Prudential Ins. Co. of Am. v. Sagers

• Decision Date: 16 July 2019
• Docket Number: Case No. 2:16-cv-01193-JNP
• Citation: 421 F.Supp.3d 1199
• Parties: The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Plaintiff, v. Neil SAGERS, an individual; and Diane Sagers, an individual, Defendants; Neil Sagers, an individual, Crossclaim Plaintiff, v. Diane Sagers, an individual; and Richard Sagers, an individual, Crossclaim/Third-Party Defendants.
• Court: U.S. District Court — District of Utah

421 F.Supp.3d 1199

The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Plaintiff,

v.Neil SAGERS, an individual; and Diane Sagers, an individual, Defendants;

Neil Sagers, an individual, Crossclaim Plaintiff,

v.Diane Sagers, an individual; and Richard Sagers, an individual, Crossclaim/Third-Party Defendants.

Case No. 2:16-cv-01193-JNP

United States District Court, D. Utah.

Signed July 16, 2019

Rodney R. Parker, Snow Christensen & Martineau, Salt Lake City, UT, for Crossclaim/Third-Party Defendants.

Michelle L. Christensen, Dunn Law Firm, St. George, UT, William O. Kimball, Jr., Pia Anderson Moss Hoyt LLC, Rodney R. Parker, Snow Christensen & Martineau, Salt Lake City, UT, for Defendant/Cross Claim plaintiff.

ORDER GRANTING IN PART DIANE SAGERS' MOTION FOR SUMMARY JUDGMENT AND DENYING NEIL SAGERS' MOTION FOR SUMMARY JUDGMENT

Jill N. Parrish, United States District Court Judge

This matter is currently before the court on cross-motions for summary judgment filed by defendant Diane Sagers ("Diane") and third-party/crossclaim defendant Richard Sagers ("Richard") and defendant and crossclaim/third-party plaintiff Neil Sagers ("Neil"). Diane and Neil (collectively "Defendants") seek summary judgment in their favor on their conflicting claims to the $1,000,000.00 life insurance proceeds (the "Death Benefit") due as a consequence of the death of Mr. David L. Sagers ("Mr. Sagers") under his group life insurance policy, Group Policy No. GO-14273 (the "Policy") issued by Plaintiff The Prudential Insurance Company of America ("Prudential"). Diane and Richard also sought summary judgment on Neil's third cause of action, a state law claim against them for tortious interference with electronic communications.

The court held oral argument on June 13, 2019. At the hearing, Neil's attorney, Mr. William Kimball ("Mr. Kimball"), made an oral motion to dismiss the third cause of action without prejudice under Fed. R. Civ. P. 41. Diane and Richard did not object and the court granted the motion. The court took the remaining issues under advisement. The court now grants Diane's motion for summary judgment and orders that a constructive trust be imposed in her favor.

I. BACKGROUND

A. PROCEDURAL HISTORY

This suit was originally brought as an interpleader action under 28 U.S.C. § 1335 by Prudential on April 7, 2016 in the United States District Court for Western District of Pennsylvania. On June 17, 2016, Diane filed her answer, asserting a claim to the Death Benefit, as well as a motion to transfer the cause pursuant to 28 U.S.C. § 1404(a). On July 15, 2016, the court entered a consent order discharging Prudential from any further liability under the Policy, dismissing all claims against Prudential with prejudice, and dismissing Prudential from the action. On November 22, 2016, the court adopted the Report and Recommendation of Magistrate Judge Susan Paradise Baxter and granted Diane's motion to transfer. The case was then transferred to the United States District Court for the District of Utah. On March 23, 2017, Neil filed his answer to the complaint setting out his claim to the Death Benefit, and filed a crossclaim complaint against Diane and a "third-party" complaint against Richard asserting claims for intentional interference with contractual relations, tortious interference with electronic communications, civil conspiracy, and punitive damages. The state law claims are not at issue in the motions now before the court.

B. EVIDENTIARY OBJECTIONS

In the motion for summary judgment, Diane and Richard provide twenty-eight statements of allegedly undisputed material fact. Neil objects to twenty-five of the statements on evidentiary grounds and provides an additional fourteen statements of material fact in his opposition to their motion on which he also relies in his motion for summary judgment. Neil's additional statements are undisputed.

Under Fed. R. Civ. P. 56(c)(2) "[a] party may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence." In the Tenth Circuit, that "does not mean that [summary judgment] evidence must be submitted ‘in a form that would be admissible at trial.’ " Trevizo v. Adams , 455 F.3d 1155, 1160 (10th Cir. 2006) (quoting Celotex Corp. v. Catrett , 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). Rather, only "the content or substance of the evidence must be admissible." Brown v. Perez , 835 F.3d 1223, 1232 (10th Cir. 2016), as amended on reh'g (Nov. 8, 2016) (quoting Argo v. Blue Cross & Blue Shield of Kansas, Inc. , 452 F.3d 1193, 1199 (10th Cir. 2006) ). In this case, Neil makes conclusory objections on grounds of hearsay that fail entirely to allege how "the material cited ... cannot be presented in a form that would be admissible in evidence." See Fed. R. Civ. P. 56(c)(2). He also objects to certain statements on relevance grounds. Finally, Neil objects to three statements of material fact on the grounds that the underlying documents were not provided in discovery, but does not reference the Federal Rule under which the evidence should be excluded. The court addresses these objections briefly, but encourages the parties to be more thorough in making future evidentiary objections or risk forfeiture of the argument. "The objecting party must make its objection clear; the trial judge need not imagine all the possible grounds for an objection." Angelo v. Armstrong World Indus., Inc. , 11 F.3d 957, 960–61 (10th Cir. 1993).

1. Relevance

Neil objects on relevance grounds to the "majority of the Undisputed Facts appearing in [Diane]'s Motion for Summary Judgment." Specifically, he objects to all statements of material fact related to the state court divorce proceedings as irrelevant.¹ These objections are overruled. While the state court proceeding has no bearing on the interpretation of the insurance contract itself, Diane's claim for unjust enrichment is based on whether or not Mr. Sager's allegedly fraudulent representations in the state court entitle her to equitable relief. Because the statements form much of the basis for her claim for equitable relief, they are certainly relevant. The objections are overruled.

2. Hearsay

Neil objects to seventeen statements of material fact offered by Diane and Richard on the grounds that they constitute inadmissible hearsay. Specifically, Neil argues that any representations made by Diane or Mr. Sagers in the state court divorce proceedings or orders entered by the state court in the divorce proceedings are hearsay.² These objections are overruled.

a. Statements by Diane and Mr. Sagers³

Hearsay is an out-of-court statement offered into evidence to prove the truth of the matter asserted. The statements made by Diane and Mr. Sagers in state court are not offered in this proceeding for the truth of the matter asserted, but rather are offered for the purpose of establishing that the statements were made. In fact, Diane's point is that the statements were false and fraudulent. She is certainly not offering them here to prove their truth. And "[i]f the significance of an offered statement lies solely in the fact that it was made, [and] no issue is raised as to the truth of anything asserted ..., the statement is not hearsay." United States v. Dupree , 706 F.3d 131, 136 (2d Cir. 2013) (quoting Fed. R. Evid. 801(c) advisory committee's note); see also George v. Celotex Corp. , 914 F.2d 26, 30 (2d Cir. 1990) ("To be sure, an out of court statement offered not for the truth of the matter asserted, but merely to show that the defendant was on notice of a danger, is not hearsay.").

For example, at ¶ 14 of their motion, Diane and Roger assert that "on January 10, 2014, [Mr. Sagers] filed a Memorandum in Support of Second Motion to Amended Temporary Orders in the divorce and stated, in relevant part" that "[t]he parties currently have two life insurance policies one on [Mr. Sagers] and one on [Diane]." The statement by Mr. Sagers was made out of this court, but it is not offered to prove that the Sagers had two life insurances policies, one on Diane and one on Mr. Sagers. Rather, it is offered to demonstrate that Mr. Sagers told the court about the two life insurance policies but did not disclose that Diane was no longer the beneficiary. Thus, the statement is not hearsay, but rather a statement offered to establish Mr. Sagers' fraud, which is an element of Diane's unjust enrichment claim. And fraudulent statements are not hearsay when they are offered as proof of the fraud. See Giove v. Stanko , 977 F.2d 413, 417 (8th Cir. 1992) (holding that a false affidavit was not offered for the truth of the matter asserted but for the fact that it existed and that it constituted fraud).

b. Court Orders

The statements made by the state court in its orders, both oral and written, are also not hearsay. See Dupree , 706 F.3d at 137 ("[T]he question whether a court's command imposes legal obligations on a party is outside the hearsay rule's concerns."). This is because orders by the court are not offered for the truth of those statements, but rather to demonstrate the legal effect of the statements on the parties. And "statements affecting the legal rights of parties are excluded from the definition of hearsay." Id. (citing Fed. R. Evid. 801(c) advisory committee's note); see also United States v. Boulware , 384 F.3d 794, 806 (9th Cir. 2004) ("A prior judgment is not hearsay ... to the extent that it is offered as legally operative verbal conduct that determined the rights and duties of the parties."). Neil's objections to the admissibility of the statements from the court orders are overruled.

3. Failure to Provide Discovery

Neil objects to Diane's statements of fact at paragraphs 15, 16, and 24 on the grounds that Diane allegedly failed to provide documents related to her payment of insurance premiums during discovery.⁴

Specifically Neil asserts in response to paragraphs 15, 16, and 24:

[D]uring discovery, [Neil] requested any evidence of

...