New Mexico federal court considers interpleader jurisdiction
In PRIMERICA LIFE INSURANCE COMPANY v. Montoya, CV No. 18-109 JCH/CG (D.N.M. May 4, 2018). the federal Northern District of New Mexico addressed a complex question involving an insurance provider whose interpleader claim forced the court to consider whether a party invoking interpleader may do so even if the remaining claimants do not have diversity of citizenship. The Court affirmed the precedent that where jurisdiction was present at time case was filed, dismissal of stakeholder, leaving only claimants who were nondiverse, did not destroy that jurisdiction.
The case involved a life insurance beneficiary dispute. In 1998 Joseph Trujillo purchased a life insurance policy from Primerica Life Insurance Company. The Policy, named his wife at the time, Cynthia Montoya, and his niece Bianca Trujillo, as the primary and contingent beneficiaries, respectively. After 18 years of marriage, Joseph and Cynthia divorced in 2016. The divorce decree entered by the court made no mention of how the life insurance policy was to be treated after the divorce. Joseph never removed Cynthia as the policy’s primary beneficiary.
Joseph passed away in March 2017. Upon his death, Cynthia, assigned almost $10,000 from the life insurance proceeds to Hass Funeral Services to help pay for Joseph's funeral expenses. Hass in turn assigned the contract to Defendant Heritage Memorial Funding, LLC, a Mississippi entity. Soon after that, Cynthia, Heritage, and Bianca all made claims against the policy proceeds.
Upon processing Cynthia's claim, Primerica discovered for the first time that she and Joseph divorced. Primerica contended it could not determine what beneficial interests if any, Defendants had to the Policy's proceeds under New Mexico's statute dealing with revocation of non-probate transfers, NMSA 1978 § 45-2-804.
Given the competing claims to the policy between Cynthia and Bianca, Primerica filed an interpleader lawsuit and deposited the $80,000 fund into the Court's registry. Primerica's Complaint invoked both statutory and rule interpleaders. When presented with the question as to how or if Primerica may be dismissed from the case, the court took note of the two species of interpleader. "Whereas complete diversity is a prerequisite for rule interpleader under Fed. R. Civ. P. 22 (stakeholder must be diverse from all claimants), statutory interpleader requires only minimal diversity (at least two claimants must be diverse, but citizenship of stakeholder is irrelevant.” The Court reasoned that since Primerica was not part of the "real controversy" involved in the case; therefore, the court should only look to the citizenship of Heritage, Bianca, and Cynthia. At the time of filing, diversity of citizenship did exist because of at least one claimant, Heritage, a citizen of Mississippi. However, Heritage had been dismissed from the case earlier, thus leaving Cynthia and Bianca, both residents of New Mexico who did not have a diversity of citizenship.
The court ruled that Primerica should be dismissed from the case even though the full diversity of citizenship of the remaining parties was not present. The court noting that Primerica's discharge from the case “would not destroy the Court's jurisdiction founded on diversity of citizenship even though the remaining claimants, Bianca and Cynthia, are not of diverse citizenship from each other.” Secondly, the court noted that Primerica had a legitimate fear of multiple liabilities given that “Cynthia and Bianca have asserted mutually exclusive claims to the stake. Primerica asserts no claim to the stake and has represented itself as a disinterested stakeholder wishing to pay its obligations” by depositing its stake into the Registry of the Court and by agreeing to waive its attorneys' fees for litigation associated with this action. Thus, the Court ruled that Primerica should be allowed to avail itself of interpleader.