Normally, a federal court is required to proceed with a case in which it has jurisdiction. Actions for declaratory relief, however, are treated differently, and the federal court has wide discretion to accept the controversy. Here, a federal court declines to hear a life insurance interpleader case involving the assertion of the Colorado slayer statute, because of the pendency of state court litigation on the same subject.
What is Colorado’s Slayer Statute?
Colorado’s slayer statute operates to deny life insurance and all other benefits to someone who commits a homicide with respect to a decedent. Colorado Revised Statutes 15-11-803. Colorado’s slayer statute states, in pertinent part:
(2) Forfeiture of statutory benefits. An individual who feloniously kills the decedent forfeits all benefits with respect to the decedent’s estate, including an intestate share, an elective-share, an omitted spouse’s or child’s share, the decedent’s homestead exemption under section 38-41-204, C.R.S ., exempt property, and a family allowance. If the decedent died intestate, the decedent’s intestate estate passes as if the killer disclaimed his or her intestate share.
(3) Revocation of benefits under governing instruments. The felonious killing of the decedent:
(a) Revokes any revocable (i) disposition or appointment of property made by the decedent to the killer in a governing instrument, (ii) provision in a governing instrument conferring a general or nongeneral power of appointment on the killer, and (iii) nomination of the killer in a governing instrument, nominating or appointing the killer to serve in any fiduciary or representative capacity, including a personal representative, executor, trustee, or agent; and
(b) Severs the interests of the decedent and killer in property held by them at the time of the killing as joint tenants with the right of survivorship or as community property with the right of survivorship, transforming the interests of the decedent and killer into tenancies in common.
The Facts Of The Henthorn Case
Harold Henthorn was convicted of murdering his wife, allegedly by pushing her off of a cliff in Rocky Mountain National Park. She fell 130 feet to her death. Prior to her death, a life insurance policy with a $1.5 million death benefit was obtained on the life of Ms. Henthorn, naming Mr. Henthorn as the sole beneficiary. There were two other life insurance policies as well, naming Mr. Henthorn as at least a partial beneficiary.
The case has been the subject of extensive media coverage, including CBS’s 48 hours. Questions are now also being raised about the accidental death of Mr. Henthorn’s first wife 20 years earlier.
During the state court probate proceedings, the two other life insurance companies interpled the death benefit into the state probate court case. The insurance companies are raising the possible application of Colorado’s “Slayer Statute,” which would deny life insurance and all other benefits to someone who commits a homicide with respect to a decedent. Colorado Revised Statutes 15-11-803.
The Personal Representative of Ms. Henthorn’s estate was already trying to deny Mr. Henthorn all benefits under the slayer statute at the time of American General’s federal interpleader action.
Despite the fact that the estate was proceeding with slayer statute litigation in Colorado state court, including two insurance company interpleader actions on the applicability of the slayer statute, American General nonetheless filed its interpleader action in federal court, in American General v. Henthorn, 2016 U.S. Dist. LEXIS 3573 (D. Colo. 2016).
In dismissing American General’s interpleader action, the court noted the exception to the broad requirement that federal courts must hear cases over which it has subject matter jurisdiction.
It is undisputed that this Court has subject-matter jurisdiction with regard to AGLI’s interpleader claim under 28 U.S.C. § 1332. As to this claim, the only remedy sought by AGLI is a declaratory one — releasing it from any further obligations to the other parties. In such circumstances, the federal courts’ “virtually unflagging obligation to exercise its jurisdiction” is not present. Sinclair Oil Corp. v. Amoco Production Co., 982 F.2d 437, 440 (10th Cir. 1992). Instead, the Court possesses “wide discretion in refusing to hear duplicative declaratory proceedings.” Id.; Brillhart v. Excess Ins. Co., 316 U.S. 491, 494-95, 62 S. Ct. 1173, 86 L. Ed. 1620 (1942).
The court looked to a five-factor test that federal courts should use in exercising jurisdiction over a declaratory matter:
(i) whether a declaratory action would settle the controversy; (ii) whether it would serve a useful purpose in clarifying relations; (iii) whether the declaratory remedy is being used for procedural fencing; (iv) whether entertaining the federal action would increase friction between the state and federal courts; and (v) whether there is an alternative remedy that is better or more effective than the federal action. St. Paul Fire and Marine Ins. Co. v. Runyon, 53 F.3d 1167, 1169 (10th Cir. 1995).
Because of the pendency of the same slayer statute litigation in the Colorado state probate court, the possibility of inconsistent outcomes were two lawsuits to proceed, and the fact that all of the slayer statute litigation has to be stayed until the criminal case is resolved with finality, the court dismissed the case, with the suggestion to American General that it file its interpleader case in the state court probate action.
