Wife is found dead in the street outside the home she shared with husband. Her death is investigated as a homicide. Husband, who is the sole beneficiary on wife's life insurance policy, is a suspect. Life insurance company files an interpleader action and deposits the policy benefits plus interest with the trial court. Wife's mother, who would be entitled to the policy benefits if husband were found to have feloniously and intentionally killed wife, defaults in the action. The court awards husband the interpleaded funds less attorney fees and costs requested by the life insurance company. Husband contends the attorney fees and costs award is erroneous because his right to the policy benefits never was in dispute and no potential for double liability existed, thus rendering the interpleader action unnecessary and the statutory requirements for attorney fees and costs unmet. We disagree. Under the circumstances of this case, the life insurance company was entitled to file an interpleader action, and the court did not err by exercising its discretion to award attorney fees and costs. We thus affirm the judgment.
Frank Allan and Rosamaria Rees married in 1997.
On September 18, 2009, Rosamaria, on her way to pick up Frank from a Gamblers Anonymous meeting, was shot and killed in the street outside the home she shared with Frank. She died intestate, without a will and without having borne any children. She was predeceased by her father but survived by her mother. A Farmers's insurance agent informed the company of Rosamaria's death on September 23, 2009. A claims officer contacted Frank, who indicated that the Los Angeles Police Department (LAPD) was investigating Rosamaria's death as a homicide. Farmers sent Frank a claim form for the policy benefits.
The manager spoke with another LAPD detective on January 18, 2010. The manager's notes stated that the police had "not completed their investigation and [said]
For the next four months, February, March, April and May, the manager sent letters to Frank informing him that, according to the LAPD, the investigation of Rosamaria's death still is ongoing and no one has been ruled out as a suspect in her homicide and that it would await the results of the investigation before discharging its obligation.
Frank retained counsel, who sent Farmers a letter on July 14, 2010. Counsel requested various documents from Farmers and asked for confirmation that Frank's "claim was complete and that [it] [had] received all the supporting documents needed to process his claim ...." Counsel also requested confirmation that "the
On August 3, 2010, Farmers filed a complaint in interpleader identifying Frank's claim for the policy benefits and alleging that, based on LAPD's investigation of Frank as a suspect in the homicide of Rosamaria, "[a]s there is no other primary or contingent beneficiary, should Frank ... be convicted of murdering Rosamaria ..., the life insurance benefits would go to [her] estate." Farmers named Frank as a defendant and alleged, "[o]n information and belief, [that] no probate action has been filed, and no administrator named, in connection with the death of Rosamaria .... If an administrator
Farmers alleged that, "[b]ecause [LAPD] has not ruled out Frank ... as a suspect, [Farmers] has been unable to determine the appropriate payee for the death benefit proceeds. The claim made by Frank ... and the potential claim of Ros[a]maria['s] ... estate are adverse should Frank ... be accused of Ros[a]maria['s] ... murder. [Farmers] is unable to safely determine which, if any, of the claims [is] valid." Farmers "is indifferent with respect to whether it should pay the death benefits to Frank ... or the estate of Ros[a]maria .... [Farmers] claims no interest in the proceeds and is a disinterested stakeholder." Farmers alleged that it would deposit $154,587, the amount of the policy benefit plus interest, with the court and that it had incurred attorney fees and costs as a result of the proceeding. Farmers prayed for a judgment ordering Frank to interplead and litigate his claim to the death benefits proceeds, appointment of an estate administrator if necessary, a discharge of its liability and an award "from the death benefit proceeds deposited with the ... [c]ourt its costs and reasonable attorney[] fees incurred in this action ...."
On October 1, 2010, Frank answered the complaint, asserting no affirmative defenses. He also, on October 19, 2010, filed a first amended cross-complaint, asserting a cause of action for declaratory relief against Farmers and Rosamaria's mother, as the person who would receive the policy benefits through Rosamaria's estate if he were found to have feloniously and intentionally killed Rosamaria. Frank asked for a judicial determination that he was entitled to the $150,000 in benefits on Rosamaria's policy. Frank also asserted causes of action against Farmers for breach of contract and bad faith based on its failure to pay him the policy benefits despite his filing a claim for them.
On November 22, 2010, Farmers answered the first amended cross-complaint and then, on January 7, 2011, filed a first amended complaint in interpleader in which it added Rosamaria's mother as a defendant. According to Farmers, because Rosamaria died without a will and had no living children, her mother, by virtue of her estate, had a claim to the life insurance proceeds if Frank were not entitled to receive them.
Rosamaria's mother did not answer or otherwise respond to the first amended complaint in interpleader. The clerk entered a default against her on March 18, 2011. In the entry of default Farmers represented that it would seek attorney fees and costs from the funds deposited with the court. On
On December 6, 2011, Farmers moved for an order discharging and dismissing it from the interpleaded portion of the action and awarding it costs and attorney fees of $7,997.49. Frank opposed the motion, arguing that Farmers was not entitled to attorney fees and costs or a discharge of liability because it was never faced with a potential viable claim that could give rise to liability and the equities did not favor such an award. Frank submitted the declaration of an insurance industry expert, who opined that "Farmers did not act reasonably and within the standards of the insurance industry in the handling of [Frank's] claim in its investigation and payment of benefits ...." On January 19, 2012, the trial court issued an order discharging Farmers from the interpleader action. According to the court, "The policy would have been payable to [Rosamaria's mother] if [Frank] had been found to have murdered [Rosamaria], [Code of Civil Procedure] [s]ection 386[, subdivision] (b)[,] only requires a potential for different claims to an insurance policy for the interpleader to be permissible, and Farmers ... had information that [Frank] was the prime suspect in the murder of his wife, the insured. This seems to be a situation [that] is appropriate for judicial interpleader." The court awarded Farmers attorney fees of $7,506.30 plus $491.19 in costs and directed the clerk to pay Farmers that amount, which was the balance of the interpleaded funds.
On March 19, 2012, the court entered judgment, discharging Farmers's liability regarding the death benefits on Rosamaria's policy and awarding it $7,997.49 in attorney fees and costs. Frank dismissed his first amended cross-complaint without prejudice and filed a notice of appeal from the judgment.
Frank contends that the attorney fees and costs award was improper because the funds Farmers deposited with the court were never "in dispute" as required by statute. (Code Civ. Proc., § 386.6, subd. (a) [court has discretion to award costs and reasonable attorney fees from amount "in dispute" deposited with the court].) According to Frank, "[b]ecause no one other than [myself], the subject policy's named beneficiary, claimed the funds, they were never `in dispute' as that term is used in [Code of Civil Procedure] section 386.6." We disagree.
The first amended complaint in interpleader defined the dispute over the policy benefits. On the one hand, Frank filed a claim to obtain the benefits as the sole beneficiary on the policy. On the other hand, Frank was a suspect, at one point "a `prime' suspect in the death of his wife," and LAPD had an ongoing investigation into Rosamaria's death. If Frank were found to have feloniously and intentionally killed Rosamaria, he would not have been entitled to the policy benefits, and they would have been payable to Rosamaria's mother through her estate. (See Prob. Code, § 252 ["named beneficiary of a bond, life insurance policy, or other contractual arrangement who feloniously and intentionally kills the principal obligee or the person upon whose life the policy is issued is not entitled to any benefit under the bond, policy, or other contractual arrangement, and it becomes payable as though the killer had predeceased the decedent"].) Because of the ongoing investigation, Farmers recognized a dispute over how it should handle payment of the policy benefits. It thus initiated the interpleader proceeding.
Frank next contends that, based on Insurance Code section 10172, Farmers would have been immunized from double liability if it had paid him the policy benefits while LAPD continued to investigate Rosamaria's death and, as a result, the interpleader action was unnecessary. He essentially maintains that the trial court erred in awarding attorney fees and costs under Code of Civil Procedure section 386.6, subdivision (a), because Farmers did not have grounds for an interpleader action under Code of Civil Procedure section 386, subdivision (b).
Frank forfeited the right to contest the propriety of the interpleader action by not doing so during the initial phase of the proceeding. "A defendant in interpleader has the right to put in issue the question as to whether or not the facts were such as to entitle the plaintiff to compel the defendants to interplead. It has therefore been held in effect that, if the defendants in interpleader have fully litigated their claims without objection, they will be deemed to have consented to the remedy invoked and granted, and will not later be heard to object that the plaintiff's complaint did not state a cause of action for interpleader.... [Citation.]" (Conner v. Bank of Bakersfield (1920) 183 Cal. 199, 202-203 [190 P. 801].) As a result, when a defendant does "not raise the issue of the right of the plaintiff to use the remedy of interpleader while litigating th[e] matter before the trial court, the question may not be raised on appeal." (O'Connell v. Zimmerman (1958) 157 Cal.App.2d 330, 337 [321 P.2d 161].)
Here, Frank did not question Farmers's use of the remedy of interpleader but rather litigated the matter in the trial court. As noted, the court initially determines the right of the plaintiff to interplead the funds. (Shopoff & Cavallo LLP v. Hyon, supra, 167 Cal.App.4th at p. 1513.) Frank did not contest Farmers's decision to interplead the funds. Rather, he answered the original complaint, without asserting any affirmative defenses, and stipulated to the filing of the first amended complaint adding Rosamaria's mother as a
Frank argues that he did not forfeit an objection to the interpleader action. He cites Wells Fargo Bank, N.A. v. Zinnel (2004) 125 Cal.App.4th 393 [22 Cal.Rptr.3d 750] for support. In that case, the appellate court held that the trial court properly had granted the bank's motion to discharge its liability in an interpleader action but reversed an award of attorney fees and costs on the ground that the bank did not satisfy the statutory interpleader requirement in Code of Civil Procedure section 386 to deposit the amount of funds in dispute with the court. (125 Cal.App.4th at p. 403.) The appellate court, however, did not address the question whether the bank had been entitled to maintain an interpleader action — the issue that Frank forfeited here. (See id. at p. 400 [declining to address defendant's argument that the bank had no right to interplead because she was entitled to the funds].) Nor does it appear that the bank raised an issue of forfeiture. The question of forfeiture, therefore, was not before the appellate court, which simply decided that the bank did not have a right to attorney fees and costs because it had failed to fulfill one of the statutory requirements for such an award. The case thus does not support Frank's argument against forfeiture.
In any case, even on its merit, Frank's argument against interpleader based on a theory of immunization from double liability is not persuasive. Frank relies on Insurance Code section 10172, which provides, "Notwithstanding [s]ections 751 and 1100 of the Family Code and [s]ection 249.5 of the Probate Code, when the proceeds of, or payments under, a life insurance policy become payable and the insurer makes payment thereof in accordance with the terms of the policy, or in accordance with the terms of any written assignment thereof if the policy has been assigned, that payment shall fully discharge the insurer from all claims under the policy unless, before that payment is made, the insurer has received, at its home office, written notice by or on behalf of some other person that the other person claims to be entitled to that payment or some interest in the policy." According to Frank, this statute means that, if Farmers had paid him the policy benefits as the sole beneficiary on Rosamaria's policy and he subsequently were determined to have feloniously and intentionally killed Rosamaria, Farmers would have been immune from double liability to Rosamaria's estate because it had not received written notice of another claimant. We disagree that the statute rendered the interpleader action unnecessary.
Frank contends that, during the interpleader litigation, Farmers ceased being a disinterested stakeholder such that awarding it attorney fees and costs was erroneous under the statutory scheme for interpleader. According to Frank, when Farmers opposed his motion to release the interpleaded funds on the ground that the funds should not be distributed until he dismissed his first amended cross-complaint asserting causes of action for breach of contract and bad faith, it ceased being a disinterested stakeholder and thus could not qualify for an award of attorney fees and costs.
At the time Farmers opposed his motion for release of the funds, however, the interpleader issues already were resolved. Farmers deposited the funds in dispute with the trial court and asserted its status as a disinterested stakeholder. Rosamaria's mother defaulted in the action, and the court determined that Frank was entitled to the interpleaded funds. That Farmers sought a dismissal of Frank's first amended cross-complaint does not suggest it was asserting an interest in the interpleaded funds. In fact, Farmers never claimed an interest in the funds. The court recognized as much by granting Frank's motion to release the funds. As a result, Farmers's attempt to obtain a dismissal of the first amended cross-complaint did not alter its status in the litigation so as to disqualify it from an award of attorney fees and costs.
Frank's last contention is that the trial court abused its discretion by awarding attorney fees and costs in this case. Frank maintains that "it should
Frank's additional point that a trial court abuses its discretion by awarding attorney fees and costs to a life insurance company that files an interpleader action before it has received an adverse claim is contrary to our decision. As noted, because Frank would not have been entitled to the policy benefits if he were found to have feloniously and intentionally killed Rosamaria, either by a final judgment of conviction or by a court determination by a preponderance of the evidence of a felonious and intentional killing, a potential for adverse claims existed such that Farmers could interplead the policy benefits. The absence of Farmers's actual receipt of an adverse claim did not cause the interpleader action to be unnecessary nor prevent Farmers from recovering attorney fees and costs under the same statutory scheme for interpleader. The court, therefore, did not abuse its discretion by awarding Farmers attorney fees and costs even though it had not received adverse claims.
Frank's further arguments for abuse of discretion, namely that the funds were not in dispute, that Farmers would not have been exposed to double liability by paying him the policy benefits and that Farmers ceased being a disinterested stakeholder, simply repeat his theories for reversal of the attorney fees and costs award. Those arguments are ones we already have rejected and thus do not suggest the trial court abused its discretion by awarding Farmers its attorney fees and costs.
The judgment is affirmed. The parties shall bear their own costs on appeal.
Mallano, P. J., and Chaney, J., concurred.
