NY Life Ins v. Shelton

Case: 21-11037 Document: 00516249464 Page: 1 Date Filed: 03/22/2022
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
March 22, 2022
No. 21-11037
Lyle W. Cayce
Summary Calendar Clerk
New York Life Insurance and Annuity Corporation,
Plaintiff—Appellee,
versus
Bob Shelton, as Trustee of Barbara Jean Brown Living
Trust DTD 5/29/2018,
Defendant—Appellant.
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 4:21-CV-490
Before Davis, Jones, and Elrod, Circuit Judges.
Per Curiam:*
In this concursive proceeding filed by New York Life Insurance and
Annuity Corporation (“NYLIAC”), the court overruled the defendant, Bob
Shelton’s objection to the concursive proceeding, and denied the
*
Pursuant to 5th Circuit Rule 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5th Circuit Rule 47.5.4.
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No. 21-11037
defendant’s motion to file a counterclaim for penalties and attorneys’ fees
and awarded attorneys’ fees of $5,000 to plaintiff against Shelton. We affirm.
I.
Plaintiff, NYLIAC, filed this concursive proceeding to determine the
party to whom it owed the proceeds of two annuity policies on the life of
Barbara Jane Brown. The policies named two trustees as beneficiaries: the
first named “Barbara Brown Family Trust” and was dated March 10, 2010;
the second trust was dated September 30, 2010 and was styled, “The Barbara
Jane Brown Living Trust.”
The insured, Barbara Jane Brown, died in 2018. Defendant, Bob
Shelton, as trustee of a third trust, “The Barbara Jean Living Trust” dated
May 29, 2018 (“the 2018 trust”) asserted a claim to the death benefits. He
represented that the 2018 trust under which he claimed was the only trust in
existence and that it superseded all other trusts.
NYLIAC made repeated efforts to obtain from Shelton a copy of the
May 29, 2018 trust to verify that it did indeed supersede all other trusts and
he was entitled to the proceeds of the NYLIAC policies. NYLIAC made
numerous requests to furnish the 2018 trust documents. Shelton refused to
respond to these requests and declined to provide the support demonstrating
that the trust under which he claimed was the proper beneficiary of the
policies. NYLIAC also offered to pay the proceeds of the 2018 trust to
Shelton if he would sign a release and indemnity agreement to protect
NYLIAC against any future claims that might be made for the proceeds.
None of these efforts were fruitful, and after Shelton threatened suit,
NYLIAC filed this concursive proceeding to determine the proper party
entitled to the proceeds of the policy.
After the proceeding was filed, Sharon and Ken Britton (“The
Brittons”) appeared in the action alleging they were co-trustees of one of the
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No. 21-11037
trusts created by the insured. However, in May, 2021, the Brittons agreed
for the proceeds to be distributed to the 2018 trust.
In July, 2021, Shelton moved to file a counter-claim against NYLIAC
for penalties under §542.058 of the Texas Insurance Code for delaying
payment of the proceeds of the policies to him. The district court denied
leave to file the counterclaim on grounds that it would be futile given the
failure of Shelton to provide supporting documentation to NYLIAC
demonstrating he was indeed the beneficiary of a trust that succeeded to the
rights of all trusts named of record as beneficiaries of the policy proceeds.
Relatedly, the district court overruled Shelton’s objection to the
concursive proceeding based on the fact that he failed to provide the
documentation or cooperate with NYLIAC to establish that the 2018 living
trust was entitled to the proceeds.
NYLIAC also moved for attorneys’ fees, and the district court, in its
discretion, granted the request and awarded $5,000 in fees for the
defendant’s failure to provide documentation necessary for NYLIAC to
determine to whom the proceeds were owed.
The district court then granted a joint motion of the parties to pay the
proceeds (less the $5,000 attorneys fee assessed against defendant) to the
2018 trust.
II.
Based on our review of the record, we agree with the district court’s
conclusion that NYLIAC correctly utilized the concursive proceeding to
have the court determine the party entitled to the proceeds of the NYLIAC
policy. This proceeding was made necessary by the refusal of defendant to
furnish documentation to NYLIAC demonstrating that the 2018 trust was
entitled to the proceeds. For essentially the same reason, we also agree that
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the district court did not abuse its discretion in assessing attorneys’ fees
against the defendant and denying him permission to file his counterclaim for
penalties for failure to timely pay over the proceeds. We otherwise find no
reversible error in the district court’s order.
For these reasons and those stated by the district court in its careful
order of September 14, 2021, we AFFIRM the district court’s judgment.
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