Ing Life Ins. v. French
| Decision Date | 13 October 2010 |
| Docket Number | C.A. NO: PC 07-6366 |
| Parties | ING LIFE INSURANCE and ANNUITY CO., INC. f/k/a AETNA LIFE INSURANCE AND ANNUITY CO. v. JOSEPH FRENCH, PHYLLIS ALLSOP, MARY CROCE, LOUIS CROCE, NICHOLAS CROCE, and THE ESTATE OF DEBORAH FRENCH |
| Court | Rhode Island Superior Court |
STERN, J.Before this Court are: a Motion to Strike a Defendant's answer to the First Amended Complaint; a motion for Summary Judgment in favor of the Plaintiff; a Cross-motion for Summary Judgment in favor of one Defendant; and a Cross-motion for Summary Judgment in favor of another Defendant. These motions arise out of an action where the Plaintiff seeks interpleader in a dispute over the ownership of an annuity. The Plaintiff, ING Life Insurance and Annuity Co., Inc., f/k/a Aetna Life Insurance and Annuity Co. ("ING"), made a Motion for Summary Judgment on Count I of its First Amended Complaint against the Defendants, decedent Deborah French's family (the Defendants are divided into three distinct groups: Phyllis Allsop, Mary Croce, Louis Croce, Nicholas Croce ("Croce Defendants"); Joseph French ("French"); and the Estate of Deborah French ("The Estate")). After ING filed its Motion for Summary Judgment, Defendant French filed a cross motion against ING for Summary Judgment and the Croce Defendants did the same. The Croce Defendants also filed a Motion to Strike Defendant French's answer to the First Amended Complaint.
Prior to her death, Deborah French (to distinguish from Defendant French, hereafter "Deborah") owned an annuity through ING. When Deborah passed away, both the Croce Defendants and French claimed ownership of the ING annuity individually. The Croce Defendants assert that the annuity belongs to Mary Croce, Deborah's mother, because Mary Croce applied to purchase the annuity with Deborah as a co-owner and because she provided purchase money for the annuity. French, Deborah's widower, claims that he is the rightful owner of the annuity because ING issued the annuity to Deborah as the sole owner, and Deborah subsequently designated him as a beneficiary.
ING brought the original action seeking relief due to these conflicting claims over ownership of the annuity. In its original Complaint, ING sought to interplead the Defendants so that ownership of the annuity might be determined through litigation. In its interpleader claim, ING requested that the Court order ING to pay the value of the annuity into the Registry of the Court and that ING then be dismissed from the case and discharged from all liability in this matter. Finally, ING's interpleader claim sought injunctive relief from any further actions concerning the annuity brought against ING by the Defendants.
The Croce Defendants timely answered the original Complaint. French did not answer, and the clerk made an entry of default against him. This Court denied French's motion to have the entry of default vacated. ING and the Croce Defendants both made motions for an entry of final judgment of default against French and were both denied. Later, the Court allowed the Estate to intervene as a Defendant.
Each of the Defendants in this action asserts various counterclaims against ING. These sound in tort and contract. In essence, these claims assert that ING breached a duty of care owed to the Defendants by mishandling the application process and the formation of the annuity and that various harms (unique to each Defendant group) resulting from this alleged mishandling.
In 2008, ING moved for an order of interpleader under Rule 22 of the Rhode Island Superior Court Rules of Civil Procedure. This Court denied that motion. Subsequently, ING amended its complaint and added a claim for declaratory judgment as well as alternative relief on Count I of the Complaint. French timely answered this First Amended Complaint.
The motions that are the subject of this hearing were submitted in the Spring of 2010 and were scheduled to be heard in June of 2010. After reviewing the Parties' memoranda, the Court ordered the Parties to re-brief the issue of contract formation and to cite to legal authorities in support of their arguments. The hearing was continued until August 31, 2010. The Croce Defendants complied with the Court's request for additional briefing.
On a summary judgment motion, the court must review the evidence and draws all reasonable inferences in the light most favorable to the non-moving party. Chavers v. Fleet Bank (RI), N.A., 844 A.2d 666, 669 (R.I. 2004). On such a motion, the court is to determine only whether a factual issue exists. It is not permitted to resolve any such factual issues. The emphasis is on issue finding, not issue determination. O'Connor v. McKenna, 116 R.I. 627, 633, 359 A.2d 350, 353 (1976); Palazzo v. Big G Supermarkets, Inc., 110 R.I. 242, 245, 292 A.2d 235, 237 (1972); Slefkin v. Tarkomian, 103 R.I. 495, 496, 238 A.2d 742 (1968). "Summaryjudgment is appropriate if it is apparent that no material issues of fact exist and the moving party is entitled to judgment as a matter of law." Chavers, 844 A. 2d at 669. A party opposing a motion for summary judgment "'carries the burden of proving by competent evidence the existence of a disputed material issue of fact and cannot rest on allegations or denials in the pleadings or on conclusions or legal opinions. '" Id At 669-70 (quoting United Lending Corp., 827 A. 2d at 631).
Rule 22 of the Rhode Island Superior Court Rules of Civil Procedure governs interpleader cases. The Rule states:
(Super. R. Civ. P. 22.)
The issue before the Court in regards to this Rule is whether a stakeholder, through a motion for interpleader, may properly be dismissed from an action and discharged of any liability in that action, where separate claims of liability against the stakeholder exist. Further, the court is asked to determine if the stakeholder should be granted injunctive relief barring any future claims related to the stake at issue. With no case law directly on point in Rhode Island, the Court looks to Federal and other state precedents for guidance.
In the past several decades, two distinct approaches to this Rule (adopted from a Federal statute) have developed. Some jurisdictions follow a traditional, hard line approach, while other jurisdictions have adopted a more modern, flexible reading of the Rule. Traditionally, when the stakeholder (usually the interpleading plaintiff) does not assert a claim to the stake, "the stakeholder should be dismissed immediately following its deposit of the stake into the registry of the court." Hudson Savings Bank v. Austin, 479 F.3d 102, 107(1st Cir. 2007) (citing Comm'l Union Insurance Co. v. United States, 999 F.2d 581, 583 (D.C. Cir. 1993). This dismissal occurs before the court adjudicates the disputes among the interpleading defendants. Id. However, under the traditional Rule, an order of interpleader is not available to an interpleading plaintiff who has incurred "independent liability"— liability over and above or in addition to the stake. Farmers & Mechanics National Bank v. Walser, 316 Md. 366, 373 (Md. Ct. App. 1989) (citing 4 J. Pomeroy, Equity Jurisprudence § 1322, at 906 (5th Ed. 1941)); see Wright & Miller, Federal Practice and Procedure § 1706 (3d Ed. 2010). This restriction of not allowing interpleader if there are independent claims of liability has softened in recent decades, but many jurisdictions still bar an order of interpleader where the stakeholder has some independent liability, for example in negligence. Wright & Miller § 1706.
The modern trend dictates that rather than denying the interpleader motion outright when there are independent claims of liability, the court should grant interpleader in part and use a three step process. In the first step of this process, the stakeholder deposits the stake with the court. In step two, without the dismissal of the stakeholder from the case, the defendants litigate the issue of ownership among themselves. The third and final step involves the stakeholder litigating the matter of liability with the defendant who was not successful in the second step, or who asserted a liability beyond the stake. Farmers & Mechanics National Bank v. Walser, 316 Md. 386 (Citing Chafee, Modernizing Interpleader, 30 Yale L. J. 814, 843 (1921)). It should be noted that even under this more modern, flexible standard, where there are claims against the stakeholder for liability independent of the stake, the stakeholder does not warrant dismissal from the suit. Id. at 385-86. Furthermore, "the trial court may not enjoin a separate action against the stakeholder based upon this liability." Id. at 385. The stakeholder remains in the background of the case until the defendants have litigated ownership of the stake amongst themselves, then defendants' claims of independent liability proceed against the plaintiff. Id. at 386.
A.
Count I.
Before this Court, ING moves for summary judgment on Count I of its First Amended Complaint. (Pl. 's Mot. for Summ. J.) ING argues that it is entitled to relief on its interpleader claim because it is a...
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