Minn. Life Ins. Co. v. Kagan

• Decision Date: 31 July 2013
• Docket Number: No. 12–1840.,12–1840.
• Citation: 724 F.3d 843
• Parties: MINNESOTA LIFE INSURANCE COMPANY, Plaintiff, v. Arlene KAGAN, Defendant–Appellee, v. Tammy Kagan, et al., Defendants–Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

724 F.3d 843

MINNESOTA LIFE INSURANCE COMPANY, Plaintiff,

v.Arlene KAGAN, Defendant–Appellee,

v.Tammy Kagan, et al., Defendants–Appellants.

No. 12–1840.

United States Court of Appeals, Seventh Circuit.

Argued Oct. 24, 2012.

Decided July 31, 2013.

Catherine A.T. Nelson, Attorney, Cozen O'Connor, Chicago, IL, for Plaintiff.

Stephen M. Komie (argued), Attorney, Komie & Associates, Chicago, IL, for Defendant–Appellee.

Steven N. Fritzshall, Brad J. Pawlowski (argued), Attorneys, Fritzshall & Pawlowski, Chicago, IL, for Defendants–Appellants.

Before POSNER, WOOD, and TINDER, Circuit Judges.

TINDER, Circuit Judge.

I

An unexpected death can often unite family members in their grief, bringing them closer together and helping them to overlook previous differences. But for the Kagans, an unexpected death in 2009 seemed to have just the opposite effect, fueling the flames of an already burning feud among family members. The decedent, Allen Kagan, suffered a fatal heart attack while doing yard work on December 2, 2009, after years of heart problems and a prior open-heart surgery. Allen left behind a wife of three years, Arlene, as well as three adult children from a previous marriage, Tammy, Scott, and Richard. At the time of Allen's death, Tammy and her children lived with Allen and Arlene, and the tensions resulting from three generations plus a stepmother living under the same roof appear to be the source of the present family feud. According to Arlene, the blame for these tensions lie with Tammy and her children, who “on numerous occasions ... verbally f[ought] ... and scream[ed] profanities” at Allen and at each other. In contrast, according to Tammy, the blame lies entirely with Arlene, who “fought constantly” with Allen to the point that Allen and Arlene had to seek marriage counseling.

Regardless of who was initially to blame, these intrafamily tensions escalated upon Allen's death. Allen had written a will bequeathing $100,000 and a grave site to Arlene. Arlene, however, was never able to collect this bequest as Allen's valuable assets had all passed outside of probate, leaving his estate with insufficient funds. Allen had designated his three children as the beneficiaries of the majority of his assets, which included a home, life insurance policies, retirement accounts, and other savings accounts. In fact, the sole asset for which Allen had not specifically designated a beneficiary was the life insurance policy at issue in this case.

Allen received this life insurance policy as part of his compensation package from SuperValu, where he had worked as a pharmacist since 2007. The policy, which was issued by Minnesota Life Insurance Company, provided $74,000 in basic coverage and $341,000 in supplemental coverage. In the event that the policyholder failed to designate a beneficiary by his date of death, the proceeds would pass to the policyholder's spouse by default. On the date of Allen's death, Minnesota Life had never received any indication that Allen wished to designate a beneficiary. Minnesota Life had never received a change-of-beneficiary form from Allen, nor does it appear that Allen had ever sent a change-of-beneficiary form to Minnesota Life.

Nonetheless, it appears that Allen may have filled out a change-of-beneficiary form prior to his death. In the days immediately following Allen's death, Tammy, Scott, and Richard (hereinafter “the children”) found a change-of-beneficiary form that was allegedly completed by their father on August 15, 2008—more than a year before his death—but never submitted to Minnesota Life. This form designated the children as the beneficiaries to the SuperValu policy, excluding Arlene entirely. The children submitted this form to Minnesota Life through their attorney on December 23, 2009, approximately three weeks after their father's death. Arlene, in turn, submitted a claim to Minnesota Life through her attorney on February 1, 2010, claiming to be the policy's sole beneficiary by default. And so the present dispute over the proceeds from the SuperValu policy began.

Over seven months passed, yet Arlene and the children were never able to reach an agreement about how to distribute the SuperValu policy proceeds. Consequently, Minnesota Life filed this interpleader action under 28 U.S.C. § 1332 and Fed.R.Civ.P. 22, asking the federal district court to allow Minnesota Life to deposit the disputed proceeds with the court, to discharge Minnesota Life from any further liability under the SuperValu policy, to determine the proper beneficiary of the policy, and to award Minnesota Life its costs from bringing the action. The district court granted judgment to Minnesota Life the next day, directing it to deposit the policy proceeds “with the Clerk of the Court in an interest bearing account.” Arlene and the children then resumed their fight over the policy proceeds in the federal district court.

This fight continued for almost a year until both Arlene and the children filed cross-motions for summary judgment in the summer of 2011. On March 13, 2012, the district court granted Arlene's motion and denied the children's motion. Even if Allen had filled out a change-of-beneficiary form on August 15, 2008, as the children alleged, the district court found that Allen had neither exactly complied nor substantially complied with the SuperValu policy's requirements for changing beneficiaries since he had never mailed the completed form to Minnesota Life during the fifteen months before his death. Thus, Arlene, the default beneficiary, was entitled to the proceeds of the SuperValu policy.

The children filed a timely appeal of the district court's grant of summary judgment to Arlene. Although the children initially expressed an intent to appeal both the district court's grant of summary judgment to Arlene and the district court's denial of summary judgment to them, they have subsequently abandoned the appeal regarding their motion for summary judgment. The children now request that we reverse the district court's decision on Arlene's motion and remand the case for trial. For the reasons that follow, we decline the children's request and affirm the judgment of the district court.

II

Before we can discuss the merits of this case, we must first ensure that our appellate jurisdiction is secure. We pointed out a procedural irregularity in the district court's disposition of the case at the outset of this appeal, in accordance with our “obligation to examine [appellate] jurisdiction sua sponte, even if the parties fail[ed] to raise a jurisdictional issue.” Wingerter v. Chester Quarry Co., 185 F.3d 657, 660 (7th Cir.1998). The children brought this appeal pursuant to 28 U.S.C. § 1291, which gives us jurisdiction over “appeals from all final decisions of the district courts.” But as soon as we looked at the decision of the district court in this case, we became concerned that it was not, in fact, final.

A district court's decision is final if “the district court has finished with the case.” Chase Manhattan Mortg. Corp. v. Moore, 446 F.3d 725, 726 (7th Cir.2006). The district court's initial order entering judgment in favor of Arlene and against the children (issued on March 13, 2012) certainly sounded final. Explicitly dismissing the case “in its entirety,” the initial order even described itself as a “final and appealable order.” Despite this language, however, the order was not the last one issued by the district court prior to appeal. On March 27, 2012, the district court entered an order amending the March 13th order. Shortly after her victory on the merits, Arlene filed a motion to amend the judgment under Fed.R.Civ.P. 59(e), disputing the amount of interest that Minnesota Life had paid on the SuperValu policy proceeds since Allen's death. In response to Arlene's motion, the district judge amended the judgment by “reserv[ing] jurisdiction to resolve any dispute between the Plaintiff Minnesota Life ... and Claimant–Defendant Arlene Kagan of the proper amount of interest to be paid under the policy.”

The language of the district court's amended order troubled us because it suggested that the district court had not actually finished with the case. Despite the fact that the court had resolved all disputes between Arlene and the children, it appeared that an active dispute still remained between Arlene and Minnesota Life. Furthermore, the amended order indicated that the district court still considered Minnesota Life to be a party fully before the court, despite its earlier order “grant[ing] judgment in favor of the Plaintiff, Minnesota Life.” For these reasons, we ordered the parties to file jurisdictional memoranda stating why the March 27th amended order was a final decision for the purposes of 28 U.S.C. § 1291, and thus, appealable to our court.

A single statement in Arlene's jurisdictional memorandum resolved our concerns: “Arlene contacted Minnesota Life and received an explanation of how the interest was determined. After due consideration, it appears Minnesota Life has paid the proper amount of policy interest due under the terms of the policy. Therefore, Arlene disclaims any intent to seek further amendment of the judgment.” With this statement, Arlene ended the one dispute that remained in the case after the March 27th amended order, “ ‘leav[ing] nothing for the court to do but execute the judgment.’ ” ITOFCA, Inc. v. MegaTrans Logistics, Inc., 235 F.3d 360, 363 (7th Cir.2000) (quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 467, 98 S.Ct. 2454, 57 L.Ed.2d 351 (1978)).

Previously, we have found a party's repudiation of any potentially remaining claims sufficient to convert a district court's nonfinal order into a final, appealable one for the purposes of § 1291. In fact, this situation has arisen several times before our court in the context of an appeal from a district court's dismissal of a claim without prejudice. Dismissals without prejudice are normally nonfinal for the...