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Nationwide Life Insurance Co. v. Compton

Supreme Court of West Virginia

March 13, 2018


         (Wyoming County No. 16-C-107)


         The petitioner herein and plaintiff below, Nationwide Life Insurance Company ("Nationwide"), by counsel Ronda L. Harvey and Patrick C. Timony, appeals an order entered December 5, 2016, by the Circuit Court of Wyoming County. By that order, the circuit court denied Nationwide's request to interplead $30, 000.00 of life insurance policy death benefits with the circuit court. Eva Dawn Compton ("Ms. Compton") is represented by counsel, Timothy P. Lupardus and Tenisha D. Cline. Kayla Denise Compton ("Kayla Compton") filed no responsive pleading below, but was recorded as present at hearings held before the circuit court. Betty Holleman (individually and as administratrix of The Estate of Robert Adams) ("Ms. Holleman") and Linda Rasnake ("Ms. Rasnake") filed responsive pleadings pro se and appeared in person, pro se, during proceedings before the circuit court. Kayla Compton, Ms. Holleman, and Ms. Rasnake have not filed briefs with this Court.

         On appeal to this Court, Nationwide contends that the circuit court erred when it denied Nationwide interpleader relief under Rule 22 of the West Virginia Rules of Civil Procedure. Nationwide claims that interpleader provides an uninterested stakeholder, such as Nationwide, a vehicle to deposit funds with the court and to join multiple conflicting claimants with competing claims to the funds so that a determination as to the asset's rightful owner can be made. Nationwide asserts that the circuit court abused its discretion in refusing its request which presented a textbook interpleader scenario.

         Upon our review of the parties' arguments, the appendix record, and the pertinent authorities, we find that the circuit court erred in denying the request of Nationwide for relief pursuant to interpleader. Accordingly, we reverse and remand this case to allow Nationwide to file an interpleader and deposit the proceeds of the life insurance policy into the court. Because this case does not present a new or significant issue of law, and for the reasons set forth herein, we find this case satisfies the "limited circumstance" requirements of Rule 21(d) of the West Virginia Rules of Appellate Procedure and is proper for disposition as a memorandum decision.

         On November 28, 1978, Robert Adams ("Mr. Adams"), the decedent herein, purchased life insurance policy No. L035933680 from Nationwide. Due to Mr. Adams' permanent disability, Nationwide converted the policy to a whole life policy No. L018306570 ("the Policy") on November 28, 2002. The Policy provided Mr. Adams' beneficiary with a death benefit of $30, 000.00.

         Mr. Adams' wife of some forty-six years was the named beneficiary until her death in 2013. Thereafter, on November 7, 2013, Mr. Adams requested that the beneficiary under the Policy be changed to Ms. Rasnake, who is Mr. Adams' step-daughter. On June 15, 2015, Mr. Adams requested that Nationwide change the beneficiary to Ms. Compton. The designated beneficiary was changed by Mr. Adams to Ms. Rasnake on July 21, 2015. On January 19, 2016, Mr. Adams once again requested that the beneficiary be changed to Ms. Compton. The record includes copies of the beneficiary designation change application forms.

         On May 11, 2016, Mr. Adams, with assistance from his sister, Ms. Holleman, telephonically contacted Nationwide inquiring about who the named beneficiary was on the Policy. The telephone call was recorded by Nationwide and is part of the record. Around 4:21 pm on May 11, 2016, Ms. Compton called Wyoming County 911 and reported Mr. Adams as missing.[1] Some two weeks later, on May 24, 2016, law enforcement officers located Mr. Adams' body and recovered it from the Guyandotte River. An investigation of the circumstances of the death of Mr. Adams proceeded and Nationwide was served with a subpoena from the Wyoming County Sheriff seeking all life insurance documents related to Mr. Adams.

         Following the recovery of Mr. Adams' body, Ms. Compton contacted Nationwide about the distribution of the death benefit indicating that she was the designated beneficiary. Ms. Holleman also contacted Nationwide regarding the death benefit. Ms. Holleman disputed Ms. Compton's entitlement to the benefit representing that it rightfully belonged to Ms. Rasnake because Ms. Compton improperly influenced Mr. Adams, who lacked capacity. Ms. Holleman expressed her belief that Ms. Compton had involvement in Mr. Adams' death. Additionally, Ms. Holleman submitted a letter from a physician who represented that Mr. Adams and his wife had been his patients since 2007, that Mr. Adams became depressed following his wife's death, and that, thereafter, Ms. Compton had a profoundly negative and controlling effect on Mr. Adams. Specifically, the physician indicated that Mr. Adams was "confused, unsure of himself, had poor insight, etc." Additionally, among other things, the physician wrote that, in his professional opinion, "Mr. Adams was not competent to make any type of legal or financial decisions."

         Given the competing claims, as well as the Wyoming County Sheriff's Department open investigation into the circumstances of the death of Mr. Adams, on August 15, 2016, Nationwide filed an Interpleader Complaint with the Circuit Court of Wyoming County. Ms. Compton filed an answer generally indicating that Nationwide should pay her the policy proceeds as the named beneficiary of the policy. A handwritten letter answer of Linda Rasnake detailed her relationship with her step-father, Mr. Adams, as well as alleged facts regarding the detrimental and abusive role of Ms. Compton in his life. Generally, Ms. Rasnake claimed that Ms. Compton was a well-known local drug addict who showed up with friends at Mr. Adams' home three times a month when he received his miner's pension, his social security, and his workers' compensation benefits; left him financially ruined; sold all his household goods, appliances, and furnishings for drug money; and destroyed his vehicle. She further indicated that Ms. Compton was not Mr. Adams' fiancée and Kayla Compton was not his step-daughter as had been indicated in the beneficiary change documents. Ms. Holleman also filed a handwritten answer to the effect that Ms. Compton was a drug abuser, was not a fiancée of Mr. Adams, and orchestrated and lied on beneficiary forms, and further asserted that Kayla Compton is a minor who has been in the custody of the West Virginia Department of Health and Human Services. Ms. Holleman disputed the legitimacy of the beneficiary change form stating that the form purportedly and improperly was signed by Ms. Compton as a witness and by Ms. Compton's boyfriend as a witness. She also indicated that the contingent beneficiary, Kayla Compton, was falsely listed as a step-daughter. Ms. Holleman's position was that the proceeds of the Nationwide policy should be paid to Ms. Rasnake.

         A hearing was held on November 16, 2016, during which Nationwide and Ms. Compton were represented bycounsel. At the hearing, counsel for Ms. Compton represented that there was no objection to Nationwide depositing the money into the circuit court. Ms. Compton argued that she was the last formally named beneficiary, she had not been charged with a crime in connection with Mr. Adams' death, and the autopsy showed nothing other than death by drowning. Ms. Holleman argued that Ms. Compton exerted undue influence over Mr. Adams, raised questions regarding his mental competence, indicated that there were misrepresentations on the beneficiary change forms regarding Ms. Compton, and asserted that Ms. Compton was involved in Mr. Adams' death. Nationwide contended that Ms. Compton and Ms. Holleman had competing, conflicting, and legitimate claims to the funds they were holding. In light of the issues raised and the ongoing criminal investigation, coupled with the fact that it had no interest in the money, Nationwide argued for the application of a traditional two-step interpleader procedure whereby it would deposit the funds into the court, where interest would be earned, until such time as those with competing interests resolved the matter through a jury trial, or otherwise.[2]

         The circuit court was disturbed by the notion that the two competing parties would be expending money to determine to whom the funds should be paid. The circuit court indicated that the individuals would be "stuck paying for their own lawyers" noting further that "I see Nationwide being obligated to payfor legal representatives for everybody." The circuit court questioned "[w]hy should they pay for an attorney? My take is that they may be entitled to have lawyers representing them by Nationwide because if it weren't for Nationwide for that lawsuit which is exactly where it's going." Moreover, the circuit court suggested that Nationwide was engaging in a money laundering tactic. "I'll tell you what they're trying to do, they're trying to laundry [sic] their money." According to the circuit court, Nationwide was seeking relief in the form of "laundering their money to the Court."

         Thereafter, the circuit court entered the December 5, 2016, order concluding that the parties have conflicting claims which may need to be litigated in court. However, the circuit court observed that Nationwide was unfairly forcing the parties to litigate because it was unsure how to honor its contract with Mr. Adams. The circuit court further concluded that forcing the potential beneficiaries to litigate would subject them to costs and attorney's fees that would reduce the death benefit. Thus, Nationwide's request to pay the death benefits into the court and be removed from the action was denied.

         On December 16, 2016, Nationwide filed a motion to amend the order whereby it again set forth a factual and legal argument as to why the interpleader process affords it an appropriate mechanism for the deposit with the court of the insurance funds. A hearing was held on February 8, 2017. Nationwide and Ms. Compton were present by counsel. Kayla Compton was present. Ms. Rasnake and Ms. Holleman were present pro se. Ms. Compton and Ms. Holleman again argued over the facts regarding who should be the beneficiary of the funds. The circuit court reiterated its position that it was not going to permit Nationwide to deposit the funds and "walk away." The circuit court again stated the position that "it seems to me that [Nationwide] just want[s] to pay the money into a court so that people can spend their assets in their suit over who gets the money and who gets to go home free and I'm hard put to allow that." Accordingly, an order was entered on February14, 2017, denying Nationwide's motion to amend the order. Nationwide then filed and perfected the present appeal.

When this Court reviews challenges to the findings and conclusions of the circuit court, a two-prong deferential standard of review is applied. We review the final order and the ultimate disposition under an abuse of discretion standard, and we review the circuit ...

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