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Bremus v. Crofton Diving Corporation

United States District Court, E.D. Virginia, Norfolk Division

September 22, 2017

ANN BREMUS, Plaintiff,
v.
CROFTON DIVING CORPORATION, and CAMILLE CROFTON GOBRECHT, Defendants.

          MEMORANDUM OPINION AND ORDER

          ARENDA L. WRIGHT ALLEN, UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on a Motion to Dismiss (ECF No. 4) filed by Defendants Crofton Diving Corporation and Camille Gobrecht (hereinafter referred to singularly as "Crofton Diving"). The Motion is granted, and this suit is dismissed with prejudice. Another case is now the sole vehicle for determining entitlement to the funds sought by Plaintiff Ann Bremus.[1]

         I. BACKGROUND

         Before the Court are two related cases: this action, Bremus v. Crofton Diving Corp., No. 2:16-cv-700 (E.D. Va. Dec. 7, 2016), and Crofton Diving Corp. v. Bremus, No. 2:16-cv-734 (E.D. Va. Dec. 21, 2016). Both cases concern an employee retirement fund (a 401K) worth approximately $417, 000, established by now-deceased Crofton Diving employee Michael Bremus. After Michael Bremus's death, his second wife, Ann Bremus, and his daughter, Jordan Bremus (Ann Bremus' stepdaughter) each claimed entitlement to his retirement fund. Jordan Bremus anchors her claim in a 2003 beneficiary designation form, which names her as beneficiary of the fund. However, Ann Bremus contends that the terms of the retirement plan favor spousal beneficiaries, and that her 2011 marriage to Michael Bremus superseded the beneficiary designation made in 2003.

         On November 15, 2016, Ann Bremus filed this suit in Portsmouth Circuit Court, alleging that Crofton Diving breached a fiduciary duty and violated the Employee Retirement Employee Retirement Income Security Act of 1974 ("ERISA"), by failing to promptly release the disputed funds to her. See Compl. ¶¶ 13-16 (ECF No. 1-1). Crofton Diving removed the action to this Court. See Notice of Removal (ECF No. 1).

         On December 21, 2016, Crofton Diving brought a separate interpleader action in this Court, naming both Ann Bremus and Jordan Bremus as defendants. See Compl., Crofton Diving, No. 2:16-cv-734 (E.D. Va. Dec. 21, 2016). In the interpleader action, Crofton Diving moved to deposit the disputed funds with the Court, be dismissed from the proceedings, and be relieved of any liability. See Mot. for J. on the Pleadings, Crofton Diving, No. 2:16-cv-734 (E.D. Va. Mar. 2, 2017). The Court granted that Motion and advised that Crofton Diving would be dismissed from the suit after depositing the funds. See Crofton Diving, No. 2:16-cv-734, slip op. at 1-3 (E.D. Va. May 17, 2017). On June 6, 2017, Crofton Diving deposited $446, 844.77 with the Court, which includes the retirement-fund principal plus interest. See Deposit Receipt, Crofton Diving, No. 2:16-cv-734 (E.D. Va. June 6, 2017).

         II. LEGAL STANDARD

         When dismissing a complaint, federal district courts must decide whether to dismiss with or without prejudice. A dismissal with prejudice "is a complete adjudication of the issues presented by the pleadings and is a bar to a further action between the parties." Harrison v. Edison Bros. Apparel Stores, Inc., 924 F.2d 530, 534 (4th Cir. 1991). Conversely, a dismissal without prejudice "operates to leave the parties as if no action had been brought at all." Dove v. CODESCO, 569 F.2d 807, 809 n.3 (4th Cir. 1978). Despite this distinction, both types of dismissal share one important characteristic: the termination of the specific action (or claim). See Taylor v. Sturgell, 553 U.S. 880, 892 (2008); see also United States v. California, 507 U.S. 746, 756 (1993) ("A dismissal without prejudice terminates the action and concludes the rights of the parties in that particular action.").

         Whether to dismiss a claim with or without prejudice generally lies within the discretion of the district court. See Carter v. Norfolk Comm. Hosp. Ass'n, 761 F.2d 970, 974 (4th Cir. 1985); see also Payne v. Brake, 439 F.3d 198, 204 (4th Cir. 2006). When a complaint is incurable through amendment, dismissal with prejudice is proper. See Cozzarelli v. Inspire Pharms., Inc., 549 F.3d 618, 630 (4th Cir. 2008); see also Gadda v. State Bar of Cal, 511 F.3d 933, 939 (9th Cir. 2007).

         III. ANALYSIS

         In the case at hand, Ann Bremus alleges that Crofton Diving breached a fiduciary duty by failing to promptly release the disputed funds to her. See Compl. ¶¶ 1-2. When faced with Ann Bremus's pre-suit demands to remit the funds, Crofton Diving demurred out of concern over legal propriety. See Surreply at 1 (ECF No. 9). The company observed that a recent Supreme Court ruling raised the possibility that Jordan may be entitled to some of the disputed funds. See Id. at 1-2 (citing Hillman v. Maretta, 133 S.Ct. 1943, 1945 (2013) (holding that a federal statute preempts a Virginia statute governing when an employee's marital status changes but he or she fails to update his or her life insurance beneficiary designation prior to death)). Consequently, Crofton Diving filed the interpleader action to resolve the dispute. See Compl., Crofton Diving, No. 2:16-cv-734 (E.D. Va. Dec. 21, 2016).

         "Interpleader is a form of joinder open to one who does not know to which of several claimants he or she is liable .... It permits the person to bring the claimants into a single action, and to require them to litigate among themselves to determine which, if any, has a valid claim." Charles A. Wright & Mary Kay Kane, Federal Procedure Deskbook § 79 (2017). The interpleader action was developed in common law to be "an equitable rather than a legal procedure." Id. In keeping with its equitable purpose, Federal Rule of Civil Procedure 22 permits an interpleader action "whenever there are multiple claimants whose claims are such that the plaintiff-called the stakeholder-is or may be exposed to double or multiple liability. . . ." Id. "[T]he purpose is to protect against double vexation in respect to a single liability, rather than to prevent a double liability ...." Id.

         Crofton Diving inpled the disputed funds so that the parties claiming entitlement-Ann and Jordan Bremus-could litigate the issue without Crofton Diving's involvement. Crofton Diving, slip op. at 1-3. After depositing the funds, Crofton was "discharged from all liability . .. regarding the disposition of the deposited funds." Id. at 1. The Court enjoined Ann and Jordan Bremus preliminarily and permanently from the "institution or prosecution" of "any other proceedings in any other court against [Crofton Diving] with regard to the deposited funds or their distribution." Id. The parties agree that this Court's injunction requires dismissal of the instant suit. However, contrary to Ann Bremus's assertions, it also precludes her from reasserting a future breach of fiduciary duty claim. Therefore, her suit must be dismissed with prejudice.

         When a disinterested third party interpleads funds, courts will ordinarily bar a subsequent suit for breach of fiduciary duty that is premised on failure to remit the disputed funds. In Prudential Ins. Co. of America v. Hovis, an insurer filed an interpleader complaint and one of the potential beneficiaries counterclaimed, alleging the insurer acted negligently and in bad faith in its handling of policy changes. 553 F.3d 258, 259 (3rd Cir. 2009). The district court below had ruled that the insurer had properly brought an interpleader action against the defendants, and was therefore shielded from further liability. The Third Circuit affirmed, holding that when "the stakeholder bears no ...


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