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Pamela Stonebreaker v. Guardian Life Insurance Company of America

February 23, 2012

PAMELA STONEBREAKER,
PLAINTIFF,
v.
GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, A CORPORATION; WESTERN RESERVE LIFE INSURANCE COMPANY OF OHIO, A CORPORATION; UNION SECURITY INSURANCE COMPANY, A CORPORATION; DOES 1-100, INCLUSIVE. DEFENDANTS.
WESTERN RESERVE LIFE INSURANCE COMPANY OF OHIO, A CORPORATION, COUNTERCLAIMANT,
v.
PAMELA STONEBREAKER, COUNTERDEFENDANT. WESTERN RESERVE LIFE INSURANCE COMPANY OF OHIO, A CORPORATION, THIRD-PARTY PLAINTIFF,
v.
ROE ONE, AS EXECUTOR OF THE ESTATE OF ROBERT STONEBREAKER; ROES 2-10, INCLUSIVE; THIRD-PARTY DEFENDANTS. UNION SECURITY INSURANCE COMPANY, A CORPORATION COUNTERCLAIMANT,
v.
PAMELA STONEBREAKER, AN INDIVIDUAL. COUNTERDEFENDANT.
UNION SECURITY INSURANCE COMPANY, A CORPORATION CROSS-CLAIMANT,
v.
KRISTIN STONEBREAKER, A MINOR; KELLI STONEBREAKER, A MINOR; CROSS-DEFENDANT. GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, A CORPORATION, COUNTERCLAIMANT,
v.
PAMELA STONEBREAKER, COUNTERDEFENDANT. GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, A CORPORATION, CROSS-CLAIMANT,
v.
KRISTIN STONEBREAKER, A MINOR; KELLI STONEBREAKER, A MINOR; RYAN STONEBREAKER, A MINOR, CROSS-DEFENDANTS.



The opinion of the court was delivered by: Hayes, Judge:

ORDER

The matters before the Court are the following Motions filed by Plaintiff: the Motion for Partial Summary Judgment on Plaintiff's Breach of Contract Claims (ECF No. 37); the Motion for Summary Judgment on Defendant Guardian Life Insurance Company of America's ("Guardian") Counterclaim in Interpleader and Cross-claim for Interpleader (ECF No. 116); the Motion for Summary Judgment on Defendant Western Reserve Life Assurance Company of Ohio's ("Western Reserve") Counterclaim in Interpleader and Third-party Complaint for Interpleader (ECF No. 117); the Motion for Summary Judgment on Defendant Union Security Insurance Company's ("Union Security") Counterclaim in Interpleader and Cross-claim for Interpleader (ECF Nos. 118, 122); the Motion for Release of Funds that Guardian Deposited with the Court (ECF No. 152); the Motion for Release of Funds that Union Security Deposited with the Court (ECF No. 153-54); and the Motion for Release of Funds that Western Reserve Deposited with the Court (ECF No. 155); and the Motion for Judgment in Interpleader (ECF No. 88) filed by Western Reserve; and the Motion for Discharge and Dismissal of Disinterested Stakeholder (ECF No. 141) filed by Union Security.

I. Background

On April 15, 2011, Defendants Guardian, Western Reserve, and Union Security removed the Complaint filed by Plaintiff Pamela Stonebreaker in the Superior Court of California for the County of San Diego to this Court pursuant to 28 U.S.C. § 1332(a) diversity jurisdiction. Plaintiff alleged that she was married to Robert Stonebreaker who purchased the following life insurance policies: (1) three policies from Defendant Guardian totaling $2,000,000; (2) one policy from Defendant Western Reserve in the amount of $250,000; (3) one policy from Defendant Union Security in the amount of $525,000. Plaintiff alleged that Robert Stonebreaker died on January 16, 2010 and that Defendants have failed to pay the life insurance benefits to Plaintiff, the primary beneficiary. Plaintiff asserts a claim for breach of contract and a claim for breach of the implied covenant of good faith and fair dealing against each Defendant.

On April 21, 2011, Defendant Western Reserve filed a Counterclaim in Interpleader against Plaintiff Stonebreaker and a Third-party Complaint in Interpleader against the executor of the Estate of Robert Stonebreaker.*fn1 Western Reserve alleged that Plaintiff is the primary beneficiary to a life insurance policy owned by Robert Stonebreaker, and that there are no secondary beneficiaries. Western Reserve alleged that Robert Stonebreaker's death was determined to be a homicide and that Plaintiff, the beneficiary of the life insurance policy, was a suspect in the homicide. Western Reserve alleged that Plaintiff may be prohibited from recovering the proceeds of the life insurance policy if she is found to have caused her husband's death and that the proceeds would be distributed to the Estate of Robert Stonebreaker. Western Reserve alleged that, although Western Reserve admits the proceeds of the life insurance policy are due and owing to someone, payment of the proceeds may subject Western Reserve to the risk of multiple claims. Western Reserve deposited $251,576.62 with the Clerk of the Court as "the benefits payable under a life insurance policy issued by [Western Reserve] on the life of Robert Stonebreaker." (ECF No. 10 at 2).

On April 22, 2011, Defendant Union Security filed a Counterclaim in Interpleader against Plaintiff and filed a Cross-claim in Interpleader against the guardian ad litem for Kristin Stonebreaker and Kelli Stonebreaker, minor children. Union Security alleged that Plaintiff is the primary beneficiary to a life insurance policy owned by Robert Stonebreaker and that Kristin Stonebreaker and Kelli Stonebreaker are the secondary beneficiaries. Union Security alleged that it is willing and able to pay the proceeds of the life insurance policy, but it cannot determine the identity of the proper beneficiary. Union Security deposited $560,956.58 with the Clerk of the Court. (ECF No. 49 at 2; 140 at 8).

On April 22, 2011, Guardian filed a Counterclaim for Interpleader against Plaintiff and filed a Cross-claim in Interpleader against Kristin Stonebreaker, Kelli Stonebreaker, and Ryan Stonebreaker, minor children. Guardian alleges that Plaintiff is the primary beneficiary to a life insurance policy owned by Robert Stonebreaker and that Kristin Stonebreaker, Kelli Stonebreaker, and Ryan Stonebreaker are the secondary beneficiaries. Guardian alleged that it is willing and able to pay the proceeds of the life insurance policy, but it cannot determine the identity of the proper beneficiary. Guardian deposited $1,998,397.41 with the Clerk of the Court as "the benefits payable under a life insurance policies issued by [Guardian] on the life of Robert Stonebreaker." (ECF No. 121 at 2).

On June 10, 2011, Plaintiff filed a Motion for Partial Summary Judgment on the breach of contract claim against all three Defendants.*fn2 (ECF No. 37).

On July 11, 2011, a guardian ad litem was appointed to represent Kristin Stonebreaker, Kelli Stonebreaker, and Ryan Stonebreaker, the minor children in this case.

On August 29, 2011, Western Reserve filed a Motion for Judgment in Interpleader (ECF No. 88).

On October 4, 2011, Plaintiff filed a Motion for Summary Judgment on Guardian's Counterclaim in Interpleader and Cross-claim for Interpleader (ECF No. 116), a Motion for Summary Judgment on Western Reserve's Counterclaim in Interpleader and Third-party Complaint for Interpleader (ECF No. 117), and a Motion for Summary Judgment on Union Security's Counterclaim in Interpleader and Cross-claim for Interpleader (ECF Nos. 118, 122).*fn3

On November 14, 2011, Union Security filed a Motion for Discharge and Dismissal of Disinterested Stakeholder (ECF No. 141).

On November 23, 2011, the guardian ad litem for Kristin, Kelli, and Ryan Stonebreaker filed a "Notice of No Competing Claim and Non-opposition to the Motion for Disbursement of Funds to Plaintiff Stonebreaker." (ECF No. 151). The guardian ad litem states "that she has not and is not making competing claims to the funds that [Guardian], [Union Security], and [Western Reserve] have deposited with the Court.... [The guardian ad litem] is unaware of evidence sufficient to justify making a competing claim and ... believes that the Stonebreaker children have no right to claim the policy proceeds." Id. at 2.

On November 23, 2011, Plaintiff filed a Motion for Release of Funds that Guardian Deposited with the Court (ECF Nos. 152-53), a Motion for Release of Funds that Union Security Deposited with the Court (ECF No. 154), and a Motion for Release of Funds that Western Reserve Deposited with the Court (ECF No. 155).

II. Interpleader

There are two steps to an interpleader action. The first step is determining whether the requirements of interpleader have been met. See 28 U.S.C. § 1335. The second step is to "adjudicat[e] the adverse claims of the defendant claimants." W. Conf. of Teamsters Pension Plan v. Jennings, Case No. C--10--03629 EDL, 2011 WL 2609858 at * 5 (N.D. Cal. June 6, 2011) (noting that bifurcation is not mandatory and the entire action may be disposed of at one time) (citing N.Y. Life Ins. Co. v. Connecticut Development Authority, 700 F.2d 91, 95 (2nd Cir. 1983)); see also 28 U.S.C. ยง 2361 (stating that the ...


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