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The Lincoln National Life Insurance Co. v. Chico Girls II, LLC

United States District Court, N.D. West Virginia

April 28, 2017

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, an Indiana corporation, Plaintiff,
v.
CHICO GIRLS II, LLC, a Delaware limited liability company, and SAMUEL A. CHICO, III, Defendants.

          MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF'S MOTION FOR INTERPLEADER [DKT. NO. 15] AND DENYING DEFENDANT'S MOTION TO DISMISS [DKT. NO. 26]

          IRENE M. KEELEY UNITED STATES DISTRICT JUDGE.

         Pending before the Court are the motion for interpleader (dkt. no. 15) filed by the plaintiff, The Lincoln National Life Insurance Company (“Lincoln National”), and the motion to dismiss (dkt. no. 26) filed by defendant Chico Girls II, LLC (“Chico Girls”). For the reasons that follow, the Court GRANTS Lincoln's motion for interpleader and DENIES Chico Girls' motion to dismiss.

         I. BACKGROUND

         On September 28, 2005, Samuel A Chico, Jr. (“Mr. Chico”) and Ida Chico (“Mrs. Chico”) purchased a Jefferson-Pilot Life Insurance Company Flexible Premium Adjustable Survivorship Life Insurance Policy, Policy Number JF5525788 (the “Policy”), in the amount of $550, 000.00. Jefferson-Pilot Insurance Company later merged with Lincoln National, which became legally obligated under the terms of the Policy. The stated owner and beneficiary of the Policy is Chico Girls II, LLC (“Chico Girls”). Premium bills were to be sent to Mr. Chico, Mrs. Chico, and Chico Girls. Proceeds of the Policy (“Proceeds”) were to become payable upon the death of the second to die of Mr. Chico and Mrs. Chico. Mr. Chico died on February 7, 2013, and Mrs. Chico died on June 20, 2016. Thus, upon the death of Mrs. Chico, the Proceeds became due and payable.

         On June 29, 2016, John F. Hussell, IV (“Hussell”), attorney for Sam A. Chico, III (“Sam III”), sent a letter to Lincoln National claiming a portion of the Proceeds and providing notice of a pending civil action involving the defendants, among others, in the Circuit Court of Monongalia County, West Virginia, Civil Action No. 15-C-108 (Judge Clawges).[1] On July 5, 2016, Lincoln National sent a letter to Chico Girls and an email to Julia Abbitt (“Ms. Abbitt)[2] requesting information to process a claim. Following this request, on August 30, 2016, Chico Girls submitted a Claimant's Statement that claimed entitlement to the proceeds.

         On September 8, 2016, Lincoln National sent a letter to Chico Girls and Hussell stating:

1. It had received a Claimant Statement from Abbitt, completed on behalf of Chico Girls;
2. It had been notified by Hussell that Sam Jr. also was claiming the Proceeds;
3. It was requesting additional information about the litigation pending in Monongalia County, West Virginia;
4. It admitted the Proceeds are due and payable, but “if we pay them to one party, we run the risk of being sued by the other party[, ]” and provided notice that the solution would be to file an action in Interpleader; and
5. If it became necessary for it to file an action in interpleader, it would request the Court to order that the defendants reimburse it for its legal fees and costs out of the Proceeds.

         On September 29, 2016, Lincoln National sent a letter to Hussell requesting additional information to support Sam III's claim. Further, the letter notified Hussell that it would delay payment for fourteen days, but, if it had not received the necessary information by then, it would pay Proceeds to the beneficiary of record. On October 13, 2016, Hussell submitted documents in support of Sam III's claim, including a Claimant's Statement dated September 15, 2016, stating that Sam III is “filing this claim as . . . a beneficiary of an [Irrevocable Joint Life Insurance Trust] which is the proper owner and beneficiary of the policy.” (Dkt. No. 21 at 4).

         Lincoln National contends that it is now faced with competing claims to the Proceeds and cannot safely determine the correct recipient without being subject to multiple lawsuits and multiple liability. To alleviate its risk, Lincoln National has filed a complaint pursuant to Fed.R.Civ.P. 22 seeking authorization to deposit the Proceeds with the Court and requiring the defendants to interplead to determine the rightful claimant. As relief, it seeks the following:

• An Order from the Court ordering it deposit the Proceeds, plus applicable interest, with the Court;
• Reimbursement for legal costs and attorney's fees from the Proceeds by submitting an invoice to this Court for its approval within ten (10) business days of the entering of the Order and then deducting ...

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