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Jackson National Life Insurance Co. v. Roosen

United States District Court, D. Connecticut

May 3, 2019

JACKSON NATIONAL LIFE INSURANCE COMPANY, Plaintiff,
v.
ELIZABETH N. ROOSEN, LISA DAWN JOHNSTONE (f/k/a LISA DAWN SHINNERS), and DOROTHY B. JOHNSON (f/k/a DOROTHY B. SHINNERS), Defendants.

          RULING ON MOTION FOR ENTRY OF STIPULATED JUDGMENT [ECF NO. 27] AND MOTIONS FOR DEFAULT JUDGMENT [ECF NOS. 28 & 30]

          Michael P. Shea, U.S.D.J.

         This case arises out of a dispute regarding the rightful beneficiary of life insurance proceeds held, at the time the complaint was filed, by Jackson National Life Insurance Company (“Jackson National”). Jackson National filed a Complaint in Interpleader against three potential beneficiaries: Elizabeth Roosen (“Roosen”), Lisa Johnstone (“Johnstone”), and Dorothy Johnson (“Johnson”). ECF No. 1. Johnson failed to appear to defend against the Complaint in Interpleader. Roosen and Johnstone filed an Answer to the Complaint in Interpleader and a Cross Complaint against Jackson National and Johnson. ECF No. 16. Jackson National, Roosen, and Johnstone successfully moved for entry of default against Johnson under Federal Rule of Civil Procedure 55(a). ECF Nos. 20 & 22. Jackson National has now filed a Motion for Default Judgment against Johnson under Federal Rule of Civil Procedure 55(b)(2). ECF No. 28. Roosen and Johnstone have filed a separate Motion for Default Judgment against Johnson under the same rule. ECF No. 30. Finally, Jackson National, Roosen, and Johnstone together filed a Motion for Entry of Stipulated Judgment. ECF No. 27.

         For the reasons discussed below, the Court hereby enters the following orders. Jackson National's Motion for Default Judgment, ECF No. 28, is GRANTED IN PART and DENIED IN PART. The order of default with respect to Johnstone and Roosen against Johnson, ECF No. 22, is VACATED. Roosen's and Johnstone's Motion for Default Judgment, ECF No. 30, is DENIED WITHOUT PREJDUICE. The Joint Motion for Entry of Stipulated Judgment, ECF No. 27, is DENIED WITHOUT PREJUDICE.

         I. Factual Background

         The following facts are taken from the Complaint in Interpleader, ECF No. 1, and the Cross Complaint, ECF No. 16.

         On July 11, 1998, Valley Forge Life Insurance Company issued a life insurance policy that provided for the payment of a $100, 000 death benefit, plus interest, upon the death of Jerome Shinners (“Shinners”). ECF No. 1 at ¶ 2; ECF No. 28-1 at 2. This policy is now held by Jackson National. ECF No. 1 at ¶ 2. Jackson National is a corporation organized under the laws of the State of Michigan and maintains its principal place of business in Lansing, Michigan. Id. at ¶ 4. Roosen is Shinners's friend and maintains a primary residence in Avon, Connecticut. Id. at ¶¶ 5, 13. Johnstone is Shinners's daughter and maintains a primary residence in San Diego, California. Id. at ¶¶ 6, 12. Johnson is Shinners's ex-wife and maintains a primary residence in West Palm Beach, Florida. Id. at ¶¶ 7, 13.

         In his application for the policy, Shinners designated Johnson as the irrevocable beneficiary and Johnstone as the contingent beneficiary. Id. at ¶ 12. Shinners and Johnson were later divorced and a Judgment of Divorce and Agreement (“Divorce Judgment”) was entered on September 20, 2000. Id. at ¶ 17. The Divorce Judgment stated, in part, that Shinners would pay alimony to Johnson for eight years and would continue to name her as the irrevocable beneficiary of the insurance policy for the same term:

1. The Plaintiff shall pay alimony to the Defendant in the amount of $300.00 per week for a period of 8 years from the date of dissolution. Said alimony shall be non-modifiable as to term, but shall terminate sooner upon the death of either party or the Defendant's remarriage . . . .
2. The Plaintiff shall maintain a $100, 000.00 life insurance policy on his life, naming the Defendant as the irrevocable beneficiary of same, for as long as he has an obligation to pay alimony to the Defendant.

Id. at ¶ 18. On November 5, 2001, Shinners executed a Change of Beneficiary Form in which he designated Johnson as a Primary Beneficiary eligible to receive 50% of the death benefit, and Roosen as a Primary Beneficiary eligible to receive 50% of the death benefit. Id. at ¶ 13. Johnson did not execute the form. Id. On September 5, 2008, Shinners executed another Request for Change of Beneficiary Form and designated Roosen and Johnstone as co-equal Primary Beneficiaries, each to receive 50% of the death benefit. Id. at ¶ 14; ECF No. 16 at 2-3 ¶ 1. Johnson again did not execute the form. ECF No. 1 at ¶ 14.

         Shinners died on December 18, 2017 in Avon, Connecticut. Id. at ¶ 1. Following his death, the death benefit became payable to the proper beneficiaries. Id. at ¶ 15. On January 28, 2018, Roosen executed a Life Claimant Statement, seeking payment of the benefit. Id. At ¶ 16. Roosen and Johnstone each claim entitlement to 50% of the death benefit on the basis that each was properly named as a beneficiary in the Change of Beneficiary Form submitted on September 5, 2018. ECF No. 16 at 2-3 ¶ 1. They further claim that the divorce agreement obligated Shinners to designate Johnson the irrevocable beneficiary only for as long as his obligation to pay alimony remained and this obligation terminated in 2008. ECF No. 1 at ¶ 19. Johnson claims entitlement to 100% of the death benefit on the basis that she was designated the irrevocable beneficiary under the policy. Id. at ¶ 20.

         II. Procedural History

         On June 5, 2018, Jackson National filed a Complaint in Interpleader seeking an order (1) granting interpleader relief; (2) compelling Johnson, Roosen, and Johnstone to settle or litigate their respective entitlement to the death benefit; (3) declaring the lawful and proper beneficiaries of the death benefit; (4) awarding Jackson National attorneys' fees and costs and permitting Jackson National to pay the resulting net death benefit to the Registry of the Court[1]; (5) absolving Jackson National of any further liability to any claimant of the death benefit and dismissing Jackson National from the suit upon its payment of the death benefit to the Registry of the Court; (6) restraining the parties to this action from instituting or prosecuting any other suit against Jackson National seeking the death benefit or asserting claims under the policy; and (7) providing any other relief the Court deems equitable and just. ECF No. 1 at 6-7. On the same date, Jackson National filed a motion to deposit the death benefit proceeds with the Court. ECF No. 3. On June 8, 2018, the Court granted this motion and directed the Clerk of the Court to deposit the proceeds in an interest-bearing account. ECF No. 8. On June 22, 2018, the Court issued a notice indicating that it received a deposit in the amount of $100, 561.42.[2] ECF No. 9.

         Jackson National filed waiver of service forms as to Johnson, Roosen, and Johnstone on June 5, 2018, June 19, 2018, and June 25, 2018, respectively.[3] ECF Nos. 12, 17, 18. Johnson did not appear or file an answer. On July 12, 2018, Roosen and Johnstone filed an Answer and Cross Complaint, asserting that Johnson has no legal or equitable claim to the death benefit and seeking payment of the death benefit plus all interest. ECF No. 16 at 3. In contravention of Federal Rule of Civil Procedure 5, Roosen and Johnstone did not serve this pleading on Johnson - or at least they have failed to file proof of service on the docket. Fed.R.Civ.P. 5(a)(1)(B) (requiring service of “a pleading filed after the original complaint”); Id. at 5(a)(2) (“No service is required on a party who is in default for failing to appear. But a pleading that asserts a new claim for relief against such a party must be served on that party under Rule 4.”).[4] As such, Roosen and Johnstone shall serve this order, together with their Answer and Cross Complaint, on Johnson in accordance with the Court's directions below.

         On August 28, 2018, Jackson National filed a motion for default entry under Rule 55(a) against Johnson. ECF No. 19. On September 11, 2018, Roosen and Johnstone filed a motion for default entry under Rule 55(a) against Johnson. ECF No. 21. The Clerk of the Court entered a default against Johnson as to Jackson National on September 10, 2018, ECF No. 20, and as to Roosen and Johnstone on September 17, 2018, ECF No. 22. This order vacates the latter order of default due to lack of evidence of service of the Cross Complaint on Johnson.

         On October 5, 2018, Jackson National, Roosen, and Johnstone filed a Joint Motion for Entry of Stipulated Judgment seeking an order (1) providing interpleader relief in favor of Jackson National; (2) discharging and absolving Jackson National from further liability to Johnson, Roosen, Johnstone, and any other claimant in connection with the death benefit; (3) discharging and absolving Jackson National, its employees, agents, representatives, predecessors, successors-in-interest, parents, subsidiaries, and assigns, from all liability to Johnson, Roosen, and Johnstone, and from any claims arising under the policy; (4) entering judgment on the Cross Complaint in favor of Roosen and Johnstone; (5) restraining Johnson from instituting or prosecuting any other suit against Jackson National, Roosen, or Johnstone seeking the death benefit; (6) restraining Roosen from instituting or prosecuting any other suit against Jackson National, Johnstone, or Johnson seeking the death benefit; (7) restraining Johnstone from instituting or prosecuting any other suit against Jackson National, Roosen, or Johnson seeking the death benefit; (8) distributing 50% of the funds deposited with the Court to Roosen and 50% of the funds to Johnstone; and (9) dismissing all parties with prejudice and without costs and with each party bearing its own attorney fees. ECF No. 27-1 at 1-3. On the same day, Jackson National filed a Motion for Default Judgment against Johnson, seeking the relief requested in the Complaint in Interpleader. ECF No. 28. On October 10, 2018, Roosen and Johnstone filed a Motion for Default Judgment against Johnson, seeking the relief requested in their Cross Complaint. ECF No. 30.

         III. ...


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