Graham v. New York Life Insurance Company

• Court: District Court, W.D. Washington
• Decided: October 10, 2025
• Docket: 3:25-cv-05483
• Status: Unknown

Opinion

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5 6 7 UNITED STATES DISTRICT COURT 8 WESTERN DISTRICT OF WASHINGTON AT TACOMA 9 10 BARBARA GRAHAM, CASE NO. 3:25-cv-05483-DGE 11 Plaintiff, ORDER DENYING MOTION TO 12 v. DISMISS (DKT. NO. 11) 13 NEW YORK LIFE INSURANCE COMPANY, 14 Defendant. 15 16 I INTRODUCTION 17 This matter comes before the Court on Plaintiff Barbara Graham’s motion to dismiss 18 (Dkt. No. 11) New York Life Insurance Co.’s (“New York Life”) Interpleader action (Dkt. No. 6 19 at 8). New York Life is currently in possession of a life insurance policy and seeks equitable 20 relief to determine the beneficiary of the policy. (Id.) Plaintiff seeks dismissal claiming an 21 interpleader action is improper because Third Party Interpleader Defendant Constance Graham 22 23 24 1 “has no colorable claim to the proceeds.” (Dkt. No. 11 at 1.) For the reasons stated herein, the 2 Court DENIES Plaintiff’s motion to dismiss. (Dkt. No. 11).1 3 II BACKGROUND 4 The relevant facts to this motion are largely undisputed. On or about July 26, 2000,

5 Glenn Lee Graham purchased a $500,000 life insurance policy (“the Policy”) from New York 6 Life. (Dkt. Nos. 1 at 2, 6 at 9.) In March 2002, Mr. Graham signed a Change of Beneficiary 7 Request naming his then-wife Constance Graham as the first beneficiary on the Policy and 8 Plaintiff as the second beneficiary. (Id.) In November 2007, Mr. Graham and Ms. Graham 9 dissolved their marriage. (Id.) In Exhibit A of the divorce decree, Mr. Graham was awarded, 10 among other property, “all the benefits from his own . . . life insurance policies.” (Dkt. No. 6–3 11 at 4.) Mr. Graham died on October 1, 2023. (Dkt. No. 6-4 at 2.) 12 Both Plaintiff and Ms. Graham made claim for benefits under the Policy. (Dkt Nos. 1 at 13 3, 6 at 9.) In a letter dated April 12, 2024, Ms. Graham, through counsel, sent New York Life a 14 notice of dispute and demand to halt distribution of life proceed under the Policy. (Dkt. No. 6–5

15 at 2.) Ms. Graham contended that she believed California was the controlling choice of law for 16 distribution of the funds, and “[e]ven if one were to assume [Washington Revised Code 17 § 11.07.0102] is applicable here, this is an oversimplification of the law in Washington as the 18 1 Plaintiff requested oral argument in their Motion to Dismiss for Failure to State a Claim. (Dkt. 19 No. 11.) However, the Court determines that oral argument would not be helpful to the Court’s disposition of the motion and denies Plaintiff’s request. See LCR 7(b)(4). 20 2 Washington Revised Code § 11.07.010(2)(a) states 21 If a marriage or state registered domestic partnership is dissolved or invalidated, or a state registered domestic partnership terminated, a provision made prior to 22 that event that relates to the payment or transfer at death of the decedent's interest in a nonprobate asset in favor of or granting an interest or power to the decedent's 23 former spouse or state registered domestic partner, is revoked. A provision affected by this section must be interpreted, and the nonprobate asset affected 24 1 same does not apply in all contexts and there are various exemptions.” (Id. at 3.) Ms. Graham 2 noted that she would “pursue any and all legal rights against [New York Life] should it disregard 3 this dispute and distribute funds to someone other than” herself. (Id. at 4.) In a letter dated 4 February 10, 2025, Plaintiff, through counsel, made a demand for payment under the Policy.

5 (Dkt. No. 6–6 at 2.) On April 28, 2025, in an email to Plaintiff’s counsel, New York Life stated, 6 I also reviewed Washington law and it appears that Constance Graham’s divorce from Glenn Lee Graham revokes her interest in the death benefit, and [Ms. 7 Graham’s children] are not designated as beneficiaries of the policy. However, the attached Decree of Dissolution mentions an Exhibit A that purportedly lists 8 the assets or properties of Constance and Glenn. In order to ensure that the Decree does not list the insurance policy as an asset or property of Constance or 9 the children, we need a copy of Exhibit A.

10 (Dkt. No. 6–7 at 4.) 11 In an attempt to resolve the competing claims to the Policy, Plaintiff, New York Life, and 12 Ms. Graham discussed an agreement regarding the distribution of the Policy’s benefits. (Dkt. 13 No. 6 at 10.) On May 12, 2025, New York Life sent a Settlement and Release Agreement to 14 Plaintiff, Ms. Graham, and Ms. Graham’s two sons. (Id.) Ms. Graham and her two sons signed 15 the proposed settlement agreement, but Plaintiff refused to sign the agreement and release New 16 York Life from liability unless New York Life paid her Washington’s statutory prejudgment 17 interest on the Policy. (Id.) New York Life refused the new term and stated that Plaintiff could 18 either sign the agreement by June 6, 2025, or New York Life would commence an interpleader 19 action. (Dkt. No. 6–9 at 2.) 20 21

22 passes, as if the former spouse or former state registered domestic partner, failed to survive the decedent, having died at the time of entry of the decree of 23 dissolution or declaration of invalidity or termination of state registered domestic partnership. 24 1 On June 2, 2025, Plaintiff sued New York Life, alleging breach of contract, Consumer 2 Protection Act violations, bad faith, and Insurance Fair Conduct Act violations for failure to pay 3 her the Policy benefits. (Dkt. No. 1 at 4–6.) 4 On August 11, 2025, New York Life filed a counterclaim and interpleader action to limit

5 its liability in response to the multiple claims. (Dkt. No. 6.) New York Life claimed it had no 6 interest in the dispute and feared exposure to multiple liability if it distributed the Policy to either 7 Plaintiff or Ms. Graham. (Id. at 11.) New York Life requested to deposit the policy proceeds 8 with the Court’s registry and be dismissed with prejudice from the action. (Id. at 12.) 9 Plaintiff moves to dismiss New York Life’s interpleader action under Rule 12(b)(6), 10 arguing that the action fails to state a colorable claim by Ms. Graham. (Dkt. No. 11.) 11 III JURISDICTION 12 New York Life filed its counterclaim and interpleader action based on 28 U.S.C. § 1335. 13 (Dkt. No. 6.) Ms. Graham is a citizen of the state of California, while Plaintiff is a citizen of 14 Washington state. (Id. at 8.) Additionally, the Policy far exceeds $500, thus satisfying the

15 amount in controversy requirement. Accordingly, the Court finds that it has subject matter 16 jurisdiction over the interpleader action. 17 IV DISCUSSION 18 A. Standards of Review 19 Federal Rule of Civil Procedure 12(b) motions to dismiss may be based on either the lack 20 of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal 21 theory. Balistreri v. Pacifica Police Dep’t., 901 F.2d 696, 699 (9th Cir. 1988). Material 22 allegations are taken as admitted and the complaint is construed in the plaintiff’s favor. Keniston 23 v. Roberts, 717 F.2d 1295 (9th Cir. 1983). In this case, the Court construes the interpleader

24 1 action in favor of New York Life. “While a complaint attacked by a Rule 12(b)(6) motion to 2 dismiss does not need detailed factual allegations, a plaintiff’s obligation to provide the grounds 3 of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation 4 of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 554–

5 555 (2007) (internal citations omitted). “Factual allegations must be enough to raise a right to 6 relief above the speculative level, on the assumption that all the allegations in the complaint are 7 true (even if doubtful in fact).” Id. at 555 (internal citation omitted). The complaint must allege 8 “enough facts to state a claim to relief that is plausible on its face.” Id. at 547. 9 Interpleader is a procedure authorized by 28 U.S.C. § 1335 and Federal Rule of Civil 10 Procedure 22 that allows a party holding property to join in a single suit two or more defendant- 11 claimants asserting mutually exclusive claims to the property. Gains v. Sunray Oil Co., 539 F.2d 12 1136, 1141 (8th Cir. 1976). The main purpose of interpleader is to protect the stakeholder from 13 the expenses of multiple lawsuits and from having to contend with inconsistent or multiple 14 determinations of liability. Texas v. Florida, 306 U.S. 398, 406–07 (1939). While rule and

15 statutory interpleader have different requirements for subject matter jurisdiction, venue, process 16 service, invoking either type requires meeting certain criteria. Fed. R. Civ. P. 22(a)(1); 28 USC 17 § 1335; See also, Libby, McNeill, & Libby v. City Nat. Bank, 592 F.2d 504, 507 (9th Cir. 1978). 18 First, multiple adverse claims or potential adverse claims must be made to that same 19 property. Libby, 592 F.2d at 507. Additionally, the plaintiff stakeholder must have a reasonable 20 fear of multiple liability. The stakeholder is not required to determine the validity of the 21 competing claims or wait to be sued by one or more of the claimants. State Farm Fire & Cas. 22 Co. v. Tashire, 386 U.S. 523, 532–33. However, the stakeholder must have “a good faith belief 23

24 1 that there are or may be colorable competing claims to the stake,” based on “a real and 2 reasonable fear.” Michelman v. Lincoln Nat. Life Ins. Co., 685 F.3d 887, 894 (9th Cir. 2012). 3 An interpleader action proceeds in two stages. In the first stage, a court evaluates 4 whether interpleader is proper based on the facts of the case, including determining whether the

5 stakeholder actually faces or could face multiple adverse claims. See U.S. v. High Tech. 6 Products, Inc., 497 F.3d 637, 642 (6th Cir. 2007) (citing CHARLES ALAN WRIGHT, ARTHUR R. 7 MILLER, & MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE § 1704 (3d ed. 2001)). If 8 interpleader is not properly invoked, the action is dismissed. If (and only if) an interpleader is 9 determined to be proper does a court move to the second stage to determine the merits of the 10 adverse claims. Id. 11 During the first phase, the party seeking interpleader bears the burden of demonstrating 12 she is or may be subject to adverse claims. Dunbar v. United States, 502 F.2d 506, 511 (5th Cir. 13 1974). Adverse claims or potentially adverse claims exist when at least two defendants lay claim 14 to the property held by the stakeholder. See General Elec. Credit Corp. v. Grubbs, 447 F.2d 286,

15 289 (5th Cir. 1971), rev’d on other grounds, 405 U.S. 699 (1972) (holding a plaintiff who failed 16 to demonstrate they have been or may be subject to two or more competing claims has failed to 17 meet interpleader requirements). Sustaining an interpleader based on potential claims requires a 18 “real and reasonable” belief that the interpleaded parties could have a colorable claim to the 19 stake. Michelman, 685 F.3d at 893. 20 The Ninth Circuit has emphasized that the good faith requirement “is not an onerous 21 requirement.” Id. at 894. The “threshold to establish good faith is necessarily low so as not to 22 conflict with interpleader’s pragmatic purpose, which is ‘for the stakeholder to protect itself 23 against the problems posed by multiple claimants to a single fund.’ ” Id. (quoting Mack v.

24 1 Kuckenmeister, 619 F.3d 1010, 1024 (9th Cir. 2010). A stakeholder “need not sort out the merits 2 of conflicting claims as a prerequisite,” but “good faith requires a real and reasonable fear of 3 exposure to double liability or the vexation of conflicting claims.” Id; see also N.Y. Life Ins. Co. 4 v. Welch, 297 F.2d 787, 790 (D.C.Cir. 1961) (“A stakeholder, acting in good faith, may maintain

5 a suit in interpleader to avoid the vexation and expense of resisting adverse claims, even though 6 he believes only one of them is meritorious.”). Thus, a stakeholder need not show that the 7 purported adverse claimant might eventually prevail but must establish only that an adverse 8 claim meet a “minimal threshold level of substantiality.” Id. at 894-95. 9 B. Analysis 10 Prior to Plaintiff filing suit against New York Life for not paying her the Policy benefits, 11 Ms. Graham sent a letter to New York Life disputing Plaintiff was the proper beneficiary. (Dkt. 12 Nos. 1 at 4, 6–5 at 3.) This dispute remained active immediately prior to the filing of the present 13 litigation. Thus, at the time of the filing of the interpleader action, New York Life was aware of 14 adverse claims to the Policy proceeds.

15 Plaintiff argues that Ms. Graham has no colorable claim to the Policy proceeds. (Dkt. 16 No. 11 at 5.) In John Hancock Mutual Life Insurance Co. v. Beardslee, 216 F.2d 457 (7th Cir. 17 1954), the Seventh Circuit addressed a situation where the facts did not justify interpleader. The 18 designated beneficiary of a life insurance policy had changed back and forth several times 19 between the insured’s daughter and wife. Id. at 458. While the wife was the designated 20 beneficiary, the insured and his daughter discussed changing the policy again to designate the 21 daughter as the beneficiary, but the insurer falsely told them that the beneficiary could not be 22 changed. Id. at 458, 460. After the insured’s death, the daughter sent a letter to the insurer in 23 which she expressed her hope that the insurer would be able to help her cover the insured’s

24 1 medical and burial expenses. Id. at 460–61. She noted that the insurance proceeds would have 2 been just enough to cover those expenses and added that her letter would have been unnecessary 3 if, before her father's death, the insurer had been honest about his ability to change the 4 beneficiary. Id.

5 The Seventh Circuit found that the insurer was unreasonable in filing the interpleader 6 action because the daughter had no actual or potential claim against the policy. Id. at 461. The 7 Court noted that the daughter’s communications to the insurer “did not indicate that [she] 8 thought she had any legal right to collect any part of the proceeds on the policy.” Id. at 460. The 9 only possible legal claim by the daughter to any money from the insurer would have been a tort 10 action based on the alleged misinformation given to her by the insurer about the possibility of 11 changing the policy. Id. at 461. This potential claim was not a basis for interpleader because it 12 did not suggest the daughter’s entitlement to the policy proceeds. Id. 13 Here, unlike in Beardslee, Ms. Graham’s communications did assert a claim against the 14 Policy based on choice of law and exemptions to the controlling Washington statute, Washington

15 Revised Code § 11.07.010. (Dkt. No. 6–5 at 3.) Although it may be, as Plaintiff argues, that Ms. 16 Graham is not entitled to any of the subject proceeds, absent responsive pleading from Ms. 17 Graham, the Court is not prepared to definitively conclude Ms. Graham has no viable claim at 18 this time. 19 For purposes of the present motion, the only issue is whether New York Life has a “real 20 and reasonable” belief that Ms. Graham could have a colorable claim to the proceeds; a 21 requirement that is not onerous. Michelman, 685 F.3d at 893–894. New York Life need not 22 prove the merits of the conflicting claims, only a “real and reasonable fear of exposure to double 23 liability or the vexation of conflicting claims.” Id. at 394. The record indicates Ms. Graham

24 1 took steps to indicate her intent to litigate. She had her attorney send New York Life a letter 2 demanding that it halt distribution of the Policy proceeds, and stated she will “pursue any and all 3 legal rights against [New York Life] should it disregard this dispute and distribute the funds to 4 someone other than” Ms. Graham. (Dkt. No. 6-5 at 3–4.) Accepting the facts alleged in the

5 interpleader complaint as true for purposes of the present motion, the Court finds New York Life 6 has alleged it reasonably fears there are multiple parties with colorable adverse claims to the 7 Policy. 8 V CONCLUSION 9 For the reasons stated herein, the Court DENIES Plaintiff’s Motion to Dismiss (Dkt. No. 10 11.) 11 As New York Life filed its interpleader action pursuant to 28 U.S.C. § 1335 (Dkt. No. 6 12 at 8), New York Life is directed to deposit the proceeds of the Policy into the Court’s registry no 13 later than October 20, 2025. See 28 U.S.C. § 1335(a)(1). 14 Dated this 10th day of October, 2025.

15 A 16 David G. Estudillo 17 United States District Judge

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