Wall v. Metropolitan Life Insurance Company

Filing 32

Order entered re: Notice of Settlement and show cause regarding accrued interest. a pro ami settlement hearing is set for 4/2/2012 02:00 PM in US Courthouse, Courtroom 5A, 113 St. Joseph Street, Mobile, AL 36602 before Judge Kristi K. DuBose. Partie s are to file UNDER SEAL a copy of their proposed settlement agreement on or before 3/28/12. The Court finds that six percent (6%) per annum is the appropriate rate to apply, as set out in order.. Signed by Judge Kristi K. DuBose on 3/14/2012. (cmj)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
MICAH J. WALL a/k/a MICAH J.
WALL-ELLIS,
Plaintiff,
vs.
METROPOLITAN LIFE INSURANCE
COMPANY,
Defendant.
METROPOLITAN LIFE INSURANCE
COMPANY,
Counter Claimant and
Third Party Plaintiff,
vs.
MICAH J. WALL a/k/a MICAH J.
WALL-ELLIS,
Counter Defendant,
And,
V.R.E. (a minor), W.C.E. (a minor),
Third Party Defendants.

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CIVIL ACTION NO. 11-00193-KD-B

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ORDER

This action is before the Court on defendant Metropolitan Life Insurance Company’s
(MetLife) response to this Court’s order to show cause and plaintiff Micah J. Wall-Ellis’ reply
(docs. 26, 29, 30). Metlife was ordered to show cause why no accrued interest on the proceeds of
the decedent’s Group Accidental Death and Dismemberment Policy was paid into Court. Upon
consideration and for the reasons set forth herein, the Court finds that MetLife complied with the
order and has shown cause as to why it did not pay accrued interest.

Further, this action is also before the Court on the parties’ notice of settlement.
Accordingly, this action is set for a pro ami settlement hearing on April 2, 2012 at 2:00 p.m. before
the undersigned in Courtroom 5 A, of the United States Courthouse, 113 St. Joseph St., Mobile,
Alabama 36602. Additionally, on or before March 28, 2012, the parties shall file, under seal, a
copy of their proposed settlement agreement.
The Guardian ad Litem may exercise her discretion as to the best interests of the
minors in regard to whether they should attend the hearing.
The show cause order
In the Notice of Interpleader of Funds, MetLife interplead “$50,000 . . . being the entire
amount at issue in this lawsuit . . . “ (doc. 24, p. 2). However, in MetLife’s answer, counterclaim in
interpleader and third party interpleader complaint, MetLife stated that it “seeks to deposit into the
Registry of the Court the Plan Benefits, plus any applicable interest due and owing under the terms
of the Plan, for disbursement in accordance with the Judgment of this Court.” (Doc. 7, p. 18, P 28).
Additionally, in MetLife’s Motion to Deposit Funds with Court and Appoint Guardian ad Litem for
Minor Third Party Defendants, MetLife moved the Court for an order directing it to deposit with the
Court, the benefits payable in the amount of $50,000, “together with accrued claim interest, if
any[.]” (Doc. 18, p. 2). The motion was granted and the Court directed MetLife to deposit the
$50,000.00, with interest accrued thereon. (Doc. 22, Order). MetLife deposited only the $50,000.00
(doc. 25). At that time the Court ordered MetLife to show cause why no interest was deposited
(doc. 26). As explained below, MetLife will be required to pay prejudgment interest, however said
interest was not automatically due under the Plan, thus MetLife has shown cause why it has not
deposited the interest.

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Analysis
MetLife points out that this Court is faced with a choice of law question because the
interpleader defendants are residents of Alabama and the contract of insurance was issued in
Arkansas with a provision that Arkansas law would apply. MetLife argues that because Alabama
follows the rule of lex loci contractus, Arkansas law controls and under Arkansas law1 delayed
settlement interest is not available for group life insurance policies (doc. 29).2 Based thereon,
MetLife argues that no interest has accrued on the $50,000.00. In response, Wall argues that this
Court should assess delayed settlement interest because ERISA preempts the Arkansas statutes.
However, ERISA does not provide a basis for a claim for delayed settlement interest.
Rather, the ERISA statute provides for the recovery of “benefits due to [a participant or beneficiary]
under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights
to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B). Moreover, the Eleventh
Circuit in Green v. Holland, 480 F. 3d 1216 (11th Cir. 2007), held that a separate or stand-alone
cause of action for interest accrued on a delayed payment is not available unless the ERISA plan
expressly provides for accrued interest as a plan benefit. Green, at 1222-1223 citing Flint v. ABB,
Inc., 337 F. 3d 1326, 1329-30 (11th Cir. 2003) (addressing a stand-alone cause of action for accrued
1

Met Life cites to Ark. Code Ann. § 23-81-118. Chapter 81 covers life insurance policies.
Section § 23-81-118(b)(1), states as follows: “When proceeds of any individual policy of life
insurance, delivered or issued for delivery in this state, or refunds of premiums on any individual
policy of life insurance delivered or issued for delivery in this state after July 20, 1979, are not paid
within a reasonable period of time after proof of the death of the insured has been furnished to the
insurer, the insurer shall pay interest upon the proceeds or refunds of premiums at the rate of eight
percent (8%) per year.”
Chapter 83 governs group life insurance and annuities and there is no comparable statute to
§ 23-81-118. Thus, MetLife asserts that the Arkansas statutes do not provide for delayed settlement
interest on group life insurance policies.
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See Doc. 29-1, copy of MetLife’s statement of “Policy Situs” : “This policy is issued for
delivery in and governed by the laws of Arkansas.”
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interest on reinstated benefits and stating that “no circuit has recognized a claim for interest under §
502(a)(1)(B) of ERISA. . . . Given the Supreme Court's unwillingness to allow implied causes of
action under ERISA and the fact that, like the plan in Clair [ v. Harris Trust & Sav. Bank, 190 F.3d
495, 497 (7th Cir.1999)], the Plan here does not provide for such interest, we follow Clair and
conclude that Flint's claim under § 502(a)(1)(B) fails.”).
Although the action before the Court is not a stand-alone action for interest, Green and Flint,
are instructive on the issue. Plaintiff Wall has not provided the Court with any evidence that the
Policy or the Wal-Mart Associates’ Health and Welfare Plan3 provides for delayed settlement
interest as a benefit under ERISA. Accordingly because there is no basis for an automatic award of
delayed settlement interest. See also Sahlie v. Nolen, 984 F.Supp. 1389, 1398 (M.D. Ala., 1997)
(finding that other courts have “concluded, and this court agrees, that where a plan neither requires
interest payments on withheld benefits nor prescribes any method of calculating such interest, and
ERISA is silent on the issue, the decision to deny interest payments on withheld benefits could not
be considered unreasonable under any standard of review.”)
However, that does not mean prejudgment interest on a discretionary basis is not available.
Florence Nightingale Nursing Serv., Inc. v. Blue Cross/Blue Shield of Alabama, 41 F.3d 1476, 1484
(11th Cir. 1995) (“The award of an amount of prejudgment interest in an ERISA case is a matter
‘committed to the sound discretion of the trial court.’ ”); Smith v. Am. Int'l Life Assurance Co. of
New York, 50 F.3d 956, 957 (11th Cir. 1995) (awarding prejudgment interest where plaintiff
received judgment for benefits); Green v. Holland, 480 F. 3d 1216, 1224 n.4 (11th Cir. 2007)
(“Flint did not, however, create a per se prohibition on a recovery of interest under § 502(a)(1)(B),
in fact, the Flint decision leaves open the prospect of an ERISA claimant litigating and recovering
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The Summary Plan Description is docketed at document 7-1 through 7-5.
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an award of benefits that are due and unpaid under § 502(a)(1)(B) and receiving, as part of that
benefits award, interest on those benefits from the time they were due.”); Cheal v. Life Insurance
Company of North America, 330 F. Supp. 2d 1347, 1351-1352 (N.D. Ga., 2004) (awarding
prejudgment interest and finding “that Plaintiff’s request for interest is ‘no more than an ordinary
request for prejudgment interest on a judgment [that would be] obtained pursuant to a federal
statute.’”) (brackets in original) quoting Skretvedt v. E.I. Dupont de Nemours, 372 F. 3d 193, 205
(3rd Cir. 2004). The court finds that prejudgment interest is appropriate in this instance.
Since the policy at issue was “issued for delivery in and governed by the laws of Arkansas”
(doc. 29-1, p. 2), the question becomes what state law should this Court apply to determine the rate
of prejudgment interest: Alabama as the forum state or Arkansas as the site of the policy. In Oliver
v. Coca-Cola Co., 397 F.Supp. 2d 1327 (N.D. Ala., 2005),4 the district court held that because the
“Plan contains language providing that the law of Georgia governs, the court looks to the interest
rate in Georgia . . .” Id. at 1331. Moreover, in Capone v. Aetna Life Ins. Co., 592 F.3d 1189 (11th
Cir. 2010), the Eleventh Circuit applied the choice of law provision in an insurance policy to govern
the interpretation of policy language in order to determine coverage. Specifically, the circuit court
explained that it had “recognized that ERISA's preemptive authority sweeps broadly but concluded
that there was no evidence in the statutory language or common law of ERISA suggesting that a
valid choice of law provision would be subversive to ERISA policy.” Id. at 1198 citing Buce v.
Allianz Life Ins. Co., 247 F.3d 1133, 1148 (11th Cir.2001). The circuit court further explained that
a choice of law provision in an ERISA contract “should be followed, if not unreasonable or
4

The district court was initially affirmed in Oliver v. Coca Cola Co., 497 F.3d 1181 (11th
Cir. 2007). In that decision the circuit court stated that Coca-Cola did not appeal the award of
interests and that the issue was waived. Id. at 1202. Although the case was the heard on rehearing
and ultimately vacated in part and reheard again, those later decisions did not involve prejudgment
interest. See Oliver v. Coca-Cola Co., 546 F. 3d 1353 (11th Cir. 2008) (decision on rehearing).
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fundamentally unfair.” Id. citing Buce, at 1149. Nothing before the Court indicates that applying
the choice of law provision at issue would subvert the policies of ERISA or that the provision is
unreasonable or fundamentally unfair. In that regard, the general prevailing rate for contract
disputes in Arkansas is six percent (6%) per annum. See 1 Howard W. Brill & Christian H. Brill,
Arkansas Law of Damages § 10:4 (5th ed. 2011) (discussing the uniform award of prejudgment
interest at the rate of six percent (6%) per annum based upon the Constitution of the State of
Arkansas); Ark. Const. Art. 19, § 13(d)(1) (setting the rate of interest for contracts where the parties
have not agreed to a rate); USAA Life Ins. Co. v. Boyce, 294 Ark. 575, 578, 745 S.W.2d 136, 137
(Ark., 1988) (award of prejudgment interest at the rate of 6% interest per annum affirmed on
appeal). Accordingly, the Court finds that six percent (6%) per annum is the appropriate rate to
apply.
DONE and ORDERED this the 14th day of March, 2012.

/s/ Kristi K. DuBose
KRISTI K. DuBOSE
UNITED STATES DISTRICT JUDGE

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