Set Aside Default, Magistrate Judge Says

In this interpleader action involving life insurance benefits, a magistrate judge for the Alexandria U.S. District Court recommends setting aside entry of default for two of decedent’s four children, as their letters to the court indicate they have meritorious defenses asserting incapacity and undue influence, and there would not be significant prejudice as their brother filed a similar, but timely, response.

Defendants Jennifer Olin, Jessica Jardine, Jeffrey Olin and Jerrod Olin, who are decedent Patricia Olin’s children, were originally named as the beneficiaries of the life insurance policy at issue. About a year and a half before her death, Patricia Olin changed the beneficiary to defendant John Rives III. After Patricia’s death, Rives requested payment of the life insurance benefits. After receiving notice from Patricia’s estate of a dispute, plaintiff life insurance carrier initiated this interpleader action.

In substance, if not in form, letters of Jennifer Olin and Jessica Jardine are motions to set aside entry of default on one of two grounds: they timely responded and default never should have been entered against them; or they timely responded when they realized they were in default and they have a meritorious defense.

It appears defendants Jennifer Olin and Jessica Jardine have a meritorious defense. Their letters are sufficient for the court to infer that their position is that the change of beneficiary was invalid due to incapacity or undue influence, and it is hornbook law that such allegations, if proven, can invalidate a change of beneficiary.

Defendants Jennifer Olin and Jessica Jardine have acted with reasonable promptness. The record reflects that the first either would have learned of the entry of default against her was upon service of plaintiff’s motion for default judgment. The clerk received Ms. Olin’s letter on Feb. 3, 2011, a day before plaintiff filed the motion for default judgment. The clerk received Ms. Jardine’s letter on March 7, 2011 but her letter indicates she did not receive copies of plaintiffs’ motions until Feb. 24, 2011.

Under the circumstances, both defendants acted promptly when they learned of their default status.

The position advanced by Jennifer Olin and Jessica Jardine are substantially similar to that of defendant Jeffrey Olin’s timely response. There is thus no history of dilatory action on the part of defendants Jennifer Olin and Jessica Jardine, and there clearly exist lesser sanctions than default.

Though there can be some dispute whether defendants are responsible for their default status, all other factors weigh in favor of setting aside default. Even if personal responsibility is assumed, the entries of default should be set aside based on other factors.

In contrast to his sisters, defendant Jerrod Olin has filed no response to the complaint in this case and there exist no grounds on which to set aside the entry of default against him. The magistrate judge finds plaintiff is entitled to an order permanently enjoining Jerrod Olin from instituting or prosecuting any proceeding in a state or U.S. court affecting the funds at issue in this case; and discharging plaintiff from further liability to defendant Jerrod Olin in connection with the funds at issue in this case. Plaintiff is entitled to be reimbursed its attorney’s fees and costs of $11,995 from the funds deposited with the court.

Minnesota Life Ins. Co. v. Rives (Jones)No. 1:10cv1099, March 18, 2011; USDC at Alexandria, Va. VLW 011-3-157, 6 pp.