Wisconsin Province of Society of Jesus v. Cassem

          MEMORANDUM OF DECISION ON TEACHERS INSURANCE AND ANNUITY ASSOCIATION - COLLEGE RETIREMENT EQUITIES FUND COUNTERCLAIM FOR INTERPLEADER [DKT. 51]

          HON. VANESSA L. BRYANT, UNITED STATES DISTRICT JUDGE

         Before the Court is a Counterclaim for Interpleader brought by Defendant Teachers Insurance and Annuity Association - College Retirement Equities Fund (“TIAA-CREF”). [Dkt. 51]. Plaintiff, Wisconsin Province for the Society of Jesus (“Wisconsin Province”) filed an Amended Complaint on June 7, 2018, which disputed the beneficiary designation on two retirement accounts accrued by the late Fr. Edwin H. Cassem administrated by TIAA-CREF. See [Dkt. 44]. The Amended Complaint named as defendants Audrey Cassem, Thomas F. Owens II, Neil Kraner in his capacity as Temporary Administrator of the Estate of Edwin H. Cassem, and TIAA-CREF. [Id.]. TIAA-CREF requests the following relief: 1) Plaintiff and Defendants A. Cassem, Thomas Owens II, and Neil Kraner interplead their respective claims among themselves; 2) TIAA-CREFF shall hold the disputed funds a constructive stakeholder pending the resolution of the dispute; 3) TIAA-CREF shall comply with any final determination from the Court; 4) TIAA- CREF shall be dismissed as a party; and 5) TIAA-CREF shall recover its costs, attorney's fees, and further just and proper relief. [Dkt. 51, at 17-18]. For the following reasons, TIAA-CREF's requested relief is GRANTED in part and DENIED in part.

         Background

         Based on the extensive briefing on the motion to dismiss and the recent Order on the Motion to Dismiss [Dkt. 74], the court assumes general familiarity with the factual background and procedural posture of this case. The retirement accounts at issue in the Amended Complaint [Dkt. 44] are held by TIAA-CREF. [Dkt. 51, ¶¶ 62-67]. TIAA-CREF argues that it would be exposed to multiple liabilities if it were to distribute the funds without a court determination as to the primary beneficiary. [Id. at ¶ 69]. TIAA-CREF argues that it has not colluded with any of the parties and has no substantive interest in the outcome of the case. [Id. at ¶ 71]. Wisconsin Province denies that TIAA-CREF is entitled to attorney's fees and argues that TIAA-CREF must pay interest on the funds retained. [Dkt. 56 (Plaintiff's Answer to Defendant TIAA-CREF Counterclaim), at 3].

         Discussion

         A. Interpleader

         An “interpleader is designed to protect stakeholders from undue harassment in the face of multiple claims against the same fund, and to relieve the stakeholder form assessing which claim among many has merit.” Washington Elec. Coop. v. Paterson, Walke & Pratt, P.C., 985 F.2d 677, 679 (2d Cir. 1993). To resolve an action for interpleader, the Court first determines that the requirements of 28 U.S.C. § 1335 are met, and second the Court adjudicates the claims of the defendant claimants. See New York Life Insurance Co. v. Connecticut Development Authority, 700 F.2d 91, 95 (2d Cir. 1983). For the purposes of this filing, the Court considers only the first step.

         28 U.S.C. § 1335 provides, in part, that the district court shall have original jurisdiction over a civil action if 1) the party filing the interpleader action has custody or possession of money, property, or other instrument of value or amount of $500 or more; 2) two or more claimants, of diverse citizenship as defined in 28 U.S.C. § 1332, are claiming the property or the benefits of the property; and 3) the interpleader plaintiff has deposited such money or property into the registry of the court, or has given bond payable to the clerk of the court. 28 U.S.C. § 1335(a).

         Whether an interpleader action is appropriate depends on whether the plaintiff has “a real and reasonable fear of double liability or vexatious, conflicting claims” against the fund at issue. Washington Elec. Coop., Inc., 985 F.2d at 679. This determination does not rest on the merits of the competing claims. See John Hancock Mutual Life Ins. Co. v. Kraft¸ 200 F.2d 952, 954 (2d Cir. 1953) (holding that “[t]he stakeholder should not be obliged at its peril to determine which of two claimants has the better claim”). Thus, if both the jurisdictional requirements and the prudential requirements are met, the Court will discharge the stakeholder from liability. New York Life Inc. Co., 700 F.2d at 95.

         In the instant action, all of the requirements are met. Complete diversity exists under 28 U.S.C. § 1332 because Wisconsin Province is organized under the laws of Wisconsing with a principal place of business in Chicago, defendants A. Cassem and Thomas Owens II are citizens of Connecticut, and defendant Neil Kraner is the temporary administrator of Fr. Cassem's estate, which is pending in probate court in Connecticut. See [Dkt. 44, ¶¶ 2-6]. The funds at issue are valued at over $1.5 million. See [Id., at ¶ 23]. Wisconsin Province and Defendants A. Cassem and Thomas Owens II all claim to be the appropriate beneficiary of the disputed funds, thereby exposing TIAA-CREF to potential liability. There is no indication that, as a neutral administrator of the plan, TIAA-CREF is independently liable to any claimant.

         Judgment discharging the stakeholder in an interpleader action may, of course, be delayed or denied if there are serious charges that the stakeholder commenced the action in bad faith.” New York Life Insurance Co. v. Conn. Dev. Auth., 700 F.2d 91, 96 (2d Cir. 1983). Wisconsin Province does not claim that TIAA-CREF acted in bad faith. There is no evidence to doubt TIAA-CREF's assertion that it has not colluded with any parties and has no substantive interest in the outcome of the dispute.

         B. Deposit of Funds with the Court

         TIAA-CREF asks to “hold the disputed fees as constructive stakeholder pending the resolution or judicial determination of the instant dispute.” [Dkt. 51, at 18]. The Court denies this request. The interpleader statute states that jurisdiction over an interpleader action is appropriate when

“the plaintiff has deposited such money or property or has paid the amount of the loan or other value of such instrument or the amount due under such obligation into the registry of the court, there to abide by the judgment of the court, or has given bond payable to the clerk of the court in ...