to worry about the tax implications and asked Plaintiff to tear up the check. See id. at 6. Plaintiff did not tear up the check. See Dkt. No. 68 at 11. On December 16, 2016, Defendant called Plaintiff and said he was keeping all the money, then hung up. See Dkt. No. 69 at 6, 42.
Defendant stopped payment on the check. See id. at 40-41. Plaintiff presented the check to the bank for deposit. The check was returned with a notion of "stop payment" on it. See id. at 6.
In September and October of 2017, Defendant used $330,000 of the insurance proceeds to buy the interests of his deceased wife's children in a house located at 2016 Wickersham Drive, Huntsville, Texas. See id. at 7, 43-44. The house was originally purchased in 2013. See Dkt. No. 103 at 5. In 2019, the house had an appraised value of $336,650. See Dkt. No. 69 at 7, 33-34. Defendant also used the insurance proceeds for dental, medical, and legal expenses. See id. at 43. In his deposition, Defendant testified that he still has about $200,000 of the insurance proceeds. See id. at 43.
In his live pleading, Plaintiff brings claims against Defendant for suit on the instrument, breach of contract, and money had and received/unjust enrichment. He seeks actual damages, attorneys' fees, and the imposition of a constructive trust over all property that can be traced back to the insurance proceeds, including Defendant'shouse. See Dkt. No. 55.
During discovery, Bank of America located the beneficiary form in old MBNA files. See id. at 7. On the beneficiary form, David designated Plaintiff as the sole beneficiary of the Prudential life insurance policy. See Dkt. No. 69 at 73-74.
After Plaintiff filed the motion for summary judgment, Defendant's counsel was allowed to withdraw, and Defendant represented himself for a time. See Dkt. No. 74. Defendant did not file a response, and Judge Boyle granted Plaintiff's motion for summary judgment in part, as recommended in the first FCR. See Dkt. No. 91. The Court was later notified of an incorrect address for Defendant in the court system - resulting in undeliverable mail. See Dkt. No. 93. Judge Boyle vacated the order accepting the FCR and gave Defendant an opportunity to respond to Plaintiff's motion for summary judgment. See id.
Defendant timely filed a response. He asserts there are material issues of fact that preclude summary judgment, specifically, whether Plaintiff was a holder in due course of a negotiable instrument, there was valid consideration for the alleged verbal contract, and Plaintiff was David's common law spouse. He also argues that Plaintiff had unclean hands, which bars recovery, fully or partially, under the money had and received claim. See Dkt. No. 102.
The undersigned now concludes that Plaintiff's summary judgment motion should be granted.
Under Federal Rule of Civil Procedure 56, summary judgment is proper "if themovant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). A factual "issue is material if its resolution could affect the outcome of the action." Weeks Marine, Inc. v. Fireman's Fund Ins. Co., 340 F.3d 233, 235 (5th Cir. 2003). "A factual dispute is genuine, if the evidence is such that a reasonable [trier of fact] could return a verdict for the nonmoving party." Crowe v. Henry, 115 F.3d 294, 296 (5th Cir. 1997).
If the moving party seeks summary judgment as to his opponent's claims or defenses, "[t]he moving party bears the initial burden of identifying those portions of the pleadings and discovery in the record that it believes demonstrate the absence of a genuine issue of material fact, but is not required to negate elements of the nonmoving party's case." Lynch Props., Inc. v. Potomac Ins. Co., 140 F.3d 622, 625 (5th Cir. 1998). "A party asserting that a fact cannot be or is genuinely disputed must support the assertion by: (A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or (B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." FED. R. CIV. P. 56(c)(1). Pioneer Expl., L.L.C. v. Steadfast Ins. Co., 767 F.3d 503, 511 (5th Cir. 2014) (internal quotation marks and footnote omitted).
"Once the moving party meets this burden, the nonmoving party must set forth" - and submit evidence of - "specific facts showing a genuine issue for trial and not rest upon the allegations or denials contained in its pleadings." Lynch Props., 140 F.3d at 625; Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc); accord Pioneer Expl., 767 F.3d at 511 ...
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