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Morris v. Prudential Insurance Co.

United States District Court, Fourth Circuit

May 30, 2013



DEBORAH K. CHASANOW, District Judge.

Plaintiff Marguerite Morris commenced this action on June 29, 2012, seeking to enjoin disbursement of a death benefit payable under a Servicemembers' Group Life Insurance ("SGLI") policy issued by Defendant Prudential Insurance Company of America.[1] The insured, Katherine Morris, committed suicide on May 6, 2012. Her husband, Army Specialist Isaac J. Goodwin, is named as the beneficiary under the policy. Plaintiff, Katherine's mother, alleges that the marriage was a ruse to collect a higher Basic Allowance for Housing from the Army, and that Specialist Goodwin's abusive and adulterous conduct contributed to Katherine's suicide. Thus, she contends, "it would be inequitable and unjust for Goodwin to reap the benefits of such horrific behavior." (ECF No. 1 ΒΆ 17). Notably, she does not assert a competing claim to the benefit.

Prudential responded by filing, along with its answer, a counterclaim and third-party complaint naming all potential claimants to the death benefit - specifically, Plaintiff, Specialist Goodwin, and members of his family who are designated as beneficiaries under his SGLI policy. The counterclaim/third-party complaint raises two claims. First, Prudential seeks a declaratory judgment "regarding whether the Death Benefit is payable in the event the Court finds that the marriage between the Insured and [Specialist Goodwin] was fraudulently entered into and not valid[.]" (ECF No. 9, at 12). Additionally, "[i]n the event that the [c]ourt enters a declaratory judgment finding that the Death Benefit is payable" ( id. at 13), Prudential asserts a claim in interpleader, seeking an order directing it to deposit the death benefit, along with accrued interest, into the court's registry; directing the third-party defendants to interplead their rights; appointing a guardian ad litem to represent the interests of a minor contingent beneficiary; discharging Prudential from any liability; and awarding it attorneys' fees and costs.

On December 21, 2012, Specialist Goodwin's family members, proceeding pro se, filed what was purported to be an answer to the third-party complaint. In substance, however, this pleading addresses only the allegations raised in Plaintiff's complaint. While it is not responsive to Prudential's third-party complaint, none of the family members assert a competing claim to the benefit; in fact, they essentially defend Specialist Goodwin's entitlement to it. On December 27, Specialist Goodwin, by counsel, answered the third-party complaint, alleging that because he is "the legal beneficiary of the policy at issue, [] there is no basis to deny him payment pursuant to the policy[.]" (ECF No. 28, at 4). He requests denial of all relief sought by Prudential and an award of attorneys' fees and costs. To date, Plaintiff has not answered the counterclaim.

Following a January 3, 2013, telephone conference, the case was stayed pending Plaintiff's submission of a report advising of the status of investigations related to the circumstances of the marriage and Katherine's death. On February 8, Plaintiff reported that one or more Army investigations were ongoing and requested that the stay be continued. On the same date, the court invited Prudential and the third-party defendants to express their views regarding Plaintiff's request for continuance of the stay. Specialist Goodwin responded, on February 21, opposing continuance and adding that "Plaintiff has still failed to answer the question of her standing to impede the payment of the death benefits to either Mr. Goodwin as the automatic beneficiary of his late wife's insurance policy, or the payment of the benefits to his beneficiaries if for some reason he is disqualified[.]" (ECF No. 34, at 1).

Noting that the issue of Plaintiff's standing had been raised as an affirmative defense in the responsive pleadings filed by both Prudential and Specialist Goodwin, and that it was discussed during the telephone conference, the court issued an order, on March 21, directing Plaintiff to show cause within fourteen days why the complaint should not be dismissed for lack of standing. (ECF No. 36). Prudential and the third-party defendants were invited to file papers in response.

Plaintiff did not respond to the show cause order. Prudential submitted an informal response, taking no position on the standing issue, but requesting, "in the event that the [c]ourt dismisses Plaintiff's complaint due to lack of standing and... does not receive objection to Prudential's request, " that it "direct payment of the death benefit to Third-Party Defendant Isaac J. Goodwin and release Prudential from any further liability[.]" (ECF No. 37, at 1). Specialist Goodwin also filed a response, reiterating his position that Plaintiff had no standing and requesting dismissal of the complaint and an award of attorneys' fees and costs. (ECF No. 38).

The United States Court of Appeals for the Fourth Circuit recently summarized the relevant considerations in the standing analysis in Doe v. Virginia Dept. of State Police, ___ F.3d ___ 2013 WL 1496937 (4th Cir. 2013). The court explained:

There exist two strands of standing: Article III standing, which ensures that a suit presents a case or controversy as required by the Constitution, and "prudential standing, " which encompasses "judicially self-imposed limits on the exercise of federal jurisdiction." Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984).
To have Article III standing, [the plaintiff] must be able to show that (1) she suffered an actual or threatened injury that is concrete, particularized, and not conjectural; (2) the injury is fairly traceable to the challenged conduct; and (3) the injury is likely to be redressed by a favorable decision. Miller v. Brown [, 462 F.3d 312, 316 (4th Cir. 2006)] (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)). "The party invoking federal jurisdiction bears the burden of establishing these elements." Lujan, 504 U.S. at 561....
Federal courts also face judicially imposed prudential limits on their jurisdiction "founded in concern about the proper - and properly limited - role of the courts in a democratic society." Warth v. Seldin, 422 U.S. 490, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). Standing doctrine's prudential dimensions are not as definite as its constitutional dimensions, but the Supreme Court has explained that "prudential standing encompasses the general prohibition on a litigant's raising another person's legal rights, the rule barring adjudication of generalized grievances more appropriately addressed in the representative branches, and the requirement that a plaintiff's complaint fall within the zone of interests protected by the law invoked.'" Elk Grove Unified School Dist. v. Newdow, 542 U.S. 1, 12, 124 S.Ct. 2301, 159 L.Ed.2d 98 (2004) (quoting Allen, 468 U.S. at 751).

Doe, 2013 WL 1496937, at *3.

There is little case law addressing standing in the context of an SGLI policy, but the Fifth Circuit's unreported decision in Prudential v. Flanigan, 204 F.3d 1117, 1999 WL 1328633 (5th Cir. 1999), is instructive. There, Prudential filed an interpleader action to determine the beneficiary of an SGLI policy where the designated beneficiary, the insured's husband, had been convicted of murdering his wife and was, therefore, ineligible to receive the benefit. Prudential learned that the insured may have been survived by a minor child, who could have asserted a claim. Upon finding that the minor was not the insured's biological or adopted child, the district court awarded the proceeds to the insured's parents. The insured's husband appealed, arguing that the minor - purportedly, his son - should have received the benefit. Noting that the appellant was not appealing in a representative capacity, the court found that he lacked standing:

To have standing to appeal, a party must be aggrieved by the district court's order. "[A]n indirect financial stake in another party's claim is insufficient to create standing on appeal[."] Rohm & Hass Tex. v. Ortiz Bros. Insulation, 32 F.3d 205, 208 (5th Cir. 1994) (internal citation omitted). Accordingly, as urged by Prudential, as well as in the amicus brief of the parents of the insured, [the ...

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