Category Archives: Life Insurance

Josh Powell Life Insurance Update

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At last.  New York Life has filed a motion to dismiss itself from the case, leaving the Coxes and Powell to duke it out in federal court.

Without taking a position either way, New York Life’s motion surveys the facts – who claimed what and when – and asks the court for permission to give the money to the court and let it decide who gets the money, and asks for an order releasing it from liability for paying the money to the wrong person.  In support of the motion, New York Life refers to the policy, and Josh Powell’s numerous beneficiary designations.  Part I of the insurance documents are here; Part II is here.

Update re: Powell Insurance Interpleader

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Three updates for this case.

First, here’s New York Life Insurance Co.’s First Amended Answer.  Still not sure why New York Life has not moved for an order to deposit the funds, and for an order of dismissal here.  What’s taking so long guys?  We’re curious.

Second, here’s the Case Scheduling Order – mark your calendars.

Third, here is Michael Craig Powell’s response to the complaint, and claim on the funds.  Here, Michael is claiming entitlement to the policy on Josh’s life, and Josh’s sons’ lives, for a total of $1 million and $500,000 respectively.  It appears he’s not claiming entitlement to the policy on Susan’s life, which is $1 million total.

Update: Josh & Susan Powell Life Insurance Saga

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Only two sides have appeared in this case. Those sides are the Charles Cox, Judi Cox (Susan’s parents) and Susan’s Estate (except that Susan is not deceased, at least not legally) all represented by attorney Anne Bremner; and Michael Powell, represeted by attorney Thomas West.

The Interpleading party, New York Life Insurance, is represented by the Lane Powell firm.

According to the recently filed Joint Status Report, the Cox and Powell sides will be filing claims for the funds.  Nobody else named in the complaint have responded.

So we have a few questions.

1. First, we don’t understand why things have gotten this far, i.e. a Joint Status Report negotiated without all the defendants’ involvement.  There is a good possibility that more parties will show up, and then New York Life’s attorneys will be herding cats on a new Joint Status Report.  We think New York Life Insurance should have defaulted the non-responding parties out and then negotiated the JSR.

2. Second, why hasn’t New York Life filed a Stipulation or Motion for an order allowing it to deposit the proceeds in the registry and receive dismissal from the case?  Here’s where Transamerica did this in a similar case.

3. Third, interest is racking up on those funds.  Everyday New York LIfe waits, it’s paying interest on the money.  Is there disagreement over its attorneys’ fees or its entitlement to fees that have not been worked out?  Here are the arguments for and against:

Argument for Fees: 28 U.S.C. 2361 (and relevant case law) entitles the district court to (a) discharge an interpleader plaintiff from further liability upon its deposit of the proceeds at issue, and (b) enjoin claimants from instituting any action against the interpleader plaintiff.  Courts routinely grant attorneys fees and costs in interpleader actions such as this unless there is a showing of bad faith.  See Gelfgren v. Republic Nat’l Life Ins. Co., 680 F.2d 79, 81 (9th Cir. 1982); Schirmer Stevedoring Co. v. Seaboard Stevedoring Corp., 306 F.2d 188, 194 (9th Cir. 1962); Mass. Mut. Life Ins. Co. v. Morris, 61 F.2d 104, 105 (9th Cir. 1932).

Argument against Fees:  The district court is authorized to grant fees, but they are not mandatory.  The issue is within the court’s discretion (Abex, 748 F.2d
513, 516 (9th Cir.).  Federal law governs:  Island Title Corp. v. Bundy, 488 F. Supp. 2d 1084, 1095 (D. Hi).  Factors for the court to consider are: (1) Necessity of services, Hartford, 337 F.2d 1011; (2) Diligence in pursuing remedy, Aetna, 365 F. Supp. 1210; (3) Degree to which determination is part of stakeholder’s ordinary cost of business, Fidelity, 592 F. Supp. 513, 527 (E.D. Pa. 1984); (4) whether interpleading party is acting for own benefit (trying to save itself money), San Rafael, 327 F.2d 581 (9th Cir. 1964); (5) State substantive law on attorney fees, Fidelity, supra.   (WA allows costs of filing, but not necessarily fees – RCW 4.08.160).

So this begs the question:  Does the life insurance policy provide for fees in an interpleader?  If not, then we think New York Life is out its fees.

Update: Josh & Susan Powell Life Insurance

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First, here’s a brief review:  There is a $1 million policy on Josh’s life, a $1 million policy on Susan’s life (she is not legally deceased, by the way) and a $250,000 policy on the life of each child.  Unsure to whom the policy proceeds belong, the insurer, New York Life Insurance, started a lawsuit in federal court, naming Josh Powell’s heirs, and Susan Powell’s heirs as defendants.

Now, here’s the update:

As required by federal civil procedure rules, Josh’s brother, Michael has filed his “Initial Disclosures,” which tell the Cox family what information he has to support his case.  In turn, the Cox family filed their Initial Disclosures too.

The way an interpleader works, the insurer sues everyone who might claim an interest in the money, and in turn, those people (if they indeed claim an interest) answer the lawsuit by suing the other named people.  So far, nobody has filed a formal response that answers the allegations or claims an interest in the policy proceeds.  This is curious.  Is this because they are negotiating a settlement behind the scenes?  Or are they too busy getting their ducks in a row, collecting information to make their case, playing their cards close to their chest?  Or is someone hard at work on a stellar motion for summary judgment or judgment on the pleadings?

Were the Powells’ Life Insurance Policies Community Property?

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So we’ve received questions on this, so how about some answers.

First, in Washington, a policy purchased wholly with community property funds is community property.  Occidental Life Ins. Co. v. Powers, 192 Wash. 475, 74 P.2d 27 (1937).

Second, the time of acquisition of the policies matters in determining whether it is community property.  In Washington State, courts apply an apportionment theory in determining the time of acquisition.  Other community property law jurisdictions hold that the ownership of a life insurance policy is determined by reference to the time when the policy was purchased.  So the Powells and Coxes will be looking to when the policies were purchased, and where the Powells lived at that time.

Without knowing the facts (which is what a trial is for), we think it likely these policies were purchased during the Powells’ marriage, and are thus community property under both Utah and Washington law.

One interesting question will be how Josh’s continued payment of premiums after Susan went missing will be treated.  If she is presumed deceased at the time she went missing, then it is arguable that a portion of the proceeds are Josh’s separate property.  See e.g., W. DeFuniak & M. Vaughn, PRINCIPLES OF COMMUNITY PROPERTY 64, 79 (2d ed. 1971).