Ohio National Life Assurance Corp. v. Langkau Ex Rel. Estate of Langkau , 353 F. App'x 244 ( 2009 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
NOVEMBER 17, 2009
No. 08-15142 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket No. 06-00290-CV-J-33JRK
OHIO NATIONAL LIFE ASSURANCE CORPORATION,
Plaintiff-Counter Defendant,
versus
CHRISTOPHER LANGKAU,
as Personal Representative of
the Estate of Ralph L. Langkau,
Defendant-Cross Claimant-
Appellee,
ERIK T. CLAY,
Defendant-Counter-
Claimant-Cross
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Middle District of Florida
_________________________
(November 17, 2009)
Before DUBINA, Chief Judge, BLACK and BARKETT, Circuit Judges.
PER CURIAM:
Erik Clay, proceeding pro se, appeals the district court’s orders finding
Christopher Langkau (“Langkau” or “PR of the Estate”), as personal
representative of the estate of Ralph Langkau, entitled to the proceeds of decedent
Ralph Langkau’s life insurance policy and denying Clay’s subsequent motion for
reconsideration.
This appeal arises out of an action in interpleader. Pursuant to a land
transaction, in which Clay purported to transfer property to Ralph Langkau, Ralph
Langkau obtained a life insurance policy from Ohio National Life Assurance
Corporation (“ONLAC”) in the amount of $100,000. On January 26, 2004, Clay
executed a “Mortgage Deed” purporting to convey property subject to a mortgage
to Ralph Langkau, who, in turn, executed a “Mortgage Note,” promising to pay
Clay $120,000 for the property. While the Mortgage Deed is ambiguous, the
parties agree that Ralph Langkau attempted to buy the subject property from Clay.
On the same day, Ralph Langkau executed an amendment to the insurance policy
naming himself as the owner, Clay as the primary beneficiary, and the estate of
Ralph Langkau as the contingent beneficiary of the policy. Ralph Langkau also
collaterally assigned the policy to Clay by executing an “Assignment.” There is
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no dispute that the insurance policy was intended as security for the Mortgage
Note.
After the death of Ralph Langkau, Clay and Langkau in his individual
capacity, filed with ONLAC death claim forms for death benefits on Ralph
Langkau’s life. Accordingly, ONLAC filed an interpleader complaint in the
district court, in which it sought permission to pay the proceeds of the policy into
the court registry and to require the defendants to interplead and settle between
themselves their rights to the insurance proceeds. The district court granted
interpleader and dismissed ONLAC from the suit. Subsequently, Langkau moved
to substitute himself in his capacity as personal representative of Ralph Langkau’s
estate as the real party in interest. The district court granted the motion.
During the litigation, the district court imposed sanctions against Clay for
failure to appear at a first pretrial hearing. After reviewing Clay’s response to its
order to show cause as to why sanctions should not be imposed against him, the
district court found that Clay’s noncompliance was unjustified and ordered Clay,
pursuant to Fed.R.Civ.P. 16(f)(2), to pay the reasonable expenses and attorney’s
fees Langkau had incurred in preparing for and attending the pretrial hearing.
During a second pretrial hearing, the district court ascertained the relevant
law, and the parties agreed that, under Florida law, a life insurance beneficiary
3
must have an insurable interest in the life of the insured at the time the beneficiary
is named. Clay argued that he had an insurable interest in Ralph Langkau’s life by
virtue of his relationship of natural affection with Ralph Langkau and a pecuniary
interest, which arose from the enforceable Mortgage Deed and attached Mortgage
Note.
During the bench trial, Clay testified that after Ralph Langkau had failed to
make a single payment on the Mortgage Note, the two men “decided to dissolve
the mortgage deed and note, to let go of each other’s interests, and cancel the
mortgage deed and note forever.” There is no dispute that, after ONLAC filed the
interpleader complaint, Clay reclaimed the property and gifted it to his aunt.
Noting that Clay had “disregarded the [M]ortgage [D]eed,” reclaimed the land,
and gifted it to his aunt, Langkau argued that the estate was entitled to the
insurance proceeds or the subject property, as it would be inequitable for Clay to
retain both the insurance proceeds and the property.
On August 13, 2008, the district court resolved the merits of the parties’
claims to the interpleaded insurance proceeds in favor of the contingent
beneficiary, Langkau, as the representative of Ralph Langkau’s estate. Adhering
to the parties’ legal stipulation, the court first concluded that Clay did not have a
relationship of natural affection sufficient to give rise to an insurable interest.
4
With respect to Clay’s pecuniary interest, the district court rejected Clay’s claim of
entitlement to the insurance proceeds on the ground that he had no insurable
interest in Ralph Langkau’s life. The court reasoned that the land transaction was
insufficient to give rise to an insurable interest in Ralph Langkau’s life because
the Mortgage Note was unsupported by consideration, and Clay never transferred
title or the land to Ralph Langkau. The court further found that the Mortgage
Deed did not contain a promise to transfer the land to Ralph Langkau. A
disbursement voucher from the clerk of court in the amount of $119,534.12 was
issued to Langkau as PR of the Estate on August 14, 2008.
Clay filed a motion for reconsideration, which the court rejected, noting that
both parties had stipulated that a life insurance beneficiary must have an insurable
interest in the life of the insured.
On appeal, Clay raises numerous issues, which generally encompass (1) the
district court’s disbursement of the insurance proceeds; (2) commencement and
maintenance of the interpleader action; (3) imposition of sanctions against Clay
for failure to appear at the preliminary hearing; (4) merits of the district court’s
order awarding the insurance proceeds to Langkau, as PR of the Estate; (5) alleged
errors committed during the first pretrial hearing and the bench trial by the district
court and counsel for Langkau; (6) Clay’s entitlement to costs, expenses, and
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damages; and (7) the denial of his motion for reconsideration.
As an initial matter, we review pro se pleadings liberally, holding them to a
less stringent standard than those drafted by attorneys. Hughes v. Lott, 350 F.3d
1157, 1160 (11th Cir. 2003). However, courts will not act as de facto counsel for
pro se parties or rewrite a deficient pleading. GJR Investments, Inc. v. County of
Escambia, Fla., 132 F.3d 1359, 1369 (11th Cir. 1998). “[I]ssues not briefed on
appeal by a pro se litigant are deemed abandoned.” Timson v. Sampson, 518 F.3d
870, 874 (11th Cir.), cert. denied, 129 S. Ct. 74 (2008). A party does not
sufficiently raise an issue on appeal when he mentions the issue in his brief
without providing specific argument in support of the issue. See Greenbriar, Ltd.
v. City of Alabaster, 881 F.2d 1570, 1573 n.6 (11th Cir. 1989) (counseled); see
also Lovett v. Ray, 327 F.3d 1181, 1183 (11th Cir. 2003) (holding that an
argument raised for first time in pro se litigant’s reply brief was not properly
before this Court); but see Lorisme v. I.N.S., 129 F.3d 1441, 1444 n.3 (11th Cir.
1997) (determining that a pro se petitioner, who spoke Creole and was illiterate,
did not abandon his petition for review by adopting a member of the Board of
Immigration Appeals’ dissent as his argument).
Further, issues not raised before the district court generally will not be
considered. See S.E.C. v. Diversified Corporate Consulting Group, 378 F.3d
61219, 1227 (11th Cir. 2004); see Fed.R.Civ.P. 46 (“When the ruling or order is
requested or made, a party need only state the action that it wants the court to take
or objects to, along with the grounds for the request or objection.”). However,
“[f]ailing to object does not prejudice a party who had no opportunity to do so
when the ruling or order was made.” Fed.R.Civ.P. 46.
In this case, because jurisdiction is premised on diversity, the procedural
aspects of the case are controlled by federal law, and the substantive aspects of the
case are controlled by Florida law. Hammer v. Slater, 20 F.3d 1137, 1140 (11th
Cir. 1994) (applying Georgia law).
I.
Clay argues for the first time in his reply brief that the district court abused
its discretion in disbursing the insurance proceeds before the time within which to
file a motion for reconsideration or notice of appeal had expired. Because the
question of premature disbursement may render the instant appeal moot, we
address it first.
Rule 62 of the Federal Rules of Civil Procedure imposes a ten-day
automatic stay on the enforcement of judgments. Fed.R.Civ.P. 62(a). This rule
provides an appellant with the opportunity to post a supersedeas bond to obtain a
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stay pending appeal. Fed.R.Civ.P. 62(d) (“If an appeal is taken, the appellant may
obtain a stay by supersedeas bond . . . .”).
An appellant’s rights to property on deposit in the court registry are not
abolished merely because the court has entered judgment and disbursed the
property. See Baltimore & O.R. Co. v. United States, 279 U.S. 781, 786, 49 S. Ct.
492, 493, 73 L. Ed. 954 (1929) (recognizing the “well established” principle that
one has a “right to recover what one has lost by the enforcement of a judgment
subsequently reversed”).
We conclude from the record that this appeal is not rendered moot by the
district court’s disbursement of the proceeds because Clay can recover the
proceeds if the court determines on remand that he is the proper recipient of the
insurance proceeds.
II.
“Interpleader is the means by which an innocent stakeholder, who typically
claims no interest in an asset and does not know the asset’s rightful owner, avoids
multiple liability by asking the court to determine the asset’s rightful owner.” In
re Mandalay Shores Co-op. Hous. Ass’n Inc., 21 F.3d 380, 383 (11th Cir. 1994).
Interpleader action proceeds in two stages. Prudential Ins. Co. of Am. v. Hovis,
553 F.3d 258, 262 (3d Cir. 2009). At the first stage, the court determines whether
8
interpleader is proper and “whether to discharge the stakeholder from further
liability to the claimants.” Id. At the second stage, the court evaluates “the
respective rights of the claimants to the interpleaded funds.” Id.Interpleader is appropriate where the stakeholder may be subject to adverse
claims that could expose it to multiple liability on the same fund.
Fed.R.Civ.P. 22(a)(1). “In an interpleader action, the burden is on the party
seeking interpleader to demonstrate that he is entitled to it,” or more specifically,
“that he has been or may be subjected to adverse claims.” Dunbar v. United
States, 502 F.2d 506, 511 (5th Cir. 1974). When the court decides that
interpleader is available, it may issue an order discharging the stakeholder, if the
stakeholder is disinterested. United States v. High Tech. Prods., Inc., 497 F.3d
637, 641-42 (6th Cir. 2007) (internal quotation marks omitted).
Historically, in order to bring an interpleader action, a plaintiff threatened
with multiple liability on a single fund was required to show that he had incurred
no independent liability to any claimant, such that he was indifferent as between
the claimants. Hayward & Clark v. McDonald, 192 F. 890, 892-93 (5th Cir.
1912). The law of this circuit has not maintained the independent liability
restriction on interpleader explicitly. See Odum v. Penn Mut. Life Ins. Co., 288
F.2d 744, 747-48 (5th Cir. 1961) (assuming, arguendo, the applicability of the
9
independent liability restriction and stating that the effect of an absolute
assignment on the designation of policy beneficiary “as a matter of contract law
will properly be resolved in the part of the interpleading proceeding in which the
claimants themselves vie for the fund in the possession of the court”).
A. Subject Matter Jurisdiction
Clay argues that the district court lacked subject matter jurisdiction over the
interpleader action and that ONLAC failed to satisfy the elements necessary to
demonstrate its right to the interpleader action and should not have been dismissed
from the action. To this end, he argues that (1) diversity did not exist between the
parties; (2) ONLAC was neither disinterested nor a mere stakeholder; and
(3) ONLAC failed to show the non-existence of an independent liability to one of
the claimants.
We review de novo questions of subject matter jurisdiction, including
standing. Elend v. Basham, 471 F.3d 1199, 1204 (11th Cir. 2006). In federal
courts, there are two interpleader remedies: “statutory interpleader under [28
U.S.C. §] 1335 and traditional equitable interpleader governed by Rule 22 [of the
Federal Rules of Civil Procedure].” Lummis v. White, 629 F.2d 397, 400 (5th Cir.
1980), rev’d on other grounds by Cory v. White, 457 U.S. 85, 102 S. Ct. 2325, 72
L. Ed. 2d 694 (1982). The difference is that § 1335 interpleader has more liberal
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procedural rules. Id. Relevant to this appeal, Rule 22 requires complete diversity
between the stakeholder and the claimants. Id. at 400-01. In contrast, § 1335
requires minimal diversity among the claimants, that is, at least one claimant must
be of diverse citizenship from another claimant. State Farm Fire & Cas. Co. v.
Tashire, 386 U.S. 523, 530, 87 S. Ct. 1199, 1203, 18 L. Ed. 2d 270 (1967).
Subject matter jurisdiction premised on diversity of citizenship also requires that
the amount in controversy exceed $75,000. 28 U.S.C. § 1332(a).
Because Clay and Langkau, both Florida claimants, were diverse from
ONLAC, an Ohio corporation, and the amount in controversy exceeded $75,000,
we conclude that the district court had jurisdiction under Rule 22 and 28 U.S.C. §
1332(a)(1) over the interpleader action. Moreover, we conclude that the district
court properly dismissed ONLAC from the interpleader action because ONLAC
(1) was disinterested because it had no interest in the outcome of the dispute
between the claimants, and (2) had no independent liability to either of the
claimants, because it had no obligation apart from payment of the deposited funds.
B. ONLAC’s Breach of its Contractual Duties
Clay argues that ONLAC breached its contractual duties to him by
wrongfully withholding payment of the insurance proceeds, failing to defend his
11
claim to the proceeds, disclosing confidential information to Langkau, and
furnishing death forms to other claimants.
Clay’s arguments are without merit. First, because ONLAC never disputed
its duty to pay the proceeds of the policy and has no obligation to defend the
claims of adverse claimants in an interpleader action, it cannot have breached its
duties by wrongfully withholding payment or failing to defend. Second, because
Clay raised his arguments concerning the disclosure of confidential information
and death forms for the first time in his reply brief, we decline to consider them.
C. ONLAC’s Failure to State a Claim
Clay argues that the interpleader complaint should have been dismissed
because ONLAC failed to state a claim.
We review de novo questions concerning a district court’s ruling on a
motion filed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
Hill v. White, 321 F.3d 1334, 1335 (11th Cir. 2003).
Federal Rule of Civil Procedure 8(a)(2) requires a plaintiff to set forward in
his complaint “a short and plain statement of the claim showing that the pleader is
entitled to relief.” Fed.R.Civ.P. 8(a)(2). “[A] complaint attacked by a Rule
12(b)(6) motion to dismiss does not need detailed factual allegations.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 1964, 167 L. Ed.
122d 929 (2007). However, “a plaintiff’s obligation to provide the grounds of his
entitlement to relief requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.” Id. at 555, 127 S. Ct.
at 1964-65 (internal quotation marks and alteration omitted). “Factual allegations
must be enough to raise a right to relief above the speculative level.” Id. at 555,
127 S. Ct. at 1965. At the pleading stage, Rule 8(a)(2) requires that “the plain
statement possess enough heft to show that the pleader is entitled to relief.” Id. at
557, 127 S. Ct. at 1966 (internal quotation marks and alternation omitted). A
complaint is viewed in the light most favorable to the plaintiff, and the court
accepts as true all of the plaintiff’s well-pleaded facts. Am. United Life Ins. Co. v.
Martinez, 480 F.3d 1043, 1057 (11th Cir. 2007).
Because ONLAC’s factual allegations in its interpleader complaint sufficed
to provide the grounds for its entitlement to interpleader, we conclude that the
district court properly declined to dismiss the interpleader complaint for failure to
state a claim.
D. ONLAC’s Failure to Attach a Reservation-of-Rights Letter to its
Complaint
Clay argues that the interpleader action was improper because ONLAC
failed to attach a reservation-of-rights letter to its complaint.
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Section 627.426(2)(a) of the Florida Statutes precludes a liability insurer
from denying coverage based on a particular coverage defense, unless the liability
insurer provides written notice of reservation of rights to assert a coverage defense
to the named insured. This statute, by its terms, “applies only to a denial of
coverage based on a particular coverage defense.” Almendral v. Sec. Nat’l Ins.
Co., 704 So.2d 728, 730 (Fla. Dist. Ct. App. 1998) (internal quotation marks
omitted).
Because ONLAC has not denied its obligation to pay the proceeds of the
insurance policy, we conclude that the protections afforded by Fla. Stat. §
627.426(2)(a) are inapplicable to the instant case.
E. ONLAC’s Failure to Attach an Affidavit of No Collusion and to
Seek an Expeditious Judicial Determination
Clay argues that the interpleader action was improper because ONLAC
failed to attach an affidavit of no collusion to the complaint and to seek an
expeditious judicial determination. Because we are persuaded that the interpleader
action was commenced in compliance with the Federal Rules of Civil Procedure
and Clay cites no federal authority in support of his arguments, he cannot show
that the interpleader action was improper for these reasons.
F. Langkau’s Answer
14
Clay argues that he was entitled to the insurance proceeds because
Langkau’s answer to the interpleader complaint was deficient because it failed to
state a claim and was untimely filed.
We conclude from the record that Clay was not entitled to insurance
proceeds by virtue of any deficiency in Langkau’s answer because the court’s
inquiry at the first stage of interpleader concerns the propriety of maintaining the
interpleader action, not the respective rights of the claimants to the life insurance
proceeds.
G. Langkau’s Capacity to Maintain the Interpleader Action as PR of
the Estate
Clay argues that, because the estate of Ralph Langkau was not properly
joined as an indispensible party or substituted, Langkau lacked standing and the
interpleader action should have been dismissed. He further argues that his
constitutional rights were violated because the court (1) granted Langkau’s
untimely motion for substitution and (2) failed to provide Clay notice and the right
to be heard before granting the motion to substitute.
The Supreme Court has held that an interpleader action cannot proceed in
the absence of a party who must be joined in accordance with the standard set
forth in Rule 19 of the Federal Rules of Civil Procedure. Republic of Philippines
15
v. Pimentel, ___ U.S. ___, 128 S. Ct. 2180, 2193-94, 171 L. Ed. 2d 131 (2008).
Rule 19(a)(1)(A) provides for the joinder of a person who is subject to service of
process and whose joinder will not destroy subject matter jurisdiction if the
person’s presence is necessary to afford complete relief. Where such a person
cannot be joined, a court must determine whether the action should proceed among
the existing parties or should be dismissed. Fed.R.Civ.P. 19(b). The Federal
Rules of Civil Procedure further provide that “[a]n action must be prosecuted in
the name of the real party in interest.” Fed.R.Civ.P. 17(a)(1). However, an
executor or administrator may sue in his own name “without joining the person for
whose benefit the action is brought.” Fed.R.Civ. P. 17(a)(1)(A) and (B).
Moreover, a court is not authorized to dismiss “an action for failure to prosecute in
the name of the real party in interest until, after an objection, a reasonable time has
been allowed for the real party in interest to ratify, join, or be substituted into the
action.” Fed.R.Civ.P. 17(a)(3). “After ratification, joinder, or substitution” of the
real party in interest, “the action proceeds as if it had been originally commenced
by the real party in interest.” Id. Pursuant to Rule 25, the court may substitute or
join the transferee of an interest upon receipt of a motion so long as the motion is
served in compliance with Fed.R.Civ.P. 4 & 5. Fed.R.Civ.P. 25(c) and (a)(3).
16
Clay’s arguments in this regard are without merit. First, Langkau in his
capacity as PR of the Estate was joined and substituted into the action in
compliance with the Federal Rules of Civil Procedure. Moreover, because Clay
challenged the district court’s failure to provide him with notice and an
opportunity to be heard before granting Langkau’s substitution motion for the first
time in his reply brief, we decline to consider it.
H. Langkau’s Improper Incorporation of Legal and Equitable Claims
In his reply brief, Clay argues that the district court lacked jurisdiction to
grant Langkau legal or equitable relief because he improperly incorporated legal
and equitable claims in his counterclaims against ONLAC and his cross-claims
against Clay. Because Clay raises this argument for the first time in his reply
brief, we decline to consider it.
We conclude that ONLAC properly commenced and maintained the
interpleader action, and that the district court properly exercised subject matter
jurisdiction over the action and the parties involved. Accordingly, we affirm as to
the above-raised issues.
III.
Clay argues that the district court erred in sanctioning him for failure to
appear at the first pretrial hearing because the court (1) did not afford him a right
17
to be heard before imposing sanctions against him, and (2) denied his response to
its order to show cause as to why sanctions should not be imposed based on
hearsay.
We review a district court’s order imposing sanctions for abuse of
discretion. See United States v. Samaniego, 345 F.3d 1280, 1284 (11th Cir. 2003).
Pursuant to Rule 16 of the Federal Rules of Civil Procedure, a district court may
impose sanctions against a party or his attorney for failure to appear at a pretrial
conference or to obey a pretrial order. Fed.R.Civ.P. 16(f)(1)(A) and (C). The
district court must order a party, his attorney or both “to pay the reasonable
expenses . . . incurred because of any noncompliance with [Rule 16], unless the
noncompliance was substantially justified or other circumstances make an award
of expenses unjust.” Fed.R.Civ.P. 16(f)(2). “The district court has broad
discretion [to impose sanctions], and this is especially true when the imposition of
monetary sanctions is involved.” BankAtlantic v. Blythe Eastman Paine Webber,
Inc., 12 F.3d 1045, 1048 (11th Cir. 1994) (internal quotation marks omitted). Pro
se litigants are “subject to sanctions like any other litigant.” Moon v. Newsome,
863 F.2d 835, 837 (11th Cir. 1989).
18
Because the district court afforded Clay an opportunity to be heard and
imposed sanctions based on Clay’s own failure to justify his absence from the first
pretrial hearing, we affirm as to this issue.
IV.
“We review de novo a district court’s interpretation of a state law.”
McMahan v. Toto, 311 F.3d 1077, 1081 (11th Cir. 2002). We “generally accord
deference in diversity cases to a district court’s interpretation of the law of the
state in which it sits.” Davis v. Nat’l Med. Enterprises, Inc., 253 F.3d 1314, 1319
(11th Cir. 2001). “The interpretation of a contract is a question of law subject to
de novo review on appeal.” S.E.C. v. Elliott, 953 F.2d 1560, 1582 (11th Cir.
1992). We review a district court’s findings of fact for clear error. Wexler v.
Anderson, 452 F.3d 1226, 1230 (11th Cir. 2006). Courts interpret contracts
consistent with the intent of the parties. Siegel v. Whitaker, 946 So.2d 1079,
1083-84 (Fla. Dist. Ct. App. 2006).
Pursuant to Florida law, “[a]ny individual of legal capacity may procure or
effect an insurance contract on his or her own life or body for the benefit of any
person. . . .” Fla. Stat § 627.404(1) (2009).1 Florida law further provides that “no
1
It is noteworthy that Fla. Stat. § 627.404(1) is discussed as amended effective July 1,
2008. Compare Fla. Stat. § 627.404(1) (2008) with Fla. Stat. § 627.404(1) (2009). The
amendments were “intended to clarify existing law.” Fla. Stat. § 627.404 (2009), Amendment
19
person shall procure” insurance on the life of another individual “unless the
benefits under [the policy] are payable to . . . any person having, at the time such
contract was made, an insurable interest in the individual insured.” Id. An
insurable interest “arises whenever a potential beneficiary has a cognizable
interest, whether pecuniary or arising from natural affection, in the life of the
insured.” Brockton v. S. Life and Health Ins. Co., 556 So.2d 1138, 1139 (Fla.
Dist. Ct. App. 1989) (internal quotation marks and emphasis omitted). The
requirement that an individual contracting for insurance on the life of another have
an insurable interest in that life is established to prevent “wagering contracts.”
Lopez v. Life Ins. Co. of Am., 406 So.2d 1155, 1158 (Fla. Dist. Ct. App. 1981) (“It
is assumed that the existence of such an insurable interest will counterbalance any
temptation that might otherwise exist for a beneficiary to murder the insured for
insurance proceeds.”).
Neither statutory nor Florida common law appear to preclude a person who
obtains an insurance policy in his own life from naming a beneficiary or assignee
with no insurable interest. See Fla. Stat. § 627.404(1). This is consistent with
another statutory provision that “[a]n individual has an insurable interest in his or
her own life, body, and health.” Fla. Stat. § 627.404(2)(b)(1). However, we have
Notes.
20
discovered no Florida case explicitly holding that one may insure his own life for
the benefit of another having no insurable interest therein.
A. Stipulation of Law
In this case, the district court confined its analysis to the question of
whether Clay had an insurable interest in Ralph Langkau’s life. Notably, the
parties stipulated during the second pretrial hearing that, under Florida law, a life
insurance beneficiary must have an insurable interest in the life of the insured at
the time the beneficiary is named. The parties’ stipulation appears to be in conflict
with the plain language of Florida Statute § 627.404(1).
However, because Clay did not sufficiently challenge the validity of the
stipulation, we may hold him to it. As a general rule, parties are bound by
stipulations made before trial. See G.I.C. Corp., Inc. v. United States, 121 F.3d
1447, 1449-50 (11th Cir. 1997). “Before agreeing to a stipulation, a litigant has a
duty to satisfy himself concerning the matters which his opponent proposes for
stipulation.” Downs v. Am. Employers Ins. Co., 423 F.2d 1160, 1164 (5th Cir.
1970). A court, however, has discretion to disregard issues of law stipulated by
the parties in order to grant a party relief from a stipulation in order to prevent
manifest injustice. See Equitable Life Assurance Soc’y v. MacGill, 551 F.2d 978,
983-84 (5th Cir. 1977).
21
Because Clay has not challenged the validity of the stipulation in his initial
brief, he has abandoned any challenge in this regard, and we will proceed pursuant
to the law on insurable interest as stipulated to by the parties.
B. Standing to Raise Clay’s Lack of an Insurable Interest
In holding the parties to their stipulation, the issue of Langkau’s standing to
raise the want of an insurable interest arises. While Clay argues that the issue of
his lack of an insurable interest was not raised properly because only ONLAC had
standing to raise the issue, because Clay stipulated to the applicable law, we reject
his challenge to his opponent’s standing to raise the legal issue to which he
stipulated.
C. Clay’s Entitlement to the Interpleaded Fund as Beneficiary
1. Relationship of Natural Affection
On appeal, Clay offers no specific argument challenging the district court’s
finding that he did not have an insurable interest in Ralph Langkau’s life based on
their relationship of natural affection. Because Clay does not advance a specific
argument regarding natural affection in either his initial brief or his reply brief, he
has abandoned it, and we decline to consider any argument in this regard.
2. Pecuniary Interest
22
On appeal, Clay argues that he had a pecuniary interest in Ralph Langkau’s
life sufficient to give rise to an insurable interest therein, which arose from
contractual dealings pursuant to their land transaction.
An individual may have an insurable interest in the life of another person if
he “has an expectation of a substantial pecuniary advantage through the continued
life . . . of that other person and consequent substantial pecuniary loss by reason of
the death . . . of that other person.” Fla. Stat. § 627.404(2)(b)(3). Such a benefit
does not arise where there is no present obligation or one certain to arise in the
future. See Flynn v. Prudential Ins. Co. of Am., 223 So.2d 86, 88 (Fla. Dist. Ct.
App. 1969). Moreover, the arrangement giving rise to the pecuniary interest must
be legally valid. See BankAmerica Hous. Services v. Allstate Ins. Co., 771 So.2d
1218, 1220-21 (Fla. Dist. Ct. App. 2000) (discussing insurable interests in
property). It is only necessary that the interest exist “at the time [the life
insurance] contract was made . . . ; [t]he insurable interest need not exist after the
inception date of coverage under the contract.” Fla. Stat. § 627.404(1); see
McMullen v. St. Lucie County Bank, 175 So. 721, 722 (Fla. 1937) (“[I]f the
insurable interest existed at the time the insurance was secured, the fact that such
interest is later cut off or for other reasons ceases to exist is of no consequence.”).
Florida courts have held that “a promissory note given for purchase money,
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in pursuance of the terms of an executory contract for the sale of land, is not
without consideration, because the executory contract itself is a sufficient
consideration for the promise of the purchaser to pay the purchase price . . . .”
Henderson v. Morton, 147 So. 456, 457 (1933); Parker v. Weiss, 404 So.2d 820,
821 (Fla. Dist. Ct. App. 1981) (holding that, in a sale of realty, “the purchaser’s
promise to pay in exchange for the vendors’ executory agreement was sufficient to
form a binding contract”).
Moreover, under Florida law, a deed is not necessary to pass equitable title.
See Martinez v. Kennedy Real Estate of Labelle, Inc., Pension Trust, 565 So.2d
399, 400 (Fla. Dist. Ct. App. 1990). Florida courts have recognized land
transactions similar to the transaction at issue here as contracts for deed. For
instance, in Bowman v. Saltsman, the parties were deemed to have entered into an
agreement for deed where the buyer promised to pay a certain sum for the desired
property and, when all the money was paid, the buyer would receive legal title to
the property. 736 So.2d 144, 145 (Fla. Dist. Ct. App. 1999). Under such an
arrangement, “the buyer immediately receives and holds the equitable title and the
seller holds the bare legal title only as security for the unpaid purchase price.”
White v. Brousseau, 566 So.2d 832, 835 (Fla. Dist. Ct. App. 1990).
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Although the Mortgage Deed is ambiguous, it appears that Ralph
Langkau’s promise to pay as embodied in the Mortgage Note and Clay’s promise
to sell Ralph Langkau land subject to a mortgage in the Mortgage Deed
constituted valid consideration for each other, such that the parties had entered
into a binding contract. Because the parties entered into a valid contract on
January 26, 2004, which was not invalidated by Clay’s failure to deliver the deed
to Ralph Langkau, it appears that Clay had a pecuniary interest in the life of Ralph
Langkau sufficient to give rise to an insurable interest at that time. Accordingly,
we reverse the district court’s order finding Langkau, as personal representative of
the estate of Ralph Langkau, entitled to the proceeds of decedent Ralph Langkau’s
insurance policy and remand to the district court to consider whether and to what
extent Clay’s insurable interest in the life of Ralph Langkau entitles him to the
insurance proceeds as primary beneficiary.
D. Clay’s Entitlement to the Interpleaded Fund as Assignee
On appeal, Clay argues that he was entitled to the insurance proceeds as
assignee of the policy.
Because the district court erred in determining the merits of Clay’s claim to
the proceeds as assignee by adhering to the parties’ stipulation, which had no
application to assignments, we vacate the district court’s order as to this issue and
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remand with instructions to consider Clay’s claim to the proceeds as assignee
without regard to the stipulation concerning the necessity of an insurable interest.
E. Clay’s Entitlement to the Interpleaded Fund as Giftee
On appeal, Clay offers no specific argument showing his entitlement to the
insurance proceeds as giftee of the policy. Therefore, he abandoned this claim,
and we decline to consider any argument in this regard.
V.
On appeal, Clay argues that various errors committed during a pretrial
hearing and the bench trial by the district court and counsel for Langkau violated
his state and federal constitutional rights to due process or resulted in a manifest
injustice.
We review the district court’s adherence to Rule 16 of the Federal Rules of
Civil Procedure for abuse of discretion. Burdis v. Tx. & Pac. Ry. Co., 569 F.2d
320, 323 (5th Cir. 1978). We review “assertions of constitutional error de novo.”
Eagle Hosp. Physicians, LLC v. SRG Consulting, Inc., 561 F.3d 1298, 1303 (11th
Cir. 2009).
Rule 16, which pertains to pretrial procedure, provides that the district court
may order the attorneys and any unrepresented parties to appear for
one or more pretrial conferences for such purposes as:
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(1) expediting disposition of the action;
(2) establishing early and continuing control so that the case will not
be protracted because of lack of management;
(3) discouraging wasteful pretrial activities;
(4) improving the quality of the trial through more thorough
preparation; and
(5) facilitating settlement.
Fed.R.Civ.P. 16(a). To these ends, the district court may “formulat[e] and
simplify[ ] the issues, and eliminat[e] frivolous claims or defenses.”
Fed.R.Civ.P. 16(c)(2)(A).
Because Clay cannot show that he was prejudiced by any alleged error
committed in his absence during the first pretrial hearing, his arguments in this
regard are unavailing. Moreover, we decline to consider the alleged errors Clay
identifies with respect to the bench trial because Clay failed to raise any point of
error during the trial, and, thus, he cannot raise these errors on appeal. See
Fed.R.Civ.P. 46.
VI.
Clay argues that he is entitled to costs, expenses, and damages against
Langkau and ONLAC pursuant to Fla. Stat. § 57.105 and damages against
ONLAC pursuant to Fla. Stat. § 627.428(1). “We review the decision to grant or
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deny attorneys’ fees for an abuse of discretion.” Davis v. Nat’l Med. Enterprises,
Inc., 253 F.3d 1314, 1318-19 (11th Cir. 2001) (reviewing court’s award of
attorney fees under Florida law in diversity suit).
Only a prevailing party is entitled to relief under Fla. Stat. § 57.105(1)
(mandating an award of attorney’s fees to the prevailing party if certain conditions
are met) or Fla. Stat. § 627.428(1) (providing that a prevailing party shall be
entitled to attorney’s fees as against the insurer). Because Clay cannot show that
he is the prevailing party, we conclude that he is not entitled to attorney’s fees,
pursuant to Fla. Stat. §§ 57.105(1) or 627.428(1), at this time.
VII.
Although Clay identifies the motion for reconsideration as a subject of the
instant appeal in his initial brief and adopts his motion for reconsideration in
support of his brief, he articulates no argument concerning why he is entitled to
relief from the district court’s order on the motion. Accordingly, we deem any
argument concerning the district court’s denial of the motion for reconsideration
abandoned.
Conclusion
Based on our review of the record and the parties’ briefs, we hold that
(1) this appeal is not moot; (2) the interpleader action was properly commenced
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and maintained; (3) the district court did not abuse its discretion in imposing
sanctions on Clay; (4) none of the alleged procedural errors warranted reversal;
and (5) no error was shown in the district court’s denial of fees or Clay’s motion
for reconsideration. However, we reverse the district court’s order finding
Langkau, as personal representative of the estate of Ralph Langkau, entitled to the
proceeds of decedent Ralph Langkau’s insurance policy and remand to the district
court for further proceedings to determine whether and to what extent Clay was
entitled to the proceeds as beneficiary or assignee of the policy.
AFFIRMED in part and VACATED and REMANDED in part.
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