Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-02918/USCOURTS-caed-2_06-cv-02918-3/pdf.json

Parties Involved:
Rachel Billini
Defendant
Monique Diaz
Defendant
Nicole Diaz
Defendant
Pablo Diaz
Defendant
Regina Diaz
Defendant
Tiara Diaz
Defendant
Metropolitan Life Insurance Company
Plaintiff

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

METROPOLITAN LIFE INSURANCE

COMPANY,

NO. CIV. S-06-02918 WBS KJM

Plaintiff-in-Interpleader,

v. ORDER RE: PLAINTIFF’S MOTION

FOR DISMISSAL OF PLAINTIFF-ININTERPLEADER; DISCHARGE; 

INJUNCTION; AND ATTORNEYS’ 

FEES AND COSTS

RACHEL BILLINI; MONIQUE DIAZ;

NICOLE DIAZ; PABLO DIAZ; REGINA

DIAZ; TIARA DIAZ; and DOES 1

through 10, inclusive,

Defendants-in-Interpleader.

----oo0oo----

This is an interpeader action involving a dispute over

the proceeds of a life insurance policy administered by

plaintiff-in-interpleader Metropolitan Life Insurance Company

(“MetLife”). MetLife filed this interpleader action after

receiving competing claims on the policy from claimants-ininterpleader (“claimants”). Now, MetLife requests this court to

1) dismiss MetLife, with prejudice, from the action; 2) discharge

Case 2:06-cv-02918-WBS -KJM Document 26 Filed 11/27/07 Page 1 of 8
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MetLife, SBC Communications Inc. (“SBC”), and SBC Benefit Program

(“Plan”) from further liability to the claimants; 3) enjoin

claimants from asserting claims related to the Plan; and 4) award

MetLife its attorneys’ fees and costs.

I. Factual & Procedural Background

In 1984, decedent enrolled in the Plan, which was a

group life insurance policy through his former employer, SBC,

that MetLife issued and administered. (Compl. 2:15-16, 21-22.) 

On August 30, 1994, decedent named his wife, Susan Diaz, as his

primary plan beneficiary and designated five children, Pablo

Diaz, Monique Diaz, Tiara Diaz, Nicole Diaz, and Regina Diaz

(“decedent’s children”), as contingent beneficiaries. (Id. Ex.

A.) Subsequently, decedent and his wife divorced, which

automatically revoked the designation in favor of his wife. (Id.

at 3:3-5, Ex. B.) On March 17, 2005, decedent executed a second

form and designated Rachel Billini, who has claimed to be

decedent’s niece, as the sole beneficiary of his plan benefits. 

(Id. Ex. C.) On April 30, 2005, decedent executed a third form,

naming his children as the sole beneficiaries of his plan

benefits. (Id. Ex. D.) 

Decedent passed away on May 3, 2005. The SBC Rules for

Employee Beneficiary Designations provide that a beneficiary

designation is effective only if the employee is “alive as of the

time and date of the receipt of the beneficiary designation.” 

(Id. at 3:26-27, Ex. B.) MetLife claims it received the April

30, 2005 designation form on May 4, 2005, but decedent’s children

claim the form was sent to MetLife via over-night delivery on May

2, 2005. (Id. at 3:23-24; Answer ¶ 13.) 

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MetLife recognizes that decedent’s death benefit of

$46,000, plus interest, is payable under the Plan. (Compl. 5:7-

8.) On June 24, 2005, it received a claim form from Billini,

alleging that she was decedent’s niece. (Id. Ex. E.) Then, on

July 11, 2005, it received claim forms from decedent’s children. 

(Id. Ex. F.) In letters to MetLife, decedent’s children also

stated that they would seek legal recourse if MetLife paid the

benefits to Billini. (Id. Exs. G, H.) 

MetLife did not pay the benefits to Billini or

decedent’s children because it was uncertain who was entitled to

them. (Id. at 5:25-26.) The April 30, 2005 designation to

decedent’s children could be invalid if it was received after May

3, 2005. The May 17, 2005 designation to Billini could also be

invalid because, in their letters to MetLife, decedent’s children

stated that Billini exerted undue influence to persuade decedent

to designate Billini as the primary beneficiary and that Billini

falsely claimed she was decedent’s niece. (Id. at 5:1-5.) If

the May 17, 2005 and April 30, 2005 designations are both

invalid, MetLife contends that the August 30, 1994 designation

would be controlling. (Id. at 5:15-16.) Under that designation,

decedent’s children would be entitled to the benefits. 

To avoid double liability, MetLife brought this

interpleader action on December 26, 2006. Decedent’s children

have been served and have filed an answer; however, Billini, who

was personally served on April 9, 2007, has not filed an answer. 

In February, MetLife deposited the policy benefits with this

court and now seeks to be dismissed from the action and

discharged from liability. MetLife also requests this court 

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enjoin claimants from pursuing additional claims against the

policy and award MetLife its attorneys’ fees and costs. Neither

decedent’s children nor Billini filed a responsive pleading to or

opposed MetLife’s motion. 

II. Discussion

When a stakeholder of a sum of money is subject to

competing claims, an interpleader action allows the stakeholder

to sue the various claimants, forcing the claimants to litigate

who is entitled to the money. Cripps v. Life Ins. Co. of N. Am.,

980 F.2d 1261, 1265 (9th Cir. 1992). Procedurally, an

interpleader action encompasses two stages. “First, the court

determines the propriety of interpleading the adverse claimants

and relieving the stakeholder from liability. The second stage

involves an adjudication of the adverse claims of the defendant

claimants.” First Interstate Bank of Or. v. U.S., 891 F. Supp.

543, 546 (D. Or. 1995) (citing 3A James Wm. Moore & Jo D. Lucas,

Moore's Federal Practice §§ 22.14[1]-[2] (2d ed. 1994) and

Cripps, 980 F.2d at 1265). 

 Federal Rule of Civil Procedure 22 allows a

stakeholder to bring an interpleader claim when the stakeholder

“is or may be exposed to double or multiple liability.” Fed. R.

Civ. P. 22. In this case, it is undisputed that MetLife was

justified in bringing an interpleader action because it received

conflicting claims and decedent’s children informed MetLife that

they would bring a lawsuit if MetLife paid the proceeds of the

policy to Bellini. 

If an interpleader action is properly brought and the

funds have been deposited with the court, a court should readily

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1 MetLife’s request to be discharged “from further

liability to the named Claimants-in-Interpleader” is too broad. 

See State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 533

(1967) (interpleader action does not entitle a stakeholder “to an

order both enjoining prosecution of suits against it outside the

confines of the interpleader proceeding” and suits for tortious

conduct). 

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discharge a stakeholder absent bad faith or delay by the

stakeholder. First Interstate Bank of Or., 891 F. Supp. at 547;

see generally 4 James Wm. Moore & Richard D. Freer, Moore’s

Federal Practice § 22.03[2][a]. Here, MetLife is disinterested

in who prevails, has deposited the funds with the court, and none

of the claimants have alleged that MetLife has acted in bad

faith. Accordingly, the court will dismiss, with prejudice,

MetLife from the action and discharge MetLife, SBC, and the Plan

from further liability for the Plan benefits.1 

Given the futility of an interpleader action if

claimants file separate suits against the stakeholder, the court

may enjoin the claimants from doing so. U.S. v. Major Oil Corp.,

583 F.2d 1152, 1157-58 (10th Cir. 1978). Again, claimants have

not opposed MetLife’s request for an injunction and the court can

see no reason not to issue it. Therefore, the court will enjoin

the claimants from instituting any other proceeding in any state

or federal court against MetLife, SBC, or the Plan regarding the

Plan benefits. 

“Generally, courts have discretion to award attorney

fees to a disinterested stakeholder in an interpleader action.” 

Abex Corp. v. Ski’s Enters., Inc., 748 F.2d 513, 516 (9th Cir.

1984). “The traditional test for determining attorneys fees in

an interpleader action is less rigorous than the more elaborate

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factors used to consider fee awards in other contexts.” Sun Life

Assurance Co. of Canada v. Chan, 2003 WL 22227881 at *3 (N.D.

Cal. 2003) (citations omitted). Fees are generally paid from the

policy benefits and the party requesting fees has the burden to

establish entitlement to them. Dirs. Guild of Am.-Producer

Pension Benefits Plans v. Tise, 234 F.3d 415, 427 (9th Cir.

2000). 

When the stakeholder requesting fees is an insurance

company, interpleader actions offer two distinct benefits. 

First, “the availability of attorneys’ fees for interpleader

plaintiffs recognizes that by bringing the action, the plaintiff

benefits all parties ‘by promoting early litigation on the

ownership of the fund, thus preventing dissipation.’” See id.

at 426 (quoting Schirmer Stevedoring Co. Ltd. v. Seaboard

Stevedoring Corp., 306 F.2d. 188, 193 (9th Cir. 1962)). Second,

interpleader is a “valuable procedural device” for insurance

companies that are faced with competing claims because it

provides a way for the insurance companies to “disclaim[] any

position as to which of the claimants is entitled to the fund.” 

Id. 

The latter interest has prompted other courts to deny

fees when the stakeholder is an insurance company. See, e.g.,

Aetna U.S. Healthcare v. Higgs, 962 F.Supp. 1412, 1414-15 (D.

Kan. 1997); Sun Life Assurance Co. of Canada v. Thomas, 735

F.Supp. 730, 733 (W.D. Mich. 1990); Life Ins. Co. of N. Am. v.

Nava, 667 F.Supp. 279, 280 (M.D. La. 1987); Mutual of Omaha Ins.

Co. v. Dolby, 531 F.Supp. 511, 517 (E.D. Pa. 1982). In doing so,

these courts observe that competing claims “are part of the

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ordinary course of business for an insurance company” and an

interpleader action should not be utilized to transfer these

“ordinary business expenses to the claimants.” Mutual of Omaha

Ins. Co., 531 F.Supp. at 517. 

While the Ninth Circuit has not barred recovery of fees

and costs when the stakeholder is an insurance company, it has

explained that fee awards in interpleader actions are “typically

modest,” especially because a fee award could “deplete the fund

at the expense of the party who is ultimately deemed entitled to

it.” Dirs. Guild of Am.-Producer Pension Benefits Plans v. Tise,

234 F.3d 415, 426-28 (9th Cir. 2000) (affirming a district

court’s award of $3,000.00 in fees when the stakeholder requested

$97,000.00). The Ninth Circuit has also explained that, for

interpleader plaintiffs, “[c]ompensable expenses include, for

example, preparing the complaint, obtaining service of process on

the claimants to the fund, and preparing an order discharging the

plaintiff from liability and dismissing it from the action.” Id.

at 426-27 (quoting Schirmer Stevedoring Co. Ltd., 306 F.2d at 194

and Charles Alan Wright, Arthur R. Miller & Mary Kay Kane,

Federal Practice & Procedure § 1719 & n.20 (1986))).

In this case, decedent’s policy is for $46,000.00 and

MetLife has requested $8,717.82 in fees and costs, which is

almost one-fifth of the Plan benefits. In issuing policies and

setting premiums, MetLife must anticipate that conflicting claims

will arise and that it will routinely be required to incur

expenses to investigate and resolve such claims. MetLife would

have incurred many of those expenses if it did not file an

interpleader action. 

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2 This amount includes $840 to draft the complaint, $420

to personally serve Billini (it took two attempts), and $1,440 to

prepare this motion. The award does not include the fees for

counsel’s appearance at oral argument on November 26, 2007, since

MetLife has a personal interest in appearing at oral argument in

order to recover its fees. 

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Therefore, the court will award MetLife only the fees

and costs it incurred solely because of this interpleader action,

which is the $2,700.00 incurred to prepare the complaint and this

motion and the costs to serve the claimants.2

IT IS THEREFORE ORDERED that (1) MetLife’s motion to 

be dismissed from this action, with prejudice, be, and the same

hereby is, GRANTED; (2) MetLife’s motion for MetLife, SBC, and

the Plan to be discharged from further liability for the Plan

benefits be, and the same hereby is, GRANTED; (3) MetLife’s

motion for an injunction enjoining claimants from asserting

claims related to the Plan benefits be, and the same hereby is,

GRANTED; (4) MetLife’s motion for attorneys’ fees and costs be,

and the same hereby is, GRANTED in the amount of $2,700.00,

payable from the fund deposited with the court.

DATED: November 26, 2007

 

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