UniCare Life & Health Insurance Company v. Swarn
2:21-cv-11951
E.D. Mich.Mar 24, 2022Background
- UniCare insured John Jones Jr. under a group life policy with a $41,000 death benefit; Jones died October 6, 2020.
- Policy named Rosa Lee Swarn (a friend) as primary beneficiary; Swarn and multiple adverse claimants (the decedent’s children and his estate) each sought the death benefit.
- UniCare filed an interpleader complaint and summonses; all claimants except Swarn answered; Swarn was served but made no appearance.
- Clerk’s entry of default was entered against Swarn; UniCare moved for default judgment against Swarn and for leave to deposit the Death Benefit into the court registry.
- The court found interpleader jurisdiction satisfied, granted UniCare leave to deposit the $41,000 (less $4,000 agreed attorneys’ fees and accrued interest), ordered UniCare discharged and dismissed with prejudice, and recommended entry of default judgment barring Swarn from recovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether interpleader was properly invoked and federal jurisdiction exists | UniCare: minimal diversity under 28 U.S.C. §1335 and ERISA-plan basis under §1331; multiple adverse claimants risk double liability | No party contested jurisdiction (Swarn made no appearance) | Court: interpleader jurisdiction exists and invocation proper |
| Whether UniCare may deposit funds, be discharged, and obtain an injunction | UniCare: admitted liability, seeks to deposit funds, deduct agreed $4,000 fees, be discharged, and be enjoined from further suits | No objections from appearing claimants; Swarn did not respond | Court: approved deposit (minus $4,000), discharged UniCare, and permanently enjoined claimants from suing UniCare over the benefit |
| Whether reduction of the fund by $4,000 for attorneys’ fees is appropriate | UniCare: $4,000 in fees is agreed by the parties who appeared | Appearing claimants agreed; Swarn did not object | Court: exercised discretion to allow the agreed $4,000 deduction |
| Whether default judgment against Swarn should be entered | UniCare: Swarn was served, failed to answer, and default forfeits her claim to the res | Swarn: no defense or argument (no appearance) | Court: entry of default judgment appropriate; Swarn barred from receiving any of the death benefit |
Key Cases Cited
- United States v. High Tech. Prods., Inc., 497 F.3d 637 (6th Cir. 2007) (describing two-stage interpleader analysis)
- Antoine v. Atlas Turner, Inc., 66 F.3d 105 (6th Cir. 1995) (district court has discretion to enter default judgment)
- Thomas v. Arn, 474 U.S. 140 (1985) (failure to timely object to a magistrate judge's report and recommendation waives appellate review)
- Frontier Ins. Co. v. Blaty, 454 F.3d 590 (6th Cir. 2006) (only specific objections to a magistrate's report preserve issues for appeal)