Unum Life Ins. Co. of America v. Kelling
Decision Date | 02 November 2001 |
Docket Number | No. 3-01 0173.,3-01 0173. |
Citation | 170 F.Supp.2d 792 |
Parties | UNUM LIFE INSURANCE COMPANY OF AMERICA, Plaintiff, v. Arlene KELLING, Ronald Sonneman, Makayla Ver Velde and Teresa Ver Velde, as parent and guardian of Makayla Ver Velde, Defendants. |
Court | U.S. District Court — Middle District of Tennessee |
Holly N. Knight, Hale, Headrick, Dewey, Wolf, Golwen, Thornton & Chance, PLLC, Nashville, TN, Stirman R. Headrick, Hale, Headrick, Dewey, Wolf, Golwen, Thornton & Chance, PLLC, Memphis, TN, for Plaintiff.
Arlene Kelling, Clarksville, TN, pro se.
Ronald Sonneman, Sheboygan, WI, pro se.
Thomas Neal Bateman, Bateman, Bateman & Darnell, P.C., Clarksville, TN, for Defendants Makayla Ver Velde and Teresa Ver Velde.
Before the Court is plaintiff Unum Life Insurance Company's ("Unum") motion for attorneys' fees in the amount of $4,967.58. Defendant Teresa Ver Velde, individually and on behalf of minor Makayla Ver Velde ("the Ver Veldes"), requests that the motion be denied.
Christopher Lee Sonneman died on July 1, 2000. His life was insured by Unum in the amount of $15,000.00. Mr. Sonneman did not designate a beneficiary to his policy. However, the policy provided that when no beneficiary was designated, the proceeds of the policy would be paid to the first surviving class of beneficiaries in the following order of preference: (1) the insured person's widow or widower, if surviving the insured person, otherwise; (2) the insured person's surviving child or children, in equal shares, otherwise; (3) the insured person's parents in equal shares or the surviving parent. Mr. Sonneman died without leaving a widow or living children. At the time of his death, Mr. Sonneman's fiancé, defendant Teresa Ver Velde, was pregnant with his child, defendant Makayla Ver Velde, born on September 20, 2000. Teresa Ver Velde made a claim to the proceeds on Makayla's behalf. Additionally, Mr. Sonneman's parents, defendant Ronald Sonneman and defendant Arlene Kelling, made individual claims to the proceeds of the policy. Unum acknowledged that the proceeds of the policy should be paid to one of these potential beneficiaries and filed an interpleader action under the federal interpleader statute, 28 U.S.C. sec. 1335. Unum paid the proceeds of the policy into the Court. On May 29, 2001, the Court entered an agreed order ending any of Ms. Kelling's claims, declaring Makayla Ver Velde to be the rightful beneficiary of the policy, and granting leave for both the Ver Veldes and Unum to apply for attorneys' fees.1
Unum seeks an award of attorneys' fees from the proceeds of the policy, totaling their services at $4,967.58. The Ver Veldes' counsel, Thomas N. Bateman, also seeks attorneys' fees to be paid from the proceeds of the policy in the amount of $3,873.00.2 For the following reasons, Unum's motion for an award of attorneys' fees is DENIED.
A. General Federal Rule. Under Federal law, the general rule is that a disinterested "mere stakeholder" plaintiff who brings a necessary interpleader action is entitled to a reasonable award of attorneys' fees.3 Mutual Life Insurance Co. v. Bondurant, 27 F.2d 464, 465 (6th Cir. 1928); In re Creekstone Apartments Associates, L.P., 165 B.R. 851, 855 (Bkrtcy. M.D.Tenn.1994).
Unum argues that it is entitled to an award of attorneys' fees under the general rule as a disinterested "mere stakeholder" plaintiff. Specifically, Unum claims that it had no other option but to file an interpleader action because the three conflicting claimants were unwilling to resolve their claims to the policy benefits out of court.
The Ver Veldes appear to argue that Unum should not fall within the general rule because the interpleader action was unnecessary. First, the Ver Veldes argue the interpleader action was unnecessary because the ordinary meaning of the word "child" includes after-born children. Thus according to the Ver Veldes, there was no ambiguity in the policy and the policy benefits should therefore have been given to Makayla Ver Velde. In the alternative, the Ver Veldes argue that even if the word "child" was ambiguous, the interpleader action was still unnecessary because that ambiguity should be construed against Unum under interpretation principles of contract law.
The Ver Veldes' arguments, however, are without merit. Regardless of the legitimacy of any of the three competing claims, Unum would still potentially be subject to multiple lawsuits if they had made a decision to award benefits to only one of the claimants. Cf. Paul Revere Life Ins. Co. v. Riddle, 222 F.Supp. 867, 868 (E.D.Tenn.1963) (). The Ver Veldes themselves indicated in their pleadings that the interpleader action was the only alternative because they and the other claimants could not agree on how to divide the benefits. Such a situation is precisely what the interpleader statute is intended to resolve. Cf. Outlaw, 411 F.Supp. at 826. Thus, Unum did not file the interpleader action unnecessarily.
Furthermore, Unum appears to fit within the general definition of a "disinterested stakeholder." Unum clearly had no interest in which of the competing claimants received the fund paid into the Court. Unum made no claim to the policy and did not dispute the amount of the policy. By submitting the fund to this Court, Unum preserved it for the benefit of the successful claimant. In addition, Unum's request for attorneys' fees appears reasonable in amount. Unum's request of $4,967.58 is within $100.00 of defense counsel's request before reduction, $4,873.14. For these reasons, Unum at least initially falls within the general rule awarding attorneys' fees to interpleading plaintiffs.
B. Exceptions to the General Federal Rule. However, "whether a court should allow a party who commences an interpleader action to recover his attorney[s'][sic] fees and cost of the action is matter committed to judicial discretion," In re Robby's Pancake House of Florida, Inc. v. Walker, 24 B.R. 989 (Bkrtcy. E.D.Tenn.1982), and is "rarely awarded as a matter of course," Paul Revere Life Insurance Co. v. Riddle, 222 F.Supp. 867, 868 (E.D.Tenn.1963). Moreover, courts use their discretion to exclude insurance companies from the general "disinterested plaintiff" rule under three separate theories. First, courts have found, on facts identical to those of the instant case, that insurance companies should not be compensated merely because conflicting claims to proceeds have arisen during the normal course of business. See e.g., Sun Life Assurance Co. of Canada v. Thomas, 735 F.Supp. 730, 732 (W.D.Mich.1990) ( ); see also Prudential v. Baton Rouge, 537 F.Supp. 1147, 1150-51 (M.D.Ga.1982) ( )(citations omitted); Minnesota Mutual Life Ins. Co. v. Gustafson, 415 F.Supp. 615, 617-19 (N.D.Ill.1976) (same).
Next, courts have exempted insurance companies from the general rule and denied them an award of attorneys' fees because insurance companies, by definition, are interested stakeholders; filing the interpleader action immunizes the company from further liability under the contested policy. See Prudential, 537 F.Supp. at 1150-51 (); Western Life Ins. Co. v. Nanney, 290 F.Supp. 687, 688 (E.D.Tenn.1968) ( ); Cogan v. United States, 659 F.Supp. 353, 354 (S.D.Miss.1987) (same).
Finally, some courts have exempted insurance companies from the general rule based on the policy argument that such an award would senselessly deplete the fund that is the subject of preservation through interpleader. See Paul Revere, 222 F.Supp. at 868 ( ); see also Metropolitan Life Ins. Co. v. Jordan, 221 F.Supp. 842, 844 (W.D.N.C.1963) ; Hunter v. Federal Life Ins. Co., 111 F.2d 551, 556 (8th Cir.1940) (); Trustees of Directors Guild of America Producer Pension Benefits Plans v. Tise, 234 F.3d 415, 426 (9th Cir.2000) (). Furthermore, those policy concerns become even stronger when a minor seeks to benefit from the fund. See Western Life, 290 F.Supp. at 689-90. In one recent case, the court refused to award attorneys' fees to the insurance company and awarded the minor's attorneys only 25% of their request. See Id. at 688-89.
While a perfunctory application of the general rule would require awarding attorneys' fees to Unum, the Court must look beyond the general rule and...
To continue reading
Request your trial-
N.Y. Life Ins. Co. v. Terry
...be compensated simply because conflicting claims have arisen during the normal course of business. Unum Life Ins. Co. of American v. Kelling, 170 F. Supp. 2d 792, 794 (M.D. Tenn. 2001) (citing Sun Life Assurance Co. of Canada v. Thomas, 735 F. Supp. 730, 732 (W.D. Mich. 1990) (declining to ......
-
Farmer v. Am. Fed'n of Gov't Emps.
...than, for instance, an ordinary dispute among claimants to a life-insurance policy. See, e.g., Unum Life Ins. Co. of America v. Kelling, 170 F. Supp. 2d 792, 795 (M.D. Tenn. 2001) (rejecting an insurance company's petition for attorneys' fees on the basis that conflicting claims to insuranc......
-
Prudential Ins. Co. of Am. v. McFadden
...fees and costs to a disinterested stakeholder-plaintiff is the "general rule" under federal law. Unum Life Ins. Co. of Am. v. Kelling , 170 F. Supp. 2d 792, 793 (M.D. Tenn. 2001) (citing Mutual Life Ins. Co. v. Bondurant , 27 F.2d 464, 465 (6th Cir. 1928) ; In re Creekstone Apartments, L.P.......
-
Metro. Life Ins. Co. v. Sutherlin
...claims against Plaintiff to recover the proceeds from Frizzell's life insurance policy. See Unum Life Ins. Co. of America v. Kelling, 170 F.Supp.2d 792, 794 (M.D. Tenn. 2001) (defining “disinterested” as having “no interest in which of the competing claimants receive[s] the fund paid into t......