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Buckeye State Mutual Insurance Company v. Moens

United States District Court, Eighth Circuit

May 13, 2013

BUCKEYE STATE MUTUAL INSURANCE COMPANY, Plaintiff,
v.
BRENT MOENS, TANYA DEE MOENS, ESTATE OF GERALD RALPH BOGE a/k/a JERALD RALPH BOGE, DOUGLAS LEE OLDENKAMP, TRACEY BAILEY, individually and as Guardian of BJB, DANIEL BAILEY, LEE RAE GEISINGER, individually, CONSERVATORSHIP OF LEE RAE GEISINGER, ALICE MARIE GEISINGER, individually, CONSERVATORSHIP OF ALICE CONDIT a/k/a ALICE MARIE GEISINGER, WELLMARK, INC., UNITED FIRE GROUP, INC., VALLEY FORGE INSURANCE COMPANY, and AMERICAN ZURICH INSURANCE CO., Defendants. DANIEL BAILEY, TRACEY BAILEY, and BRAEDEN J. BAILEY, Cross-Claimants,
v.
BRENT MOENS, TANYA DEE MOENS, and COLE MOENS, Cross-Claim Defendants. LEE RAE GEISINGER, individually, CONSERVATORSHIP OF LEE RAE GEISINGER, ALICE MARIE GEISINGER, individually, CONSERVATORSHIP OF ALICE CONDIT a/k/a ALICE MARIE GEISINGER, Third-Party Plaintiffs,
v.
C.M. and GCC ALLIANCE CONCRETE, INC., Third-Party Defendants.

MEMORANDUM OPINION AND ORDER REGARDING THE MOENS DEFENDANTS' MOTION TO ENJOIN THE STATE COURT PROCEEDING FILED BY THE ESTATE OF GERALD RALPH BOGE

MARK W. BENNETT, District Judge.

This interpleader action, pursuant to 28 U.S.C. §§ 1335, 1397, and 2361, was initiated by an insurance company, because it asserts that claims for "bodily injury" coverage, arising from a multi-vehicle accident, exceed policy limits. The insurance company has named as defendants its insureds and all claimants to "bodily injury" coverage, deposited funds up to the policy limits with the court, and asks to be exonerated from any further liability to its insureds or the claimants, leaving this court to determine the proper allocation of the funds among the claimants. One state court action arising from the underlying accident was stayed by agreement of the parties, pending disposition of this federal action, and all of the claims concerning liability and fault originally asserted in that state court action are now asserted in this federal action, via cross-claims and third-party claims. The plaintiff's insureds now seek an order enjoining another state court action arising from the accident, after the state court denied a contested motion for a stay in that case. Most of the parties to this federal action have joined in the insureds' motion to stay the remaining state court action, but the plaintiff in that action, who is already a party to this federal interpleader action, resists such a stay. The insureds assert that an injunction on the remaining state court action is authorized by § 2361 and otherwise appropriate, while the plaintiff in that action asserts that such an injunction would exceed the authority for an injunction under § 2361, as interpreted by the United States Supreme Court in State Farm Fire & Casualty Company v. Tashire, 386 U.S. 523 (1967).

I. INTRODUCTION

A. Factual Background

This interpleader action and two state court actions arise from a multi-vehicle accident on August 11, 2010, at the intersection of U.S. Highway 71 and County Road C25, in Buena Vista County, Iowa. The initial collision occurred as a vehicle driven by teenager Cole Moens, in which BJB was a passenger, entered the highway and collided with a semi-trailer truck driven by Douglas Lee Oldenkamp, and owned by GCC Alliance Concrete, Inc., which was traveling on the highway. Cole's vehicle then spun into a vehicle driven by Lee Rae Geisinger, in which Alice Marie Geisinger was a passenger, and Oldenkamp's truck collided with another semi-trailer truck driven by Gerald Boge, and owned by Hog Slat, Inc. Although there are allegations of tortious conduct by others involved in the accident, only Cole received any citations arising from the accident-specifically, a citation for failure to yield upon entering through a highway, and a citation for violation of a minor's school driver's license. Cole was convicted at trial of both charges. Brent and Tanya Moens, Cole's parents, owned the vehicle that Cole was driving. That vehicle was covered by an insurance policy (the Policy), issued by Buckeye State Mutual Insurance Company (Buckeye), which had a $250, 000 per person and $500, 000 per accident limit for "bodily injury" liability.

B. Procedural Background

1. The federal interpleader action

On March 20, 2012, plaintiff Buckeye initiated this federal interpleader action by filing a Complaint (docket no. 1), alleging interpleader claims, pursuant to Rule 22 of the Federal Rules of Civil Procedure and 28 U.S.C. §§ 1335 and 2361, and a claim for declaratory judgment, pursuant to 28 U.S.C. §§ 2201-2202. Buckeye named as defendants its insureds, Brent and Tanya Moens (the Moens Defendants), [1] and two groups of claimants against the Policy, identified as the "bodily injury claimants" and the "lien claimants." The "bodily injury claimants" were identified as BJB and his parents, Daniel and Tracey Bailey (the Bailey Defendants); Gerald Boge (the Boge Estate); Oldenkamp; and Lee and Alice Geisinger and their respective conservatorships (the Geisinger Defendants). The "lien claimants" were identified as Wellmark, Inc. (Wellmark), as to any recovery by the Bailey Defendants; United Fire and Casualty Company (United Fire), as to any recovery by the Bailey Defendants; CNA, as to any recovery by the Boge Estate; and American Zurich Insurance Company (American Zurich), as to any recovery by Oldenkamp. Buckeye alleged that the claims of these defendants exceeded the limits of the Policy and, consequently, that the claims of the various defendants are adverse. Also on March 20, 2012, Buckeye filed its Motion To Deposit Funds (docket no. 2), seeking leave of the court to deposit with the Clerk of Court the pertinent Policy limits of $500, 000 as the interpleader registry funds pursuant to § 1335(a)(2) and Rule 67(a). By Order (docket no. 6), filed March 27, 2012, a magistrate judge of this court directed the deposit of the funds in question with the Clerk of Court, with the funds to be deposited in an interest-bearing account, pending outcome of this action.

On April 17, 2012, the Bailey Defendants filed their Answer, Counterclaim, and Cross-Claim (docket no. 9). As to their claims, the Bailey Defendants asserted a counterclaim against Buckeye for "underinsured motorist" coverage (in addition to "bodily injury" coverage); a cross-claim against Oldenkamp for negligence arising from the accident on August 11, 2010; a cross-claim against the Moens Defendants for vicarious liability for Cole's negligence; a third-party claim against Cole, who had not been a party to this lawsuit until then, for negligence arising from the accident on August 11, 2010; and a cross-claim for "underinsured motorist" coverage against United Fire, the Bailey Defendants' own insurer. On May 18, 2012, Buckeye filed its Answer To Defendants Baileys' [sic] Counterclaim (docket no. 17). On September 21, 2012, United Fire filed an Answer (docket no. 57) to the Bailey Defendants' Cross-Claim.[2] Three other defendants filed Answers to Buckeye's original Complaint: the Geisinger Defendants on May 17, 2012 (docket no. 15); Valley Forge Insurance Company (Valley Forge) on June 27, 2012 (docket no. 24), in which it asserted that it had been improperly identified in Buckeye's original Complaint as CNA; and the Boge Estate on July 16, 2012 (docket no. 25).

On July 24, 2012, with leave of court, Buckeye filed an Amended Complaint (docket no. 31), substituting Tracey Bailey, as the Guardian of BJB, for BJB, and substituting Valley Forge for CNA. In its Amended Complaint, Buckeye alleges that it is an Ohio insurance company that is authorized to do business in Iowa; that the Moens Defendants are residents and citizens of Iowa; that the Bailey Defendants are residents and citizens of Iowa; that defendant Wellmark is an Iowa corporation with its principal place of business in Iowa; that Untied Fire is an Iowa insurance company with its principal place of business in Iowa; that the Boge Estate is administered in, resides in, and is a citizen of Iowa; that Valley Forge is a Pennsylvania corporation with its principal place of business in Illinois; that Oldenkamp resides in and is a citizen of Iowa; that American Zurich is an Illinois corporation with its principal place of business in Illinois; and that the Geisinger Defendants reside in and are citizens of Iowa. Jurisdiction is premised on 28 U.S.C. § 1332(a)(1), because the matter in controversy exceeds $75, 000, and is between citizens of different states, and § 1335(a)(1), because there are two or more adverse claimants who are of diverse citizenship as defined in 28 U.S.C. § 1332(a). Venue is premised on 28 U.S.C. §§ 1391(b)(1) and (b)(2) and 1397.

Buckeye asserts three claims in its Amended Complaint, which are essentially the same as in its original Complaint. More specifically, in Count I, Buckeye asserts a "Rule 22 Interpleader" claim, asserting that it is or may be exposed to double or multiple liability with respect to the fund represented by the Policy limits for bodily injury. Buckeye prays that all defendants be interpleaded and required to assert their various claims in this action, that it be discharged, released, and exonerated from any and all claims, and that it be awarded such other and further relief as the court deems just and equitable, including an award of all of its costs and expenses from the fund. In Count II, Buckeye asserts a "28 U.S.C. §§ 1335, 2361 Interpleader" claim, again alleging that there are two or more adverse claimants under the Policy, and that it would deposit with the Clerk of Court the sum of $500, 000, representing the pertinent Policy limits, as registry funds, pursuant to Rule 67(a) of the Federal Rules of Civil Procedure, to abide the judgment of the court. In that count, Buckeye prays that a preliminary and permanent injunction be entered against all defendants forbidding each of them from suing it on the Policy; that the defendants be interpleaded and required to assert their various claims wholly against the fund paid into the court; that it be discharged, released, and exonerated from any and all claims to such fund; and that it be awarded such other and further relief as the court deems just and equitable, including an award of all of its costs and expenses from the fund. In Count III, Buckeye asserts a "28 U.S.C. §§ 2201, 2202 Declaratory Judgment" claim to resolve a dispute with the Bailey Defendants about availability to them of underinsured/uninsured motorist coverage under the Policy. Five parties filed answers to Buckeye's Amended Complaint: American Zurich on July 31, 2012 (docket no. 34); Valley Forge on August 1, 2012, (docket no. 37); the Moens Defendants on August 16, 2012 (docket no. 42); United Fire on September 21, 2012 (docket no. 56); and the Geisinger Defendants on October 16, 2012 (docket no. 73).[3]

On September 18, 2012, the Geisinger Defendants filed their Cross-Claims (docket no. 49), consisting of a "negligence" claim against the Moens Defendants, in Count I, and a "negligence" claim against Oldenkamp, in Count II. On October 12, 2012, the Moens Defendants filed an Answer (docket no. 72) to the Geisinger Defendants' Cross-Claim. On December 31, 2012, Oldenkamp filed his Answer (docket no. 85) to the Geisinger Defendants' Cross-Claim. On October 11, 2012, the Geisinger Defendants filed a Third-Party Complaint (docket no. 68) asserting a "negligence" claim against Cole Moens, in Count I, and a claim of "vicarious liability" for the negligence of Oldenkamp against GCC Alliance Concrete, Inc. (GCC), which had not been a party to this lawsuit until then. On November 21, 2012, Cole Moens filed his Answer (docket no. 79) to the Geisinger Defendants' Third-Party Complaint, and on December 31, 2012, GCC filed its Answer (docket no. 84).

The various pleadings were not the only activity in this federal interpleader action. On August 27, 2012, the Bailey Defendants filed a Motion For Partial Summary Judgment (docket no. 43), asserting that there were no genuine issues of material fact as to the existence or applicability of the Moens Defendants' liability and the availability to them of underinsured motorist coverage under the Buckeye Policy. On September 20, 2012, Buckeye filed its Resistance To Motion For Summary Judgment And Cross-Motion For Summary Judgment (docket no. 51), asserting that it, not the Bailey Defendants, was entitled to summary judgment that there was no underinsured motorist coverage available to the Bailey Defendants under the Policy. On September 20, 2012, the Moens Defendants also filed a Response (docket no. 54) to the Bailey Defendants' Motion For Partial Summary Judgment. On October 11, 2012, the Bailey Defendants filed their Resistance (docket no. 70) to Buckeye's Cross-Motion For Summary Judgment. On October 22, 2012, Buckeye filed its Reply (docket no. 78) in further support of its motion. On March 25, 2013, I filed a Memorandum Opinion And Order Regarding Cross Motions For Summary Judgment (docket no. 88), published at Buckeye State Mut. Ins. Co. v. Moens, 2013 WL 1196622 (N.D. Iowa March 25, 2013) (slip op.), denying the Bailey Defendants' Motion For Partial Summary Judgment, granting Buckeye's Cross-Motion For Summary Judgment, and, accordingly, holding that the Moens Defendants' underinsured motorist coverage under the Policy is not available to pay Braeden J. Bailey's (BJB's) claim for damages.

On May 9, 2013, the parties filed a Stipulation (docket no. 103) to the dismissal, without prejudice, of the Bailey Defendants' counterclaim against Buckeye seeking recovery of underinsured motorist benefits for any fault that Oldenkamp may have arising from his operation of the truck owned by GCC that was involved in the August 11, 2010, accident. The parties stipulated that such dismissal does not, in any manner, affect the ruling entered on March 25, 2013, which denied the Bailey Defendants' Motion For Partial Summary Judgment and granted Buckeye's Cross-Motion For Summary Judgment.

Before turning to the motion, now before me, to enjoin one related state court action, I will briefly describe both of the related state court actions arising from the August 11, 2010, accident.

2. The Geisinger Defendants' state court action

On July 27, 2012, the Geisinger Defendants filed an action in the Iowa District Court For Buena Vista County (the Geisinger Defendants' State Court Action), asserting claims arising from the August 11, 2010, accident. See Moens Defendants' Motion To Enjoin State Court Proceeding, Exhibit C (docket no. 87-4), second document (Geisinger Defendants' State Court Petition). Thus, the Geisinger Defendants' State Court Action was filed almost two-and-a-half months after they filed their Answer to Buckeye's original federal interpleader Complaint, but before they filed any of their cross-claims or third-party claims in this federal action. In their State Court Petition, the Geisinger Defendants named as defendants the Moens Defendants and Cole Moens, Oldenkamp, and GCC. They asserted the following claims: In Count I, "negligence" claims against Cole Moens and Oldenkamp and "vicarious liability" claims against the Moens Defendants and GCC; in Count II, a "loss of consortium" claim by Lee Geisinger against "the Defendants"; and, in Count III, a "loss of consortium" claim by Alice Geisinger against "the Defendants."

Approximately two-and-a-half months after the Geisinger Defendants filed their Cross-Claims in this federal interpleader action and approximately one-and-a-half months after they filed their Third-Party Complaint in this federal interpleader action, Iowa District Court Judge Carl J. Peterson entered his November 26, 2012, Order On Joint Motion To Stay in the Geisinger Defendants' State Court Action. Moens Defendants' Motion To Enjoin State Court Proceeding, Exhibit A (docket no. 87-2) (Order Staying Geisinger Defendants' State Court Action). That Order concerned a Motion To Stay Proceedings, by all parties to that action, requesting a stay of that proceeding until the resolution of the parties' claims and defenses currently pending in this federal interpleader action. After considering the reasons set out in the motion and the factors in First Midwest Corp. v. Corporate Fin. Assocs., 663 N.W.2d 888 (Iowa 2003), Judge Peterson determined that a stay was proper and in the interest of the parties and justice. Therefore, he granted the parties' joint motion, stayed the Geisinger Defendants' State Court Action as to the parties in that case, and noted that, "[n]otwithstanding applicable federal law, nothing in this Order shall limit a party's right to request a lift of the current stay from this Court." Order Staying Geisinger Defendants' State Court Action at 2.

3. The Boge Estate's state court action

On August 13, 2012, almost a month after the Boge Estate answered Buckeye's original Complaint in this federal interpleader action, the Boge Estate filed an action in the Iowa District Court For Buena Vista County (the Boge Estate's State Court Action), asserting claims arising from the August 11, 2010, accident. See Moens Defendants' Motion To Enjoin State Court Proceeding, Exhibit D (docket no. 87-5), second document (Boge Estate's State Court Petition). The Boge Estate named as defendants GCC, Oldenkamp, the Moens Defendants, Cole Moens, and Progressive Northern Insurance Company (Progressive), which was Gerald Boge's insurer. At that time, GCC was not a party to this federal interpleader action, and Progressive was not yet and has not since become a party to this federal interpleader action. The Boge Estate asserts the following claims in its State Court Petition: in Count I, a "negligence" claim against Oldenkamp and a claim of "vicarious liability" against GCC for Oldenkamp's negligence; in Count II, a "negligence" claim against the Moens

Defendants, individually and as the parents of Cole Moens;[4] and, in Count III, an "underinsured motorist" claim against Progressive.

After all of the various pleadings had been filed in this federal interpleader action, the Moens Defendants filed a motion on December 21, 2012, to stay the Boge Estate's State Court Action, but that motion was resisted by both the Boge Estate and Progressive. The other parties to that action, GCC and Oldenkamp, apparently took no position. On January 22, 2013, Iowa District Judge David A. Lester filed his Order Re: Defendant Moens' Motion To Stay in the Boge Estate's State Court Action. Moens Defendants' Motion To Enjoin State Court Proceeding, Exhibit B (docket no. 87-3) (Order Denying Stay Of The Boge Estate's State Court Action). After considering the factors in First Midwest Corp. v. Corporate Fin. Assocs., 663 N.W.2d 888 (Iowa 2003), as had Judge Peterson in the Geisinger Defendants' State Court Action, and after also noting that a stay "would be contrary to the function a federal interpleader action is intended to serve, " citing State Farm Fire And Casualty Co. v. Tashire, 386 U.S. 523, 533-37 (1967), Judge Lester denied the Moens Defendants' motion in the Boge State Court Action. Order Denying Stay Of The Boge Estate's State Court Action at 2-3.

4. The motion to enjoin state court proceedings

Having failed to obtain a stay of the Boge Estate's State Court Action in state court, the Moens Defendants and Cole Moens filed their March 18, 2012, Motion To Enjoin State Court Proceedings (docket no. 87), which is now before me, in this federal interpleader action. In their Motion, they ask me to enjoin, pursuant to 28 U.S.C. §§ 1335 and 2361, any further prosecution of the Boge Estate's State Court Action until the conclusion of this federal interpleader action. Several parties filed Joinders in the Moens Defendants' and Cole Moens's Motion: the Geisinger Defendants on March 26, 2013 (docket no. 89); the Bailey Defendants on March 28, 2013 (docket no. 90); Valley Forge and American Zurich, separately, on March 29, 2013 (docket nos. 91 and 92, respectively); and Oldenkamp and GCC, jointly, on April 11, 2013 (docket no. 99). On the other hand, on April 8, 2013, the Boge Estate filed its Resistance (docket no. 98) to the Motion, and Wellmark and United Fire have filed no response at all to the Motion. On April 18, 2013, the Moens Defendants and Cole Moens filed a Reply (docket no. 100) in further support of their request to enjoin the Boge Estate's State Court Action.

No party requested oral arguments on the Motion To Enjoin State Court Proceedings in the manner required by applicable local rules, and I have not found oral arguments to be necessary in light of the parties' briefing and the applicable law. Therefore, the Motion is deemed fully submitted on the parties' written submissions.

II. LEGAL ANALYSIS

To put in context the parties' arguments concerning whether or not to stay or enjoin the Boge Estate's State Court Action, I will first examine the purpose and requirements of a federal statutory interpleader action. I will also provide a preliminary overview of the authority of a federal court hearing such an action to stay other related actions.

A. Statutory Interpleader Actions

1. Purpose and provisions

The Eighth Circuit Court of Appeals explained, some time ago, that both statutory interpleader and interpleader pursuant to Rule 22 of the Federal Rules of Civil

Procedure are "designed to protect stakeholders not only from double or plural liability but also from duality or plurality of suits." Dakota Livestock Co. v. Keim, 552 F.2d 1302, 1306 (8th Cir. 1977); accord State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 530 (1967) (explaining that the legislative purpose of the statute is "broadly to remedy the problems posed by multiple claimants to a single fund."). Provisions of the Judiciary Code and Judiciary Act of 1948 establishing statutory interpleader now appear in three statutes, 28 U.S.C. §§ 1335, 1397, and 2361. See Underwriters at Lloyd's v. Nichols, 363 F.2d 357, 360-61 (8th Cir. 1966) (providing a brief history of statutory interpleader). Only the statutory interpleader claim is identified here as the basis for the Moens Defendants' and Cole Moens's Motion To Enjoin State Court Proceedings.

More specifically, the primary federal interpleader statute, § 1335, provides as follows:

(a) The district courts shall have original jurisdiction of any civil action of interpleader or in the nature of interpleader filed by any person, firm, or corporation, association, or society having in his or its custody or possession money or property of the value of $500 or more, or having issued a note, bond, certificate, policy of insurance, or other instrument of value or amount of $500 or more, or providing for the delivery or payment or the loan of money or property of such amount or value, or being under any obligation written or unwritten to the amount of $500 or more, if
(1) Two or more adverse claimants, of diverse citizenship as defined in subsection (a) or (d) of section 1332 of this title, are claiming or may claim to be entitled to such money or property, or to any one or more of the benefits arising by virtue of any note, bond, certificate, policy or other instrument, or arising by virtue of any such obligation; and if (2) the plaintiff has deposited such money or property or has paid the amount of or the loan or other value of such instrument or the amount due under such obligation into the registry of the court, there to abide the judgment of the court, or has given bond payable to the clerk of the court in such amount and with such surety as the court ...

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