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Companion Life Insurance Co. v. McCreary

United States District Court, D. South Carolina, Columbia Division

December 19, 2016

Companion Life Insurance Company, Plaintiff,
v.
Michelle M. McCreary; Jean Bankett; American Funeral Financial, LLC; American Capital Funding, LLC; and C&J Financial LLC, Defendants.

          REPORT AND RECOMMENDATION

          Shiva V. Hodges, United States Magistrate Judge

         This interpleader action concerns Jean Bankett's (“Bankett”) entitlement to the insurance benefits due under a policy of life insurance that is in the name of her deceased son, Rodney M. Moore (“Decedent”). This matter comes before the court on the motion for attorneys' fees by Bankett [ECF No. 58] and by American Funeral Financial, LLC (“American Funeral”) and C&J Financial LLC (“C&J”) (collectively “Financial Firms”) [ECF No. 57].

         I. Factual and Procedural Background

         The court made findings of facts by prior order dated January 11, 2016 (“Order”) [ECF No. 28], which are repeated herein for reference. Before he died on June 11, 2015, Decedent was employed by The Society of St. Vincent de Paul (“Employer”). Employer maintained group life insurance coverage with Companion Life Insurance Company (“Companion”) for the benefit of its employees as part of an employee welfare benefit plan (“Plan”) governed by the Employment Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq. On January 10, 2013, Decedent enrolled in the Plan's basic group term life and accidental death and dismemberment insurance policy (Policy Number 932-25-71390-000) (“the Policy”) for $60, 000, and designated Bankett as the sole beneficiary under the Policy. [ECF No. 1-1]. He made no further changes to his beneficiary designation.

         Upon Decedent's death, Bankett submitted a Group Life Insurance Claim Form dated June 15, 2015, to Companion, requesting the Policy proceeds be distributed to her. [ECF No. 1-6]. Bankett assigned the following interests in the Policy proceeds to pay for her son's funeral expenses:

(1) $8, 533.87 assignment on June 15, 2015, to defendant American Funeral Financial, LLC (“American Funeral”) [ECF No. 1-3];
(2) $10, 180.64 assignment on June 19, 2015, to defendant American Capital Funding, LLC (“American Capital”)[1] [ECF No. 1-4].
(3) $3, 757.73 assignment on June 19, 2015, to defendant C&J Financial, LLC

(“C&J”) [ECF No. 1-5].

         Companion also received a letter from defendant Michelle M. McCreary (“McCreary”) dated July 8, 2015, indicating that it was her understanding that she was entitled to 50% of the Policy proceeds under Arizona community property laws because she had married the Decedent on December 1, 2014, six months before his death. [ECF No. 1-7]. The Policy terms incorporate the laws of the state in which the policy is delivered. [ECF No. 1-8]. The Policy indicates it was delivered in the state of Arizona, where Decedent resided from the time he was covered under the Policy until his death. Id.

         After his death, the Policy proceeds became subject to distribution. Companion filed this interpleader action pursuant to Fed.R.Civ.P. 22 and 67 and Local Civ. Rules 67.01 (D.S.C.), asserting it was not able to determine each defendant's portion of the Policy proceeds, if any. On December 1, 2015, Plaintiff filed a motion to deposit the Policy proceeds into the court's registry, for attorney's fees, and to be dismissed from the case. [ECF No. 26]. The defendants did not respond to the motion. The court granted the motion by Order dated January 11, 2016, granting Companion's attorney's fees and costs of $3, 501.88, accepting the net Policy proceeds of $56, 498.12 into the court's registry, and dismissing Companion. [ECF No. 28]. The Order noted: “Each Defendant and their agents, attorneys, representatives, assigns, and all other persons claiming at any time, are perpetually enjoined and restricted from initiating or pursuing any proceeding in this or any other court of law or equity against Plaintiff on account of the Policy.” Id. at 7.

         On May 9, 2016, the undersigned issued a report and recommendation (“Report”) recommending that the court grant Bankett's motion for judgment on the pleadings as to her entitlement to the policy proceeds, but deny her request for attorneys' fees. [ECF No. 51]. The report further stated:

Finally, to the extent that American Funeral and C&J asserted protective cross-claims against Bankett for breach of contract and unjust enrichment, they represent that if Bankett's motion is granted, it would moot their cross-claims, “provided she agrees to the disbursement . . . of the principal amount owed to [them], plus all other funds owed” under the assignments, including their attorneys' fees [ECF No. 41 at 7; ECF No. 42 at 7]. Bankett did not file responses to the cross-memoranda in support of judgment by American Funeral and C&J. Therefore, it appears that Bankett concurs in the assessment that she is liable to them for funds claimed.

Id. No objections to the Report were filed and the Honorable Mary Geiger Lewis, United States District Judge, adopted it and incorporated it into the court's order ...


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