Opinion
CV 13-00127 RSWL (AJWx)
08-28-2013
P. Kellie C. Brimberry, Plaintiff, v. The Northwestern Mutual Life Insurance Company, and Does 1 through 50, inclusive Defendant. The Northwestern Mutual Life Insurance Company, a Wisconsin corporation, Counter-Claimants, v. P. Kellie C. Brimberry, an individual; Fiduciary Trust International of California, a California corporation; and Does 1 through 10, inclusive, Counter-Defendants.
ORDER RE: COUNTER-
DEFENDANT P. KELLIE C.
BRIMBERRY'S MOTION FOR
SUMMARY JUDGMENT [25]
Currently before the Court is Counter-Defendant P. Kellie C. Brimberry's Motion for Summary Judgment [25]. The Court, having reviewed all papers submitted pertaining to this Motion, NOW FINDS AND RULES AS FOLLOWS: The Court DENIES Counter-Defendant's Motion for Summary Judgment.
I. BACKGROUND
P. Kellie C. Brimberry ("Mrs. Brimberry") instigated the present Action against The Northwestern Mutual Life Insurance Company ("Northwestern") and Does 1 through 50 for failure to pay benefits due to Mrs. Brimberry under two life insurance policies ("Policies") belonging to her late husband, Kurt Brimberry [1]. Prior to Mr. Brimberry's death in 2012, Northwestern issued the Policies to Mr. Brimberry, specifying that in the event of his death, the Policies' benefits would be given to a beneficiary as designated by Mr. Brimberry. Statement of Uncontroverted Facts ## 2, 3. Mr. Brimberry died in August 2012 of unknown causes. Id. at # 15. At the time of his death, the Policies provided a net benefit of $3,501,691.46, and the sole designated beneficiary under both Policies was Mrs. Brimberry. Id. at ## 4, 5. On August 31, 2012, Mrs. Brimberry notified Northwestern of a claim for benefits under the Policies. Id. at # 6.
While investigating Mrs. Brimberry's claim, Northwestern was contacted by counsel for Fiduciary Trust International of California ("Fiduciary"), the company for which Mr. Brimberry worked from November 2001 until his termination on August 14, 2012. Dkt. # 3, ¶ 14; Statement of Uncontroverted Facts # 7. Fiduciary's counsel asserted that Fiduciary had an interest in the benefits payable under Mr. Brimberry's two Northwestern Policies because Mr. Brimberry had embezzled funds from Fiduciary during his employment there and had used the embezzled funds to pay some, if not all, of the Policies' premiums. Id. On November 29, 2012, Fiduciary's counsel wrote to Northwestern on behalf of both Fiduciary and Mrs. Brimberry, making a joint demand that Northwestern stay further processing of their adverse claims to benefits while Fiduciary and Mrs. Brimberry attempted to informally resolve their competing claims. Dkt. # 3, ¶ 17.
On December 5, 2012, Mrs. Brimberry instigated the present Action against Northwestern for failure to pay benefits due to her under the Policies [1]. Northwestern, in turn, filed a Counterclaim in Interpleader against Mrs. Brimberry, Fiduciary, and Does 1 through 10, alleging that Northwestern was unable to determine whether Mrs. Brimberry or Fiduciary was entitled to the policy benefits [3]. Mrs. Brimberry and Northwestern subsequently stipulated to the dismissal of Mrs. Brimberry's Complaint against Northwestern [23, 24], leaving only Northwestern's Counterclaim in Interpleader against Mrs. Brimberry and Fiduciary. Mrs. Brimberry presently moves for summary judgment as to Fiduciary's adverse claim to the policy benefits [25], arguing that Fiduciary's "existing vague and unsubstantiated claim is insufficient to serve as a legitimate interpleader claim." Mot. 1:15-16.
II. LEGAL STANDARD
Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). A fact is "material" for purposes of summary judgment if it might affect the outcome of the suit, and a "genuine issue" exists if the evidence is such that a reasonable fact-finder could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The evidence, and any inferences based on underlying facts, must be viewed in the light most favorable to the opposing party. Twentieth Century-Fox Film Corp. v. MCA, Inc., 715 F.2d 1327, 1329 (9th Cir. 1983).
Where the moving party does not have the burden of proof at trial on a dispositive issue, the moving party may meet its burden for summary judgment by showing an "absence of evidence" to support the non-moving party's case. Celotex v. Catrett, 477 U.S. 317, 325 (1986).
The non-moving party, on the other hand, is required by Fed. R. Civ. P. 56(c) to go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial. Id. at 324. Conclusory allegations unsupported by factual allegations are insufficient to create a triable issue of fact so as to preclude summary judgment. Hansen v. United States, 7 F.3d 137, 138 (9th Cir. 1993). A non-moving party who has the burden of proof at trial must present enough evidence that a "fair-minded jury could return a verdict for the [non-moving party] on the evidence presented." Anderson, 477 U.S. at 255.
In ruling on a motion for summary judgment, the Court's function is not to weigh the evidence, but only to determine if a genuine issue of material fact exists. Anderson, 477 U.S. at 255.
III. ANALYSIS
A. The Parties' Evidentiary Objections
As a preliminary matter, the Court addresses the Parties' evidentiary objections. Fiduciary objects to the Declaration of Mrs. Brimberry on various grounds [31], including lack of foundation, lack of personal knowledge, and legal conclusion. See Fiduciary Objections 2:6-3:2.
As succinctly stated by the Eastern District of California,
[S]tatements based on speculation, improper legal conclusions, personal knowledge, or argumentative statements are not facts and can only be considered as arguments, not as facts, on a motion for summary judgment. Instead of challenging the admissibility of this evidence,
lawyers should challenge its sufficiency.Century 21 Real Estate LLC v. All Prof'l Realty, Inc., 889 F. Supp. 2d 1198, 1215 (E.D. Cal. 2012) (emphasis in original). See also Ditton v. BNSF Ry. Co., No. CV 12-6932 JGB (JCGx), 2013 WL 2241766 at *4 (C.D. Cal. May 21, 2013). Specifically, as to Fiduciary's "lack of foundation" objection to Mrs. Brimberry's statement that her husband purchased life insurance policies from Northwestern (see Fiduciary Objections 2:13-14), this objection is not well-taken, given that Fiduciary does not actually contest the fact that Mr. Brimberry did purchase two life insurance policies from Northwestern. Accordingly, based on the foregoing, the Court OVERRULES Fiduciary's evidentiary objections.
Objections on any of these grounds are superfluous, and the court will overrule them.
Mrs. Brimberry asserts her own set of objections to Fiduciary's evidence, primarily focused on the Declaration of J. Chisholm Lyons, but also addressing the Declarations of Catherine A. Conway and Debra Wong Yang [35-3, 35-4]. Mrs. Brimberry objects to these declarations on numerous grounds, including that they contain statements lacking hearsay and personal knowledge; statements that are irrelevant, argumentative, and more prejudicial than probative; statements that constitute hearsay and lay opinion; and statements that violate the best evidence rule.
As to Mrs. Brimberry's personal knowledge, irrelevance, and argumentative objections, the Court OVERRULES these objections pursuant to the legal authority stated above. See Ditton, 2013 WL 2241766 at *4; Century 21, 889 F. Supp. 2d at 1215.
With regard to her best evidence, lack of foundation, and hearsay objections, "[a] declaration used to support or oppose a motion [for summary judgment] must . . . set out facts that would be admissible in evidence." Fed. R. Civ. P. 56(c)(4) (emphasis added). "On summary judgment, the non-moving party's evidence need not be in a form that is admissible at trial. . . . as long as a party submits evidence which, regardless of its form, may be admissible at trial . . . ." Atkinson v. Kofoed, No. NIV S-06-2652 RRB EFB P, 2008 WL 508410 at *2 (E.D. Cal. Feb. 22, 2008) (citing Burch v. Regents of the Univ. of Cal., 433 F. Supp. 2d 1110, 1119 (E.D. Cal. 2006), report & recommendation adopted, No. 2:06-cv-02652-JKS-EFB, 2008 WL 4186150 (E.D. Cal. Sept. 10, 2008). Because Fiduciary does not rely on evidence which, on its face, presents evidentiary obstacles that would prove insurmountable at trial, the Court OVERRULES Mrs. Brimberry's best evidence, lack of foundation, and hearsay objections. See Olenicoff v. UBS AG, No. SACV 08-1029 AG (RNBx), 2012 WL 1192911 at *7 (C.D. Cal. April 10, 2012); Alvarez v. T-Mobile USA, Inc., No. CIV. 2:10-2373 WBS, 2011 WL 6702424 (E.D. Cal. Dec. 21, 2011).
Similarly, the Court OVERRULES Mrs. Brimberry's objections to statements whose probative value is purportedly "outweighed by . . . unfair prejudice." Fed. R. Evid. 403. In the summary judgment context, a court need not exclude evidence for danger of unfair prejudice, confusion of issues, or any of the other grounds outlined in Federal Rule of Evidence 403. Bafford v. Travelers Cas. Ins. Co. of Am., No. CIV. S-11-2474 LKK/JKM, 2012 WL 5465851 at *8 (E.D. Cal. Nov. 8, 2012).
Lastly, the court OVERRULES Mrs. Brimberry's "lay opinion" objection to Mr. Lyons' statement that Fiduciary would have terminated Mr. Brimberry's employment earlier than August 14, 2012, had Fiduciary known of Mr. Brimberry's "fraudulent" conduct. Lyons Decl. ¶ 12. Mr. Lyons, as the Executive Vice President of Business Development and Marketing at Fiduciary, does not appear to be giving his "opinion" on this issue so much as making a statement on what Fiduciary actually would have done under a different set of facts. Accordingly, Mrs. Brimberry's objection to this statement is OVERRULED. B. Mrs. Brimberry's Motion for Summary Judgment
1. Subject Matter Jurisdiction
First addressing Mrs. Brimberry's argument that the Court lacks subject matter jurisdiction in this case, the Court finds that Mrs. Brimberry's argument is without merit. Northwestern asserted its Counterclaim in Interpleader pursuant to Federal Rule of Civil Procedure 22, claiming that the Court had subject matter jurisdiction because (1) there was complete diversity of citizenship between the stakeholder, Northwestern, on the one hand, and the counter-defendants, Mrs. Brimberry and Fiduciary, on the other hand, and (2) the amount in controversy exceeded $75,000 [33]. These facts are precisely the kind upon which diversity jurisdiction is based for interpleader under Rule 22. See Lee v. W. Coast Life Ins. Co., 688 F.3d 1004, 1008 n.1 (9th Cir. 2012); Gelfren v. Republic Nat'l Life Ins. Co., 680 F.2d 79, 81 n.1 (9th Cir. 1982); Liberty Life Assurance Co. v. Ramos, No. CV-11-156-PHX-LOA, 2012 WL 10184 at *2 (D. Ariz. Jan. 3, 2012). As such, the Court has proper subject matter jurisdiction in this case.
2. Abstention
Mrs. Brimberry also urges the Court to defer to "parallel" proceedings currently pending in state Court and to abstain from asserting jurisdiction in this case. Under Colorado River Water Conservation District v. United States, 424 U.S. 800, 813 (1976), and a subsequent line of cases (e.g., Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 19 (1983)), a federal court may stay a federal case in favor of a related state case "in exceptional circumstances." Scotts Co. LLC v. Seeds, Inc., 688 F.3d 1154, 1158 (9th Cir. 2012). "Although courts usually avoid duplicative litigation when similar cases are pending in two different federal courts, '[g]enerally, as between state and federal courts, the rule is that the pendency of an action in the state court is no bar to proceedings concerning the same matter' in a federal court." R.R. St. & Co. Inc. v. Transport Ins. Co., 565 F.3d 966, 974-75 (9th Cir. 2011) (emphasis and alteration in original) (quoting Colorado River, 424 U.S. at 817). It is well established that only "exceptional" cases and "the clearest of justifications" support dismissal of a federal case in favor of a related state case. Id. at 978. Given the "virtually unflagging obligation of the federal courts to exercise the jurisdiction given them" (Colorado River, 424 U.S. at 817), the Ninth Circuit has recognized eight different factors that a court must balance prior to staying or dismissing a federal case (R.R. St. & Co., 565 F.3d at 978-79), "with the balance heavily weighted in favor of the exercise of jurisdiction." Mercury Const. Corp., 460 U.S. at 16 (1983).
Given that Mrs. Brimberry did not argue for the Court's abstention in her moving papers and only raised the abstention argument in her Reply, the Court need not consider this argument. See Cedano-Viera v. Ashcroft, 324 F.3d 1062, 1066 n.5 (9th Cir. 2003); Thompson v. Comm'r of Internal Revenue, 631 F.2d 642, 649 (9th Cir. 1980); United States ex rel. Giles v. Sardie, 191 F. Supp. 2d 1117, 1127 (C.D. Cal. 2000). Furthermore, even if the Court were to consider Mrs. Brimberry's abstention argument, her curt analysis has not demonstrated that this is an "exceptional" case that clearly justifies dismissal pursuant to Colorado River, let alone that the two cases are actually duplicative of one another. As such, the Court finds that abstention is not warranted here.
3. Prejudgment Attachment
Mrs. Brimberry asserts in her moving papers that Fiduciary is using the procedure of interpleader to constructively effect a prejudgment attachment, essentially "block[ing] the payment of over $3.5 million in insurance proceeds" to Mrs. Brimberry. Mot. 6:18. Relying on one case from the California Court of Appeal and two district court cases from outside this Circuit, Mrs. Brimberry suggests that Fiduciary has managed to "hold over $3.5 million hostage" through the improper use of interpleader. Id. at Part IV.A. However, the cases upon which Mrs. Brimberry relies are not on point here because they address actions in which there was no basis for the claimants to assert interpleader claims to the particular funds at issue. See Downing v. Goldman Phipps PLLC, No. 4:13CV206 CDP, 2013 WL 1991531 at *8 (E.D. Mo. May 13, 2013); Ctr. Partners Mgmt., Ltd. v. Cache, Inc., 657 F. Supp. 48, 49 (S.D. Fla. 1986); City of Morgan Hill v. Brown, 71 Cal. App. 4th 1114, 1125-26 (1999). By way of contrast, Fiduciary does appear to have a basis for its claim to the policy benefits that are the subject of this Action. The case law upon which Fiduciary relies suggests that if payments for the insurance premiums can be traced to funds wrongfully obtained from Fiduciary, then the fruit of such payments is held in constructive trust for the benefit of Fiduciary. See Church v. Bailey, 90 Cal. App. 2d 501, 504 (1949); Brodie v. Barnes, 56 Cal. App. 2d 315, 323 (1942). See also Brown v. N.Y. Life Ins. Co., 152 F.2d 246, 250 (9th Cir. 1945). As such, Mrs. Brimberry has not demonstrated that interpleader is being improperly used in this case to effect a prejudgment attachment.
The argument in Mrs. Brimberry's Reply regarding prejudgment attachment is similarly unpersuasive because the legal authority upon which she relies there deals exclusively with the use of lis pendens in real property cases (see B.J. Assocs. v. Superior Court, 75 Cal. App. 4th 952, 969-70 (1999); Westbrook v. Superior Court, 176 Cal. App. 3d 703, 714-15 (1986)) and the use of constructive trusts to secure the payment of debt to a creditor (see CHoPP Computer Corp. v. United States, 5 F.3d 1344, 1348-49 (9th Cir. 1993); Universal Marine Ins. Co v. Beacon Ins. Co., 592 F. Supp. 948, 955 (W.D.N.C. 1984)), neither of which is the case here. Accordingly, the Court rejects Mrs. Brimberry's argument regarding prejudgment attachment and finds that the procedure of interpleader is not being used improperly in this case.
4. Genuine Issues for Trial
As to Fiduciary's burden of proof for purposes of this Motion, Mrs. Brimberry asserts that Fiduciary has failed to meets its burden of "produc[ing] competent evidence with 'concrete specifics.'" Reply 2:8-10. Federal Rule of Civil Procedure 56(c) mandates the entry of summary judgment against "a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322. Fiduciary asserts that it is entitled to the benefits at issue here via a constructive trust that was imposed upon the Policies' proceeds as a result of Mr. Brimberry's alleged embezzlement from Fiduciary. Assuming, arguendo, that the legal authority upon which Fiduciary relies supports such a claim (see Brown, 152 F.2d at 249-50; Bailey, 90 Cal. App. 2d at 504; Brodie, 56 Cal. App. 2d at 323), Fiduciary must prove at trial that Mr. Brimberry wrongfully obtained money from Fiduciary and that the money Mr. Brimberry used to pay insurance premiums is traceable to his fraudulent conduct.
Although Mrs. Brimberry would have the Court believe that "[t]here are no specifics tracing any misappropriated funds to this policy purchase" (Reply 2:22), Fiduciary has presented (1) evidence that Mr. Brimberry submitted and received over $100,000 from Fiduciary under the guise of business expenses in violation of Fiduciary's policies (see Lyons Decl., Ex. A), (2) a declaration from Mr. Lyons stating that if Fiduciary had discovered Mr. Brimberry's fraudulent activities at an earlier date, Fiduciary "would have terminated Mr. Brimberry's employment at such earlier date and would not have paid Mr. Brimberry a salary or any other compensation or benefits after that date" (see Lyons Decl. ¶ 12), and (3) a bank statement reflecting that a payment was made to Northwestern out of the same account into which Mr. Brimberry's compensation from Fiduciary was deposited (see id. at Ex. B). Additionally, Mr. Lyons attests to two separate, internal investigations conducted within Fiduciary, which revealed that Mr. Brimberry engaged in travel-and-entertainment expense fraud in connection with expense reimbursement claims and misappropriation of funds from the account of a Fiduciary client. See Lyons Decl. ¶¶ 3, 8. Based on the factual evidence and legal authority presented by Fiduciary, the Court finds that a genuine issue remains for trial, thus defeating Mrs. Brimberry's Motion for Summary Judgment. See Celotex, 477 U.S. at 331 n.2 ("[I]f . . . there is any evidence in the record from any source from which a reasonable inference in the [nonmoving party's] favor may be drawn, the moving party simply cannot obtain a summary judgment . . . ." (quoting In re Japanese Elec. Prods. Antitrust Litig., 723 F.2d 238 (3d Cir. 1983))).
IV. CONCLUSION
Based on the foregoing, the Court OVERRULES the Parties' objections and DENIES Mrs. Brimberry's Motion for Summary Judgment.
IT IS SO ORDERED.
___________________
HONORABLE RONALD S.W. LEW
Senior, U.S. District Court Judge