Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_06-cv-01165/USCOURTS-caed-1_06-cv-01165-9/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1132 E.R.I.S.A.

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

ANTHEM LIFE INSURANCE CASE NO. 1:06-cv-1165 GSA

COMPANY,

ORDER REGARDING PETITION

Plaintiff, FOR MINOR’S COMPROMISE

vs.

ORDER TO CLOSE ACTION

HILDA OLQUIN, et al.,

Defendants.

 /

I. INTRODUCTION

On October 25, 2006, Plaintiff Anthem Life Insurance Company (plaintiff), by compliant in

interpleader, deposited proceeds in the amount of $50,369.18 with the court from death benefits of the

life insurance policy of Kathleen Susan Rindy (“Ms. Rindy”). Ms. Rindy was a former employee of

California Pacific MedicalCenter. She died on February 27, 2006. At the time of her death, Ms. Rindy

was insured under a California Pacific Medical Center group life insurance plan (the “policy”). This

policy was part of an employee benefit plan that was governed by the Employee Retirement Security Act

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ERISA governs employee benefit plans. 29 U.S.C § 1003(a).

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of 1974 (“ERISA”, 29 U.S.C. § 1001 et seq.)1

By beneficiary designation executed November 25, 1991, Ms. Rindy designated her mother,

Defendant Nadia R. McKinney, as the sole beneficiary of the policy. Thereafter, on August 11, 2004,

Ms. Rindy designated her friend, Defendant Hilda Olguin, as the sole beneficiary of the policy. In

August 2004, Ms. Rindy also designated her godson, Defendant Vincent James Musso Borgmeyer (the

“minor”) as the contingent beneficiary. 

Defendant Naida McKinney contested the validity of Hilda Olguin’s designation as beneficiary

on the basis that Ms. Rindy was incompetent, incapacitated, and/or under duress and/or influence at the

time she executed the 2004 beneficiary. Defendant McKinney assigned her to claimsto the minor. (Doc.

62). The minor’s date of birth is February 20, 1990. Prior to his eighteenth birthday, Phillip Borgmeyer

was appointed guardian ad litem for the minor . (Doc. 27). On November 13, 2008, a settlement

conference was held. The case did not settle at that time. On November 14, 2007, Plaintiff was

discharged and was awarded $4.000 in attorney fees. The remaining balance in the account was 

$46, 369.18. 

On January 24, 2008, a second settlement conference was held and the case settled. The parties

consented to Magistrate Judge jurisdiction and the case wasreassigned to this court on February 4, 2008.

The minor reached the age of majority after the case settled on February 20, 2008. A hearing on the

Petition for Minor’s Compromise was held on April 2, 2008. Appearing on behalf of the petitioner was

his attorney, Joel Murillo. The minor, nor the guardian ad litem were present at the hearing. For the

reasons discussed below, the Court will grant the petition in part.

II. BACKGROUND

At the January 24, 2008 settlement conference, it was agreed that fifty-five (55%) ofthe proceeds

of the policy would be disbursed to Defendant Olquin and the remaining forty-five (45%) would be

awarded to the minor. On January 25, 2008, a preliminary hearing was held regarding the minor’s

compromise. At that time, the court ordered that Mr. Murillo, the minor’s attorney, file a declaration

outlining his attorney fees. 

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On January 28, 2008 Mr. Murillo filed a declaration under seal outlining his fees. In the

declaration, Mr. Murillo requested a lump sum of the minor’s settlement for attorney fees. He indicated

that fromthat amount, he would reimburse defendant McKinneya $2,500 retainer thatshe had previously

paid him. There was no further explanation ofthe settlement agreement or the basisfor the attorney fees.

The court found the declaration inadequate. 

On February 8, 2008, the court issued an order requiring that Mr. Murillo file a petition for

minor’s compromise in accordance with Local Rule 17-202. The order specifically outlined the court’s

requirementsfor the contents of the petition including, but not limited to, the exact amount of attorney’s

fees, the basis of the fees, with an itemization of the costs sought to be allowed and charged against the

minor’s settlement amount. The order also required a description of the manner in which the settlement

proceeds would be distributed. If the settlement money was to be deposited in an account or accounts

subject to withdrawal only upon order ofthe court, the name and address ofthe proposed depositorywas

to be provided. The court further ordered that documentation clearly outlining Ms. Nadia McKinney’s

knowing and voluntary assignment of her beneficiary rights to the minor be included as part of the

petition. The court noted that while Ms. McKinney had filed a notice of assignment of rights in this

litigation (Doc. 26), the document was not sufficient to execute the assignment since it had not been

properly signed, nor were there any other documents supporting the assignment. See, Local Rule 7-

131(b). The court noted that the minor’s date of birth was February 20, 1990. Assuch, the court would

determine whether further hearing on the petition was needed once the petition was received. In this

order, the court also explicitly advised the attorney that it would not order that the minor’sfunds be used

to reimburse an existing retainer/contract agreement between Ms. Mc Kinney and the attorney. The

attorney had already attempted to obtain a court order allowing that the minor assume the benefits ofMs.

Mc Kinney and an obligation of the contract between Ms. Mc Kinney and Mr. Murillo. (Doc. 18). That

request was denied. (Doc. 27).

On February 25, 2008, the court received a letter from Mr. Murillo dated February 25, 2008,

entitled, “RE: Vincent James Musso Borgmeyer adv. p. Anthem Life Insurance Co., Case 06-cv-01165-

AWI-GSA, via e-mail, indicating that the minor turned 18 years old. The letter provided information

regarding the amount of his attorney fees and requested clarification on whether a minor’s compromise

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was necessary. The court received a copy of this same letter from Mr. Murillo in the mail on February

27, 2008. The court ordered the Clerk of the Court to file the letter into the record. Doc. 55.

Thereafter, on February 27, 2008, the court issued a second order regarding the petition for

minor’s compromise. Doc. 54. The court indicated that it was still requiring the minor’s compromise

since the minor had not reached the age ofmajority at the time ofthe settlement agreement. The attorney

was ordered to file the minor’s compromise no later than March 12, 2008.

Subsequently, onMarch 13, 2008, Mr. Murillo sent a document entitled “PetitionandDeclaration

for Compromise of Minor’s Claim” via e-mail to chambers. Doc. 56. He was instructed to file the

document with the Clerk of the Court which he eventually did. The petition included a brief procedural

history of the matter and a summary of the proposed settlement subject to this court’s approval. In the

petition, Mr. Murillo indicated that at the time of the settlement conference, the interpleaded funds was

$46, 369.18 plusinterest that had accrued since the payment to Anthem Life. The petition indicated that

the settlement agreement provided that 55% wasto go to Olquin and 45% was to be given to the minor.

Forty-five percent of the interpled funds equals $20,866.13 which was the total due to the minor. 

In this petition, Mr. Murillo again asserted that the minor wasto receive $15,000 and Mr. Murillo

wasto receive the amounts above the $15,000 and reimburse $2,500 Defendant McKinneywhich she had

paid him for a retainer. After the reimbursement, the attorney would receive $3,366.13 plus the

$2,500.00 retainer amount he received from Ms. McKinney. The total amount Mr. Murillo wasseeking

in attorney fees is $5,866.13 which was twenty-eight percent (28%) of the minor’s total settlement. 

The petition did not comply with the instructions contained in the court’s order dated February

8, 2008 because it did not list the basis of the fees, or an itemization of costssought to be charged against

the minor’ssettlement. Additionally, it also did not include any information regarding to whomand how

the funds should be disbursed (i.e., a bank and account number, or an address where any checks should

be sent), nor did it comply with the request for the assignment information. Assuch, the court issued an

order to show cause why the settlement agreement should not be set aside and the matter set for trial.

Doc. 58. In the order to show cause, the court reiterated that the petition contain the following

information:

1. A thorough explanation of the history of the assignment and a properly executed declaration

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fromMs. Nadia McKinneyclearlyoutlining her knowing and voluntaryassignment ofthose rights

to the minor. Any other documents executed in connection with the assignment should also be

attached to the declaration;

2. An explanation of the gross and net amounts of the settlement, as well as a description of the

manner in which the settlement proceeds will be distributed. If the settlement money is to be

deposited in an account or accountssubject to withdrawal only upon order ofthe court, the name

and address of the proposed depository shall be provided; and, 

3. The exact amount of attorney’s fees, the basis of the fees, with an itemization of the costs

sought to be allowed and charged against the minor’s settlement amount.

On March 28, 2008, Mr. Murillo filed another petition and declaration for minor’s compromise.

Doc. 59. Attached to the petition was a revised assignment of rights that contained Ms. McKinney’s

signature on it, as well as several letters written by Ms. McKinney regarding her intention to assign her

rights to the minor. In the petition, Mr. Murillo again acknowledged that the balance on the interpled

funds was $46, 369.18 plus interest. He further indicated that defendant Olquin was to receive 55% of

the settlement, and the minor was to receive 45% of the total interpled funds which was $20,866.13.

Also, Mr. Murillo indicated that he would be retaining the $2,500 retainer previously received from

Defendant McKinney. Mr. Murillo requested an additional $3,366,13 in attorney fees for a total of

$5866.13 plusinterest which wasstill twenty-eight percent (28%) of the minor’s proceeds. He indicated

that after attorney fees, the minor would receive $17,500. The petition also indicated that the guardian

ad litem agreed to reimburse Ms. KcKinney the $2500 retainer if she desired. The revised petition did

not contain any of the information related to the basis of attorney fees or itemization of costs that the

court had requested. 

III. DISCUSSION

This Court’s Local Rule 17-202 addresses settlements for minors and provides in pertinent

part:

(b) Settlement. No claim by . . . a minor . . . may be settled or compromised

absent court order by the assigned Judge or Magistrate Judge approving the settlement

or compromise.

. . .

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(2) The approval of a proposed settlement shall be filed and calendared 

pursuant to L.R. 78-230. Such application shall disclose, among other things, the age

and sex of the minor . . . , the nature of the causes of action to be settled or

compromised, the facts and circumstances out of which the causes of action arose,

including the time, place and persons involved, the manner in which the compromise

amount or other consideration was determined, including such additional information

as may be required to enable the Court to determine the fairness of the settlement or

compromise ...

(c) Disclosure of Attorney’s Interest. When the minor . . . is represented by an

attorney, it shall be disclosed to the Court by whom and the terms under which the

attorney was employed, whether the attorney became involved in the application at the

instance of the party against whom the causes of action are asserted directly or

indirectly, whether the attorney stands in any relationship to said party, and whether

the attorney has received or expects to receive any compensation, from whom, and the

amount.

. . .

(e) Payment of Judgment. Whenever money . . . is recovered on behalf of a

minor . . . the money . . . will be (1) disbursed to the representative pursuant to state

law upon a showing that he is the duly qualified representative under state law, (2)

disbursed otherwise pursuant to state law, or (3) disbursed pursuant to such other

order as the Court deems proper for the protection of the minor . . .

F.R.Civ.P. 17(c) empowers a district court to make such “order as it deems proper for the

protection” of a minor. “Federal courts generally require that claims by minors . . . be settled in

accordance with applicable state law. California law requires court approval of the fairness and terms

of the settlement.” 2 Schwarzer, Tashima & Wagstaffe, California Practice Guide, Federal

Procedure Before Trial (2002) Pretrial Conference and Settlement Procedures, para. 15:138, p. 15-

42 (emphasis in original). A settlement for a minor and attorney fees to represent a minor must be

approved by the court. Cal. Prob. Code, § 3601; Cal. Fam. Code, § 6602. Reasonable expenses and

court costs to be paid out of the settlement also must be approved by the court. Cal. Prob. Code, §

3601. A leading California practice guide observes:

Courts vary in their fee approval policies. All will consider the time expended

and the complexity of the case. But, in contingency fee cases, most courts require a

showing of “good cause” to award more than 25% of any recovery. [Citations

omitted.]

Attorneys who believe their work deserves a fee higher than that usually

approved must be prepared to demonstrate this to the judge.

2 Weil & Brown, Cal. Practice Guide, Civil Procedure Before Trial (2002) Settlement Procedures,

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paras. 12:576 and 12:577, p. 12(II)-14. If the attorney is seeking more than 25% of the recovery, he

needs to demonstrate why this fee is warranted.

The court finds that a division of fifty five percent (55%) to defendant Olquin and forty-five

(45%) to the minor of interpled funds is a fair settlement in case. The court further finds that the

petition substantially includes information required by this Court’s Local Rule 17-202(b)(2) and (c). 

At the order to show cause hearing, the court addressed the amount of attorney fees which should be

awarded in this case. Mr. Murillo confirmed that he would be retaining the $2,500 that defendant

McKinney had paid to him. After reviewing the record and the work that Mr. Murillo completed in

this case, the court has determined that an additional $2,500, for a total of $5,000 in attorney fees is

warranted. Mr. Murillo is in agreement with this amount. Because the minor has now reached the

age of majority, the funds will be distributed to him directly. 

IV. CONCLUSION

For the reasons discussed above, IT IS HEREBY ORDERED :

1) The Petition for approval of Minor’s Compromise is GRANTED IN PART. The Clerk of

the Court is directed to disburse the interpled fund by Plaintiff, Anthem Life Insurance Company, in

the above-captioned case, in the amount of $46, 369.18, plus accrued interest, if any, as follows :

2) Fifty-five percent (55%) of the balance of funds shall be distributed to Defendant Hilda

Olquin. The check shall be made payable to Hilda Olguin and her attorney, Donald J. Proietti, and

mailed to the following address :

Donald J. Proietti

Attorney at Law

PO Box 2184

Merced, California

3) Forty-Five percent (45%) of the balance of the funds shall be distributed to the minor,

Vincent James Musso Borgmeyer. The check shall be made payable to Vincent Borgmeyer. The

Clerk of the Court shall subtract twenty-five hundred dollars ($2,500) from the minor’s portion and

disburse this amount to Joel Murillo for attorney fees. The check for $2,500 shall be made payable to

Joel M. Murillo. Both the minor’s check, and Mr. Murillo’s check shall be mailed to the following

address: 

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Law Offices of Joel M. Murillo

311 E. Merced Street

Fowler, California 93625

4) The invested funds may be subject to a registry fee at the time of disbursement pursuant to

Local Rule 67-150(h). If the Clerk determines that the registry fee applies, the fee shall be accessed

to the parties based on their pro rata share of the fund.

5) After disbursement of the funds, the Clerk of the Court shall administratively close this

case.

IT IS SO ORDERED.

Dated: April 7, 2008 Gary S. Austin

The Honorable Gary S. Austin

United States Magistrate Judge

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