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Unum Life Ins. Co. of Am. v. Witt

United States District Court, W.D. Virginia, Abingdon Division

January 6, 2015

UNUM LIFE INSURANCE COMPANY OF AMERICA, Plaintiff,
v.
JUSTIN B. WITT, ET AL., Defendants

For UNUM Life Insurance Company of America, Plaintiff: David E. Constine, III, LEAD ATTORNEY, Rebecca Elaine Ivey, Troutman Sanders LLP, Richmond, VA.

For Justin B Witt, Defendant: Robert Brandon Snodgrass, LEAD ATTORNEY, Snodgrass Law Firm, Abingdon, VA.

For J W M, a minor, Defendant: Johnny Lee Rosenbaum, LEAD ATTORNEY, SCYPHERS & AUSTIN, P.C., ABINGDON, VA; Michael Alan Bishop, LEAD ATTORNEY, MICHAEL A BISHOP PC, ABINGDON, VA.

For First Sentinel Bank, Defendant: William Bradford Stallard, LEAD ATTORNEY, Penn Stuart & Eskridge, Abingdon, VA.

OPINION AND ORDER

James P. Jones, United States District Judge.

In this interpleader action, an insurance company has paid into court the death benefit proceeds of a life insurance policy and requested the court to determine who is entitled to those proceeds -- either the named beneficiaries of the policy or a bank that obtained an assignment of the policy as collateral for a loan to the insured. The bank has now moved for summary judgment in its favor, contending that there are no genuine disputes as to any material facts and it is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a). For the following reasons, I will grant the bank's motion.

I.

The undisputed facts contained in the summary judgment record are as follows.

Douglas A. Witt was the insured under a group life insurance policy (the " Group Policy" ) through his employer, American Electric Power Service Corporation. The Group Policy was issued and administered by Unum Life Insurance Company of America (" Unum" ). Witt, as a benefit of his employment, obtained life insurance coverage of $150,000 through the Group Policy. He left his employment in 2002, but elected to continue this coverage. On November 24, 2010, Witt executed an Assignment of Life Insurance Policy as Collateral (the " Assignment" ) to First Sentinel Bank (the " Bank" ), as security for a loan to Witt in the amount of $358,875. The loan was also secured by real estate owned by Witt. The loan had a 12-month term, but it was not paid as scheduled and was modified twice by extending the due date, the last due date being July 24, 2013. Payment was not made on that date.

Witt died less than a month later, on August 20, 2013, of a gunshot wound. Before he died, on April 11, 2013, he had designated his two children, Justin B. Witt and J.M.W., a minor, as the beneficiaries of the Group Policy (the " Beneficiaries" ). At his death, the payoff amount of the loan to the Bank was $359,375.

Following Witt's death, on September 5, 2013, James W. Dudley, an attorney for the Bank, wrote to Unum advising it that the decedent had assigned the life insurance policy to the Bank as collateral for a loan, and enclosing a copy of the Assignment. In response, Unum sent a letter dated November 22, 2013, to Justin Witt, one of the Beneficiaries, advising him that " James Dudley, at the Dudley Law Firm is claiming to be a beneficiary of the Group Life Insurance benefits for which you have also submitted a claim." (Compl. Ex. F, ECF No. 1-6.) A similar letter was sent to attorney Dudley, advising him that Justin Witt had made a claim to the proceeds of the policy.

Unum followed up by letters dated December 13, 2013, to both Dudley and Justin Witt, advising them that because Unum had not heard further from them as to " the dispute" it was " interpleading the proceeds into the court system." (Compl. Ex. H, ECF No. 1-8.) The present interpleader action was thereafter filed on February 10, 2014, naming the Bank and the Beneficiaries as defendants. Subject-matter jurisdiction of this court is based upon diversity of citizenship and amount, 28 U.S.C. § 1332(a), as well as federal question jurisdiction under the provisions of the Employee Retirement Income Security Act of 1974 (" ERISA" ), 29 U.S.C. § 1132(e). Unum has paid into court the death benefit proceeds of the policy in the amount of $151,982.88, and without objection has been dismissed as a party. (Order, July 17, 2014, ECF No. 22.)

In advance of trial, and following discovery, the Bank has moved for summary judgment in its favor. The motion has been briefed and ...


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