Jackson National Life Insurance Company v. Bohnert

Background

Jackson National Life Insurance Company filed this interpleader action in July 2015 concerning annuity benefits payable after Kenneth R. Boettcher’s death. Jackson deposited the disputed benefits with the court and was dismissed from the action in 2016.

The remaining dispute involved Karyl L. Bohnert, Nancy Anderson, and Michael D. Kozlik, identified as the personal representative of the Estate of Kenneth R. Boettcher. In December 2016, the County Court of Sarpy County, Nebraska, removed Kozlik as the Estate’s personal representative. The probate court later appointed Mary Wilson as Special Administrator to preserve and protect the Estate’s rights and interests in this case. Wilson was not initially authorized to bind the Estate to a settlement without probate-court approval.

After the parties reported that they had reached an agreement, Wilson sought authority from the probate court to execute the settlement for the Estate. Kozlik sought to prevent her from doing so. This court stayed the federal case while the probate court considered Wilson’s authority. On December 26, 2019, the probate court authorized Wilson to execute a settlement in this case and to exercise the powers of the Estate’s personal representative under Nebraska law. Kozlik appealed, and that appeal remained pending when the federal court ruled. The Nebraska Supreme Court had also affirmed Kozlik’s removal as personal representative.

Bohnert’s Motion to Dismiss

Bohnert moved under Federal Rule of Civil Procedure 17(a)(1) and 17(b)(3) to dismiss the Estate, arguing that the Estate lacked a representative with authority to represent it. Rule 17(a)(1) concerns prosecution of an action by the real party in interest, and Rule 17(b)(3) addresses an entity’s capacity to sue or be sued under applicable state law.

The court held that Rule 17 did not support dismissal here. Rule 17 applies to transfers of legal interests occurring before a lawsuit begins, but the Estate’s legal interests were not transferred from Kozlik to Wilson before this lawsuit commenced. The court also explained that Rule 17(a) applies to a plaintiff prosecuting a claim, while the Estate was a defendant and was not prosecuting a claim. The court therefore denied Bohnert’s motion to dismiss. The court noted that, even if Rule 17(a) applied, the rule generally allows time for substitution before dismissal for failure to proceed in the name of the real party in interest.

Wilson’s Motion to Substitute

Wilson moved under Federal Rule of Civil Procedure 25(c) to substitute herself for Kozlik as the Estate’s representative. Rule 25(c) permits a court to substitute or join a transferee when a legal interest is transferred during a lawsuit. The court explained that state law determines who is the proper party, while federal law governs the procedure for seeking substitution. Whether to order substitution under Rule 25(c) is within the district court’s discretion.

The court recognized that Kozlik was no longer the Estate’s personal representative and that the probate court had appointed Wilson and authorized her to settle this case and exercise the powers of a personal representative. But Bohnert argued that Wilson lacked current authority because Kozlik’s appeal of the probate court’s December 26, 2019 order was pending.

Under Nebraska law, an appeal of a matter arising under the Nebraska Probate Code suspends the order specifically appealed from unless the suspension is removed. The court concluded that the probate court’s order authorizing Wilson to settle the case and act as the Estate’s personal representative was therefore suspended during Kozlik’s appeal. The record did not show that a Nebraska court had removed that suspension. Because the record did not clearly establish that the Estate’s interest had effectively transferred to Wilson, the court found her substitution request premature and denied it without prejudice. The court did not reach Bohnert’s alternative arguments against substitution.

Order and Effect

The court ordered that Karyl L. Bohnert’s motion to dismiss was denied. Mary Wilson’s motion to substitute was denied without prejudice, meaning the order did not bar her from seeking substitution again after the authority issue changed or was resolved. The order did not decide the underlying entitlement to the annuity benefits.