Goldberg Segalla Saves Insurer From Paying Life Insurance Proceeds Twice June 10, 2013

Goldberg Segalla’s Carrie P. Appler and Daniel W. Gerber saved a life insurer from having to pay out an insurance policy twice in a complex federal case involving a homicide and competing claims for a life insurance policy.

The insurer first issued a term life insurance policy to the policyholder in April 2006. The policy provided a death benefit of $100,000, designating as joint beneficiaries the individual’s fiancé and minor nephews. It was reissued in July 2009, designating the insured’s fiancé as the policy’s primary beneficiary and designating her nephews as successor beneficiaries.

Sadly, the policyholder was found murdered in August 2009. Police advised the insurer shortly thereafter that the policyholder’s fiancé was a “person of interest” in the murder. On September 1, the policyholder’s fiancé submitted a form claiming the $100,000 death benefit due him as the policy’s primary beneficiary. A short time later, a separate form claiming the policy’s $100,000 death benefit was submitted by the insured’s nephews as the insured’s successor benefits.

Facing competing claims to the life insurance proceeds, the insurer filed an action for interpleader relief in April 2012. The insurer sought to deposit the death benefit proceeds with the court, thereby discharging it from all liability in connection with the life insurance policy, and also sought an order directing the defendant fiancé and defendant nephews to litigate the proper recipient of the proceeds. In addition, the insurer sought an order enjoining the defendants from commencing any other action against it relative to the policy’s proceeds; sought $2,000 in attorney’s fees and costs to be deducted from the policy’s proceeds; and sought dismissal from this action with prejudice.

In June 2013, the magistrate judge filed a Report and Recommendation recommending that the insurer’s motion be granted in its entirety. The district court accepted the Report and Recommendation in its entirety and granted the insurer’s motion.