Securian Life Insurance Company v. Gillis

Background

Securian Life Insurance Company issued life-insurance coverage under an employee welfare benefit plan. Aubrey Thomas Gillis became insured for a $702,000 death benefit and died on March 13, 2022. Mari Gillis was the designated beneficiary.

Before his death, Aubrey Thomas Gillis and Vu had a son, B.G., who was a minor. The opinion states that an alleged child-support agreement required him to maintain at least $500,000 in life insurance for B.G.’s benefit and that he allegedly owed $85,671.66 in child-support arrears. Vu claimed that the arrears should be paid from the life-insurance policy, while Mari Gillis claimed the full death benefit as the sole designated beneficiary.

Because of the competing claims, Securian filed this interpleader action under Federal Rule of Civil Procedure 22 and deposited $712,424.22, including accrued interest, into the court’s registry. Interpleader allows a stakeholder facing competing claims to disputed funds to deposit those funds with the court and ask to be released from further liability, leaving the claimants to resolve their dispute.

Discharge from the Case

The court held that the interpleader action was procedurally proper under 28 U.S.C. § 1335 because there was one fund, the defendants asserted competing claims to all or part of it, and Securian deposited the proceeds with the court. The court found no indication that Securian had an interest in how the money was divided.

The court rejected Mari Gillis’s objection that Securian should have paid her as the sole beneficiary instead of filing the action. It also rejected her argument that Securian was not disinterested because filing the action breached the insurance contract; she provided no supporting legal authority. The court found that Vu did not dispute that interpleader was proper.

The court therefore found the interpleader action proper and completely discharged Securian from the litigation. The remaining claimants were left to resolve their dispute over the proceeds.

Attorneys’ Fees and Costs

The court explained that a disinterested stakeholder may receive reasonable fees and costs for bringing an interpleader action, but such awards are generally limited to work necessary to file the action and obtain the stakeholder’s release from liability. The court also considered the need to avoid depleting the fund for the person ultimately found entitled to it.

Both defendants opposed Securian’s request. Vu argued that Securian’s initial failure to name her individually caused her to incur additional fees. Securian responded that it initially knew of Vu’s claim only as guardian for B.G. and learned of her individual claim for child-support arrears later. Mari Gillis argued that Securian’s fees were much higher than her counsel’s fees. The court rejected both objections as reasons to deny the request.

Securian requested $25,122.50 for 79.6 hours of attorney work. Applying the lodestar method—the reasonable hours multiplied by a reasonable hourly rate—the court found the hourly rates reasonable but determined that some time entries were excessive or inadequately described, including entries with redactions. The court reduced the requested fees by 10 percent, or $2,512.25, and awarded $22,610.25 in attorneys’ fees.

Securian requested $496.30 in costs. The court found that the request included two filing-fee charges even though the case’s filing fee was $402.00. It awarded $447.30 in costs. The total award was $23,057.55, to be paid immediately from the interpleaded fund in the court registry.

Injunction and Disposition

Securian also requested an injunction barring the defendants from bringing related actions in state or federal court. The court held that an injunction could extend only to claims concerning the interpleaded funds, not to every claim related to the insurance policy.

The court granted Securian Life Insurance Company’s motion for entry of judgment of discharge in interpleader. It discharged Securian from the case and released it from liability based on its handling of the policy’s death benefit. The defendants were permanently enjoined from suing Securian in state or federal court on claims against the policy’s death benefit or the interpleaded funds without first obtaining an order from the court.