STATE FARM LIFE INSURANCE COMPANY v. JONAS et al

Filing 42

ENTRY REGARDING PENDING MOTIONS: Accordingly, the motion to dismiss or for judgment on the pleadings is DENIED. Accordingly, the motion 17 is DENIED. Accordingly, State Farm's motion to interplead funds is GRANTED. Within 14 days of the date of this Entry, State Farm shall deposit into the court's registry the life insurance proceeds from the policy issued to Jennifer Jonas, calculated at the contractual interest rate from the date of Jennifer Jonas's death to the date of deposit ***SEE ENTRY FOR ADDITIONAL INFORMATION***. Signed by Judge William T. Lawrence on 6/11/2013. (DW)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
STATE FARM LIFE INSURANCE CO.,
Plaintiff,
vs.
TROY JONAS, et al.,
Defendants.

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) CAUSE NO. 1:12-cv-1500-WTL-MJD
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ENTRY REGARDING PENDING MOTIONS
Several motions pend in this case. Each is addressed, in turn, below.
DEFENDANT TROY JONAS’S MOTION TO DISMISS (DKT. NO. 7)
Defendant Troy Jonas has moved to dismiss the claim against Defendant Estate of
Jennifer Jonas or, in the alternative, for judgment on the pleadings.1 The Court is unaware of any
provision of the Federal Rules of Civil Procedure under which one defendant in a case can move
to dismiss the plaintiff’s claim against another defendant for failure to state a claim. The rules
cited by Jonas, Rules 12(b)(6) and 12(c), apply to a party seeking to dismiss claims asserted
against him, not claims asserted against another party. Accordingly, the motion to dismiss or for
judgment on the pleadings is DENIED.2
DEFENDANT TROY JONAS’S MOTION FOR SUMMARY JUDGMENT (DKT. NO. 17)
Defendant Troy Jonas has filed a motion for summary judgment in this case seeking to
resolve what he terms as “[t]he question in this case”: “who or what is entitled to the proceeds

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The Court notes that Jonas’s filing violates Local Rule 7-1 in that it was filed in the
same document as Jonas’s answer to the complaint and it was not accompanied by a separate
brief.
2
The Court notes that the motion for judgment on the pleadings was premature in any
event because the pleadings had not yet been closed.

from the Plaintiff’s life insurance policy insuring the life of Jennifer Jonas.” The only claim
currently in this case is that brought by the Plaintiff, State Farm Life Insurance Company (“State
Farm”), however, and State Farm’s claim does not raise the issue that Jonas seeks to resolve with
his motion for summary judgment. State Farm’s complaint does not raise the issue of who
should receive the life insurance proceeds; it is an interpleader complaint seeking to pay the
proceeds into the court and absolve State Farm from any further responsibility with regard to
those proceeds. In essence, Jonas seeks summary judgment on cross-claims that he has not
asserted against his co-defendants. Accordingly, the motion is DENIED.
MOTION TO INTERPLEAD FUNDS (DKT. NO. 29)
Plaintiff State Farm has moved to interplead the life insurance proceeds pursuant to
Federal Rule of Civil Procedure 67(a), said funds to be held by the court until the issue of who
the proper beneficiary is can be resolved. Jonas does not object to the funds being interpleaded,
but he argues that pursuant to Texas law the unpaid proceeds are subject to interest at a rate of
18% per year that will continue to accrue until they are paid to the beneficiary (which he argues
is himself). State Farm, on the other hand, argues that it is obligated only to pay interest on the
funds as provided in the life insurance policy: 2% per year paid from the date of death to the
date of payment.
All parties agree that Texas law applies to this dispute. The Texas prompt payment of
claims statute provides, in relevant part:
a) Except as otherwise provided, if an insurer, after receiving all items,
statements and forms reasonably requested and required under Section
542.055, delays payment of the claim for a period exceeding the period
specified by other applicable statutes or, if other statutes do not specify a
period, for more than 60 days, the insurer shall pay damages and other
items as provided by Section 542.060.
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(c) A life insurer that receives notice of an adverse, bona fide claim to all or
part of the proceeds of the policy before the applicable payment deadline
under Subsection (a) shall pay the claim or properly file an interpleader
action and tender the benefits into the registry of the court not later than
the 90th day after the date the insurer receives all items, statements, and
forms reasonably requested and required under Section 542.055. A life
insurer that delays payment of the claim or filing of the interpleader and
tender of the proceeds for more than 90 days shall pay damages and other
items as provided by Section 542.060 until the claim is paid or the
interpleader is properly filed.
Tex. Ins. Code § 542.058.2. Section 542.060(a) provides, in turn, “[i]f an insurer that is liable
for a claim under an insurance policy is not in compliance with this subchapter, the insurer is
liable to pay the holder of the policy or the beneficiary of the policy making the claim under the
policy, in addition to the amount of the claim, interest on the amount of the claim at the rate of
18 percent a year as damages, together with reasonable attorney’s fees.”
The question before the Court, then, is whether State Farm had notice of a bona fide
claim adverse to Jonas’s claim such that it was permitted to file this interpleader action rather
than pay Jonas the proceeds of the insurance policy within sixty days of his claim. Under Texas
law, an insurer’s interpleader action is proper if the insurer “is subject to, or has reasonable
grounds to anticipate, rival claims to the same funds.” See, e.g., Clements v. Minnesota Life Ins.
Co., 176 S.W.3d 258, 263 (Tex.App. 2004) (quoted in State Farm Life Ins. Co. v. Martinez, 216
S.W.3d 799, 807 n.41 (Tex. 2007)). In other words, “if a reasonable doubt exists in law or fact
as to whom the proceeds belong, an insurer should interplead them and let the courts decide.”
Martinez, 216 S.W.3d at 806. Further, Texas law has long been that “’every reasonable doubt
should be resolved in favor of the stakeholder’s right to interplead.’” Id. (quoting Bryant v.
United Shortline Inc. Assur. Servs., N.A., 972 S.W.2d 26, 31 (Tex. 1998) and citing Nixon v.
Malone, 100 Tex. 250 (1906)).

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In this case, State Farm was aware of facts that created a reasonable doubt as to who the
proper beneficiary of the life insurance policy was. While Jonas was listed as the beneficiary on
the policy, that designation was made prior to the Jonases’ divorce. Texas Family Code § 9.301
provides:
(a) If a decree of divorce or annulment is rendered after an insured has designated
the insured’s spouse as a beneficiary under a life insurance policy in force at the
time of rendition, a provision in the policy in favor of the insured’s former spouse
is not effective unless:
(1) the decree designates the insured’s former spouse as the beneficiary;
(2) the insured redesignates the former spouse as the beneficiary after
rendition of the decree; or
(3) the former spouse is designated to receive the proceeds in trust for, on
behalf of, or for the benefit of a child or a dependent of either former
spouse.
(b) If a designation is not effective under Subsection (a), the proceeds of the
policy are payable to the named alternative beneficiary or, if there is not a named
alternative beneficiary, to the estate of the insured.
The divorce decree in this case transferred ownership of the life insurance policy from Jennifer
Jonas to Troy Jonas, but the owner of the policy is not synonymous with the beneficiary. There
was, therefore, at least a reasonable legal basis for State Farm to be uncertain regarding whether,
under Texas law, the provision in the Jonases’ divorce decree satisfied the requirement of Texas
Family Code § 9.301(a)(1) that a divorce decree “designate the insured’s former spouse as the
beneficiary” in order to avoid making a pre-decree designation ineffective. If it did not satisfy
the requirement, the Jonases’ children, who were named as successor beneficiaries, would be the
proper beneficiaries.
Because the facts known to State Farm created a reasonable doubt regarding the proper
beneficiary of the life insurance policy, it was proper under Texas law for State Farm to file an

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interpleader action rather than pay the proceeds to Jonas. State Farm therefore is not subject to
the 18% interest damages provision found in Tex. Ins. Code § 542.060(a), but rather is obligated
to pay interest as provided in the policy. Accordingly, State Farm’s motion to interplead funds is
GRANTED. Within 14 days of the date of this Entry, State Farm shall deposit into the
court’s registry the life insurance proceeds from the policy issued to Jennifer Jonas,
calculated at the contractual interest rate from the date of Jennifer Jonas’s death to the
date of deposit.
SO ORDERED: 06/11/2013
_______________________________
Hon. William T. Lawrence, Judge
United States District Court
Southern District of Indiana

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