United of Omaha Life Ins. Co. v. Womack-Rodriguez

• Decision Date: 15 May 2020
• Docket Number: Case No. SA-19-CV-0814-JKP
• Parties: UNITED OF OMAHA LIFE INSURANCE COMPANY, Plaintiff, v. Sara Jo WOMACK-RODRIGUEZ, et al., Defendants.
• Court: U.S. District Court — Western District of Texas

461 F.Supp.3d 455

UNITED OF OMAHA LIFE INSURANCE COMPANY, Plaintiff,

v.Sara Jo WOMACK-RODRIGUEZ, et al., Defendants.

Case No. SA-19-CV-0814-JKP

United States District Court, W.D. Texas, San Antonio Division.

Signed May 15, 2020

Marjorie C. Nicol, Wilson Elser, Houston, TX, for Plaintiff.

Camie Carlene Wade, Kerby & Wade, P.C., David Leslie Kerby, Thompson & Kerby, P.C., Lubbock, TX, for Defendant Sara Jo Womack-Rodriguez.

Judson Paul Manning, Field, Manning, Stone, Hawthorne & Aycock, Lubbock, TX, for Defendant Trenton Seth Womack.

James Maverick McNeel, Chamberlain, Hrdlicka, White, Williams & Aughtry, San Antonio, TX, Margaret Jones Hopson, Margaret Jones Hagelman Law, PLLC, Luling, TX, for Defendant James G. Murry, Jr.

Stephen Harrison Nickey, The Law Offices of Stephen H. Nickey, P.C., El Paso, TX, for Defendant American Funeral Financial, LLC.

MEMORANDUM OPINION AND ORDER

JASON PULLIAM, UNITED STATES DISTRICT JUDGE

Plaintiff, United of Omaha Life Insurance Company ("United") commenced this interpleader action alleging that, following the death of its insured, Michael Kelly Womack, on May 13, 2019, it held death benefits based upon two life insurance policies (Policy UA9443754 ($1,600,000) and Policy UA9451672 ($400,000)). It identified four potential claimants for the single death benefit fund: (1) the decedent's daughter, Sara Jo Womack-Rodriguez; (2) his son, Trenton Seth Womack; (3) his business associate, James G. Murry, Jr.;¹ and (4) American Funeral Financial, LLC, which had provided funeral services. Murry has countersued United and its insurance agent, Saul Trevino for acts and omissions related to attempts to change the beneficiary on both policies.

Before the Court are the following four motions: (1) Opposed Motion for Discharge and Other Interpleader Relief (ECF No. 20); (2) United of Omaha Life Insurance Company's Motion to Dismiss James G. Murry's Second Amended Counterclaims (ECF No. 58); (3) Counter-Defendant Saul Trevino's Motion to Dismiss (ECF No. 65); and (4) First Amended Joint Motion to Order Deposit and Disburse Interpled Funds (ECF No. 68). The motions are ripe for ruling.

I. BACKGROUND²

The two relevant life insurance policies initially named the policyholder's daughter as the sole beneficiary. See Ex. A-1 (application); Ex. A-7 (application). Trevino as agent for United solicited both policies and was the agent of record. Each policy states:

You may change the beneficiary by written request during the insured's lifetime. Unless you specify otherwise in the written request, the change will be effective on the date you sign the written request. However, it will not be binding on us until we record it at our home office. Any rights created by a change of beneficiary will be subject to any payments we make or actions we take between the date you sign the written request and the date we record it at our home office. If the beneficiary designation in effect is irrevocable, the beneficiary must also sign the written request.

Ex. A-1 at 10; Ex. A-7 at 10.

In October 2017, the policyholder through Trevino attempted to change the beneficiary for both policies to the policyholder's son. United processed, recorded, and accepted the changed beneficiary for the lesser policy, i.e., Policy UA9451672, but rejected the designation for the major policy, i.e., Policy UA9443754, because the form was not notarized.

Later that month, the policyholder signed and notarized a change of beneficiary to Murry for the major policy. This change of beneficiary was provided to Trevino who maintained it in his records. In October 2018, the policyholder signed a change of beneficiary to Murry for the lesser policy. The policyholder had this change notarized on November 1, 2018. The signed and notarized change was provided to Trevino who maintained it in his records. On or about November 6, 2018, Trevino sent this change to Murry for his signature so as to make the change irrevocable. Two weeks later, Murry executed and returned the change to Trevino. As shown by Changes of Beneficiary ("COB") attached to the interpleader complaint, such COBs state: "No changes are binding until received and recorded by the company at the home office. We will record the change(s) and send a confirmation." Ex. A-3; Ex. A-9.

Both policies remained in effect through the policyholder's death on May 13, 2019. After the policyholder's death, his daughter assigned $8,489.45 of the insurance proceeds to American Funeral Financial, LLC. See Ex. A-6.

Murry called Trevino the day after the death. Trevino informed him that both changes to Murry were ineffective because they had not been notarized. To Murray's knowledge it is unclear whether, during the policyholder's lifetime, (1) Trevino submitted the two changes naming Murry beneficiary of both policies to United or (2) United received and failed to process, record, and accept the changes.

On or about May 29, 2019, Murry requested a determination as to his claims to the proceeds of both policies. Ex. A-5. On June 13, 2019, counsel for Murry contacted United through email stating a "hearty and vigorous disagreement" with any failure to recognize the change of beneficiaries to Murry. See Ex. A-4. The next day, United responded that its review of the file showed no attempt to change the beneficiary to Murry. See id. The day after that, counsel expressed surprise regarding the lack of documentation and stated that it would be remedied immediately. See id. That same day, United contacted Trevino about the COBs. See id. Trevino responded that there had been an exchange of documents, but the COBs had not been notarized. See id. At United's request, Trevino, on June 17, 2019, provided COBs naming Murry as beneficiary for both policies. See id. Despite receiving those forms, United has not processed, recorded, or accepted the forms.

United brought this interpleader action under Fed. R. Civ. P. 22 as a bearer of life insurance benefits sought by four rival claimants: (1) daughter, (2) son, (3) business associate, and (4) funeral parlor. After each claimant filed an answer to the interpleader complaint, United filed an opposed motion for discharge and other interpleader relief. Though that motion, United seeks (a) a declaration that it has satisfied its duties and obligations with respect to policies and owes no other duties or obligations; (b) to deposit death benefits plus accrued interest into the registry of the Court less attorney fees in the amount of $10,000; (c) to be discharged from this action with prejudice; (d) to enjoin parties from further litigation except an action by Murry pending in state court, Murry v. United of Omaha Life Insurance Company and Saul Trevino , No. 2019CI14979; (e) to dismiss all claims asserted against it in this action with prejudice; (f) to realign remaining parties to reflect the true nature of the dispute. See ECF No. 20. Only Murry opposes this motion, but he expressly does not oppose the deposit of death benefits, except to the extent United seeks to with-hold fees. He opposes discharging the insurance company or enjoining any other litigation against it because of his asserted counterclaims and because the insurance company is not free from blame for the controversy.

In his most recent operative pleading, Murry asserts three counterclaims against United: (1) breach of contract and duties of good faith and fair dealing; (2) violation of the Prompt Payment of Claims provisions of Subchapter B of Chapter 542 of the Texas Insurance Code, Tex. Ins. Code Ann. §§ 542.051 – 542.061, in two distinct respects (a) by not notifying him in writing whether it accepted or rejected his claim, required additional documents or forms for the claims, or needed additional time to make a determination in violation of § 542.055 and (b) violating Tex. Ins. Code § 542.058(c) by failing to deposit proceeds of the insurance policies into the Court registry within ninety days of receiving documents from the claimants in this interpleader action; and (3) negligence. See ECF No. 57 ¶¶ 21-44. Murry asserts only the negligence claim against Trevino. Id. ¶¶ 38-44; ECF No. 70 (response to Trevino's motion to dismiss).

Murry claims that a valid contract was formed between he and United, upon Trevino's receipt of the change of beneficiary to Murry on the major policy. He further claims that United breached that contract when it failed to process, record, or accept the form. In addition, he claims that United breached its duties of good faith and fair dealing by not evaluating, processing, or providing a denial of his claims. He also claims that, as a result of United's breaches, he has sustained damages and incurred attorneys' fees and expenses.

Murry premises his negligence claims against both United and Trevino on the failure of Trevino to submit the changed beneficiary forms within the policyholder's lifetime. Alternatively, he alleges that Trevino owed a duty to ensure that both beneficiary changes were submitted, accepted, recorded, and processed by United and that his conduct fell below the applicable standard of care owed.

United has moved to dismiss Murry's counterclaims under Fed. R. Civ. P. 12(b)(1) on grounds of standing or ripeness and Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted. Trevino has also moved to dismiss the counterclaims under Rules 12(b)(1) and (6). He argues that the Court lacks subject matter jurisdiction because Murry only asserts state claims and there is an absence of diversity jurisdiction. Murry opposes both motions.³

The rival claimants recently filed a joint motion to order deposit and disbursement of the interpleaded funds. See ECF No. 68. The claimants therein state that they "have agreed to resolve the disputes between them and have entered a settlement agreement." Id. ¶ 5. They further state that United "refused to participate in the settlement discussions with the claimants" and thus, Murry's counterclaims against United and...