Metropolitan Life Insurance Company v. Reynolds et al

Filing 25

ORDER: MetLife's Motion to Deposit the Disputed Plan Benefits in the Court's Registry 23 is GRANTED; MetLife's Motion for an Order Dismissing it from this Action and Entering Injunctive Relief 23 is GRANTED; MetLife's Motion for Attorneys' Fees 23 is GRANTED and MetLife is awarded $3,307.20 in attorneys' fees; MetLife's Request for an Award of Costs is GRANTED and that MetLife is awarded $447.05 in costs. MetLife is excused from attending the Rule 16 Case Management Conference set for November 20, 2013. Signed by Magistrate Judge Bridget S Bade on 11/15/2013. (See attached PDF for complete information)(ALS)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Metropolitan Life Insurance Company, Plaintiff, 10 11 ORDER v. 12 No. CV-13-01253-PHX-BSB Rosina Reynolds and Marlene Reynolds, 13 Defendants. 14 15 Plaintiff Metropolitan Life Insurance Company (MetLife) has filed a motion in 16 this interpleader action requesting: (1) an order directing the Clerk of Court to accept the 17 $161,100.00 Plan Benefits at issue for placement in an interest bearing account;1 (2) an 18 order enjoining Defendants from initiating any action or proceeding in any federal or 19 state court against MetLife for the recovery of Plan Benefits by reason of the death of 20 Michael Reynolds; (3) an order dismissing MetLife with prejudice from this action and 21 discharging it from any further liability upon payment of the Plan Benefits into the 22 registry of this Court; and (4) an order awarding MetLife its costs and reasonable 23 attorneys’ fees incurred in bringing this interpleader action. (Doc. 23.) 24 25 26 27 28 1 Plaintiff’s motion identifies the Plan Benefits as $161,000.00 (Doc. 23 at 1, 2, 4, 5), $161,100.00 (Id. at 2), and $168,000.00 (Id. at 6). However, the Complaint and the Rule 26(f) Joint Case Management Report state that the Plan Benefits are $161,100.00. Because the amount of the Plan Benefits is not identified as a disputed issue in the Joint Case Management Report, the Court uses the $161,100.00 figure that appears in the Complaint and the Joint Case Management Report. (Doc. 1¶12; Doc. 22 at 2.) 1 Although Defendants Rosina Reynolds and Marlene Reynolds have not 2 specifically responded to the pending motion, the Rule 26(f) Joint Case Management 3 Report indicates that they do not object to the Court ordering MetLife to deposit the Plan 4 Benefits plus accrued interest into the Court’s registry and dismissing MetLife from this 5 action. (Doc. 22 at 3-4.) Accordingly, the Court will consider, without requiring further 6 briefing, whether to direct MetLife to deposit the disputed funds into the Court’s registry, 7 whether to dismiss MetLife from this lawsuit, and whether to enjoin Defendants from 8 initiating further litigation against MetLife regarding the disputed funds. Additionally, 9 MetLife states that counsel for each Defendant has advised that they do not object to 10 MetLife’s request for attorneys’ fees and costs. (Doc. 23 at 5.) Thus, the Court will also 11 consider the request for attorneys’ fees and costs without additional briefing. 12 I. Background 13 On June 24, 2013, MetLife filed the Complaint in interpleader pursuant to 28 14 U.S.C. § 1335 and Federal Rule of Civil Procedure 22, requesting that this Court 15 determine the rightful beneficiary of an insurance policy. (Doc. 1.) MetLife named 16 Rosina Reynolds and Marlene Reynolds as Defendants. MetLife asserts that Decedent 17 Michael Reynolds was an employee of Alcatel-Lucent and a participant his employer’s 18 Group Life Insurance Plan for Retired Employees (the Plan), an ERISA regulated 19 employee welfare benefit plan sponsored by Alcatel-Lucent and funded by a group life 20 insurance policy issued by MetLife. 21 Upon Decedent’s death on May 1, 2012, life insurance proceeds became payable 22 in the amount of $161,100.00 (the Plan Benefits). (Doc. 1 ¶¶ 11, 12.) According to the 23 terms of the Plan, MetLife must pay benefits to the Decedent’s named beneficiary, who is 24 his ex-wife Rosina Reynolds. She asserted a claim for the Plan Benefits on July 19, 25 2012. (Doc. 1 ¶¶ 12, 16.) Defendant Marlene Reynolds, also an ex-wife of the Decedent, 26 asserted a claim to the Plan Benefits on May 17, 2012. (Doc. 1 ¶ 14.) Her claim is based 27 on a November 1, 1990 Marital Settlement Agreement incorporated into her Decree of 28 Dissolution of Marriage that required the Decedent to “obtain and maintain, through his -2- 1 employment or otherwise, life insurance on his life with coverage in the amount of 2 $197,000.00, and to name [Marlene Reynolds] as the beneficiary of that life insurance.” 3 (Doc. 22 at 3.) 4 Dissolution pre-empts the Plan beneficiary designation and, therefore, she is entitled to 5 the Plan Benefits. (Id.) Marlene Reynolds asserts that the November 1, 1990 Decree of 6 MetLife filed this interpleader action because of these competing claims to the 7 Plan Benefits. In the pending motion, MetLife seeks an order permitting it to deposit the 8 disputed Plan Benefits with the Clerk of Court, dismissing MetLife from the action with 9 prejudice upon deposit of the Plan Benefits, enjoining Defendants from commencing or 10 prosecuting any other action regarding the policy benefit on the life of Mr. Reynolds in 11 any other federal or state court, and awarding MetLife its attorneys’ fees and costs 12 incurred in this action.2 (Doc. 1 at 4-5.) 13 II. Legal Standards and Analysis 14 “Interpleader is a procedural device used to resolve conflicting claims to money or 15 property. It enables a person or entity in possession of a tangible res or fund of money 16 (the stakeholder) to join in a single suit two or more claimants asserting mutually 17 exclusive claims to that stake.” Nevada v. Pioneer Cos., Inc., 245 F Supp.2d 1120, 1125 18 (D. Nev. 2003) (quoting 4 James Wm. Moore, et al., Moore’s Federal Practice 19 § 22.02[1] (3d ed 2002)). An interpleader action avoids the issue of multiple, conflicting 20 claims to a single fund by forcing the “claimants” to a limited amount of money to 21 resolve their potentially adverse claims simultaneously before the same judge. See State 22 Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523. (1967). An “[i]nterpleader’s primary 23 purpose is not to compensate, but rather to protect stakeholders from multiple liability as 24 25 26 27 28 2 MetLife also seeks an order “that upon the defendants’ failure to litigate or settle or agree between themselves their claims for the Plan Benefits, that this Court should settle and adjust their claims and determine to whom the Plan Benefits should be paid.” (Doc. 23 at 1.) An order to this effect is unnecessary because, if MetLife establishes that interpleader is appropriate, the Court will adjudicate Defendants’ competing claims to the interplead funds, and the action will proceed as any other civil action. See Wells Fargo Bank v. Magellan Owners Assoc., 2010 WL 46794, at *2 (D. Ariz. Jan. 4, 2010) (discussing the procedure for interpleader actions). -3- 1 well as from the expense of multiple litigation.” Aetna Life Ins. Co. v. Bayona, 223 F.3d 2 1030, 1034 (9th Cir.2000). 3 An interpleader action usually proceeds in two stages. At the first stage, the court 4 determines whether the interpleader action is appropriate. If so, then the court may order 5 the plaintiff to deposit the disputed funds, discharge the plaintiff, and direct the claimants 6 to interplead. At the second stage, the court adjudicates the defendants’ competing 7 claims to the interplead funds, and the action usually proceeds as any other civil action. 8 See Wells Fargo Bank, 2010 WL 46794, at *2 (discussing procedure for interpleader 9 action). The second stage is usually resolved when the district court enters judgment in 10 favor of a defendant who is legally entitled to the interplead funds. Id. (citing Diamond 11 Shamrock Oil & Gas Corp. v. Comm’r of Revenues, 422 F.2d 532, 534 (8th Cir. 1970)). 12 Here, MetLife has submitted evidence that it faces exposure to multiple liability 13 (Doc. 1, Exs. E, G) and has averred that it is a disinterested party with no claim to the 14 insurance proceeds. Because each Defendant asserts that she is entitled to the insurance 15 proceeds that are due as a result of Mr. Reynolds’s death, MetLife cannot distribute the 16 proceeds without exposing itself to liability or litigation. Exposure to multiple claims for 17 the proceeds of any ERISA benefit plan is a type of action for which interpleader is 18 appropriate. See Trs of the Dirs. Guild of America-Producer Pension Benefits Plan v. 19 Tise, 234 F.3d 415, 426 (9th Cir. 2000). Thus, MetLife has established its right to 20 interplead. 21 A. Deposit of Disputed Funds 22 A statutory interpleader action, brought pursuant to 28 U.S.C. § 1335 as in this 23 case, is “commenced . . . the date when the interpleader fund is deposited with Court.” In 24 Re Enron Corp. Sec., Derivative & ERISA Litig., 391 F. Supp. 2d 541, 563 (S.D. Tex. 25 2005) (citing Murphy v. Travelers Ins. Co., 534 F.2d 1155, 1159 (5th Cir.1976) (“The 26 deposit requirement is a jurisdictional prerequisite to a suit under the interpleader statute. 27 28 U.S.C. § 1335”)); 28 U.S.C. § 1335(a)(2). Accordingly, MetLife requests a Court 28 -4- 1 order permitting it to deliver the disputed funds to the Clerk of Court for deposit in the 2 Court’s registry. (Doc. 23 at 4.) 3 Federal Rules of Civil Procedure 67 provides that when any part of the relief 4 sought is a sum of money, a party may deposit the money with the court “on notice to the 5 other party.” Fed. R. Civ. P. 67(a). MetLife has provided Defendants with notice and 6 they do not object to MetLife depositing the funds with the Court. (Doc. 22 at 3-4.) 7 Accordingly, upon consideration of Plaintiff’s request to deposit funds and, as authorized 8 by Rule 67 and LRCiv 67.1, the Court grants Plaintiff’s request. MetLife may deliver to 9 the Clerk of Court for deposit in the Court’s registry the disputed Plan Benefits in the 10 amount of $161,100.00, plus any accrued interest, payable as a consequence of the death 11 of Mr. Reynolds and as identified in the Complaint. The Clerk of Court shall place such 12 funds in an interest bearing account pursuant to LRCiv 67.1(b). 13 Upon MetLife’s delivery of the disputed funds to Clerk of Court, MetLife will 14 have satisfied the jurisdictional prerequisites for a statutory interpleader action. See 28 15 U.S.C. 1335. First, MetLife commenced this civil action because it has possession of 16 money with a value of more than $500.00, specifically the Plan Benefits of $161,100.00 17 See 28 U.S.C. § 1335(a). Second, there is no dispute that the two adverse claimants have 18 diverse citizenship. See 28 U.S.C. § 1335(a)(1) (requiring adverse citizenship between 19 two or more adverse claimants); see also Blackmon Auctions, Inc. v. Van Buren Truck 20 Ctr., Inc., 901 F. Supp. 287, 289 (W.D. Ark. 1995) (“The Federal Interpleader Act 21 provides an independent basis for federal jurisdiction when there is minimal diversity 22 between the claimants, i.e., when at least two of the claimants are citizens of different 23 states.”). Rosina Reynolds is a resident of Alto, New Mexico, and Marlene Reynolds is a 24 resident of Arizona. (Doc. 1; Doc. 22 at 5.) Third, pursuant to this Order, MetLife will 25 deposit the insurance proceeds at issue into the registry of the Court. 26 U.S.C. § 1335(a)(2). See 28 Therefore, MetLife will have satisfied the jurisdictional 27 28 -5- 1 prerequisites of 28 U.S.C. § 1335 upon the deposit of the disputed funds with the Clerk of 2 Court.3 3 B. Dismissal of Interpleader Plaintiff and Injunctive Relief 4 MetLife also seeks an order dismissing it from this action and enjoining 5 Defendants from initiating further litigation regarding the disputed Plan Benefits. The 6 Court grants the requested relief as discussed below. 7 When the jurisdictional prerequisites of 28 U.S.C. § 1335 are satisfied, “‘[t]he 8 court should readily grant discharge of the [disinterested] stakeholder.’” Wells Fargo, 9 2010 WL 46794, at *4 (quoting Moore’s Federal Practice § 22.03(2)(a); § 22.04(6)(b) 10 (“Once a disinterested stakeholder deposits the stake with the court, the stakeholder 11 should be dismissed from the action.”)) “The law normally regards the plaintiff in an 12 interpleader action as having been discharged of full responsibility regarding the 13 interpleaded funds when the funds have been paid into the registry of the court and the 14 parties have had notice and opportunity to be heard.” Central Bank of Tampa v. United 15 States, 838 F. Supp. 564, 567 (M.D. Fla. 1993) (internal citations omitted). 16 Accordingly, once MetLife appropriately deposits all of the disputed funds with 17 the Clerk of Court, the Court will dismiss MetLife from this action and enter the 18 requested injunctive relief pursuant to 28 U.S.C. § 2361. See Star Ins. Co. v. Cedar 19 Valley Express, LLC, 273 F.Supp.2d at 43–44 (D. D.C. Sept. 18, 2002) (noting that the 20 3 21 22 23 24 25 26 27 28 The Complaint invokes both § 1335 and Rule 22. Because the Plan at issue is governed by ERISA, this Court also has jurisdiction over a Rule 22 interpleader action. See Aetna Life Ins. Co. v. Bayona, 223 F.3d 1030, 1033 (9th Cir. 2000) (a party seeking to bring a federal interpleader action under Rule 22 must establish statutory jurisdiction). However, because MetLife requests injunctive relief under 28 U.S.C.§ 2361, which is only applicable to statutory interpleader actions, the Court considers this action as a statutory interpleader action under 28 U.S.C. § 1335. See Metro. Life Ins. Co. v. Probst, 2009 WL 3740775, at *1 (D. Ariz. Nov. 6, 2009) (stating that § 2361 only applies to statutory interpleader actions). Although courts have used the All Writs Statute, 28 U.S.C. § 1651, to enjoin defendants in Rule 22 interpleader actions from bringing future proceedings regarding the same claim in federal or state court, Plaintiff’s motion does not address the standards for entering injunctive relief under § 1651. See New York Life Ins. Co. v. Deshotel, 142 F.3d 873, 879 (9th Cir. 1998) (Under the All Writs Statute, a federal court in a Rule 22 action has the power to issue an injunction enjoining the parties from relitigating the same issues in federal court); Trs. of the ILPWU-PMA Pension Plan v. Coates, 2013 WL 556800, at 87-8 (N.D. Cal. Feb. 12, 2013) (“the All Writs Statute may be used to enjoin parties from relitigating the same issues or claims before state courts.”). -6- 1 policy considerations underlying the interpleader statute, including protecting the 2 stakeholder from the expense of multiple lawsuits and from double liability, support the 3 entry of injunctive relief). 4 III. Attorneys’ Fees and Costs 5 Finally, MetLife seeks an award of attorneys’ fees and costs. Counsel for MetLife 6 has submitted billing invoices including time entries in support of its request for 7 attorneys’ fees in the amount of $3,307.20. (Doc. 23, Ex. A.) The Court will award 8 attorneys’ fees for the time entries attached to MetLife’s motion, which total the 9 requested amount. See Schirmer Stevedoring Co., LTD. v. Seaboard Stevedoring Corp., 10 306 F.2d 188, 194 (9th Cir. 1962) (holding that the proper rule in an interpleader case 11 with a disinterested plaintiff is for the plaintiff to be awarded attorneys’ fees for the 12 services of his attorneys in interpleading). 13 After reviewing the time entries, the Court finds that MetLife’s attorneys charged 14 a reasonable rate and spent a reasonable amount of time working on this interpleader 15 action. See Trs. of Directors Guild, 234 F.3d at 426-26 (interpleader plaintiff is properly 16 awarded attorneys’ fees for fees that are incurred in filing the action and pursuing the 17 plan’s release from liability). 18 attorneys’ fees to be paid from the sum that will be deposited with the registry of the 19 Court in this case. See Id. at 427 (attorney’s fees awarded to the disinterested stakeholder 20 in an interpleader action are paid from the interpleaded fund); CUNA Mut. Ins. Soc. v. 21 Carrillo, 2009 WL 1383283, at *1 (D. Ariz. May 18, 2009) (awarding stakeholder in an 22 interpleader action $7,566.00 in attorneys’ fees to be paid from the sum deposited with 23 the court). The Court, therefore, awards MetLife $3,307.20 in 24 MetLife also seeks an award of $447.05 for costs including postage, the filing fee, 25 and copying. (Doc. 23, Ex. 1.) Whether to award the disinterested stakeholder costs in 26 an interpleader action is within the court’s discretion. Gelfgren v. Republic Nat’l Life Ins. 27 Co., 680 F.2d 79, 81 (9th Cir. 1982). Here, MetLife’s request for costs is reasonable and 28 Defendants indicated that they do not object to those costs. (Doc. 23 at 5); see Schirmer -7- 1 Stevedoring, 306 F.2d at 194 (ordinarily a stakeholder may be awarded fees and costs 2 related to preparing and filing the complaint in the interpleader, securing a court order 3 restraining further prosecution against the stakeholder, and preparing the details of the 4 stakeholder's accounting); Allianz Life Ins. v. Agorio, 852 F. Supp. 2d 1163, 1170 5 (N.D. Cal. 2012) (awarding interpleader stakeholder costs for research, filing and service 6 expenses). Accordingly, the Court exercises its discretion to award MetLife its requested 7 costs. 8 Accordingly, 9 IT IS ORDERED that MetLife’s motion to deposit the disputed Plan Benefits in 10 the Court’s registry (Doc. 23) is GRANTED. MetLife must deposit the Plan Benefits, 11 together with any interest accrued up to the date of such deposit, in compliance with 12 LRCiv 67.1(a). 13 IT IS FURTHER ORDERED that MetLife’s motion for an order dismissing it 14 from this action and entering injunctive relief (Doc. 23) is GRANTED such that when 15 the disputed funds are deposited with the Clerk of Court, MetLife will be dismissed from 16 this action and Rosina Reynolds and Marlene Reynolds will be permanently enjoined 17 from instituting any action or proceeding in any federal or state court against MetLife or 18 the Alcatel-Lucent Group Life Insurance Plan for Retired Employees for the recovery of 19 the Plan Benefits by reason of the death of Michael Reynolds. 20 IT IS FURTHER ORDERED that MetLife’s motion for attorneys’ fees 21 (Doc. 23) is GRANTED and that MetLife is awarded $3,307.20 in attorneys’ fees. After 22 MetLife has deposited the disputed funds with the Court, the award of attorneys’ fees will 23 be paid out of the sum that MetLife deposited. 24 IT IS FURTHER ORDERED that MetLife’s request for an award of costs is 25 GRANTED and that MetLife is awarded $447.05 in costs. After MetLife has deposited 26 the disputed funds with the Court, the costs will be paid out of the interpleaded funds that 27 MetLife deposited. 28 -8- 1 2 3 IT IS FURTHER ORDERED that MetLife is excused from attending the Rule 16 Case Management Conference set for November 20, 2013 (Doc. 21). Dated this 15th day of November, 2013. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -9-

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