Wednesday, September 4, 2013
Court of Appeal Upholds Fee Award in Interpleader Action
Panel Says Insurer Reasonably Questioned Whether to Pay Murdered Woman’s Spouse
By a MetNews Staff Writer
A life insurance company that interpled policy proceeds, rather than pay them to the husband of a woman who was mysteriously shot to death near the couple’s Harbor Gateway home, was properly awarded attorney fees and costs, this district’s Court of Appeal has ruled.
Div. One held Friday that Farmers New World Life Insurance Company acted reasonably in interpleading $150,000 in proceeds following the death of Rosamaria Rees in 2009.
Police never publicly identified a suspect in the killing of the 47-year-old woman, but a Farmers representative testified during the interpleader proceedings that a police detective told him Frank Allan Rees was the “prime” suspect.
Rosamaria Rees was apparently on her way to pick her husband up from a Gamblers Anonymous meeting when she was shot. The couple had married in 1997, taken out mutual life insurance policies the following year, and had no children.
Based on the lack of a definitive determination that the husband did not kill his wife, Farmers filed the interpleader action, naming Frank Rees and Rosamaria Rees’ mother—who would have inherited the money if Frank Rees was found to have murdered his wife—as defendants.
Rees filed a cross-complaint, seeking release of the money and accusing Farmers of breach of contract and bad faith.
After his mother-in-law defaulted, Frank Rees dismissed his cross-complaint without prejudice and moved for summary judgment that he was entitled to the money. Farmers then agreed that he was entitled to the full amount, with interest, less nearly $8,000 in fees and costs, and Los Angeles Superior Court Judge Robert L. Hess so ordered.
On appeal, Frank Rees argued that Farmers should not have been awarded fees and costs because it was not a disinterested stakeholder and because the equities did not favor the award. But Justice Frances Rothschlld, writing for the Court of Appeal, sided with the insurer.
The justice wrote:
“That Farmers sought a dismissal of Frank’s first amended cross complaint does not suggest it was asserting an interest in the interpleaded funds. In fact, Farmers never claimed an interest in the funds. The court recognized as much by granting Frank’s motion to release the funds. As a result, Farmers’ attempt to obtain a dismissal of the first amended cross-complaint did not alter its status in the litigation so as to disqualify it from an award of attorney fees and costs.”
Rothschild also rejected the argument that it was inherently unfair for an insurance company, which incurs attorney fees in the normal course of its business, to recover those fees from a policyholder.
Attorneys on appeal were Ave Buchwald and John P. Blumberg of Blumberg Law Corporation for Frank Rees and Peter H. Mason and Ryan T. McCoy of Fulbright & Jaworski for Farmers.
The case is Farmers New World Life Insurance Company v. Rees, 13 S.O.S. 4638.
Copyright 2013, Metropolitan News Company