Prudential Mutual Fund Services, LLC v. Meredith, Civil Action 1:20-00309-JB-N
| Decision Date | 21 July 2021 |
| Docket Number | Civil Action 1:20-00309-JB-N |
| Parties | PRUDENTIAL MUTUAL FUND SERVICES, LLC, Plaintiff, v. OLEN MEREDITH, Individually and as Executor of the Estate of Alma Ruth Meredith, THE ESTATE OF ALMA RUTH MEREDITH, PAUL MEREDITH, and ROBERT MEREDITH, Defendants. |
| Court | U.S. District Court — Southern District of Alabama |
This matter is before the Court on Defendant Prudential Mutual Fund Services, LLC's (“Prudential”) Motion to Dismiss the Counterclaims asserted by Paul Meredith and Motion for Relief in Interpleader. (Doc. 79). Also before the Court is Olen Meredith's Motion to Dismiss the Cross Claims asserted by Paul Meredith. (Doc. 78). The Motions have been briefed. After briefing, Paul Meredith filed a Motion to Dismiss for Lack of Jurisdiction and a Second Motion to Dismiss for Lack of Jurisdiction.[1] (Docs. 99 and 100). With the benefit of oral argument on the motions to dismiss and upon due consideration of the filed documents and relevant law the Court finds as follows:
I. BACKGROUND
Plaintiff Prudential filed this interpleader action against Defendants Olen Meredith (“Olen”), the Estate of Alma Ruth Meredith (“the Estate”), Paul Meredith (“Paul”), and Robert
Meredith (“Robert”), on June 9, 2020. The interpleader funds are the balance of a Transfer on Death (“TOD”) mutual fund (the “account'). This case is complicated because Olen, one of the TOD beneficiaries utilized a power of attorney to make three withdrawals from the account after Alma's death but before Prudential was given notice she was deceased. Based on competing claims from the TOD beneficiaries and the Estate Prudential filed an interpleader Complaint under 28 U.S.C § 1335. (Doc. 1).
On November 15, 2012, Alma designated her sons, Defendant Olen Meredith (“Olen”), Defendant Robert Meredith (“Robert”) and Defendant Paul Meredith (“Paul”), as primary Transfer on Death (“TOD”) beneficiaries to her account, in equal shares, upon her death. (Doc. 1). Alma's beneficiary designation form identified her three surviving sons as both primary and alternate beneficiaries. (Id.). Prudential inquired with its agent and determined that the three were the primary beneficiaries of the TOD fund. (Id.). On or about January 18, 2013, the account number was changed to one ending in 7695, reflecting it had become a TOD fund. (Id.). On November 15, 2012, Alma also designated Olen as an agent with certain powers regarding the account. (Id.).
Over the ensuing years, dividend payments were made to Alma regularly. (Doc. 1). No. other disbursements were requested or made from the account between the time it was established and February 5, 2017, the date of Alma's death. (Id.). Alma's death was not reported to Prudential until June 19, 2018, nearly a year and a half later. (Id.). The value of the account on her date of death was $349, 242.88. (Id.).
Between February 5, 2017 and June 19, 2018, Olen exercised his Power of Attorney (“POA”) making three withdrawals from the account. On February 10, 2017, Olen withdrew $100, 000.00. On April 19 and June 26, 2017, Olen withdrew $60, 000.00, for a total withdrawal of $220, 000.00 before Prudential became aware Alma was deceased. (Doc. 1.).
After making these withdrawals, Olen distributed some funds he withdrew from the account to the beneficiaries of the Estate, which includes Olen, Robert, Paul and Nicole Meredith (the daughter of Alma's son, Eric, who predeceased Alma, who is not a party to this action or a beneficiary of the account). (Id.). Olen (on behalf of himself and the Estate) and Paul have all made claims to the remaining funds and have contested the way those funds should be distributed. (Id.). Paul has asserted counterclaims against Prudential and Cross Claims against Olen.
With his Answer, Paul Meredith asserted five counterclaims against Prudential. Paul also contests this Court's jurisdiction generally in his Answer and specifically in his later filed Motion to Dismiss for Lack of Jurisdiction. (Docs. 74, 100). Paul contends that Prudential is responsible for the $220, 000 wrongfully withdrawn by Olen under the POA. Paul maintains the interpleader action does not shield Prudential from liability because its actions caused the present dispute over the funds.
Paul has also brought two cross claims against Olen. Count One of the Cross Claim alleges Olen tortiously interfered with a contract while Count Two makes a claim for breach of fiduciary duties owed by Olen. Olen has moved to Dismiss these cross claims, arguing they fail to state claims for which relief can be granted. Olen has also made a request for an award of attorney's fees and costs.
II. LEGAL STANDARD
A. Motion to Dismiss.
Rule 12(b)(6), Fed. R. Civ. P., provides a court may dismiss a claim for failure to state a claim upon which relief can be granted. “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Conclusory statements, assertions or labels will not survive a 12(b)(6) motion to dismiss. Id. A plaintiff's claim has facial plausibility “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.; see also Edwards v. Prime, Inc., 602 F.3d 1276, 1291 (11th Cir. 2010). “Factual allegations must be enough to raise a right to relief above the speculative level[.]” Twombly, 550 U.S. at 555 (citation omitted). “Although it must accept well-pled facts as true, the court is not required to accept a plaintiff's legal conclusions.” Iqbal, 556 U.S. at 678.
III. ANALYSIS
Friends of the Everglades v. U.S. E.P.A., 699 F.3d 1280, 1289 (11th Cir. 2012) (citation omitted); see also Odyssey Marine Exploration, Inc. v. Unidentified Shipwrecked Vessel, 657 F.3d 1159, 1179 (11th Cir. 2011) ("Subject matter jurisdiction of the lower federal courts is determined by Congress in the exact degrees and character to which Congress may seem proper for the public good.") (citation and internal quotation marks omitted). Federal courts "only have the power to hear cases over which the Constitution or Congress has given them authority.” Title Pro Closings, L.L.C. v. Tudor Ins. Co., 840 F.Supp.2d 1299, 1302 (M.D. Ala. 2012). If a federal court oversteps those bright-line boundaries, "it violates the fundamental constitutional precept of limited federal power." Griffin v. Wal-Mart Stores East, L.P., 884 F.Supp.2d 1218, 1221 (N.D. Ala. 2012) (citations omitted).
Prudential filed this case asserting this Court has jurisdiction under 28 U.S.C. § 1335 because Olen is an adult resident of Florida, the estate is an Alabama legal proceeding, Paul is an adult resident of Louisiana, and Robert is an adult resident of New York. (Doc. 1). Section 1335 confers original jurisdiction on federal district courts in interpleader proceedings only where “[t]wo or more adverse claimants, of diverse citizenship as defined in subsection (a) or (d) of section 1332 of this title, are claiming or may claim to be entitled to such money or property.” 28 U.S.C. § 1335(a)(1) (emphasis added); see also American General. Life Ins. Co. v. Jones, 2008 U.S. Dist. LEXIS 92850, *1, n.1 (S.D. Ala. Nov. 13, 2008) (recognizing “the requirement in statutory interpleader actions that there be at least minimal diversity between the claimants”). The allegations of Prudential's Complaint satisfy the minimum diversity requirements of Section 1335.
Paul also contends Prudential may not bring this action in interpleader because he believes Prudential is responsible for the dispute which may subject it to multiple liability, because Olen added his name to the TOD registration as a “joint owner” several days after Alma completed and signed the form. (Doc. 100).
The facts alleged by Paul do not support the conclusion that Prudential's actions caused the dispute about ownership of the account proceeds. The text of the TOD registration form expressly states joint ownership of a TOD account is not allowed. (Doc. 75-1). Olen's alleged after-the-fact addition of his name as a joint owner did not affect the ownership of the TOD account based on the express terms of the TOD Rules.
Paul also contends there is no real dispute regarding ownership of the funds Prudential has plead into Court. (Doc. 100). This contention is without merit. At a minimum, the claims asserted by the Estate and the cross claims asserted by Paul against Olen bely this argument. The Court finds that a sufficient dispute over the ownership of the account exists to support Prudential's interpleader.
Finally Paul maintains his Niece Nicole Meredith is a necessary party because Olen shared portions of the account proceeds he improperly withdrew exercising his POA before notifying Prudential that Alma was deceased. This theory is also unavailing. The facts alleged in Prudential's Complaint and Paul's Counterclaim establish Olen's POA withdrawals from the account were effected without notice to Prudential. Thus, under the terms of the POA, Prudential is not...
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