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Cox v. Reliance Standard Life Insurance Co.

United States District Court, E.D. California

July 8, 2014

NICOLE COX, et al., Plaintiffs,
v.
RELIANCE STANDARD LIFE INSURANCE COMPANY, et al., Defendants.

FINDINGS AND RECOMMENDATIONS GRANTING PLAINTIFFS' MOTION FOR APPROVAL AND COMPROMISE FOR MINOR PLAINTIFFS

JENNIFER L. THURSTON, Magistrate Judge.

Plaintiffs M.E., J.E. and K.C are minors appearing in this proceeding by and through their guardian ad litem, Nicole Cox, who seeks approval of the minor's compromise in this action. (Doc. 55). Defendant filed a statement of non-opposition to the motion. (Doc. 57) For the following reasons, the Court recommends Plaintiff's motion for approval of the settlement be GRANTED.

I. Factual and Procedural History

This action was initiated by the minor plaintiffs in the Kern County Superior Court on November 16, 2012 to recover life insurance benefits they contended should have been paid after their father was killed in a vehicle accident. (Doc. 1 at 7; Doc. 16 at 2) In their complaint, Plaintiffs asserted that $110, 000 of benefits were still owed based upon their claim that the decedent elected a higher level of coverage in his employer's benefit program. Id. at 4. The matter was removed to this Court on January 22, 2013 by Reliance Standard Life Insurance Company which was the claims administrator for the employer-sponsored plan through which the decedent was alleged to have purchased the life insurance policy. (Doc. 1; Doc. 16 at 2)

The second amended complaint, filed on July 17, 2013, also named LKQ Corporation, the decedent's former employer. (Doc. 16 at 2) On September 6, 2013, LKQ filed a motion to dismiss and argued that it was not a proper defendant because it had no discretionary authority over the decision to deny the full benefits at issue. (Doc. 35 at 9. Likewise, it argued that it was not a fiduciary. Id . On March 6, 2014, the Court granted the motion to dismiss with prejudice. (Doc. 44) Notably, the Court found that, as a matter of law, LKQ was not a proper defendant on the grounds urged in the motion. Id . Thus, the case was scheduled by the Court on April 15, 2014 as to the two parties remaining. (Doc. 50)

On May 22, 2014, Plaintiffs engaged in early mediation at which the parties agreed to settle the case. (Doc. 55 at 2; Doc. 56) In full settlement, Defendant Reliance agreed to pay $115, 750 to settle the case with the amount, less fees and cost, shared equally between the Nicole Cox and the three children.

II. Settlement Approval Standards

No settlement or compromise of "a claim by or against a minor or incompetent person" is effective unless it is approved by the Court. Local Rule 202(b). The purpose of requiring the Court's approval is to provide an additional level of oversight to ensure that the child's interests are protected. Toward this end, a party seeking approval of the settlement must disclose:

the age and sex of the minor, the nature of the causes of action to be settled or compromised, the facts and circumstances out of which the causes of action arose, including the time, place and persons involved, the manner in which the compromise amount... was determined, including such additional information as may be required to enable the Court to determine the fairness of the settlement or compromise, and, if a personal injury claim, the nature and extent of the injury with sufficient particularity to inform the Court whether the injury is temporary or permanent.

Local Rule 202(b)(2).

Federal Rule of Civil Procedure 17(c), imposes on the Court the responsibility to safeguard the interests of child-litigants. Robidoux v. Rosengren , 638 F.3d 1177, 1181 (9th Cir. 2011); See Friends for All Children, Inc. v. Lockheed Aircraft Corp. , 567 F.Supp. 790, 812-813 (D.D.C.1983. Thus, the Court is obligated to independently investigate the fairness of the settlement even where the parent has recommended it. Robidoux, at 1181. Moreover, rather than focusing on the amount of fees to be awarded, the Court is to evaluate whether the net amount to the child is fair and reasonable "without regard to the proportion of the total settlement value designated for adult co-plaintiffs or plaintiffs' counsel" and "in light of the facts of the case, the minor's specific claim, and recovery in similar cases." Id. at 1181-1182. The Court is obligated to consider the child's specific claim and other awards in similar cases to determine whether the settlement amount is reasonable. Id.

III. Discussion and Analysis

The petition in this case sets forth the information that is required. The children involved are a 7-year-old girl and 6-year-old and 4-year-old boys. (Doc. 55 at 3) Each was a named beneficiary on the insurance policy allegedly issued by Reliance. (Doc. 16 at 4) The petition describes the dispute at issue in which Plaintiffs claimed that Reliance failed to pay the full amount of life insurance benefits due and demanded $110, 000 plus interest and attorney's fees. (Doc. 55 at 3-5)

The motion notes the uncertainties attendant to litigation and the risk that the minors would not have prevailed and would have received nothing. (Doc. 55 at 10) In addition, the motion notes that settlement at the early mediation session avoids incurring further costs ...


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