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Standard Insurance v. Asuncion
Citations: 43 F. Supp. 3d 1154; 2014 U.S. Dist. LEXIS 117294; 2014 WL 4162535Docket: Case No. C14-0134-JCC
Court: District Court, W.D. Washington; August 21, 2014; Federal District Court
The Court grants motions for default judgment filed by Defendants Donna Marie Whitaker, Thomas Henderson, Martin Lee Henderson Oro-shiba, and Calvin John Henderson in an interpleader action concerning a life insurance policy administered by Standard Insurance Company. The policy, issued to the Washington State Counsel of LEOFF II Personnel Insurance Trust, had Joseph Henderson as the insured with a $20,000 coverage amount. His original beneficiary was his then-wife, Paula Asuncion. Following their divorce in 2008, Joseph did not change the beneficiary designation. After his death in 2013, a dispute arose between Asuncion and Joseph's siblings over the policy proceeds. Asuncion claims entitlement based on her status as the listed beneficiary under ERISA, referencing the Supreme Court decision in Egelhoff v. Egelhoff. In contrast, the siblings argue that the policy is not ERISA-governed and that Washington law automatically revoked Asuncion’s beneficiary status upon divorce, entitling them to the funds. Following competing claims, Standard Insurance filed for interpleader, leading to the Court dismissing it from the action and finding Asuncion in default. The siblings then filed for default judgment against her, seeking equal shares of the proceeds. The Court notes that a named interpleader defendant who fails to respond forfeits their claim, allowing the Court to grant default judgment in favor of the appearing claimants if they establish their entitlement to the funds without dispute over distribution. Claimants in an interpleader action must establish their entitlement to benefits. If all but one defendant defaults, the remaining defendant is entitled to the funds. The Court considers several factors when deciding on a default judgment, including potential prejudice to the plaintiff, the merits of the claim, the sufficiency of the complaint, the monetary stakes, potential factual disputes, and whether the default was due to excusable neglect. Default judgment is deemed appropriate in this case, as the sibling defendants and Standard Insurance would face prejudice if the dispute over the insurance proceeds remains unresolved. Standard initiated this action to clarify liability and ensure the funds do not remain idle in the Court’s registry. The sibling defendants have asserted their claims to the funds based on the Plan’s terms, supported by documentation, and have countered Ms. Asuncion's assertion that the claim is governed by ERISA. Ms. Asuncion’s absence and failure to defend her claim weaken her position, as she has not provided justification for her lack of participation or indicated any factual disputes favorable to her. The interpleader action aims to protect the stakeholder from multiple liabilities and further litigation costs. Although the amount at stake is relatively small, Ms. Asuncion's absence has hindered a full merits decision, leading to a forfeiture of her rights to the proceeds. As a result, the Court grants the motions for default judgment, directing the Clerk to issue checks to the sibling defendants for their respective amounts, while also ensuring that the case is closed.