Jack C. Morgan, Jr. v. Merrill, a Bank of America Company and Paul Adams

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY OWENSBORO DIVISION JACK C. MORGAN, JR., Plaintiff/Counter-Defendant, v. Civil Action No. 4:24-cv-123-DJH-HBB MERRILL, A BANK OF AMERICA COMPANY, Defendant/Counter-Claimant/Cross-Claimant, and PAUL ADAMS, Defendant/Cross-Defendant.

* * * * * MEMORANDUM OPINION AND ORDER Plaintiff/Counter-Defendant Jack C. Morgan, Jr. sued Defendant/Counter-Claimant/Cross- Claimant Merrill, a Bank of America Company and Defendant/Cross-Defendant Paul Adams, alleging unjust enrichment in relation to a retirement account held by Merrill and seeking declaratory judgment and the creation of a constructive trust. (Docket No. 12) In its answer to Morgan’s complaint, Merrill asserted a counterclaim and crossclaim for interpleader relief. (D.N.

12) Adams, proceeding pro se, moves for dismissal of all claims against him for lack of personal jurisdiction. (D.N. 20) Merrill and Morgan oppose the motion to dismiss. (D.N. 22; D.N. 23) Also pending is Merrill’s unopposed motion for interpleader relief. (D.N. 25) After careful consideration, the Court will grant the requested interpleader relief and deny as moot Adams’s motion to dismiss for the reasons explained below.

I.

Jack Morgan was married to Leanne R. Morgan. (D.N. 12, PageID.50 ¶ 9) Leanne had two children by prior marriage, one of whom is Paul Adams. (Id. ¶ 11) When Leanne opened an Individual Retirement Rollover Account (IRRA) with Merrill in 2000, Morgan was named as the “100% primary beneficiary of the [a]ccount.” (D.N. 14, PageID.81 ¶¶ 6–7) Leanne began suffering from Alzheimer’s disease around 2020. (D.N. 12, PageID.50 ¶ 12) On June 27, 2023, Merrill received a signed beneficiary-designation form naming Adams as the 100% primary beneficiary. (D.N. 14, PageID.81 ¶ 8) Leanne died on March 6, 2024. (D.N. 12, PageID.51 ¶ 18) As of October 31, 2024, the balance of the IRRA was $217,652.52. (Id. ¶ 23) Morgan alleges that Leanne “lacked the requisite mental capacity” at the time of the change in beneficiary designation and that “Adams exerted undue influence over Leanne” and “coerced her to change the beneficiary designation of the IRRA.” (D.N. 12, PageID.52 ¶¶ 28–29) Morgan’s complaint (1) requests that the Court declare him the rightful beneficiary of the IRRA, (2) seeks imposition of a constructive trust over the IRRA funds for Morgan’s benefit, and (3) asserts a common-law claim of unjust enrichment against Adams. (Id., PageID.52–54) Merrill does not claim any interest in the IRRA funds and “has been unable to determine the rightful beneficiary or beneficiaries of the [a]ccount” due to Morgan’s claims. (D.N. 14, PageID.81 ¶ 12; id., PageID.82 ¶ 17) Merrill’s interpleader complaint asserts that it should be protected from litigation regarding entitlement the IRRA funds and seeks dismissal from the present action upon the Court’s acceptance of control of the account and the entry of an order requiring Adams and Morgan to resolve their conflicting claims to the IRRA before the Court (see D.N. 14). See also Bankers Tr.

Co. v. Mfrs. Nat’l Bank, 139 F.R.D. 302, 308 (S.D.N.Y. 1991) (interpleader may be brought by crossclaim or counterclaim).

Adams moves for dismissal of “all claims against him” under Federal Rule of Civil Procedure 12(b)(2), arguing that the requirements of Kentucky’s long-arm statute and the Due Process Clause are not satisfied. (D.N. 20, PageID.102; see D.N. 20-1) Attached to the motion is a sworn affidavit explaining Adams’s lack of connection to Kentucky and asserting that “[d]efending this action in Kentucky would impose an undue burden.” (D.N. 20, PageID.103) Merrill contends that “these arguments bear no weight with respect to Merrill’s [i]nterpleader [c]omplaint” under the federal interpleader statute.1 (D.N. 22, PageID.117) Morgan joins Merrill’s assertions, arguing that because the Court has personal jurisdiction over Adams as to the interpleader claims, the Court also “possesses ancillary jurisdiction” with regard to Morgan’s claims as “compulsory counterclaims.”2 (D.N. 23, PageID.121) Adams appears to concede in his reply that the Court has personal jurisdiction as to the interpleader claims, but he maintains that the federal interpleader statute is not a basis of personal jurisdiction for Morgan’s “independent claims.” (D.N. 24, PageID.128) Merrill has since filed an unopposed motion for interpleader relief, requesting discharge from this matter with prejudice, an order to maintain the IRRA “as is,” a permanent injunction protecting Merrill from further litigation regarding the account, and $5,000 in attorney fees and costs to be taken from the proceeds of the IRRA. (D.N. 25, PageID.132 (“Morgan . . . [and] Adams . . . do not oppose the relief sought herein, including Merrill’s request for attorneys’ fees.”))

II. “[I]nterpleader is ‘an equitable proceeding that ‘affords a party who fears being exposed to the vexation of defending multiple claims to a limited fund or property that is under his control a procedure to settle the controversy and satisfy his obligation in a single proceeding.’” Pope v. Cranmer, No. 3:17-CV-546-RGJ-CHL, 2019 WL 2372886, at *2 (W.D. Ky. Feb. 7, 2019) (quoting United States v. High Tech. Prods., Inc., 497 F.3d 637, 641 (6th Cir. 2007)). Interpleader

Preferred Cap., Inc. v. Assocs. in Urology, 453 F.3d 718, 721 (6th Cir. 2006) (citation modified). “[T]he ‘primary test’ for determining whether interpleader is appropriate evaluates ‘whether the stakeholder legitimately fears multiple vexation directed against a single fund or property.’” USAA Life Ins. Co. v. Space, No. 3:14-CV-00661-TBR, 2015 WL 3407323, at *2–3 (W.D. Ky. May 26, 2015). “[T]his requirement [is] satisfied where multiple claimants present competing claims for the same identifiable [fund or property].” Mudd v. Yarbrough, 786 F. Supp. 2d 1236, 1240 (E.D. Ky. 2011) (citing High Tech. Prods., 497 F.3d at 642). Here, Merrill is subject to competing beneficiary claims by Morgan and Adams over the IRRA (see generally D.N. 14), and thus the requirement is satisfied. See Mudd, 786 F. Supp. 2d at 1240.

While Morgan’s complaint invokes the Court’s diversity jurisdiction (see D.N. 12, PageID.49 ¶ 6), the federal interpleader statute confers to district courts independent original jurisdiction over “any civil action of interpleader or in the nature of interpleader” where three elements are satisfied. 28 U.S.C. § 1335. First, the amount subject to the dispute must exceed $500, 28 U.S.C. § 1335(a), as is the case in this action. (D.N. 12, PageID.51 ¶ 23) There must also be two or more adverse claimants of diverse citizenship. See 28 U.S.C. § 1335(a)(1). This requirement is likewise met because the record indicates that Morgan is a citizen of Kentucky and Adams is a citizen of Wisconsin. (See D.N. 12, PageID.49 ¶¶ 2, 4; D.N. 120, PageID.103) Finally, the interpleader plaintiff is required to make a deposit with the Court to ensure compliance with the Court’s stage-two determination, either in the full amount at issue or as a bond deemed appropriate by the Court. 28 U.S.C. § 1335(a)(2). Because the Court will permit Merrill’s deposit of the IRRA funds upon finding that interpleader is properly invoked, the third requirement is met, and the Court has subject-matter jurisdiction over the interpleader claims.4 See USAA, 2015 WL

Personal jurisdiction is also required in interpleader actions. See 4 Moore’s Federal Practice § 22.03[1][f] (citing New York Life Ins. Co. v. Dunlevy, 241 U.S. 518, 521 (1916)). Even if Adams has not waived personal jurisdiction as to the interpleader claims, see Boswell v. Mayer, 169 F.3d 384, 387 (6th Cir. 1999) (“Pro se plaintiffs enjoy the benefit of a liberal construction of their pleadings and filings.”), the lenient personal-jurisdiction requirements of the federal interpleader statute apply. Federal Rule of Civil Procedure 4(k)(1)(C) states that “[s]erving a summons or filing a waiver of service establishes personal jurisdiction over a defendant . . . when authorized by a federal statute.” And “Congress, through the Federal Interpleader Act, 28 U.S.C. § 2361, which authorizes nationwide service of process, confers nationwide personal jurisdiction to district courts.” Yonko v. W. Coast Life Ins. Co., No. 1:20-CV-109-GNS-HBB, 2021 WL 1428476, at *4 (W.D. Ky. Apr. 15, 2021); see also Med. Mut. of Ohio v. deSoto, 245 F.3d 561,

Court directs.” (D.N. 14, PageID.83) But Merrill’s motion for interpleader relief only asks “[t]hat Merrill be ordered to restrict the Account and maintain the Account ‘as is.’” (D.N. 25, PageID.134) Unlike rule interpleader, see Fed. R. Civ. P. 22, statutory interpleader requires deposit with the Court. See 28 U.S.C. § 1335(a)(2); 6247 Atlas Corp. v. Marine Ins. Co., 155 F.R.D. 454, 461 (S.D.N.Y. 1994) (“[S]tatutory interpleader relaxes the [Rule 22 interpleader] diversity jurisdictional requirements in exchange for the somewhat onerous requirement of depositing the stake with the Court.”); State Farm Mut. Auto. Ins. Co. v. Brewer, 778 F. Supp. 925, 930 (E.D. Ky. 1991) (“Deposit of the fund at issue, or a bond in that amount, is necessary for the district court to acquire jurisdiction over a statutory interpleader action.”). The Court will therefore require that Merrill deposit the full amount at issue.

567–68 (6th Cir. 2001) (“[W]hen a federal court exercises jurisdiction pursuant to a national service of process provision, it is exercising jurisdiction for the territory of the United States and the . . . concern is whether the individual over which the court is exercising jurisdiction has sufficient minimum contacts with the United States.”). Adams has been served in Wisconsin and does not deny minimum contacts with the United States. (See D.N. 19; D.N. 21; D.N. 120, PageID.103) Therefore, the Court has personal jurisdiction over Adams for purposes of the interpleader action. See 28 U.S.C. § 2361.

Adams specifically argues that the Court lacks personal jurisdiction as to Morgan’s claims. (See D.N. 20; D.N. 24) But the second stage of interpleader will require the Court to resolve the legal question of IRRA-fund ownership as between Adams and Morgan. See High Tech. Prods., 497 F.3d at 641. Therefore, because Morgan’s claims do not seek relief beyond determination of entitlement to the IRRA funds (see D.N. 12, PageID.52–55), they are effectively mooted by Merrill’s invocation of interpleader. Adams’s challenge to those claims on personal-jurisdiction grounds is thus also moot. See Mudd, 786 F. Supp. 2d at 1242–43 (finding personal jurisdiction under federal interpleader statute after interpleader was raised defensively in insurance-beneficiary case seeking declaratory judgment); see also Glenclova Inv. Co. v. Trans-Res., Inc., 874 F. Supp. 2d 292, 306 (S.D.N.Y. 2012) (describing convergence of interpleader claims with subsequent crossclaims in the context of abstention because “the legal issues to be decided . . . [and] the relief to be granted are identical”).

In sum, interpleader has been properly invoked by Merrill under 28 U.S.C. § 1335. See High Tech. Prods., 497 F.3d at 641. The Court will therefore grant the motion for interpleader relief, award Merrill $5,000 in costs and attorney fees, dismiss Merrill from this proceeding with prejudice and enjoin Morgan and Adams from instituting or prosecuting Merrill in further litigation related to the IRRA after deposit of the IRRA funds with the Court.5 III.

For the reasons set forth above, and the Court being otherwise sufficiently advised, it is hereby ORDERED as follows: (1) Adams’s motion to dismiss for lack of personal jurisdiction (D.N. 20) is DENIED as moot. (2) Merrill’s motion for interpleader relief (D.N. 25) is GRANTED. Merrill SHALL deposit the balance of the IRRA account ending in -0G68, minus $5,000 in costs and attorney fees, into the Court Registry Investment System by check to the Clerk of Court for ultimate distribution by order of the Court. The Clerk of Court SHALL deposit the funds into an interest-bearing account pending further order of the Court. (3) Upon deposit of the funds with the Court: (a) Merrill shall be discharged from any and all liability on account of or in any way related to the IRRA or related to the handling or processing of any claims made in connection with the IRRA except as to the enforcement of the future order or judgment in the present matter. Jack C. Morgan, Jr. and Paul Adams, and each of their respective attorneys, representatives, successors, assigns, and heirs shall be permanently enjoined from instituting or prosecuting against Merrill a claim,

18) schedule a status conference with the remaining parties within thirty (30) days of the entry of this Memorandum Opinion and Order.

March 12, 2026 AG | David J. Hale, Chief Judge United States District Court