Reliance Standard Life Ins. Co. v. Lyons

Decision Date29 November 2010
Docket NumberCause No. 1:09–CV–158–TS.
Citation756 F.Supp.2d 1013
PartiesRELIANCE STANDARD LIFE INSURANCE COMPANY, Plaintiff,v.Cynthia K. LYONS, John E. Lyons, Michael B. Lyons, and Lake City Bank, Defendants.Lake City Bank, Third Party Plaintiff,v.The Standard Insurance Company, and Cigna Corporation a/k/a Cigna Group Insurance Company, Third Party Defendants.Lake City Bank, Cross–Claimant,v.Cynthia K. Lyons, John E. Lyons, and Michael B. Lyons, Cross–Defendants.
CourtU.S. District Court — Northern District of Indiana

OPINION TEXT STARTS HERE

J. Rickard Donovan, Jared Christopher Helge, Mark W. Baeverstad, Rothberg Logan & Warsco LLP, Fort Wayne, IN, for Defendants/Cross–Claimant/Third Party Plaintiff.Frank J. Gray, Travis S. Friend, Gray & Friend LLP, Sherrill W. Colvin, Haller & Colvin P.C., Fort Wayne, IN, for Defendants/Cross–Defendants.W. Sebastian Von Schleicher, Smith Von Schleicher & Associates, Chicago, IL, for Third Party Defendants.

OPINION AND ORDER

THERESA L. SPRINGMANN, District Judge.

This dispute is over the life insurance benefits payable under three group life insurance policies upon the death of John F. Lyons, a former partner with the law firm of Barrett & McNagny LLP (Barrett & McNagny). These group life insurance policies are employee welfare benefit plans governed by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq. Mr. Lyons had designated Cynthia K. Lyons (his wife) and John E. Lyons and Michael B. Lyons (his sons) (collectively “the Lyons parties) as beneficiaries of the policies. Mr. Lyons also owed some outstanding financial obligations to Lake City Bank and had agreed to execute assignments of these policies to Lake City Bank. However, he never executed assignments or changed the beneficiaries on the policies. Because Lake City Bank lodged rival claims to the life insurance proceeds, this case was instituted to determine the rightful beneficiaries.

The parties have elected to use the vehicle of summary judgment to present their respective claims and to put before the Court the relevant evidentiary materials. Now pending before the Court are the following motions that are ripe for ruling: Cynthia K. Lyons's Motion for Summary Judgment [ECF No. 69]; Lake City Bank's Motion for Summary Judgment [ECF No. 72]; John E. and Michael B. Lyons's Joint Motion for Summary Judgment [ECF No. 75]; The Standard Insurance Company's (Standard Insurance) Motion for Summary Judgment [ECF No. 77]; Lake City Bank's Motion to Strike Designated Evidence of Cynthia K. Lyons [ECF No. 85]; and Standard Insurance's Motion to Strike the Affidavit of Michael E. Gavin [ECF No. 86].

PROCEDURAL BACKGROUND

On June 8, 2009, Reliance Standard Life Insurance Company (Reliance Standard) filed an Interpleader Complaint and Request for Declaratory Judgment [ECF No. 1] and named Cynthia K. Lyons, John E. Lyons, Michael B. Lyons, and Lake City Bank as Defendants. Reliance Standard predicated this Court's subject-matter jurisdiction on 28 U.S.C. §§ 1331, 1332, and 1335 and 29 U.S.C. § 1132(e). This Interpleader Complaint addresses competing claims to proceeds of a Reliance Standard group policy (policy number GL–136322) insuring the life of John F. Lyons. On June 30, Reliance Standard was granted leave to deposit funds (i.e., the death benefit payable under policy number GL–136322) into the registry of the Court. On July 8, John E. Lyons filed an Answer [ECF No. 15] to Reliance Standard's Interpleader Complaint.

On July 24, Defendant Lake City Bank filed an Amended Answer to Reliance Standard's Complaint, Third–Party Complaint, and Cross–Claim [ECF No. 20]. Lake City Bank premises subject-matter jurisdiction over its Third–Party Complaint on 28 U.S.C. §§ 1331 and 1332 and pendent jurisdiction over its state-law claims, and it names Standard Insurance and Cigna Corporation a/k/a Cigna Group Insurance Company (more correctly identified as Life Insurance Company of North America (LINA)) as Third–Party Defendants and asserts claims to proceeds of a Standard Insurance group policy (policy number 645290–A) insuring the life of James F. Lyons and of a LINA group policy (policy number SGM–600231) insuring the life of James F. Lyons. Lake City Bank's claims to the proceeds are predicated upon a settlement agreement that John F. Lyons and Michael B. Lyons entered into with Lake City Bank, and the bank has asserted equitable liens against the proceeds. Lake City Bank asserts its Cross–Claim against the Lyons parties, claiming under the settlement agreement a right to the proceeds of the Reliance Standard, Standard Insurance, and LINA life insurance policies, as well as the proceeds of a Lincoln Financial Group policy (policy number 21652545).1 The bank also alleges unjust enrichment in its Cross–Claim.

On July 29, LINA filed an Answer to Third–Party Complaint and a Counterclaim and Cross–Claim in Interpleader [ECF No. 26] under Federal Rule of Civil Procedure 22. LINA asserted its Counterclaim and Cross–Claim in Interpleader against Lake City Bank and the Lyons parties.

On August 7, Cynthia K. Lyons filed an Answer to Reliance Standard's Interpleader Complaint [ECF No. 30], an Answer to Lake City Bank's Cross–Claim, Affirmative Defenses, and Cross–Claim Against Lake City Bank [ECF No. 31], and an Answer to LINA's Counterclaim and Cross–Claim in Interpleader [ECF No. 33]. On August 18, Michael B. Lyons filed an Answer to Reliance Standard's Interpleader Complaint [ECF No. 35], an Answer to Lake City Bank's Cross–Claim, Affirmative Defenses, and Cross–Claim Against Lake City Bank [ECF No. 39], and an Answer to LINA's Counterclaim and Cross–Claim [ECF No. 41]. On August 18, John E. Lyons filed an Answer to Lake City Bank's Cross–Claim, Affirmative Defenses, and Cross–Claim Against Lake City Bank [ECF No. 38] and an Answer to LINA's Counterclaim and Cross–Claim [ECF No. 40].

On August 18, Lake City Bank filed an Answer to LINA's Counterclaim and Cross–Claim in Interpleader [ECF No. 42]. On August 27, Lake City Bank filed an Answer to Cross–Claim of Cynthia K. Lyons [ECF No. 46]. On September 8, Lake City Bank filed an Answer to Cross–Claim of John E. Lyons [ECF No. 48] and an Answer to Cross–Claim of Michael B. Lyons [ECF No. 49].

On October 14, Michael B. Lyons filed an Amended Answer to Lake City Bank's Cross–Claim, Affirmative Defenses, and Cross–Claim Against Lake City Bank [ECF No. 60] and an Amended Answer to Reliance Standard's Interpleader Complaint [ECF No. 61]. On October 14, John E. Lyons filed an Amended Answer to Lake City Bank's Cross–Claim, Affirmative Defenses, and Cross–Claim Against Lake City Bank [ECF No. 62].

On October 14, the Court granted Reliance Standard's Motion for Final Decree of Interpleader and ordered that Reliance Standard be discharged and dismissed with prejudice from this case. Reliance Standard had earlier deposited the proceeds of group life insurance policy number GL–136322. On October 15, LINA was granted leave to deposit funds (i.e., the death benefit payable under policy number SGM–600231) into the registry of the Court. On October 23, the Court ordered that LINA be discharged and dismissed with prejudice from this case. The proceeds of LINA's insurance policy number SGM–600231 were deposited in the registry of the Court.

On November 2, Standard Insurance filed the administrative record [ECF No. 68] related to Lake City Bank's claim to the proceeds of the Standard Insurance policy. On November 19, Cynthia K. Lyons filed a Motion for Summary Judgment [ECF No. 69], a Memorandum of Law in Support [ECF No. 70], and an Appendix of Exhibits in Support [ECF No. 71]. On November 20, Lake City Bank filed a Motion for Summary Judgment [ECF No. 72], a Memorandum in Support [ECF No. 73], and evidentiary materials in support [ECF No. 74]. On November 20, John E. Lyons and Michael B. Lyons filed a Joint Motion for Summary Judgment [ECF No. 75], with an attached Affidavit [ECF No. 75–2], and a Memorandum in Support [ECF No. 76]. On November 20, Standard Insurance filed a Motion for Summary Judgment [ECF No. 77], a Memorandum in Support [ECF No. 78], and an Appendix [ECF No. 79] of evidentiary materials. On December 31, John E. Lyons and Michael B. Lyons filed a Response to Lake City Bank's Motion for Summary Judgment [ECF No. 82], and Cynthia K. Lyons filed her Response to the same Motion [ECF No. 83]. Also on December 31, Lake City Bank filed a Response [ECF No. 84] to the Motions for Summary Judgment filed by the Lyons parties and Standard Insurance, as well as a Motion to Strike Designated Evidence of Cynthia K. Lyons [ECF No. 85]. On December 31, Standard Insurance filed a Motion to Strike the Affidavit of Michael E. Gavin [ECF No. 86] and a Response in Opposition to Lake City Bank's Motion for Summary Judgment [ECF No. 87]. On January 14, 2010, Lake City Bank filed a Response to Standard Insurance's Motion to Strike [ECF No. 88]. On January 15, Cynthia K. Lyons filed a Response in Opposition to Lake City Bank's Motion to Strike [ECF No. 89] and a Supplemental Designation of Evidentiary Exhibits in Support of Motion for Summary Judgment [ECF No. 90]. On January 21, Standard Insurance filed a Reply in Support of Its Motion to Strike [ECF No. 91].

SUMMARY JUDGMENT STANDARD

The Federal Rules of Civil Procedure provide that motions for summary judgment should be granted “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). A genuine issue of material fact exists when ‘there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.’ AA Sales & Assocs. v. Coni–Seal, Inc., 550 F.3d 605, 608–09 (7th Cir.2008) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). Under Rule...

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