Gail Michelman v. Lincoln National Life Insuranc
685 F.3d 887
9th Cir.2012Background
- Gail and Irwin Michelman applied for Elizabeth’s life policy; Gail owned the policy with potential joint ownership ambiguity with Irwin.
- Policy ownership language was ambiguous; form lacked space for two primary owners; box for joint ownership with right of survivorship was checked.
- Divorce in 2001 left ownership/beneficiary questions unsettled; Gail later changed beneficiary in 2002, purportedly removing Irwin.
- Elizabeth died in 2009; investigations suggested suspicious circumstances but no evidence of foul play by Gail; Irwin claimed co-ownership and rights to proceeds.
- Lincoln sought interpleader after failed settlement discussions; Gail pursued state court claims against Lincoln for bad faith, CPA, and contract breach.
- District court granted interpleader, denied some partial summary judgments, and Lincoln deposited proceeds into court pending resolution.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether interpleader was proper with colorable competing claims | Michelman contends Irwin's claim was not colorable and Lincoln should not interplead. | Lincoln argues good faith belief in potential multiple claims justifies interpleader. | Interpleader proper; Lincoln had colorable competing claims in good faith. |
| Whether Lincoln breached the policy contract by interpleading | Gail asserts interpleading breached contractual duties and short-circuited her rights. | Lincoln contends interpleader was a proper expedient given conflicting colorable claims. | Summary judgment for Lincoln on breach-of-contract claim affirmed. |
| Whether Lincoln acted in bad faith or violated IFCA/WAC provisions | Gail claims Lincoln acted unreasonably and violated regulatory duties. | Lincoln relied on good faith interpleader and compliance with state regulations. | No triable bad-faith or IFCA violations; summary judgment affirmed. |
| Whether the district court should have granted a continuance for discovery | Gail sought more time to obtain discovery about Lincoln’s procedures and files. | Lincoln opposed further discovery; issues did not hinge on unresolved facts. | District court did not abuse discretion; denial of continuance affirmed. |
Key Cases Cited
- New York Life Ins. Co. v. Lee, 232 F.2d 811 (9th Cir. 1956) (adverse claim may be too lacking to justify interpleader)
- Beardslee, 216 F.2d 457 (7th Cir. 1954) (colorable basis required for interpleader; frivolous claim not enough)
- Ensley, 174 F.3d 977 (9th Cir. 1999) (interpleader extends to potential as well as actual claims)
- Mack v. Kuckenmeister, 619 F.3d 1010 (9th Cir. 2010) (interpleader supports efficiency and avoids premature merits-review)
- Indianapolis Colts v. Mayor of Balt., 741 F.2d 954 (7th Cir. 1984) (threshold of good faith; risk of double liability)
- Bayona, 223 F.3d 1030 (9th Cir. 2000) (potential community property interests can justify interpleader)
- Romas v. Farmers Ins. Co., 947 P.2d 754 (Wash. Ct. App. 1997) (insurer not liable for bad faith by filing interpleader under state rule)
- Osborn, 17 P.3d 1229 (Wash. Ct. App. 2001) (per se unfair trade practice under WA regs when breaching bad-faith duties)