National Life Ins. Co. v. Alembik-Eisner, Civil Action No. 1:07-CV-0557-JOF.

• Decision Date: 12 September 2008
• Docket Number: Civil Action No. 1:07-CV-0557-JOF.
• Citation: 582 F.Supp.2d 1362
• Parties: NATIONAL LIFE INSURANCE COMPANY, Plaintiff, v. Victoria ALEMBIK-EISNER, Trustee of the Abraham Henry Madenfrost Revocable Trust, et al., Defendants.
• Court: U.S. District Court — Northern District of Georgia

582 F.Supp.2d 1362

NATIONAL LIFE INSURANCE COMPANY, Plaintiff, v. Victoria ALEMBIK-EISNER, Trustee of the Abraham Henry Madenfrost Revocable Trust, et al., Defendants.

Civil Action No. 1:07-CV-0557-JOF.

United States District Court, N.D. Georgia, Atlanta Division.

September 12, 2008.

Aaron Edward Pohlmann, H. Sanders Carter, Jr., Smith Moore, LLP, Atlanta, GA, for Plaintiff.

Richard S. Alembik, Richard S. Alembik, PC, Decatur, GA, for Defendants.

OPINION AND ORDER

J. OWEN FORRESTER, Senior District Judge.

This matter is before the court on Victoria Alembik-Eisner's motion for summary judgment as to the counterclaim of the AH. Madenfrost Revocable Trust [25] and National Life Insurance Company's motion to dismiss [34].

I. Background

A. Procedural History and Facts

Plaintiff, National Life Insurance Company, filed this interpleader action against Defendants, Victoria Alembik-Eisner, Trustee of the Abraham Henry Madenfrost Revocable Trust ("Trustee"); Doris Gicherman DeMadenfrost; Monica Elka Madenfrost; Jaqueline Jaguit Madenfrost la Alameda; and Amasilis Del Carmen Gonzales Nahmens, on March 8, 2008. The interpleader res is a life insurance policy of $250,000 payable on the death of Abraham Henry Madenfrost ("Madenfrost").

The facts of this case are generally undisputed. Madenfrost first applied for a life insurance policy from National Life in January 1990. See Cmplt., ¶ 10. The application listed the beneficiary as Doris Gicherman DeMadenfrost, his wife at the time. Id., ¶ 11. On May 17, 1990, Madenfrost created a revocable trust named the Abraham Henry Madenfrost Revocable Trust. Id., ¶14. The trust document provided:

On my death the Trustee shall collect the proceeds of any insurance policies of which it is beneficiary and receive any property conveyed to it under the terms of my Will. My Trustee shall continue to hold this property, along with any other property conveyed to this trust during my lifetime, in the Family Trust for the benefit of my spouse and my descendants.

Id., ¶ 15. The trust document also provided that the trust was revocable "so long as I [Madenfrost] am physically and mentally capable of managing my affairs (as determined by the Trustee in its sole discretion. . . .") Id. ¶ 16. Madenfrost named as co-trustees his sister, Defendant Victoria Alembik-Eisner, and her husband, Michael D. Alembik. Id., ¶ 17. Madenfrost submitted to National Life an Absolute Assignment of his insurance policy to the Revocable Trust on May 21, 1990. Id., ¶ 19.

On February 5, 1993, Michael D. Alembik died leaving Victoria Alembik-Eisner as the sole trustee. Id., ¶ 20. Madenfrost and his wife Doris Gicherman DeMadenfrost divorced in Venezuela on November 2, 1993. Id., ¶ 21. Before their divorce, Madenfrost and Doris Gicherman DeMadenfrost had two children, Defendants Jaqueline Jaguit Madenfrost La Alameda and Monica Elka Madenfrost. Id., ¶ 22.

In 1996, Madenfrost was remarried to Defendant Amasilis Del Carmen Gonzales Nahmens. Id., ¶ 23. "While it has been reported to National Life that Madenfrost and Amasilis Del Carmen Gonzales Nahmens had children while they were married, that information has not been confirmed and the names of any such children have not been provided to National Life." Id., ¶ 24.

On October 28, 2002, Madenfrost executed a Notice of Revocation of Revocable Trust directing the co-trustees of the trust "to transfer the assets according to any further directions given to them by me [Madenfrost]" Id., ¶ 25. When National Life received the Notice of Revocation, it wrote to Victoria Alembik-Eisner on November 21, 2002, to ask whether the trust had been given any direction to transfer ownership and, if so, the contact information for the new owner. Id., ¶ 26. Victoria Alembik-Eisner did hot respond to this letter. Id., ¶ 27.

Madenfrost and his second wife, Amasilis Del Carmen Gonzales Nahmens, were divorced in Venezuela on November 24, 2004. Id, ¶ 28. Madenfrost died in Venezuela on April 2, 2006. Id., ¶ 29. Madenfrost was not married at the time of his death. Id., ¶ 30.

On April 12, 2006, National Life wrote to Victoria Alembik-Eisner stating that it was unable to identify the beneficiary of the death benefits payable under the policy due to Madenfrost's revocation of the trust. Id., ¶ 31. National Life asked for information on how the assets of the trust were distributed. Id. On August 3, 2006, National Life received a fax from H.R. Hauenstein, identified as Madenfrost's friend and insurance agent, stating: "Henry [Madenfrost] and his sister, Vicky Alembik-Eisner were at odds. Henry tried to get Rick Alembik who is a lawyer to get Vicky to make the changes Henry wishes to no avail. Henry's only interest was to take care of his second wife and their children." Id., ¶ 32.

On September 5, 2006, Victoria Alembik-Eisner wrote to National Life, making a formal demand of payment from National Life, stating:

You are hereby advised that at the time my brother executed the notice of revocation, and at all times thereafter, he was not physically and mentally capable of managing his affairs. As set forth in the governing document, the determination as to the capacity of the Trustor and the Trustor's legal right to revoke the Trust was given to me, in my sole and absolute discretion, as the sole Trustee.

The policy . . . was in force at the time of my brother's death and was owned by me, as the Trustee of the Trust. My brother had no legal right to revoke the Trust in 2002, and any correspondence he sent to your company was void and of no legal consequence. Under the terms of the policy, the Trust is entitled to payment of the death benefit, subject to any appropriate adjustments, upon the death of my brother.

Id., ¶ 34.

National Life claims that "[w]hether Madenfrost's revocation of the trust was valid under Georgia law is unclear. In addition, the identity of the owner of the policy at the time of Madenfrost's death, and the identity of the beneficiar(ies) of the policy are unclear. Finally, whether Madenfrost sufficiently manifested his intent and took adequate steps to revoke the trust and to change the beneficiar(ies) of the policy to Defendant Amasilis Del Carmen Gonzales Nahmens and his children of that marriage is unclear." Id., ¶ 37. Concerned that it would be faced with multiple litigation and liability, National Life filed the instant interpleader action. Id., ¶ 38.

On March 13, 2007, the court granted National Life's request to deposit $273,535.22 into the registry of the Court. Madenfrost's two children from his first marriage were served with process in the interpleader action. They subsequently signed affidavits which were submitted by the Trustee in connection with her answer to the interpleader complaint. Those affidavits indicate that the two children wished for the insurance benefits to be paid to Victoria Alembik-Eisner in her capacity as Trustee.

With her answer, Defendant Victoria Alembik-Eisner also filed a counterclaim alleging claims of breach of contract, interest, and bad faith denial of claim. She also sought a declaratory judgment that the Trust is the sole owner of the policy and asked the court to determine that this is not a proper case for interpleader based on the fact that National Life refused to immediately pay out the death benefits to the Trust. The Trustee also filed the instant motion for summary judgment as to her counterclaims on behalf of the Abraham Henry Madenfrost Revocable Trust.

On December 17, 2007, National Life filed the affidavit of Madenfrost's second wife, Amasilis Del Carmen Gonzales Nahmens in which she states that she is the former wife of Madenfrost but they had no children together. She further testifies that she believes Madenfrost's only children to be those he had with his first wife, Doris Gicherman Madenfrost. She and Madenfrost were divorced in Venezuela on November 23, 2004. Amasilis Del Carman Gonzales Nahmens acknowledged that she was aware of the instant lawsuit and understood that proceeds from an insurance policy were in dispute, but she disclaims any right to the proceeds, hoping that they would be paid to Madenfrost's children from his first marriage. Thereafter, National Life filed the instant motion to dismiss asking that because all defendants have been served with process, it be dismissed from the action, granted a permanent injunction against further legal proceedings, and be awarded its costs and attorney's fees.

B. Contentions

The Trustee argues that National Life improperly filed an interpleader action because Madenfrost's attempted revocation could not have been valid under Georgia law and therefore no other claimant had a valid claim on the proceeds of the insurance policy. The Trustee further contends that the court does not have jurisdiction over the interpleader action because there is no adverse or potentially adverse claim. The Trustee avers that National Life is liable to it for breach of contract, interest, and bad faith refusal to pay.

National Life contends that at the time it filed the interpleader action, it had a good faith basis to believe that it was subject to multiple claims because it did hot know whether Madenfrost's revocation was valid and did not know whether Madenfrost had had any children with his second wife. Under these circumstances, National Life argues that it was proper to file an interpleader action. National Life further avers that it cannot be liable to the Trustee because it never refused to pay out the benefits on the insurance policy and paid them into the registry of the court. Finally, National Life asks that the court dismiss it from the interpleader action and grant its motion for attorney's fees.

II. Discussion

A. Nature of Interpleader Action

The crux of the case comes down to a decision about whether it was appropriate for National Life to file an interpleader action or whether it was under an obligation to investigate further and make a...