United States District Court, S.D. Texas, Houston Division
MEMORANDUM OPINION AND ORDER
H. Miller, United States District Judge.
before the court are (1) a motion to dismiss the complaint in
intervention under Rules 12(b)(1) and 12(b)(6) filed by
defendants Grist Mill Trust Welfare Benefit Plan (the
“Plan”) and Kathleen Kehoe, in her capacity as
Trustee of the Grist Mill Trust Welfare Benefit Plan (the
“Trustee”) (collectively, the “Plan
Defendants”) (Dkt. 11); (2) a motion to strike
immaterial, impertinent, and scandalous statements in the
amended counterclaims in rem and original crossclaims filed
by the Plan Defendants (Dkt. 33); and (3) an amended motion
to dismiss the amended counterclaims in rem and the original
crossclaims filed by defendants Leslie A. Shyvers and Jo. M.
Pollack, M.D., P.A. (the “Pollack Co.”) (Dkt.
34). After reviewing the motions, related filings, and the
applicable law, the court is of the opinion that the motion
to dismiss the complaint in intervention and the motion to
strike should be DENIED, and the amended motion to dismiss
the amended counterclaims in rem and the original crossclaims
should be GRANTED IN PART AND DENIED IN PART.
case was initiated as an interpleader action by Accordia Life
and Annuity Company (“Accordia”). Dkt. 1.
Accordia filed the interpleader against Shyvers, the Pollack
Co., and the Plan Defendants. Id. It contends that
the Pollack Co. adopted the Plan to provide benefits to its
employees, including Shyvers, who obtained an adjustable
premium life insurance policy with Indianapolis Life
Insurance Company (the “Policy”) that named the
Trustee as the owner and beneficiary. Id. After
various acquisitions of insurance companies, Accordia
eventually became the insurer and obligor for the Policy.
Id. On November 17, 2016, the Plan, via the Trustee,
requested that Accordia surrender the Policy for full
surrender value. On December 21, 2016, Shyvers and the
Pollack Co. made a formal claim on behalf of Shyvers to the
rights and benefits of the Policy. Id. In light of
the competing claims, Accordia did not surrender the Policy
and instead filed this interpleader action in which it asks
the court to resolve the dispute. Id.
Plan Defendants filed a motion to dismiss on June 26, 2017.
Dkt. 11. They argue that the court does not have jurisdiction
because Accordia did not deposit the fund that is in dispute
with the court. Id. Accordia has since remedied this
issue. See Dkts. 14, 23, 25. The Plan Defendants
also argue that the interpleader action should be dismissed
because Accordia failed to state a claim under Federal Rule
of Civil Procedure 12(b)(6). See Dkt. 11. Accordia
responds that an interpleader action is not dependent on the
merits of the adverse claims and is instead designed to
protect the stakeholder. Dkt. 16. The Pollack Co. and Shyvers
joined in Accordia's response to the Plan Defendants'
motion to dismiss. Dkt. 18. The Plan Defendants filed a reply
in which they point out that a state court of appeals held,
in a case involving Jo Pollack individually as well as the
Pollack Co. relating to the same type of plan, that the Plan
was the owner of the Policy primarily because Pollack
executed documents indicating that the Plan was the owner and
beneficiary and Pollack had not presented any summary
judgment evidence indicating that she was prevented from
reading the documents by trick or artifice. Id.
(citing Dkt. 21, Ex. E).
30, 2017, Shyvers and the Pollack Co. filed an answer and a
counterclaim in rem. Dkt. 12. The counterclaim
alleges that while the Plan is named the owner of the Policy,
it holds it in trust exclusively for the beneficial owner, in
this case, Shyvers. Id. The counterclaim asserts
that the insurance agents promoted and marketed the Plan as a
way to save for retirement that would allow a tax deduction.
Id. Shyvers and the Pollack Co. contend that they
were supposed to be the equitable beneficiaries of the
policies in the Plan. Id. Eventually, however, the
Pollack Co. was audited and had to pay taxes and penalties
for participating in the Plan. Id. Shyvers and the
Pollack Co. assert claims against Accordia for negligent
misrepresentation, fraudulent misrepresentation, negligence,
unjust enrichment, and money had and received, and they seek
a declaratory judgment. Id.
18, 2017, the Plan Defendants filed a motion to dismiss
Shyvers and the Pollack Co.'s counterclaim in
rem. Dkt. 19. On August 3, 2017, Shyvers and the Pollack
Co. amended their answer and counterclaim and added
crossclaims against the Plan. Dkt. 24. The amended
counterclaim notes the holding by the state appellate court
in the case involving Pollack as an individual but states
that the ruling was on a “limited issue.”
Id. It asserts the same counterclaims against
Accordia-negligent misrepresentation, fraudulent
misrepresentation, negligence, unjust enrichment, and money
had and received. Id. It also asserts these claims
against the Plan and adds a breach of fiduciary duty and a
breach of contract claim against the Plan. Id.
August 18, 2017, the Plan Defendants moved to strike the
amended answer, counterclaim, and cross claim. Dkt. 33. They
also amended their July 18 motion to dismiss the
counterclaims in rem. Dkt. 34. The current live motions are
the Plan Defendants' motion to dismiss Accordia's
complaint in intervention (Dkt. 11), the Plan Defendants'
motion to strike Shyvers and the Pollack Co.'s amended
counterclaim and original crossclaim (Dkt. 33), and the Plan
Defendants' motion to dismiss Shyver and the Pollack
Co.'s amended counterclaim and original crossclaims (Dkt.
34); these motions are all ripe for disposition.
Motion to Dismiss Complaint in Intervention
the Plan Defendants argue that the court does not have
jurisdiction because Accordia did not deposit the funds into
the court's registry. Dkt. 11. Accordia deposited the
funds on August 4, 2017. See Dkt. Entry (Aug. 4,
2017). Accordingly, to the extent the motion to dismiss
relies on this argument, the motion to dismiss is
DENIED AS MOOT.
Plan Defendants also argue that (1) there is no colorable
claim by Shyvers and the Pollack Co. because the Plan is the
legal owner of the Policy; and (2) Accordia did not timely
file its complaint in intervention. Dkt. 11. The Plan
Defendants contend that the Declarations of Trust
establishing the Plan, the documents Shyvers and the Pollack
Co. executed adopting the Plan, and the application for the
Policy all identify the Plan as the Owner and that Shyvers
and the Pollack Co. thus have no claim. Id. With
regard to timing, the Plan Defendants contend that Accordia
failed to timely file its complaint in intervention because
it waited five months after receiving competing claims to
file its complaint in intervention. Id.
responds that its interpleader complaint alleges ample facts
showing that it had a legitimate fear that the
defendants' completing claims may expose it to liability
or litigation with respect to the property at stake. Dkt. 16.
It contends that it is “axiomatic that Accordia, the
interpleader plaintiff, was not required to (and could not)
decide the merits of the claims before filing the
interpleader.” Id. It asserts that it was
required only to have a good faith belief that there were
multiple colorable claims to the fund, and this good faith
can be established not only because there are competing
assertions against the Policy but also because virtually
similar claims were originally granted by a state district
court in a similar state court interpleader filed by Penn
Mutual Life Insurance Company involving the Trustee, the
Pollack Co., and Jo Pollack as an individual. Id.
(citing Kehoe v. Pollack, 526 S.W.3d 781 (Tex.
App.-Houston [14th Dist.] 2017, no pet. h.). As far as the
allegation that the complaint was not timely filed, Accordia
contends that it was not contractually obligated to make
payment under the initial surrender request until May 17,
2017, it was permitted time to determine if conflicting
claims actually existed, and it was also entitled to explore
settlement before filing to avoid costs. Id.
Accordia contends that it acted in good faith while
investigating whether there were colorable competing claims
and that it had a reasonable good faith basis to believe the
claimants might resolve the issue before it filed the
interpleader complaint. Id.
28 U.S.C. § 1335, district courts have original
jurisdiction of any civil action in the nature of
interpleader that is filed “by any person, firm, or
corporation, association, or society having in his or its
custody or possession money or property of the value of $500
or more” if there are two or more adverse claimants of
diverse citizenship who are claiming or may claim to be
entitled to the money or property and the plaintiff has
deposited the money or property into the registry of the
court. 28 U.S.C. § 1335(a). “The legislative
purpose of an interpleader action is to remedy the problems
posed by multiple claimants to a single fund, and to protect
a stakeholder from the possibility of multiple claims on a
single fund.” Rhoades v. Casey, 196 F.3d 592,
600 n.8 (5th Cir. 1999) (quoting Wausau Ins. Cos. v.
Gifford, 954 F.2d 1098, 1100 (5th Cir. 1992)). “An
interpleader action typically involves two stages. In the
first stage, the district court decides whether the
requirements for rule or statutory interpleader have been met
by determining if there is a single fund at issue and whether
there are adverse claimants to that fund.” Id.
at 600 (citing Wright, Miller & Kane, Federal Practice
& Procedure: Civil 2d § 1714 (1986)). If the
requirements for interpleader have been met, then the
district court must “make a determination of the
respective rights of the claimants.” Id. If
there is no issue of material fact regarding entitlement to
the fund, the second stage may be adjudicated at summary
interpleader action is designed to protect a stakeholder,
as such, from the possibility of multiple claims
upon a single fund.” In re Bohart, 743 F.2d
313, 324 (5th Cir. 1984). The interpleader statutes and rules
are thus “‘liberally construed to protect the
stakeholder from the expense of defending twice, as well as
to protect [it] from double liability.'”
Id. at 325 (quoting N.Y. Life Ins. Co. v.
Welch, 297 F.2d 787, 790 (D.C. Cir. 1961)). A party
seeking interpleader must demonstrate that it is entitled to
interpleader. Dunbar v. United States, 502 F.2d 506,
511 (5th Cir. 1974). The party must show that it “has
been or may be subjected to adverse claims.”
Id. “Jurisdiction is not dependent on whether
the claim for relief is meritorious; the federal courts lack
jurisdiction only if the claims are plainly frivolous or
‘patently without merit.'” Evans v.
Tubbe, 657 F.2d 661, 663 (5th Cir., Unit A, 1981)
(quoting Duke Power Co. v. Carolina Envtl. Study
Grp., 438 U.S. 59, 70-72, 98 S.Ct. 2620 (1978)).
Accordia's complaint sets forth sufficient reason for it
to have had a good faith belief that there were colorable
competing claims to the Policy. And, Accordia's complaint
was timely filed. Accordia was not contractually obligated to
even process and make the payment on the demand for six
months, and it filed its intervenor complaint before this
time lapsed. See Dkt. 15-1, Ex. 1 at 14 (“We
may delay payment, except to pay premiums on other policies
with us, for up to six months after we receive the surrender
request.”). The Plan Defendants' motion to dismiss
the intervenor complaint (Dkt. 11) is
Motion to Strike
Plan Defendants also move, pursuant to Federal Rule of Civil
Procedure 12(f), for the court to strike “offensive
statements” in paragraphs 9, 17, 18, 40, 41, and 42 of
the amended counterclaims in rem and original crossclaims
filed by Shyvers and the Pollack Co. Dkt. 33. Shyvers and the
Pollack Co. oppose the motion, arguing that the statements
the Plan Defendants seek to have stricken are directly
relevant to this case and “are true and they are blase,
rather than scandalous.” Dkt. 35.
Federal Rule of Civil Procedure 12(f), a “court may
strike from a pleading an insufficient defense or any
redundant, immaterial, impertinent, or scandalous matter. The
court may act: (1) on its own; or (2) on motion made by a
party either before responding to the pleading or, if a
response is not allowed, within 21 days after being served
with the pleading.” Fed.R.Civ.P. 12(f). A matter is not
considered “scandalous” under Rule 12(f) merely
because it “offends the sensibilities of the objecting
party if the challenged allegations describe acts or events
that are relevant to the action . . . .” In re
Gitto Global Corp., 422 F.3d 1, 12 (1st Cir. 2005);
see also United States v. Coney, 689 F.3d
365, 379-80 (5th Cir. 2012) (“Although the disputed
pleadings might ‘offend the sensibilities' of
[the defendant] and her attorneys, those pleadings are not
scandalous because they are directly relevant to the
controversy at issue and are minimally supported in the
record. (quoting In re Gitto Global Corp.)).
[I]t is well established that the action of striking a
pleading should be sparingly used by the courts. . . . It is
a drastic remedy to be resorted to only when required for the
purposes of justice. . . . The motion to strike should be
granted only when the pleading to be stricken has no possible
relation to the controversy.
Brown & Williamson Tobacco Corp. v. United
States, 201 F.2d 819, 822 (6th Cir. 1953); see
Augustus v. Bd. of Pub. Instruction of Escambia Cnty.,
Fla., 306 F.2d 862, 868 (5th Cir. 1962) (quoting the
same language from Brown). “Both because
striking a portion of a pleading is a drastic remedy, and
because it often is sought by the movant simply as a dilatory
tactic, motions under Rule 12(f) are viewed with disfavor and
are infrequently granted.” F.D.I.C. v. Niblo,
821 F.Supp. 441, 449 (N.D. Tex. 1993).