Nichols v. Unum Life Ins. Co. of America
| Decision Date | 10 October 2003 |
| Docket Number | No. C 03-00228 CRB.,C 03-00228 CRB. |
| Citation | 287 F.Supp.2d 1088 |
| Parties | Crystal L. NICHOLS, Plaintiff, v. UNUM LIFE INSURANCE COMPANY OF AMERICA, a Stock Insurance Company and a Maine corporation, Defendant. |
| Court | U.S. District Court — Northern District of California |
Geri Anne Johnson, The Harland Law Firm LLP, Eureka, CA, for Plaintiff.
Anna M. Martin, Joseph M. Rimac, William Reilly, Rimac & Martin, Erin Hurley, Rimac & Martin, P.C., San Francisco, CA, for Defendant.
In this ERISA lawsuit plaintiff brings suit to recover plan death benefits and prejudgment interest from defendant. After defendant filed an interpleader, plaintiff stipulated to release defendant from all liability, excluding plaintiff's claim for interest. Now before the Court is plaintiff's motion for summary judgment on the issue of prejudgment interest. After carefully considering the papers filed by the parties, the Court concludes that oral argument is unnecessary, see Local Rule 7-1(b), and GRANTS plaintiff's motion in part. Plaintiff is entitled to prejudgment interest in the amount of $10,132.81.
Decedent Larry Nichols worked for Pacific Lumber Company, a subsidiary of Maxxam, Inc. Maxxam offered its employees a Group Accidental Death insurance policy ("the Policy") through UNUM Life Insurance Company of America ("UNUM"). The Policy provided benefits in the event of the accidental death of the policy holder. Decedent, an eligible Maxxam employee, was covered by the Policy. The Policy provided decedent with $132,704.00 of coverage, and named decedent's wife, Crystal Nichols, as the beneficiary.
On or about October 29, 2000 Larry Nichols died from a gunshot wound to the head in Trinity County.1 The Nichols family members at the scene maintained that decedent had accidentally shot himself while out hunting. Upon arrival to the scene, police discovered that decedent's brother had moved the body. After the coroner determined that decedent died from a gun shot wound to the back of the head, the police ruled out the possibility of a suicide, and treated the case as a homicide. It is undisputed that plaintiff Crystal Nichols, decedent's wife, was in Humboldt County at the time of the incident.
Search warrants were issued to search the residences of plaintiff's son, niece, and brother-in-law. The record does not show that authorities found anything, or that they subsequently brought any action against any of the individuals in question.
Plaintiff Crystal Nichols filed an Accidental Death and Dismemberment claim with UNUM in January of 2001. UNUM engaged in routine investigation, and sought to confirm, among other things, that the death was not a suicide. In investigating the claim, UNUM sought information from the coroner, the Trinity County Sheriff's Department ("Sheriff's Department"), and the Department of Justice. Throughout its investigation, UNUM wrote Crystal Nichols five letters, informing her that it was awaiting information from the Sheriff's Department.
On July 2, 2001, the Sheriff's Department informed UNUM that it was investigating the incident as a homicide, and that it could not rule out the plaintiff's involvement. On July 9, 2001, UNUM informed plaintiff's attorney that the claim could not be paid because the Sheriff's Department was investigating the matter as a homicide, and that it had not ruled out the plaintiff as a suspect.
From July to November, UNUM kept in continual contact with the Sheriff's Department in an effort to determine whether it had ruled out the plaintiff as a suspect. During that time, UNUM also made diligent efforts to keep the plaintiff updated on the progress of its investigation. On November 30, 2001, UNUM wrote the plaintiff and informed her that it was closing the claim, pending the completion of the Sheriff's Department's investigation and/or its representation that plaintiff was ruled out as a suspect.
In October of 2002, Nichols offered the defendant evidence purporting to rule out her son as a suspect. UNUM again contacted the Sheriff's Department. On November 4, 2002, the Sheriff's Department informed defendant that the case was still open, and that it had not ruled out any member of the family. Defendant informed Nichols that the case was still open. UNUM also notified the plaintiff that it intended to interplead the funds.
On December 16, 2002, Nichols brought suit in state court to recover the proceeds under the Policy and to recover prejudgment interest. UNUM counter-claimed by filing an interpleader and removed the action to this Court. On February 6, 2003, UNUM deposited $132,704.00 with the Court—the proceeds due under the policy. On July 24, 2003, plaintiff stipulated to discharging UNUM from the action, with the exception of her claim for interest due on the $132,704.00. On August 1, 2003, Nichols filed for summary judgment on the sole issue of prejudgment interest, and defendant replied on August 29, 2003.
Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on the file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). An issue is "genuine" only if there is a sufficient evidentiary basis on which a reasonable fact finder could find for the nonmoving party, and a dispute is "material" only if it could affect the outcome of the suit under governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A principal purpose of the summary judgment procedure "is to isolate and dispose of factually unsupported claims." Celotex Corp. v. Catrett, 477 U.S. 317, 323-324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no `genuine issue for trial.'" Matsushita Elec. Ind. Co. v. Zenith Radio, 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
Plaintiff's summary judgment motion seeks $16,74.53 in prejudgment interest on the proceeds due under the Policy, from the date death benefits first became payable through the date of judgment. Plaintiff maintains that the death benefits first became payable on January 17, 2001— when plaintiff provided UNUM with decedent's legal death certificate. Plaintiff's calculations are based on the federal adjusted prime rate. Plaintiff bases its motion on the ground that awarding prejudgment interest is within the discretion of the district court.
UNUM maintains that Nichols is not entitled to any prejudgment interest for three reasons. First, prejudgment interest may not be awarded after the defendant interpleaded the Policy proceeds. Second, while a district court has discretion to award post-lawsuit prejudgment interest, plaintiff is not entitled to such interest under the so-called "Hummel factors." See Hummell v. S.E. Rykoff & Co., 634 F.2d 446, 453 (9th Cir.1980) (). Third, plaintiff is not entitled to receive pre-lawsuit interest on ERISA benefits under federal law, and the plan does not provide for such interest.
Plaintiff seeks prejudgment interest from January 17, 2001 through the date of judgment. It is well accepted that "the interpleading party bears no liability for interest on the interpleaded fund after the date that he pays the interpleaded fund into the court." See Fidelity Bank v. Commonwealth Marine & General Assur. Co., 592 F.Supp. 513, 524 (E.D.Pa.1984) (citation omitted); see also Provident Indem. Life Ins. Co. v. Durbin, 541 F.Supp. 4, 9 n. 4 (D.C.Pa.1981) (); New York Life Ins. Co. v. Cooper, 76 F.Supp. 976, 979 (S.D.N.Y.1944) ().
The record demonstrates that UNUM deposited the policy proceeds with the Court on February 6, 2003. Prejudgment interest ceased to accrue on that date.
Both parties correctly agree that the trial court has discretion to award post-lawsuit prejudgment interest. "ERISA does not specifically provide for pre-judgment interest, and absent a statutory mandate the award of pre-judgment interest is discretionary with the trial court." Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d 1017, 1030 (4th Cir.1993). Whether a trial court will grant prejudgment interest "`is a question of fairness, lying within the court's sound discretion, to be answered by balancing the equities.'" Shaw v. Int'l Ass'n of Machinists & Aerospace Workers Pension Plan, 750 F.2d 1458, 1465 (9th Cir.1985) (citing Wessel v. Buhler, 437 F.2d 279, 284 (9th Cir.1971)).
UNUM maintains that Nichols is not entitled to post-lawsuit prejudgment interest because she has failed to meet the five-factor test set out in Hummell, 634 F.2d at 453.2 However, defendant erroneously cites Hummell as the appropriate authority. In following the Fifth and Tenth Circuits, the Hummell court adopted a five factor test to serve as a guideline when awarding fees and costs, not prejudgment interest. See id. The appropriate test for awarding prejudgment interest remains "`a question of fairness, lying within the court's sound discretion, to be answered by balancing the equities.'" Shaw, 750 F.2d at 1465 (citation omitted). Accordingly, the district court may exercise "its discretion to award prejudgment interest in order to compensate [the plaintiff] for the loss of the use of his funds." Quesinberry, 987 F.2d at 1030-31.
This Court finds that fairness requires awarding plaintiff post-lawsuit prejudgment interest. According to...
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