United States District Court, D. Rhode Island
CONTINENTAL CASUALTY COMPANY and NAVIGATORS INSURANCE COMPANY, Plaintiffs,
JOSEPH A. CARAMADRE, PAULA CARAMADRE, JOHN W. MITCHELL, ESQ., EDWARD C. ROY, ESQ., MELISSA LARSEN, ESQ., UNITED STATES OF AMERICA, WESTERN RESERVE LIFE ASSURANCE COMPANY OF OHIO, and TRANSAMERICA LIFE INSURANCE COMPANY, Defendants.
REPORT AND RECOMMENDATION
PATRICIA A. SULLIVAN, UNITED STATES MAGISTRATE JUDGE
an interpleader action tracing back to Defendant Joseph A.
Caramadre's fraudulent scheme to obtain large sums of
money from insurance companies and bond issuers. Plaintiffs
Continental Casualty Company (“Continental”) and
Navigators Insurance Company (“Navigators”)
initiated this case to allow for the above-captioned
Defendants to settle their rights to proceeds from settlement
in a separate Rhode Island state court action. Navigators
deposited funds into the Registry of the Court and now moves
to be dismissed. The motion to dismiss has been referred to
me for report and recommendation. 28 U.S.C. §
636(b)(1)(B). For the reasons that follow, I recommend
granting the motion.
2011, the government prosecuted Mr. Caramadre for his
fraudulent scheme, which resulted in his 2012 guilty plea to
wire fraud and conspiracy to commit offenses against the
United States. United States v. Caramadre, CR.
11-186WES, ECF No. 224. Mr. Caramadre's sentence included
restitution to numerous insurance companies and bond issuers.
United States v. Caramadre, CR. No. 11-186 S, 2014
WL 409336, at *1, *5 (D.R.I. Feb. 3, 2014),
aff'd, 807 F.3d 359 (1st Cir. 2015).
Michael J. Lepizzera, Jr., and Anthony M. Traini represented
Mr. Caramadre in his criminal case. ECF No. 1-1 at 6. Their
representation of Mr. Caramadre ended following the Court
accepting his guilty plea, after which he retained new
counsel and challenged his plea. See Caramadre, 807
F.3d at 364-66 (affirming the rejection of that challenge).
In May 2016, Mr. Caramadre filed a legal malpractice case
against Attorneys Lepizzera and Traini in Rhode Island
Superior Court. ECF No. 1-1 at 6; see Caramadre v.
Lepizzera, C.A. No. PC-2016-2146. That case settled in
July 2018, and as part of the settlement, Plaintiffs, the
insurers of Attorneys Lepizzera and Traini, agreed to
initiate this interpleader action so that certain people and
companies (the named Defendants) can settle their rights to
proceeds of the settlement. ECF No. 1-1 at 6.
31, 2018, in Rhode Island Superior Court, Plaintiffs filed
their complaint for interpleader. Id. at 1. The
matter was removed to this Court on August 21, 2018. ECF No.
1. Upon Plaintiffs' motion, the Court granted them leave
to deposit interpleader funds in the Registry of the Court
pursuant to Fed.R.Civ.P. 67. ECF No. 33. The Court directed
Plaintiffs to deposit funds in the amount of $250, 000 total.
Id. The Court's Order stated that, following
Plaintiffs' deposits, Defendants are enjoined from
bringing any action or proceeding in any form, arising out of
and in connection with the interpleader funds. Id.
at 2. Each Plaintiff then deposited $125, 000. ECF Nos. 34,
the deposits, Navigators filed its pending motion to
dismiss. ECF No. 47. Navigators argues its role in
this action is complete and it has no claims to the funds now
in the Court Registry. No. party objected to Navigators'
STANDARD OF REVIEW
28 U.S.C. § 1335, a district court has jurisdiction of
any civil action of interpleader involving money or property
worth $500 or more where two or more adverse claimants, of
diverse citizenship as defined in 28 U.S.C. § 1332,
‘are claiming or may claim to be entitled to such money
or property.'” Sun Life Assur. Co. of Canada,
(U.S.) v. Conroy, 431 F.Supp.2d 220, 224-25, n.5 (D.R.I.
2006) (quoting 28 U.S.C. § 1335). The citizenship of the
stakeholder, the party holding the property, is irrelevant,
and § 1335 “has been uniformly construed to
require only ‘minimal diversity,' that is,
diversity of citizenship between two or more claimants,
without regard to the circumstance that other rival claimants
may be co-citizens.” State Farm Fire & Cas. Co.
v. Tashire, 386 U.S. 523, 530 (1967); Atcom Support
LP v. M/V HC Nadja Maria, Civil Action No. 15-28-RGA,
2015 WL 6181749, at *2 (D. Del. Oct. 21, 2015) (“the
citizenship of the stakeholder is irrelevant”).
interpleader cases generally have two stages. “First,
the Court determines whether the statute's requirements
have been met and whether the stakeholder may be relieved
from liability. Second, the Court adjudicates the adverse
claims to the interpleaded res.” Phoenix
Ins. Co. v. Small, 307 F.R.D. 426, 429 (E.D. Pa. 2015)
(internal citation omitted). The core rationale of
interpleader “is to relieve an obligor from the
vexation of multiple claims in connection with a liability
admittedly owed.” Id. at 434. Employing
“the equitable remedy of interpleader, a stakeholder
may file suit, deposit a sum certain with the Court, and then
withdraw from the proceedings, leaving the competing
claimants to litigate amongst themselves.” Id.
This process “is meant to protect a stakeholder faced
with multiple claims to a limited res and to protect
claimants from the ensuing unfairness of ‘a race to
judgment.'” Id. at 435 (quoting
Tashire, 386 U.S. at 533). “Once an
interpleader plaintiff pays the full amount disputed into the
court's registry, and the claimants to that res
have been given notice and opportunity to be heard and
ordered to interplead, ‘the law normally regards the
plaintiff as having discharged its full
responsibility.'” Midland Nat'l Life Ins.
Co. v. Rivas, 318 F.R.D. 303, 308 (E.D. Pa. 2016)
(internal citation omitted); see Phoenix, 307 F.R.D.
at 435 (collecting cases).
motion implicates the first stage of federal interpleader
litigation: jurisdiction and stakeholder liability. Starting
with the jurisdictional component of § 1335, I find the
Court has jurisdiction because this action involves more than
$500 and there is minimal diversity of citizenship among
Defendants. Specifically, the res in this case is
$250, 000, and two or more Defendants are diverse. ECF No.
1-1 at 4-6; see Conroy, 431 F.Supp.2d at 244-25.
find that Navigators' motion should be granted and it
“may be relieved from liability” as to this case.
Phoenix, 307 F.R.D. at 429. This determination
accords with the Court's Order permitting Navigators to
deposit its half of the $250, 000 in the Registry of the
Court. ECF No. 33 at 2 (“[U]pon the deposit of the
Interpleader Funds with the Clerk of Court, the defendants
are enjoined from bringing any action or proceeding in any
form, arising out of and in connection with the Interpleader
Funds.”). Navigators “asserts no remaining claim
to the res deposited into the Registry of the
Court.” Phoenix, 307 F.R.D. at 435. No.
evidence suggests Navigators has unclean hands. Dismissing
Navigators and relieving it of liability for the res
supports interpleader's goals and the efficient
administration of justice. Id. Further, Defendants
should be enjoined from commencing or prosecuting any actions
against Navigators as to the proceeds it deposited in the