1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE CENTRAL DISTRICT OF CALIFORNIA 10 11 METROPOLITAN LIFE Case No. 5:19-cv-01412-JWH-KKx

INSURANCE COMPANY,

12 Plaintiff-in-Interpleader, FINDINGS OF FACT AND 13 CONCLUSIONS OF LAW v. PURSUANT TO RULE 52(a)(1) OF 14 THE FEDERAL RULES OF CIVIL GUDELIA GALICIA, an individual; PROCEDURE 15 ANA DURAN, in her capacity as Administrator of the Estate of Jorge 16 Duran; DESIREE ARLENE LECEA, an 17 individual; and FOREST LAWN MORTUARY, a 18 California Corporation, 19 Defendants-in- Interpleader. 20 21 22 23 24 25 26 27 1 I. INTRODUCTION AND BACKGROUND 2 This interpleader action involves competing claims over the proceeds of a 3 life insurance policy for Decedent Jorge Duran that was issued by Plaintiff-in- 4 Interpleader Metropolitan Life Insurance Company (“MetLife”). MetLife filed 5 the complaint commencing this action on July 31, 2019.1 Defendant-in- 6 Interpleader Desiree Lecea, on the one hand, and Defendants-in-Interpleader 7 Gudelia Galicia and Ana Duran, as Administrator of the Estate of Jorge Duran 8 (jointly, the “Family”), on the other hand, made competing claims to those 9 proceeds. 10 In July 2020, MetLife deposited the life insurance proceeds of $91,911.25 11 into the Court’s registry.2 Later that month, all parties stipulated that 12 $22,072.91 of those proceeds could be paid to Defendant-in-Interpleader Forest 13 Lawn Mortuary, to fund Decedent’s funeral and burial.3 The parties also 14 stipulated that MetLife and Forest Lawn could be dismissed from this action 15 and that Ms. Lecea and the Family would continue to litigate over who should 16 receive the remainder of the proceeds.4 The Court approved the parties’ 17 Stipulation on July 23, 2020.5 18 This matter was tried to the Court on July 21, 2021. The issues presented 19 for adjudication were as follows: 20 21 22 1 Compl. (the “Complaint”) [ECF No. 1]. 23 2 See Notice of Deposit of Interpleader Funds [ECF No. 44]. That sum 24 consisted of the principal policy benefits of $91,000, plus accrued interest of $911.25. 25 3 See Stip. of the Parties to: (1) Dismiss MetLife with Prejudice; (2) Discharge MetLife of All Liability under the Policy; (3) Pay Forest Lawn 26 Mortuary $22,072.91 from the Interpleader Funds; and (4) Dismiss Forest Lawn (the “Stipulation”) [ECF No. 46]. 27 4 See id. 1 1. Was Mr. Duran mentally incapacitated to the point that on 2 November 14, 2016, he could not knowingly designate Ms. Lecea as the 3 beneficiary to the life insurance policy? 4 2. Did Ms. Lecea fraudulently induce Mr. Duran to name Ms. Lecea 5 as the beneficiary to the life insurance policy? 6 3. Should Ms. Lecea, as the designated beneficiary of Mr. Duran’s life 7 insurance policy, be paid the life insurance proceeds that MetLife deposited into 8 the registry of the Court? 9 II. FINDINGS OF FACT AND CONCLUSIONS OF LAW 10 After a bench trial and pursuant to Rule 52(a) of the Federal Rules of Civil 11 Procedure, the Court makes the following findings of fact and conclusions of 12 law: 13 A. Findings of Fact 14 Mr. Duran was an employee of Sempra Energy where he was a participant 15 in the Southern California Gas Company Active Employee Group Health and 16 Welfare Program.6 The Plan is regulated under the Employee Retirement 17 Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001, et seq. As a 18 participant in the Plan, Mr. Duran had $91,000 in basic life insurance benefits 19 (the “Plan Benefits”). The life insurance benefits under the Plan were funded 20 by MetLife, which is also the claim administrator. Mr. Duran died on May 11, 21 2018, in Los Angeles, California.7 22 Mr. Duran was Ms. Lecea’s friend, co-worker, mentor, and supervisor. 23 On November 14, 2016, through MetLife, Mr. Duran designated Ms. Lecea as 24 25 26 27 6 See Complaint, Ex. A (the “Plan”) [ECF No. 1-1, ECF pp. 2–77]. 1 the sole beneficiary of the Plan Benefits.8 On May 24, 2018, Ms. Lecea 2 submitted a claim for the Plan Benefits.9 3 Gudelia Galicia is Mr. Duran’s mother; Ana Duran is Mr. Duran’s sister 4 and the court-appointed Administrator of the Estate of Jorge Duran (the 5 “Estate”). On July 17, 2018, Ms. Duran notified MetLife that she had been 6 appointed Administrator of the Estate and that she was contesting the 7 designation of Ms. Lecea as the sole beneficiary of the Plan Benefits.10 In that 8 notification, Ms. Duran indicated that Mr. Duran was not of sound mind when 9 he designated Ms. Lecea as beneficiary and that, in view of the circumstances, 10 Ms. Duran believed that the beneficiary designation was procured by fraud.11 11 Ms. Duran also submitted a separate claim to the Plan Benefits on behalf of the 12 Estate on July 17, 2018.12 That claim form identified Ms. Galicia as a surviving 13 parent of Mr. Duran.13 14 On January 4, 2019, MetLife advised Ms. Lecea and the Family that their 15 respective claims were adverse to one another and that MetLife could not 16 ascertain whether Mr. Duran’s designation of Ms. Lecea as beneficiary was valid 17 in view of Ms. Duran’s allegations of Mr. Duran’s incompetence and of 18 Ms. Lecea’s fraud.14 Ms. Lecea and Ms. Galicia did not reach any agreement to 19 resolve their adverse claims to the Plan Benefits. Accordingly, MetLife filed this 20 21

22 8 See Complaint, Ex. G [ECF No. 1-1, ECF pp. 101–102] at ECF p. 101. 23 9 See Complaint, Ex. C (the “Lecea Claim”) [ECF No. 1-1, ECF pp. 81– 84]. 24 10 See Complaint, Ex. E (the “Duran Notification”) [ECF No. 1-1, ECF pp. 90–92]. 25 11 See id. 26 12 See Complaint, Ex. F (the “Family Claim”) [ECF No. 1-1 at ECF pp. 94– 99]. 27 13 See id. 1 interpleader action requesting that the Court determine to whom the Plan 2 Benefits should be paid.15 3 At trial the Family asserted that Mr. Duran was mentally incapacitated 4 when he designated Ms. Lecea as the sole beneficiary of the Policy and that the 5 beneficiary designation was the product of fraud and undue influence on the part 6 of Ms. Lecea. Aside from their own assertions, however, the Family did not 7 present evidence of any such mental incapacity on the part of Mr. Duran or of 8 any fraud or undue influence exercised by Ms. Lecea. 9 B. Conclusions of Law 10 Because this interpleader action arises under ERISA, this Court has 11 jurisdiction pursuant to 29 U.S.C. § 1132(e)(1), 28 U.S.C. § 1331, and Rule 22 of 12 the Federal Rules of Civil Procedure. 13 1. ERISA Preemption Generally 14 Although none of the parties raised the issue of whether ERISA preempts 15 claims under state law regarding incapacity, fraud, and undue influence, the 16 Court briefly addresses that issue here. 17 ERISA commands, in relevant part, that a plan shall “specify the basis on 18 which payments are made to and from the plan,” 29 U.S.C. § 1102(b)(4), and 19 that the fiduciary shall administer the plan “in accordance with the documents 20 and instruments governing the plan,” id. § 1104(a)(1)(D), making payments to a 21 “beneficiary” who is “designated by a participant, or by the terms of [the] 22 plan,” id. § 1002(8). 23 ERISA’s preemption provision provides that ERISA “shall supersede any 24 and all State laws insofar as they may now or hereafter relate to any employee 25 benefit plan” covered by ERISA. Id. § 1144(a). The Supreme Court has held 26 repeatedly that this broadly worded provision is “clearly expansive.” New York 27 1 State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 2 645, 655 (1995); see also Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384 3 (1992) (listing cases). However, the Supreme Court has also recognized that the 4 term “relate to” cannot be taken “to extend to the furthest stretch of its 5 indeterminacy,” or else “for all practical purposes pre-emption would never run 6 its course.” Travelers, 514 U.S. at 655. 7 A state law relates to an ERISA plan “if it has a connection with or 8 reference to such a plan.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97 (1983). 9 To determine whether state law has a “forbidden connection” with an ERISA 10 plan, courts look both to “the objectives of the ERISA statute as a guide to the 11 scope of the state law that Congress understood would survive, as well as to the 12 nature of the effect of the state law on ERISA plans.” Egelhoff v. Egelhoff ex rel. 13 Breiner, 532 U.S. 141, 147 (2001). State laws that regulate, for example, “the 14 relationship between plan and plan member, between plan and employer, 15 between employer and employee . . . and between plan and trustee,” Gen. Am. 16 Life Ins. Co. v. Castonguay, 984 F.2d 1518, 1521 (9th Cir. 1993), are generally 17 preempted. See Dish Network Corp. on behalf of Dish Network Corp. 401(k) Plan v. 18 Pompa, 2020 WL 2513671, at *3 (D. Nev. May 15, 2020). 19 Courts are divided on the issue of whether ERISA preempts common law 20 claims, such as fraud or undue influence, to invalidate beneficiary designations. 21 Some courts have held that allegations based upon the application of state 22 statutes related to incapacity, fraud and deceit, and undue influence—to 23 invalidate the beneficiary designation specified by the plan—are preempted by 24 ERISA. See Anthem Life Ins. Co. v. Olguin, 2007 WL 2904223, at *4 (E.D. Cal. 25 Oct. 3, 2007) (denying leave to amend crossclaim where claims for invalidation 26 were based upon state law and, therefore, were preempted by ERISA); see also 27 Metro. Life Ins. Co. v. Pettit, 164 F.3d 857, 864 (4th Cir. 1998) (“designating the 1 beneficiary of an ERISA life insurance plan sufficiently relates to a plan to come 2 within the scope of the preemption clause”). 3 Conversely, other courts in this circuit have held that if ERISA preempted 4 such laws, then “there would be no recourse for fraudulent beneficiary 5 designations in ERISA-governed plans as ERISA is silent on the procedures 6 related to beneficiary changes.” Pompa, 2020 WL 2513671, at *5. Similarly, in 7 Dahood v. Noyd, 2006 WL 8435816 (D. Mont. Oct. 10, 2006), the district court 8 determined that state law claims based upon theories of, inter alia, constructive 9 fraud and undue influence were not preempted because the “relevant state law 10 applicable to these claims does not act immediately and exclusively on an ERISA 11 plan nor is any ERISA plan essential to the operation of the state law.” Id. at *6. 12 The Sixth Circuit has implicitly recognized claims for undue influence. In 13 Tinsley v. Gen. Motors Corp., 227 F.3d 700 (6th Cir. 2000), the Sixth Circuit held 14 that “[s]ince ERISA does not contain any provisions regulating the problem of 15 beneficiary designations that are . . . the result of undue influence, or otherwise 16 improperly procured, it appears that federal common law must apply to . . . 17 claims [of undue influence].” Id. at 704. The Tinsley court also noted that 18 where there is no federal common law established in the Circuit, it is appropriate 19 to look to state-law principles of undue influence for guidance. Id. 20 In view of those cases, this Court concludes that claims for fraud, undue 21 influence, and incapacity under state law are not preempted by ERISA. 22 Considering that the Policy was to be paid out in California and that the parties 23 have not contended that any other state’s law should apply, the Court will apply 24 California law. 25 2. Beneficiary Designation 26 Consistent with ERISA, when determining the beneficiary of a life 27 insurance policy under California law, “the intent of the insured as expressed by 1 W. Coast Life Ins. Co., 38 Cal. 2d 643, 646–647 (1952). Where a claimant 2 challenges a beneficiary designation on the ground of undue influence, fraud, or 3 incapacity, the claimant has the burden to prove those claims. See Baekgaard v. 4 Carreiro, 237 F.2d 459, 463 (9th Cir. 1956); Primerica Life Ins. Co. v. Spaid, 2016 5 WL 9223793, at *2 (C.D. Cal. Oct. 18, 2016); State Farm Life Ins. Co. v. Hansen, 6 2012 WL 4467631, at *2 (W.D. Wash. Sept. 26, 2012). 7 Here, Ms. Lecea proved her claim to the Plan Benefits by showing that 8 the Policy designates her as the sole beneficiary of the Plan Benefits. Therefore, 9 the Family had the burden to prove their claims of undue influence, fraud, or 10 incapacity. 11 Regarding incapacity, under California law, “[a] conveyance or other 12 contract of a person of unsound mind, but not entirely without understanding, 13 made before the incapacity of the person has been judicially determined, is 14 subject to rescission.” Cal. Civ. Code § 39(a). With respect to fraud, the 15 elements under California law are (1) a misrepresentation (false representation, 16 concealment, or nondisclosure); (2) scienter or knowledge of its falsity; 17 (3) intent to induce reliance; (4) justifiable reliance; and (5) resulting damage. 18 See Lazar v. Superior Court, 12 Cal. 4th 631, 638 (1996). Finally, undue influence 19 “means excessive persuasion that causes another person to act or refrain from 20 acting by overcoming that person’s free will and results in inequity.” 21 Cal. Prob. Code § 86; Cal. Welf. & Inst. Code § 15610.70(a). “In evaluating 22 undue influence, courts consider the following four elements: (1) the 23 vulnerability of the victim; (2) the influencer’s apparent authority; (3) the 24 actions or tactics used by the influencer; and (4) the equity of the result.” 25 Primerica, 2016 WL 9223793, at *2. 26 Here, the Family did not present evidence sufficient to meet their burden 27 to show that Mr. Duran lacked the mental capacity to designate Ms. Lecea as the 1 undue influence. The evidence that the Family produced showed only that 2 Mr. Duran received sporadic treatment for alcohol use disorder and related 3 depression between 2016 and his death. That evidence did not show that 4 Mr. Duran was incapacitated or of unsound mind when he designated Ms. Lecea 5 as beneficiary. To the contrary, the medical records in evidence show that 6 Mr. Duran did not suffer from any mental impairments.16 Moreover, the 7 majority of the medical records pertain to treatment that Mr. Duran received in 8 2017—after Mr. Duran designated Ms. Lecea as the beneficiary of the Plan 9 Benefits in November 2016.17 10 Similarly, the Family presented no evidence of fraud or undue influence. 11 The Family’s failure in that regard is not surprising, considering that the Family 12 did not know about Mr. Duran’s friendship with Ms. Lecea until after 13 Mr. Duran’s death. Indeed, the testimony at trial established that for more than 14 10 years before his death, Mr. Duran’s relationship with the Family was, at best, 15 distant. The only contact between Mr. Duran and the Family during those years 16 was an occasional phone call on holidays from Mr. Duran (who would call from a 17 friend’s phone) to Ms. Galicia. Ultimately, the Family’s contentions regarding 18 fraud and undue influence were premised entirely upon their speculative belief 19 that Mr. Duran would have wanted the Family to have the Plan Benefits. In the 20 absence of substantial evidence, however, the Family’s subjective beliefs are 21 insufficient to prove their claims. 22 In sum, the Court concludes that the Family failed to sustain its burden to 23 prove that the beneficiary designation should be invalidated on the grounds of 24 undue influence, fraud, or incapacity. 25 26

27 16 See, e.g., Defs.’ Ex. List (the “Family Exhibits”) [ECF No. 77] at Exs. 1–8 & 10–15. 1 Ill. CONCLUSION 2 For the foregoing reasons, the Court hereby FINDS AND || CONCLUDES that the Plan Benefits shall be distributed to Ms. Lecea, the sole 4|| beneficiary designated by Mr. Duran on November 14, 2016. Judgment will issue consistent with these findings and conclusions. — 7 || Dated: November 1, 2021 . 8 UN ITED STATES DISTRICT JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28