Aviva Life & Annuity Co. v. White (In Re Millennium Multiple Employer Welfare Benefit Plan)

FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS November 13, 2014
Elisabeth A. Shumaker
TENTH CIRCUIT Clerk of Court
In re:
Millennium Multiple Employer Welfare
Benefit Plan,
Debtor.
AVIVA LIFE AND ANNUITY
COMPANY, fka Indianapolis Life Nos. 14-6006 and 14-6007
Insurance Company, an Iowa insurance
corporation,
Appellant,
v.
JERALD WHITE, M.D.; CLAUDIA
WHITE; DIOGENES HOLDINGS, INC.,
Appellees.
Appeal from the United States District Court
for the Western District of Oklahoma
(D.C. No. 5:13-CV-00957-F and 5:13-CV-00958-F)
J. Michael Vaughan, Walters Bender Strohbehn &Vaughan, P.C., Kansas City, Missouri
(Joseph A. Friedman, Kane Russell Coleman & Logan, P.C., Dallas, Texas, with him on
the briefs) for the Appellant.
Eric D. Madden, Reid Collins & Tsai, LLP, Dallas, Texas (Brandon V. Lewis, Reid
Collins & Tsai, LLP, and Kiran A. Phansalkar, Conner & Winters, Oklahoma City,
Oklahoma, with him on the briefs) for the Appellee.
Before HOLMES, BACHARACH, and McHUGH, Circuit Judges.
McHUGH, Circuit Judge.
In this consolidated appeal, Aviva Life & Annuity (Aviva) challenges identical
orders of the U.S. District Court for the Western District of Oklahoma sitting in its
capacity as a bankruptcy appellate court. The district court entered the orders in two
directly related cases brought by Aviva in the nature of interpleader pursuant to the
Federal Interpleader Act, 28 U.S.C. §§ 1335, 2361, and Federal Rule of Civil Procedure
22.1 Aviva argues the court erred by limiting the scope of the interpleader relief granted.
Exercising jurisdiction pursuant to 28 U.S.C. § 158(d)(1), we affirm.
1
Aviva filed its request for interpleader relief in two separate adversary
proceedings, Adv. Nos. 10-1153-WV and 11-1038-WV, before the bankruptcy court. The
bankruptcy court considered the adversary proceedings together and entered identical
orders in each. Aviva appealed both orders to the district court, which issued identical
orders resolving the appeals. Aviva’s appeals of the district court’s orders have been
consolidated before this court.
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I. BACKGROUND
This case arises from the Chapter 11 bankruptcy proceedings of the Millennium
Multiple Employer Welfare Benefit Plan (the Millennium Plan).2 Prior to seeking the
protection of the bankruptcy court, the Millennium Plan was an employee welfare benefit
plan providing medical, disability, long term care, severance, and death benefits.
Participants made contributions to the Millennium Plan, which then purchased life
insurance policies (Policies) on the lives of the participants from Aviva and other
insurance companies.
The Millennium Plan used proceeds derived from the Policies to fund its benefit
operations. In the event of the death of an insured participant, the Millennium Plan would
receive the death benefit due under the policy. It would then pay death benefits to the
participant’s heirs in accordance with its obligations under a separate agreement between
the Millennium Plan and the participant (Participation Agreement). The Millennium Plan
was obligated to pay the premiums on the Policies, regardless of whether participants
paid their contributions under the Participation Agreements. Conversely, the Participation
Agreements required the Millennium Plan to provide covered benefits, even if Aviva
denied coverage under the Policies.
2
We recite the facts based on the findings of the bankruptcy court because neither
party has challenged them on appeal. Green v. Johnson, 977 F.2d 1383, 1385 n.2 (10th
Cir. 1992).
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The Millennium Plan held the Policies for the collective benefit of all participants.
It used the benefits paid under the Policies, along with the proceeds of loans taken against
the cash surrender value of the Policies, as the primary source of funds for its various
benefit operations. Thus, the participants were neither the legal owners nor the
beneficiaries of the Policies. Instead, the Policies were owned by the Millennium Plan
and benefits paid under the Policies, as well as the proceeds of loans secured by the
Policies, were pooled for the collective benefit of all participants. In turn, the participants
were entitled to only the benefits provided under the Participation Agreements.
Several groups of participants and employers in multiple states brought lawsuits
against the Millennium Plan, Aviva, and other insurance companies under a variety of
legal theories. The claims asserted in these lawsuits were based on allegations that the
defendants fraudulently induced the participants to enter into the Participation
Agreements. Of importance to this appeal, Jerald White, Claudia White, and Diogenes
Holdings, Inc. (collectively, the Whites) brought suit in Tennessee state court against the
Millennium Plan, Aviva, and other insurance providers for fraud, negligent
misrepresentation, civil conspiracy, violations of the Tennessee Insurance Code,
violations of the Tennessee Consumer Protection Act, accounting malpractice, breach of
fiduciary duty, unjust enrichment, and constructive and resulting trust (the White
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Litigation).3 The Whites alleged agents of Aviva fraudulently induced them to enter into
the Participation Agreements with the Millennium Plan by representing the Participation
Agreements complied with section 419A(f)(6) of the Internal Revenue Code.
Specifically, the Whites claimed Aviva’s agents told them they could invest tax-
deductible amounts in the Millennium Plan and later withdraw their investment tax-free.
As the result of a 2005 Internal Revenue Service (IRS) audit, the Whites discovered the
Participation Agreements did not comply with IRS regulations. The IRS served the
Whites with a Notice of Deficiency, seeking more than $760,000 in taxes and penalties
based on their participation in the Millennium Plan. The White Litigation seeks
compensatory and punitive damages from Aviva, the Millennium Plan, and other
insurers.
Faced with the participant law suits, the Millennium Plan filed a Chapter 11
petition with the bankruptcy court and removed the White Litigation to federal court. As
part of the bankruptcy proceedings, the Millennium Plan’s bankruptcy trustee sued
Aviva, alleging the Policies were property of the bankruptcy estate and Aviva should be
ordered to tender the cash value of the Policies to the bankruptcy court. See 11 U.S.C.
§ 542 (requiring an entity in possession of property belonging to a debtor in bankruptcy
to deliver such property to the bankruptcy trustee). By doing so, the Millennium Plan
exercised ownership over the Policies.
3
All other participants have now settled with Aviva or have defaulted in the
interpleader actions. Accordingly, only the Whites are parties to this appeal.
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In response, Aviva sought interpleader relief before the bankruptcy court and the
U.S. District Court for the Western District of Oklahoma. According to Aviva, it would
be subject to duplicative liability if forced to surrender the cash value of the Policies to
the Millennium Plan’s bankruptcy trustee, while simultaneously facing claims of
ownership over the Policies from the participants. Aviva therefore sought an order
“requiring the [participants] . . . to interplead any and all claims or potential claims they
have asserted or may assert against [the] Policies and against Aviva relating to its
obligations under [the] Policies.” Additionally, Aviva sought “injunctive relief enjoining
the [participants] from initiating or prosecuting any claims or proceedings against Aviva
in any other Court affecting or which may affect those obligations, in order to protect
Aviva from further exposure to potential dual liability and multiple, vexatious litigation.”
Ultimately, the bankruptcy court entered an order granting Aviva leave to deposit
into the court registry the amount of $6,822,331.44, which was the net cash surrender
value of the Policies owned by the Millennium Plan, including the Policies insuring the
Whites. This effectively settled the Millennium Plan’s claims of ownership over the
Policies.
With respect to the participants’ claims against the Millennium Plan, the
bankruptcy trustee distributed the assets of the bankruptcy estate, including the
$6,822,331.44 cash value of the Policies, in accordance with the approved liquidation
plan. Under the plan, the Whites received a distribution in full satisfaction of their claims
against the Millennium Plan and its trustee. The Whites then moved to amend their
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complaint in the White Litigation to dismiss with prejudice the claims against the
Millennium Plan and its trustee which had been resolved in the bankruptcy proceeding. In
addition, the Whites dismissed their claims for constructive trust, unjust enrichment, and
injunctive relief against Aviva. Importantly, the Whites’ First Amended Complaint
declares, “Plaintiffs . . . do not seek to recover the life insurance policies from [Aviva].
Nor do Plaintiffs seek to rescind those insurance policies. Indeed, Plaintiffs expressly
acknowledge that legal and beneficial ownership of the . . . policies rests with the
Millennium Plan.” But the Whites continued to pursue tort claims against Aviva for
common law fraud, negligent misrepresentation, civil conspiracy, insurance fraud under
Tennessee law, violations of the Tennessee Consumer Protection Act of 1977, and breach
of fiduciary duty.
In response, Aviva petitioned the bankruptcy court for a permanent injunction
pursuant to 28 U.S.C. § 2361, enjoining the Whites and other participants from
prosecuting any claims against Aviva that would expose it to dual liability with respect to
its obligations under the Policies. Aviva argued the Whites’ state law tort claims, if
successful, would compel Aviva to disgorge the equivalent of the premiums it had
received for the Policies, even though Aviva had already paid the cash value of the
Policies to the Millennium Plan’s bankruptcy estate.
The bankruptcy court granted Aviva’s petition, in part. It found that interpleader
jurisdiction was appropriate and granted Aviva’s request for an injunction with respect to
any claims of legal or equitable ownership over the Policies. But the bankruptcy court
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denied injunctive relief for any claims for damages in tort flowing from the participants’
reliance on Aviva’s misrepresentations regarding the Millennium Plan because those
claims were beyond the scope of the court’s interpleader jurisdiction. Finally, the
bankruptcy court dismissed Aviva’s interpleader complaint with respect to the White
Litigation because the Whites had voluntarily dismissed with prejudice all claims of
ownership over the Policies.
Aviva appealed the bankruptcy court’s decision to the U.S. District Court for the
Western District of Oklahoma, arguing the bankruptcy court erred by limiting the scope
of its injunction. The district court agreed with the bankruptcy court’s analysis and result.
For the reasons discussed below, we affirm.
II. DISCUSSION
In an appeal from a final decision of a bankruptcy court, “we independently
review the bankruptcy court’s decision, applying the same standard as the [bankruptcy
appellate panel] or district court.” In re Baldwin, 593 F.3d 1155, 1159 (10th Cir. 2010).
In doing so, we treat the bankruptcy appellate panel or district court as a “subordinate
appellate tribunal whose rulings are not entitled to any deference (although they may
certainly be persuasive).” In re Miller, 666 F.3d 1255, 1260 (10th Cir. 2012). A
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bankruptcy court’s legal conclusions are reviewed de novo, while its factual findings are
reviewed for clear error. 4 Id.
On appeal, Aviva does not dispute the bankruptcy court’s conclusion that
interpleader jurisdiction was proper. Nor does it dispute the bankruptcy court’s grant of
an injunction protecting Aviva from any claims of legal or equitable ownership over the
Policies. Instead, Aviva’s challenge on appeal is limited to whether the bankruptcy court
misconstrued our precedent as established in Holcomb v. Aetna Life Insurance Co., 228
F.2d 75 (10th Cir. 1955) (Holcomb I) and Holcomb v. Aetna Life Insurance Co., 255 F.2d
577 (10th Cir. 1958) (Holcomb II), when it limited the scope of its injunction. Before
addressing Aviva’s specific claims on appeal, we briefly discuss the purpose and nature
of the interpleader remedy. We then review our decisions in Holcomb I and II, before
moving to our analysis of Aviva’s particular arguments.
A. Controlling Law
Interpleader is a statutory remedy that offers “a party who fears being exposed to
the vexation of defending multiple claims to a limited fund or property that is under his
control a procedure to settle the controversy and satisfy his obligation in a single
proceeding.” 7 Charles Allen Wright & Arthur R. Miller, Federal Practice and
Procedure § 1704 (3d ed. 2001). The interpleader statute provides that a party may bring
4
The parties dispute the proper standard of review. The Whites argue that we
review the bankruptcy court’s grant or denial of interpleader relief for abuse of discretion.
Because we would affirm under the less-deferential de novo standard advocated by
Aviva, we need not address this argument.
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an interpleader action if the party has in its possession property valued at $500 or more to
which “[t]wo or more adverse claimants, of diverse citizenship . . . are claiming or may
claim” ownership. 28 U.S.C. § 1335. The statute requires the interpleader plaintiff to
deposit the disputed property into the registry of the court or post a bond with the court.
Id. The claims to the asset need “not have a common origin” nor be identical. Id. Instead,
the statute requires that the claims to the disputed fund be “adverse to and independent of
one another.” Id. Thus, the key statutory requirements of interpleader jurisdiction are: (1)
an identifiable stake, or res, valued at $500 or more5; (2) against which adverse claims
are brought.
If those requirements are met, interpleader jurisdiction is proper and federal courts
are empowered to enjoin claimants from “instituting or prosecuting any proceeding in
any State or United States court affecting the property . . . involved in the interpleader
action.” 28 U.S.C. § 2361. The court may then discharge the interpleader plaintiff of any
further liability and make the injunction permanent, thereby allowing the interpleader
plaintiff to withdraw and leaving the interpleader defendants to prosecute their competing
claims to the disputed property among themselves. See id. Thus, interpleader suits are
focused on adverse claims to a single, identifiable stake, or res, that is under the control
of the interpleader plaintiff and can be delivered to the registry of the court. See State
Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 530 (1967) (recognizing that the
5
There is no dispute that the value of the Policies exceeds $500 and we do not
discuss this requirement of the Interpleader statute further.
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legislative purpose of interpleader is “to remedy the problems posed by multiple
claimants to a single fund”). The court’s power to grant an injunction under the
Interpleader statute is limited to enjoining adverse claims to the identified stake. Id. at
533–36 (“In this situation, the fund itself is the target of the claimants. It marks the outer
limits of the controversy.”).
Importantly, the interpleader remedy is not designed to consolidate all claims
arising out of a single transaction or occurrence into one action. To the contrary, the
Supreme Court has expressly rejected the notion that interpleader functions as “an all-
purpose bill of peace.” Id. at 534–36 (internal quotation marks omitted). In Tashire, a
Greyhound bus collided with a pickup truck in California. Id. at 525. Four passengers
injured in the collision brought suit against Greyhound, the bus driver, the truck driver,
and the owner of the truck. Id. The truck driver was insured by State Farm under a policy
with injury liability up to $10,000 per person and $20,000 per incident. Id. at 526. State
Farm brought an interpleader action against the passengers, Greyhound, the bus driver,
and the truck owner, arguing the aggregate damages far exceeded the $20,000 policy
limit. Id. It sought an injunction requiring all parties to bring their claims against the
truck driver in a single proceeding. Id. Greyhound moved to broaden the injunction to
require that all claims related to the accident be prosecuted in the interpleader proceeding.
Id. at 527. The district court granted Greyhound’s requested injunction. Id. at 527–28. On
appeal, the Supreme Court reversed. The Court upheld the original scope of the
injunction because “State Farm’s interest in [the] case, which [was] the fulcrum of the
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interpleader procedure, [was] confined to its $20,000 fund.” Id. at 535. But it concluded
the district court exceeded the powers granted by the interpleader statute when it also
attempted to control claims against Greyhound. Id. The Court admonished against
attempting to use the interpleader remedy “to solve all the vexing problems of multiparty
litigation.” Id. at 535. And it instructed that, outside of adverse claims to the identifiable
asset, plaintiffs are allowed to resolve their claims in the forum of their choice, subject to
normal jurisdiction and venue rules. Id. at 536.
The decisions of this circuit have similarly affirmed interpleader’s focus on
adverse claims to an identifiable asset. For example, in General Atomic Power Co. v.
Duke Power Co., we emphasized that the “mission of [the interpleader] statute is to
administer a limited amount of property and conflicting claims . . . to that property.” 553
F.2d 53, 57 (10th Cir. 1977). Similarly, in Knoll v. Socony Mobil Oil Co., we reversed the
district court’s injunction enjoining further claims against the interpleader plaintiff
outside of the interpleader action, stating, “In an interpleader action, . . . jurisdiction
extends only to the fund deposited with the court.” 369 F.2d 425, 429 (10th Cir. 1966),
overruled on other grounds by Liberty Nat’l Bank & Trust Co. of Okla. v. Acme Tool Div.
of the Rucker Co., 540 F.2d 1375 (10th Cir. 1976); see also N. Nat. Gas Co. v. Grounds,
292 F. Supp. 619, 640 (D. Kan. 1968), aff’d in part, rev’d in part on other grounds, 441
F.2d 704 (10th Cir. 1971) (“In interpleader actions, . . . the subject matter of the action is
not a set of facts, a transaction or occurrence which gives rise to the litigation, but a
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specific identified fund or property. Claims must not only relate to that property, but be
asserted against it . . . .” (internal quotation marks omitted) (emphasis added)).
Despite Aviva’s urging, we do not read our decisions in Holcomb I and II as
holding to the contrary. In Holcomb I, Aetna Life Insurance Company (Aetna) brought an
action in interpleader identifying the res as an annuity insurance policy purchased by
Rosa Rettenmeyer. Holcomb I, 228 F.2d at 77–78. Following Ms. Rettenmeyer’s death, a
group of individuals (the Conversion Claimants) intervened in the ensuing probate
proceedings and challenged the validity of the annuity. Id. at 78. The Conversion
Claimants had filed state court actions, alleging Aetna had wrongfully converted
government bonds owned by Ms. Rettenmeyer, and seeking the return of the bond
proceeds for the benefit of Ms. Rettenmeyer’s estate. Id. However, Ms. Rettenmeyer had
used the proceeds from the bonds to pay the premium on the annuity policy. Id. Aetna’s
interpleader complaint identified a second group of individuals (the Annuity Claimants)
who, as beneficiaries of the annuity policy, were asserting or might assert a right to
receive monthly payments under that policy. Id. In effect, the Conversion Claimants
sought the return of the premium paid to Aetna to purchase the annuity policy, while the
Annuity Claimants wanted the annuity contract honored and the benefits under it paid.
Aetna sought interpleader relief on the ground it would be subject to multiple liabilities
on the same obligation in the event both the Conversion Claimants and the Annuity
Claimants prevailed on their claims. Id. The district court exercised interpleader
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jurisdiction and enjoined the state conversion proceedings and any other potential actions
relating to the annuity contract. Id. at 78–79.
The Conversion Claimants appealed, arguing the district court exceeded its
interpleader jurisdiction by enjoining the conversion actions for two reasons. First, they
argued there could be “no identity of property, instrument, or obligation” where the state
conversion actions made no reference to the annuity contract or the premium paid for it.
Id. at 80. That is, the Conversion Claimants argued their conversion action did not target
the interpleaded asset—the annuity. Second, the Conversion Claimants argued the
“outcome of the cases in the state courts and the obligation of Aetna under the contract of
insurance [were] wholly unrelated matters”—i.e., the conversion action and any claim for
benefits under the annuity were not adverse. Id. We disagreed. Focusing on the substance
of the claims, this court explained, “If Aetna is under only a single liability, the claim
asserted against it in the state courts and the claim of the annuitants for payment or
continued payment of specified sums under the terms of the contract of insurance
necessarily in contemplation of law negate each other and are adverse each to the other.”
Id. at 81. In effect, this court held that the competing claims were necessarily adverse and
mutually exclusive claims to the same asset. Accordingly, we affirmed the district court’s
exercise of interpleader jurisdiction and its order enjoining the state conversion actions.
Holcomb II is a companion case to Holcomb I in which Aetna asserted the same
basis for interpleader with respect to an endowment contract also purchased with the
proceeds of the government bonds alleged to have been wrongfully converted. Holcomb
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II, 255 F.2d at 579. At the pre-trial conference in the district court, the Conversion
Claimants expressly disavowed any claim relative to Aetna’s obligations to the
beneficiaries under the endowment contract and argued this concession eliminated any
conflict between their conversion action and claims for benefits under the endowment
policy. See id. at 577. Nevertheless, the district court granted interpleader relief and
enjoined the conversion action and any claims arising under the endowment contract. Id.
Again focusing on the substance of the legal claims, this court upheld the district court’s
conclusion that the conversion action was an attack on the validity of the endowment
contract, explaining that if “the consideration [for the endowment contract] was
wrongfully obtained, there was no meeting of the minds, [and] the contract fails.” Id. at
582. Despite the Conversion Claimants’ attempt to artfully plead their claim to disavow
an interest in the endowment policy, and thus avoid interpleader, our focus remained on
the substance of the legal claims and whether those claims were necessarily adverse and
mutually exclusive.
Thus, our decisions in Holcomb I and II are consistent with the fundamental
principles we have previously identified as framing the interpleader analysis. In an action
in interpleader, the court must first determine whether a single, identifiable stake is
present. The court must then determine whether there are two or more adverse claims to
that stake, focusing on the substance of the legal claims asserted. If these two elements
are present, then interpleader jurisdiction is proper and the stake constitutes the outer
limits of that jurisdiction. The court may enjoin all other suits claiming an interest in the
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stake, but lacks jurisdiction to enjoin other claims between the claimants and the
stakeholder, even if they arise from the same transaction or occurrence.
B. Application of the Law to Aviva’s Claims on Appeal
As discussed, the bankruptcy court granted Aviva an injunction barring the
participants from asserting legal or equitable ownership interests in the Policies, but
denied injunctive relief as to claims Aviva asserts would subject it to liability for the
“equivalent of the premiums received for the Policies.”6 Aviva argues this was error
because interpleader is “‘the proper forum for the determination of the various issues
interwoven through the claims’ in contract on certain insurance contracts and adverse tort
claims seeking ‘funds constituting the equivalent of the premium payments received by
[the insurer].’” Appellant’s Op. Br. at 24 (quoting Holcomb II, 255 F.2d at 578-79).
Aviva’s argument is unavailing for two reasons: (1) the Whites’ remaining tort claims do
not assert an interest in the Policies; and (2) the Whites’ remaining tort claims are not
adverse to the Millennium Plan’s claim to the Policies.
6
Aviva contends the Holcomb decisions stand for the proposition that interpleader
is appropriate whenever a party seeks damages “equivalent” to the premiums paid on a
policy under which another party claims benefits. As noted by the bankruptcy court, our
decision in Holcomb II uses the phrase “funds constituting the equivalent of the premium
payments received” only in reiterating Aetna’s claims in its interpleader motion. 255 F.2d
577, 579 (10th Cir. 1958). The holding of Holcomb II is consistent with the requirements
of interpleader we have identified: (1) a single, identifiable stake valued at $500 or more;
and (2) two or more adverse claims to that stake.
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1. The tort claims do not implicate a single, identifiable stake.
The Whites’ remaining tort claims do not assert an ownership interest in the
interpleaded Policies or the premiums used to purchase those Policies. Aviva’s argument
to the contrary is a thinly-veiled attempt to cap its potential liability at the amount of the
premium payments it received from the Millennium Plan for the Policies insuring the
Whites. As the bankruptcy court recognized, the Whites’ remaining tort claims seek
general tort damages for Aviva’s role in fraudulently inducing them to enter into the
Participation Agreements with the Millennium Plan and are not limited by the value of or
consideration paid for the Policies entered into between the Millennium Plan and Aviva.
For example, if the Whites are successful on their fraudulent inducement claim,
they will have the right to recover any damages flowing from the Participation
Agreements. These tort damages may include amounts the Whites paid in contributions
to the Millennium Plan, the amount of any increased tax liability or penalties, and any
other damages incurred in reliance on the fraudulent misrepresentations. And the Whites
are free to collect any damages awarded on their remaining tort claims from Aviva’s
general funds. 7 Although the Whites’ damages may, in part, be composed of their
contributions to the Millennium Plan, nothing limits their total damages to the amount of
7
See Lee v. W. Coast Life Ins. Co., 688 F.3d 1004, 1014 (9th Cir. 2012) (holding
that a claimant may seek to recover from a stakeholder’s general funds “all damages
directly and proximately caused” by a negligent stakeholder’s actions).
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those contributions or limits the source of recovery of their damages to the cash value of
the Policies.8
In our Holcomb decisions, the Conversion Claimants identified a specific stake—
the proceeds of the government bonds that had been paid as consideration for the
policies—and asserted an ownership interest in it. Here, the Whites do not assert an
interest in any specific property, and they have specifically renounced any claim to the
Policies or the premiums paid by the Millennium Plan to Aviva. And unlike the
Conversion Claimants in Holcomb II, the Whites’ renunciation is not specious because
the success of their tort claims will not “necessarily in contemplation of law negate” the
Millennium Plan’s ownership interest in the Polices. See Holcomb I, 228 F.2d at 81.
Unlike the conversion claims in Holcomb, which targeted the proceeds from the bonds
used to pay the policy premiums, the Whites’ remaining tort claims do not implicate the
interpleader asset.
Interpleader “may not be used by the stakeholder as a weapon to defeat recovery
from funds other than the one before the court.” Great Am. Ins. Co. v. Bank of Bellevue,
366 F.2d 289, 294 (8th Cir. 1966). The bankruptcy court therefore correctly denied
interpleader relief with respect to those claims.
8
The Whites may be required to offset any award of damages they receive from Aviva by
the amount they received from the liquidation of the Millennium Plan’s assets, depending
on which of their claims are ultimately successful.
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2. The Tort Claims are not Adverse to the Millennium Plan’s ownership of the
Policies.
Another reason why interpleader jurisdiction does not extend to the Whites’
remaining tort claims is that they are not adverse to the Millennium Plan’s claim to the
Policies. As discussed, the Millennium Plan purchased the Policies from Aviva and is the
sole owner of them. Accordingly, the Policies were an asset of the Millennium Plan’s
bankruptcy estate and Aviva properly paid the face value of the Policies to the
bankruptcy trustee. Accordingly, we agree with Aviva that a claim seeking to rescind the
Policies and to recover the premiums—of the type asserted in each of the Holcomb
decisions—would be adverse to the Millennium Plan’s claim. But the Whites’ remaining
tort claims do not seek to rescind the Policies, to recover the premiums the Millennium
Plan paid for those Policies, or to recover any benefits under the Policies. In fact, the
Whites assert no interest in the Policies or in the funds the Millennium Plan used to
purchase them.
As the bankruptcy court found, the Millennium Plan’s obligations to the
participants under the Participation Agreements are distinct from Aviva’s obligations to
the Millennium Plan under the Policies. Thus, even if the Whites are successful on their
claim that Aviva fraudulently induced them to enter into the Participation Agreements, it
will not affect the Policies. Unlike the competing claims in Holcomb I and Holcomb II,
the Whites’ remaining tort claims are not mutually exclusive to the Millennium Plan’s
claim of ownership over the Policies because those claims do not challenge the validity of
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the Policies. See Holcomb I, 228 F.2d at 81. Because the Whites’ claims are not adverse
to the Millennium Plan’s claim to the value of the Policies, interpleader jurisdiction is not
proper.
III. CONCLUSION
In summary, interpleader relief does not permit Aviva to shield itself from its tort
liability related to the separate Participation Agreements or to limit its total liability in
tort to the value of the Polices. The key elements of interpleader—a single, identifiable
asset and adverse claims to that asset—are not present in the Whites’ remaining tort
claims. We therefore hold the bankruptcy court and the district court, sitting in its
capacity as a bankruptcy appellate court, correctly limited Aviva’s interpleader remedy to
allow the participants to pursue their state tort claims.
For the reasons stated above, we AFFIRM the decision of the district court.
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