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Transamerica Life Insurance Company v. Gary Shubin

July 10, 2012


The opinion of the court was delivered by: Sheila K. Oberto United States Magistrate Judge



On February 23, 2012, Plaintiff Transamerica Life Insurance Company ("Plaintiff") filed a motion for an order of discharge and an award of costs and attorney fees. (Doc. 15.) Plaintiff seeks to be discharged as the stakeholder in this interpleader action, to be awarded costs and attorneys' fees from the proceeds of the life insurance annuity, and to deposit the net balance of the annuity with the Court. (Doc. 15.) No opposition to Plaintiff's motion was filed. A hearing was held on April 11, 2012, and the Court ordered supplemental briefing. (Docs. 23, 27, 29.) Plaintiff has now provided all the requested supplemental information. (Docs. 30-32, 34.)

For the reasons set forth below, the Court RECOMMENDS that Plaintiff's motion for discharge be GRANTED, Plaintiff's request for attorneys' fees be GRANTED IN PART in a reduced amount, Plaintiff deposit one-third of the annuity with the Court and distribute the remaining two-thirds to the undisputed designated beneficiaries, and Plaintiff be discharged and dismissed from this action.


A. Factual Background

On November 23, 2011, Plaintiff filed a complaint in interpleader, alleging that it may be subject to multiple conflicting claims concerning the distribution of a deferred life insurance annuity ("Annuity") payable on behalf of Annuitant/Owner Jeri Wood-Shubin ("Wood-Shubin"). (Doc. 2).

Plaintiff alleges that on April 27, 1990, Pacific Fidelity Life Insurance Company, now known as Transamerica (Plaintiff), issued the Annuity to Wood-Shubin. (Doc. 2, ¶ 5.) Wood-Shubin had filed a Annuity Policy Change Form on July 31, 2008, naming James Shubin ("James"), Gary Shubin ("Gary")*fn1 , and Roberto Garcia ("Garcia" or, collectively, "Defendants") as beneficiaries of the Annuity, each with an equal one-third share. (Doc. 2-1, Exh. B, pp. 8-10.) James and Gary were two of Wood-Shubin's stepsons, and Garcia was allegedly Wood-Shubin's friend and caretaker. (Doc. 2-1, Exh. B, pp. 8-10.) Prior to that change, James and Gary had been the previous beneficiaries, each with an equal one-half share of the Annuity. (Doc. 2-1, Exh. B, p. 7.)

Wood-Shubin died on June 29, 2011. (Doc. 2, ¶ 5.) As of September 14, 2011, the value of the Annuity was $342,792.83. (Doc. 2, ¶ 5.) Plaintiff alleges that, after it received telephonic notice that Wood-Shubin had died, it forwarded information regarding the status of the Annuity and claim forms for completion and filing to James, Gary, and Garcia. (Doc. 2, ¶¶ 9-10, Exh. C.) On October 3, 2011, Plaintiff received an Annuity Claimant's Statement from Garcia dated September 26, 2011. (Doc. 2, ¶ 11, Exh. D.)

Shortly after receipt of Garcia's Claimant Statement, Plaintiff alleges that it became aware that on August 25, 2011, a lawsuit had been filed in the Frenso County Superior Court in the case of Evelyn Lauderdale, as Trustee of the Jeri L. Shubin 2007 Trust, v. Roberto Garcia, case no. 11 CECG02841. (Doc. 2, ¶ 12, Exh. E.) The operative pleading in the state action asserts claims against Garcia for fraud (intentional misrepresentation), emotional distress, elder abuse, conversion, specific performance, accounting, recovery of funds claimed to belong to the trust, and undue influence. (Doc. 30, pp. 5-19.) The operative complaint alleges that, due to Wood-Shubin's dementia, Garcia was able to dominate and control Wood-Shubin's daily routine and financial affairs and improperly converted her assets for Garcia's own benefit. (Doc. 30, pp. 5-19.)

In the complaint in the instant action, Plaintiff "admits that it owes the distribution of the death benefit proceeds" on Wood-Shubin's Annuity, but asserts that "due to conflicting claims and the filed lawsuit" against Garcia in Fresno County Superior Court, Plaintiff "is at risk of multiple liability." (Doc. 2, ¶ 14.) As noted above, Plaintiff alleges that Wood-Shubin had filed an Annuity Policy Change Form on July 31, 2008, adding Garcia as a one-third beneficiary, and that prior to that change James and Gary had been the previous beneficiaries, each with an equal one-half share. (Doc. 2-1, Exh. B, p. 7-10.) Plaintiff contends that this change occurred during the time period that Garcia, according to the state court lawsuit, allegedly used improper influence over Wood-Shubin and committed fraud and elder abuse. (See Doc. 17, 4:18-22.) As such, Plaintiff believes that Defendants are not in agreement concerning which beneficiaries should receive the proceeds of the Annuity. (Doc. 2, ¶ 15.)

Plaintiff is concerned that if the state court lawsuit is successful and Garcia is found to have unduly influenced Wood-Shubin, the other beneficiaries would thus be able to challenge the validity of the designation of beneficiaries as to the Annuity. (Doc. 17, 4:23-25.) Plaintiff asserts that if it pays Garcia now and he is later found to have unduly influenced Wood-Shubin, Plaintiff would then be liable for having paid the wrong person. (Doc. 17, 4:25-27.) Accordingly, Plaintiff filed the instant suit, alleging that the proceeds should be subject to interpleader. (Doc. 17, 4:27.)

B. Procedural Background

On November 23, 2011, Plaintiff filed a complaint in interpleader against Defendants Gary, James, and Garcia. (Doc. 2.) Gary was served on December 9, 2011, Garcia was served on December 10, 2011, and James was served on January 19, 2012. (Docs. 7, 8, 14.) Garcia filed an answer on January 3, 2012. (Doc. 9.) James and Gary failed to file a responsive pleading. On January 20, 2012, Plaintiff requested entry of default against Gary, which was entered by the Clerk of the Court on January 23, 2012. (Docs. 10, 11.)

On February 23, 2012, Plaintiff filed the instant motion for order for discharge and award of costs and attorney fees. (Doc. 15.) No opposition was filed. A hearing was held on April 11, 2012, before Magistrate Judge Sheila K. Oberto. (Doc. 23.) Although Garcia had not filed a response to Plaintiff's motion, Garcia's counsel was present at the hearing. On the same day, based on representations made at the hearing, Plaintiff filed a Request for Entry of Default as to James Shubin. (Doc. 24.)

On April 12, 2012, the Court issued an order requiring Plaintiff to submit supplemental briefing regarding issues raised at the hearing. (Doc. 27.) Specifically, the Court required Plaintiff to submit a copy of the current operative pleading in the Fresno County Court action and to explain if there were any changes in that pleading that affected Plaintiff's assertion in this action regarding Plaintiff's potential liability.*fn2 (Doc. 27, 4:5-13.) Plaintiff was required to set forth how the current dispute against Garcia in the state action supports Plaintiff's assertion that it is at risk of multiple litigation or potential liability as to the Annuity, and whether the Annuity was part of or separate from the state court action. Additionally, pursuant to the agreement reached at the hearing, Plaintiff and Garcia were required to file a stipulation setting forth that the only portion of the Annuity in dispute is the amount payable to Garcia, as well as any amount due to Plaintiff for attorneys' fees and costs, and that there is no dispute as to the portion of Annuity that is payable to Gary and James. (Doc. 27, 4:8-26.) Plaintiff was also required to establish the amount of attorneys' fees and costs that it seeks. (Doc. 27, 5:1-3.)

On April 16, 2012, the Court issued an order requiring Plaintiff to provide supplemental briefing concerning service on James prior to the entry of default. (Doc. 29.) The Court required Plaintiff to provide a supplemental declaration from the process service establishing that the person who accepted service on James' behalf "was at least 18 years of age and/or of suitable age and discretion to accept service." (Doc. 29, 2:6-7.)

On April 23, 2012, Plaintiff filed a supplemental brief, a declaration from counsel in support of attorneys' fees and costs, and a stipulation with Garcia regarding the portion of the Annuity subject to interpleader and fees. (Docs. 30-32.) Plaintiff's supplemental brief indicated that the second amended complaint filed in the state court action did not alter Plaintiff's concern in the instant action, since "[t]he Second Amended Complaint contends that the disposition of assets to Mr. Garcia was not the result of the decedent's true intention. That conclusion would open the door to a contention that the actions of Garcia also caused the decedent to change the beneficiaries on the annuity and puts at risk at least one third of the annuity." (Doc. 30, 3:5-9.) Plaintiff further asserts that "[i]t does not appear that the Transamerica Life Insurance annuity is mentioned in the pending state court complaint. There are no specific allegations that the actions of Mr. Garcia were specifically directed to the annuity or to the designation of beneficiaries under the annuity." (Doc. 30, 2:26-3:1.) Plaintiff seeks attorneys' fees in the total amount of $9,063.25, and indicates that these fees are reasonable and should be deducted from the entire amount of the Annuity. (Doc. 30, 3:10-25; Doc. 31, Gilmore Decl., ¶ 5.)

The stipulation between Plaintiff and Garcia provides that two-thirds of the Annuity -- the one-third shares that are each designated to James and Gary -- are not in dispute and that Garcia makes no claim as to those interests. (Doc. 32, ¶ 2.) Plaintiff and Garcia agree that Plaintiff is entitled to recover its fees and costs from the Annuity and that such fees should be deducted from the Annuity as a whole, thus making each beneficiary (James, Gary, and Garcia) responsible for one-third of the total fees and costs. (Doc. 32, ¶ 3.)

On May 24, 2012, Plaintiff filed a stipulation regarding the validity of service on James, who "acknowledge[d] valid and effective service on him" and thus addressed the Court's expressed concern that James was properly served. (Doc. 34, 1:27; see also Doc. 29.) On May 29, 2012, the Clerk of the Court entered default against James. (Doc. 36.)


A. Legal Standard

"In an interpleader action, the 'stakeholder' of a sum of money sues all those who might have claim to the money, deposits the money with the district court, and lets the claimants litigate who is entitled to the money." Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1265 (9th Cir. 1992). As such, the stakeholder forces the potential claimants to litigate who is properly entitled to the fund.

See id.; Herman Miller, Inc. Retirement Income Plan v. Magallon, No. 2:07--cv--00162--MCE--GGH, 2008 WL 2620748, at *1 (E.D. Cal. Jul. 2, 2008); Metro. Life Ins. Co. v. Billini, No. CIV. S-06-02918 WBS KJM, 2007 WL 4209405, at *2, (E.D. Cal. Nov. 27, 2007). "Interpleader's primary purpose is not to compensate, but rather to protect stakeholders from multiple liability as well as from the expense of multiple litigation." Aetna Life Ins. Co. v. Bayona, 223 F.3d 1030, 1034 (9th Cir. 2000) (explaining that interpleaders are "governed by equitable principles") (citations omitted).

"Procedurally, an interpleader action encompasses two stages. First, the court determines the propriety of interpleading the adverse claimants and relieving the stakeholder from liability. The second stage involves an adjudication of the adverse claims of the defendant claimants." ...

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