Beneficiaries
Attorney's Fees-Life

Insurer confronted with competing claims entitled to interpleader and attorney fees.
McCall v. AXA Equitable Life Ins. Co.
No. 14-04-01111-CV (Tex. App. January 3, 2006)

    The Texas Court of Appeal affirmed a trial court's grant of interpleader statue and reasonable attorney's fees to a life insurer who was presented with competing claims to proceeds of a life insurance policy. The insurer had reasonable doubt as to which claim it should pay and as an innocent stake holder, was entitled to reasonable attorney's fees.

    Upon their 1990 divorce, Leslie Williams agreed to pay his ex-wife Mary McCall contractual alimony. Williams secured the obligation with a $250,000 life insurance policy issued by AXA Equitable Life Insurance Co. When Williams subsequently married Anna Harris, he requested that his policy be changed to limit McCall's proceeds to the amount of alimony owed, with the balance to be paid to Harris.

    Equitable's agent sent Williams a beneficiary change form which Williams failed to return. Williams and Harris were divorced in 2001, and on June 25, 2002, Williams died.

    Both McCall and Harris claimed the proceeds of Williams' policy. Equitable filed an interpleader action, seeking a determination of the competing claims. The probate court awarded Equitable attorneys' fees of $4,207.14. McCall appealed, challenging the grant of interpleader status to Equitable on the ground that the evidence did not show Equitable was subject to rival and conflicting legal claims.

    The court of appeals noted that the record supported the trial court's conclusion that Equitable was faced with competing claims and had reasonable doubt as to which claim it should pay. Moreover, as an innocent stakeholder, Equitable is entitled to recover its attorneys' fees from the deposited funds. Accordingly, the court found no abuse of discretion and affirmed the trial courts grant to Equitable of interpleader status and reasonable attorney's fees.

Strafford Texas Insurance Law & Litigation Alert
February 15,2006