United States District Court, D. New Jersey
MEMORANDUM OPINION AND ORDER
N. QURAISHI, UNITED STATES MAGISTRATE JUDGE.
matter comes before the Court upon Defendants Cari Lawless
and William Lawless's Joint Motion to Stay the
Proceedings Pending Resolution of the State Court Matters
and/or to Decline Jurisdiction ("Motion to Stay").
(See Notice of Mot. to Stay, ECF No. 21.) Thomas
Lawless and Cari Lawless's two minor children ("the
children") join that Motion. (T.L. and R.L.'s Sept.
20, 2019, Letter ("TRL") 1, ECF No. 27.) Dena
Lawless opposes a stay of these proceedings, (Mem. in
Opp'n to Mot. to Stay, ECF No. 30), and Metropolitan Life
Insurance Company ("MetLife") opposes a stay while
it remains a party to the action, (MetLife's Sept. 20,
2019, Letter ("MLL") 1-2, ECF No. 29).
parties' initial briefing focused on the exceptional
circumstances standard derived from Colorado River Water
Conserv. Dist. v. United States, 424 U.S. 800, 817
(1976). In light of NYLife Distributors, Inc. v.
Adherence Grp., Inc., 72 F.3d 371, 374 (3d Cir. 1995),
in which the Third Circuit "h[e]ld the discretionary
standard enunciated in Brillhart [v. Excess
Insurance Company of America, 316 U.S. 491 (1942), ]
governs a district court's decision to dismiss an action
commenced under the interpleader statute during the pendency
of parallel state court proceedings," the Court
requested the parties provide supplemental briefing on
whether the Colorado River or Brillhart
standard applies. (Text Order, ECF No. 35.) Cari and
William submitted a joint supplemental brief
advancing the Brillhart standard, (Supp. Br. in
Support of Mot. 2, ECF No. 36), which the children joined,
(T.L. and R.L.'s Nov. 4, 2019, Letter 1, ECF No. 38). And
Dena submitted a supplemental brief contending the
Colorado River standard is more appropriate, but
also providing the Court with an analysis under the
Brillhart standard. (Supp. Mem. in Opp'n to Stay
3-4, ECF No. 37.) For the reasons set forth below, the Court
finds the Brillhart standard applies and that it is
inappropriate, at this stage of the proceedings, to stay the
case and deprive MetLife of access to expeditious
interpleader relief as provided for by Congress when it
enacted 28 U.S.C. § 1335. The Motion to Stay shall be
denied without prejudice.
ALLEGATIONS AND PROCEDURAL HISTORY
Lawless ("the Decedent") died on March 5, 2019,
causing three life insurance plans to become payable to their
identified beneficiaries. (MetLife's Am. Compl.
¶¶ 30-31, ECF No. 4.) Each life insurance plan was
maintained by one of the Decedent's former employers,
PricewaterhouseCoopers LLP ("PwC"), KPMG LLP, and
Ernst & Young LLP ("E&Y"). (Id.
¶¶ 9, 14, 22.) The KPMG and PwC plans are
purportedly governed by the Employee Retirement Income
Security Act ("ERISA"). (Id. ¶¶
16, 24; Mem. in Support of Mot. to Stay 2, ECF No. 21-1.) On
June 7, 2018, the designated beneficiary of each plan was
changed to Dena, the Decedent's wife. (MetLife's Am.
Compl. ¶¶ 2, 12, 20, 28.) Before that, the
beneficiary of the PwC plan was William, the Decedent's
brother; the beneficiary of the KPMG plan was Cari, the
Decedent's ex-wife, and the children as contingent
beneficiaries; and the beneficiaries of the E&Y plan were
Cari (14%) and the two children (each 43%). (Id.
¶¶ 3-6, 13, 21, 29.) MetLife is the administrator
of each policy. (Id. ¶¶ 39-40.) Cari
notified MetLife that she was declaring herself a rival
beneficiary due to a marital settlement agreement
("MSA") she had with the Decedent that provided he
would maintain two life insurance policies, one benefiting
her and another benefiting the children. (Id.
¶¶ 34-36.) Cari filed a caveat, (Mem. in Support of
Mot. to Stay 7), and on April 10, 2019, Dena filed a
complaint in the Superior Court of New Jersey, Chancery
Division, Probate Part, seeking to have herself declared an
omitted spouse and seeking to be appointed administratrix of
the Decedent's estate (herein the "Probate
Action"), (Mot. to Stay Ex. A 1, ECF No. 22). MetLife
filed this interpleader action, naming Dena, Cari, William,
and the children as defendants, in this Court on June 13,
2019, stating it was ready and willing to pay out the
benefits under the three plans and asking the Court to allow
it to deposit the funds into the Registry of the Court and to
determine whom should receive the benefits under the plans.
(Compl. ¶¶ 39-41, ECF No. 1; accord Am.
August 14, 2019, the children filed an answer and
counterclaim in the Probate Action through their guardian ad
litem; through their counterclaim, the children challenge
various transfers of the Decedent's funds, including both
the reassignment of benefits and certain inter vivos
gifts, allegedly caused by Dena's undue influence. (Mot.
to Stay Ex. B 15, 16-17, ECF No. 21-4.) The same day, Cari
moved in her divorce action against the Decedent before the
New Jersey Superior Court, Chancery Division, Family Part,
seeking to join the Decedent's estate and Dena to (1)
recover unreimbursed costs the Decedent owed for expenses
incurred by the children, (2) discover all documents
concerning the death benefit paid (or to be paid) to Dena
under the KPMG plan, (3) recover her marital coverture
fraction of the death benefits of the KPMG plan, (4) have the
court find the Decedent violated the MSA, and (5) recover the
life insurance benefit due under the MSA (herein the
"Family Action"). (Mot. to Stay Ex. D 1-3, ECF No.
21-6.) On September 2, 2019, William filed a third-party
complaint in the Probate Action challenging the
Decedent's assignment of Dena as the beneficiary of the
PwC plan. (Mot. to Stay Ex. C 1, 7-8, ECF No. 21-5.)
and William now move "for an Order staying these
proceedings pending resolution of the pending state court
matters and/or to decline jurisdiction." (Notice of Mot.
to Stay.) The children join that motion. (TRL 1.) MetLife
expressed no opinion about where the claims should be heard,
but opposes the stay while it is still a party to the action.
(MLL 1-2, ECF No. 29.) Dena opposes a stay. (Mem. in
Opp'n to Mot. to Stay, ECF No. 30.)
Cari and William's Arguments in Support of a
and William argue that, even accepting that the MSA is
preempted by ERISA, Cari "is still able to pursue her
claim for a constructive trust in the Family Part action upon
joinder of Dena," and the children "are permitted
to assert their claims of undue influence and lack of
capacity irrespective of the federal preemption
defense." (Mem. in Support of Mot. to Stay 13.) Cari and
William assert that the preemption claim is a "red
herring." (Id. at 20.) They contend that Dena
"will seek to assert the preemption argument to dismiss
any claim of right that Cari  asserts .... At that point,
the Court will be left with state law claims of constructive
trust, estoppel, undue influence and lack of capacity."
(Id. at 21.) Cari and William submit that
"[d]eclining jurisdiction . . . would best serve the
state courts' interests in comity and would be consistent
with longstanding practice of judicial restraint by federal
courts as to matters of state law." (Id.
(citing Carnegie-Mellon Univ. v. Cohill, 484 U.S.
343, 357 (1988)).)
and William also argue a stay should be granted because
William's state court claim arises under the PwC plan,
which is not governed by ERISA, and the children's claim
seeks to void various inter vivos transfers
unrelated to the ERISA-governed plans. (Id. at 18.)
They contend the actions are parallel and a stay of these
proceedings is necessary to avoid piecemeal litigation.
(Id. at 19 (citing Moses H. Cone Mem'I Hosp.
v. Mercury Constr. Co., 460 U.S. 1, 16 (1983)).) They
add that "there is a general principal [sic] that
duplicative litigation in the federal court system is to be
avoided based on 'considerations of "wise judicial
resources and comprehensive disposition of
litigation'"" (Id. at 20 (quoting
Colorado River Water Conserv. Dist., 424 U.S. at
The Children's Arguments
their letter joining the Motion to Stay, the children
emphasize the factors outlined in Akishev v.
Kapustin, 23 F.Supp.3d 440, 446 (D.N.J. 2014) ("(1)
whether a stay would unduly prejudice or present a clear
tactical disadvantage to the non-moving party; (2) whether
denial of the stay would create a clear case of hardship or
inequity for the moving party; (3) whether a stay would
simplify the issues and the trial of the case; and (4)
whether discovery is complete and/or a trial date has been
set.") (quotation marks, citations, and alterations
omitted)). (TRL 1.) Beginning with factors two and three, the
children claim that
[i]f the Federal matter is not stayed, [they] will have no
choice but to litigate, parallel cases, in both Federal and
State Courts which will further deplete the probate assets .
. . creating a clear case of hardship, result in inequity for
[them], complicate the issues in the case, unduly prejudice
[them] and result in duplication of efforts and useless
attorneys fees and costs.
(Id. at 2.) With respect to factor one, they contend
MetLife will not be prejudiced by the stay because it is the
parties' intention to relieve it from the case, and Dena
will not be prejudiced because she will avoid duplicative
attorney's fees and costs. (Id.) Lastly, with
respect to factor four, the children highlight that a
discovery schedule had been set in the Probate Action,
whereas this case is nascent. (Id.)
asserts no preference as to where the action is litigated
once [it] is no longer a party, however, it [submits] that
the action should remain in federal court until [it] is
provided interpleader relief. . . ." (MLL 1.) According
to MetLife, all parties agree that it has no interest in the
plans, and the parties have engaged in discussions to relieve
it from the lawsuit. (Id. at 1-2.) Specifically,
MetLife states that it offered to put the money into an
escrow account if all parties agreed on the account.
(Id. at 2.) Cari, William, and the children agreed,
but Dena "doesn't believe that interpleader relief
is available under the law if the money is not deposited or a
bond is not first posted." (Id.) MetLife
disagrees and, due to that issue, the consent order providing
it with interpleader relief remains contested by the parties
and has yet to be submitted to the Court. (Id.)