UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA
September 27, 2010
OM FINANCIAL LIFE INSURANCE COMPANY, PLAINTIFF,
MICHAEL W. HELTON, AN INDIVIDUAL, CASEY OZUNA, AN INDIVIDUAL, DEANNA OZUNA, AN INDIVIDUAL, CHRISTINA OZUNA, AN INDIVIDUAL, AND DOES 1-10, DEFENDANTS.
MEMORANDUM AND ORDER RE: MOTION FOR ORDER OF DISCHARGE AND AWARD OF COSTS AND ATTORNEYS' FEES
This is an interpleader action involving a dispute over $150,000.00 in death benefits from a life insurance policy ("Policy") administered by plaintiff OM Financial Life Insurance Company. Plaintiff filed this action in response to actual or potential competing claims to entitlement from defendants. Plaintiff now moves (1) to discharge plaintiff from further liability under the Policy to defendants and to dismiss plaintiff from this action with prejudice; (2) to permanently enjoin defendants from instituting or prosecuting any proceeding against plaintiff in state or federal court relating to the Policy benefits or Policy; (3) to award plaintiff attorneys' fees and costs from the Policy benefits deposited with the court; and (4) for defendants to bear their own attorneys' fees and costs.
I. Factual and Procedural Background
In December of 2003, plaintiff's predecessor*fn1 issued life insurance policy number L0038577 to Catherine M. Helton ("insured" or "decedent"). (Compl. ¶ 12, Ex. A, at 3.) Defendant Michael W. Helton ("Helton"), who was allegedly the insured's husband at the time, was named as the primary beneficiary of the Policy. (Id. ¶¶ 13, 16, Ex. B.) On or about December 4, 2008, plaintiff received a Request for Service, dated December 3, 2008, from the insured to change her primary beneficiaries to defendants Casey Ozuna, Deanna Ozuna, and Christina Ozuna ("Ozuna children"), who are allegedly the insured's children. (Id. ¶ 14.)
On or about January 2, 2009, plaintiff received a letter from Helton indicating the insured had died on December 10, 2008, and providing a copy of the Death Certificate. (Id. ¶ 14.) Helton informed plaintiff that he believed Tony Ozuna, the insured's former husband, had caused the Death Certificate to falsely indicate that the decedent was divorced. (Id. ¶ 16.) According to Helton, the divorce proceedings were still pending at the time of death. (Id. ¶ 16.) Helton's counsel informed plaintiff that the insured had filed for divorce on November 8, 2008, and under California law she was prohibited from changing her beneficiary designation at that time. (Id. ¶ 17.) Helton's counsel claimed entitlement to the benefits of the Policy for Helton and requested that plaintiff refrain from making any payment. (Id. ¶ 17.) Plaintiff's counsel has also spoken with the Ozuna children on "numerous occasions" and they confirmed that they claim entitlement to the benefits under the Policy. (Jain Decl. (Docket No. 17) ¶ 5.)
Plaintiff claims no interest in the Policy benefits and is willing to pay the Policy benefits to the person or persons legally entitled to them; plaintiff has not paid the Policy benefits because of the risks in determining itself which actual or potential competing claims are valid. (Compl. ¶ 21.) Plaintiff alleges that no out-of-court resolution of the competing claims is possible and no independent agreement has been reached by defendants. (Id. ¶¶ 18-19.)
To avoid multiple liability or multiple litigation, plaintiff filed its Complaint for Interpleader and Declaratory Relief on July 17, 2009, and deposited the $150,000.00 in Policy benefits, totaling $152,833.76 with accrued interest, with the court. (Id. ¶ 23; Pl.'s Mem. (Docket No. 17) 4:23-24.)
An interpleader action allows the stakeholder of money to sue various claimants to force them to litigate who is entitled to the money. Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1265 (9th Cir. 1992). Interpleader's primary purpose is to protect the stakeholder from multiple liability and the expense of multiple litigation, not to compensate the stakeholder. See Aetna Life Ins. Co. v. Bayona, 223 F.3d 1030, 1034 (9th Cir. 2000) (explaining that interpleader is governed by equitable principles).
Procedurally, an interpleader action consists of two stages: First, the court determines whether the requirements for "rule interpleader" under Federal Rule of Civil Procedure 22 or "statutory interpleader" under the Federal Interpleader Act, 28 U.S.C. §§ 1335, 1397, 2361, have been met. Second, the court determines the respective rights of the adverse claimants. See Mack v. Kuckenmeister, Nos. 09-15290, 09-15291, 2010 WL 2853881, at *9 (9th Cir. July 22, 2010) (citing Rhoades v. Casey, 196 F.3d 592 (5th Cir. 1999)).
Rule interpleader provides that "[p]ersons with claims that may expose a plaintiff to double or multiple liability may be joined as defendants and required to interplead." Fed. R. Civ. P. 22(a)(1). The court's subject matter jurisdiction over a rule interpleader action must be based on the general statutes governing jurisdiction. Bayona, 223 F.3d at 1033.
District courts also have jurisdiction to hear statutory interpleader actions in which (1) the value of the stake is $500.00 or more, (2) at least two adverse claimants of diverse citizenship are claiming or may claim to be entitled to the stake, and (3) the stakeholder has deposited the stake with the court. 28 U.S.C. § 1335(a).
Here, the court has diversity jurisdiction pursuant to § 1332.*fn2 The Complaint alleges that plaintiff is a citizen of Maryland, incorporated and with its principal place of business in Maryland; Helton is a citizen of California; Deanna Ozuna is a citizen of California; Christina Ozuna is a citizen of California; and Casey Ozuna is a citizen of Alaska. (Compl. ¶¶ 1-5.) This action meets the jurisdictional amount in controversy of greater than $75,000.00 under § 1332 because the Policy benefits are $150,000.00, plus accrued interest. (Id. ¶ 8, Ex. A, at 3, Ex. B.)
Specific jurisdiction under § 1335 also exists. First, the amount in controversy far exceeds $500.00. Second, minimal diversity between adverse claimants is satisfied because Casey Ozuna is a citizen of Alaska and Helton is a citizen of California, and they are adverse claimants. (Id. ¶ 17; Jain Decl. ¶ 5.). Third, plaintiff has deposited the Policy benefits, plus accrued interest, with the court. (Compl. ¶ 23; Pl.'s Mem. 4:23-24.)
Plaintiff is subject to actual or potential adverse claims to the decedent's Policy benefits from Helton and the Ozuna children. Accordingly, the court finds that interpleader is proper.
Once it is determined that interpleader is proper, federal courts may discharge the stakeholder from further liability. 28 U.S.C. § 2361; Wells Fargo Bank v. PACCAR Fin. Corp., No. 1:08-CV-00904 AWI SMS, 2009 WL 211386, at *6-8 (E.D. Cal. Jan. 27, 2009) (explaining that in a rule interpleader action, "[i]f an interpleading plaintiff has no interest in the stake, the plaintiff should be dismissed").
A court should readily discharge a disinterested stakeholder from further liability absent a stakeholder's bad faith in commencing an interpleader action, potential independent liability to a claimant, or failure to satisfy requirements of rule or statutory interpleader. See generally 4 James Wm. Moore et al., Moore's Federal Practice § 22.03[a] (3d ed. 2010); see also Prudential Ins. Co. of Am. v. Hovis, 553 F.3d 258, 264 (3d Cir. 2009) ("The modern approach . . . is that, where a claimant brings an independent counterclaim against the stakeholder, the stakeholder is kept in the litigation to defend against the counterclaim, rather than being dismissed after depositing the disputed funds with the court."); Mendez v. Teachers Ins. & Annuity Ass'n, 982 F.2d 783, 787 (2d Cir. 1992) (holding that discharge under § 2361 requires § 1335 to be met and lack of bad faith in commencing the interpleader action).
Plaintiff has deposited the Policy benefits, plus accrued interest, with the court and does not claim any interest in the Policy benefits. (Compl. ¶ 21-22; Pl.'s Mem. 5:8.) The court can find no factor weighing against immediate discharge. Accordingly, the court will grant plaintiff's motion to discharge plaintiff from further liability under the Policy to defendants and to dismiss plaintiff from this action with prejudice.
Although Helton and the Ozuna children have all either waived service or been served (Docket Nos. 7-8, 11, 14), none of defendants have filed an answer or a statement of opposition or non-opposition to plaintiff's instant motion. At the hearing on the motions, counsel for Helton stated that he had no oppostion to plaintiff's requests for a permanent injunction or for attorneys' fees. Nevertheless, to be prudent, the court will defer ruling on those requests until after the remaining defendants have either appeared or their defaults have been taken.
IT IS THEREFORE ORDERED that:
(1) plaintiff's motion to discharge plaintiff from further liability under the Policy to defendants and to dismiss plaintiff from this action with prejudice be, and the same hereby is, GRANTED; and
(2) plaintiff's motions to permanently enjoin defendants, to award plaintiff attorneys' fees and costs, and for defendants to bear their own attorneys' fees and costs will be taken under submission to be ruled upon after all parties have appeared or their defaults have been entered.