Sun Life Assurance Co. of Canada v. Diaz

• Decision Date: 22 April 2015
• Docket Number: CIVIL ACTION NO. 3:14-cv-01685-VAB
• Court: U.S. District Court — District of Connecticut
• Parties: SUN LIFE ASSURANCE COMPANY OF CANADA Plaintiff, v. BRUCE DIAZ, JERRY DIAZ, TOMAS DIAZ, AND ESTATE OF ELSON A. DIAZ Defendants.

SUN LIFE ASSURANCE COMPANY OF CANADA Plaintiff, v. BRUCE DIAZ, JERRY DIAZ, TOMAS DIAZ,AND ESTATE OF ELSON A. DIAZ Defendants.

CIVIL ACTION NO. 3:14-cv-01685-VAB

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT

April 22, 2015

MEMORANDUM AND ORDER

I. INTRODUCTION

Plaintiff Sun Life Assurance Company of Canada ("Sun Life") filed this interpleader action under Fed. R. Civ. P. 22 against defendants Bruce Diaz, Jerry Diaz, Tomas Diaz, and the estate of Elson A. Diaz (the "Estate") to determine the proper beneficiary or beneficiaries of a $24,000 death benefit (the "Death Benefit") owing under a life insurance policy (the "Policy") covering the deceased Elson A. Diaz and governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. ("ERISA").

Sun Life asks the Court (i) to allow Sun Life to deposit the Death Benefit into the registry of the Court pending judgment, (ii) to require the defendants to interplead their rights to the Death Benefit, (iii) to discharge Sun Life from all liability under the Policy with respect to the death of Elson A. Diaz, (iv) to restrain the defendants from instituting any other action against Sun Life to recover the Death Benefit, and (v) to award Sun Life its costs, including attorneys' fees. (Compl. at 5-6, ECF No. 1.) For the reasonsstated herein, the Court will grant Sun Life all requested relief except injunctive relief and costs.

II. FACTUAL AND PROCEDURAL BACKGROUND¹

Elson A. Diaz worked for The Siemon Company. (Id. ¶ 9.) Sun Life provided group life insurance benefits to The Siemon Company under the Policy, which partially funded The Siemon Company's employee benefit plan (the "Plan") and which is governed by ERISA. (Id. ¶ 10; Sun Life Jur. Stmt. at 1, ECF No. 15.) Elson A. Diaz was entitled to the Death Benefit under the Policy. (Compl. ¶ 11.)

On January 29, 2001, Elson A. Diaz designated his mother as the sole beneficiary of the Death Benefit. (Id. ¶ 13.) His mother died in May 2013. (Id. ¶ 14.)

On June 9, 2014, Elson A. Diaz's brother, Jerry Diaz, informed Sun Life that he was Elson A. Diaz's power of attorney and requested a beneficiary designation form. (Id. ¶ 17.) That same day, Sun Life received a beneficiary designation form dated October 20, 2013 from Jerry Diaz (the "Jerry Diaz Form"). (Id. ¶¶ 18-19.) The Jerry Diaz Form, allegedly executed by Elson A. Diaz, named Jerry Diaz as the sole beneficiary of the Death Benefit and Tomas Diaz, another brother of Elson A. Diaz's, as the sole contingent beneficiary. (Id. ¶ 18.)

On July 3, 2014, Sun Life received a beneficiary designation form from Bruce Diaz, another brother of Elson A. Diaz's, naming Bruce Diaz and Tomas Diaz as equal co-beneficiaries of the Death Benefit (the "Bruce Diaz Form"). (Id. ¶ 21.) The Bruce Diaz Form was dated July 3, 2014. (Id. ¶ 22.) Bruce Diaz executed the Bruce Diaz Form as "POA/Brother." (Id.)

Elson A. Diaz died on July 7, 2014. (Id. ¶ 24.) An attorney representing Jerry Diaz threatened to sue Sun Life to recover the Death Benefit, and an attorney representing Bruce Diaz questioned Sun Life as to why it did not pay the Death Benefit to Bruce Diaz. (Id. ¶¶ 25-26.) Sun Life advised Jerry Diaz, Bruce Diaz, and the estate of Elson A. Diaz that it would commence this interpleader² action if they were unable to resolve their competing claims. (Id. ¶ 27.)

Sun Life did not receive notice from the defendants that they resolved their competing claims, and so it initiated this action. (See id. ¶ 28.) Sun Life served Jerry Diaz on November 20, 2014, (Affidavit of Service at 1, ECF No. 8), and served Bruce and Tomas Diaz on December 6, 2014, (Affidavit of Service at 1, ECF No. 9; Affidavit of Service at 1, ECF No. 10). Because no person had sought admission of a will or letter of administration in probate court in connection with the Estate, and because Sun Life was unable to locate a personal representative for the Estate, this Court granted Sun Life permission to serve the Estate by publishing a notice once per week for two consecutive weeks in a newspaper of general circulation in Waterbury, Connecticut. (See Order, ECF No. 11.) Nevertheless, no defendant has appeared in this action.

Sun Life maintains that a dispute exists among the defendants regarding who is a proper beneficiary to the Death Benefit. (Id. ¶¶ 31-32.) Sun Life is ready and willing to pay the Death Benefit to the person(s) lawfully entitled to it, but contends that itcannot pay the Death Benefit without exposing itself to double or multiple liability because of the defendants' competing claims. (See id. ¶ 33.)

III. DISCUSSION

A. Subject Matter Jurisdiction

Federal courts acquire subject matter jurisdiction over interpleader actions in two ways. First, in "statutory interpleader" actions, 28 U.S.C. § 1335 provides district courts with original jurisdiction over any civil action of interpleader involving $500 or more if two or more adverse claimants of diverse citizenship claim, or may claim, to be entitled to the property at issue, and if the plaintiff has deposited the subject property into the registry of the court. Section 1335 does not supply jurisdiction in this case because defendants Jerry Diaz, Bruce Diaz, and Tomas Diaz all reside in Connecticut, and the Estate, to the extent that it exists,³ would have been created by operation of Connecticut law, and therefore there are not two or more adverse claimants of diverse citizenship. (Id. ¶¶ 2-4.) Also, Sun Life has not deposited the Death Benefit into the registry of the Court. (See id. at 5.)

Second, in "rule interpleader" actions, Fed. R. Civ. P. 22 provides a procedural mechanism for bringing an interpleader action in federal court, but there must be an independent basis for subject matter jurisdiction. See Correspondent Servs. Corp. v. First Equities Corp. of Florida, 338 F.3d 119, 124 (2d Cir. 2003) ("[R]ule interpleader does not provide an independent basis for jurisdiction"). The Second Circuit has recognized that where an ERISA fiduciary requests interpleader relief to resolve conflicting claims to an ERISA plan life insurance benefit, the fiduciary's interpleaderaction brought under Fed. R. Civ. P. 22 constitutes a request for equitable relief seeking to enforce the terms of an ERISA plan pursuant to 29 U.S.C. § 1132(a)(3)(B)(ii), and federal question subject matter jurisdiction therefore exists under 29 U.S.C. § 1132(e)(1). See Metro. Life Ins. Co. v. Bigelow, 283 F.3d 436, 439-40 (2d Cir. 2002) (federal question subject matter jurisdiction exists for Rule 22 interpleader action by plan administrator to resolve family members' competing claims to ERISA plan life insurance benefits pursuant to 29 U.S.C. § 1132(a)(3)(B)(ii)); see also Unum Life Ins. Co. of Am. V. Scott, No. 3:10CV00538 DJS, 2012 WL 233999, at *1 (D. Conn. Jan. 24, 2012) ("There is no doubt that this Court has jurisdiction over an ERISA benefit action initiated by a fiduciary of an ERISA-regulated employee benefit welfare plan.").

A person is a fiduciary with respect to an ERISA-covered plan to the extent he "exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets . . . [or] has any discretionary authority or discretionary responsibility in the administration of such plan." 29 U.S.C. § 1002(21)(A). Entities making discretionary decisions regarding eligibility for benefits in connection with administering employee benefit plans are fiduciaries under ERISA. See Aetna Health Inc. v. Davila, 542 U.S. 200, 220 (2004) (citing Varity Corp. v. Howe, 516 U.S. 489, 511 (1996) ("[A] plan administrator engages in a fiduciary act when making a discretionary determination about whether a claimant is entitled to benefits under the terms of the plan documents")). Most courts recognize that entities exercising discretionary authority with respect to payment of claims are ERISA fiduciaries. See, e.g., Libbey-Owens-Ford Co. v. Blue Cross & Blue Shield Mut. of Ohio, 982 F.2d 1031, 1035 (6th Cir. 1993), on reh'gen banc (Feb. 23, 1993) ("When an insurance company administers claims for an employee welfare benefit plan and has authority to grant or deny the claims, the company is an ERISA 'fiduciary'"); Metro. Life Ins. Co. v. Price, 501 F.3d 271, 277 (3d Cir. 2007) (life insurer was ERISA fiduciary where it had responsibility for paying and denying claims, and administering claims in accordance with ERISA and terms of plan); Aetna Life Ins. Co. v. Bayona, 223 F.3d 1030, 1033 (9th Cir. 2000), as amended on denial of reh'g and reh'g en banc (Nov. 3, 2000) (life insurer was ERISA fiduciary where it made claims decisions and received correspondence concerning policies).

The Court concludes that Sun Life is a fiduciary with respect to the Policy and the Plan. Sun Life exercises discretionary authority in determining eligibility for life insurance benefits under the Policy and the Plan and the amount of benefits due. (Sun Life's Juris. Stmt. at 2, ECF No. 15.) Sun Life is also responsible for paying claims under the Policy and the Plan, (id. at 2, 5), and receives correspondence regarding claims and beneficiary designations, (see Compl. ¶¶ 16, 18, 21, 25-26). Thus, 29 U.S.C. § 1132(e)(1) supplies jurisdiction because this action constitutes a request for equitable relief by a fiduciary seeking to enforce the provisions of an ERISA-covered plan pursuant to 29 U.S.C. § 1132(a)(3)(B)(ii). See Bigelow, 283 F.3d at 439-40.

B. Two-Stage Process

Whether brought under "rule interpleader," as in this case, or under "statutory interpleader," an interpleader action generally involves a two-stage inquiry. See New York Life Ins. Co. v. Connecticut Dev. Auth., 700 F.2d 91, 95 (2d Cir. 1983); Metro. Life Ins. Co. v. Little, No. 13 CV 1059 BMC, 2013 WL 4495684, at *1 (E.D.N.Y. Aug. 17, 2013). First, the stakeholder must demonstrate that the requirements for interpleaderare met and that...