San Joaquin College of Law

Civil Procedure–Interim Exam March 2002/Cartier

TIME ALLOWED: 2 hours (1 hour 20 minutes X 1.5)

             Annie and Robert were previously married. When they divorced, Robert was ordered to maintain two hundred fifty ($250,000) life insurance coverage naming their minor children, Holly and Joshua, as equal beneficiaries until the youngest child reached the age of 18. Initially, Robert complied with the mandate. After he married Sharon, Robert changed the beneficiary designation on his life insurance policies naming Sharon as the sole beneficiary. Robert died last year with two life insurance policies in effect: $250,000 with Hartford Ins. and $400,000 with Tex Life Ins. The Hartford policy was provided incident to Robert’s employment and is governed by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. @ 1001 et seq. The Tex Life policy is a standard term life policy unrelated to his employment. While Annie, her children, Robert, and Sharon were residents and citizens of Ohio at the time of Robert’s death, Sharon has since moved 65 miles away and now lives in western Pennsylvania. Hartford Ins. is a Connecticut Corporation with its principal place of business in that state; Tex Life Ins. is a Nevada corporation with its principal place of business in Texas. Both insurance companies conduct business activities in all fifty states, including Ohio.

             Annie, acting as guardian as litem of her two minor children, Holly (currently age 12) and Joshua (age 16) , filed an action in Ohio state court, seeking a declaration that payments from one or both of two insurance policies are payable to her minor children. Upon proper service in the action, defendants, Hartford and Tex Life, removed the action to the United States District Court for the Southern District of Ohio. Hartford then filed motion under FRCP 12(b)7 to dismiss for failure to join Sharon as a necessary an indispensable party. Tex Life filed an answer and an interpleader counterclaim. Hartford then filed an answer and its own interpleader counterclaim. Although both interpleader counterclaims state that Sharon may have an interest in the proceeds of the policies, she was not named as a defendant/claimant to those counterclaims. After the pleadings were completed, Annie moved for a jury trial. A review of the pertinent law indicates that courts are split on whether an action under ERISA is a legal action. There is no dispute that interpleader actions are equitable.

CONSIDERING ALL RELEVANT FACTS:

1. Was the case properly removed? DISCUSS.

2. Which parties and which claims and counterclaims are properly before the court? DISCUSS.

3. How should the court rule on the 12(b)7 motion? DISCUSS.

4. How should the court rule on the motion for a jury trial? DISCUSS.