Reliance Standard Life Insurance Company v. Scott et al
Filing
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ORDER, granting Plaintiff's motion for entry of final decree of interpleader, dismissal of plaintiff, and award of fees and costs 13 ; Plaintiff shall deposit the full amount of the proceeds from Juanita Cruz's insurance policy into the re gistry of the Court pursuant to LRCiv 67.1 within 30 days; Plaintiffs will have 15 days to submit an itemization of attorney's fees along with any supporting documentation; Plaintiffs shall file a bill of costs with the Clerk in accordance with LRCiv 54.1; any costs awarded shall be deducted from the proceeds deposited into the registry of the Court; Defendants are permanently enjoined from instituting or prosecuting any proceedings against Plaintiff in any way relating to Juanita Cruz' ;s insurance policy or its proceeds; Defendant(s) claiming a right to the policy proceeds shall file a proof of claim within 45 days; if any Defendant fails to do so, that Defendant's claim to the Cruz policy proceeds will be forever barred (see order for complete details). Signed by Judge Frederick J Martone on 1/26/12. (REW)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE DISTRICT OF ARIZONA
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Insurance)
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Plaintiff,
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vs.
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David DeWayne Scott; Eliza Soto; Joann)
Soto; Michael Soto; Estate of Juanita)
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Cruz; Does 1-10,
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Defendants.
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Reliance Standard
Company,
CV 11-01550-PHX-FJM
Life
ORDER
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The court has before it plaintiff's motion for entry of final decree of interpleader,
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dismissal of plaintiff, and award of fees and costs (doc. 13). No response was filed, and the
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time for responding has expired. No defendants have appeared in this action.
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On July 9, 2007, Juanita Cruz died from injuries she sustained in a car accident while
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her husband, defendant David DeWayne Scott, was driving. She was survived by her
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children, defendants Eliza, Joann, and Michael Soto. Cruz was insured under a Reliance
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Standard group life insurance policy with plaintiff through her employer, Hexcel
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Corporation.1 As the result of Cruz's death, $33,000 in life insurance proceeds became
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payable. After funeral expenses, $24,560.27 in policy proceeds remain. Scott is listed as the
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beneficiary of the policy.
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The policy is an employee welfare benefit plan governed by ERISA.
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In 2010, Eliza Soto, individually and on behalf of her siblings, filed an action against
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Scott in connection with Cruz's death. Judgment was entered for Cruz's children in the
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amount of $200,000 each. Scott pled no contest to manslaughter and driving under the
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influence in March 2011. Defendants have all filed a claim for the insurance proceeds. Eliza
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Soto filed her claim on July 25, 2007. Scott filed a claim on January 23, 2008. Eliza, Joann,
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Michael, and the Estate of Juanita Cruz sent a letter to plaintiff seeking all of the benefits on
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August 13, 2010.
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Plaintiff filed this interpleader action in August 2011. Eliza, Michael, and Joann Soto
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and the Estate of Juanita Cruz waived service on September 21, 2011. Scott was served on
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September 27, 2011. Defendants have not answered the complaint nor otherwise appeared
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in this action. The Clerk has not entered default, and no motion for default judgment has
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been filed. On November 16, 2011, we ordered that this matter would be dismissed for lack
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of prosecution unless good cause was shown (doc. 12). Plaintiff responded by filing the
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instant motion on November 22, 2011. Plaintiff's counsel states that the reason for delay in
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this action stems from plaintiff's efforts to seek a stipulation from defendants regarding
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plaintiff's deposit of the insurance proceeds and dismissal from this action. Having not
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received any response from the defendants, plaintiff now asks us to enter an order directing
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it to deposit the remaining life insurance proceeds, discharging it from liability relating to the
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proceeds, enjoining the defendants from initiating any action against plaintiff relating to the
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policy, and awarding plaintiff its attorney fees and costs.
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II
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We have federal question jurisdiction over this interpleader action, which is a
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"cognizable action under ERISA." Aetna Life Ins. Co. v. Bayona, 223 F.3d 1030, 1033-34
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(9th Cir. 2000) (holding that insurance company administering claims for employee benefits
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plan is an ERISA fiduciary, concluding that district court had jurisdiction over insurance
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company's interpleader action). Rule 22, Fed. R. Civ. P. provides for interpleader. A
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plaintiff with a risk of exposure to multiple liability from claimants may use interpleader to
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join these claimants as defendants and require them to interplead. Interpleader actions
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typically involve two stages. First, a court will decide whether interpleader is appropriate.
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If so, then the court may order the plaintiff to deposit the disputed funds, discharge the
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plaintiff, and direct the claimants to interplead. At the second stage, the court will adjudicate
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the defendants' competing claims, with the action proceeding as any other civil action. Wells
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Fargo Bank, N.A. v. The Magellan Owners Ass'n, CV-09-587-PHX-MHM, 2010 WL 46794
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at *2 (D. Ariz. Jan. 4, 2010); see also 7 Charles Alan Wright & Arthur R. Miller, Federal
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Practice and Procedure § 1704 (3d ed.).
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Here, plaintiff has submitted evidence that it faces exposure to multiple liability, and
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has averred that it is a disinterested party with no claim to the insurance proceeds. Each
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defendant has filed a claim with plaintiff, asserting that he or she is entitled to Cruz's
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insurance proceeds. Plaintiff cannot distribute the proceeds, which are a limited fund,
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without exposing itself to liability or litigation from the other defendants, all of whom have
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claimed an interest in the proceeds. Exposure to multiple claims for the proceeds of an
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ERISA benefit plan is one type of action for which interpleader is appropriate. See Trs. of
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the Dirs. Guild of America-Producer Pension Benefits Plans v. Tise, 234 F.3d 415, 426 (9th
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Cir. 2000). Thus, plaintiff has established its right to interpleader, and is entitled to be
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dismissed from this action.
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We are faced, however, with an unusual situation. All defendants apparently desire
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the insurance proceeds, but not a single defendant has appeared in this action to stake a claim
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to these funds. Thus, once plaintiff exits from this action there will be no dispute left before
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this court to adjudicate. Plaintiff has not offered any guidance as to how this action should
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proceed after its exit, and has made no attempt to secure default of the absent defendants.
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We think the best course of action is to provide the defendants with one last chance to assert
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their claims to the policy proceeds before their claims are barred.
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III
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Reasonable attorneys' fees and costs are generally awarded to interpleader plaintiffs,
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but are limited to fees incurred in the interpleader action. Id. at 426-27 (listing compensable
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expenses). Here, plaintiff seeks a total of $5,540.07 in fees and costs. However, plaintiff
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has not submitted documentation supporting its request for fees in accordance with LRCiv
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54.2. Without this information before us, we cannot determine whether the amount of fees
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requested is appropriate. Once the disputed funds have been successfully deposited with the
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registry of the Court and our order granting an award of attorneys' fees has issued, we will
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discharge plaintiff from this action.
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IV
IT IS ORDERED GRANTING plaintiff's motion for entry of final decree of
interpleader, dismissal of plaintiff, and award of fees and costs (doc. 13).
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IT IS ORDERED that plaintiff shall deposit the full amount of the proceeds from
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Juanita Cruz's insurance policy into the registry of the Court pursuant to LRCiv 67.1 within
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thirty (30) days of the date of this order.
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IT IS ORDERED that plaintiffs will have fifteen (15) days from the date of this order
to submit an itemization of attorney's fees along with any supporting documentation.
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IT IS ORDERED that plaintiffs file a bill of costs with the Clerk in accordance with
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LRCiv 54.1. Any costs awarded shall be deducted from the proceeds deposited into the
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registry of the Court.
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IT IS ORDERED that defendants are permanently enjoined from instituting or
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prosecuting any proceedings against plaintiff in any way relating to Juanita Cruz's insurance
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policy or its proceeds.
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IT IS FURTHER ORDERED that any defendant or defendants claiming a right to
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the policy proceeds shall file a proof of claim within forty-five (45) days of the date of this
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order. If any defendant fails to do so, that defendant's claim to the Cruz policy proceeds will
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be forever barred. We caution that the proceeds could be deemed unclaimed and deposited
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in the United States Treasury in accordance with 28 U.S.C. § 2042.
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The Clerk shall serve a copy of this order on all defendants.
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DATED this 26th day of January, 2012.
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