Ninth Circuit Holds That Interpleader Does Not Shield Insurer From Independent Tort Liability


The Ninth Circuit recently joined its sister circuits to find that the federal interpleader remedy does not limit an insurer's independent tort liability for damages directly and proximately caused by its conduct. Lee v. West Coast Life Insurance Company, Case No. 11-55026 (9th Cir. July 31, 2012).

In Lee, family members of a life insurance policyholder executed numerous change of ownership and beneficiary forms over the years. One of those forms, in 2005, was executed incorrectly at the direction of a West Coast agent, ultimately leaving two family members with the mistaken belief that they were beneficiaries under the policy. After the insured died, one family member submitted a claim, and other family members claimed entitlement to the proceeds. West Coast urged them to reach a mutual agreement, but they did not. Three claimants then sued West Coast for breach of contract and bad faith. West Coast filed a counterclaim in interpleader and deposited the policy proceeds with the court. Three other claimants filed counterclaims for negligence and declaratory relief against West Coast and crossclaims against the plaintiffs.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Manatt, Phelps & Phillips, LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.