Opinion
Civil No. 05cv0753 J (LSP).
March 17, 2006
ORDER: 1) GRANTING MOTION FOR DISCHARGE OF STAKEHOLDER; 2) GRANTING IN PART MOTION FOR SUMMARY JUDGMENT; AND 3) GRANTING REQUEST FOR JUDICIAL NOTICE
Before the Court are a Motion for Discharge of Stakeholder in Interpleader Action filed by Plaintiff-in-Interpleader Unum Life Insurance Company of America ("Plaintiff") and a Motion for Summary Judgment filed by Defendants Diane Paredes and Lisa Woeller. [Doc. Nos. 10, 22.] The Court has determined that the issues presented herein are appropriate for decision without oral argument. [Doc. Nos. 16, 29.] For the reasons addressed below, the Court 1) GRANTS Plaintiff's Motion, and 2) GRANTS in part the Motion of Defendants Diane Paredes and Lisa Woeller.
Background
On July 1, 2003, Decedent Lydia Estrada obtained a group life, accident, and dismemberment policy from Plaintiff totaling $244,000. ( See Mot. Summ. J. at 4; Lodg't Exs. Supp. Mot. Summ. J., Ex. E.) Defendants Diane Paredes, Lisa Woeller, and Gary Paredes, Jr., are siblings and one-third equal beneficiaries under the policy. ( See Lodg't Exs. Supp. Mot. Summ. J., Ex. F.) On June 14, 2004, Decedent died as a result of blunt trauma to her head. ( See id., Ex. G.) On May 10, 2005, Defendant Gary Paredes pled guilty to the first-degree murder of his mother, Decedent. ( See id., Ex. H.) Defendant Gary Paredes was convicted and sentenced to twenty-five years to life in the California Department of Corrections. ( See id.)On April 12, 2005, Plaintiff commenced this action by filing a Complaint in Interpleader with the Court, praying that the parties be required to interplead their respective claims to the proceeds of Decedent's policy. [Doc. No. 1.] On August 10, 2005, Defendants Diane Paredes and Lisa Woeller filed an Answer to Plaintiff's Complaint in Interpleader. [Doc. No. 8.] On August 26, 2005, Plaintiff filed a Motion for Discharge and Request for Attorneys' Fees and Costs, seeking 1) to deposit proceeds with the Court, 2) to be discharged of liability and dismissed from the action, 3) to recover attorneys fees and costs, and 4) to have the Court enjoin Defendants from asserting any other proceedings against Unum regarding the policy proceeds. ( See Mot. Discharge at 1.) On September 30, 2005, the Clerk of Court entered default against Defendant Gary Paredes for failure to plead or otherwise defend in the action. [Doc. No. 20.] Defendants Diane Paredes and Lisa Woeller have already received their respective one-third portions of the policy proceeds; on October 14, 2005, Defendants Diane Paredes and Lisa Woeller filed a Motion for Summary Judgment to receive "the remaining one-third share," claiming that Defendant Gary Paredes was not entitled to any recovery under California law because he had murdered Decedent. (Mem. Supp. Mot. Summ. J. at 9.) Defendant Gary Paredes has not filed an opposition.
Analysis
I. Motion for Discharge of Stakeholder in Interpleader ActionA. Plaintiff's Motion for Discharge and Dismissal
The federal interpleader statute, 28 U.S.C. section 2361, provides that a district court may discharge the plaintiff in an interpleader action of liability. See Walker v. Pritzker, 705 F.2d 942, 944 (7th Cir. 1983) (stating that the statute "contemplates that the stakeholder may be discharged from litigation once the fund is deposited with the court, leaving the adverse claimants to litigate their dispute between themselves"); see also Metropolitan Life Ins. Co. v. Foley, No. 02-1479, 2002 WL 31399787 at *4, (E.D. La. Oct. 22, 2002) ("If an interpleading plaintiff has no interest in the stake he should be dismissed.").
In the present case, Defendants Diane Paredes and Lisa Woeller have not opposed Plaintiff's Motion and they have both received their respective one-third portions of the policy proceeds. ( See Mem. Supp. Mot. Discharge at 3-4.) Plaintiff claims no interest in the funds and now seeks permission to deposit the remaining portion of the proceeds, $81,374, with the Court. ( See id.) Therefore, upon the Court's receipt of the funds, Plaintiff SHALL BE DISCHARGED of liability and DISMISSED from this action.
B. Plaintiff's Request for a Permanent Injunction
The federal interpleader statute authorizes the district court to issue an injunction restraining the claimants "from instituting or prosecuting any proceeding in any State or United States court affecting the property, instrument or obligation involved in the interpleader action." 28 U.S.C. § 2361 (2005). In United States v. Major Oil Corp., 583 F.2d 1152, 1158 (10th Cir. 1978) (internal citations omitted), the court observed as follows:
It has been long recognized that the proper accommodation between the policy against enjoining state proceedings and the objectives of Fed. Rules Civ. Proc., rule 22, interpleader is to recognize the federal court's power to issue an order whenever it is found that pending or threatened state court and/or other federal district court proceedings will destroy the effectiveness of the interpleader suit or the enforceability of its judgment.
This power has been held to extend to the injunction of federal or state proceedings not yet commenced . . . The statute, by its terms, affords the court the power to enjoin other judicial proceedings in order to reduce the possibility of inconsistent determinations or the inequitable distribution of the fund.
Thus, the injunctive power of the court is broad and intended to protect the stakeholder from multiple lawsuits. Under the present circumstances, there is a possibility that Defendants would attempt to litigate their rights to the policy proceeds in a separate action. Defendants, therefore, SHALL BE PERMANENTLY ENJOINED from asserting any other proceedings against Plaintiff with regard to the policy proceeds.
C. Attorneys Fees and Costs Attached to the Interpleader Complaint
The amount of fees to be awarded in an interpleader action is committed to the sound discretion of the trial court. See Schirmer Stevedoring Co. v. Seaboard Stevedoring Corp., 306 F.2d 188, 194 (9th Cir. 1962); Gelfgren v. Republic Nat'l Life Ins. Co., 680 F.2d 79 (9th Cir. 1982). Courts generally grant attorneys fees and costs to a disinterested stakeholder in an interpleader action absent a showing of bad faith. See First Interstate Bank, N.A. v. United States, 891 F. Supp. 543, 548 (D. Or. 1995) (citing Schirmer, 306 F.2d at 194-95). According to the U.S. Court of Appeals for the Ninth Circuit, federal courts award attorneys fees to interpleader plaintiffs because they recognize "that the plaintiff has benefitted the claimants by promoting early litigation on ownership of the fund, thus preventing dissipation, and that the plaintiff should not have to pay attorney fees to guard himself against the harassment of multiple litigation." Schirmer, 306 F.2d at 193 (citations omitted). Compensable expenses include preparing the complaint, obtaining service of process on the claimants, and preparing an order discharging the plaintiff of liability and dismissing it from the action. See Trustees of Directors Guild of America-Producer Pension Benefits Plans v. Tice, 234 F.3d 415, 426 (9th Cir. 2000) (citing Schumer, 306 F.2d at 194).
In the present action, Plaintiff is a disinterested stakeholder that has acted in good faith. Plaintiff has not challenged the rights of Defendants Diane Paredes and Lisa Woeller to the funds and makes no claim to the funds. Faced with competing claims, Plaintiff instituted the interpleader action to avoid facing multiple potential lawsuits by Defendants. In addition, Plaintiff only seeks fees related to 1) preparing, filing, and serving the Complaint, 2) service of the Summons and the Complaint, 3) filing fees, and 4) preparing the Motion to Discharge. ( See Wang Decl. Supp. Mot. Discharge at 1-2.) Plaintiff thus SHALL BE AWARDED attorneys fees and costs incurred from filing the interpleader action.
This Court recognizes that California state courts also award attorneys fees and costs incurred by stakeholders: California Code of Civil Procedure sections 386 and 386.5 provide that a stakeholder may request attorneys fees and costs incurred in filing an interpleader cause of action. See Cal. Civ. Proc. Code §§ 386, 386.5 (2005). The court may also award the stakeholder costs and attorneys fees from the amount in dispute that has been deposited with the court. See UAP-Columbus JV 326132 v. Nesbitt, 285 Cal. Rptr. 856, 861-62 (Ct.App. 1991).
II. Motion for Summary Judgment
A. Defendant Gary Paredes' Default
If a defendant defaults in an interpleader action, he must succeed in setting aside the default before he will be permitted to answer or respond to a summary judgment motion against him. See New York Life Ins. Co. v. Brown, 84 F.3d 137, 143 ("Only if a Rule 55(c) motion is made, and granted, will [the defaulting defendant] be allowed to file an answer or response to the summary judgment motion."). In addition, under the Local Rules of Practice, "[i]f an opposing party fails to file the papers in the manner required by Civil Local Rule 7.1(e)(2), that failure may constitute a consent to the granting of a motion or other request for ruling by the court."). S.D. Cal. Civ. R. 7.1(f)(3)(c).
In the present action, the Clerk of Court has entered default against Defendant Gary Paredes. [Doc. No. 20.] As a result, Defendant Gary Paredes must succeed in setting aside the default under Federal Rule of Civil Procedure 55(c) before he will be permitted to respond to the Motion for Summary Judgment. Since he has not moved under Federal Rule 55(c) and Plaintiff has not opposed the Motion, the Court could interpret his non-response as consent to the Motion pursuant to Civil Local Rule 7.1(f)(3)(c) and render a judgment for Defendants Diane Paredes and Lisa Woeller. However, in formulating its Order, the Court, nonetheless, will analyze the merits of the Summary Judgment Motion.
B. Legal Standard
Summary judgment is appropriate under Rule 56(c) where the moving party demonstrates the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. See Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact is material when, under the governing substantive law, it could affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). A dispute about a material fact is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248.
A party seeking summary judgment always bears the initial burden of establishing the absence of a genuine issue of material fact. See Celotex, 477 U.S. at 323. The moving party can satisfy this burden in two ways: 1) by presenting evidence that negates an essential element of the nonmoving party's case; or 2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. See id. at 322-23. "Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment." T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987).
"The district court may limit its review to the documents submitted for the purpose of summary judgment and those parts of the record specifically referenced therein." Carmen v. San Francisco Unified School Dist., 237 F.3d 1026, 1030 (9th Cir. 2001). Therefore, the court is not obligated "to scour the record in search of a genuine issue of triable fact." Keenan v. Allen, 91 F.3d 1275, 1279 (9th Cir. 1996) (citing Richards v. Combined Ins. Co., 55 F.3d 247, 251 (7th Cir. 1995)). If the moving party fails to discharge this initial burden, summary judgment must be denied and the court need not consider the nonmoving party's evidence. See Adickes v. S.H. Kress Co., 398 U.S. 144, 159-60 (1970).
If the moving party meets this initial burden, the nonmoving party cannot defeat summary judgment merely by demonstrating "that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th Cir. 1995) (citing Anderson, 477 U.S. at 252) ("The mere existence of a scintilla of evidence in support of the nonmoving party's position is not sufficient."). Rather, the nonmoving party must "go beyond the pleadings and by her own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex, 477 U.S. at 324 (quoting Fed.R.Civ.P. 56(e)).
When making this determination, a court must view all inferences drawn from the underlying facts in the light most favorable to the nonmoving party. See Matsushita, 475 U.S. at 587. "Credibility determinations, the weighing of evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge, [when] he [or she] is ruling on a motion for summary judgment." Anderson, 477 U.S. at 255.
C. Discussion 1. Defendant's Murder of Decedent
California Civil Code § 3517-Clean Hands Provision provides: "No one can take advantage of his own wrong." Cal. Civ. Code § 3517 (2006). In Whitfield v. Flaherty, 39 Cal. Rptr. 857, 859-61 (Dist.Ct.App. 1964), where a husband murdered his wife, he was prevented from inheriting from his wife's estate pursuant to section 3517. See also Estate of Helwinkel, 18 Cal. Rptr. 473, 475-76 (Dist.Ct.App. 1962) (holding that widow who murdered husband was denied right to succeed estate under section 3517). In the present action, Defendant Gary Paredes pled guilty to the murder of Decedent; under section 3517 this Court FINDS that he may not profit from that act. 2. Receipt of Proceeds by Defendant Gary Paredes and His Heirs
California Probate Code § 252 provides as follows:
A named beneficiary of a bond, life insurance policy, or other contractual arrangement who feloniously and intentionally kills the principal obligee or the person upon whose life the policy is issued is not entitled to any benefit under the bond, policy, or other contractual arrangement, and it becomes payable as though the killer had predeceased the decedent.
The Law Review Commission Comment for California Probate Code § 252 lends further clarification:
Under Sections 252 and 253, if the killer is treated as having predeceased the decedent for the purpose of the life insurance or other contractual benefits, the killer's heirs are similarly disqualified. See Meyer v. Johnson, 115 Cal.App. 646 (1931) . . . cf. Estate of Jeffers, 134 Cal.App.3d 729 . . . (killer may not designate alternate beneficiary of insurance proceeds).
California Probate Code section 253 provides: "In any case not described in Section 250, 251, or 252 in which one person feloniously and intentionally kills another, any acquisition of property, interest, or benefit by the killer as a result of the killing of the decedent shall be treated in accordance with the principles of this part." Cal. Prob. Code § 253 (2005).
Defendant Gary Paredes was convicted of feloniously and intentionally killing Decedent. ( See Lodg't Exs. Supp. Mot. Summ. J., Ex. H.) Therefore, in accordance with California Probate Code § 252, Defendant Gary Paredes should be treated as though he predeceased Decedent for beneficiary purposes and be prohibited from receiving any of the benefits of Decedent's life-insurance policy. Moreover, the Law Review Commission's Comment for section 252 and the case law it provides illustrate that Defendant Gary Paredes' heirs are also ineligible to inherit his portion of the policy proceeds. Thus, the Court FINDS that Defendant Gary Paredes and his heirs are unable to obtain the benefits of the life-insurance funds. 3. Receipt of Proceeds by Defendants Diane Paredes and Lisa Woeller
In Meyer, the court held that as between the heirs of the murderer and the heirs of the murdered insured, the money should go to the insured's heirs. Meyer v. Johnson, 2 P.2d 456, 458 (Dist.Ct.App. 1931); see also Beck v. West Coast Life Ins. Co., 241 P.2d 544, 545 (Cal. 1952) ("Under the terms of the policy the murderer is entitled to the proceeds, but since it would be unconscionable to allow him to profit from his own wrong, he may neither receive nor retain them.").
As discussed above, Defendant Gary Paredes shall be treated as though he predeceased Decedent, and his heirs shall not entitled to policy proceeds. Whereas the insurance policy indicates that Defendant Gary Paredes is entitled to the proceeds, established public policy and California law preclude such a result. Therefore, Defendants Diane Paredes and Lisa Woeller are the remaining heirs to Decedent's estate, and this Court FINDS that they are entitled to the remaining portion of Decedent's policy minus the costs awarded to Plaintiff for attorneys fees and costs.
III. Request for Judicial Notice
In support of their Motion for Summary Judgment, Defendants Diane Paredes and Lisa Woeller request that the Court take judicial notice of Exhibits A-I of their Lodgment of Exhibits in Support of Motion for Summary Judgment. ( See Req. Jud. Not. at 1-2.) No party to the action has opposed this Request. Finding that the Exhibits are relevant to the case at hand and are "capable of accurate and ready determination by resort to sources whose accuracy cannot be reasonably questioned" ( Fed.R.Evid. 201(b)), the Court GRANTS the Request and TAKES JUDICIAL NOTICE of the Exhibits to the extent that it has relied on them to reach its judgment.
Defendants Diane Paredes and Lisa Woeller present Exhibits A-I to the Court as true and correct copies of 1) the Complaint, 2) the Summons, 3) a Proof of Service, filed July 7, 2005, 4) the Default entered by the Clerk of Court, 5) Decedent's life-insurance policy, Number 292000, 6) Decedent's life-insurance beneficiary designation for policy Number 292000, 7) Decedent's death certificate, 8) Defendant Gary Paredes' guilty plea before the Superior Court of San Diego County, and 9) the Superior Court of San Diego County Letters of Administration, dated August 26, 2004. ( See Lodg't Exs. Supp. Mot. Summ. J., Exs. A-I.)
Conclusion
For the foregoing reasons, the Court GRANTS Plaintiff's Motion for Discharge, and GRANTS in part the Motion for Summary Judgment of Defendants Diane Paredes and Lisa Woeller. Specifically, the Court ORDERS as follows:
1) Plaintiff shall deposit the funds at issue in this interpleader action (in the amount of $81,374) with the Clerk of Court;
2) Upon deposit of the funds, Plaintiff SHALL BE HEREBY DISMISSED with prejudice from this action;
3) Upon deposit of the funds, Defendants SHALL BE HEREBY PERMANENTLY ENJOINED from any future assertion of claims against Plaintiff related to Plaintiff's group life, accident, and dismemberment policy, Number 292000;
4) Upon deposit of the funds, Plaintiff SHALL BE HEREBY AWARDED attorneys fees and costs in the amount of $3,679.20, to be deducted from the funds Plaintiff deposited with the Court; and
5) After Plaintiff deposits with the Court the funds at issue, and after $3,679.20 is deducted from the funds and is awarded to Plaintiff for attorneys fees and costs, Defendants Diane Paredes and Lisa Woeller each SHALL BE HEREBY AWARDED half of the remainder of the funds, which shall amount to $77,694.80.
IT IS SO ORDERED.