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American Fidelity Assurance Co. v. Humphreys

United States District Court, D. New Mexico

February 7, 2019

AMERICAN FIDELITY ASSURANCE COMPANY, Plaintiff,
v.
RICHARD HUMPHREYS, as Personal Representative of the Estate of George Bernard Humphreys, et al., Defendants.

          ORDER ENTERING INTERPLEADER AND GRANTING SUMMARY JUDGMENT

          GREGORY B. WORMUTH UNITED STATES MAGISTRATE JUDGE.

         THIS MATTER is before the Court on Plaintiff American Fidelity Assurance Company's Motion to Interplead Funds, for an Award of Attorney's Fees and Costs and for Dismissal (doc. 38) and Defendant Richard Humphreys' Motion for Summary Judgment (doc. 35).

         Though Defendant Richard Humphreys initially indicated his opposition to Plaintiff's Motion, see doc. 38 at 5, neither defendant ultimately elected to file a written response. However, Plaintiff and Defendant Humphreys subsequently reached an agreement regarding both the granting of the Motion and the award of attorney's fees. As for Defendant Humphreys' Motion for Summary Judgment, Plaintiff expresses no opinion regarding the ultimate disposition of the case and asks only to interplead the funds. See doc. 37. For the reasons that follow, both Motions are GRANTED.

         I. Background

         The relevant facts are not in dispute. Underlying this action is the life insurance policy of George Bernard Humphreys, who died on February 20, 2017. Doc. 38 at 3. George Humphreys carried a life insurance policy with Plaintiff American Fidelity for a total benefit of $100, 858.44. Id. at 5. At the time of Mr. Humphreys' death, the listed beneficiaries of the policy were Helen Humphreys (primary) and Brenda Evans (contingent). Id. at 1. Helen Humphreys, Mr. George Humphreys' wife, predeceased him on November 20, 2014. This initially led American Fidelity to identify Brenda Evans as the recipient of the policy benefit. See doc. 1-6.

         However, American Fidelity was soon alerted to the possibility of competing claims to the proceeds. Richard Humphreys, Mr. George Humphreys' biological son, alleges that his father completed and mailed a beneficiary change form in the spring of 2015, following Ms. Humphreys' death. He further alleges that this completed beneficiary change form listed the Estate, not Brenda Evans, as the primary beneficiary. Doc. 38 at 2. American Fidelity initiated the current suit on September 26, 2017, with the stated intention of protecting itself from double or multiple liability. Doc. 1 at 2.

         It has subsequently come to light that Ms. Evans died on February 1, 2018 (see doc. 16), and that her only surviving heir appears to be her brother, Floyd Michael Ison (doc. 38 at 2). Accordingly, Plaintiff amended its Complaint to name Mr. Ison as a defendant. Mr. Ison has disclaimed and assigned all interest in the proceeds. Doc. 32. Because Ms. Evans' will was never probated, Plaintiff also named John/Jane Does 1-5, the other possible unknown claimants to Brenda Evans' estate, as defendants. Plaintiff served them by publication in both Artesia, New Mexico and Lubbock, Texas, Ms. Evans' former places of residence. Docs. 33, 34. Publication garnered no response.

         Plaintiff now moves to interplead the funds into the Court registry, minus its attorney's fees and costs. It also requests dismissal from the case with prejudice and an injunction prohibiting further related claims against American Fidelity by any of the claimants.

         II. Interpleader

         Plaintiff filed the operative First Amended Complaint in Interpleader on August 1, 2018, invoking interpleader under Federal Rule of Civil Procedure 22.[1] Doc. 28. Interpleader allows a disinterested plaintiff to settle disputes about property ownership by joining possible claimants as defendants to a lawsuit. See Aviva Life & Annuity Co. v. White, 772 F.3d 634, 639-40 (10th Cir. 2014). Rule 22 states that “[p]ersons with claims that may expose a plaintiff to double or multiple liability may be joined as defendants and required to interplead.” Fed.R.Civ.P. 22(a)(1).

         Interpleader actions are typically resolved in two stages. Primerica Life Ins. Co. v. Montoya, 2018 WL 3068059, at *3 (D.N.M. June 21, 2018) (unpublished) (citing United States v. High Tech. Prods., 497 F.3d 637, 641 (6th Cir. 2007)). First, the court determines whether interpleader has been properly invoked. Interpleader is properly invoked when the court has jurisdiction and the stakeholder is “actually threatened with double or multiple liability.” High Tech. Prods., 497 F.3d at 641 (citing 7 Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice and Procedure § 1714 (3d ed. 2001)). “If a court determines that the plaintiff-stakeholder properly invoked interpleader and has no interest in the stake, then it may dismiss the stakeholder from the proceedings before moving to the second stage.” Primerica, 2018 WL 3068059, at *3 (citing Commercial Nat'l Bank v. Demos, 18 F.3d 485, 487 (7th Cir. 1994); In re Millennium Multiple Employer Welfare Ben. Plan, 772 F.3d 634, 639 (10th Cir. 2014)). The court may also “issue an order…enjoining the parties from prosecuting any other proceeding related to the same subject matter.” High Tech. Prods., 497 F.3d at 641 (quoting 7 Wright, Miller, & Kane, supra, at § 1714). At the second stage, “the court determines the respective rights of the claimants to the fund or property at stake via normal litigation processes.” Primerica, 2018 WL 3068059, at *3 (internal quotation marks omitted) (quoting High Tech. Prods., 497 F.3d at 641).

         At this first stage of the interpleader process, the Court finds that Plaintiff is a disinterested stakeholder and has properly interpleaded all parties with a possible claim to the policy benefit. The Court is also satisfied, given the confusion over the proper beneficiary, that Plaintiff was threatened with double or multiple liability sufficient to justify Rule 22 interpleader. The Court will therefore dismiss Plaintiff from the action, allow Plaintiff to interplead the funds, and issue an injunction preventing participating parties from bringing further actions against Plaintiff related to this matter.

         In its Motion to Interplead, Plaintiff also requested an award of its attorney's fees and costs in the amount of $22, 734.09. Doc. 38 at 5. “The award of fees and costs to an interpleader plaintiff, or ‘stakeholder,' is an equitable matter that lies within the discretion of the trial court.” Transamerica Premier Ins. Co. v. Growney, 70 F.3d 123, at *1 (10th Cir. 1995) (unpublished table opinion). Defendant Humphreys filed no response, which the Court would ordinarily construe as consent to grant the Motion. See D.N.M.LR-Civ. 7.1(b). However, subsequent to the filing of Plaintiff's Motion, the parties contacted the Court having reached an agreement as to attorney's fees and costs. Plaintiff agreed to accept, and Defendant Humphreys agreed to surrender, an award in the amount of $15, 000. The Court in its discretion sees no reason not to honor the parties' mutual agreement, given its finding, see Section III, infra, that Defendant Humphreys is the proper owner of the policy benefit.

         III. Entitlement to the ...


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