NO BAD FAITH IN BRINGING INTERPLEADER ACTION (New Jersey Federal)
The husband-beneficiary of his wife’s life insurance policy brought breach of contract, bad faith, and unfair trade practices counterclaims against an insurer for interpleading the policy proceeds into court. The couple’s children were contingent beneficiaries on the policy.
The insured had died in unclear circumstances. She either was murdered or committed suicide (the central dispute being whether she did or could have stabbed herself 47 times while being intoxicated on oxycodone). For a time the husband had been charged with murder, and was incarcerated. The criminal case, however, was eventually dismissed, and the husband released. The prosecutors, however, did not conclude the husband was innocent, instead stating that there was insufficient evidence to prove a case beyond a reasonable doubt and that they could not morally continue the prosecution. The charges were dismissed, but without prejudice.
The court held the insurer “properly invoked the interpleader device, due to a legitimate fear of multiple liability under the Slayer Statute.” The court stated, “it takes little examination of the facts to see that they could support competing, colorable claims to the benefits.” The court found it clear the insurer faced a decision that was far from ordinary.
“Although the record is only minimally developed, the evidence thus far suggests two starkly divergent paths: the Insured either died from extreme Oxycodone use, which allowed her to self-inflict forty-seven stab wounds, or was killed by [her husband]. Factually, it is also undisputed that [he] was at home alone with the Insured when she died, touched the weapon used to stab her, and was found with blood on his hands. … Therefore, ‘[e]ven though no other claims have been made on the insurance,’ potential colorable claims exist. … In a case with such gruesome facts and conflicting narratives, [the insurer] seems entitled to invoke interpleader.”
The court next found that the insurer did not bear any responsibility “for the existence of the ownership controversy.” Nor did the insurer’s decision to interplead result from its own failure to resolve the dispute between potential claimants. The husband did not allege “any plausible facts that suggest a ‘bad faith’ motivation, besides [the insurer’s] legitimate concern for avoiding multiple liability.” He was simply claiming bad faith on the basis the carrier filed an interpleader action instead of paying him the policy proceeds.
Thus, interpleader was proper and all claims against the carrier were dismissed.