Davis v. State Farm Life Insurance Company

Filing 50

ORDER APPROVING SETTLEMENT AND DISPOSITION OF PROCEEDS. Signed by Honorable Joseph F Anderson, Jr on 09/13/2010. (bshr, )

D a v i s v. State Farm Life Insurance Company

D o c . 50

IN THE UNITED STATES DISTRICT COURT F O R THE DISTRICT OF SOUTH CAROLINA C O L U M B IA DIVISION V e rn o n d Davis, individually and as p a r e n t of M. Davis and Z. Davis, P la in tif f s , vs. S ta te Farm Life Insurance Company, D e f e n d a n t. ) ) ) ) ) ) ) ) ) ) ) C / A No.: 3:10-372-JFA

ORDER APPROVING S E T T L E M E N T AND APPROPRIATE DISPOSITION OF PROCEEDS

T h is matter came before the court on September 7, 2010, for consideration of a te n t a tiv e settlement agreement that had been reached in this case. The action involves a c la im by the beneficiaries of a $50,000 life insurance policy issued on the life of Vilma D a v is , who was the wife of the plaintiff Vernond Davis and the mother of the two minor p la in tif f s , M. Davis and Z. Davis. The defendant, State Farm Life Insurance Company, iss u e d the $50,000 policy that is the subject of the lawsuit. A t the settlement hearing, it was represented to the court as follows: (1 ) The parties have reached an amicable settlement whereby the defendant will pay th e entire policy proceeds ($50,000) in full settlement of all claims asserted in this action, and w ill obtain a complete release from all beneficiaries. (2 ) Plaintiff's attorney, Everett J. Mercer, has a contract with the plaintiffs providing f o r a contingency fee of thirty-three and one-third (33 1/3) percent of any amount recovered in this litigation. Mercer is thus entitled to a fee of $16,660 under his contract with the

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p la in tif f s. He has, however, commendably determined that he should reduce his fee to the su m of $8,000, thereby cutting his contractually agreed upon fee in half. In addition, Mr. M e rc e r has incurred a filing fee of $150 and a service fee of $20, thereby yielding a total outo f -p o c k e t expenditure by him of $170. ( 2 ) By previous order Ms. Sarah Powell, was appointed as Guardian ad Litem to re p re se n t the two minor plaintiffs in this action. Both Vernond Davis and Ms. Powell re p re se n te d to the court that they had determined that the settlement is fair, just, and re a so n a b le under the circumstances presented in this case. (3) During his representation of the plaintiff, Mercer was made aware of two creditors o f Vernond Davis, both of who claim some type of lien interest or other equitable interest in th e mobile home in which Mr. Davis and his two minor daughters were residing. One of th e se creditors is Mr. E.C. Deeno Kitchen, who contended that Vernond Davis was indebted to him in the amount of $3,647, and the other was Mr. Robert Porter, who claimed a debt of $ 5 ,6 9 7 .4 4 . At the hearing, Vernond Davis agreed that the $3,647 debt to Mr. Kitchen was leg itim a te and that Mr. Mercer should be authorized to make payment to Mr. Kitchen of this a m o u n t out of the settlement share going to Vernond Davis. Mr. Davis disputed, however, the $5,697.44 claim asserted by Mr. Porter and instructed that he would refuse to allow Mr. Mercer to make payment directly to Mr. Porter. T h is , of course, placed Mr. Mercer in an ethical dilemma, because he was under an obligation to protect Mr. Porter's interest in return for Mr. Porter not evicting Mr. Davis and two c h il d re n from the mobile home. Mr. Davis objected to payment to Mr. Porter because he

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c o n ten d e d that the mobile home was uninhabitable. It thus appeared to the court that a le g itim a te dispute has arisen between Mr. Davis and Mr. Porter and that the funds claimed b y Mr. Porter should be held by a third party unless and until Mr. Davis and Mr. Porter can litig a te their dispute to conclusion, or, alternatively, reach a compromise settlement. It was u ltim a te ly determined that the best course of action would be to have the disputed $5,697.44 p aid into the Registry of this court to be held pending further order. (3 ) Ms. Powell, the Guardian ad Litem, recommended to the court that Margaret K e n n e d y, the godmother of the two minor children, be appointed as conservator to hold and m a n a g e the share of the settlement proceeds belonging to the two minor children. Ms. P o w e ll indicated that she will work with Mr. Mercer to file the necessary paperwork with the p ro b a te court to have Ms. Kennedy, or some other appropriate person, appointed as c o n s e rv a to r. Based upon the foregoing representations, the court has determined that the settlement in the amount of $50,000 is fair, just, and reasonable under the circumstances. The court f u rth e r determines that the attorney's fee request by Mr. Mercer is eminently fair and should b e authorized. The court further determines that Ms. Powell, the Guardian ad Litem, should b e compensated at a reasonable amount for her services in this case. The court further d e ter m in e s that the settlement proceeds, net of any expenses and other withheld amounts d e t a ile d below, should be divided in three equal shares, payable one share each to Mr. Davis, a n d one share each to his two minor children. T h e court finds that Mr. Kitchen has a legitimate claim of $3,647 that should be paid

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o u t of the settlement proceeds share allocated to Mr. Davis. Finally, the court determines that t h e r e is a disputed claim asserted by Mr. Porter of $5,697.44 that should be held by the R e g is try of this court pending a resolution of this dispute. B ase d on the foregoing, it is hereby ordered that the settlement proposed to the court is fair, just, and reasonable and the same is hereby approved. The defendant shall tender the $ 5 0 ,0 0 0 check to Mr. Mercer, who shall obtain releases from Vernond Davis and Sarah P o w e ll, the Guardian ad Litem for the two minor children. Upon execution of these releases, M r . Mercer is authorized to deposit the settlement proceeds in his trust account and disperse s u c h proceeds as follows: (a ) $ 8 ,1 7 0 .0 0 (representing an $8,000 attorney fee and $170 of co sts) to Mr. Mercer; a reasonable sum to be determined by Ms. Powell and Mr. M e rc e r to Ms. Powell for her Guardian ad Litem fee; a n y fee charged by the probate court for commencement of the c o n se rv a to rs h ip proceedings called for herein; and th e balance of the funds shall be divided into three equal shares: o n e share each shall be paid to the duly appointed conservator f o r M. Davis and Z. Davis, the minor plaintiffs herein; the other sh a re shall be disbursed as follows: $3,647 to Mr. Kitchen to p a y the undisputed claim he asserts against Vernond Davis, and $ 5 ,6 9 7 .4 4 to the court Registry to be held pending further order o f this court which will issue once the dispute between Mr. D av is and Mr. Porter is resolved. The balance of Mr. Davis's sh a re shall be paid to Vernond Davis in full settlement of his c la im s in this case.

(b)

(c )

(d)

IT IS SO ORDERED.

S ep tem b er 13, 2010 C o lu m b ia , South Carolina

J o s e p h F. Anderson, Jr. U n ite d States District Judge

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