Chance v. Prudential Insurance Co. of America

          ORDER GRANTING JOINT MOTION TO APPROVE MINORS’ SETTLEMENT (DOC. NOS. 24)

         Before the court is the parties’ joint motion to approve a compromise of the minors’ claims in this action. (Doc. No. 24.) A hearing on the motion was held June 21, 2016. Attorney Craig A. Edmonston appeared with and on behalf of plaintiff and counter-defendant Leslie J. Chance, third-party defendant Jessica Lopez (also known as Jessica Bullman), and third-party defendants S.D.C. and S. N.C. Attorney Rebecca Tana Green appeared on behalf of defendant and third-party plaintiff Prudential Insurance Company of America.

         Having considered the parties’ requests and heard oral argument, and for the reasons set forth below, the court grants the motion to approve the minors’ compromise.

         FACTUAL AND PROCEDURAL BACKGROUND^[1]

         Defendant Prudential Insurance Company of America (“Prudential”) issued a group life insurance policy, Group Policy No. G-46581-OR, to Con-way, Inc. The life insurance policy provided a benefit in the amount of $84, 000.00 to decedent Todd Chance. (See Doc. No. 8 at 7, Ex. A.)

         On August 25, 2013, Todd Chance died as a result of multiple gunshot wounds. At the time of his death, Todd Chance had not designated a beneficiary to receive the proceeds from his death benefit. The beneficiary rules provision of the life insurance policy provides that benefits are payable to the designated beneficiary. If there is no designated beneficiary, the benefits are payable to the first of the following: “(a) surviving spouse or Registered Domestic Partner; (b) surviving child(ren) in equal shares; (c) surviving parents in equal shares; (d) surviving siblings in equal shares; (e) estate.” (See Doc. No. 8, Ex. A at 32.) At the time of his death, Todd Chance was married to plaintiff Leslie J. Chance, and had three surviving children: Jessica Lopez, a/k/a Jessica Bullman (currently age 26), S.D.C. (currently age 17), and S. N.C. (currently age 15).^[2]

         On September 30, 2013, plaintiff submitted a claim to the death benefit as Todd Chance’s surviving spouse. On November 20, 2013, and again on January 12, 2015, the Kern County Sheriff’s Office advised Prudential that plaintiff was a suspect in Todd Chance’s death. She denies any involvement in the death, and no charges have been filed. Because California law prohibits payment of a life insurance benefit to a beneficiary who feloniously and intentionally kills the person upon whose life the policy is issued, see Cal. Prob. Code § 252, 254, there existed a dispute as to whether the benefits provided to Todd Chance are payable to plaintiff Leslie Chance (i.e., his surviving spouse) or instead to his three surviving children.

         On August 25, 2015, plaintiff Leslie Chance commenced this action for breach of contract and declaratory relief, in Kern County Superior Court. (See Doc. No. 1-1.) On December 18, 2015, defendant Prudential removed this action from state court. (Doc. No. 1.) On December 28, 2015, defendant filed an answer to the complaint and a third-party complaint against Todd Chance’s three children. (Doc. No. 8.) On February 4, 2016, the court appointed Leslie J. Chance as guardian ad litem to Todd Chance’s two surviving minor children, S.D.C. and S. N.C. (Doc. No. 16.) On April 27, 2016, the parties filed a notice of joint settlement. (Doc. No. 22.) On May 2, 2016, the parties filed the instant motion to approve a compromise of the minors’ claims in this action. (Doc. No. 24.)

         The terms of the settlement agreement are outlined in the instant joint motion (Doc. No. 24 ¶¶ 16-30) and embodied in the accompanying proposed order submitted by the parties (Doc. No. 24-5).^[3] Pursuant to the settlement agreement, the parties agree that no benefit other than the death benefit described herein is payable under the group life insurance policy, Group Policy No. G-46581-OR. (Doc. No. 24 ¶ 17.) The parties agree that the death benefit (plus any applicable interest) shall be payable in equal one-third shares to each of the decedent’s surviving children, Jessica Lopez, S.D.C., and S. N.C. Plaintiff Leslie Chance will not receive any portion of the death benefit. (Id. ¶ 18.) Upon Prudential mailing the checks to each of the parties and their counsel, plaintiff Chance and third-party defendants Lopez, S.D.C., and S. N.C. release any and all claims each asserted or could have asserted against Prudential arising under the group life insurance policy or the death benefit and are further restrained from bringing any actions or proceedings against Prudential with respect to those claims. (Id. ¶ 27.)

         APPROVAL OF MINORS’ COMPROMISE

         This court has a duty to protect the interests of minors participating in litigation before it. Salmeron v. United States, 724 F.2d 1357, 1363 (9th Cir. 1983). To carry out this duty, the court must “conduct its own inquiry to determine whether the settlement serves the best interests of the minor.” Robidoux, 638 F.3d at 1181 (quoting Dacanay v. Mendoza, 573 F.2d 1075, 1080 (9th Cir. 1978)); see also Salmeron, 724 F.2d at 1363 (“[A] court must independently investigate and evaluate any compromise or settlement of a minor’s claims to assure itself that the minor’s interests are protected, even if the settlement has been recommended or negotiated by the minor’s parent or guardian ad litem.”) (citation omitted). In considering the fairness of a settlement of a minor’s claim, federal courts sitting in diversity generally are guided by state law.^[4] See Tashima & Wagstaffe, California Practice Guide: Federal Civil Procedure Before Trial ¶ 15:138 (Cal. & 9th Cir. Eds. 2015) (“Federal courts generally require that claims by minors . . . be settled in accordance with applicable state law. California law requires court approval of the fairness and terms of the settlement.”). A settlement for a minor and attorney’s fees to represent a minor must be approved by the court. Cal. Prob. Code § 3601; Cal. Fam. Code § 6602. Reasonable expenses and court costs to be paid out of the settlement also must be approved by the court. Cal. Prob. Code § 3601. In addition, the Local Rules of this court require disclosures regarding the minors involved, the nature of the controversy, the manner in which the compromise was determined, and whether a conflict of interest may exist between the minor and her attorney. See Local Rules 202(b)-(c).

         Here, the proposed settlement agreement provides that defendant Protective will pay each of Todd Chance’s surviving children a one-third share of the death benefits under the life insurance policy at issue. Thus, each minor will receive an amount similar to that to which she would likely be entitled as a beneficiary under the plan, in the absence of a qualified surviving spouse or registered domestic partner. Having carefully reviewed the parties’ submissions, the court finds that the proposed settlement is fair and reasonable.

         In addition, the instant petition seeks an order awarding attorney’s fees amounting to 25% of the total recovery for each minor. Is has been the practice in the Eastern District of California to consider 25% of the recovery as the benchmark for attorney’s fees in contingency cases involving minors. See, e.g., Mitchell v. Riverstone Residential Grp., No. 2:11-cv-02202-LKK-CKD, 2013 WL 1680641, at *2 (E.D. Cal. Apr. 17, 2013); McCue v. South Fork Union Sch. Dist., NO. 1:10-cv-00233-LJO-MJS, 2012 WL 2995666, at *2 (E.D. Cal. Jul. 23, 2012); Welch v. Cty. of Sacramento, No. 2:07-cv-00794-GEB-EFB, 2008 WL 3285412, at *1 (E.D. Cal. Aug. 5, 2008); Red v. Merced Cty., No. 1:06-cv-01003-GSA, 2008 WL 1849796, at *2 (E.D. Cal. Apr. 23, 2008); Schwall v. Meadow Wood Apartments, No. 2:07-cv-00014-LKK, 2008 WL 552432, at *1, (E.D. Cal. Feb. 27, 2008); Walden v. Moffett, No. 1:04-cv-06680-LJO-DLB, 2007 WL 2859790, at *3 (E.D. Cal. Sept. 20, 2007). The court finds the award of attorney’s fees sought to be reasonable under the circumstances.

         ORDER

         Accordingly, for the reasons stated above, the court grants the joint motion for minors’ compromise (Doc. No. ...