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Hartford Life Ins. Co. v. Banks

January 26, 2010

HARTFORD LIFE INS. CO., PLAINTIFF,
v.
MARY BANKS, ET AL., DEFENDANTS.



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

ORDER

The matters before the Court are the Motion to Dismiss Cross-Complaint filed by Defendant Sandberg, Phoenix & Von Gontard ("Sandberg") (Doc. # 54); the Motion for Judgment on the Pleadings filed by Sandberg, Defendant Mary Banks ("Banks"), and Defendant Beryl Rayford ("Rayford") (Doc. # 69); the Motion to Drop Defendant filed by Defendant Umar Almajid ("Almajid") (Doc. # 56); the Ex Parte Motion to Set Status Conference filed by Sandberg (Doc. # 70); and the Ex Parte Motion to Continue Pretrial Dates filed by Sandberg (Doc. # 77).

BACKGROUND

On July 16, 2008, Plaintiff Hartford Life Insurance Company ("Hartford") initiated this action by filing the Complaint in Interpleader ("Complaint") against Sandberg, Banks, Rayford, Almajid, North American Mercantile ("NAM"), Richard Wier ("Wier"), and Monneye Gross ("Gross"). (Doc. # 1). This case concerns a dispute over the inheritance of annuities owned by Cleona Bailey Shortridge ("Shortridge"). The Complaint alleges that Almajid and Rayford, Shortridge's nephew and niece, were named as the beneficiaries of the annuities in a revocable trust executed on August 4, 1997, with Banks as the successor trustee. Compl. at 5. The Complaint alleges that on June 2, 2002, Shortridge changed the beneficiary of the annuities to NAM. Id. at 4.

The Complaint alleges that after Shortridge's death, Banks and Rayford filed a Petition in the Circuit Court of the City of St. Louis, Missouri ("Petition") which disputed ownership of the annuities. Id. at 5. The Complaint alleges Sandberg, a law firm, represented Almajid and NAM in the state court suit. Id. at 5. The Complaint alleges a settlement was memorialized in writing on July 10, 2007. Id. at 6. The Complaint alleges Hartford sent forms allowing the disbursement of funds pursuant to the settlement to Sandberg for Almajid and NAM to complete. Id. at 6. The Complaint alleges the forms were never returned. Id. The Complaint alleges that Almajid sent a letter to Hartford stating that there was a dispute between Almajid, NAM, and Sandberg. Id. at 7. The Complaint alleges Hartford requested confirmation from Almajid and NAM that Sandberg still represented them, but received no response. Id. The Complaint alleges that the dispute over disbursement of proceeds necessitated this interpleader action by Hartford. Id. The Complaint alleges claims for declaratory relief and interpleader. Id.

On September 30, 2008, Sandberg filed an answer. (Doc. # 8). On November 12, 2008, Wier and Gross were dismissed as interpleader defendants. (Doc. # 19). On November 21, 2008, Almajid, proceeding pro se, filed an "Answer-Complaint in Interpleader Counterclaim for Damages" ("Answer and Cross-Claim") on behalf of himself and NAM. (Doc. # 21). The Cross-Claim against Sandberg, Banks, Rayford, Gross, and Wier alleged claims for (1) civil RICO violations, (2) conspiracy, (3) interference with contractual relationship, (4) fraudulent concealment, and (5) accounting. On December 17, 2008, Banks and Rayford's Motion for a 30-day extension of time to file an answer was granted. (Doc. # 26). Neither Banks nor Rayford has filed an answer.

On March 25, 2009, this Court dismissed Almajid's Cross-Claim in its entirety for failure to state a claim. (Doc. # 39). On July 17, 2009, the Court granted Sandberg's Motion for Leave to File Cross-Complaint Against North American Mercantile, Inc. (Doc. # 48). On July 20, 2009, the Court struck the Answer that Almajid filed on behalf of NAM, holding that NAM may not appear pro se because it is a corporation. (Doc. # 48). Also on July 20, 2009, the Court granted Almajid's Motion for Leave to File an Amended Answer and Cross-Complaint. Id. On August 3, 2009, Sandberg filed its Cross-Claim which alleged a single claim for breach of contract against NAM. (Doc. # 49). NAM did not file an answer to Sandberg's Cross-Claim. On August 12, 2009, Almajid filed his amended Answer and Cross-Complaint against Sandberg, Banks, Rayford, Gross, and Wier. (Doc. # 52). The Cross-Claim alleges claims for (1) civil RICO violations, (2) conspiracy, (3) interference with contractual relationship, (4) fraudulent concealment and (5) accounting. Id. at 23-26. On September 1, 2009, Sandberg filed its Motion to Dismiss Cross Complaint. (Doc. # 52). On September 2, 2009, Almajid filed his Motion to Drop Defendant. (Doc. # 56). On September 4, 2009, the Clerk of the Court entered default on Sandberg's Cross-Claim in favor of Sandberg and against NAM. (Doc. # 58). On October 2, 2009, the Clerk of the Court entered Default Judgment on the Cross-Claim in favor of Sandberg and against NAM. (Doc. # 65). On October 8, 2009, Sandberg, Banks, and Rayford filed their Motion for Judgment on the Pleadings. (Doc. # 69). On October 9, 2009, Sandberg filed its Ex Parte Motion to Set Status Conference. (Doc. # 70).

ANALYSIS

I. Sandberg's Motion to Dismiss Cross-Complaint

A. Allegations of the Cross-Claim

Almajid's Cross-Claim arises out of an alleged "complex insurance company fraud scheme that caused substantial losses . . . founded upon a frivolous lawsuit [in Missouri state court] consisting [of] known misrepresentations . . . ." (Doc. # 52 at 3). The Cross-Claim alleges that Sandberg was deficient in its representation of Almajid and NAM and conspired with Rayford and Banks to defraud Almajid and NAM. Id. The Cross-Claim alleges "Rayford and Banks sought to wrongfully procure insurance proceeds managed by Hartford" while "Sandberg sought to procure exorbitant profits from Almajid by failure to file procedural motions to cure Banks and Rayford['s] pleadings deficiencies . . . ." Id. The Cross-Claim alleges "Sandberg recognized the deficiencies in the St. Louis lawsuit from the outset[, but]

[i]nstead of filing pertinent motions in initial stages, Sandberg chose to compound and conceal Rayford and Banks in an apparent effort to justify exorbitant fees." Id. at 4.

The Cross-Claim alleges that "the fraudulent scheme lasted seven years, from 2000 to 2007." Id. at 6. The Cross-Claim alleges that Banks informed Almajid that she no longer wished to be named as the successor trustee to Shortridge's will, and that Almajid and Banks approached Banks's attorneys, Monneye Gross and Richard Wier, to change Shortridge's estate planning documents. Id. The Cross-Claim alleges Gross, Weir, Banks, and Rayford conspired to submit "a series of false reports" to the San Diego County Health and Human Services Department. Id. The Cross-Claim alleges the subsequent investigation revealed "no evidence to substantiate allegations of criminal or tortuous [sic] conduct." Id. The Cross-Claim alleges that Sandberg was aware that the investigation by San Diego County authorities revealed that Almajid had not abused Shortridge, but Sandberg concealed this information from the Missouri state court in order to defraud Almajid and NAM. Id. at 17. The Cross-Claim alleges Sandberg failed to prevent Banks from embezzling $15,000 from the annuity and concealed the embezzlement from the Missouri state court. Id. at 18. The Cross-Claim alleges "Sandberg prepared a settlement agreement that unjustly enriched itself, Banks, and Rayford. Almajid executed the purported settlement under ...


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