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First National Bank & Trust Company of Mountain Home v. Stonebridge Life Insurance Co.

May 8, 2007

FIRST NATIONAL BANK & TRUST COMPANY OF MOUNTAIN HOME, SPECIAL ADMINISTRATOR FOR THE ESTATE OF DEBRA HULSE KNIGHTON, DECEASED PLAINTIFF
v.
STONEBRIDGE LIFE INSURANCE COMPANY; EMC NATIONAL LIFE COMPANY; MINNESOTA LIFE INSURANCE COMPANY; AND FLOYD KNIGHTON DEFENDANTS STONEBRIDGE LIFE INSURANCE COUNTER PLAINTIFF CROSS PLAINTIFF THIRD-PARTY PLAINTIFF
v.
FIRST NATIONAL BANK & TRUST COMPANY OF MOUNTAIN HOME, SPECIAL ADMINISTRATOR FOR THE ESTATE OF DEBRA HULSE KNIGHTON, DECEASED COUNTER DEFENDANT MARSHA SMITH; DONNIE GARVIN; AND VINCENT KNIGHTON THIRD-PARTY DEFENDANTS FLOYD KNIGHTON CROSS DEFENDANT CROSS PLAINTIFF
v.
MINNESOTA LIFE INSURANCE COMPANY; EMC NATIONAL LIFE COMPANY; AND STONEBRIDGE LIFE INSURANCE COMPANY CROSS DEFENDANTS



The opinion of the court was delivered by: Wm. R. Wilson, Jr. United States District Judge

ORDER

Pending is separate Cross Defendant Minnesota Life Insurance Company's ("Minnesota") Motion to Dismiss First National Bank and Trust Company's ("FNBT") Complaint and Floyd Knighton's ("Knighton") Cross Claim.*fn1 Plaintiff FNBT responded and suggested that I grant the motion and withhold ruling on its claim against Minnesota.*fn2 Cross Claimant Knighton responded that his claim against Minnesota is ripe.*fn3

This is an action brought by FNBT, the Administrator of the Estate of Debra Knighton, to claim life insurance funds from three insurance companies on behalf of her estate.*fn4 Knighton filed cross claims against these three companies.*fn5 The other two life insurance companies interpled their funds and have been dismissed from this case.*fn6

Minnesota was one of the three insurance companies sued by FNBT and Knighton. But, the claims against Minnesota are different because Minnesota's policy was issued through Knighton's employer. Therefore, it is undisputed that claims against Minnesota are governed by ERISA.*fn7

I. Background

Debra Knighton died from a gunshot wound inflicted by her husband -- Knighton. At the time of the incident, Minnesota's accidental death and dismemberment policy was in effect and covered Knighton and his wife. Under the terms of the policy, Knighton is the "certificate holder," and is the only eligible beneficiary.*fn8 Knighton alleges that his wife's death was an accident. But, FNBT alleges that Knighton intentionally took his wife's life, and he should not recover the benefits under Arkansas law,*fn9 which designates the estate as the true beneficiary.*fn10

Minnesota contends that the competing claims of FNBT and Knighton must be dismissed for the following reasons: (1) the claims are premature; (2) Debra Knighton's estate and FNBT cannot receive benefits under the clear terms of the policy; and (3) Knighton did not state claims under ERISA, but alleged state law claims that are preempted.

II. Motion to Dismiss Standard

In ruling on a motion to dismiss under Rule 12(b)(6), a plaintiff's well-pleaded factual allegations are taken as true.*fn11 A motion to dismiss should not be granted unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim for relief.*fn12

III. Authority

A. Applicable ERISA Legal Standards

Like the Arkansas rule, the federal "slayer's rule" holds that "a beneficiary who has wrongfully caused the death of an insured forfeits his right to insurance proceeds."*fn13 There is a divergence of opinion as to whether federal common law or state common law applies to ERISA under such circumstances.*fn14

The Eighth Circuit Court of Appeals has not specifically addressed this question, but has held that ERISA preemption makes the designation of plan beneficiaries and the determination of who is entitled to plan benefits questions of federal law.*fn15 Federal law and Arkansas law do not conflict with respect to Knighton's claim -- he will forfeit the benefits if it is determined that he killed his wife. A problem arises with respect to the claim on behalf of the estate.

Arkansas, along with a majority of other states, holds that when a beneficiary is barred from recovering because he took the insured's life -- in the absence of a special provision to the contrary -- the ...


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