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Standard Insurance Co. v. Harnett

United States District Court, C.D. Illinois, Springfield Division

October 16, 2017

STANDARD INSURANCE COMPANY, Plaintiff,
v.
MICHAEL J. HARNETT, BROOKE KLETZLI, KELLEN KLETZLI, CHRISTINA WEIPRECHT, and MARQUITA L. HARNETT, Defendants.

          OPINION

          SUE E. MYERSCOUGH UNITED STATES DISTRICT JUDGE.

         This cause is before the Court on Plaintiff Standard Insurance Company's Motion for Discharge (d/e 9). The Motion is GRANTED.

         I. BACKGROUND

         In March 2017, Plaintiff filed this statutory interpleader action pursuant to 28 U.S.C. § 1335. The Complaint for Interpleader names as defendants Michael J. Harnett, Brooke Kletzli, Kellen Kletzli, Christina Weiprecht, and Marquita L. Harnett. Because many of the parties have the same last name, the Court will refer to the individuals by their first names.

         The Complaint for Interpleader contains the following allegations. Plaintiff issued a Group Life Insurance Policy to the Albuquerque Public Schools on January 1, 2012. The Policy provided life insurance coverage to eligible employees of the Albuquerque Public Schools, including the decedent, Vesta Harnett. Vesta retired from employment with the Albuquerque Public Schools in 1991, 24 years before her death on September 17, 2015. Several years prior to her death, Vesta moved from Albuquerque to Springfield, Illinois. Upon Vesta's death, her lawful beneficiary or beneficiaries were eligible for life insurance benefits, which included a basic life insurance benefit of $4, 000 and an additional life insurance benefit of $25, 000. The total benefit of $29, 000 is referred to as the “Life Benefit.”

         In December 2015, the Albuquerque Public Schools advised Plaintiff of Vesta's death. As a result of Vesta's death, the Life Benefit under the Policy became due and payable upon Plaintiff's receipt of proof of loss and proof of those designated to be the lawful beneficiaries of the Life Benefit.

         Defendant Michael J. Harnett, Vesta's son, made a claim for 100% of the Life Benefit. Michael claimed he was entitled to 100% based on the most recent beneficiary designation. Specifically, on July 22, 2015, Vesta named Michael as her agent in an Illinois Statutory Short Form Power of Attorney For Property. Within three days, and pursuant to the power of attorney, Michael changed Vesta's prior beneficiary designation to provide Michael with 100% of the Life Benefit.

         Plaintiff asserts that the Retiree Life Insurance Change Form is ambiguous in that the form suggests that the beneficiary change is only with respect to the $25, 000 benefit. However, near the bottom of the page, in the area of the form titled “BASIC LIFE BENEFICIARY (if applicable), ” Michael purports to also designate himself as the beneficiary of 100% of Vesta's Basic Life Insurance- the $4, 000 benefit.

         Plaintiff rejected Michael's claim to 100% of the Life Benefit on the ground that the power of attorney did not, under Illinois law, authorize Michael to change the beneficiaries of the Life Benefit. If Michael is not entitled to 100% of the Life Benefit, Vesta's beneficiary designation of June 15, 2011 applies. The June 2011 designation divides the $4, 000 benefit equally between Michael and Marquita, Vesta's daughter. The 2011 beneficiary designation divides the $25, 000 benefit between Michael and Marquita (one-third each) and between Vesta's four grandchildren (one-twelfth each). The grandchildren are Christina, Kellen, Brooke, and Sean Kletzli. Plaintiff did not name Sean Kletzli as a defendant in this case because, upon Plaintiff's information and belief, Sean died in a motorcycle accident in 2014. Under the June 15, 2011 beneficiary designation, upon the death of Sean, his one-twelfth would be apportioned equally among the remaining three living grandchildren Vesta designated as beneficiaries at the same time she designated Sean. Compl. ¶ 24; but see Policy at 28 (d/e 53) (applying the following where two or more beneficiaries are named in a class: “If you provide for unequal shares in a class, and two or more Beneficiaries in that class survive, we will pay each surviving Beneficiary his or her designated Share. Unless you provide otherwise, we will then pay the share(s) otherwise due to any deceased Beneficiary(ies) to the surviving Beneficiaries pro rata based on the relationship that the designated percentage or fractional share of each surviving Beneficiary bears to the total shares of all surviving Beneficiaries.”).

         Plaintiff alleges that it faces multiple liabilities due to the competing claims. Plaintiff asked Defendants to settle and resolve their controversies regarding the Life Benefit and advised that it would abide by any decision they might reach on the division of the Life Benefit of $29, 000. Defendants have not settled their disputes, necessitating the filing of this action.

         After the Court granted Plaintiff's motion to deposit funds, Plaintiff deposited $29, 000 with the Clerk of the Court (d/e 4).

         Michael, Christina, and Kellen executed waivers of service (see docket entries 5, 6, and 7) and their answers were due in May 2017. No answers or other responses were filed.

         Brooke was served with summons on April 20, 2017. See d/e 11. In letters dated April 24, 2017, both Marquita and Brooke acknowledge receipt of the Summons and the Complaint. The letters, which are notarized, also state: “Please consider this my formal, written notice of non-participation in pursuit of and confirmation that I do relinquish my monetary benefit from the life insurance policy[.]” See Letters (d/e 10-2, 10-3).

         On August 4, 2017, Plaintiff filed a Motion for Discharge (d/e 9) asking that Plaintiff be discharged from liability and dismissed from this lawsuit with prejudice. Plaintiff ...


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