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Mutual of America Life Insurance Co. v. Smith

United States District Court, D. Maryland

June 29, 2018

MUTUAL OF AMERICA LIFE INSURANCE COMPANY
v.
NADINE SMITH, et. al.

          MEMORANDUM OPINION

          DEBORAH K. CHASANOW UNITED STATES DISTRICT JUDGE.

         Presently pending and ready for resolution in this statutory interpleader action are renewed motions for entry of default (ECF No. 81) and for discharge, injunction, and attorneys' fees and costs (ECF No. 82) filed by Mutual of America Life Insurance Company (“Mutual of America” or “Mutual”). The court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, the motions will be granted.

         I. Factual Background

         Verneda Pigott (“Decedent”) was the contract holder of an Individual Retirement Annuity (“IRA”) and two Flexible Premium Annuity (“FPA”) contracts issued by Mutual of America. Under these contracts, if an annuitant dies before the commencement of annuity payments, the value of the contracts becomes payable to the named beneficiaries. (ECF Nos. 1-3; 1-4; 1-5).

         Decedent died on May 29, 2015. (ECF No. 1-15, at 4). At the time of her death, Decedent had not yet elected to receive annuity payments. Accordingly, the value of the three contracts became payable to the named beneficiaries.[1] (ECF No. 1 ¶ 20). According to the most recent beneficiary designation on file, dated April 14, 2015, the Decedent listed Defendants Nadine Smith, Patricia Doxey, and Estate of Verneda R. Pigott (the “Estate”) as primary beneficiaries under all three contracts in shares of 37%, 24%, and 39% respectively.[2] (ECF No. 1-6). The beneficiary designations were made by Defendant Craig Seymour, as guardian for Decedent, who was appointed guardian of the property of Decedent by order of the Circuit Court for Montgomery County, Maryland on June 20, 2013. (ECF Nos. 1-6; 1-7).

         Upon notification of Decedent's death, Mutual of America sent letters to Defendants Smith, Doxey, and the Estate, advising them of their respective benefits under the contracts. (ECF No. 1-8). Thereafter, Mutual received letters from Defendant Kim St. Amant, as personal representative of the Estate, claiming that the April 14, 2015 beneficiary designation is invalid because Defendant Seymour lacked the legal authority to make the beneficiary designation. Defendant St. Amant also claimed that a beneficiary designation, dated October 23, 2013, is similarly invalid and that the Decedent lacked the mental capacity to make beneficiary designations on May 7, 2013 and January 24, 2013. (ECF Nos. 1-9; 1-10). Mutual also received a letter from Defendant Doxey, acknowledging the adverse claims asserted by St. Amant and recommending Mutual file an interpleader action. (ECF No. 1-15, at 2).

         II. Procedural Background

         On April 15, 2016, Mutual of America filed this interpleader action, pursuant to 28 U.S.C. § 1335, to resolve competing claims over the amounts payable pursuant to the annuity contracts. (ECF No. 1). Defendants Doxey, Smith, St. Amant, Seymour, the Estate, The Living Trust of Verneda Pigott, Trustee of the Verneda Pigott Trust (the “Living Trust”), and Lillian Robinson answered. (ECF Nos. 16; 17; 25; 28; 30). Default was entered as to Defendants Karen Leftride and Matilda Dawson. (ECF Nos. 43; 46). Mutual of America filed motions for discharge (ECF No. 69) and for entry of default as to the Estate of Sylvia Coleman (ECF No. 71), which were denied because the Estate of Sylvia Coleman had not been served properly. (ECF No. 74). The Estate of Sylvia Coleman was served properly on April 24, 2018. (ECF No. 78). To date, the Estate of Sylvia Coleman has not answered. On June 4, Mutual renewed its motion for entry of default as to the Estate of Sylvia Coleman. (ECF No. 81). On June 7, Mutual renewed its motion for discharge, injunction, and attorneys' fees and costs. (ECF No. 82).

         III. Motion for Entry of Default

         Pursuant to Fed.R.Civ.P. 55(a), “[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default.” Although this rule refers to entry of default by the clerk, “it is well-established that a default also may be entered by the court.” Breuer Elec. Mfg. Co. v. Toronado Sys. of Am., Inc., 687 F.2d 182, 185 (7th Cir. 1982).

         Defendant Estate of Sylvia Coleman was served properly on April 24, 2018. (ECF No. 78). The administrator of the Estate of Sylvia Coleman, Thomas Coleman, mailed a letter dated May 7, 2018, to Mutual's counsel. Mutual's counsel filed this letter with the court. (ECF No. 79-1). However, this letter is not an official pleading by the Estate of Sylvia Coleman and Mr. Coleman may not represent the Estate. See Local Rule 101.1(a) (D.Md. 2016). Thus, no appearance or answer on behalf of the Estate of Sylvia Coleman has been filed since it was served on April 28, and Mutual's motion for entry of default will be granted.

         IV. Motion for Discharge

         A. Standard of Review

         An interpleader action involves two stages. 7 Charles A. Wright et al., Federal Practice and Procedure § 1714 (3d ed. 2001); Rapid Settlements, Ltd. v. U.S. Fid. & Guar. Co., 672 F.Supp.2d 714, 717 (D.Md. 2009). In Metro. Life Ins. Co. v. Vines, No. WDQ-10-2809, ...


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