Standard Insurance Co. v. Quenga

• Court: Superior Court of Guam
• Decided: February 4, 2014
• Docket: CV0047-13
• Status: Unknown

Opinion

IN THE SUPERIOR COURT OF GUAM

2 STANDARD INSURANCE COMPANY, ) 3 CIVIL CASE NO. CV0047-13 ) 4 Plaintiff, ) ) 5 vs. ) DECISION AND ORDER ) 6 ANTHONY D. QUENGA, MARIA A. T. ) 7 WILLIAMS, MARGARET C.G. QUENGA ) AND ARDASIAN WILLIAMS, ) 8 )

9 __________________________ Defendants. ) )

10 ) ANTHONY D. QUENGA, ) II ) Counterclaim Plaintiff, ) 12 ) 13 VS. ) ) 14 ) STANDARD INSURANCE COMPANY, ) 15 Counterclaim Defendant. ) 16 ) -------------------------------- 17 INTRODUCTION 18 This matter came before the Honorable James L. Canto II on Plaintiff Standard 19 Insurance Company's motion for summary judgment on Plaintiffs interpleader claim, filed 20 June 11, 2013; and Defendant and Counterclaim Plaintiff Anthony D. Quenga's motion for 21 leave to amend his counterclaim, filed September 27, 2013. The Court heard oral arguments on 22 November 12, 2013. Attorney Kevin J. Fowler appeared on behalf of Plaintiff, Attorney Gary 23 W.F. Gumataotao represented Defendant Anthony D. Quenga, and Attorney Curtis C. Van De 24 Veld represented Defendant Margaret C.G. Quenga. Having considered the parties' briefs, oral 25 arguments, and the applicable law, the Court now issues the following Decision and Order. 26 BACKGROUND 27 On or about January 18, 2012, Rosemarie Genese (hereinafter "Genese") executed a 28 beneficiary designation on her Government of Guam group life insurance policy which named

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2 Quenga, and Cardasian Williams. Months later on or about August 201 Genes changed 3 the beneficiary designation under the group life insurance to name Anthony as the sole 4 beneficiary. 5 On September 24, 2012, the Guam Office of the Public Guardian filed a Petition for 6 Appoiutment of Temporary Guardianship in the Superior Court of Guam with respect to the 7 person of Genese and the handling of her estate. The petition detailed that Genese was unable 8 to communicate or manage her affairs, was likely to be deceived or imposed upon and was in 9 need of a guardian to make medical and financial decisions. (Mot. Sunun. J., Exhibit A, Jun. 10 11, 2013). Genese's handwritten letter on or about March 28, 2012, seeking help with respect 11 to an abusive relationship with Anthony, was attached to a declaration in support of the petition. 12 (Mot. Summ. J., Exhibit C, Jun. 11, 2013). The Court granted that petition. 13 On September 28, 2012, Genese died at the Guam Memorial Hospital. 14 On or about October 4, 2012, 1\nthony made a claim to Plaintiff for one hundred percent 15 (100%) of the life insurance benefits of Genese's policy. On or about October 29, 2012, 16 Standard paid one fourth of the available life insurance benefits ($12,500.00) to Anthony. 17 On or about November 28, 2012, Standard sent letters to the four named beneficiaries 18 from the January 18, 2012 beneficiary designation, informing them that Plaintiff questioned 19 Genese's mental competency in making the August 23, 2012 beneficiary designation of 20 Anthony as the sole beneficiary. (Complaint, Exhibit A-D, Jan. 31, 2013). In light of this, 21 IStandard asked the four individuals if they could reach an agreement on the distribution of the I 22 remaining group life insurance policy death benefits. /d. The letter further states that Plaintiff 23 investigated the mental competency of Genese to make the August 23, 2012 beneficiary 24 designation, but this investigation yielded inconclusive findings. /d. 25 On January 31, 2013, Plaintiff filed a complaint for interpleader with respect to the 26 balance of funds owing pursuant to a $50,000 policy of Government of Guam group life 27 insurance issued on life of Genese. (Complaint, Jan. 31, 2013). 28

Page 2 of 10 On February 21, 201 Anthony filed his answer to the complaint for interpleader and a 2 counterclaim against Standard alleging bad faith and oppressive conduct by Standard in refusing 3 to properly investigate and pay Anthony the entire value of his claim. (Verified Answer & 4 Counterclaim, Feb. 21, 2013). On August 1 2013, Anthony's counterclaim was dismissed by 5 ,jI the Court for the failure to state a claim for relief pursuant to Guam R. P. 12(b)(6). 6 On June 11, 2013, Plaintiff filed a motion for summary judgment on its interpleader 7 claim, arguing that there is no genuine issue of material fact with respect to Standard's 8 entitlement to interplead the subject funds and be discharged from this matter, and seeking an 9 award of Standard's attorneys' fees and costs related to the filing of the interpleader action. 10 (Mot. Summ. J. 5-10, Jun. 11, 2013). On July 19, 2013, Anthony filed an opposition to the 11 motion, arguing that Standard is not entitled to summary judgment where a genuine issue of 12 material fact exists as to whether Standard beached its covenant of good faith and fair dealing to 13 diligently investigate prior to refusing to pay Anthony one hundred percent (100%) of the 14 proceeds ofthe claim. (Opp'n. Mot., 5-8, Jul. 19, 2013). 15 On September 27, 2013, Anthony filed a motion for leave to amend, arguing that he 16 should have been afforded an opportunity to effect amendments before the Court dismissed the 17 counterclaim. (Mot. Leave to Amend, 5, Sept. 27, 2013). On October 24, 2013, Standard filed 18 an opposition to the motion, arguing that the proposed amendments do not cure the deficiencies 19 identified by the Court in the Decision and Order issued on August 12, 2013 and Anthony's 20 proposed amended counterclaim would be futile pursuant to Guam R. Civ. P. 15. (Opp'n Mot.,

21 5-6, Oct. 24, 2013). 22

23 DISCUSSION 24 I. Motion for Summary Judgment 25 A. Summary Judgment Standard 26 Guam R. Civ. P. 56(c) provides that a court may grant summary judgment "if the 27 pleadings, depositions, answers to interrogatories, and admissions on file, together with the 28 affidavits, if any, show that there is no genuine issue as to any material fact and that the moving

Page 3 of 10 .I lS IS to a 2 'sufficient evidence' which establishes a factual dispute requiring resolution by a fact-finder." 3 lizuka Corp. v. Kawasho Int'l (Guam), Inc., 1997 Guam 10 ~ 7 (citing T.W. Serv., Inc. v.

4 Pacific 'n, 809 F.2d 626, 630 (9th 1987)). "A 'material' 1s one

5 that is relevant to an element of a claim or defense and whose existence might affect the

6 outcome of the suit.. .. Disputes over irrelevant or unnecessary facts will not preclude a grant of

7 summary judgment." Id. "If the movant can demonstrate that there are no genuine issues of

8 material fact, the non-movant cannot merely rely on allegations contained in the complaint, but

9 must produce at least some significant probative evidence tending to support the complaint."

10 Id. at~ 8 (citing Anderson v. Liberty Lobby, 477 U.S. 242, 249, 106 S.Ct. 2505 (1986)).

II In order to determine whether summary judgment may be granted, "the Court must view

12 the evidence and draw inferences in the light most favorable to the nonmovant." Edwards v.

13 Pacific Financial Corp., 2000 Guam 27 ~ 7 (citing Anderson, 477 U.S. at 249). "The court's

14 ultimate inquiry is to determine whether the 'specific fact' set forth by the nonmoving party,

15 coupled with undisputed background or contextual facts, are such that a rational or reasonable

16 jury might return a verdict in its favor based on that evidence." Jizuka, 1997 Guam 10 ~ 8

17 (quoting T.W. Elec. Serv., 809 F.2d at 631) (internal quotations omitted). "Stated simply, there

18 is a trial issue if there is sufficient evidence for a jury to return a verdict in the non-moving

19 party's favor." Kim v. Hong, 1997 Guam 11 ~ 8 (citing Anderson, 477 U.S. at 250).

20 B. Interpleader 21 Rule 22 of the Guam Rules of Civil Procedure and Title 7 Section 12114 of the Guam

22 Code govern interpleader actions. They state as follows:

23 Persons having claims against the plaintiff may be joined as defendants and 24 required to interplead when their claims are such that the plaintiff is or may be exposed to double or multiple liability. It is not ground for objection to the joinder 25 that the claims of the several claimants or the titles on which their claims depend do not have a common origin or are not identical but are adverse to and 26 independent of one another, or that the plaintiff avers that the plaintiff is not liable 27 in whole or in part to any or all of the claimants. A defendant exposed to similar liability may obtain such interpleader by way of cross-claim or counterclaim. The 28

Page 4 oflO provisions of this rule supplement and do not in any way limit the joinder of parties pennitted in Rule 20. 2 Guam R. Civ. P. and 3 A defendant, against whom an action is pending upon a contract or for specific 4 personal property, may at any time before answer, upon affidavit that a person not a party to the action makes against him, and without any collusion with him, a 5 demand upon such contract, or for such property, upon notice to such person and 6 the adverse party, apply to the court for an order to substitute such person in his place, and discharge him from liability to either party, upon his depositing in 7 court the amount claimed on the contract, or delivering the property or its value to such person as the court may direct; and the court may, in its discretion, make the 8 order. And whenever conflicting claims are or may be made upon a person for or 9 relating to personal property, or the performance of an obligation, or any portion thereof, such person may bring an action against the conflicting claimants to 10 compel them to interplead and litigate their several claims among themselves. The order of substitution may be made and the action of interpleader may be II maintained, and the applicant or plaintiff be discharged from liability to all or any 12 of the conflicting claimants, although their titles or claims have not a common origin, or are not identical, but are adverse to and independent of one another. I3 7 GCA § 12114 (2005). 14 The Supreme Court of Guam explained the role of interpleader actions as follows: 15 The purpose of interpleader is to prevent a multiplicity of suits and double 16 vexation .... The right to the remedy by interpleader is founded, however, not on 17 the consideration that a person may be subjected to double liability, but on the fact that he is threatened with double vexation in respect to one liability.... 18 Interpleader is proper if the claims relate to the same thing, debt, or duty held by 19 the stakeholder.

20 Guam Hous. & Urban Renewal Auth. v. Pacific Enterprises Corp., 2001 Guam 8 , 17 (internal quotations and citations omitted). 21 The Ninth Circuit Court of Appeals has clarified that a good faith belief that there may 22 be colorable competing claims to the stake is required before a plaintiff can avail itself of the 23 interpleader remedy. Michelman v. Lincoln Nat. Life Ins. Co., 685 F.3d 887, 894 (9th Cir. 24 2012). 25 In this case, Plaintiff asserts that it is facing competing claims to Genese's life insurance 26 policy benefits and is exposed to double or multiple liability. Plaintiff alleges that each 27 Defendant has made a claim to the remaining policy benefits. (Complaint, 17-18, Jun. 11, 28

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court that ao it may the

5 further liability ... A court should readily ui~;cn:an!•~;; disinterested stakeholder 6 further liability absent a stakeholder's bad faith in commencing ao interpleader action, 7 potential independent liability to a claimaot, or failure to satisfy requirements of rule or 8 statutory interpleader." Transamerica Lifo Ins. Co. v. Shubin, No. 1:11-cv-01958-LJO-SKO, 9 2012 WL 2839704, *6 (E.D.Cal. July 10, 2012) (internal quotations and citations omitted). 10 In this case, Anthony alleges Plaintiff committed bad faith by failing to conduct a 11 diligent investigation prior to refusing to pay Anthony 100% of the proceeds of the claim. 12 Because stakeholder Plaintiff has a potential independent liability to claimaot Anthony, the 13 Court cannot discharge the stakeholder from further liability. 14 For these reasons, the Court graots Plaintiff's motion summary judgment in part as to the 15 interpleader, but denies Plaintiff's motion as to the discharge from further liability. 16 C. Attorneys' Fees 17 The Court of Appeals for the Ninth Circuit has held that in ao interpleader action, "the 18 plaintiff should be awarded attorney fees for the services of his attorneys in interpleading." 19 Schirmer Stevedoring Co. Ltd. v. Seaboard Stevedoring Corp., 306 F.2d 188, 194 (9th Cir. 20 1962). However, "if there is a contest between plaintiff aod the interpleaded parties, either as to 21 the correctness of the amount deposited or as to any interest of plaintiff in the fund, the court 22 may not, in the absence of special circumstances, award attorney fees for the services of his 23 attorneys in connection with such contest." !d. Compensable attorney's fees include "preparing 24 the complaint, obtaining service of process on the claimants to the fund, and preparing an order 25 discharging the plaintiff from liability aod dismissing it from the action." Trustees of Directors 26 Guild of America-Producer Pension Benefit Plains v. Tice, 234 F.3d 415, 426-27 (9th Cir. 27 2000). Furthermore, fee awards to the disinterested interpleader plaintiff are typically modest 28 because "the attorneys' fees are paid from the interpleaded fund itself, there is ao important

Page 6 of 10 policy interest in seeing that the fee award does not deplete the fund at the expense of the party 2 who is ultimately deemed entitled to it." Id. at 3 Having found that an interpleader is appropriate in this case, Plaintiff shall submit an 4 itemization of attC~meys' fees and costs associated solely to the interpleader action to the Court

5 for review. 6

7 II. Motion for Leave to Amend 8 Plaintiff contends that the Court should deny Anthony leave to file the amended 9 counterclaim because the proposed amendments do not cure the deficiencies identified by the 10 Court in the Decision and Order issued on August 12, 2013. (Opp'n Mot., 5-6, Oct. 24, 2013). 11 Furthermore, Plaintiff argues that Anthony's proposed amended counterclaim would be futile 12 because Anthony cannot withstand Plaintiffs motion for summary judgment as to the

l3 interpleader. Id. at 7-8. 14 Under Guam law, leave of court is required to amend a pleading after a responsive 15 pleading is filed or when no responsive pleading is permitted, "and leave shall be freely given 16 when justice so requires." Guam R. Civ. P. 15(a). Furthermore, "the court may, upon 17 reasonable notice and upon such terms as are just, permit the party to serve a supplemental 18 pleading setting forth transactions or occurrences or events which have happened since the date 19 ofthe pleading sought to be supplemented." Guam R. Civ. P. 15(d). 20 Leave to amend or supplement may be denied in the circumstances of"undue delay, bad 21 faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by 22 amendments previously allowed, undue prejudice to the opposing party by virtue of allowance 23 of the amendment, [or] futility of amendment." Arashi & Co., Inc. v. Nakashima Entnprises, 24 Inc., 2005 Guam 21 ~ 16 (quoting Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227 (1962)). 25 "Although leave to amend should be denied where the an1endment would be futile, denial on the 26 ground of futility should occur only when the proposed amendment is clearly insufficient or 21 frivolous on its face." Carter v. Mayor and City Council of Baltimore, No.Civ. H-01-1024,

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2 1986)). 3 There are minimal legal authorities in Guam that specifically address and define claims 4 for v1vavu of the implied covenant of good faith and fair dealing or claims for bad faith. 5 Therefore, the Court shall look to other jurisdictions for guidance. 6 As an example, California courts have addressed a breach of the implied covenant of 7 good faith and fair dealing and bad faith as follows: 8 Under California law, a breach of the implied covenant of good faith and fair 9 dealing has two elements: "(1) benefits due under the policy must have been IO withheld and (2) the reason for \\ljthholding benefits must have been unreasonable or without proper cause." Love v. Fire Ins. Exch., 221 Cal.App.3d 1136, 1151 II (1990); Waller v. Truck Ins. Exch., Inc., 11 Cal.4th 1, 35 (1995). I2 The implied covenant of good faith requires insurers to be reasonable, not I3 flawless. See, e.g., California Shoppers, Inc. v. Royal Globe Ins. Co., 175 Cal.App.3d 1, 55 (1985) (mistakes made by insurance company in handling of 14 claim do not constitute bad faith; proper standard is "unfair dealing"); Congleton v. National Union Fire Ins. Co., 189 Cal.App.3d 51, 59 (1987). 15

16 Bad faith implies dishonesty, fraud and concealment. Merritt v. Reserve Ins. Co., 34 Cal.App.3d 858, 876 (1973); accord, Hodges v. Standard Accident Ins. Co., 17 198 Cal.App.2d 564, 574 (1962). Mistakes or negligence in claims handling do not support a cause of action for bad faith. Aceves v. Allstate Ins. Co., 68 F .3d 18 1160, 1166 (9th Cir.l996) ("In California, mere negligence is not enough to 19 constitute unreasonable behavior and does not establish a breach of the implied covenant of good faith and fair dealing in an insurance case"); National Life & 20 Accident Ins. Co. v. Edwards, 119 Cal.App.3d 326, 339 (1981) (although the insured's claims handling "may have constituted negligent behavior, it ... did not 21 constitute a violation of the covenant of fair dealing"); see also Sanchez v. 22 Lindsey Morden Claim Servs., Inc., 72 Cal.App. 4th 249, 254 (1999) (in California, insureds cannot state a negligence claim against an insurer). 23

24 Arronson v. State Farm Ins. Co., No. CV -99-4074, 2000 WL 667285, at *8-9 (C.D.Cal. May 11, 2010). 1 25

27 1 This common law cause of action is not exclusive to California. See, e.g., BMW ofNorthAmerica v. Complete Auto Recon Services, 731 S.E.2d 902,907 (S.C.App.Ct.2012); Beck v. Farmers Ins. Exchange, 701 P.2d 795, 801 28 (Utah 1985); Best Place, Inc. v. Penn America Ins. Co., 920 P.2d 334, 346-47 (Hawaii 1996).

Page 8 of 10 In the insurance context, "[t]o constitute bad faith, an insurer's conduct must 2 demonstrate "a failure or refusal to discharge contractual responsibilities, prompted not by an 3 honest mistake, bad judgment or negligence but rather by a conscious and deliberate act .... " !d. 4 at *9 (citing State Farm Fire & Cas. Co. v. Superior Court, 45 Cal.App. 4th 1093, 1105 (1996)). 5 This Court does net herein adopt any liability standard for this tort, as this would be 6 premature. Rather, the Court details above the approach by Califomia courts merely to 7 illustrate the propriety of such a claim by Defendant. The Court notes that various jurisdictions 8 employ a range of legal standards for the tort of breach of implied covenant of good faith and 9 fair dealing in the insurance context. See Best Place, Inc., 920 P.2d at 346-47. IO In this case, Anthony inserts new allegations in the amended counterclaim. Anthony 11 asserts that Plaintiff had a duty to diligently search for and consider evidence that supported 12 coverage of the claim, but failed to do so. (Proposed Amended Counterclaim, 3, Sept. 27, 2013). l3 In addition, Anthony lists Plaintiffs failures in its investigation as the basis ofhis counterclaim. 14 !d. As a result, this Court cannot conclude that the proposed amendments are clearly 15 insufficient or frivolous on their face. Carter, 2001 WL 793308 at *4. This is because some 16 jurisdictions merely require "unreasonable action" short of malice in order to prove up this tort. 17 See, e.g., Nichols v. State Farm Mutual Automobile Ins. Co., 306 S.E.2d 616,619 (S.C. 1983); 18 Gruenberg v. Aetna Ins. Co., 510 P.2d 1032, 1037 (Cal. 1973). The proposed amended 19 counterclaim sufficiently alleges factual claims which reasonably anticipate proving this tort, 20 depending, of course, on the legal standard to be adopted by this Court, and on the type of facts 21 (i.e., scienter) which will become necessary to satisfy the standard eventually adopted. At this 22 point, however, Defendant's proposed amendments to his counterclaim are not futile as a matter 23 of law. Incidentally, because Anthony's counterclaim is independent of the interpleader, 24 granting of the motion for summary judgment as to the interpleader does not make the

25 counterclaim futile for that reason. 26 For all of the above reasons, Anthony's motion for leave to amend the counterclaim

27 shall be granted. 28 Ill

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3 CONCLUSION 4 Based upon the foregoing, Plaintiff's motion for summary judgment is hereby 5 GFANTED in part and DENIED in part. Furthermore, Defendants' motion leave to amend

6 is hereby GRANTED. 7 This matter is set for further proceedings on February 12, 2014 at 9:00a.m.

lO SO ORDERED this L-/rn day of February, 2014. II

13 HON. JAMES L. CANTO II 14 Judge, Superior Court of Guam 15

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