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American General Life Insurance Co. v. Henthorn

United States District Court, D. Colorado

January 11, 2016

HAROLD A. HENTHORN; ESTATE OF TONI B. HENTHORN, a/k/a Toni Bertolet; and GARY CLEXTON, as Special Administrator of the Estate of Toni B. Henthorn a/k/a Toni Bertolet, Defendants.


MARCIA S. KRIEGER, Chief District Judge.

THIS MATTER is before the Court on the Magistrate Judge's August 11, 2015 Report (# 75) that recommends that the Court abstain from exercising jurisdiction over this matter. Both Mr. Henthorn (# 77) and Plaintiff American General Life Insurance Company ("AGLI") (# 78) object. The Court heard oral argument by the parties on the Objections on November 23, 2015 and invited additional briefing (# 87, 88). Having considered those matters, the Court is now prepared to rule.


In September 2012, Toni Henthorn fell to her death while hiking with her husband, Defendant Harold Henthorn. Suspicion arose that Mr. Henthorn was responsible for Ms. Henthorn's death, and in late 2014, a federal grand jury indicted him for the murder of his wife. He has since been convicted by jury verdict, sentenced to life imprisonment, and is appealing his conviction.

A probate case to administer Ms. Henthorn's estate was opened in the Colorado 18th Judicial District sitting in Douglas County. Defendant Gary Clexton was appointed as Personal Representative and Special Administrator. Mr. Henthorn, along with Ms. Henthorn's daughter, "H, " are the primary heirs to her estate. The proceeds of at least two insurance policies that insured Ms. Henthorn's life have been interpleaded in the probate action.

At the time of her death, Ms. Henthorn's life was insured by Plaintiff, AGLI pursuant to a policy providing $1.5 million in benefits. Mr. Henthorn was named as the primary beneficiary on the policy; Ms. Henthorn's estate is now the contingent beneficiary. Shortly after Ms. Henthorn's death, Mr. Henthorn made a claim for benefits under the AGLI policy, but AGLI did not immediately pay over the benefits. Instead, it commenced this interpleader action. It deposited the policy proceeds with the Court and seeks: (1) a determination as to whom the AGLI policy benefits should be paid; and (2) to discharge all potential claims against it arising out of that policy. Mr. Henthorn and Mr. Clexton (on behalf of Ms. Henthorn's estate) have asserted claims to the proceeds. In addition, Mr. Henthorn has brought a counterclaim for bad faith breach of the insurance policy against AGLI for unreasonable denial and delay in payment of the policy proceeds to him.

Underlying Mr. Henthorn's claim to the AGLI policy and other life insurance policy proceeds is application of C.R.S. ยง 15-11-803, commonly referred to as the "Slayer Statute." It prevents persons who commit a homicide from receiving life insurance proceeds or other benefits resulting from the victim's death. Both AGLI, in this action, and Mr. Clexton, in the probate proceeding, assert that the Mr. Henthorn is barred from receiving the benefits of insurance policies on Ms. Henthorn's life because he killed Ms. Henthorn.

The Magistrate Judge Recommended (# 75) that this Court abstain from exercising jurisdiction over AGLI's interpleader claim, in deference to the ongoing probate proceedings in state court.[1] Mr. Henthorn and AGLI both objected to the Recommendation, albeit for different reasons.

The Court scheduled oral argument on the Objections and, at that argument, proposed bifurcating the interpleader claim from Mr. Henthorn's counterclaim, declining to exercise jurisdiction on the former (and thus requiring AGLI to seek interpleader in the probate action), and administratively closing this case with regard to the latter pending the outcome of the appeal of Mr. Henthorn's conviction on murder charges. The Court invited the parties to file briefs. AGLI filed a brief (# 87) that continues to oppose abstention on the interpleader claim. Mr. Clexton filed a brief (# 88) favoring abstention.


A. Bifurcation

Before turning to the question of whether the Court should decline to exercise its jurisdiction with regard to the AGLI's interpleader claim, the Court must first determine whether it is appropriate to bifurcate it from Mr. Henthorn's counterclaim for bad faith breach of insurance contract. Bifurcation is left to the Court's discretion, to be exercised where appropriate to avoid prejudice or to further the convenient, expeditious, and economical resolution of the issues. Sterling Const. Management, LLC v. Steadfast Ins. Co., 280 F.R.D. 576, 580 (D.Colo. 2011).

It is worth noting at the outset, that the legal nature of AGLI's interpleader claim is different from Mr. Henthorn's bad faith breach of insurance contract counterclaim. The interpleader claim is brought in rem. The claim is for the determination of entitlement to a res - the benefits under the AGLI policy. As to this claim, AGLI is a party only in nominal terms, and ordinarily, would cease to participate in the action once interpleader is approved and the funds are deposited with the court. With regard to the interpleader claim, there is no reason for AGLI to participate in pretrial discovery or motion practice. For this claim, the issue to be determined is whether Mr. Henthorn is barred from receiving such benefits under Colorado's Slayer Statute - a dispute between Mr. Henthorn and Mr. Clexton, the special administrator of the probate estate.

In contrast, Mr. Henthorn's bad faith counterclaim against AGLI is an in personam claim. The counterclaim seeks a monetary judgment against AGLI for its failure to act properly after Ms. Henthorn's death. As to this claim, AGLI is an active party that would be expected to take and propound discovery, participate in motion ...

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