In the 11th Circuit, Can a Life Insurance Company Recover ITS Attorney Fees and Costs in an Interpleader Action Concerning DISPUTED PROCEEDS OR Death Benefits?

A disinterested stakeholder initiating a necessary interpleader action may receive attorney’s fees and costs, within the Court’s discretion, unless the claim arises out of the normal course of the plaintiff’s business. In re Mandalay Shores Co-op. Housing Ass’n, Inc., 21 F.3d 380, 383 (11th Cir. 1994). This exception “typically is applied to insurance companies,” for which disputed claims to insurance proceeds “arise with some modicum of regularity.” Id. Insurance companies may only be entitled to those attorney fees and costs that are “not of the type regularly incurred” in the course of the insurance business. Id. at 383 n.2 (citations omitted); see Unum Life Ins. Co. of Am. v. Smith, No. 2:17-cv-489, 2018 WL 1977257, *4 (M.D. Ala. March 28, 2018) (“the majority of district court cases in the Eleventh Circuit disfavor the award of attorneys’ fees in interpleader lawsuits involving insurance companies and disputed proceeds.”).

Accordingly, in the 11th Circuit, the filing of an interpleader action and the filing of an interpleader motion typically occur within the normal course of a life insurance company’s business and thus, attorney fees and costs are not recoverable for such filings. See Sun Life Assurance Co. of Canada v. McElroy, No. 2:10-cv-488, 2010 WL 11615016, *2 (S.D. Ala. June 3, 2010) (denying attorney’s fees under the Mandalay rule for an insurance company that initiated an interpleader action and moved for a discharge from liability); see also, e.g., Huntington Nat’l Bank v. Jesus Film Project, No. 6:18-cv-704-PGB-TBS, 2018 WL 6983630, *3 (M.D. Fla. Dec. 4, 2018) (same), report and recommendation adopted, 2019 WL 2225754 (Mar. 6, 2019); Fidelity & Guar. Life Ins. Co. v. Estate of Smith ex rel. Smith, No. 5:12-cv-224, 2012 WL 3561790, *1 (M.D. Ga. Aug. 16, 2012) (same; collecting cases); Hauger v. John Hancock Life Ins. Co., No. 8:07-cv-1711-EAJ, 2008 WL 341432, *4 (M.D. Fla. Feb. 5, 2008)(denying attorney’s fees where “the dispute over the proceeds of the annuity fund arose in the normal course of business”).

Joel Ewusiak frequently represents beneficiaries who are named as defendants in interpleader complaints filed by life insurance companies. Please contact Joel for legal assistance with your specific matter.