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United of Omaha Life Insurance Co. v. Acass Systems, LLC

United States District Court, D. Nebraska

September 16, 2019

UNITED OF OMAHA LIFE INSURANCE COMPANY, Plaintiff,
v.
ACASS SYSTEMS, LLC, et al., Defendants.

          MEMORANDUM AND ORDER

          John M. Gerrard Chief United States District Judge.

         This case presents a collision of federal interpleader, the Bankruptcy Code, and Nebraska common law. The Court has already allowed the interpleading plaintiff to deposit disputed funds with the Court, so the plaintiff wants to be dismissed-but, one of the interpleaded defendants wants to counterclaim against the plaintiff, and another of the interpleaded defendants is in Chapter 7 bankruptcy.

         So, the Court is faced with "who," "what," and "where" questions: who should remain in the case, what claims should be at issue, and in what court should they be adjudicated? For the reasons explained below, the Court concludes that the plaintiff may be dismissed, because the claims against it shouldn't be permitted, and that the remaining claims should be referred to the bankruptcy court.

         BACKGROUND

         Aaron Cass bought a $5 million life insurance policy from United of Omaha in 2015. Filing 1 at 2. The policy insured Aaron's life, and designated his company, ACASS Systems, as the owner and beneficiary of the policy. Filing 1 at 2. Later that year, Aaron executed an assignment naming BizCapital BIDCO 1, LLC as the assignee of the policy. Filing 1 at 2.

         In August 2018, ACASS declared bankruptcy, and its Chapter 11 petition was filed in the U.S. Bankruptcy Court for the District of Nebraska as no. 18-81299.[1] In September 2018, Aaron executed a form purporting to change ownership of the policy from ACASS to himself. Filing 1 at 3. At the same time, he completed a change of beneficiary naming his wife, Colleen Cass, as sole beneficiary. Filing 1 at 3. But a few days later, United notified ACASS it had been "unable to proceed" with those changes. Filing 1 at 3.

         Aaron committed suicide on March 29, 2019. Filing 1 at 3; filing 29 at 4. ACASS (represented by the Bankruptcy Trustee), BizCapital, and Colleen dispute who should receive the proceeds of the policy. Filing 1 at 3. United agrees that someone should receive them, filed this complaint in interpleader pursuant to Fed.R.Civ.P. 22 and 28 U.S.C. § 1335, and has deposited the funds with the Clerk of the Court pursuant to Fed.R.Civ.P. 67. Filing 1 at 3; filing 30. The interpleaded defendants have filed crossclaims against one another. Filing 22; filing 29; filing 31.

         To begin with, the Trustee seeks a declaratory judgment that Colleen and BizCapital have no right to the proceeds. Filing 29 at 6. The Trustee asserts that the purported changes in beneficiary and ownership of the policy were ineffective. See filing 29 at 5. Similarly, the Trustee contends that the purported assignment to BizCapital was ineffective. Filing 29 at 6. And, the Trustee alleges, any change in the beneficiary or ownership of the policy that was accomplished was a fraudulent transfer, avoidable pursuant to 11 U.S.C. § 548. Filing 29 at 6.

         For her part, Colleen denies the Trustee's allegations. Filing 32 at 1. But she does agree with the Trustee (for different reasons) that the purported assignment to BizCapital was ineffective. Filing 32 at 1-2. So, she concludes that the change of beneficiary was effective, entitling her to the insurance proceeds. Filing 31 at 2.

         Finally, BizCapital wants a declaration that it is entitled to the insurance proceeds. Filing 22 at 3. And BizCapital is asking for leave to counterclaim against United, alleging that it relied on correspondence from United in accepting assignment of the life insurance policy as partial collateral for a loan to ACASS. Filing 36 at 5. So, BizCapital seeks damages from United based on the alleged misrepresentations, asserting that if the assignment proves ineffective, it's United's fault BizCapital accepted it and made an unsecured loan. See filing 36. United opposes allowing BizCapital to plead any counterclaims, contending that the proposed counterclaims would be futile. Filing 38.

         The parties also disagree about the appropriate forum to resolve these disputes. Under this Court's rules, proceedings arising under Title 11 of the U.S. Code, or related to a case brought under Title 11, are referred to the bankruptcy court. NEGenR 1.5(a). United, having deposited the insurance proceeds with the Clerk of the Court, doesn't care where the case is resolved: United just wants to go home, and "the remaining parties can determine in what forum they would prefer to litigate the interpleader." Filing 21 at 1. So, United moves to be dismissed from the action. Filing 33. Obviously, BizCapital opposes dismissing United. Filing 39. The Trustee and BizCapital want the pending crossclaims (and nascent counterclaims) referred to bankruptcy court. Filing 25; filing 26. Colleen opposes reference to bankruptcy court. Filing 23.

         DISCUSSION

         Summed up, there are three ...


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