Transamerica Premier Ins. Co. v. Growney

• Citation: 70 F.3d 123
• Parties: NOTICE: Although citation of unpublished opinions remains unfavored, unpublished opinions may now be cited if the opinion has persuasive value on a material issue, and a copy is attached to the citing document or, if cited in oral argument, copies are furnished to the Court and all parties. See General Order of
• Decision Date: 29 November 1993
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 123

70 F.3d 123

NOTICE: Although citation of unpublished opinions remains unfavored, unpublished opinions may now be cited if the opinion has persuasive value on a material issue, and a copy is attached to the citing document or, if cited in oral argument, copies are furnished to the Court and all parties. See General Order of November 29, 1993, suspending 10th Cir. Rule 36.3 until December 31, 1995, or further order.

TRANSAMERICA PREMIER INSURANCE COMPANY, Plaintiff-Appellee, v. John GROWNEY and Kevin Lutz, Defendants-Appellants, and Dan BOOS; St. Joseph Health Center; State Farm Mutual

Automobile Insurance Company; University of

Kansas Medical Center, Defendants.

No. 94-3396.

United States Court of Appeals, Tenth Circuit.

Nov. 13, 1995.

Before TACHA and BARRETT, Circuit Judges, and BROWN, ^** Senior District Judge.

ORDER AND JUDGMENT ¹

BARRETT, Circuit Judge.

After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed. R.App. P. 34(a); 10th Cir. R. 34.1.9. The case is therefore ordered submitted without oral argument.

Defendants John Growney and Kevin Lutz appeal from two orders entered by the district court in this statutory interpleader action. See 28 U.S.C. 1335. Plaintiff Transamerica Premier Insurance Company commenced this case to resolve the cumulative claims of Growney and Lutz and a third defendant, Dan Boos, to the proceeds of a liability policy issued to an insured whose reckless driving caused injury to all three defendants. Conceding coverage and seeking a determination of the proper distribution of the $50,000 policy limit (far exceeded by defendants' damages), Transamerica deposited the sum with the court and made no subsequent claim thereto, other than a request for reimbursement of fees and costs. By order entered August 2, 1994, the district court announced its disposition of the fund, discharged Transamerica from further liability, and awarded $1,686.28 to Transamerica for fees and costs incurred. Defendants moved for reconsideration of the latter award and for modification of the order's language relating to Transamerica's discharge. The district court denied the motion, and this appeal followed. We affirm and grant Transamerica's request for fees on appeal as well.

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. 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); United Bank of Denver, Nat'l Ass'n v. Oxford Properties, Inc., 683 F.Supp. 755, 756 (D.Colo.1988). Accordingly, we review such an award under the abuse of discretion standard generally applicable to fee awards. Chase Manhattan Bank, 21 F.3d at 383; see Supre v. Ricketts, 792 F.2d 958, 961 (10th Cir.1986).

This court has recognized the "common practice" of reimbursing an interpleader plaintiff's litigation costs out of the fund on deposit with the court. United States Fidelity & Guar. Co. v. Sidwell, 525 F.2d 472, 475 (10th Cir.1975). The rationale for the award is that the plaintiff has, at its own expense, facilitated the efficient resolution of a dispute in which it has no interest (other than avoiding liability for an erroneous distribution of the stake), to the benefit of the competing claimants--the true disputants--who should be able to cover the typically minor expense involved out of the fund distributed to them. See Chase Manhattan Bank, 21 F.3d at 383; Lincoln Income Life Ins. Co. v. Harrison, 71 F.R.D. 27, 30 (W.D.Okla.1976). Accordingly, fees are normally awarded to an interpleader plaintiff who "(1) is 'disinterested' (i.e., does not itself claim entitlement to any of the interpleader fund); (2) concedes its liability in full; (3) deposits the disputed fund in court; and (4) seeks discharge," and "who is [not] in some way culpable as regards the subject matter of the interpleader proceeding." United Bank of Denver, 683 F.Supp. at 756, 757; see Lincoln Income Life Ins. Co., 71 F.R.D. at 32; see also Liberty Nat'l Bank & Trust Co. v. Acme Tool Div. of Rucker Co., 540 F.2d 1375, 1382 (10th Cir.1976)("the award of an attorney's fee in an interpleader action has in mind the performance of services in connection with the preservation of the funds").

Defendants Growney and Lutz argue that Transamerica's delay in offering the policy limit and/or filing this action was unjustified and, thus, negates its requisite status as an innocent stakeholder. The district court rejected this contention, accepting instead Transamerica's explanation that it had postponed resolution of their blanket demands for policy limits while investigating the independent claim of defendant Boos. Growney and Lutz seek to undermine this explanation by dismissing the seriousness of Boos' injuries, but we note that Boos was ultimately awarded an unchallenged portion (six percent) of the interpleaded fund. ² Further, we reject the suggestion that an award of fees is improper because Transamerica filed this action out of self-interest, i.e., to avoid further exposure to defendants' various claims on or derived from the policy. Such an ancillary motive, having nothing to do with the pursuit of any interest in the interpleaded fund, does not preclude the discretionary award of fees if otherwise appropriate. See United Bank of Denver, 683 F.Supp. at 756 (equating requisite "disinterested[ness]" with fact that stakeholder "does not itself claim entitlement to any of the interpleader fund"); see also Sidwell, 525 F.2d at 475 (holding fee award appropriate where plaintiff motivated to file interpleader action by wish to avoid entanglement in litigation with claimants).

Further discussion of the contentions urged by defendants in this regard is not warranted. ³ Nothing defendants have said even suggests to us that the district court might have abused its discretion in awarding fees and costs to Transamerica. As the amount has not been challenged, we affirm the award.

Defendants also object to certain statements made by the district court in its order disposing of the interpleaded fund, specifically that "the stakeholder ... does not appear to the court to be culpable," App. at A121, and that "plaintiff shall be discharged from further liability in connection with the claims for personal injury of the defendants ... arising from the operation by [the insured] of a motor vehicle on September 6, 1993," id. at A122. As to the first statement, defendants are concerned about its potential preclusive effect on insurance bad faith litigation pursued against Transamerica. While the district court did not qualify its culpability finding, the only issue before the court was whether Transamerica's conduct with respect to the limited subject matter of this action weighed against an equitable fee award; whether Transamerica's overall treatment of defendants satisfied standards developed for the tort of insurance bad faith is a matter well beyond the scope of this case. Whatever significance, if any, the limited culpability finding made here might have on the latter should be resolved by the tribunal hearing the tort claim.

Similarly, the quoted discharge language, if overbroad, is also innocuous. Since interpleader jurisdiction is generally limited to the "fund in controversy," United States v. Major Oil Corp., 583 F.2d 1152, 1155 (10th Cir.1978); see Equitable Life Assurance Soc'y v. Jones, 679 F.2d 356, 358 n. 2 (4th Cir.1982)(resolution of interpleader action consists in determining "entitle[ment] to the stake"), in this case the policy limit deposited with the district court, the discharge passage quoted above cannot be read as affecting any causes of action, such as tortious bad faith, defendants may assert against Transamerica over and above the policy claims resolved here. Indeed, the district court explained the limited scope of Transamerica's discharge in the same order in which it denied defendants' motion for clarification:

The defendants contend that the court should have made a finding that the distribution of the interpleaded fund should not affect the rights of the defendants to pursue other claims against the plaintiff. Such language was not a requisite to the order entered by the court. In order to direct the disbursement of the interpleaded fund it was not necessary for the court to reach the issue of whether any of the parties to this action have or do not have further claims against any of the other parties. Consequently, the court did not deal with such an issue.

App. at A192. We see no reason to disturb the judgment entered and explained by the district court.

Finally, Transamerica seeks an award of fees on appeal. ⁴ This request raises an important question about the reach of the interpleader fee rule that has not been acknowledged and engaged by the courts. Unfortunately, the pertinent arguments advanced by the parties are correspondingly underdeveloped as well. The basic problem derives from an inconsistency between the general formulation of the rule itself, which does not suggest any limitation on its application beyond the trial (i.e., district or bankruptcy court) level, and the carefully articulated rationale guiding its use, which has strong restrictive implications in this regard.

Those implications can be seen clearly and concretely here. Transamerica's request for fees on appeal--i.e., for reimbursement of expenses incurred in defending its own recovery of monies from the interpleaded fund (and, thus, from defendants)--does not involve the same equitable considerations of disinterestedness and nonadversariality that underlie...