No Insurance Company Exception for Award of Interpleader Fees/Costs Under CCP § 386.6(a).
CCP § 386.6(a) permits a court to award discretionary attorney’s fees and costs to a neutral stakeholder interpleading moneys or funds with the Court if interpleader procedures are followed. This section was at issue in Farmers New World Life Ins. Co v. Rees, Case No. B241099 (2d Dist., Div. 1 Aug. 30, 2013) (published), a 3-0 decision authored by Justice Rothschild.
There, a wife was found dead in the street outside the home she shared with husband. The death was investigated as a homicide, because husband was the sole beneficiary on wife’s life insurance policy. Wife’s mother was next in line to receive the proceeds if husband was found to have feloniously murdered wife. After insurance company received a letter from husband’s attorney while the criminal investigation was on-going, insurance company interpled the policy benefits plus interest with the court, initially only naming husband as defendant. Husband answered and cross-complained against insurance company and wife’s mother. Insurance company added wife’s mother to the suit, and husband moved to release the funds to him. The lower court granted husband’s motion, but granted the insurance company request for a $7,997.49 fee/costs award which was deducted from the $150,000 in proceeds released to husband.
Husband appealed the fee/costs award, but did not prevail before the 2/1 panel.
The appellate court first determined that the policy benefits indeed were in dispute given the on-going criminal investigation of the matter as a possible homicide.
Husband also waived the right to contest the use of the interpleader procedure because he did not object upfront to it; rather, he answered and asked for a release of funds--litigation efforts which precluded his challenge to the interpleader process. The appellate court did not accept husband’s argument that insurance company was immunized from exposure due to Insurance Code section 10712 (which allows payment when proceeds are truly payable) because it was far from certain that proceeds were payable to husband, with the interpleader being the procedure to determine who should get payment under Probate Code section 252 (to husband, if he was not the killer; but to wife’s mother, if he was). Finally, in response to husband’s argument that the insurance company should bear fees/costs as a routine cost of business spread across all of its policyholders, the 2/1 panel noted that the interpleader fee provision has no exception for insurance companies as far as fee entitlement was concerned, contrary to husband’s suggestion otherwise.
Barbara Stanwyck and Fred MacMurray in Double Indemnity.
Comments