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Western-Southern Life Assurance Co. v. Lee

United States District Court, E.D. Missouri, Eastern Division

May 6, 2015

WESTERN-SOUTHERN LIFE ASSURANCE COMPANY, Plaintiff,
v.
SAMUEL H. LEE, JR., et al., Defendants.

MEMORANDUM AND ORDER

CAROL E. JACKSON, District Judge.

Plaintiff Western-Southern Life filed this interpleader action pursuant to 28 U.S.C. § 1335, asking the Court to determine which of the defendants are entitled to receive the proceeds of a life insurance policy issued to decedent Katie M. Clemons-Lee. Named as defendants are Samuel H. Lee, Jr., Tameka Lee, Walter Armour, and Frederick White. Service was achieved on all defendants, and answers were timely filed by defendants Samuel H. Lee, Jr. and Tameka Lee. Defendant Walter Armour failed to answer or otherwise enter an appearance in the matter and is in default. On February 13, 2014, defendant White filed a military power of attorney, pursuant to 10 U.S.C. § 1044b, appointing his wife Sherrie J. Lee-White as his attorney-in-fact. Defendant White did not file an answer or otherwise respond to the complaint, and the power of attorney he submitted expired on June 1, 2014. [Doc. #15]. Also, he did not respond to an order directing him to inform the Court of his current military status by February 13, 2015. [Doc. #38].

On March 25, 2014, plaintiff deposited $56, 122.01 into the registry of the Court. Thereafter, the Court granted plaintiff's motion to be dismissed from the case. The plaintiff's request for attorneys' fees and costs was denied without prejudice.

On December 9, 2014, defendant Samuel H. Lee, Jr. filed a memorandum asking that the policy proceeds be paid to defendants Armour and White, in accordance with the decedent's 2009 change of beneficiary form. He also stated his desire to "abandon the interpleader" so that the proceeds could be paid to the other defendants. [Doc. #30]. On December 31, 2014, defendant Tameka Lee filed a memorandum stating that she wished to forfeit her rights to the policy proceeds. [Doc. #36].

Plaintifffiled a renewed motion for attorney's fees and costs, contemporaneously submitting copies of invoices to support its request for fees and costs for in camera review. The plaintiff seeks $12, 981.22 in attorney's fees, and $356.62 in costs, for a total of $13, 337.84.

I. Legal Standard

A disinterested stakeholder who brings an interpleader action may be entitled to recover attorney's fees and costs in the bringing the action. S & W Foreclosure Corp. v. Okenfuss, No. 4:09-CV-353 (CDP), 2010 WL 106675, at *1 (E.D. Mo. Jan. 6, 2010). The court's authority to grant an award is discretionary; it is not an absolute right. Amer. Life Ins. Co. of N.Y. v. Karnes, No. 07-40353-CV-C-NKL, 2007 WL 4365732, at *3 (W.D. Mo. Dec. 11, 2007). "In the usual case the fee will be relatively modest, inasmuch as all that is necessary is the preparation of a petition, the deposit in court or posting of a band, service on the claimants, and the preparation of an order discharging the stakeholder." 7 Charles Alan Wright et al., Federal Practice and Procedure § 1719 (3d ed. 1998); see also Hunter v. Federal Life Ins. Co., 111 F.2d 551, 557 (8th Cir. 1940) (stating that an interpleader action "does not usually involve any great amount of skill, labor or responsibility, " and as such, "the amount allowed for [attorney's] fees should be modest.").

Federal district courts have excluded insurance companies from the general rule of awarding reasonable attorney's fees to disinterested stakeholders who bring interpleader actions under three theories. See Unum Life Ins. Co. of Amer. V. Kelling, 170 F.Supp.2d 792, 794 (M.D. Tenn. 2001) (explaining the exceptions to permitting insurance companies to recovery attorney's fees and costs in interpleader actions); see also Hearing v. Minnesota Life Ins. Co., No. C13-4101-LTS, 2014 WL 3587406, at *8 (N.D. Iowa July 21, 2014) (same). First, some courts suggest insurance companies should not be compensated, because conflicting claims to proceeds are part of such companies' "ordinary course of business." See Metro. Life Ins. Co. v. Mitchell, 966 F.Supp.2d 97, 105 (E.D.N.Y. 2013); see also Feehan v. Feehan, No. 09-CIV-7016, 2011 WL 497852, at *7 (S.D.N.Y. Jan. 10, 2011) (collecting cases). Second, courts have denied attorney's fees to insurance companies because such companies are, by definition, interested stakeholders; filing an interpleader action immunizes the company from further liability under the contested policy. See Kelling, 170 F.Supp.2d at 794-95; Mitchell, 966 F.Supp.2d at 105.

Third, courts have also carved out insurance companies from the general rule because an award for fees and costs would unnecessarily deplete the fund that is the subject of preservation through the interpleader action. See Paul Revere Life Ins. Co. v. Riddle, 222 F.Supp. 867, 869 (E.D. Tenn. 1963) (denying attorney's fees and noting that if the court held otherwise, every stakeholder with conflicting claims could interplead the funds, deposit them in a court registry, gain protection from further liability, and "in effect, cause the successful claimant to bear the costs"); see also Hunter, 111 F.2d at 556 ("[T]here would be no justification for seriously depleting the fund deposited in the court by a stakeholder through the allowance of large fees to his counsel."). The Eighth Circuit, however, has not adopted a clear exception for insurance companies, providing its most recent guidance in 1940. See Hearing, 2014 WL 3587406, *5-7 (noting 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'") (quoting Hunter, 111 F.2d at 557). As such, the Court will determine a reasonable and modest amount to compensate the plaintiff for bringing this action.

II. Discussion

A. Attorney's Fees

The broad rule governing an award of attorney's fees in an interpleader action is reasonableness. Protective Life Ins. Co. v. Kridner, Civ. No. 12-582 (JRT/JJG), 2013 WL 1249205, at *4 (D. Minn. Mar. 27, 2013). In determining what fees are reasonable, courts consider the following factors: (1) whether the case is simple or complex; (2) whether the stakeholder performed unique services for the claimants or the court; (3) whether the stakeholder acted in good faith and with diligence; (4) whether the services rendered benefitted the stakeholder; and (5) whether the claimants improperly protracted the proceedings. Id.; see also Noeller v. Metro. Life Ins. Co., 190 F.R.D. 202, 207 (E.D. Tex. 1999) (citing Charles Alan Wright et al., Federal Practice and Procedure § 1719 (3d ed. 1998)).

The stakeholder seeking fees has the burden of proving the reasonableness of the request. Kridner, 2013 WL 1249205, at *5. "[A]ny uncertainties in a fee application due to nonspecific entries are resolved against the applicant.'" Id. (quoting In re OEM Indus. Corp., 135 B.R. 247, 251 (Bankr. W.D. Pa. 1991)). The general starting point for calculating reasonable attorney's fees is the "lodestar, " which is calculated by multiplying a reasonable hourly rate by the number of hours reasonably expended on the case. See Fish v. St. Cloud State Univ., 295 F.3d 849, 851 (8th Cir. 2002). A court is not required to reach a lodestar determination, however, and may attempt to identify specific hours that should be eliminated or simply reduce the award within its discretion. Hensley v. Eckerhart, 461 U.S. 424, 436-37 (1983).

Two law firms represented Western-Southern Life in this action, Bradley Arant Boult Cummings LLP in Birmingham, Alabama and Armstrong Teasdale LLP as local counsel in St. Louis, Missouri. The two firms report spending 43 hours on the matter. Their hourly rates range from $180 an hour for a paralegal (12 hours), $245-270 for associates (11.3 hours), and $300-400 for partners (19.5 hours), for a total of $12, 981.22 in attorney's fees. They also report costs of $356.62, consisting of copy charges, ...


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