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Guardian Life Insurance Co. of America v. Cortes

United States District Court, D. New Mexico

January 10, 2017

THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, Plaintiff,
v.
ALMA HELENA CORTES and A.C., a Minor Child, Defendants.

          MEMORANDUM OPINION AND ORDER

         This matter comes before the Court upon Plaintiff The Guardian Life Insurance Company of America's Combined Motion to Appoint Guardian Ad Litem, for Leave to Deposit Interpleader Funds, and for Dismissal with Prejudice (Motion), filed on October 3, 2016. (Doc. 8). Plaintiff also sought in the Motion an award of $2, 000.00 for attorneys' fees and costs incurred in bringing this interpleader lawsuit, and requested that the award be deducted from the $38, 000.00 basic life insurance Benefit at issue in this case.

         The Court subsequently held a telephonic status hearing on November 10, 2016, at which the Court extended the time for pro se Defendant Alma Helena Cortes (Cortes) to respond to the Motion to November 28, 2016. (Doc. 14) at 2. The Court also required Plaintiff to file a supplemental brief to address the issue of attorney's fees and costs, including an appropriate affidavit and breakdown of the requested attorney's fees and costs. Id. at 1.

         On November 15, 2016, the Court granted the Motion, in part, when it appointed a guardian ad litem for Defendant A. C., Cortes' child. (Doc. 15). Then, on December 2, 2016, Plaintiff filed Defendant [sic] the Guardian Life Insurance Company of America's Supplemental Briefing in Support of its Request to Recover Reasonable Attorneys' Fees and Costs (Supplemental Brief) in which Plaintiff now seeks $7, 064.25 in attorneys' fees and costs. The new requested award is just under 20% of the Benefit. (Doc. 16) at ¶ 6. Cortes has not responded to either the Motion or the Supplemental Brief. Having reviewed the Motion and the Supplemental Brief, the Court will grant the Motion, in part, as described herein.

         A. Background

         Plaintiff seeks to interplead and deposit with the Court registry the basic life insurance Benefit of $38, 000.00 which became payable under a policy Plaintiff issued to insure the life of Ryan Edemann, now deceased. (Doc. 16) at 1; (Doc. 1) at 1, and ¶¶ 6-7. Plaintiff contends that the insured named both Cortes and A.C. as primary beneficiaries under the policy. (Doc. 1) at ¶ 8. Plaintiff further contends that, although Cortes and A.C. are named primary beneficiaries, the policy designates Cortes as receiving “100%” of the benefit. Id. Cortes has since made a claim to the Benefit. Id. at ¶ 9. Plaintiff asserts that it “is an innocent and disinterested stakeholder” of the Benefit and that it “is unable to determine who is entitled to the Benefit without incurring the risk of being subject to costs and expenses in defending itself in multiple suits or the possibility of multiple payments for the amount due.” Id. at ¶¶ 12 and 15.

         B. The Remainder of the Motion Before the Court

         Plaintiff moves the Court under Fed.R.Civ.P. 22 to (1) permit Plaintiff to deposit the Benefit, plus any applicable interest, into the Court's registry within 30 days of the date of the entry of this Memorandum Opinion and Order, (2) permanently enjoin Defendants and all other claimants from asserting claims against Plaintiff related to the Benefit, (3) discharge Plaintiff “from any and all liability with respect to the Benefit, ” (4) dismiss Plaintiff from this action with prejudice, (5) order Defendants to present their claims to the Benefit, and (6) award Plaintiff reasonable attorney's fees and costs incurred in bringing this interpleader action, which would be deducted from the interpleaded Benefit. (Doc. 8) at 1-2.

         C. Discussion

         1. Whether the Court Should Order Plaintiff to Deposit the Benefit into the Court's Registry, Enter a Permanent Injunction, Discharge Plaintiff from Liability, Dismiss Plaintiff with Prejudice, and Order Defendants to Present Claims to the Benefit

         Interpleader is a statutory remedy that offers “a party who fears being exposed to the vexation of defending multiple claims to a limited fund or property that is under his control a procedure to settle the controversy and satisfy his obligation in a single proceeding.” The Late Charles Alan Wright, et al., 7 Fed. Prac. & Proc. Civ. § 1704 (3d ed.). The Court is empowered in an interpleader action to enjoin claimants to a fund or property from “instituting or prosecuting any proceeding in any State or United States court affecting the property ... involved in the interpleader action.” 28 U.S.C. § 2361. The Court “may then discharge the interpleader plaintiff of any further liability and make the injunction permanent, thereby allowing the interpleader plaintiff to withdraw and leaving the interpleader defendants to prosecute their competing claims to the disputed property among themselves.” In re Millennium Multiple Employer Welfare Ben. Plan, 772 F.3d 634, 639 (10th Cir. 2014) (citing Section 2361).

         Pursuant to the above well-established law and the undisputed allegations in the complaint, the Court will order Plaintiff to deposit the Benefit, plus any applicable interest, into the Court's registry within 30 days of the date of the entry of this Memorandum Opinion and Order. Moreover, upon written confirmation that Plaintiff has deposited the Benefit into the Court's registry, the Court will (1) permanently enjoin Defendants and all other claimants from asserting claims against Plaintiff related to the Benefit, (2) discharge Plaintiff “from any and all liability with respect to the Benefit, ” (3) dismiss Plaintiff from this action with prejudice, and (4) order Defendants to present their claims to the Benefit.

         2. Whether the Court Should Grant Plaintiff's Request for an Award of Attorneys' Fees and Costs

         The remaining issue then is whether to grant Plaintiff's request for an award of attorneys' fees and costs for bringing this interpleader action, the amount of which would be deducted from the Benefit. The Tenth Circuit Court of Appeals “has recognized the ‘common practice' of reimbursing an interpleader plaintiff's litigation costs out of the fund on deposit with the court.” Transamerica Premier Ins. Co. v. Growney, 1995 WL 675368, at *1 (10th Cir.) (quoting U.S. Fid. & Guar. Co. v. Sidwell, 525 F.2d 472, 475 (10th Cir.1975)). The Tenth Circuit has also recognized that “[t]he award of fees and costs to an interpleader plaintiff, or ‘stakeholder, ' is an equitable matter that lies within the discretion of the trial court.” Id. at *1 (citing Chase Manhattan Bank v. Mandalay Shores Coop. Hous. Ass'n (In re Mandalay Shores Coop., Hous. Ass'n), 21 F.3d 380, 382-83 (11th Cir.1994); Abex Corp. v. Ski's Enters., 748 F.2d 513, 516 (9th Cir.1984)). On the other hand, “a number of courts have held that attorneys fees [and costs] should not be awarded to an insurance company in an interpleader action where the claims to the fund are of the type that arise in the ordinary course of business and are not difficult to resolve.” Prudential Prop. & Cas. Co. v. Baton Rouge Bank & Trust Co., 537 F.Supp. 1147, 1150 (M.D. Ga.1982). See also Guardian Life Ins. Co. of Am. v. Church of Jesus Christ of Latter-Day Saints, 2016 WL 4734591, at *4 (D. Utah) (listing insurance interpleader cases in which courts denied fee awards to insurers); Allstate Life Ins. Co. v. Shaw, 2016 WL 1640461, at *5 (E.D. Mich.) (listing insurance interpleader cases in which “courts have acknowledged an exception to the allowance of interpleader fee and cost awards.”). But see N.Y. Life Ins. Co. v. Miller, 139 F.2d 657, 658 (8th Cir. 1944) (“If the [insurance company] had brought an independent suit in interpleader, it would have been entitled to an allowance for attorneys' fees to be determined by the District Court and paid out of the fund in Court.”); Tower Life Ins. Co. v. Tucker, 557 F.Supp.2d 1287, 1289-92 (D.N.M. 2007) (rejecting argument that insurers should not be allowed attorney's fees and costs in interpleader actions).

         The courts which have determined not to award attorney's fees and costs to insurers in interpleader actions have done so for several sound reasons. The District Court for the Eastern ...


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