LEONARD T. STRAND, United States Magistrate Judge.
TABLE OF CONTENTS
I. INTRODUCTION ..........................................................1037
II. BACKGROUND ............................................................1038
III. ANALYSIS ..............................................................1039
A. The Motion to Deposit Funds .......................................1039
1. Is Interpleader Appropriate? ..................................1039
2. Attorney Fees and Costs .......................................1042
a. Legal Standard ............................................1042
b. Discussion ................................................1044
B. The Motion to Dismiss/Motion for Summary Judgment .................1045
1. Arguments of the Parties ......................................1045
2. Applicable Standards ..........................................1046
3. Undisputed Facts ..............................................1047
4. Discussion ....................................................1047
IV. CONCLUSION ............................................................1052
This case is before me on: (a) a motion (Doc. No. 18) by defendant Minnesota Life Insurance Company (Minnesota Life) to deposit interpleader funds, recover attorney fees and costs and for dismissal with prejudice; and (b) a motion (Doc. No. 22) by plaintiff Joetta Hearing (Hearing) to dismiss counterclaim, or in the alternative, for summary judgment. Both motions are resisted. I held a telephonic hearing on July 8, 2014. Attorney Theodore Karpuk appeared for Hearing, attorney Molly Hamilton Cawley appeared for Minnesota Life and attorney David Watermeier appeared for third-party defendant Nikole Holloway (Holloway). The motions are fully submitted.
Jon Holloway (Jon) purchased a life insurance policy from Minnesota Life in 1998. He died on June 28, 2013. The policy designated Hearing, who is Jon's sister, as the beneficiary. On or about July 8, 2013, Minnesota Life received correspondence from Holloway (who is Jon's daughter) disputing the beneficiary designation. She claimed the decree that dissolved Jon's marriage required that he maintain the life insurance policy for Holloway and, further, that Jon had named Holloway as the intended beneficiary of the policy in a signed handwritten note.
The dissolution decree, entered in 1998, directed Jon to pay child support in the amount of $225 per month "... until the minor child, Nikole, reaches the age of 18 or graduates from high school, whichever is later." Doc. No. 33-1 at 9. The decree also required that Jon "maintain life insurance on his life in the sum of $100,000, payable to the children as equal beneficiaries until his support obligation is closed."
The signed handwritten note is dated September 18, 2012, and is addressed to "Nikki." It states in relevant part, "Chris would like the 44 back, the rest you get." The end of the note lists the life policy number and the contact information for Jon's Minnesota Life agent. It also lists information for other financial accounts and contains publicity and funeral requests. Doc. No. 10-1 at 1.
The policy contains the following provision regarding how to change a beneficiary:
Doc. No. 20 at 15. Minnesota Life has no record that Jon ever changed Hearing as the policy's designated beneficiary.
After receiving notice of Holloway's claim to the life insurance proceeds, Minnesota Life advised the parties of their competing claims and asked them to reach an agreement as to the disbursement of those proceeds. The parties were unable to agree. Instead, on October 8, 2013, Hearing filed a petition against Minnesota Life in the Iowa District Court for Woodbury County seeking an order directing Minnesota Life to pay the proceeds to her immediately. Doc. No. 3. Minnesota Life timely removed the action to this court based on diversity jurisdiction and filed an answer, counterclaim and third-party complaint for interpleader in accordance with Federal Rule of Civil Procedure 22 and 28 U.S.C. § 1335. The third-party complaint added Holloway to this case as the other party asserting entitlement to the insurance proceeds. Doc. No. 6. Holloway then
During discussions about the proposed scheduling order and discovery plan in February 2014, Minnesota Life advised the other parties that it wanted to deposit the insurance proceeds with the Clerk and be dismissed from the case to avoid incurring additional fees and costs, which would be taken from the proceeds. Doc. No. 18 at 17. Holloway was agreeable to such a stipulation, but Hearing was not. Id. at 18. Minnesota Life submitted its Rule 26(a)(1) disclosures on March 11, 2014, and renewed its request for the parties to stipulate to Minnesota Life depositing the proceeds with the court and being dismissed from the action. Id. at 20. Again, Holloway agreed to the stipulation, but Hearing objected. Id. at 28-30.
In her resistance to the motion to deposit funds and in her motion to dismiss/motion for summary judgment, Hearing argues interpleader is unnecessary because Holloway's counterclaim fails to state a claim upon which relief can be granted. She objects to an award of attorney fees and costs to Minnesota Life altogether and alternatively, to the amount Minnesota Life has requested. Holloway does not object to the use of interpleader or Minnesota Life's requested attorney fees and costs. She has filed a resistance to Hearing's motion to dismiss/motion for summary judgment.
"Interpleader is a procedural device whereby a party holding money or property concededly belonging to another may join in a single suit two or more parties asserting mutually exclusive claims to the fund. The stakeholder is thereby freed from the threat of multiple liability and/or the vexation of multiple lawsuits." Gaines v. Sunray Oil Co., 539 F.2d 1136, 1141 (8th Cir.1976) (citing 3A Moore's Federal Practice P 22.02(1) (1974)). Minnesota Life brings this interpleader action pursuant to 28 U.S.C. § 1335 and Federal Rule of Civil Procedure 22. The federal interpleader statute provides:
28 U.S.C. § 1335. Jurisdiction is appropriate based on this statute as the amount at stake ($92,938.14)
Fed.R.Civ.P. 22. It is undisputed that Minnesota Life asserts no claim to the proceeds. However, Hearing objects to the interpleader action because she asserts Holloway's claim to the proceeds is so completely devoid of merit that Minnesota Life cannot reasonably claim fear of exposure to double liability.
Normally, the respective merits of each party's claim to the proceeds is not a sufficient reason for prohibiting interpleader. See Hunter v. Fed. Life Ins. Co., 111 F.2d 551, 556 (8th Cir.1940) ("the jurisdiction of a federal court to entertain a bill of interpleader is not dependent upon the merits of the claims of the defendants...."). However, Hearing cites Protective Life Ins. Co. v. Kridner, CIV. 12-582 JRT/JJG, 2013 WL 1249205 (D.Minn. Mar. 27, 2013), to argue that interpleader is inappropriate here due to the alleged lack of merit of Holloway's claim. In Kridner, one defendant objected to an award of attorney fees to the interpleader plaintiff, arguing the competing claim to the proceeds was frivolous and the insurance company could have resolved the issue without resorting to interpleader. Kridner, 2013 WL 1249205, at *3. The court had previously determined that interpleader was appropriate based on the fact that there were competing claims. Id. The court noted that the defendant's argument about the merits of the competing parties' claims went to "the propriety of an interpleader action in the first instance, and not to whether the interpleading plaintiff is entitled to attorney fees."
The objecting defendant in Kridner had not opposed the prior motion to deposit funds. Id. The court stated that even if it were to reconsider its ruling on that motion, it would still find that interpleader was appropriate because of the competing claims. It reasoned that "[a] stakeholder need not believe that all of the claims asserted against a fund are meritorious in order to maintain an interpleader action." Id. at *3-4 (citing Hunter, 111 F.2d at 556 and Michelman v. Lincoln Nat'l Life Ins. Co., 685 F.3d 887, 894 (9th Cir.2012)). The court found it was enough for the insurance company to have "a reasonable fear of exposure to double liability," which had been established by facts showing the competing claimants were represented by an attorney, made claim to the proceeds, refused to settle the dispute and raised questions of whether California or Idaho law applied. Id. at *4. The court ultimately found the insurance company was entitled to an award of attorney fees and costs in bringing the interpleader action. Id.
Relying on Kridner, Hearing objects to Minnesota Life's motion to deposit funds — and thus contests Minnesota Life's request for attorney fees and costs — by arguing that Holloway's claim is too weak to support interpleader relief. While the procedural posture of her objection may be appropriate, I find Hearing has failed to demonstrate that Minnesota Life lacks a reasonable fear of exposure to double liability. Courts have found there is no reasonable fear of exposure to double liability only when there are not two bona fide competing claims to the proceeds. See John Hancock Mut. Life Ins. Co. v. Beardslee, 216 F.2d 457 (7th Cir.1954) (finding interpleader was not appropriate when one party's only possible legal claim was not a claim to the proceeds, but a possible tort action against the insurance company); Bierman v. Marcus, 246 F.2d 200 (3d Cir. 1957) (finding misuse of interpleader when the interpleading parties controlled one of the competing parties and knew it had no claim to the funds and could not assert a claim without their consent); Francis I. duPont & Co. v. O'Keefe, 365 F.2d 141 (7th Cir.1966) (finding interpleader inappropriate when only one of the competing parties claimed entitlement to the funds and all other "competing" parties asked that funds be paid to the party claiming entitlement). Unless the issue is jurisdictional or a party alleges the stakeholder acted in bad faith, courts only require that adverse claims meet "a minimal threshold of substantiality," meaning the actual or potential adverse claim "must be at least colorable." Michelman, 685 F.3d at 894-95.
Hearing does not allege the court lacks jurisdiction or that Minnesota Life has acted in bad faith. She also does not dispute that Holloway is making a claim to the proceeds. Hearing's objection to interpleader is based solely on the merits of Holloway's claim. Even if Holloway's claim could not survive a motion to dismiss, this does not mean Minnesota Life lacks a "real and reasonable fear of exposure to double liability or the vexation of conflicting claims." See id. ("Interpleader is appropriate where the stakeholder reasonably fears that there may be multiple parties with colorable adverse claims to the stake."). The Michelman court noted:
Here, Holloway's claim is at least colorable such that Minnesota Life could have a real and reasonable fear of exposure to double liability. Shortly after the insured's death, Holloway contacted Minnesota Life disputing the beneficiary designation. She provided Jon's dissolution decree and a copy of the signed handwritten note, both of which arguably suggest Holloway was the intended beneficiary of the policy. Holloway is represented by an attorney. Rather than immediately filing an interpleader action, Minnesota Life asked the parties to reach an agreement as to the payment of the proceeds. Hearing filed this action after the parties were unable to agree. Under these circumstances, it was reasonable and appropriate for Minnesota Life to then remove the action to this court and seek interpleader relief. For these reasons, Minnesota Life's motion to deposit funds will be granted.
Minnesota Life seeks to recover the attorney fees and costs incurred in bringing and maintaining this interpleader action. No rule or statute permits an interpleader plaintiff to recover its attorney fees. Normally, this lack of authorization would preclude such a recovery. See, e.g., Doe v. Nixon, 716 F.3d 1041, 1048 (8th Cir.2013) (describing the so-called "American Rule," pursuant to which each party bears its own attorney fees unless Congress has provided "explicit statutory authority for awarding fees to a prevailing party") (quoting Buckhannon Bd. and Care Home, Inc. v. W. Va. Dep't of Health and Human Res., 532 U.S. 598, 602, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001)). However, federal courts have traditionally relied on the equitable nature of the interpleader remedy to allow a "modest" award of attorney fees despite the lack of statutory authority. The Eighth Circuit Court of Appeals explained as follows, over seventy years ago:
Hunter, 111 F.2d at 557; accord The Equitable Life Assur. Soc'y of the United States v. Miller, 229 F.Supp. 1018, 1020-21 (D.Minn.1964) (acknowledging that attorney fees may be recovered but noting that the awards are "generally modest"). Judge Pratt of the Southern District recently
Some federal courts have questioned whether attorney fees are appropriate when a stakeholder files an interpleader action to obtain the court's assistance concerning a decision arising in the normal course of business, or otherwise realizes benefits from the interpleader remedy. For example, Sun Life Assur. Co. of Canada v. Thomas, 735 F.Supp. 730 (W.D.Mich. 1990), presented a factual scenario analogous to that present here, with a group life insurer commencing an interpleader action after an insured died in an automobile accident. The court denied the plaintiff's request for attorney fees, stating:
Id. at 733. Several other federal courts have reached similar conclusions. See, e.g., In re Mandalay Shores Coop. Hous. Ass'n, 21 F.3d 380, 383 (11th Cir.1994) (recognizing a "normal course of business" exception to an award of attorney fees in an interpleader action); Emcasco Ins. Co. v. Davis, 753 F.Supp. 1458, 1464-65 (W.D.Ark.1990); Fidelity Bank v. Commonwealth Marine & Gen. Assur. Co., 592 F.Supp. 513, 525-26 (E.D.Pa.1984). These authorities call into question whether Minnesota Life should recover any of its attorney fees and case-related expenses. However, recognizing that the Eighth Circuit has stated a "stakeholder should not ordinarily be out of pocket for the necessary expenses and attorney's fees incurred by him," Hunter, 111 F.2d at 557, I find that Minnesota Life is entitled to an award in some amount.
Finally, I note that "[t]he starting point in determining attorney fees is the lodestar, which is calculated by multiplying the number of hours reasonably expended by the reasonable hourly rates." Fish v. St. Cloud State Univ., 295 F.3d 849, 851 (8th Cir.2002) (citing Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983)). The party seeking the award must provide evidence to support the number
Minnesota Life seeks a reimbursement of a total amount of $4,669.00, with $4,229.00 in attorney fees and $400.00 in costs. The attorney fees represent 18.1 hours of work at a rate of $240.00.
Hearing objects to the amount of requested attorney fees and costs. She contends the hourly rate exceeds what she claims to be the local customary rate ($150.00 to $200.00 per hour). She also contends the itemization fails to adequately describe the services provided because some entries are either redacted or ambiguous. Finally, she contends Minnesota Life should not be awarded attorney fees and costs related to discovery as these services were not performed in furtherance of the interpleader and Minnesota Life would have had to bear these costs even if had been dismissed earlier.
I find Hearing's objection to the requested hourly rate of $240.00 to be without basis. She has offered nothing but the opinion of her own counsel as to what is "typically charged in the Sioux City, Iowa area." Doc. No. 21 at 4. While Hearing's counsel undoubtedly has some information concerning hourly rates in this community, he has not provided any foundation for his opinion. Moreover, this court has approved hourly rates that are greater than the rate Minnesota Life requests. See, e.g., DIRECTV, LLC, v. Klingenberg, C13-4097-LTS, 2014 WL 2808222, at *9 (N.D.Iowa June 20, 2014) (approving hourly rates ranging from $250 to $350 per hour); Fraserside IP L.L.C. v. Faragalla, No. C11-3032-MWB, 2012 WL 453237, at *6 (N.D.Iowa Feb. 13, 2012) (approving hourly rate of $350). Because an hourly rate of $240 is not plainly outrageous, and because Hearing has failed to submit persuasive evidence that it is excessive, I find that $240 per hour is a reasonably hourly rate for the services performed by Minnesota Life's counsel.
As for the number of hours, I have carefully reviewed Minnesota Life's itemization and find that some reduction is necessary. Minnesota Life has redacted many of the descriptions, presumably to preserve attorney-client and/or work-product privilege. While those redactions may be understandable, they make it difficult to determine the purpose of the services at issue. Some of those services appear to be communications between Minnesota Life and its counsel. Others involve discovery matters and at least two entries describe legal research concerning topics that have been redacted.
I agree with Hearing that Minnesota Life is not entitled to reimbursement for discovery-related attorney fees. Even if Minnesota Life was not a party, it would have been subject to discovery through the subpoena process. See Fed.R.Civ.P. 45. Nor will I allow Minnesota Life to recover attorney fees for attorney-client communications or unspecified legal research.
Hearing argues Holloway's counterclaim must be dismissed for failure to state a claim upon which relief can be granted, or in the alternative, summary judgment should be granted in favor of Hearing on Holloway's counterclaim.
Holloway agrees that Hearing's motion should be considered as a motion for summary judgment. She contends that due to Hearing's failure to comply with local rules, she is unable to address the grounds and material facts upon which Hearing relies.
Because Hearing's motion relies on evidence outside the pleadings, I will consider it as a motion for summary judgment. See Fed.R.Civ.P. 12(d) ("If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56."). Any party may move for summary judgment regarding all or any part of the claims asserted in a case. Fed. R.Civ.P. 56(a). Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A material fact is one that "`might affect the outcome of the suit under the governing law.'" Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Thus, "the substantive law will identify which facts are material." Id. Facts that are "critical" under the substantive law are material, while facts that are "irrelevant or unnecessary" are not. Id.
"An issue of material fact is genuine if it has a real basis in the record," Hartnagel v. Norman, 953 F.2d 394, 395 (8th Cir. 1992) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)), or when "`a reasonable jury could return a verdict for the nonmoving party' on the question," Woods v. DaimlerChrysler Corp., 409 F.3d 984, 990 (8th Cir.2005) (quoting Anderson, 477 U.S. at 248, 106 S.Ct. 2505). Evidence that only provides "some metaphysical doubt as to the material facts," Matsushita, 475 U.S. at 586, 106 S.Ct. 1348, or evidence that is "merely colorable" or "not significantly probative," Anderson, 477 U.S. at 249-50, 106 S.Ct. 2505, does not make an issue of material fact genuine.
As such, a genuine issue of material fact requires "sufficient evidence supporting the claimed factual dispute" so as to "require a jury or judge to resolve the parties' differing versions of the truth at trial." Anderson, 477 U.S. at 248-49, 106 S.Ct. 2505 (citation and internal quotation marks omitted). The party moving for entry of summary judgment bears "the initial responsibility of informing the court of the basis for its motion and identifying those portions of the record which show a lack of a genuine issue." Hartnagel, 953 F.2d at 395 (citing Celotex, 477 U.S. at 323, 106 S.Ct. 2548). Once the moving party has met this burden, the nonmoving party must go beyond the pleadings and by depositions, affidavits, or otherwise, designate specific facts showing that there is a genuine issue for trial. Mosley v. City of Northwoods, 415 F.3d 908, 910 (8th Cir. 2005). The nonmovant must show an alleged issue of fact is genuine and material as it relates to the substantive law. If a party fails to make a sufficient showing of an essential element of a claim or defense with respect to which that party has the burden of proof, then the opposing party is
In determining if a genuine issue of material fact is present, I must view the evidence in the light most favorable to the nonmoving party. Matsushita, 475 U.S. at 587-88, 106 S.Ct. 1348. Further, I must give the nonmoving party the benefit of all reasonable inferences that can be drawn from the facts. Id. However, "because we view the facts in the light most favorable to the nonmoving party, we do not weigh the evidence or attempt to determine the credibility of the witnesses." Kammueller v. Loomis, Fargo & Co., 383 F.3d 779, 784 (8th Cir.2004). Instead, "the court's function is to determine whether a dispute about a material fact is genuine." Quick v. Donaldson Co., Inc., 90 F.3d 1372, 1376-77 (8th Cir.1996).
Applying these standards, I must assume that the following facts are true for purposes of considering Hearing's motion:
Jon purchased the policy from Minnesota Life in 1998 and designated Hearing as the sole beneficiary. He purchased the policy in response to a dissolution decree that (a) directed him to pay child support until Holloway reached the age of 18 or graduated from high school, whichever occurred later, and (b) required that he "maintain life insurance on his life in the sum of $100,000, payable to the children as equal beneficiaries until his support obligation is closed." The life insurance application stated that Jon was "Naming sister as beneficiary so wife can't control the death proceeds." Jon's support obligation ended, at the latest, five years before his death.
The policy includes the following provision:
Jon died on June 28, 2013. Holloway is his sole surviving child. When Jon died, the policy still designated Hearing as the sole beneficiary. Jon took no steps, before his death, to notify Minnesota Life of any intention to change the beneficiary. He did, however, intend for Holloway to be the policy's beneficiary. He authored a handwritten note, which he signed and dated September 18, 2012, that expressed this intention (among other things). The note was found on or near his body after his death. Holloway submitted the note to Minnesota Life about ten days after Jon's death.
To prevail on her counterclaim, Holloway must prove that: (1) Jon expressed a clear intention to change his beneficiary designation to make her the beneficiary and (2) he did all that he could to notify Minnesota Life of his request in the manner provided in the policy. See Jacobs v. Abraham Lincoln Life Ins. Co., 223 Iowa 1157, 274 N.W. 879, 883 (1937).
Under Iowa law, "where the by-laws or constitution of a mutual benefit society provide a method of making a change of beneficiary, that method must be pursued by a member making such change or designation." Thomas v. Locomotive Engineers' Mut. Life & Acc. Ins. Ass'n, 191 Iowa 1152, 183 N.W. 628, 637 (1921); Miller v. Miller, 200 Iowa 1070, 205 N.W. 870, 872 (1925) ("The law is well settled in this state that, where a method of changing beneficiary is contained in the policy, such method is exclusive and must be followed, and that a change cannot in such a case be made by will."); Ehlerman v. Bankers' Life Co., 199 Iowa 417, 200 N.W. 408, 409-10 (1924) ("Subject to certain well-defined exceptions, a change of beneficiary can be accomplished only by a strict compliance with the provisions of the policy."). The "well-defined exceptions" are as follows:
Jacobs, 274 N.W. at 881-82.
Under the first exception, Iowa law recognizes that the technicalities expressed in the policy are for the benefit of the insurance company, and by interpleading, the company waives strict compliance with the policy provisions. See Thomas, 183 N.W. at 634-36 (acknowledging that "most of the rules with respect to making a change of beneficiaries ... are intended for the benefit of the insurer" and "by interpleading and bringing the money into court, the company waived technicalities required in the bylaw."). Because I have found that interpleader is appropriate, only substantial compliance is required.
The Iowa Supreme Court has approvingly-cited the following as a summary of Iowa's "substantial compliance" doctrine:
Pitts v. Farm Bureau Life Ins. Co., 818 N.W.2d 91, 105 (Iowa 2012) (quoting Franck v. Equitable Life Ins. Co., 203 F.2d 473, 476-77 (8th Cir.1953)). As the Court in Pitts noted, "there are significant differences
The Minnesota Life policy at issue contains the following provision:
Doc. No. 20 at 15. Hearing has not argued that the insured did not reserve the right to change the beneficiary. The policy, at minimum, requires the "owner of the policy as shown in the application" to file
As stated above, Iowa courts interpreting change of beneficiary requests have required both: (1) that the insured expressed a clear intention to change the beneficiary and (2) that the insured did all that he or she could to notify the insurance company of his or her request in the manner provided in the policy. See Jacobs, 274 N.W. at 883 (noting that "[a] mere intention on the part of the member to change beneficiary, not acted upon in the manner required by the constitution of the association during the lifetime of the member is ineffectual...."); Franck, 203 F.2d at 476-77 ("proof of clear intent, plus written notice to the insurer prior to death, appears to be enough, under Iowa law, to effect the desired change, where the failure to meet all the requirements is excusable.")
Under the first requirement, courts have held that clear intent is not enough to change a beneficiary because the rights of the designated beneficiary become absolutely vested upon the death of the insured. See Wandell v. Mystic Toilers, 130 Iowa 639, 105 N.W. 448, 449 (1905) ("the first beneficiary, on the death of the member without the required steps having been taken to effect a change, acquires a vested right.") (citing Modern Woodmen of Am. v. Little, 114 Iowa 109, 86 N.W. 216, 218 (1901)). Courts have typically awarded interpleaded funds to the original beneficiary when the insurer received notice of an intent to change the beneficiary after the insured died. See Isgrig v. Prudential
Iowa courts have been particularly strict with regard to the second requirement — that the insured must have done everything he or she could to comply with the policy. See Thomas, 183 N.W. at 634-38 (finding the insured did not do "all within his power to effect the change of beneficiary" by telling the association whom he wanted as beneficiary and why he could not send in the old certificate because he did not submit his explanation by affidavit as required by the policy); Isgrig, 45 N.W.2d at 427 (noting that the insured did "all he was required to do" to effect the change of beneficiary and the only requirement that was not fulfilled was the failure of the company). This interpretation is consistent with the third exception to strict compliance, which will excuse the company's failure to complete a request to change a beneficiary as long as the insured did everything possible to comply with the policy. See also Wandell, 105 N.W. at 449-50 ("[I]f those acts which are required by the constitution of the association to be done in order to effect the change have been done, then the change is effectual, even though some purely ministerial action remains to be done by the officer of the association ....") [emphasis added].
Here, even if the handwritten note is read as a written request to change the beneficiary to Holloway, there is no evidence that Jon attempted to comply with the requirements of the policy by filing the request with Minnesota Life. While the note is dated September 18, 2012, Holloway's attorney indicated during the hearing that it was found on Jon's person after he died on June 28, 2013. There is no evidence that Jon did anything, during the intervening nine months, to notify Minnesota Life of his alleged intent to change the beneficiary.
In several Iowa cases, the insured took more significant steps than Jon without successfully accomplishing a change of beneficiary. For instance, the policy at issue in Jacobs required the insured to pay the local recorder a fee of fifty cents, deliver the benefit certificate to him with written surrender on the back and directions as to whom to change the beneficiary to. 274 N.W. at 881. The insured paid the recorder fifty cents and executed a change of beneficiary form to change the beneficiary to her sister. The insured died later that day. Id. The following day, the sister took the old certificate and change of beneficiary form to the local recorder who sent the documents to the company that day. Id. The company denied the request because it was received after the death of the insured and the interest of the listed beneficiary had vested at the moment of death. Id. The court in Isgrig characterized such cases as examples of "unexecuted intent." 45 N.W.2d at 428.
Holloway has not come forward with evidence of specific facts showing that Jon attempted to comply with the requirements of the policy before his death. She also did not request more time to develop such facts under a Fed.R.Civ.P. 56(d) motion.
Holloway also argues (but did not plead) that the court should impose a constructive trust for her benefit. This argument also fails as a matter of law. A constructive trust is "a remedial device by which the holder of legal title is held to be a trustee for the benefit of another who in good conscience is entitled to the beneficial interest." Loschen v. Clark, 256 Iowa 413, 127 N.W.2d 600, 603 (1964) (citing 89 C.J.S. Trusts, § 138). There are three classes of constructive trusts: trusts that arise from actual fraud; trusts that arise from constructive fraud and trusts that arise from some equitable principle independent of the existence of any fraud. Id. A constructive trust is "an equitable remedy applied for purposes of restitution, to prevent unjust enrichment." Estate of Wild v. Wild, 834 N.W.2d 872, at *4 (Iowa Ct.App.2013) (unpublished table decision) (quoting In re Estate of Peck, 497 N.W.2d 889, 890 (Iowa 1993)). "Other circumstances supporting imposition of equitable principles include bad faith, duress, coercion, undue influence, abuse of confidence, or any form of unconscionable conduct or questionable means by which one obtains the legal right to property which they should not in equity and good conscience hold." Id. (citing In re Estate of Welch, 534 N.W.2d 109, 111 (Iowa Ct.App.1995)).
Overlooking the fact that Holloway failed to request this remedy in her counterclaim, Holloway has not presented evidence suggesting Hearing would be unjustly enriched by receiving the proceeds or that she otherwise became the beneficiary through unjust means. See Prudential Ins. Co. v. Hinkel, 121 F.3d 364 (8th Cir.1997) (reversing district court's imposition of constructive trust in favor of daughter who was intended beneficiary, but not designated beneficiary, because facts did not establish undue influence by designated beneficiary). She has only alleged that she was the intended beneficiary. "[D]isappointment of a mere expectation does not justify the imposition of a constructive trust." See Estate of Farrell, 461 N.W.2d 360, 361 (Iowa Ct.App.1990) (affirming district court's refusal to impose a constructive trust on pension proceeds in favor of all children where father designated only one child as beneficiary even though court believed father intended to distribute proceeds to all children).
Jon designated Hearing as the sole beneficiary fifteen years before his death. His obligation to maintain life insurance for Holloway's benefit expired at least five years before he died. There is no evidence that he did anything, during those extended periods of time, to effectuate a change of beneficiary. Nor is there evidence that Hearing did anything to prevent Jon from taking such action. In the absence of facts suggesting unconscionable conduct that the court should correct, the equitable remedy of a constructive trust is clearly inappropriate as a matter of law. Holloway has no valid claim to the life insurance proceeds, either directly or through a constructive trust.
For the foregoing reasons, Minnesota Life's motion (Doc. No. 18) to deposit funds, recover attorney fees and costs and be dismissed with prejudice is
Hearing's motion (Doc. No. 22) to dismiss counterclaim, or in the alternative, motion for summary judgment is
Because Hearing is the only remaining party with a claim to the policy proceeds, judgment shall be entered in favor of Hearing. Once Minnesota Life has deposited the net proceeds with the Clerk of Court, those funds shall be disbursed to Hearing.
