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Unum Life Insurance Company of America v. Brookshire

United States District Court, D. South Carolina, Florence Division

April 27, 2016

Unum Life Insurance Company of America, Plaintiff/Counter-Defendant,
v.
Donna Brookshire; Bryant Weaver, and Jennifer Weaver, Defendants/Cross-Defendants, and S.W., a minor, Defendant/Counter-Claimant/Cross-Claimant.

          REPORT AND RECOMMENDATION

          KAYMANI D. WEST, Magistrate Judge.

         This case is before the undersigned because all Defendants are proceeding pro se.[1] Pursuant to 28 U.S.C. §636(b)(1), and Local Civil Rule 73.02(B)(2)(e) (D.S.C.), this magistrate judge is authorized to review all pretrial matters in such pro se cases and to submit findings and recommendations to the District Court. The parties did not conduct any discovery and the proceeds of the Policy are now subject to distribution. Because no party filed a dispositive motion in the case after being given notice of the importance and time to do so, ECF Nos. 61, 78, and of the court's intention to consider the merits sua sponte if no dispositive motion was filed, ECF No. 97, the undersigned is considering the merits of each party's positions as stated in their initial pleadings on the court's own motion for summary judgment. Fed.R.Civ.P. 56 (f). Therefore, under the liberal construction of pro se pleadings rule, the undersigned hereby construes S.W., a minor's Crossclaims, ECF No. 34, as a motion for summary judgment so as to permit entry of a Report and Recommendation ("Report") on the merits of this interpleader action to the district court. For ease of reference, the parties will be referred to according to their positions relative to the Crossclaims.

         I. Factual Background

         The undisputed facts show that Cross-Defendant Donna Brookshire is a resident and citizen of Myrtle Beach, South Carolina and was the girlfriend of the Decedent, Clifford Weaver ("Decedent") at the time of his death. Cross-Defendant Bryant Weaver is a resident and citizen of Conway, South Carolina and is the brother of the Decedent. Cross-Defendant Jennifer Weaver is a resident and citizen of Alderson, West Virginia and is the former spouse of the Decedent. Cross-Claimant S.W. is a surviving minor child of the Decedent and Jennifer Weaver and currently resides in West Virginia with Jennifer Weaver. S.W. is disabled with cerebral palsy and receives medical benefits through Medicaid. ECF Nos. 34, 55.

         Decedent's former employer, Conbraco Industries, Inc. ("Conbraco") established and/or maintained basic group life and supplemental group life insurance coverage with Unum Life Insurance Company of America ("Unum") for the benefit of its employees as part of an employee-welfare benefit plan ("Plan") governed by 29 U.S.C. § 1001 et seq. ("ERISA"). This Plan was funded, at least in part, through Unum's group life insurance policy number 417111 (the "Policy"). Decedent was a participant in the Plan. Decedent was a covered insured under a basic group policy in the amount of Twenty Thousand and no/100 Dollars ($20, 000.00) and under a supplemental group policy in the amount of One Hundred Fifty Thousand and no/100 Dollars ($150, 000.00) issued to Conbraco. Prior to Decedent's death and almost five months after the June 16, 2014 entry of the final judgment in his South Carolina divorce action (see below), on November 15, 2014, Decedent designated Cross-Defendant Brookshire (50%), Cross-Defendant Bryant Weaver (25%) and Cross-Claimant S.W. (25%) as primary beneficiaries of the Policy. ECF No. 1-2. Decedent made no further changes to his beneficiary designation before he died on or about January 7, 2015.

         At an undisclosed time, Cross-Defendant Jennifer Weaver provided Conbraco with a copy of her divorce decree from an action entitled Jennifer Sue Weaver v. Clifford Henry Weaver, Jr., No. 2013-DR-26-1577 in the Family Court of Horry County. The court decree specifically incorporates a settlement agreement entered by the parties, which agreement contains a provision that states "HUSBAND shall continue to maintain the life insurance policy through his employer in the amount of One Hundred Fifty Thousand and no/100 Dollars ($150, 000.00) and name WIFE as the sole beneficiary to the policy. HUSBAND shall continue the policy and timely pay the premiums and costs associated therewith. HUSBAND shall provide proof of the coverage annually, by December 31 of every year, to WIFE."[2] ECF No. 1-3 at 3. This is the only reference to insurance coverage in the divorce decree.

         II. Standard of Review

         The court shall grant summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(a). The movant bears the initial burden of demonstrating that summary judgment is appropriate; if the movant carries its burden, then the burden shifts to the non-movant to set forth specific facts showing that there is a genuine issue for trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). If a movant asserts that a fact cannot be disputed, it must support that assertion either by "citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials;" or "showing... that an adverse party cannot produce admissible evidence to support the fact." Fed.R.Civ.P. 56(c)(1).

         In considering a motion for summary judgment, the evidence of the non-moving party is to be believed and all justifiable inferences must be drawn in favor of the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). However, "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Id. at 248. Further, while the federal court is charged with liberally construing a complaint filed by a pro se litigant to allow the development of a potentially meritorious case, see, e.g., Cruz v. Beto, 405 U.S. 319, 323 (1972), the requirement of liberal construction does not mean that the court can ignore a clear failure in the pleadings to allege facts that set forth a federal claim, nor can the court assume the existence of a genuine issue of material fact when none exists. Weller v. Dep't of Soc. Servs., 901 F.2d 387, 391 (4th Cir. 1990).

         III. Discussion

         A. The Parties' Contentions

         Citing only to non-ERISA-based state law, [3] Cross-Claimant S.W., a minor, through her GAL, contends that the full $150, 000.00 portion of the Policy should be distributed to Cross-Defendant Jennifer Weaver based on an argument that the Horry County divorce decree should prevail over the Decedent's subsequent contrary beneficiary designation. ECF No. 34 at 2. SW notes that, given her disability, there are Medicaid reimbursement issues that might arise should she be awarded any portion of proceeds. S.W. contends that the remaining proceeds from the policy should be awarded in accordance with Decedent's beneficiary designation. Id. Cross-Defendant Bryant Weaver responds that he does not know all the facts, but that he has suffered emotional and financial hardships since his brother's death, "there are discrepancies" in the Horry County divorce decree, and he believes that Decedent's wishes should be carried out. He, like Cross-Defendant Brookshire, asks that the Policy proceeds be divided among the three beneficiaries and in the percentages listed by Decedent in the beneficiary-designation document. ECF No. 53. Cross-Defendant Jennifer Weaver contends that the $150, 000.00 portion of the proceeds should be awarded to her as provided under the divorce decree. She states that she and S.W. have suffered financial hardship since Decedent's death and that she had previously expended "thousands of dollars toward attorneys fees" in connection with the Horry County divorce proceedings "to protect" her and her daughter. ECF No. 55 at 1. She states that "it is in S.W.'s best interest" to enforce the Horry County divorce decree and award the $150, 000.00 Policy proceeds to her because that would protect the proceeds from seizure by Medicaid to reimburse the amounts it has paid toward S.W.'s care to date. Id. Cross-Defendant Donna Brookshire responds that Cross-Claimant S.W. and Cross-Defendant Jennifer Weaver, as the custodial parent of the disabled child, are benefitting financially from Social Security survivor benefits, that the child custody/visitation provisions of the Horry County divorce decree had been breached by Cross-Defendant Jennifer Weaver, and that the wishes of Decedent should prevail over the vaguely and broadly worded insurance provision of the settlement agreement. Therefore, she requests that all proceeds from the Policy be divided among the three beneficiaries and in the percentages listed by Decedent in the beneficiary-designation document. ECF No. 56.[4]

         B. Applicable Law

         As noted in the Orders previously issued in this case, the Policy at issue in this case is the type of life insurance policy governed by the Employee Retirement Income Security Act of 1974 ("ERISA"). "Interpleader actions such as this one filed by ERISA plan stakeholders are quite common... [i]ndeed, it has been held that failure to interplead can constitute breach of ERISA's fiduciary duty of prudent plan administration." John H. Langbein, Destructive Federal Preemption Of State Wealth Transfer Law In Beneficiary Designation Cases: Hillman Doubles Down On Egelhoff, 67 VNLR 1665, 1676 n.56 (November 2014) (citing ERISA § 404(a)(1)(B), 29 U.S.C. 1104(a)(1)(B) and Atwater v. Nortel Networks,388 F.Supp.2d 610 (M.D. N.C. 2005)). Generally, ERISA "preempts all state laws that relate to' an ERISA plan." Darcangelo v. Verizon Commc'ns,292 F.2d 181, 194 (4th Cir. 2002); see also 1 Ronald J. Cooke, ERISA Practice and Procedure § 2:23 (2d ed. 2015). However, an exception to the preemption rule is state law respecting domestic relations where a QDRO is entered by a state court. Metro. Life Ins. Co. v. Pettit,164 F.3d 857, 863 (4th Cir. 1998); Metro. Life Ins. Co. v. Leich-Brannan,812 ...


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