Leimbach v. Allen

• Decision Date: 06 October 1992
• Docket Number: No. 91-3054,91-3054
• Parties: Gay L. LEIMBACH, Plaintiff-Appellee, v. Marsha S. ALLEN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 912

976 F.2d 912

Gay L. LEIMBACH, Plaintiff-Appellee, v. Marsha S. ALLEN, Defendant-Appellant.

No. 91-3054.

United States Court of Appeals, Fourth Circuit.

Argued Oct. 1, 1991.

Decided Oct. 6, 1992.

Melvin George Bergman, Lanham, Md., argued, for defendant-appellant.

Katherine Kelly Cawood, Cawood, Krain, Lotridge & Kelly, P.A., Annapolis, Md., argued (Timothy S. Smith, on brief), for plaintiff-appellee.

Before WIDENER and NIEMEYER, Circuit Judges, and MERHIGE, Senior District Judge for the Eastern District of Virginia, sitting by designation.

OPINION

WIDENER, Circuit Judge:

Marsha S. Allen appeals from an order of the United States District Court for the District of Maryland entering judgment in favor of the plaintiff below, Gay L. Leimbach. We find that this Fed.R.Civ.P. 22 interpleader action is properly within the subject matter jurisdiction of the court, and that the district court did not err in finding that appellant Mrs. Allen exerted undue influence upon the decedent insured, thereby invalidating the decedent's change of beneficiaries on two life insurance policies. Accordingly, we affirm the judgment of the district court.

I

The facts pertinent to this appeal are as follows. ¹ On January 14, 1990, Harry R. (Dick) Leimbach, the husband of the plaintiff-appellee Gay L. Leimbach (Gay), died at George Washington University Medical Center in Washington, D.C., as the result of an inoperable spinal cord tumor. At the time of his death Dick was the insured under two life insurance policies that are the subject of the present litigation, one issued by the Metropolitan Life Insurance Company pursuant to the Federal Employees' Group Life Insurance Act (the FEGLI policy), and one issued by the New York Life Insurance Company (the New York Life policy). The FEGLI policy carried a death benefit of $129,000, while the New York Life policy, a decreasing term, mortgage protection policy, carried a benefit of $18,000 at the time of Dick's death.

Gay and Dick Leimbach were married in June, 1969. A daughter was born of the marriage, Calley P. Leimbach (Calley), age 13 at the time of the district court's decision. Shortly after his marriage, Dick made his wife, Gay, the beneficiary of the FEGLI policy. He likewise designated Gay as the primary beneficiary of the New York Life policy upon its issuance in 1978.

The Leimbachs' marriage apparently was a sound one from 1969 until 1988, when the record reveals a deterioration in the marital relationship. The district court found that from 1988 to August 23, 1989, Dick left the marital home on several occasions during which he stayed in the home of Marsha S. Allen, the defendant-appellant herein. In August 1989 Dick left the marital home and moved in with Mrs. Allen, with whom he maintained an intimate relationship for the remainder of his life. Soon thereafter Gay filed an action seeking a limited divorce in the Circuit Court for Anne Arundel County, Maryland.

The onset of the health problems that ultimately would claim Dick's life came during the same time as the breakup of his marriage. After experiencing symptoms during the spring and summer of 1989, Dick was admitted to George Washington University Medical Center on November 20, 1989. There, following a biopsy performed on November 22, Dick was diagnosed as having an inoperable spinal cord tumor near the brain. Dick thereafter remained hospitalized until his death on January 14, 1990.

During this time period, Mrs. Allen assumed an ever-greater role in Dick's affairs. On November 20, prior to entering the hospital, Dick executed a power of attorney granting Mrs. Allen the "authority to make those decisions that are normally reserved for the next of kin," and the "power of attorney to act for and on my behalf in all matters." On the same day Dick informed the medical staff by typed notice that Mrs. Allen was to be his "one point of contact with the outside world."

The district court further found that, as Dick's medical condition worsened, so did Mrs. Allen's involvement in his affairs become more complete. By November 26, the hospital staff had been instructed to release medical information only to Mrs. Allen, and a sign was placed on the telephone in Dick's room stating that no calls were to be made without consulting Marsha Allen, "fiancee." Moreover, Mrs. Allen did not allow Mr. Leimbach and any member of his family to be alone with each other. Mrs. Allen was in Mr. Leimbach's hospital room whenever family members came to visit, with the exception of two or three isolated instances, over a 55-day period of hospitalization.

Quite significant with respect to the matters at hand is the role that Mrs. Allen played in Dick's personal legal affairs during his hospitalization. First, on November 25, with Mrs. Allen's assistance, Dick executed a will. After naming Mrs. Allen as executrix, trustee, and the primary beneficiary, the will made the following statement with regard to the insurance policies that are the subject of this case:

FIFTH: It is my intent to change the beneficiary on all my life insurance policies to be placed in trust for CALLEY P. LEIMBACH after all outstanding bills have been paid. If I am unable to change the beneficiary of my life insurance policies prior to my death, I request that GAY LEIMBACH honor my request.

Next, Mrs. Allen was involved in the transactions that prompted the instant litigation, the change of beneficiaries on the two life insurance policies. On November 28, Dick changed the beneficiary designation on both the New York Life and FEGLI policies from his wife, Gay, to Mrs. Allen. As to the New York Life policy, the district court found that Mrs. Allen personally contacted an agent of the New York Life Insurance Company for the purpose of obtaining the forms necessary to effect the change in beneficiary. That agent testified that Mrs. Allen telephoned him to ask for the forms and explained that she was calling because Dick was having trouble speaking. Rather than mailing the necessary forms as Mrs. Allen had requested, the agent personally delivered them to Dick's hospital room and assisted in their execution. Mrs. Allen was present in the hospital room throughout this transaction.

As to the FEGLI policy, it appears from the record that Dick himself procured the necessary change of beneficiary forms by contacting Colonel Malachi Brown Jones, his former supervisor at Walter Reed Army Medical Center, where Dick had been employed prior to his illness. The district court found, however, that Mrs. Allen procured the witnesses necessary to complete the change of beneficiary form; assisted in filling out the majority of the form; had physical control of the form; and submitted the form to the proper Federal department the day after it was signed.

The final relevant factual findings of the district court which we mention concern Dick's physical and mental condition during his hospitalization. Dick was taking pain medication daily, up to and including November 28, the day the change of beneficiaries occurred. Further, hospital records indicate that Dick "remain[ed] weak" on that day.

Following Dick's death on January 14, 1990, both insurers received notices from both Gay and Mrs. Allen claiming rights to the death benefits under the policies. Faced with these conflicting claims, both insurers filed complaints in interpleader in the United States District Court for the District of Maryland making Gay Leimbach and Marsha Allen parties under Fed.R.Civ.P. 22. ² After Gay and Mrs. Allen were brought into the suit, the insurers paid the disputed insurance proceeds into the registry of the court and then were dismissed from the case. Thereafter the case proceeded to trial before the district judge sitting without a jury.

After reciting the above-noted facts, among others, the district court, applying Maryland law, held that the disputed changes of beneficiaries were the product of undue influence exerted by Mrs. Allen and thus were ineffective. Accordingly, the court ordered the policy proceeds to be paid out of the registry of the court to Gay Leimbach. Mrs. Allen then moved the district court to alter or amend its judgment pursuant to Fed.R.Civ.P. 52(b) and 59(e), which motion was denied. This appeal followed.

II

Though the issue was not raised in the district court, at oral argument before this court the question arose whether this case was properly within the subject matter jurisdiction of the district court and thus of this court on appeal, and we requested memoranda on the question. It is our duty to assure ourselves of our jurisdiction. See Goldsmith v. Mayor & City Council of Baltimore, 837 F.2d 158, 160 (4th Cir.1988).

Jurisdiction in this case is alleged under the general diversity statute, 28 U.S.C. § 1332. As Rule 22 and § 1332 have been construed, the diversity requirement is satisfied in a Rule interpleader case when each stakeholder is diverse from each claimant. See Equitable Life Assurance Soc. of the United States v. Jones, 679 F.2d 356, 358 n. 2 (4th Cir.1982). Assuming the proper citizenship of the parties and the requisite amount in controversy, jurisdiction exists in a Rule interpleader case if the interests of the parties are genuinely adverse so as to support the action under the terms of Rule 22(1).

While the district court made no explicit findings of jurisdictional fact, it appears to be undisputed that both insurers, who were the original plaintiffs and stakeholders, are citizens of New York for purposes of § 1332. It is also undisputed that both claimants Gay and Mrs. Allen are citizens of Maryland, and that the amount in controversy exceeds $50,000. At bottom, then, the jurisdictional questions raised here are whether, at the time the case was filed, the interest of the plaintiff insurers was sufficiently adverse to the defendant claimants' interests, and, if so, whether the district court retained jurisdiction over the dispute between the...