Hearing v. Minn. Life Ins. Co.

• Decision Date: 21 July 2014
• Docket Number: No. C13–4101–LTS.,C13–4101–LTS.
• Citation: 33 F.Supp.3d 1035
• Parties: Joetta HEARING, Plaintiff, v. MINNESOTA LIFE INS. CO., Defendant, v. Nikole C. Holloway, Third–Party Defendant.
• Court: U.S. District Court — Northern District of Iowa

33 F.Supp.3d 1035

Joetta HEARING, Plaintiff
v.
MINNESOTA LIFE INS. CO., Defendant
v.
Nikole C. Holloway, Third–Party Defendant.

No. C13–4101–LTS.

United States District Court, N.D. Iowa, Western Division.

Signed July 21, 2014.

33 F.Supp.3d 1037

Theodore E. Karpuk, Sioux City, IA, for Plaintiff.

Molly R. Hamilton Cawley, Messerli & Kramer, PA, Minneapolis, MN, for Defendant.

David Wayne Watermeier, Morrow, Poppe, Watermeier & Lonowski, PC, Lincoln, NE, John D. Mayne, Bikakis, Mayne, Arneson, Hindman & Hisey, Sioux City, IA, for Third–Party Defendant.

ORDER

LEONARD T. STRAND, United States Magistrate Judge.

TABLE OF CONTENTS

I.	INTRODUCTION	1037
II.	BACKGROUND	1038
III.	ANALYSIS	1039

A. The Motion to Deposit Funds 1039

1.	Is Interpleader Appropriate?	1039
2.	Attorney Fees and Costs	1042

a.	Legal Standard	1042
b.	Discussion	1044

B. The Motion to Dismiss/Motion for Summary Judgment 1045

1.	Arguments of the Parties	1045
2.	Applicable Standards	1046
3.	Undisputed Facts	1047
4.	Discussion	1047

IV. CONCLUSION 1052

I. INTRODUCTION

This case is before me on: (a) a motion (Doc. No. 18) by defendant Minnesota Life Insurance Company (Minnesota Life) to deposit interpleader funds, recover attorney fees and costs and for dismissal with prejudice; and (b) a motion (Doc. No. 22) by plaintiff Joetta Hearing (Hearing) to dismiss counterclaim, or in the alternative, for summary judgment. Both motions are resisted. I held a telephonic hearing on July 8, 2014. Attorney Theodore Karpuk appeared for Hearing, attorney Molly Hamilton Cawley appeared for Minnesota Life and attorney David Watermeier appeared for third-party defendant Nikole Holloway (Holloway). The motions are fully submitted.

33 F.Supp.3d 1038

II. BACKGROUND

Jon Holloway (Jon) purchased a life insurance policy from Minnesota Life in 1998. He died on June 28, 2013. The policy designated Hearing, who is Jon's sister, as the beneficiary. On or about July 8, 2013, Minnesota Life received correspondence from Holloway (who is Jon's daughter) disputing the beneficiary designation. She claimed the decree that dissolved Jon's marriage required that he maintain the life insurance policy for Holloway and, further, that Jon had named Holloway as the intended beneficiary of the policy in a signed handwritten note.

The dissolution decree, entered in 1998, directed Jon to pay child support in the amount of $225 per month “... until the minor child, Nikole, reaches the age of 18 or graduates from high school, whichever is later.” Doc. No. 33–1 at 9. The decree also required that Jon “maintain life insurance on his life in the sum of $100,000, payable to the children as equal beneficiaries until his support obligation is closed.”¹ Doc. No. 33–1 at 10. Jon's life insurance application contains the following notation: “Naming sister as beneficiary so wife can't control the death proceeds.” Doc. No. 24–2 at 3. Holloway reached the age of 18 in July 2008 and is Jon's only surviving child.

The signed handwritten note is dated September 18, 2012, and is addressed to “Nikki.” It states in relevant part, “Chris would like the 44 back, the rest you get.” The end of the note lists the life policy number and the contact information for Jon's Minnesota Life agent. It also lists information for other financial accounts and contains publicity and funeral requests. Doc. No. 10–1 at 1.

The policy contains the following provision regarding how to change a beneficiary:

Can you change the beneficiary?

Yes. If you have reserved the right to change the beneficiary, you can file a written request with us to change the beneficiary. If you have not reserved the right to change the beneficiary, the written consent of the irrevocable beneficiary will be required.

Your written request will not be effective until we record it in our home office. After we record it, the change will take effect as of the date you signed the request. However, if the insured dies before the request has been so recorded, the request will not be effective as to those death proceeds we have paid before your request was so recorded.

Doc. No. 20 at 15. Minnesota Life has no record that Jon ever changed Hearing as the policy's designated beneficiary.

After receiving notice of Holloway's claim to the life insurance proceeds, Minnesota Life advised the parties...