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Hartford Life Insurance Co. v. Banks

March 25, 2009

HARTFORD LIFE INSURANCE COMPANY, PLAINTIFF,
v.
MARY BANKS, AN INDIVIDUAL AND TRUSTEE OF THE CLEONA SHORTRIDGE REVOCABLE TRUST; BERYL RAYFORD, AN INDIVIDUAL; UMA ALMAJID, AN INDIVIDUAL; NORTH AMERICAN MERCANTILE, INC., A CORPORATION; SANDBERG, PHOENIX AND VON GONTARD, P.C., A BUSINESS ORGANIZATION; MONNYE GROSS, AN INDIVIDUAL; AND RICHARD WYER, AN INDIVIDUAL, DEFENDANTS.



The opinion of the court was delivered by: Hayes, Judge

ORDER

The matter before the Court is the Motion to Dismiss Counterclaims of Counter-Claimant Umar Abd Almajid and North American Mercantile, Inc. (Doc. # 31) filed by Defendant and Counter-Defendant Sandberg, Phoenix & von Gontart P.C.

Background

A. The Complaint in Interpleader

On July 16, 2008, Plaintiff Hartford Life Insurance Company ("Hartford") initiated this action by filing the Complaint in Interpleader ("Complaint") (Doc. # 1). The Complaint alleges claims for (1) declaratory relief, and (2) interpleader.

(i) Factual Allegations in the Complaint

Union Security Insurance Company ("Union") issued two annuities to Cleona Bailey Shortridge ("Shortridge") as owner and annuitant. The annuities were later assumed by Fortis Benefits Insurance Company and thereafter by Hartford. On August 10, 2000, Hartford received a change in beneficiary designation on the annuities, which designated Defendant Umar Almajid ("Almajid") and Defendant Beryl Rayford ("Rayford") as beneficiaries. On June 11, 2002, Shortridge changed the beneficiaries on the annuities to Defendant North American Mercantile, Inc. ("NAM").

On July 26, 2004, a Petition was filed in the Circuit Court of the City of St. Louis, State of Missouri ("Petition"). The Petition alleged that Shortridge executed a revocable trust, which named Shortridge as grantor and trustee, and Defendant Mary Banks ("Banks") as successor trustee. The Petition alleged that "[t]he Trust allegedly named Cleona Bailey Shortridge's nephew, Umar Almajid, and her niece, Beryl Rayford, each as 50 percent beneficiaries of the Trust." Complaint, ¶ 19. The Petition alleged that a dispute arose between Banks, Rayford, Almajid and NAM regarding the ownership of and/or entitlement to various trust assets, including the annuities.

On December 28, 2005, Defendant Monnye R. Gross ("Gross"), the attorney for Banks and Rayford, forwarded the Petition to counsel for Hartford, and stated that the parties were working toward a settlement. Almajid and NAM were represented in connection with the issues raised by the Petition by attorney Marty Daesch of Defendant law firm Sandberg, Phoenix and Von Gontard ("Sandberg").

A settlement regarding the ownership of the annuities was memorialized in a writing dated July 10, 2007, which contemplated liquidation of one of the annuities. Hartford liquidated the annuity pursuant to the terms of the settlement, but was unable to distribute the proceeds without proper authorization and completion of a form designated for that purpose. Hartford forwarded the form to attorney Daesch, but neither Daesch nor anyone else returned signed forms to Hartford. On February 10, 2008, an attorney for Hartford received an unsolicited communication from Almajid, which gave Hartford good cause to believe that a dispute had arisen between Almajid, NAM, and their counsel, Sandberg. Hartford requested written confirmation from Almajid and NAM that Sandberg still represented them. Hartford advised Daesch that if proper authorization of the settlement was not received by Hartford's counsel by June 9, 2008, that Hartford would initiate an action in interpleader. Hartford did not receive written confirmation from NAM or Almajid that they were still represented by Sandberg. Hartford did not receive proper authorization of the settlement. Hartford's counsel was then advised that NAM, Almajid, Banks and Rayford were willing to release Hartford, Fortis and Union from further liability, but were unwilling to authorize the settlement. A dispute then arose as to whether Hartford should disburse the proceeds of the second annuity "to the Trustee, or to the multiple payees identified in the original settlement agreement." Id., ¶ 36. Based on the foregoing, Hartford filed the Complaint. B. The "Answer-Complaint in Interpleader Counterclaim for Damages"

On November 21, 2008, Almajid, proceeding pro se, filed the "Answer-Complaint in Interpleader Counterclaim for Damages" ("Cross-Claim") (Doc. # 21). The Cross-Claim arises out of an alleged "scheme devised by Defendants Rayford, Banks, Gross, Wier and Sandberg to defraud [Cross-Claimants] and to procure exorbitant profits from [Cross-Claimants] by failure to fully disclose and/or correct material misstatements of fact." Cross-Claim, ¶ 3. The Cross-claim alleges that "[o]n or about October 2000 and continuing through July 2008... Defendants Rayford, Banks, Gross, Wier and Sandberg continuously engaged in wrongful acts." Id., ¶ 4. The Cross-Claim alleges causes of action for (1) civil RICO substance and conspiracy, (2) conspiracy, (3) interference with contractual relationship, (4) fraudulent concealment, and (5) accounting.

(i) Factual Allegations in the Cross-Claim

On or about April 19, 2000, Banks informed Shortridge and Almajid that she was no longer able to or had the desire to be named a principal participant in the Shortridge estate planning documents. Almajid sent Gross a letter memorializing Shortridge's decision. On or about June 20, 2000, Shortridge's wishes were memorialized in estate planning amendments, and were executed and witnessed. Cross-Claim, ¶ 18.

"Defendants in defiant disregard of law have filed or caused to be filed" the lawsuit presently before this Court and in the Superior Court of California. Id., ¶3. "Approximately seventeen days after the demise of Shortridge, Defendants Rayford, Banks, Gross and Wier" filed the Petition, which was "based neither on information and belief nor subject to penalties of perjury. The absence of proper execution strongly suggests that the parties knowingly and willingly filed a frivolous lawsuit and sought to avoid the penalties of perjury." Id., ¶ 24. "Sandberg provided Counter claimants with a draft answer" to the Petition, which alleged fraud. Id., ¶ 26. "Sandberg knew or should have known that allegations of fraud based on information and belief do not satisfy the particularity requirement," and "Sandberg's defense to specious assertions resulted in protracted and expensive discovery of non existent facts." Id. ...


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