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Court Rules Interpleader Is Proper, But Lets Stand Claim By Ex-Husband, A ‘Person of Interest’ In Wife’s Murder

Blogs, Life Insurance

A federal court in Illinois let stand murder suspects claim against an insurance company for life insurance proceeds, but also ruled that the insurer’s interpleader lawsuit was proper.

In Metropolitan Life Ins. Co. v. Johnson, No. 11 C 8210, 2012 WL 2192283 (N.D. Ill. June 13, 2012), the dispute focused on the payment of death benefits from a life insurance policy issued by MetLife to cover the life of Geraldine Johnson.

Geraldine died of stab wounds in 2003, “and the manner of death was determined to be a homicide,” said the court.

Her surviving spouse, Danny Johnson Sr., and her children, Danny and Deanna, submitted claims to the life insurance proceeds.  MetLife paid the children, and then did not pay Danny, saying that the police department investigating Geraldine’s death has repeatedly said that Danny Johnson Sr. is suspect.  MetLife further said that “an insurance company cannot make payments to a primary beneficiary where it has been specifically notified by the criminal authorities that an investigation of the beneficiary’s participation in a decedent’s death has not been closed.”

In 2011, MetLife filed an interpleader, saying payment to Danny Johnson Sr. would risk exposure to double liability.  Johnson filed a counterclaim, alleging that he has not been charged with any crime, and that MetLife wrongfully withheld and unreasonably delayed payment to him.

The court first determined that the interpleader action by MetLife was proper:

In this litigation, Johnson’s status as a suspect in Decedent’s homicide creates a disputed issue as to whom the Policy’s benefits should be paid.  Federal common law bars recovery of life insurance to a person implicated in the homicide of the insured.  Met. Life Ins. Co. v. White, 972 F.2d 122, 124 (5th Cir. 1992) (citing New York Mutual Life Ins. Co. v. Armstrong, 117 U.S. 591 (1886)).  Therefore, regardless of whether Danny or Deanna files an additional claim to the contested funds, Johnson cannot recover the Policy’s benefits if this Court holds that his implication in Decedent’s homicide is preclusive.  Accordingly, because MetLife has a ‘real and reasonable fear of double liability of conflicting claims,’ its interpleader action is proper . . . .

Metropolitan Life Ins. Co. v. Johnson, 2012 WL 2192283, *3.

    As for Johnson’s counterclaim, the Court denied MetLife’s motion to dismiss:

Johnson alleges that he has not been named a suspect in Decedent’s death and has not been charged with any crime relating to Decedent’s death. . . .  Therefore, he argues that MetLife’s failure to pay Johnson the benefits from the Decedent’s policy is unreasonable.  In response, MetLife argues that because the policy department investigating the Decedent’s death repeatedly advised MetLife that Johnson remains a person of interest in the ongoing investigation, there is a bona fide dispute regarding coverage.

* * *

At this stage of litigation, the Court is limited to considering the allegations in Johnson’s Counterclaim.  MetLife’s argument that the policy department informed MetLife that Johnson is a person of interest in Decedent’s death is not properly considered at the pleading stage.  There are factual issues regarding whether MetLife’s decision to not pay Johnson the benefits of Decedent’s policy is bona fide . . . .  Accordingly, MetLife’s Motion to Dismiss is denied as to Johnson’s Counterclaim.

Metropolitan Life Ins. Co. v. Johnson, 2012 WL 2192283, *4-5.

The full opinion is available here.