Transamerica Life Insurance Company v. Bagala et al, No. 2:2014cv02738 - Document 85 (E.D. La. 2016)
Court Description: ORDER AND REASONS denying 76 Motion for relief from Judgment.. Signed by Judge Sarah S. Vance on 6/6/16. (jjs)
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Transamerica Life Insurance Company v. Bagala et al Doc. 85 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA TRANSAMERICA LIFE INSURANCE COMPANY CIVIL ACTION VERSUS NO: 14-2738 PEGGY CARSKADON BAGALA, ET AL. SECTION: R ORD ER AN D REASON S Transam erica Life Insurance Com pany filed this interpleader action to determ ine the beneficiaries of an annuity contract. On December 29, 20 15, the Court granted sum m ary judgm ent in favor of defendants-in-interpleader and counter-claim ants Dawn, Darlene, Dena, and Buddy Bagala (collectively, the "Bagala children").1 Defendant-in-interpleader and counter-claim ant Peggy Bagala now m oves under Federal Rule of Civil Procedure 60 (b)(4) to vacate the Court's order as void for lack of jurisdiction.2 For the following reasons, the Court denies the m otion. I. BACKGROU N D 1 R. Doc. 63. 2 R. Doc. 76. Dockets.Justia.com This case involves an annuity contract issued by Merrill Lynch Life Insurance Com pany, a predecessor in interest of Transam erica, to Shelby Bagala.3 Upon Mr. Bagala's death in J anuary 20 14, Shelby Bagala's widow, Peggy Bagala, and the four Bagala children asserted com peting claim s to the annuity contract proceeds. In response, Transam erica filed this interpleader lawsuit, requesting that this Court issue a judgm ent declaring the rights of each of the parties and determ ine the proper distribution of the annuity proceeds. In its com plaint, Transam erica alleged that jurisdiction was proper under the diversity statute, 28 U.S.C. § 1332(a)(1).4 In the heading for the second cause of action, titled "Interpleader," the com plaint also cited the interpleader statute, 28 U.S.C. § 1335, which grants federal jurisdiction over interpleader actions in which there is m inim al diversity am ong the claim ants and the am ount in controversy is at least $ 50 0 .5 After filing its com plaint, Transam erica deposited the disputed proceeds with the registry of the court. Transam erica then m oved the Court for dism issal, arguing that it was a m ere stakeholder with no interest in the 3 Unless otherwise noted, the Court draws these facts from its earlier sum m ary judgm ent order, R. Doc. 63. 4 R. Doc. at 1 ¶ 1. 5 Id. at 6. 2 proceeds. The Court granted the m otion and dism issed Transam erica as a party. Later, the four Bagala children m oved for sum m ary judgm ent seeking to be declared the rightful beneficiaries under the plain term s of Shelby Bagala's annuity contract. Peggy Bagala did not oppose the m otion. The Court granted the Bagala children's m otion for sum m ary judgm ent and entered a judgm ent declaring Dawn, Darlene, Dena, and Buddy Bagala the four beneficiaries under the annuity contract.6 After failing to file a tim ely appeal of the Court's judgm ent, Peggy Bagala fired her attorney and obtained new representation.7 Through her new attorney, Peggy Bagala now m oves to vacate the Court's judgm ent under Federal Rule of Civil Procedure 60 (b)(4).8 Peggy Bagala argues that the Court's judgm ent was void for lack of jurisdiction because Transam erica's com plaint did not satisfy the jurisdictional requirem ents of the interpleader statute.9 In her reply brief, Peggy Bagala argues for the first tim e that although the Court had diversity jurisdiction when this case was filed, jurisdiction was 6 R. Doc. 64. 7 R. Doc. 76-1 at 5. 8 R. Doc. 76. 9 R. Doc. 76-1 at 5-7. 3 destroyed when Transam erica was dism issed without having invoked the interpleader provisions of Federal Rule of Civil Procedure 22.10 II. LEGAL STAN D ARD A district court has broad discretion to grant or deny a m otion under Rule 60 (b). Halicki v. Louisiana Casino Cruises, Inc., 151 F.3d 465, 470 (5th Cir. 1998). Under Rule 60 (b), a court will grant relief from a final judgm ent or order only upon a showing of one of: (1) m istake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in tim e to m ove for a new trial under Rule 59(b); (3) fraud (whether previously called intrinsic or extrinsic), m isrepresentation, or other m isconduct of an adverse party; (4) the judgm ent is void; (5) the judgm ent has been satisfied, released, or discharged, or a prior judgm ent upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgm ent should have prospective application; or (6) any other reason justifying relief from the operation of judgm ent. Fed. R. Civ. P. 60 (b). 10 R. Doc. 84 at 4-6. 4 Peggy Bagala argues that the Court's judgm ent should be set aside under Rule 60 (b)(4). Although this rule perm its a district court to relieve a party from a final judgm ent if the judgm ent was "void," the interests of finality dictate that "the concept of void judgm ent m ust be narrowly restricted." In re Ziebarth, 51 F.3d 10 44 (5th Cir. 1995) (quoting United States v. 119.67 Acres of Land, Etc., 663 F.2d 1328, 1331 (5th Cir. 1981)). The Court m ay therefore set aside a judgm ent under Rule 60 (b)(4) if it lacks subject m atter jurisdiction. Callon Petroleum Co. v. Frontier Ins. Co., 351 F.3d 20 4, 20 8 (5th Cir. 20 0 3); Hill v. McDerm ott, Inc., 827 F.2d 10 40 , 10 43 (5th Cir. 1987). But "because federal courts regulate the scope of their own jurisdiction, a Rule 60 (b)(4) challenge to jurisdiction should be sustained only where there is a 'clear usurpation of power' or 'total want of jurisdiction.'" Callon Petroleum Co. v. Frontier Ins. Co., 351 F.3d 20 4, 20 8 (5th Cir. 20 0 3). III. D ISCU SSION Peggy Bagala argues that the Court's order granting sum m ary judgm ent in favor of the Bagala children m ust be vacated because the Court lacks subject m atter jurisdiction. As an initial m atter, Peggy Bagala's m otion fails to establish that she is entitled to her requested relief. Rule 60 (b)(4) challenges to a court's jurisdiction are disfavored. See Callon, 351 F.3d at 20 8 (holding 5 that courts should not sustain a Rule 60 (b)(4) challenge to jurisdiction unless there is a "clear usurpation of power" or "total want of jurisdiction"). As the Fifth Circuit holds, "a district court's exercise of subject-m atter jurisdiction, even if erroneous, is res judicata and is not subject to collateral attack through Rule 60 (b)(4) if the party seeking to void the judgm ent had the opportunity previously to challenge jurisdiction and failed to do so." In re Bell Fam ily Trust, 575 F. App'x 229, 233 (5th Cir. 20 14); see also Brow n v. Illinois Cent. R. Co., 480 F. App'x 753, 754 (5th Cir. 20 10 ) (sam e). Here, Transam erica filed its interpleader com plaint in Decem ber 20 14.11 The Court did not enter its final judgm ent until Decem ber 29, 20 15, giving Peggy Bagala am ple opportunity to challenge the Court's subject m atter jurisdiction. Nonetheless, Peggy Bagala waited until three m onths after the Court's final judgm ent before raising her jurisdictional argum ents for the first tim e Rule 60 (b)(4) m otion. Peggy Bagala attem pts to explain this delay by arguing that her form er counsel's perform ance took a "turn" for the worse "in late 20 15," causing him to m iss a deadline for filing an opposition to the Bagala children's m otion for sum m ary judgm ent. But even if errors or inadvertence of counsel could, under certain circum stances, prevent a litigant from 11 R. Doc. 22 at 1; R. Doc. 61 at 1. 6 challenging jurisdiction,12 Peggy Bagala does not explain how her attorney's "turn" at a late stage of this case prevented her from litigating jurisdictional issues earlier in the proceedings. Cf. Bell, 575 Fed. App'x at 223 (finding Rule 60 (b)(4) relief unwarranted when m ovant argued that she only recently realized a jurisdictional defect in the trial court's earlier order). Having failed to raise her jurisdictional argum ents in a tim ely m anner, Peggy Bagala cannot reopen the issue at this late stage under Rule 60 (b)(4). See Picco v. Glob. Marine Drilling Co., 90 0 F.2d 846, 850 (5th Cir. 1990 ) (barring a Rule 60 (b)(4) challenge to jurisdiction because the challenging party had notice of the order in question and opportunity to challenge jurisdiction on appeal, but did not do so). Even setting aside Peggy Bagala's dilatoriness, her jurisdictional argum ents lack m erit. Peggy Bagala contends that federal jurisdiction over Transam erica's suit arises under the interpleader statute, 28 U.S.C. § 1335. Peggy Bagala argues that because the interpleader statute's minimum diversity requirem ent is not satisfied, the Court's sum m ary judgm ent is void for lack of jurisdiction. 12 Peggy Bagala cites no case, Fifth Circuit or otherwise, for this proposition. 7 This argum ent ignores that there are two types of interpleader actions: statutory interpleader under 28 U.S.C. § 1335 and rule interpleader under Federal Rule of Civil Procedure 22. Auto Parts Mfg. Mississippi, Inc. v. King Const. of Houston, L.L.C., 782 F.3d 186, 192 (5th Cir. 20 15). Although these actions are substantively the sam e, they differ in their jurisdictional requirem ents. Id. (citing 7 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 170 3 (3d ed.)). The interpleader statute grants federal jurisdiction over an interpleader action if there is minimal diversity among the claimants--that is, two or more adverse claimants have diverse citizenship--and the am ount in controversy is at least $ 50 0 . 28 U.S.C. § 1335(a); Auto Parts, 782 F.3d at 192. By contrast, Rule 22 does not confer subject m atter jurisdiction; it is m erely a procedural device for bringing interpleader claim s that fall within one of the general statutory grants of federal jurisdiction. Selective Ins. Co. of Am . v. N orris, 20 9 F. Supp. 2d 580 , 582 (E.D.N.C. 20 0 2). This includes the diversity statute, which confers federal jurisdiction over all cases in which there is com plete diversity and the am ount in controversy exceeds $ 75,0 0 0 . See 28 U.S.C. § 1332(a). Thus, a federal court has subject m atter jurisdiction over an Rule 22 interpleader action when there is "(1) com plete diversity of citizenship, which is m et when the stakeholder is diverse from all the claim ants, even if citizenship of the 8 claim ants is not diverse; and (2) an am ount-in-controversy that exceeds $ 75,0 0 0 exclusive of interest and costs." Hussain v. Boston Old Colony Ins. Co., 311 F.3d 623, 635 n. 46 (5th Cir. 20 0 2). Here, while m inim um diversity am ong the claim ants is lacking, Transam erica's interpleader suit satisfies the diversity statute. The am ount in controversy exceeds $ 75,0 0 0 . And there is com plete diversity because the stakeholder, Transam erica, is an Iowa corporation with its principal place of business in Iowa, and each claim ant is a citizen of Louisiana. Thus, the Court had jurisdiction to determ ine the proper distribution of the annuity contract proceeds. See Travelers Ins. Co. v. First N at. Bank of Shreveport, 675 F.2d 633, 637 (5th Cir. 198 2) (holding district court had jurisdiction over rule interpleader action brought by an insurer to determ ine ownership of life insurance policy proceeds when the insurer was diverse from every claim ant, even though the claim ants were all citizens of the sam e state). And because Transam erica's suit m et the requirem ents for rule interpleader under Rule 22, the Court did not lose jurisdiction when Transam erica was discharged from this litigation, leaving only the non-diverse potential claim ants to the disputed proceeds. See Standard Ins. Co. v. N elson, No. C0 7-0 140 RSM, 20 0 7 WL 14530 99, at *1 (W.D. Wash. May 17, 20 0 7) ("Federal courts m aintain subject m atter jurisdiction over rule interpleader actions even when the diverse 9 stakeholder is dism issed, leaving co-citizen claim ants to litigate the outcom e of the stake in controversy." (citing 7 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1710 (3d ed.)).13 IV. CON CLU SION For the foregoing reasons, the Court DENIES Peggy Bagala's m otion for relief from judgm ent. 6th New Orleans, Louisiana, this _ _ _ day of J une, 20 16. _________________________________ SARAH S. VANCE UNITED STATES DISTRICT J UDGE 13 To resist this conclusion, Peggy Bagala argues that Transam erica's suit cannot be m aintained as a rule interpleader suit because Transam erica did not affirm atively "invoke" Federal Rule of Civil Procedure 22 prior to obtaining its dism issal from this case. The Court will not consider this argum ent because Peggy Bagala raised it for the first tim e in her reply brief. Cf. United States v. My ers, 772 F.3d 213, 218 (5th Cir. 20 14). 10
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