COMBINED INSURANCE COMPANY OF AMERICA v. CHRISTIAN et al
Filing
32
MEMORANDUM OPINION AND ORDER signed by CHIEF JUDGE WILLIAM L. OSTEEN, JR on 08/24/2015, that this action is a proper action or proceeding for interpleader under 28 U.S.C. § 1335 and for determination of the respective rights, if any, o f Defendants under the Policy and to the Policy Proceeds, and this court has jurisdiction over the subject matter of this action and the parties thereto. The net benefit due and payable under the Policy is $55,583.18, and said total has been deposited into the registry of the court. FURTHER that Plaintiff's Motion for Discharge and Attorneys' Fees (Doc. 25 ) is GRANTED IN PART and DENIED IN PART. Plaintiff's request for attorneys' fees is DEN IED WITHOUT PREJUDICE, but all other requests for relief are GRANTED. Plaintiff shall be reimbursed for the $927.63 in costs that it requested from the proceeds deposited in this court's registry. FURTHER that Plaintif f is discharged from any and all liability to any and all Defendants and from any and all liability under the Policy. FURTHER that Plaintiff is dismissed from this action with prejudice. FURTHER that Defendants are permanently restra ined and enjoined from instituting or prosecuting any action or proceeding against Plaintiff arising out of, or related to, the Policy in any federal or state court. FURTHER that this court will retain jurisdiction of this action for the d etermination of such further matters as properly come before this court. FURTHER that Plaintiff shall have such other and further relief that is just and appropriate. Finding no just reason for delay, a Judgment consistent with this Memorandum Opinion and Order will be entered contemporaneously herewith pursuant to Fed. R. Civ. P. 54(d).(Taylor, Abby)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
COMBINED INSURANCE COMPANY OF
AMERICA,
Plaintiff,
v.
GREGORY LEE CHRISTIAN, DARRYL
LEE CHRISTIAN, through his
attorney-in-fact, GREGORY LEE
CHRISTIAN, NANCY KENT BENNETT,
and THE ESTATE OF WILLIAM
RIVERS, through its coadministrators, NANCY KENT
BENNETT and JAMES RIVERS,
Defendants.
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1:14CV647
MEMORANDUM OPINION AND ORDER
OSTEEN, JR., District Judge
Plaintiff Combined Insurance Company of America
(“Plaintiff”) initiated this interpleader action on August 1,
2014, seeking a determination of the proper beneficiary of a
life insurance policy issued to William Rivers, now deceased.
Presently before this court is Plaintiff’s Motion for
Discharge and for Attorneys’ Fees pursuant to 28 U.S.C. § 2361.
(Doc. 25.)
Defendants do not object to Plaintiff’s discharge
from this case.
However, the Estate of William Rivers, through
its co-administrators, Nancy Kent Bennett and James Rivers, and
Defendants Gregory Lee Christian and Darryl Lee Christian, by
and through his attorney-in-fact, Gregory Lee Christian, have
responded in opposition to Plaintiff’s request for attorneys’
fees.
(Docs. 28, 29.)
Plaintiff has filed a reply.
(Doc. 30.)
This matter is now ripe for adjudication, and for the
reasons stated herein, this court will grant Plaintiff’s request
for discharge and injunction, grant Plaintiff’s request to be
reimbursed for costs, but deny Plaintiff’s request for
attorneys’ fees.
I.
DISCHARGE AND INJUNCTION
Plaintiff requests an order “restraining each Defendant
from commencing any action against [Plaintiff] on the insurance
policy at issue in this action, discharging [Plaintiff] from any
and all liability in this matter, [and] dismissing with
prejudice [Plaintiff] from this interpleader action.”
(Pl.’s
Mot. for Discharge & for Attorneys’ Fees (“Pl.’s Mot.”) (Doc.
25) at 1.)
After a thorough review of the file, and Plaintiff’s
motion, this court now makes the following findings of fact and
conclusions of law.
A.
Findings of Fact
This court makes the following findings of fact, all being
uncontested by the parties:
1.
Plaintiff issued a life insurance policy bearing
policy no. 000303554 (the “Policy”), which insured the life of
William Rivers (the “Insured”).
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2.
The Insured died October 3, 2013. At the time of the
Insured's death, the beneficiary or beneficiaries of the Policy
became entitled to payment from Plaintiff.
3.
As of January 21, 2015, the net benefit due and
payable under the Policy was $55,583.18 (the “Policy Proceeds”).
4.
Defendant Gregory Lee Christian (“G. Christian”) on
his own behalf and on behalf of Defendant Darryl Lee Christian
(“D. Christian”) as his attorney-in-fact, and Defendant Nancy
Kent Bennett (“Bennett”) on her own behalf and with James Rivers
on behalf of the Estate of William Rivers (“the Estate”), assert
competing claims to the Policy Proceeds, claim to be a
beneficiary under the Policy, and dispute the amount to which
the other is entitled to receive pursuant to the Policy.
5.
Defendant G. Christian resides in North Carolina,
Defendant D. Christian resides in Florida,1 Defendant Bennett
resides in Georgia, and the Estate of William Rivers is being
probated in Glascock County, Georgia.
1
Plaintiff alleges that Defendant D. Christian resides in
Punta Gorda, Florida, upon information and belief. (Interpleader
Compl. (Doc. 1) ¶ 3.) The parties, including Defendant G.
Christian as his attorney-in-fact, are currently unsure of
Defendant D. Christian’s whereabouts. (See Ans. of Defs. G.
Christian & D. Christian, by and through his Attorney-in-Fact,
G. Christian to the Interpleader Compl. & Claim for Funds
(“Christian Ans.”) (Doc. 21) at 2.) Nonetheless, because
Defendant G. Christian and Defendant Bennett are “adverse
claimants, of diverse citizenship,” this court can find it has
jurisdiction over this action without definitively finding where
D. Christian is domiciled. See 28 U.S.C. § 1335(a)(1).
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6.
Plaintiff brought this action, pursuant to 28 U.S.C.
§ 1335, the federal interpleader statute, against persons who
have asserted claims under the Policy.
Plaintiff now moves for
determination of its interpleader claim and, inter alia, for
discharge from further liability and permanent injunctive relief
pursuant to 28 U.S.C. §§ 1335 and 2361.
7.
In view of Defendants' adverse and conflicting
interests, Plaintiff was unable to make an apportionment of the
Policy Proceeds among Defendants and, therefore, filed the
instant action.
8.
On January 21, 2015, Plaintiff deposited the Policy
Proceeds (in the amount of $55,583.18) into the registry of the
court, pursuant to this court’s order. (Doc. 24.)
9.
This court finds: (A) that this action was filed by
Plaintiff, a corporation, which had in its custody or possession
money of the value of $500.00 or more, and which issued a policy
of insurance in an amount of more than $500.00; (B) that there
were two or more adverse claimants of diverse citizenship as
defined in 28 U.S.C. § 1332 claiming to be entitled to such
money; and (C) that Plaintiff deposited such money into the
registry of the court. Therefore, the requirements of 28 U.S.C.
§ 1335 have been met and this court has original jurisdiction
over this matter.
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B.
Conclusions of Law
Based upon the foregoing findings of fact, this court
concludes as a matter of law that:
1.
To the extent that any of the foregoing Findings of
Fact are deemed, or constitute, Conclusions of Law, those
Findings of Fact are restated and incorporated herein.
2.
The captioned action is a proper action or proceeding
for interpleader under 28 U.S.C. § 1335 and for determination of
the respective rights, if any, of Defendants to the Policy and
to the Policy Proceeds, and this court has jurisdiction over the
subject matter of this action and the parties thereto.
3.
The net benefit due and payable under the Policy is
$55,583.18 (the “Policy Proceeds”), and said total has been
deposited into the registry of the court.
4.
Plaintiff's motion should be granted in part to the
extent it requests an order “restraining each Defendant from
commencing any action against [Plaintiff] on the insurance
policy at issue in this action, discharging [Plaintiff] from any
and all liability in this matter, [and] dismissing with
prejudice [Plaintiff] from this interpleader action.”
(Pl.’s
Mot. (Doc. 25) at 1.)
5.
Plaintiff should be discharged from any and all
liability to any and all Defendants and from any and all
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liability under the Policy, and the Policy is deemed null and
void with no further force or legal effect.
6.
Plaintiff should be dismissed from this action.
7.
Defendants should be permanently restrained and
enjoined from instituting or prosecuting any action or
proceeding against Plaintiff arising out of, or related to, the
Policy in any federal or state court.
8.
This court will retain jurisdiction of this action for
the determination of such further matters as properly come
before this court.
9.
This court, finding no just reason for delay, will
enter final judgment dismissing with prejudice Plaintiff from
this action pursuant to Federal Rule of Civil Procedure 54(d).
II.
ATTORNEYS’ FEES
In addition to requesting a discharge and injunctive
relief, Plaintiff also requests that this court order that it be
reimbursed for its costs and expenses out of the Policy
Proceeds.
Specifically, Plaintiff requests that this court
award $27,283.05 in attorneys’ fees and $927.63 in costs.
(Pl.’s Mem. of Law in Supp. of Mot. for Discharge and for
Attorneys’ Fees (“Pl.’s Mem.”) (Doc. 26) at 10.)
In support of this request, Plaintiff describes the actions
that made this interpleader action “more work intensive than a
standard interpleader” action, ultimately requiring 89.5 hours
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of attorney and paralegal time.
(Id. at 9-10.)
Additionally,
Plaintiff’s counsel has submitted an affidavit with supporting
documents.
(See Pl.’s Mem., Ex. 1, Aff. of Frank E. Emory, Jr.
in Supp. of Mot. for Discharge (Doc. 26-1).)
Defendants have
filed objections to the request for attorneys’ fees.
(See
Objection of the Estate of William Rivers, through its
co-administrators Nancy Kent Bennett and James Rivers, to Pl.’s
Mot. for Attorneys’ Fees (“Estate’s Objection”) (Docs. 28);
Objection of Def. G. Christian and Def. D. Christian, by and
through his Attorney-in-Fact, G. Christian to the Pl.’s Mot. for
Attorneys’ Fees (“Christian’s Objection”) (Doc. 29).)
For the
following reasons this court will grant Plaintiff’s request for
costs but will deny its request for attorneys’ fees.
This court recognizes that the Fourth Circuit “has not
provided any guidance as to the awarding of attorneys' fees in
the context of the federal interpleader statute,” see Lindsey v.
Primerica Life Ins. Co., No. 1:00CV00789, 2002 WL 1585908, at *1
(M.D.N.C. May 17, 2002), but that other circuits have found that
it “is settled that a federal court has discretion to award
costs and counsel fees to the stakeholder in an interpleader
action whenever it is fair and equitable to do so.” Sun Life
Assurance Co. of Canada v. Sampson, 556 F.3d 6, 8 (1st Cir.
2009) (alterations and internal quotation marks omitted); see
also James Talcott, Inc. v. Allahabad Bank, Ltd., 444 F.2d 451,
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468 (5th Cir. 1971); Charles Alan Wright, Arthur R. Miller, Mary
Kay Kane, Richard L. Marcus & Adam N. Steinman, 7 Federal
Practice and Procedure § 1719 (3d ed. 2015).
In determining if
it is fair and equitable to allow costs and fees, courts look to
factors such as (1) whether the party has acted in bad faith or
(2) whether the interpleader is disinterested in the litigation.
See Sampson, 556 F.3d at 8.
Defendants have given no reason why this court should not
award costs and expenses.
There is no indication that Plaintiff
acted with undue delay in bringing this interpleader action or
did anything else that might be considered bad faith.
Moreover,
this court finds that Plaintiff is a disinterested stakeholder
that does not benefit from resolution of the case in favor of
any defendant.
Therefore, this court finds it appropriate to
reimburse Plaintiff for its costs of $927.63.
This court also finds that Plaintiff’s lack of bad faith
and status as a disinterested participant in these proceedings
could justify an award of reasonable attorneys’ fees.
However,
there are two reasons why this court will not order payment of
the attorneys’ fees that Plaintiff has requested.
First, this
court finds that the materials submitted in support of
Plaintiff’s request for its attorneys’ fees are not sufficiently
specific or itemized for this court to determine whether the
requested award is reasonable. Plaintiff’s Memorandum does
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outline the work done by Plaintiff’s counsel in this case, and
counsel’s affidavit outlines the experience and qualifications
of the three attorneys and the paralegal who have worked on this
case. (See Pl.’s Mem., Ex. 1, Aff. of Frank E. Emory, Jr. (Doc.
26-1).)
However, besides statements that the fees and services
“were necessarily and reasonably incurred” and that Plaintiff’s
counsel kept costs low in this matter, along with a summary
chart outlining the rate and total amount billed by each
professional, (id. at 3-4, 16), this court has no other
information to determine whether the number of hours and the
hourly rate requested for the work done in this case is
reasonable.
As such, this court is unable to determine whether
such an award would be reasonable in this instance.
See
Robinson v. Equifax Info. Servs., LLC, 560 F.3d 235, 243 (4th
Cir. 2009).2
Second, this court is concerned that the requested amount
of attorneys’ fees may not be reasonable on its face.
The
requested attorneys’ fees, $27,283.05, constitute approximately
49 percent of the Policy Proceeds at issue in this case.
2
The parties spend time in their briefs outlining the
factors this court should consider in determining if the
requested fees are reasonable. (See Pl.’s Mem. (Doc. 26) at 810; Estate’s Objection (Doc. 28) at 4-5; Christian’s Objection
(Doc. 29) at 2-5.) This court need not reach this question
because Plaintiff has not presented sufficient information for
this court to evaluate the reasonableness of the requested
attorneys’ fees.
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Plaintiff cites other cases where federal courts have ordered
that an insurance company be reimbursed for the costs of
initiating an interpleader action, including one such order made
by a court in this district.
*3.
See Lindsey, 2002 WL 1585908, at
However, the amount of attorneys’ fees awarded in these
case were much smaller percentages of the policy proceeds than
the one requested in this case.
See id. (awarding attorneys’
fees of $9,563.29 or 17 percent of the $54,900.30 proceeds); see
also Sampson, 556 F.3d at 7-8 (affirming original attorneys’
fees award of $8,668 or 24 percent of the $36,000 proceeds);
Transamerica Premier Ins. Co. v. Growney, 70 F.3d 123, at *1
(10th Cir. 1995) (unpublished) (affirming an attorneys’ fees and
costs award of $1,686.28 or 3 percent of the $50,000 policy
limit); Prudential Ins. Co. of Am. v. Boyd, 781 F.2d 1494, 1498
(11th Cir. 1986) (reviewing an attorneys’ fees award of $971.25
or 1.5 percent of the $63,261.60 proceeds); Jefferson Pilot Fin.
Ins. Co. v. Buckley, No. Civ.A. 3:04CV783, 2005 WL 221076, at
*1-*2 (E.D. Va. Jan. 13, 2005) (awarding attorneys’ fees of
$1,005.00 or approximately 10 percent of the $10,153.42
proceeds).
Here, Plaintiff’s requested attorneys’ fees would
substantially deplete the Policy Proceeds at issue in this case.
Although the value of the contested funds is not inexorably
linked to the complexity of the case or the reasonableness of a
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requested award of attorneys’ fees from the case, the amount of
fees compared to the amount of funds available is something this
court should consider in determining if granting a fee award is
equitable in a particular case.
See Powell Valley Bankshares,
Inc. v. Wynn, No. 2:01CV00079, 2002 WL 728348, at *2 (W.D. Va.
Apr. 11, 2002) (noting that the “amount of fees and expenses
sought by [Plaintiff] total $40,575.50, which is nearly half of
the accrued dividends of $83,826” and finding “the requested
fees and expenses excessive”).
Plaintiff offers some explanation for why its requested
attorneys’ fees are so much higher than the fees paid for “tasks
generally associated with a federal court interpleader action.”
(See Pl.’s Mem. (Doc. 26) at 9-10.)
Plaintiff notes (1) the
complication of serving process on Defendant D. Christian who is
legally incapacitated and whose attorney-in-fact is Defendant G.
Christian; (2) the time spent preparing answers to the
“counterclaims” filed by Defendants; and (3) the time spent
responding to Defendant Bennett’s “Motion to Transfer Venue or
Motion to Dismiss on Forum Non Conveniens.”
(See id. at 10.)
Defendants claim that this court should not award attorneys’
fees for such work because Plaintiff was not required to respond
to either the “Counterclaims” or “Motion to Transfer Venue.”
(See Estate’s Objection (Doc. 28) at 5; Christian’s Objection
(Doc. 29) at 6.)
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Without fully adopting Defendants’ arguments, this court
finds that Defendants’ arguments create doubts for this court
about the reasonableness of Plaintiff’s request, and Plaintiff
has not presented sufficient information to address these
issues.
This court previously determined that Defendant
Bennett’s “motion,” where she asserted that the Superior Court
of Glascock County, Georgia, is a more proper venue for this
action, was made in Defendant Bennett’s answer, did not comply
with Local Rule 7.3, and thus did not require anything more than
a perfunctory response.
(See Order (Doc. 27) at 2.)
In fact,
this court did not docket the “motion” until after Plaintiff
filed its response.
In the absence of more specific time and
billing information, this court is not able to evaluate the
reasonableness of the request.
Furthermore, Plaintiff responded to each Defendant’s claim
for funds included in each Defendant’s answer to the
interpleader complaint. (See Ans. & Claim to Funds of the Estate
of William Rivers (“Estate’s Ans.”) (Doc. 13) at 4; Ans. & Claim
to Funds by Def. Bennett (Doc. 14) at 4; Christian Ans. (Doc.
21) at 10-14.)
In each of their claims, Defendants asserted
that they are “the proper beneficiary to the policy in question”
and are “entitled to the proceeds thereof.” (See, e.g., Estate’s
Ans. (Doc. 13) at 4.)
These claims were not designated as
counterclaims and are actually cross-claims against fellow
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Defendants.
Even assuming a response from Plaintiff was
required, the response itself is for the most part a standard,
perfunctory pleading to preserve Plaintiff’s rights - something
not likely to take substantial time.
Notably, each of
Plaintiff’s responses cites to the North Carolina Rules of Civil
Procedure, not the rules applicable to this case.
(See, e.g.,
Pl.’s Answer to Def. The Estate of William Rivers’ Counterclaim
(Doc. 16) at 2.)
Again, in the absence of detailed billing
records or some other evidence, this court is not able to
determine that the requested fees are reasonable in light of the
work performed.
This court does not doubt that Plaintiff’s counsel felt a
response was prudent to Defendants’ filings, but this court is
concerned about awarding such high attorneys’ fees and depleting
the Policy Proceeds for such expenses.
Furthermore, the fact
that Defendants did not file actual counterclaims against
Plaintiff distinguish this case from cases cited by Plaintiff
where the court granted large attorneys’ fee awards.
In those
cases, the defendants had counterclaimed for breach of contract
against the insurance company, thus requiring more significant
legal fees from the insurance company’s counsel.
See, e.g.,
Nat'l Life Ins. Co. v. Alembik-Eisner, 582 F. Supp. 2d 1362,
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1372 (N.D. Ga. 2008).
Without any claims directed at Plaintiff,
there is less basis for finding the requested fees reasonable.3
Based on the deficiencies outlined herein, this court does
not find a sufficient basis for determining that Plaintiff’s
requested attorneys’ fees are reasonable, and as a result, this
court will not reimburse Plaintiff for the attorneys’ fees it
requests. The burden remains on Plaintiff to establish the
reasonableness of its requested fees, and this court will not
set a reasonable fee on its own.
Nonetheless, this court will
consider a more specific and itemized request for attorneys’
fees if Plaintiff chooses to submit such a request.4
3
This court notes briefly that other courts have expressed
some concern over whether an insurance company should be
reimbursed for initiating an interpleader action, see In re
Mandalay Shores Co-op. Hous. Ass'n, Inc., 21 F.3d 380, 383 (11th
Cir. 1994) (“Unlike innocent stakeholders who unwittingly come
into possession of a disputed asset, an insurance company can
plan for interpleader as a regular cost of business and,
therefore, is undeserving of a fee award.”); Travelers Indem.
Co. v. Israel, 354 F.2d 488, 490 (2d Cir. 1965), or have found
that a fee award in an interpleader action runs contrary to the
policy put forward in Rule 54(d) of the Federal Rules of Civil
Procedure because the prevailing party ultimately bears the
costs of the interpleader’s fees rather than the losing party,
see Coppage v. Ins. Co. of N. Am., 263 F. Supp. 98, 101 n.2 (D.
Md. 1967). This court does not rely on either of these cases in
denying Plaintiff’s request for attorneys’ fees, but these
arguments support this court’s efforts to carefully scrutinize
Plaintiff’s request for attorneys’ fees.
4
Pursuant to Fed. R. Civ. P. 54(d)(2), a claim for
attorneys’ fees must be made no later than 14 days after entry
of judgment.
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III. CONCLUSION
IT IS THEREFORE ORDERED that this action is a proper action
or proceeding for interpleader under 28 U.S.C. § 1335 and for
determination of the respective rights, if any, of Defendants
under the Policy and to the Policy Proceeds, and this court has
jurisdiction over the subject matter of this action and the
parties thereto.
The net benefit due and payable under the
Policy is $55,583.18, and said total has been deposited into the
registry of the court.
IT IS FURTHER ORDERED that Plaintiff's Motion for Discharge
and Attorneys’ Fees (Doc. 25) is GRANTED IN PART and DENIED IN
PART.
Plaintiff’s request for attorneys’ fees is DENIED WITHOUT
PREJUDICE, but all other requests for relief are GRANTED.
Plaintiff shall be reimbursed for the $927.63 in costs that it
requested from the proceeds deposited in this court’s registry.
IT IS FURTHER ORDERED that Plaintiff is discharged from any
and all liability to any and all Defendants and from any and all
liability under the Policy.
IT IS FURTHER ORDERED that Plaintiff is dismissed from this
action with prejudice.
IT IS FURTHER ORDERED that Defendants are permanently
restrained and enjoined from instituting or prosecuting any
action or proceeding against Plaintiff arising out of, or
related to, the Policy in any federal or state court.
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IT IS FURTHER ORDERED that this court will retain
jurisdiction of this action for the determination of such
further matters as properly come before this court.
IT IS FURTHER ORDERED that Plaintiff shall have such other
and further relief that is just and appropriate.
Finding no just reason for delay, a Judgment consistent
with this Memorandum Opinion and Order will be entered
contemporaneously herewith pursuant to Fed. R. Civ. P. 54(d).
This the 24th day of August, 2015.
______________________________________
United States District Judge
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