A federal district court in Connecticut, following the general rule in the U.S. Court of Appeals for the Second Circuit, has denied attorneys' fees and costs to an insurer in an interpleader action.
The Case
The Wisconsin Province of the Society of Jesus disputed the beneficiary designation on two retirement accounts – valued at over $1.5 million – that had been accrued by the late Fr. Edwin H. Cassem and that were administered by the Teachers Insurance and Annuity Association – College Retirement Equities Fund (“TIAA-CREF”). The Wisconsin Province sued, naming Audrey Cassem, Thomas F. Owens II, Neil Kraner in his capacity as temporary administrator of the estate of Edwin H. Cassem, and TIAA-CREF as defendants.
TIAA-CREF counterclaimed for interpleader, requesting among other things that Ms. Cassem, Mr. Owens, and Mr. Kraner interplead their respective claims among themselves; that TIAA-CREFF be dismissed as a party; and that TIAA-CREF be granted its costs and attorneys' fees.
TIAA-CREF argued that it would be exposed to multiple liabilities if it were to distribute the funds without a court determination as to the primary beneficiary. It asserted that it had not colluded with any of the parties and had no substantive interest in the outcome of the case.
Wisconsin Province objected to TIAA-CREF's request for costs and attorneys' fees.
The District Court's Decision
After ruling that TIAA-CREF had to deposit the disputed funds with the clerk of court, the district court considered TIAA-CREF's request for costs and attorneys' fees.
The district court explained that, in an action for interpleader, a reasonable award of costs and attorneys' fees was appropriate when the plaintiff was (1) a disinterested stakeholder, (2) who conceded liability, (3) who deposited the disputed funds into court, and (4) who sought a discharge from liability. Still, the district court continued, the decision to award fees and costs was left “to the sound discretion of the district court.”
The district court pointed out that courts in the Second Circuit have typically declined to award insurance companies attorneys' fees and costs in interpleader actions.
It explained that “conflicting claims to the proceeds of insurance policies” were “normal risks of the insurance business” and that an insurance company brought an action for interpleader “primarily in its own self-interest.”
The district court added that TIAA-CREF cited “no fact or rule” to persuade it that TIAA-CREF was entitled to attorneys' fees, finding no indication that TIAA-CREF incurred any “unique expenses” in filing the interpleader action that exceeded the ordinary cost of doing business.
Accordingly, the district court denied TIAA-CREF's request for costs and attorneys' fees, concluding that TIAA-CREF's role in this action did not require any unique or complex services.
The case is Wisconsin Province of the Society of Jesus v. Cassem, No. 3:17-CV-1477 (VLB) (D. Conn. March 19, 2019).
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].