Mary Linda McCall v. AXA Equitable Life Insurance Company

Affirmed and Memorandum Opinion filed January 5, 2006

Affirmed and Memorandum Opinion filed January 5, 2006.

In The

Fourteenth Court of Appeals

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NO. 14-04-01111-CV

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MARY LINDA McCALL, Appellant

V.

AXA EQUITABLE LIFE INSURANCE COMPANY, Appellee

On Appeal from the Probate Court No. 1

Harris County, Texas

Trial Court Cause No. 332,026-401

M E M O R A N D U M   O P I N I O N

Mary Linda McCall, appellant, appeals the trial court=s order permitting the interpleader of AXA Equitable Life Insurance Company (Equitable) of the proceeds of an insurance policy in the amount of approximately $250,000. In five issues, McCall argues the trial court abused its discretion in granting the interpleader petition and in awarding attorney=s fees to Equitable.  In a single cross-issue, Equitable argues the trial court erroneously limited the award of appellate attorney fees.  We affirm.

Background

On October 16, 1990, Leslie Williams, the deceased, and McCall were divorced. Williams agreed to pay contractual alimony and secured the alimony with a $250,000 life insurance policy issued by Equitable with McCall as the beneficiary.  On April 8, 1994, Equitable converted the original life insurance policy into Policy 385.  Policy 385 was for $250,000 and listed McCall as the beneficiary.  After Policy 385 was issued, Williams married Anna Harris. After marrying Harris, Williams wrote to an Equitable agent requesting that the beneficiary of Policy 385 be changed to limit McCall=s portion of the policy proceeds to the amount of alimony owed, with the balance of the proceeds to Harris.  The Equitable agent sent a beneficiary change form to Williams, which Williams failed to return.  Williams and Harris were divorced in November, 2001.  Incident to the divorce, Williams agreed that the insurance proceeds would be used to pay any outstanding taxes on his death.

On June 25, 2002, Williams passed away.  Both McCall and Harris claimed the proceeds of Policy 385.  On September 19, 2002, Equitable filed an interpleader action in the probate court requesting the court to determine the competing claims. On January 7, 2003, the trial court signed an interlocutory order permitting the interpleader.  On October 7, 2004, the court signed a final order in which it permitted Equitable to deposit the proceeds of the policy into the registry of the court and awarded Equitable attorney=s fees of $4207.14 and an additional $2000 for any appeal of the action. 

Interpleader

In her first three issues, McCall argues Equitable is not entitled to interpleader status because the evidence was legally and factually insufficient to show Equitable was subjected to rival and conflicting bona fide legal claims to the proceeds of Policy 385.  Under Rule 43 of the Texas Rules of Civil Procedure, a party who receives multiple claims to funds in its possession may join all claimants in one lawsuit and tender the disputed funds into the registry of the court.  Heggy v. American Trading Employee Retirement Acct. Plan, 123 S.W.3d 770, 775 (Tex. App.CHouston [14th Dist.] 2003, pet. denied).  A party is entitled to interpleader relief if (1) it is either subject to, or has reasonable ground to anticipate, rival claims to the same funds; (2) it has not unreasonably delayed filing its action for interpleader, and (3) it has unconditionally tendered the funds into the registry of the court.  Olmos v. Pecan Grove Mun. Util. Dist., 857 S.W.2d 734, 741 (Tex. App.CHouston [14th Dist.] 1993, no writ).  Failure to satisfy any of those elements will defeat a petitioner=s standing as an innocent stakeholder and preclude interpleader relief.  Heggy, 123 S.W.3d at 775.

Standard of Review

We review the grant of an interpleader for an abuse of discretion.  Bryant v. United Shortline Inc. Assur. Services, N.A., 984 S.W.2d 292, 296 (Tex. App.CFort Worth 1998, no pet.).  Under the abuse of discretion standard, a challenge to the legal and factual sufficiency of the evidence is not an independent ground of error, but is merely a factor in assessing whether the trial court abused its discretion.  See Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 226 (Tex. 1991).  In addressing these overlapping standards of review, we first determine whether the trial court had sufficient information to exercise its discretion, then we determine whether the court abused its discretion.  See Chavez v. Chavez, 148 S.W.3d 449, 456 (Tex. App.CEl Paso 2004, no pet.).

Rival Claims

McCall challenges the trial court=s ruling on the first element of an interpleader action, i.e., whether the party seeking relief is subject to, or has reasonable grounds to anticipate, rival claims to the same funds.  The trial court had sufficient evidence to consider whether Equitable was subject to competing claims.  McCall, as the named beneficiary on the policy, claimed all the proceeds. Harris, however, produced evidence that Williams intended to limit McCall=s benefits to unpaid alimony, and designate Harris as the beneficiary of the remainder of the proceeds.  There is no question that Equitable was faced with competing claims.

McCall argues that although Equitable is faced with competing claims, Harris=s claim is not a bona fide claim under the policy.  As authority for this proposition, McCall cites section 1103.102(b) of the Insurance Code, which provides:

A company that issues a life insurance policy is not required to pay the proceeds of the policy to a designated beneficiary under Subsection (a) if the company receives notice of an adverse claim to the proceeds from a person who has a bona fide legal claim to all or part of the proceeds.

Tex. Ins. Code Ann. ' 1103.102(b) (Vernon Pamph. 2004).  Section 1103.102(b) does not conflict with Rule 43, which permits interpleader.  The insurance code provides that an insurance company is not required to pay a policy if it receives notice of a bona fide adverse claim. The cited section has nothing to do with determining whether Harris= claim was a bona fide one.  Consequently, Tthis rule does not affect the insurance company=s right to interpleader. 

Equitable was entitled to maintain an interpleader action if it had a reasonable doubt as to which claim it should pay, and for that reason it in good faith declined to pay the policy, but admitted liability and deposited the funds into the registry of the court.  See Great American Reserve Ins. Co. v. Sanders, 525 S.W.2d 956, 958 (Tex. 1975). To require Equitable to sort through the facts and determine whether Harris=s claim to the proceeds is a bona fide claim would defeat the purpose of interpleader.  See id. at 959. (AAn insurance company should not be compelled to act as judge and jury.@).  Because Equitable is faced with rival claims and has a reasonable doubt as to which claim it should pay, it is entitled to an interpleader action.  McCall=s first three issues are overruled.

Attorney=s Fees

In her fourth issue, McCall contends the trial court abused its discretion in awarding Equitable recovery of attorney=s fees and expenses because Equitable failed to prove it was an innocent stakeholder entitled to interpleader relief.  In her fifth issue, McCall contends the trial court abused its discretion in failing to condition the award of Equitable=s attorney=s fees on a successful appeal.  In a cross-issue, Equitable contends the trial court erroneously limited the award of attorney=s fees. 

Standard of Review

An innocent stakeholder is entitled to recover its attorney fees from the deposited funds if it has a reasonable doubt either of fact or law as to which claimant is entitled to the funds.  United States v. Ray Thomas Gravel Co., Inc., 380 S.W.2d 576, 581 (Tex. 1964). The award of attorney=s fees is within the trial court=s sound discretion.  Olmos, 857 S.W.2d at 741.

McCall=s Issues

In disposing of issues one through three, we determined the trial court did not abuse its discretion in finding that Equitable is an innocent stakeholder entitled to interpleader relief.  Equitable asks only that it be released and discharged from any liability on account of the proceeds, that it recover its attorney=s fees for bringing the interpleader, and that it be paid his fees and costs out of the proceeds.  Therefore, Equitable is an innocent stakeholder and is entitled to recover its attorneys fees from the deposited funds.  The learned trial court did not abuse its discretion in awarding attorney=s fees.  See Olmos, 857 S.W.2d at 741.  Equitable=s fourth issue is overruled.

In her fifth issue, McCall contends the trial court erred in awarding unconditional attorney=s fees on appeal.  McCall failed to preserve this issue for appeal.  To preserve an issue for appeal, a party must have presented to the trial court a timely request, objection or motion specifically stating the grounds for the desired ruling.  Tex. R. App. P. 33.1(a)(1). Because McCall did not raise this complaint during trial or in a post‑judgment motion, she has not preserved the issue for review.  See In re A.A.F., 120 S.W.3d 517, 519 (Tex. App.CDallas 2003, no pet.) (complaint about attorney=s fees waived for failure to object or file a post-judgment motion).  McCall=s fifth issue is overruled.

Equitable=s Cross-Issue

In its cross-issue, Equitable argues the trial court erred in limiting the award of appellate attorney=s fees to $2000.  Following the trial court=s initial award of attorney=s fees, Equitable filed a motion for additional attorney=s fees in the event of an appeal.  Attached to that motion, Equitable=s attorney filed an affidavit in which he stated in his opinion a reasonable attorney=s fee for an appeal to the Court of Appeals would be $5500, plus $2250 in the event of a request for review to the Texas Supreme Court and $3500 if the supreme court grants review.  The trial judge awarded Equitable $2000 Afor attorney=s fees for any appeal of this cause of action.@  Equitable contends the trial court abused its discretion in reducing its attorney=s request for appellate fees totaling $11,250 to $2000.

Equitable contends that because no party objected to its attorney=s affidavit or suggested that attendant circumstances contradicted or cast suspicion on it that the trial court abused its discretion in failing to award appellate attorney=s fees of $11,250.  Generally, the testimony of an interested witness, such as a party to the suit, though not contradicted, does no more than raise a fact issue to be determined by the juryfact finder.  Ragsdale v. Progressive Voter=s League, 801 S.W.2d 880, 882 (Tex. 1990).  Where the testimony of an interested witness, however, is not contradicted by any other witness, or attendant circumstances, and the same is clear, direct and positive, and free from contradiction, inaccuracies, and circumstances tending to cast suspicion thereon, it is taken as true, as a matter of law.  Id. This exception to the general rule regarding interested witness testimony, however, does not mean in every case in which a party offers uncontradicted testimony, such testimony mandates an award of the claimed amount.  Welch v. Hrabar, 110 S.W.3d 601, 610 (Tex. App.CHouston [14th Dist.] 2003, pet. denied).  Even though the evidence might be uncontradicted, if the trier of fact determines its belief is questionable, then such evidence would only raise a fact issue to be determined by the trier of fact.  Id.  Trial judges can draw on their common knowledge and experience as lawyers and as judges in considering the testimony, the record, and the amount in controversy in determining attorney=s fees.  Leggett v. Brinson, 817 S.W.2d 154, 157 (Tex. App.CEl Paso 1991, no writ); see also Bocquet v. Herring, 972 S.W.2d 19, 22 (Tex. 1998) (dissenting opinion). 

In this case, Equitable=s attorney filed an affidavit requesting $13,500 in attorney=s fees for his representation of Equitable in the trial court.  A hearing was held, and Equitable=s attorney was vigorously cross-examined about the number of hours he worked on the case.  After that hearing, the trial court awarded Equitable $4207.14 in attorney=s fees.  Equitable=s attorney then filed a request for more than $11,000 in appellate attorney=s fees.  Although a full hearing was not held, the trial court was entitled to consider the previous hearing, and draw on its common knowledge in awarding appellate fees. The trial court as the trier of fact was within its discretion in similarly reducing the appellate fees. Although Equitable=s attorney=s affidavit was uncontroverted, the trial court had sufficient evidence to exercise its discretion in reducing the amount of appellate attorney=s fees.  We conclude the trial court did not abuse its discretion in awarding $2000 for appellate attorney=s fees.  Equitable=s cross-issue is overruled.

The judgment of the trial court is affirmed.

/s/        John S. Anderson

Justice

Judgment rendered and Memorandum Opinion filed January 5, 2006.

Panel consists of Chief Justice Hedges and Justices Yates and Anderson.