Mass. Mut. Life Ins. Co. v. Gideon Lamar Sanders Jr.

• Decision Date: 09 May 2011
• Docket Number: Civil Action No. H–10–1826.
• Parties: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, Plaintiff,v.Gideon Lamar SANDERS Jr. and Banco Popular, N.A., Texas, Defendants.
• Court: U.S. District Court — Southern District of Texas

787 F.Supp.2d 628

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, Plaintiff,

v.Gideon Lamar SANDERS Jr. and Banco Popular, N.A., Texas, Defendants.

Civil Action No. H–10–1826.

United States District Court,S.D. Texas,Houston Division.

May 9, 2011.

Andrew C. Whitaker, Amber Michelle Billingsley, Figari and Davenport LLP, Dallas, TX, for Plaintiff.Marc Manuel Ariza, The Ariza Law Firm, Houston, TX, Robert L. Knebel, Jr., Fernandez LLP, Dallas, TX, for Defendants.

Memorandum Opinion and Order

GRAY H. MILLER, District Judge.

Pending before the court is plaintiff Massachusetts Mutual Life Insurance Company's (“MassMutual”) motion for summary judgment (Dkt. 18), defendant Gideon Lamar Sanders's (“Sanders”) cross-motion for summary judgment (Dkt. 22), and defendant Banco Popular, N.A., Texas's (“Banco Popular”) motion for summary judgment (Dkt. 24). Having considered the motions, related documents, and applicable law, the court is of the opinion that MassMutual's motion for summary judgment (Dkt. 18) should be GRANTED, Banco Popular's motion for summary judgment (Dkt. 24) should be GRANTED, and Sanders's cross motion for summary judgment (Dkt. 22) should be DENIED.

I. Background

This is an interpleader action. In January 2001, Banco Popular issued a loan to Sanders, his wife Jackie Gold Sanders,¹ and Skyline Messenger Service, Inc. for $1,100,000 pursuant to the Small Business Administration program. Dkt. 25. As part of the loan, Banco Popular required Sanders and Mrs. Sanders each to obtain term life insurance policies and assign the policies to Banco Popular as collateral to secure the U.S. Small Business Note. Id. MassMutual issued an adjustable premium term life insurance policy with a face value of $440,000 on Mrs. Sanders's life to Mrs. Sanders.² Id. Sanders was named the beneficiary of Mrs. Sanders's policy. Dkt. 18, Exh. 1 at App. 044. Mrs. Sanders executed an Assignment of Life Insurance Policy as Collateral (“Assignment”), which purported to transfer her life insurance policy to Banco Popular. Dkt. 19, Exh. 1 at App. 058–61. Michael Newhouse, the soliciting agent who assisted Mrs. Sanders with her insurance application, signed the Assignment as a witness.³ Id.; Dkt. 18. Mrs. Sanders submitted the Assignment to MassMutual. Dkt. 18. MassMutual acknowledged receipt of the Assignment by placing a “received” stamp on it. Id. & Exh. 1 at App. 059.

On September 12, 2005, Mrs. Sanders died of a myocardial infarction associated with lung cancer. Dkt. 18; Dkt. 19–2 at App. 099. On October 13, 2005, Sanders filed for bankruptcy under Chapter 7 of the U.S. Bankruptcy Code. Dkt. 19–2 at App. 105. Sanders's counsel listed the Banco Popular loan on Schedule F, which is the portion in which debtors list creditors holding unsecured nonpriority claims. Dkt. 18; Dkt. 19–1 at App. 105. On December 12, 2005, Sanders called MassMutual and reported Mrs. Sanders's passing. Dkt. 18; Dkt. 19 at App. 075. Deborah Robinson, a claim examiner for MassMutual, wrote Sanders a letter on December 15, 2005, advising him that he was the beneficiary of the policy but that MassMutual's records contained a collateral assignment to Banco Popular. Dkt. 18; Dkt. 19 at App. 079. Robinson further informed Sanders that he needed to review and complete the claim packet, including Part VII–10, which needed to be completed by both Sanders and Banco Popular. Id. Robinson's letter advised that Sanders needed to “be sure that the exact dollar amount that is to be paid to the assignee is indicated on the blank line provided.” Id. She instructed Sanders to return the completed packet to her with a certified death certificate. Id. Sanders did not respond to this letter.

On February 3, 2006, the Bankruptcy Court entered an order of discharge. Dkt. 19–2 at App. 112. On April 4, 2006, Robinson sent Sanders a follow-up letter and enclosed another set of forms. Dkt. 19–1 at App. 087. On April 21, 2006, Sanders called Robinson and stated that Banco Popular had “called their note and put them out of business” in June 2005, that they had abandoned the messenger company, that he, Mrs. Sanders, and the company had all filed for bankruptcy, and that his indebtedness to Banco Popular had been discharged through his bankruptcy. Dkt. 18. Robinson asked Sanders to fax the discharge papers to MassMutual. Id.

Sanders sent a completed claims packet to MassMutual in May 2006, but he did not secure Banco Popular's signature on Part VII–10, relating to the Assignment. Id. Robinson emailed Sanders to inform him that she had received the Claims Packet, but she advised him that she still needed the paperwork proving that the debt to Banco Popular was discharged in his bankruptcy. Id. On June 12, 2006, Sanders's bankruptcy counsel, James B. Jameson, sent MassMutual a letter stating that the Banco Popular debt had been discharged during the bankruptcy and attaching Sanders's Schedule F and the discharge order. Dkt. 19, App. 105–12.

On June 21, 2006, MassMutual responded to Jameson's letter, advising that the debt to Banco Popular was a secured debt and requesting a copy of the secured claims Sanders claimed during the bankruptcy proceeding. Dkt. 18; Dkt. 19 at App. 115. By September 2006, Jameson had not responded to this request, so MassMutual sent follow up letters to both Jameson and Sanders. Id.; Dkt. 19 at App. 116–17. Sanders responded via email on November 1, 2006, but he did not submit any information about whether the Banco Popular note was a secured claim. Dkt. 18; Dkt. 19 at App. 118. On December 8, 2006, MassMutual sent another letter to Jameson and requested that he contact the bankruptcy trustee to determine the disposition of the assignment to Banco Popular if he could not provide a list of the secured claims. Dkt. 18; Dkt. 19 at App. 119.

On August 7 2007, MassMutual contacted Banco Popular. Dkt. 18. MassMutual stated that it had “been unable to confirm that the assignment, a secured liability, ha[d] been released via bankruptcy proceedings,” and it asked Banco Popular to provide “a written statement reflecting the bank's position with regard to the assignment.” Dkt. 18; Dkt. 19 at App. 120. By November, MassMutual had not received a response. MassMutual sent follow up letters to Banco Popular on November 7, 2007 and February 15, 2008. Dkt. 18. On September 30, 2008, Robinson sent an employee of Banco Popular with whom she had become acquainted relating to a different policy an email inquiring about Banco Popular's position with regard to the Sanders Assignment. Dkt. 18. On October 2, 2008, Banco Popular sent MassMutual a payoff statement indicating that the total payoff for the Sanders's loan was $884,744.12, and it requested a copy of the Assignment, which MassMutual provided. Id.

On November 4, 2008, MassMutual wrote a letter to Sanders informing him that Banco Popular had advised MassMutual that it would be making a claim for the entire proceeds of the policy and that it needed a copy of the portion of his bankruptcy filing listing the secured claims. Dkt. 18; Dkt. 19 at App. 138. On November 17, 2008, Sanders's bankruptcy attorney, Jameson, wrote a letter to MassMutual advising that he had forwarded Sanders's Schedule F and that he had not forwarded the Schedule D, which listed secured creditors, because Schedule D contained no creditors. Dkt. 18; Dkt. 19 at App. 139–40. Jameson stated that the debt was listed in Schedule F rather than D because it was a personal guaranty. Jameson claimed that the secured debt was incurred by Skyline Messenger Service, not Sanders.⁴ Id.

In July 2009, Sanders phoned Robinson and advised her that he would like to come to an agreement with Banco Popular. Dkt. 18. By January 2010, Robinson had not heard anything from Sanders regarding the status of the attempt to reach an agreement, so she called him and told him she was going to contact the bankruptcy trustee. Dkt. 18. She left a voicemail with the bankruptcy trustee on January 21, 2010. Id.

On March 4, 2010, Marc Ariza sent a letter to Robinson advising that he and Addison Welch were now representing Sanders and demanding that MassMutual pay all of the policy proceeds to Sanders. Id.; Dkt. 19 at App. 204–05. On April 1, 2010, Robinson informed Welch and Banco Popular that there were competing interests in the proceeds and MassMutual had reasonable doubt as to the correct beneficiary. MassMutual advised that if it did not receive a written agreement between Sanders and Banco Popular regarding how the proceeds should be distributed within 30 days, it would file an interpleader action. Dkt. 18; Dkt. 19 at App. 207–210. The parties did not reach an agreement, and MassMutual filed this interpleader action on May 21, 2010. Dkt. 1. The complaint and an accompanying motion sought to deposit the proceeds of the policy into the court's registry, and the complaint requested that the court discharge MassMutual from all liability to Sanders and Banco Popular with respect to the proceeds. Id.; Dkt. 3. On June 14, 2010, Banco Popular filed its answer and claimed all of the proceeds of the policy. Dkt. 6. It also requested that the court discharge MassMutual from all liability and dismiss MassMutual from the lawsuit. Id. On June 15, 2010, the court granted MassMutal's motion to deposit the funds into the court's registry. Dkt. 7. On June 17, 2010, Sanders filed his answer and claimed all of the proceeds of the policy. Dkt. 9. Unlike Banco Popular, Sanders requested that the court deny MassMutual's prayer for discharge from liability and request for dismissal from the lawsuit. Id.

On December 15, 2010, MassMutual filed a motion for summary judgment in which it argues that all of the elements for the first stage of interpleader are met and that it is entitled to summary judgment on its interpleader claim, dismissal from the lawsuit with prejudice, and attorneys' fees. Dkt. 18. On January 5, 2011, Banco Popular filed a response to MassMutual's motion for summary judgment in which...