Hearing v. Minn. Life Ins. Co.

• Citation: 33 F.Supp.3d 1035
• Decision Date: 21 July 2014
• Docket Number: No. C13–4101–LTS.,C13–4101–LTS.
• 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

Ordered accordingly.

[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.	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 of their competing claims and asked them to reach an agreement as to the disbursement of those proceeds. The parties were unable to agree. Instead, on October 8, 2013, Hearing filed a petition against Minnesota Life in the Iowa District Court for Woodbury County seeking an order directing Minnesota Life to pay the proceeds to her immediately. Doc. No. 3. Minnesota Life timely removed the action to this court based on diversity jurisdiction and filed an answer, counterclaim and third-party complaint for interpleader in accordance with Federal Rule of Civil Procedure 22 and 28 U.S.C. § 1335. The third-party complaint added Holloway to this case as the other party asserting entitlement to the insurance proceeds. Doc. No. 6. Holloway then [33 F.Supp.3d 1039] filed an answer and counterclaim in which she asked that Hearing's claim be dismissed and that Minnesota Life be directed to pay the proceeds to her. Doc. No. 10. During discussions about the proposed scheduling order and discovery plan in February 2014, Minnesota Life advised the other parties that it wanted to deposit the insurance proceeds with the Clerk and be dismissed from the case to avoid incurring additional fees and costs, which would be taken from the proceeds. Doc. No. 18 at 17. Holloway was agreeable to such a stipulation, but Hearing was not. Id. at 18. Minnesota Life submitted its Rule 26(a)(1) disclosures on March 11, 2014, and renewed its request for the parties to stipulate to Minnesota Life depositing the proceeds with the court and being dismissed from the action. Id. at 20. Again, Holloway agreed to the stipulation, but Hearing objected. Id. at 28–30. In her resistance to the motion to deposit funds and in her motion to dismiss/motion for summary judgment, Hearing argues interpleader is unnecessary because Holloway's counterclaim fails to state a claim upon which relief can be granted. She objects to an award of attorney fees and costs to Minnesota Life altogether and alternatively, to the amount Minnesota Life has requested. Holloway does not object to the use of interpleader or Minnesota Life's requested attorney fees and costs. She has filed a resistance to Hearing's motion to dismiss/motion for summary judgment. III. ANALYSIS A. The Motion to Deposit Funds; 1. Is Interpleader Appropriate? “Interpleader is a procedural device whereby a party holding money or property concededly belonging to another may join in a single suit two or more parties asserting mutually exclusive claims to the fund. The stakeholder is thereby freed from the threat of multiple liability and/or the vexation of multiple lawsuits.” Gaines v. Sunray Oil Co., 539 F.2d 1136, 1141 (8th Cir.1976) (citing 3A Moore's Federal Practice P 22.02(1) (1974)). Minnesota Life brings this interpleader action pursuant to 28 U.S.C. § 1335 and Federal Rule of Civil Procedure 22. The federal interpleader statute provides: (a) 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, association, or society having in his or its custody or possession money or property of the value of $500 or more, or having issued a note, bond, certificate, policy of insurance, or other instrument of value or amount of $500 or more, or providing for the delivery or payment or the loan of money or property of such amount or value, or being under any obligation written or unwritten to the amount of $500 or more, if; (1) Two or more adverse claimants, of diverse citizenship as defined in subsection (a) or (d) of section 1332 of this title, are claiming or may claim to be entitled to such money or property, or to any one or more of the benefits arising by virtue of any note, bond, certificate, policy or other instrument, or arising by virtue of any such obligation; and if (2) the plaintiff has deposited such money or property or has paid the amount of or the loan or other value of such instrument or the amount due under such obligation into the registry of the court, there to abide the judgment of the court, or has given bond payable to the clerk of the court in such amount and with such surety as the court or judge may deem proper, conditioned upon the compliance [33 F.Supp.3d 1040] by the plaintiff with the future order or judgment of the court with respect to the subject matter of the controversy.; (b) Such an action may be entertained although the titles or claims of the conflicting claimants do not have a common origin, or are not identical, but are adverse to and independent of one another.; 28 U.S.C. § 1335. Jurisdiction is appropriate based on this statute as the amount at stake ($92,938.14) 2 is over $500 and at least two of the parties are diverse (Doc. No. 2).3 Interpleader is also addressed by Rule 22: (a) Grounds. (1) By a Plaintiff. Persons with claims that may expose a plaintiff to double or multiple liability may be joined as defendants and required to interplead. Joinder for interpleader is proper even though: (A) the claims of the several claimants, or the titles on which their claims depend, lack a common origin or are adverse and independent rather than identical; or; (B) the plaintiff denies liability in whole or in part to any or all of the claimants.; (2) By a Defendant. A defendant exposed to similar liability may seek interpleader through a crossclaim or counterclaim.; (b) Relation to Other Rules and Statutes. This rule supplements—and does not limit—the joinder of parties allowed by Rule 20. The remedy this rule provides is in addition to—and does not supersede or limit—the remedy provided by 28 U.S.C. §§ 1335, 1397, and 2361. An action under those statutes must be conducted under these rules.; Fed.R.Civ.P. 22. It is undisputed that Minnesota Life asserts no claim to the proceeds. However, Hearing objects to the interpleader action because she asserts Holloway's claim to the proceeds is so completely devoid of merit that Minnesota Life cannot reasonably claim fear of exposure to double liability. Normally, the respective merits of each party's claim to the proceeds is not a sufficient reason for prohibiting interpleader. See Hunter v. Fed. Life Ins. Co., 111 F.2d 551, 556 (8th Cir.1940) (“the jurisdiction of a federal court to entertain a bill of interpleader is not dependent upon the merits of the claims of the defendants....”). However, Hearing cites Protective Life Ins. Co. v. Kridner, CIV. 12–582 JRT/JJG, 2013 WL 1249205 (D.Minn. Mar. 27, 2013), to argue that interpleader is inappropriate here due to the alleged lack of merit of Holloway's claim. In Kridner, one defendant objected to an award of attorney fees to the interpleader plaintiff, arguing the competing claim to the proceeds was frivolous and the insurance company could have resolved the issue without resorting to interpleader. Kridner, 2013 WL 1249205, at *3. The court had previously determined that interpleader was appropriate based on the fact that there were competing claims. Id. The court noted that the defendant's argument about the merits of the competing parties' claims went to “the propriety of an interpleader action in the first instance, and not to whether the interpleading plaintiff is entitled to attorney fees.” [33 F.Supp.3d 1041] Id. (citing Irwin v. Principal Life Ins. Co., 404 F.Supp.2d 1271, 1279 (D.Kan.2005)). The objecting defendant in Kridner had not opposed the prior motion to deposit funds. Id. The court stated that even if it were to reconsider its ruling on that motion, it would still find that interpleader was appropriate because of the competing claims. It reasoned that “[a] stakeholder need not believe that all of the claims asserted against a fund are meritorious in order to maintain an interpleader action.” Id. at *3–4 (citing Hunter, 111 F.2d at 556 and Michelman v. Lincoln Nat'l Life Ins. Co., 685 F.3d 887, 894 (9th Cir.2012)). The court found it was enough for the insurance company...