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Federated Life Insurace Co. v. Fifth Third Bank

United States District Court, M.D. Florida, Fort Myers Division

March 29, 2017

FEDERATED LIFE INSURANCE COMPANY, Plaintiff,
v.
FIFTH THIRD BANK, ROBERT E. TARDIF, FLORIDA PETROLEUM COMPANY LLC, EVANS ENERGY PARTNERS LLC, KC TRANSPORTATION LLC, E2 REAL ESTATE LLC and EVANS OKEECHOBEE LLC, Defendants.

          OPINION AND ORDER [1]

          SHERI POLSTER CHAPPELL UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on United States Magistrate Judge Carol Mirando's Report and Recommendation (Doc. 112) dated January 31, 2017. Judge Mirando recommends denying Seminole Tribe of Florida, Inc.'s Motion to Intervene as Defendant, Reopen Interpleader, and Set Aside Judgment (Doc. 69).[2] Seminole has filed timely objections to the Report and Recommendation. (Doc. 115). Interpleader Plaintiff Federated Life Insurance Company and Interpleader Defendants Fifth Third Bank and Evans Energy Partners, LLC have responded to Seminole's objections. (Doc. 116; Doc. 117; Doc. 118). Thus, the Report and Recommendation is ripe for review.

         INTRODUCTION

         This case started as a statutory interpleader action to resolve potential claims to life insurance policies (hereinafter, the “Policies”). It commenced in September 2014 and resolved thirteen months later with Evans Energy and Fifth Third splitting the Policies' proceeds.

         Seminole played no role in the interpleader action. The reason for its non-action is disputed. According to Seminole, it is the victim of a conspiracy headed by certain interpleader defendants and other participants to deprive it of the Policies' proceeds. Seminole maintains that the conspirators colluded to keep it in the dark about the interpleader because they knew Seminole had the sole interest in the Policies. The opposing view is that Seminole's former chief financial officer, Michael Ulizio, knew of the interpleader action during its pendency, and he elected not to make a claim on Seminole's behalf because he determined that it had no claim to the Policies. The plot thickens, however, because Seminole maintains that Ulizio participated in the conspiracy. It also points an accusatory finger at Christopher Lombardo, Esq., who not only represented Evans Energy in this action and other related matters, but also Seminole in another case.

         Having been left out of the interpleader, Seminole wants the Court to set aside the judgment and reopen the case. Seminole charts this course because, now that the money has been disbursed, it wants to assert cross-claims against the named defendants and bring a third-party complaint against non-parties Ulizio and Kousay Askar, who controlled Evans Energy. Seminole's proposed causes of action are conversion, civil theft, breach of the duty of loyalty, breach of fiduciary duty, and conspiracy. (Doc. 69-1; Doc. 115-1). Against this backdrop, the Court will outline the facts pertinent to the issues at hand.

         BACKGROUND[3]

         Federated Life initially issued the Policies to Evans Oil Company, LLC to insure the life of its sole owner, Randy Mural Long. Evans Oil assigned its rights to the Policies to Fifth Third as collateral for a loan. When Evans Oil petitioned for bankruptcy months later, Florida Petroleum Company, LLC purchased certain assets of Evans Oil. That tenure did not last long, as Florida Petroleum assigned its interests in the assets to Evans Energy, KC Transportation, LLC, E2 Real Estate, LLC, and Evans Okeechobee, LLC. Askar controlled all four companies.

         Seminole thereafter purchased assets from Evans Energy and KC Transportation. (Doc. 69-2). At that time, Evans Energy owed Fifth Third $5.625 million. Thus, as part of Seminole's consideration for the assets, it gave Fifth Third a Term Note for $5.625 million, eliminating Evans Energy's debt. (Doc. 69-4).

         Whether the Policies were included in the above assignments and asset purchases was - and still is - disputed. Indeed, in the months following Long's death, Federated Life received inquiries regarding the Policies. Unsure of who had valid claims to the Policies, Federated Life filed this statutory interpleader action against Fifth Third, Florida Petroleum, and Robert E. Tardif, as trustee for the bankruptcy estate of Randy Mural Long.[4] (Doc. 1). Federated Life amended its pleading, adding Evans Energy, KC Transportation, E2 Real Estate, and Evans Okeechobee as named defendants. (Doc. 20).

         In January 2015, the Court found interpleader to be appropriate. (Doc. 35). Thus, Federated Life deposited the Policies' proceeds into the Court's Registry, [5] and the interpleader defendants made their claims. (Doc. 37; Doc. 38). Nine months later, Fifth Third, Evans Energy, KC Transportation, E2 Real Estate, Evans Okeechobee, and Florida Petroleum resolved their claims and agreed that Fifth Third and Evans Energy would split the Policies' proceeds. (Doc. 64). Consequently, the Court directed the Clerk of Court to release the proceeds and close the case.[6] The Clerk entered judgment on October 22, 2015. (Doc. 68).

         During the above events, Ulizio served as Seminole's CFO. He held that position from 2012 until January 29, 2016. Ulizio worked for Seminole when it purchased Evans Energy's assets in May 2013. (Doc. 84 at ¶ 7). At that time, Ulizio claims that neither Seminole nor he knew that Evans Energy had purchased the Policies. (Id. at ¶ 8). According to Ulizio, Seminole did not purchase the Policies from Evans Energy - a fact that Seminole now disputes. (Id. at ¶ 10; Doc. 69-5 at ¶ 7). And Ulizio alleges that he did not learn of the Policies until after Long died. (Doc. 84 at ¶ 9).

         Pertinent here, Ulizio also claims that he learned of the interpleader action in late February 2015. (Doc. 84 at ¶ 12). As CFO, Ulizio avers that he “investigated the facts of the interpleader action and determined that [Seminole] did not maintain an interest in the [Policies'] proceeds.” (Id. at ¶¶ 15, 21). Ulizio states that he told Seminole's president and board member of the interpleader and Seminole's non-interest in the proceeds. (Id. at ¶¶ 16-17). Despite Seminole's disinterest, he assisted Evans Energy and Fifth Third in settling their claims to the Policies. (Id. at ¶ 18). Ulizio also instructed Lombardo, on behalf of Seminole, to disburse the settlement proceeds to Evans Energy. (Id. at ¶ 20; Doc. 69-11).

         According to Tena Grandit, Seminole's former financial controller and current executive director of finance, Ulizio told her in “mid-2015” that Long had died and “possibly had an insurance policy on his life which might benefit [Seminole].” (Doc. 69-9 at 9). Grandit maintains that Ulizio told her that “he would follow up on the matter and let [her] know if anything was discovered. Ulizio did not discuss the matter with [her] again.” (Id. at ¶ 7). Grandit says that Ulizio never followed up with her. (Id.).

         On February 11, 2016, approximately four months after judgment had been entered, Seminole held a Board meeting in which Long's death was mentioned. (Doc. 69-5 at ¶ 8). Grandit advised the Board of her conversation with Ulizio. (Doc. 69-9 at ¶ 9). Upon this information, the Board discussed “whether any insurance existed on his life which could inure to the benefit of [Seminole].” (Doc. 69-5 at ¶ 8). From there, the Board tasked Marc Solomon, Seminole's general counsel, to investigate the matter. (Id. at ¶ 10).

         Five days after the Board meeting, Solomon emailed Lombardo requesting all correspondence and documents relating to the interpleader action. (Id. at ¶ 11). Lombardo responded with copies of the wire transfer of the proceeds and an email from Ulizio that directed him to release the proceeds to Askar. (Id.). According to Solomon, this was his first notice of the interpleader. (Id. at ΒΆ 12). On February 22, 2016, Solomon sent a demand letter to Lombardo, ...


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