Life Insurance And Interpleader Action

Life insurance lawyers will get calls from people who may or may not be entitled to life insurance proceeds after someone has died.  In these situations, that being situations where more than one person is making a claim for life insurance benefits, the insurance company will usually file a lawsuit against the claimants.  In the lawsuit the insurance company will inform the Court that a person has died, that the life insurance company is unsure who the correct person is to receive the life insurance proceeds, and then asks the Court to make the determination and to allow the insurance company to get out of the lawsuit while the people contesting for the insurance benefits remain in the lawsuit.  This is called an Inter-Pleader Action.

This was situation in a lawsuit in the U.S. Southern District of Texas, Houston Division, recently.  The case is styled, Colonial Life & Accident Insurance Company v. Aletha Burke Wade, Serbrina Wade, Lekisha Wade, and Frank Hollingsworth.

Kendrick Wade purchased a Life Policy in 2012 and designated his mother, Helen Wade, as beneficiary.  In 2014, Kendrick purchased an Accidental Death Policy designating his sisters, Lekisha and Serbrina, as co-equal beneficiaries.  Kendrick married Aletha Wade in 2015 and never amended the policies to name her as a beneficiary.  Kendrick was killed in December 2017.  Helen pre-deceased Kendric and the terms of the Life Policy made Kendrick’s estate the primary beneficiary.

Aletha claims she is entitled to some of the Colonial Life Policies despite not being named as a beneficiary because some portion of the Policies is community property under Texas law and that premiums were paid on the Policies with community funds until Kendric died.

Lekisha and Serbrina filed a Rule 12(b) motion in an effort to defeat Aletha’s claim.

The Court ruled that the way to attack Aletha’s claim is by a Motion For Summary Judgment.  This Court Ordered that the Rule 12(b) motion be converted to a Motion For Summary Judgment and gave Aletha time to respond to the Motion.  The Court also allowed Colonial to withdraw from the case while the contest over the proceeds continued.