California Court of Appeals, Second District, First Division
FARMERS NEW WORLD LIFE INSURANCE COMPANY, Plaintiff and Respondent,
FRANK ALLAN REES, Defendant and Appellant.
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC442877, Robert L. Hess, Judge.
Blumberg Law Corporation, Ave Buchwald and John P. Blumberg for Defendant and Appellant.
Fulbright & Jaworski, Peter H. Mason and Ryan T. McCoy for Plaintiff and Respondent.
Wife is found dead in the street outside the home she shared with husband. Her death is investigated as a homicide. Husband, who is the sole beneficiary on wife’s life insurance policy, is a suspect. Life insurance company files an interpleader action and deposits the policy benefits plus interest with the trial court. Wife’s mother, who would be entitled to the policy benefits if husband were found to have feloniously and intentionally killed wife, defaults in the action. The court awards husband the interpleaded funds less attorney fees and costs requested by the life insurance company. Husband contends the attorney fees and costs award is erroneous because his right to the policy benefits never was in dispute and no potential for double liability existed, thus rendering the interpleader action unnecessary and the statutory requirements for attorney fees and costs unmet. We disagree. Under the circumstances of this case, the life insurance company was entitled to file an interpleader action, and the court did not err by exercising its discretion to award attorney fees and costs. We thus affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
1. Wife’s Death and Husband’s Claim for Benefits Under Her Life Insurance Policy
Frank and Rosamaria Rees married in 1997. In May 1998 they each obtained from Farmers New World Life Insurance Company (Farmers) a life insurance policy with benefits of $150, 000. Rosamaria’s policy insured her life, and Frank’s policy insured his life. They named the other as the sole primary beneficiary and listed no contingent beneficiaries. According to the terms of Rosamaria’s policy, if Frank predeceased Rosamaria, the benefits were to be paid to Rosamaria or to her estate.
On September 18, 2009, Rosamaria, on her way to pick up Frank from a Gamblers Anonymous meeting, was shot and killed in the street outside the home she shared with Frank. She died intestate, without a will and without having borne any children. She was predeceased by her father but survived by her mother. Farmers’ insurance agent informed the company of Rosamaria’s death on September 23, 2009. A claims officer contacted Frank, who indicated that the Los Angeles Police Department (LAPD) was investigating Rosamaria’s death as a homicide. Farmers sent Frank a claim form for the policy benefits.
On October 1, 2009, a Special Investigation Unit Manager (manager) for Farmers spoke with an LAPD detective regarding Rosamaria’s death. According to the manager’s notes, the detective reported that “no one has been ruled out in this death. He said that [Frank] is a big gambler and has a couple million dollars in life insurance on his wife.” About two weeks later, on October 14, 2009, Frank submitted a claim to Farmers for the $150, 000 in life insurance benefits. Farmers responded by letter to Frank the next day, “During our claims evaluation we have contacted the [LAPD] Robbery/Homicide Division and have been informed that their investigation is ongoing and that no one has been ruled out as a suspect in the homicide of our insured [Rosamaria] at this time. Therefore, we will await the results of the police investigation before discharging our obligation in this case.” About a month later, and then again the following month, Farmers sent Frank letters repeating essentially the same information. On January 12, 2010, Frank called the manager, who informed “him that the police were still conducting their investigation and no one had been ruled out as a suspect. [The manager] said that [he] would call the detective and contact [Frank] if there were any changes in [Farmers’] handling.”
The manager spoke with another LAPD detective on January 18, 2010. The manager’s notes stated that the police had “not completed their investigation and [said] do not pay the claim.” On January 19, 2010, the manager spoke with the initial detective and noted that the police had “not ruled out Frank... as a suspect and the investigation is ongoing.” Farmers again sent a letter to Frank informing him that the investigation was ongoing and it would await the results before discharging its obligation. On January 22, 2010, the manager left a message for Frank, in response to a call from him, indicating that Farmers is “awaiting the police investigation final report and that no one has been ruled out as a suspect. [The manager] could not give him a time line.”
For the next four months, February, March, April and May, the manager sent letters to Frank informing him that, according to the LAPD, the investigation of Rosamaria’s death still is ongoing and no one has been ruled out as a suspect in her homicide and that it would await the results of the investigation before discharging its obligation. On May 25, 2010, Frank called the manager asking for the status of the claim. The manager told Frank he would contact LAPD. According to the manager’s notes, the initial detective said that Frank “is still considered a ‘prime’ suspect in the death of his wife.” On June 18, 2010, Farmers sent Frank a letter, again informing him that the investigation of Rosamaria’s death still is ongoing, that no one has been ruled out as a suspect in her homicide and that it would await the results of the investigation before discharging its obligation.
Frank retained counsel, who sent Farmers a letter on July 14, 2010. Counsel requested various documents from Farmers and asked for confirmation that Frank’s “claim was complete and that [it] [had] received all the supporting documents needed to process his claim....” Counsel also requested confirmation that “the only reason the benefits have not been paid to [Frank] is due to the possibility that he may have been involved in the killing of his wife. [¶] We would appreciate knowing whether anyone has accused [Frank] of having been involved in any way in the killing of his wife; and, if so, who has made the accusation. [¶] We would also appreciate knowing whether anyone other than [Frank] has made a claim to the benefits of [Rosamaria’s] life insurance policy. [¶] Finally, we would appreciate knowing whether your company... or someone acting on behalf of your company has undertaken its own investigation regarding [Rosamaria’s] demise or whether it is relying solely on the investigation by the [LAPD]....” Based on the receipt of this letter, “and the fact ...