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Principal Life Insurance Co. v. McMillan

May 21, 2010


The opinion of the court was delivered by: Wall, Magistrate Judge


Before the court is a motion by defendant Nancy Jia for an order disqualifying defendant Susan McMillan from serving as guardian of infant defendant Cody McMillan for purposes of this litigation. See Docket Entry ("DE") [34]. Jia also seeks an order disqualifying attorney Dierdre James from representing any party in this action. For the reasons set forth herein, Jia's motion is denied in its entirety.


This interpleader action was commenced by Principal Life Insurance Company ("Principal Life") regarding the disposition of a life insurance policy. Interpleader relief was granted to Principal Life and a Consent Judgment was entered on December 4, 2009. DE [25].

According to the complaint, Principal Life issued a life insurance policy (the "Policy") to Sonitrol Securities Services, Inc. ("Sonitrol") that insured the life of Marty McMillan (the "decedent"), an employee of Sonitrol who died in November 2008. Compl. ¶¶ 1, 16, DE [1]. The Policy was issued in August 2001 and provided a $774,000.00 death benefit. Id. ¶13. The decedent designated his wife at that time, Susan McMillan, as the primary beneficiary. Id. ¶ 14. Marty and Susan McMillan had a son, Cody McMillan, who is an infant defendant in this matter.

The decedent and Susan McMillan divorced sometime during 2003. See Dinnocenzo Aff. ¶7, DE [34-1]. In November 2006, the decedent married defendant Nancy Jia a/k/a Xi Mei Jia ("Jia"), see DE [34-3], and the two were apparently still married at the time of Marty's death in 2008. Dinnocenzo Aff. ¶7.

Defendant Sonitrol also maintained an employee deferred compensation plan that constituted an employee benefit plan under ERISA, and Marty McMillan was an employee-participant in that plan. Compl. ¶¶ 1,3. Sonitrol provided Principal Life with a copy of a Voluntary Deferred Compensation Agreement (the "Deferred Compensation Agreement") executed September 19, 2005. Id. ¶25. In connection with this Deferred Compensation Agreement, the decedent purportedly executed a beneficiary designation form naming Cody McMillan as first beneficiary, and Jia, who was at that time, decedent's fiancee, as second beneficiary. Id. ¶26.

According to Principal Life, Susan McMillan, Cody McMillan, Sonitrol, and Jia have each claimed entitlement to payment of the death benefit to the exclusion of all other claimants. Susan McMillan claims entitlement based upon her designation as primary beneficiary of the Policy. Compl. ¶¶21-22. Principal Life states that the beneficiary designation form for the Deferred Compensation Agreement "is the basis for Jia and Cody's claim for death benefits under the Policy." Id. ¶27. Sonitrol also claimed payment. Id. ¶24.

Jia argues that Susan's interests in this litigation are in direct conflict with Cody's, and seeks a ruling that Susan not be allowed to act as Cody's guardian in relation to this matter. Although she does not specifically state as much, Jia apparently is asking the court to appoint a guardian ad litem for Cody for this case. Additionally, Jia moves to disqualify Cody's current attorney, Dierdre James, who was retained at the outset of this litigation by Susan McMillan acting as Cody's guardian. Jia argues that since Susan and Cody's interests conflict and Susan, allegedly, is privy to, or has influenced, James's legal strategies, James must be disqualified.*fn1


Rule 17(c) of the Federal Rules of Civil Procedure allows the court to appoint a guardian ad litem, or issue another appropriate order, to protect a minor. See Fed. R. Civ. P. 17 (c)(2). "The appointment of such a guardian ad litem is not mandatory; rather, a court may in its discretion decide that the circumstances surrounding given litigation indicate that some other form of protection of an incompetent's interests would be more appropriate or that appointment of a guardian is simply unnecessary." Ruppert v. Secretary of U.S. Dept. of Health and Human Serv., 671 F. Supp. 151, 172 (E.D.N.Y.,1987), rev'd on other grounds, 871 F.2d 1172 (2d Cir. 1989). Generally, the court "should attempt to decrease costs by refraining from appointing guardians unless there is a substantial likelihood that a conflict of interest may exist and an infant may need protection." Peterfreund v. Ogunleye, 1999 WL 65997, at *4 (E.D.N.Y. Feb. 10, 1999) (quoting Geddes v. Cessna Aircraft Co., 881 F. Supp. 94, 100 (E.D.N.Y. 1995)(citations omitted)).

As to motions to disqualify counsel, the resolution of such motions is "a matter committed to the sound discretion of the district court." Cresswell v. Sullivan & Cromwell, 922 F.2d 60, 72 (2d Cir. 1990). The Second Circuit has indicated that courts should exercise caution when considering motions to disqualify counsel as such motions "'are often interposed for tactical reasons,' and... 'even when made in the best of faith... inevitably cause delay.'" Evans v. Artek Sys. Corp., 715 F.2d 788, 791-2 (2d Cir. 1983) (quoting Board of Educ. v. Nyquist, 590 F.2d 1241, 1246 (2d Cir. 1979)); see also Koch Indus., Inc. v. Hoechst Aktiengesellschaft, 650 F. Supp. 2d 282, 286 (S.D.N.Y. 2009) (noting that disqualification motions are "generally disfavored in this Circuit because of their tendency to be made for tactical reasons"). As such, the moving party "bear[s] a heavy burden of proving facts required for disqualification." Evans, 715 F.2d at 791-92; see also Skidmore v. Warburg Dillon Read, LLC, 2001 WL 504876, at *2 (S.D.N.Y. May 11, 2001) (movant must meet "high standard of proof"). With the standards for appointment of a guardian ad litem and for a motion to disqualify counsel in mind, the court turns to the arguments presented in this case.

Motion to Appoint a Guardian ad litem

Jia's arguments center upon her contention that for Susan to prevail in her claim to the insurance proceeds, Cody's claim must necessarily fail, and thus the interests of Susan and Cody conflict. Counsel for Susan and Cody note, however, that mother and son are pursuing separate theories of recovery--Susan as beneficiary of the Policy and Cody ...

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