Life insurance claims attorneys will eventually have a case where the life insurance company knows they owe the life insurance benefits on a policy but are unsure about who to pay. When this situation arises the Texas Insurance Code, Section 542.058(c), has specific provisions for how the situation should be handled. Specifically, the life insurance company, when it is unsure who it should pay the policy benefits, has 90 days to interplead the funds into the registry of the Court.
A 2021, from the Northern District of Texas, Dallas Division, discusses how the Federal Courts handle interpleader cases. This case is styled, American General Life Insurance Company v. Carol Corzo, Brenda Lizbeth Melgar Cruz, Adan Alberto Melgar Cruz, and Daniel Melgar Cruz.
This interpleader action concerns the proceeds of a life-insurance policy issued by American General. In September 2016, Ottoniel Melgar Perez purchased a $300,000 life-insurance policy from American General. He named Defendants, who are his relatives, as primary beneficiaries on the Policy. A few years later, Perez married Blanca Nelis Chicas (Chicas). Subsequently, Perez passed away, leaving his $300,000death benefit from the Policy behind. Chicas and Defendants both submitted claims to American General for the death benefit.
To resolve these competing claims, American General filed an interpleader action in this Court against Chicas and Defendants. Shortly thereafter, the Court granted American General’s motion to deposit the death-benefit sum of $300,000into the Court’s registry and American General deposited the funds. Defendants then filed an answer to American General’s complaint, which contains a cross-claim alleging that “Chicas is not entitled to any of the life insurance proceeds.” Nearly one month later, Chicas was served with American General’s interpleader complaint. When Chicas failed to timely file an answer to the complaint, American General sought and obtained an entry of default against her. American General and Defendants then filed a joint motion asking the Court to discharge American General from liability and disburse the death benefit.
Federal law says, Statutory interpleader is proper when a (1) stakeholder has a single fund worth at least $500; (2) where two or more adverse claimants with diverse citizenship are competing for that fund; and (3) the stakeholder has deposited the fund in the Court’s registry. An interpleader action allows the stakeholder to pay the money in dispute into court, withdraw from the proceedings, and leave the claimants to litigate between themselves their entitlement to the funds. In determining whether the interpleader requirements are satisfied,the Court must first determine if there is a single fund at issue and whether there are adverse claimants to that fund. If these requirements are met, the Court then determines the rights of the claimants.
American General has met the requirements for interpleader. First, Ameerican General, as stakeholder, holds a single fund worth over $500. Second, there are at least two adverse claimants of diverse citizenship claiming an interest in the fund: Chicas is a citizen of Texas, while Defendants are citizens of Florida and Guatemala. Third, American General deposited the funds at issue into the Court’s registry.
Because American General has satisfied the requirements for interpleader, the Court discharges American General from liability. Further, the Court may award American General reasonable attorneys’ fees incurred in bringing the interpleader action, because American General is “a disinterested stakeholder, and is not in substantial controversy with one of the claimants. Here, American General has requested $2,500 in attorneys’ fees, and the Court finds this request reasonable given that American General filed an interpleader complaint, a motion to deposit funds into the Court registry, a request for an entry of default, and the joint motion at hand.
The remainder of the opinion is interesting as to how these specific case facts were handled by the Court.