UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

DONALD GILBERG, et al., ) ) Plaintiffs, ) ) v. ) ) METLIFE, INC., et al., ) ) Defendants/Third-Party Plaintiffs, ) Civil Case No. 09-1826 (RJL) ) v. ) ) BANK OF AMERICA, N.A., d/b/a U.S. Trust ) Bank of America Private Wealth Management, ) as successor in interest to U.S. Trust Company, ) N.A., ) ) Third-Party Defendant. )

MEMORANDUl OPINION (August~2010) [#20]

Plaintiffs Donald Gilberg and Donna Gilberg, together with their children, (the

"Gilbergs") bring this action against MetLife, Inc. ("MetLife"), New England Life

Insurance Company ("New England"), and Patrick M. Dunn (collectively, the

"defendants") for damages related to lapse of a life insurance policy. Defendant filed a

third-party complaint against Bank of America, N.A., d/b/a U.S. Trust Bank of America

Private Wealth Management, as successor in interest to U.S. Trust Company, N.A. ("U.S.

Trust''). Before the Court is U.S. Trust's Motion to Dismiss the third-party complaint.

For the following reasons, U.S. Trust's Motion to Dismiss is GRANTED. BACKGROUND

In 1999, the law firm of Gilberg and Kiernan purchased a $1.4 million term life

insurance policy ("the Policy") on the life of Donald Gilberg. Third-Party Compi. ~ 4.

Subsequently, ownership of the Policy was transferred to Gilberg. Id. On or about

September 19,2006, the Policy permanently lapsed. Id. ~ 13.

On August 6, 2009, the plaintiffs filed their Complaint in Superior Court for

damages relating to the lapse of the Policy. See PIs.' Compi. Ex. A. J The Complaint

alleged breach of contract, breach of fiduciary duty, fraudulent misrepresentation, bad

faith, and violation of the D.C. Consumer Protection statute. Id. In a separate, prior

litigation commenced in November 2006, the Gilbergs had sued both U.S. Trust and

MetLife and asserted similar claims. Third-Party CompI. ,r 14. U.S. Trust and the

Gilbergs settled those claims, and the Gilbergs subsequently dismissed with prejudice

their claims against U.S. Trust in that prior litigation. Id.

On September 24, 2009, defendants removed the instant action to this Court. On

October 16,2009, defendants filed a third-party complaint against U.S. Trust, seeking to

hold U.S. Trust liable for the Gilbergs' alleged damages, should defendants be found

liable, based on common law indemnification and contribution theories. See Third-Party

CompI. at 6-7. U.S. Trust filed its motion to dismiss on February 11,2010.

A court may consider documents incorporated into a complaint by reference and matters of which a court may take judicial notice without converting a motion to dismiss into one for summary judgment. See Tellabs. Inc. v. Makar Issues & Rights, Ltd.,

(2007).

2 ANALYSIS

U.S. Trust moves to dismiss the third-party complaint pursuant to Fed. R. Civ. P.

12(b)(6). A 12(b)(6) motion to dismiss shall be granted if a plaintiff fails "to state a claim

upon which relief can be granted:' Fed. R. Civ. P. 12(b)(6). To survive a motion to

dismiss, a plaintiff s "[ fJactual allegations must be enough to raise a right to relief above

the speculative level, on the assumption that all the allegations in the complaint are true

(even if doubtful in fact)." Bell Atl. Corp. v. Twombly,

(2007)

(citations omitted); see also Ashcroft v. Iqbal,

(2009) (stating that if

a court has determined that a plaintiff has asserted "well-pleaded factual allegations," the

court "should assume their veracity and then determine whether they plausibly give rise to

an entitlement to relief"). Unfortunately for the defendants, even taking as true all of the

allegations in the third-party complaint. their claim against U.S. Trust must be dismissed.

The parties agree that under D.C. law, if a verdict is obtained against a non-settling

tort feasor and it is also determined that the settling tortfeasor should contribute, the non-

settling tortfeasor is liable only for one-half of the verdict, i.e., a pro rata portion of the

judgment. Martello v. Hawley,

(D.C. Cir. 1962). This is because "by

his settlement, the plaintiff has sold one-half of his claim for damages. Anything else

would be unfair to the settling tort feasor who has bought his peace, and unfair to the

defendant tort[Jfeasor, who should not be disadvantaged by a settlement to which he was

not a party and to which he did not consent."

In the alternative, if the fact-finder

3 renders a verdict for the plaintiff but does not find that the settling defendant contributed

to the plaintiffs loss, or the settling defendant's liability is undetermined, the non-settling

defendant is entitled to the benefit of the settlement dollar-for-dollar, i.e., a pro tanto

credit. See Washington v. Washington Hosp. Ctr.,

(D.C. 1990).

The parties dispute, however, whether the defendants must maintain a third-party

claim against U. S. Trust to remain entitled to a pro rata credit, should it later be

determined that the defendants are liable to the Gilbergs. Defendants argue that under

D.C. law, if a defendant fails to assert a cross-claim or third-party claim, he or she can

lose eligibility for a pro rata credit. U.S. Trust counters that the D.C. Court of Appeals

has recognized that a non-settling defendant can safeguard its contributing claim against

settling joint defendants by requesting a determination of the settling defendants' liability

through a special jury verdict. I agree with U.S. Trust.

It is unnecessary to keep U.S. Trust, having settled with the Gilbergs, involved in

this litigation. Indeed, the D.C. Court of Appeals has recognized that a defendant can

safeguard a claim for pro rata credit "by asserting a cross-claim for contribution, as did

the non-settling defendants in Martello, or an equivalent request for a determination by

the jury of the settling defendants' negligence." Washington,

(emphasis

added); see also Farmer v. Mount Vernon Realty, Inc.,

(D.D.C.

1989) (stating that liability of a co-defendant "may be decided by the Court without the

necessity of bring ... a settling partyrJ back into the case"); Koonce v. Merit Oil Co., No.

4 89-2977,

, at *10 (D.D.C. June 3,1991) (stating same). To

find to the contrary and "permit nonsettling defendants to bring settling defendants back

into the case would seriously undermine the incentive of parties to settle their claims."

Farmer,

. The same analysis applies to a claim for indemnity. See

Rose v. Associated Anesthesiologists,

(D.C. Cir. 1974); Koonce, No.

89-2977,

, at * 10. Therefore, it is both consistent with D.C.

law and in keeping with the public policy favoring efficient settlement of claims to find

that U.S. Trust is immune from suit. To find otherwise would, in fact, prejudice U.S.

Trust, which has already "bought its peace" with the Gilbergs. See Martello,

.

Furthermore, the dismissal of the defendants' third-party complaint does not

prejudice any of the remaining parties. As discussed above, defendants may request a

determination by the jury or this Court of U.S. Trust's liability, thus allowing it to seek a

pro rata credit against any potential judgment. In the event that U.S. Trust were found

not to be liable, the defendants would be entitled to a pro tanto credit. Thus, the

defendants' potential liability is not affected by the dismissal of the third-party complaint.

In addition, with the defendants having raised the issue at this stage, the Gilbergs are now

on notice that the defendants may seek a pro rata credit against any judgment rendered

against them. Therefore, the Gilbergs cannot be said to be prejudiced by the dismissal of

the third-party complaint.

5 CONCLUSION

For the foregoing reasons, the Court GRANTS U.S. Trust's Motion To Dismiss

and DISMISSES the defendants' Third-Party Complaint. An Order consistent with this

decision accompanies this Memorandum Opinion. •

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