Minnesota Mut. Life Ins. Co. v. Ensley

Citation174 F.3d 977
Decision Date06 April 1999
Docket NumberNo. 97-55560,97-55560
Parties99 Cal. Daily Op. Serv. 2511, 1999 Daily Journal D.A.R. 3292 MINNESOTA MUTUAL LIFE INSURANCE COMPANY, Plaintiff-Counter-Defendant-Appellee, v. Donald Joe ENSLEY, Defendant-Counter-Claimant-Cross-Claimant-Appellant, v. Laura L. Ensley, Defendant-Cross-Defendant-Appellee, and Kevin Burke; Burke Group, Counter-Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Brad J. Husen, Corona, California, for defendant-counter-claimant-cross-claimant-appellant.

Gary J. Goodstein, Bannan, Green, Smith, Frank & Rimac, Los Angeles, California, for plaintiff-counter-defendant-appellee.

Frederick J. Seymour, Augustine & Seymour, Alhambra, California, for defendant-cross-defendant-appellee.

Christina Bull Arndt, James E. Fitzgerald, Luce, Forward, Hamilton & Scripps, Los Angeles, California, for counter-defendants-appellees.

On Appeal from the United States District Court for the Central District of California; William D. Keller, District Judge, Presiding. D.C. No. CV-96-01391-WDK-SHx.

Before: BEEZER, HALL and TASHIMA, Circuit Judges.

BEEZER, Circuit Judge:

Donald Ensley appeals judgment in interpleader and summary judgment in favor of Minnesota Mutual Life Insurance Company, Kevin Burke, The Burke Group and Laura Ensley. We have jurisdiction pursuant to 28 U.S.C. §§ 1291, 1391. We affirm in part, vacate in part and remand for further proceedings.

I

In 1987, Minnesota Mutual Life Insurance Company ("Minnesota Mutual"), through its agent Kevin Burke, issued a policy insuring the life of appellant's brother, James W. Ensley, now deceased. When the policy issued, James and his wife, Laura Ensley, resided in California. The premiums on the policy were paid by checks drawn on an account of Eastside Electrical Supply Company ("Eastside Electrical"), the family business of James and Laura.

Originally, James was the owner of the policy and Laura the beneficiary. A document was executed changing ownership of the policy to Laura's name. According to Laura and Burke, James and Laura executed the document in 1987 for estate planning purposes, but did not submit it to Minnesota Mutual until 1993. Donald insists that Laura forged James' name to this document. At her deposition, Laura admitted that she might have forged James' signature to the document.

In 1993, James was sentenced to prison. Eastside Electrical ceased operations and the family residence was subject to foreclosure. Laura moved to Arizona. She became unable to pay the life insurance premiums, and she borrowed money against the policy to allow the policy to remain in effect. In May of 1994, Laura petitioned the Arizona court for a dissolution of marriage. The Arizona court issued a preliminary injunction enjoining either party from "[t]ransferring, encumbering, concealing, selling or otherwise disposing of any of the joint, common or community property" belonging to the parties.

In 1995, Laura again became unable to pay the premiums. She and Burke agreed that he would pay the premiums in exchange for a 50% ownership interest in the policy. A few months later, Burke assigned the policy back to Laura.

After his release from prison, James began investigating the status of the policy. Laura informed James that the policy had lapsed. His independent inquiry revealed that the policy remained in existence. As a result of this investigation, Minnesota Mutual changed the ownership of the policy back to James. He then designated his brother, Donald, as the sole beneficiary of the insurance policy.

James died of cancer on January 11, 1996. Although James and Laura submitted a Stipulated Decree of Dissolution to the Arizona Court prior to James' death, the Arizona court did not enter the Decree of Final Dissolution until January 16, 1996. James and Laura were therefore legally married on James' date of death. Neither the Stipulated Decree nor the Decree of Final Dissolution expressly disposed of the life insurance policy.

Donald submitted a Beneficiary Claim Form to Minnesota Mutual on January 22, 1996. On February 28, 1996, Minnesota Mutual filed a complaint in interpleader naming Laura and Donald as defendants. Minnesota Mutual deposited $279,927.82 into the registry of the court as the full policy proceeds. Laura subsequently answered the complaint and submitted her own claim for the proceeds of the insurance policy.

Donald answered the complaint and filed a counter-claim against Minnesota Mutual, including claims for breach of contract, breach of the implied covenant of good faith and fair dealing, negligence and fraud. Donald also brought third party claims against Laura, Kevin Burke and the Burke Group.

Kevin Burke and the Burke Group (collectively, "the Burke defendants") moved for summary judgment on November 18, 1996. The next day, Minnesota Mutual moved for summary judgment on Donald's counter-claims and for judgment in interpleader. Laura joined Minnesota Mutual's motion for summary judgment.

On January 27, 1997, the court granted the motion for judgment in interpleader and granted Minnesota Mutual's, Laura's and the Burke defendants' motions for summary judgment on Donald's counter-claim/third party complaint. The court directed Laura to move for summary judgment on the issue of her entitlement to the insurance proceeds. On April 9, 1997, the court granted Laura's motion for summary judgment and awarded her 100% of the insurance proceeds. This timely appeal followed.

II

The court did not err in granting Minnesota Mutual's motion for judgment in interpleader. The federal interpleader statute provides in relevant part:

The district courts shall have original jurisdiction of any civil action of interpleader or in the nature of interpleader filed by any person, firm or corporation ... having issued a ... policy of insurance or other instrument of value or amount of $500 or more ... if (1) Two or more adverse claimants of diverse citizenship ... are claiming or may claim to be entitled to ... any one or more of the benefits arising by virtue of any ... policy ...; and if (2) the plaintiff has deposited ... the amount due under such obligation into the registry of the court ...

28 U.S.C. § 1335(a).

Donald contends that the interpleader statute was not satisfied because he was the only person to file a claim to the proceeds of the insurance policy. This argument is without merit. Section 1335 allows a stakeholder to file an interpleader action to protect itself against the problems posed by multiple claimants to a single fund. See 28 U.S.C. § 1335; State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 530, 87 S.Ct. 1199, 18 L.Ed.2d 270 (1967). The statute authorizes district courts to hear cases of two or more claimants of diverse citizenship who "are claiming or may claim to be entitled" to the money or property. 28 U.S.C. § 1335(a) (emphasis added). The court's jurisdiction under the interpleader statute extends to potential, as well as actual, claims. See id.; see also Dakota Livestock Co. v. Keim, 552 F.2d 1302, 1308 (8th Cir.1977).

Minnesota Mutual satisfied the requirements of the interpleader statute. It faced potential liability to Donald, a California citizen, and Laura, a citizen of Arizona. Upon depositing the amount of the insurance proceeds with the court, Minnesota Mutual was properly discharged from the dispute.

III

We review de novo the district court's entry of summary judgment in favor of Minnesota Mutual and the Burke defendants. See Margolis v. Ryan, 140 F.3d 850, 852 (9th Cir.1998). We determine, viewing the evidence in a light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. See id. at 852.

A

Minnesota Mutual and the Burke defendants are entitled to summary judgment on Donald's claims for breach of contract and breach of the implied covenant of good faith and fair dealing. Donald contends that Minnesota Mutual breached the insurance contract and the implied covenant by failing to pay him the policy benefits. In light of Minnesota Mutual's good faith belief that it faced the possibility of multiple claims, it did not act unreasonably in failing to pay Donald's claim. See Egan v. Mutual of Omaha, 24 Cal.3d 809, 169 Cal.Rptr. 691, 620 P.2d 141, 145 (Cal.1979); see also Love v. Fire Ins. Exchange, 221 Cal.App.3d 1136, 271 Cal.Rptr. 246, 255 (Cal.Ct.App.1990). Minnesota Mutual satisfied its obligation under the contract by instituting the interpleader action.

Donald's claims against the Burke defendants for breach of the insurance contract and the implied covenant of good faith and fair dealing also fail. Under California law, an insurance agent cannot be held liable for breach of contract or breach of the implied covenant of good faith and fair dealing because he is not a party to the insurance contract. See Gruenberg v. Aetna Ins. Co., 9 Cal.3d 566, 108 Cal.Rptr. 480, 510 P.2d 1032, 1038-39 (Cal.1973); Henry v. Associated Indemnity Corp., 217 Cal.App.3d 1405, 1416-17, 266 Cal.Rptr. 578 (1990). The Burke defendants were acting as the agents of Minnesota Mutual; they were not a party to the insurance contract. The Burke defendants cannot be held liable for breach of contract or breach of the implied covenant of good faith and fair dealing as a matter of law.

B

Minnesota Mutual and the Burke defendants are entitled to summary judgment on Donald's claims of negligence. To prevail on a claim for negligence, a plaintiff must prove that the defendant owed and breached a legal duty to the plaintiff and that the breach was a proximate cause of damages sustained by the plaintiff. See Ann M. v. Pacific Plaza Shopping Center, 6 Cal.4th 666, 25 Cal.Rptr.2d 137, 863 P.2d 207, 211 (Cal.1993).

Contrary to Donald's allegation, Minnesota Mutual discharged any duty it owed to disburse the proceeds of the policy by filing...

To continue reading

Request your trial
83 cases
  • Estate of Mitchell
    • United States
    • California Court of Appeals Court of Appeals
    • December 20, 1999
    ...a transfer or disposition of "property," standing alone, applied to such an expectancy. (See Minnesota Mutual Life Insurance Company v. Ensley (9th Cir.1999) 174 F.3d 977, 986 [husband's change of beneficiary on insurance policy from his wife to his brother did not violate injunction agains......
  • Rubinbaum Llp v. Related Corporate Partners
    • United States
    • U.S. District Court — Southern District of New York
    • February 16, 2001
    ...State Farm Fire & Casualty Co., 386 U.S. at 531-33, 87 S.Ct. 1199; see also Ashton, 918 F.2d at 1068 n. 2; Minnesota Mut. Life Ins. Co. v. Ensley, 174 F.3d 977, 980 (9th Cir.1999). The mere threat of future litigation is sufficient for a plaintiff to invoke the statutory interpleader remedy......
  • Burwell v. Burwell (In re Burwell)
    • United States
    • California Court of Appeals Court of Appeals
    • January 29, 2014
    ...characterization “will depend on the ... premium for the final term of the policy.” (Minnesota Mut. Life Ins. Co. v. Ensley (9th Cir.1999) 174 F.3d 977, 983 (Minnesota Mut. Life Ins. Co.).) The effect of the rules governing characterization of term life insurance proceeds depends on multipl......
  • Trust v. Kuckenmeister
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • July 22, 2010
    ...stakeholder may file an interpleader action to protect itself against “potential, as well as actual, claims.” Minn. Mut. Life Ins. Co. v. Ensley, 174 F.3d 977, 980 (9th Cir.1999). Because Darren Mack has not actually disclaimed his right to the funds-and, to the contrary, asserted a right i......
  • Request a trial to view additional results
1 firm's commentaries
  • Navigating The Interpleader Process
    • United States
    • Mondaq United States
    • March 28, 2023
    ...511 (5th Cir. 1974); Bauer v. Uniroyal Tire Co., 630 F.2d 1287, 1292 (8th Cir. 1980)). See also Minnesota Mutual Life Ins. Co. v. Ensley 174 F.3d 977 (9th Cir. 1999); Mack v. Kuckenmeister, 619 F.3d 1010 (9th Cir. 2010) (citing John Hancock Mut. Life Ins. Co. v. Kraft, 200 F.2d 952, 954 (2d......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT