United States District Court, S.D. New York
REPORT AND RECOMMENDATION
HENRY PITMAN, Magistrate Judge.
TO THE HONORABLE RICHARD J. SULLIVAN, United States District Judge.
Pursuant to the Federal Interpleader Act, 28 U.S.C. § 1335, and Fed.R.Civ.P. 22, Wilton Reassurance Life Company of New York ("Wilton") brought this interpleader action to resolve competing claims to the proceeds of a life insurance policy. The competing claimants contest the validity of two change-of-beneficiary forms purportedly executed by the decedent before her death. The first change-of-beneficiary form, which is not challenged, named defendants Walter F. Garbrecht, Jr., minor D.G., Joshua Rodriguez and Renee Maisano-Cuzzo as beneficiaries. The second, disputed, form allegedly added defendants Joyce Regina Maisano, Gail Dardano and Suzanne Schmidt as beneficiaries. Wilton never accepted the second form and allegedly sent the insured three notices instructing her how to properly add beneficiaries of the policy. Arguing that the second form should be effective, Dardano states that she believes the insured intended to add the beneficiaries and that the insured never received the first two notices from Wilton.
By notice of motion, dated June 17, 2014 (Docket Item 25), defendants Garbrecht, D.G. and Rodriguez move for an entry of default and default judgment against defendants Maisano and Schmidt and summary judgment against Dardano, directing that the proceeds of the policy be distributed only to Garbrecht, D.G., Rodriguez and Maisano-Cuzzo in accordance with the first accepted change-of-beneficiary request. For the reasons set forth below, I respectfully recommend that the motion be granted.
A. The Change-of-Beneficiary Notices in Issue
In September 2000, North American Company for Life and Health Insurance of New York ("NANY") issued life insurance policy No. LN01015420, on the life of Donna A. Garbrecht (the "insured") in the amount of $200, 000 (Complaint, dated Aug. 7, 2013, (Docket Item 1) ("Compl.") ¶¶ 11-12). The insured was the owner of the policy, and her son, Walter Garbrecht, and the insured's fiance, Lawrence Rubino, were designated as the primary beneficiaries, each entitled to an equal share of the proceeds (Compl., ¶ 15).
On April 13, 2001, NANY approved the insured's request to change the primary beneficiary to Garbrecht and the contingent beneficiary to D.G., Garbrecht's son and the insured's grandson (Compl., ¶¶ 8, 16-17). On March 23, 2004, NANY endorsed the insured's request to change the primary beneficiaries back to Garbrecht and Rubino to share equally (Compl., ¶¶ 18-19). However, on September 15, 2006, NANY rejected a second request by the insured to change the primary beneficiaries to D.G. and Rubino because the insured failed to date her request (Compl., ¶¶ 20-21).
Thereafter, Wilton succeeded NANY as the insurer of the policy (Compl., ¶ 1). After Wilton rejected a series of flawed change requests by the insured,  on January 21, 2009, Wilton processed her request to change the allocation of the proceeds to the beneficiaries as follows: 62.5% to Garbrecht and 12.5% each to D.G., the insured's grandson, Joshua Rodriguez, and the insured's niece, Renee Maisano-Cuzzo (Compl., ¶¶ 28-29 and Exhibits 15 & 16 annexed thereto). This was the last change request accepted by Wilton (the "Last Accepted Change Request") (Compl., Ex. 16).
Some time between January 2009 and March 2010, the insured submitted an undated request to Wilton with a handwritten attachment listing the names of each beneficiary and the amount of proceeds they were to receive (the "Rejected Change Request") (Compl., ¶¶ 29-30 and Exhibit 17 annexed thereto). The request sought to provide (1) $50, 000 (25%) each to Garbrecht and the insured's sister, Joyce Maisano, (2) $25, 000 (12.5%) each to D.G., Rodriguez and Maisano-Cuzzo, (3) $15, 000 (7.5%) to the insured's friend Gail Dardano and (4) $10, 000 (5%) to the insured's friend Suzanne Schmidt (Compl., Ex. 17).
Wilton did not process the request (Compl., ¶ 31). Instead, it sent identical letters to the insured on March 18, 2010 and December 29, 2010, informing her that she must complete, sign and date the appropriate form in order for the beneficiary change to take effect (Compl., ¶¶ 31-32). On October 10, 2011, Wilton again informed the insured that her request had not been processed because (1) she failed to provide the second dated and signed page of the change request form, (2) she failed to sign and date the form as directed and (3) she allocated the funds by monetary values instead of percentages (Compl., ¶ 33 and Exhibit 20 annexed thereto). The insurer provided the insured with blank change request forms which stated that the forms were "[i]ncomplete without all [p]ages, " indicated that the form included two pages on the bottom of both pages and included a space for the insured's signature and the date on the second page (see Compl., Exs. 15 & 17). Wilton instructed the insurer that the entire completed form had to be submitted for the change to be effective (Compl., Ex. 20). The insured did not take any of the actions specified in the October 10, 2011 notice (Compl., ¶ 34).
The insured died on December 27, 2012 (Compl., ¶ 35 and Exhibit 21 annexed thereto). Each of the defendants submitted a claim for benefits under the policy (Compl., ¶¶ 36-42). Wilton informed Maisano, Schmidt and Dardano that their claims were being denied because they were not identified in the Last Accepted Change Request; Wilton also requested that they withdraw their claims (Compl., ¶¶ 43-45). Each refused to withdraw her claim for benefits and stated her belief that the insured intended her to be a beneficiary of the policy (Compl., ¶¶ 46-48). Garbrecht opposed Maisano's claim for benefits (Compl., ¶ 49). Wilton was unable to determine to whom the death benefits are owed (Compl., ¶ 53).
B. Proceedings to Date
Wilton brought suit seeking a judgment (1) directing Wilton to deposit the death benefit and interest with the Clerk of Court, (2) directing defendants to interplead each other, (3) discharging Wilton from further liability and enjoining defendants from commencing any actions against it and (4) awarding Wilton fees and costs from the policy proceeds (Compl., at 9-10). Thereafter, Wilton properly served the summons, complaint, Rule 7.1 statement and exhibits on all Defendants.
Only defendants Garbrecht, D.G. and Rodriguez answered and cross-claimed seeking (1) disbursement of the funds in accordance with the Last Accepted Change Request, (2) payment of fees and costs by Dardano, Maisano and Schmidt should they contest the case and (3) an order enjoining defendants from bringing suit against Wilton, Garbrecht, D.G. or Rodriguez regarding rights under the policy (Amended Answer and Cross-Claim, dated Oct. 16, 2013 (Docket Item 10) ("Garbrecht Am. Answer")). Dardano also answered, claiming that (1) she believes the insured did not receive the May 18, 2010 and December 29, 2010 letters,  (2) she knows that the insured repeatedly changed her policy, but she believes that the insured meant for the Rejected Change Request to be effective and (3) she believes it was the insured's "dying wish" to provide for her sister, Maisano (Answer, dated Oct. 29, 2013, (Docket Item 14) ("Dardano Answer") at 1-2). To date, neither Maisano nor Schmidt have appeared or answered in this action (Declaration of Vincent Gelardi in Support of Motion for Summary Judgment, dated June 17, 2014, (Docket Item 26) ("Gelardi Decl.") ¶ 11). There is nothing in the record indicating that either has contacted the court in any way.
On January 31, 2014, Wilton deposited the death benefit and accumulated interest (the "Funds"), totaling $205, 547.04, with the Clerk of Court (Gelardi Decl., ¶ 3; Minute Entry for Dec. 13, 2013 on Docket Report for 13 Civ. 5536). On February 4, 2014, I ordered that the Funds be deposited in an interest-bearing account and, subject to certain limitations, authorized the Clerk of Court to deduct a fee equal to 10% of the income earned (Order for Deposit in Interest-Bearing Account, dated Feb. 4, 2014 (Docket Item 21)). The Funds were deposited in an interest-bearing account on February 20, 2014 (Gelardi Decl., ¶ 3).
Defendants Garbrecht, D.G. and Rodriguez, by notice of motion (Docket Item 25), move for (1) entry and grant of default against Maisano and Schmidt (2) summary judgment against Dardano and (3) distribution of the Funds to Maisano-Cuzzo and themselves in accordance with the Last Accepted Change Request. Movants properly served the motion on defendants Maisano-Cuzzo, Maisano, Dardano and Schmidt and plaintiff Wilton (Aff. of Serv., dated June 17, 2014 (Docket Item 28)).
A. Legal Standard for Default
The Court of Appeals for the Second Circuit set forth the rules applicable to the entry of default in City of New York v. Mickalis Pawn Shop, ...