Case 1:20-cv-01598-RM-MEH Document 35 Filed 08/11/20 USDC Colorado Page 1 of 9

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Civil Action No. 1:20-cv-01598-RM-MEH

ZURICH AMERICAN INSURANCE COMPANY,

Plaintiff,

v.

FRANKLIN RZUCEK as personal representative of the Estate of Shannan Watts,

Et al.,

Defendants.

UNOPPOSED MOTION TO INTERPLEAD FUNDS INTO THE COURT’S REGISTRY,

FOR DISMISSAL WITH PREJUDICE AND FOR PERMANENT INJUNCTION

Plaintiff Zurich American Insurance Company (“Zurich”), by and through its attorneys,

Kutak Rock LLP, submits its Unopposed Motion to Interplead Funds into the Court’s Registry,

for Dismissal with Prejudice and for Permanent Injunction requesting that the Court enter an

Order under Fed. R. Civ. P. 22 and 28 U.S.C. §2361 allowing Zurich to pay to the Court for

deposit certain funds representing proceeds under an insurance policy, for an order requiring

claimants to those funds to interplead their adverse claims and not to institute or proceed with

any litigation against Zurich in any State or federal court over those proceeds or that policy, and

for an order discharging Zurich from any further liability under the policy and dismissing it from

this action with prejudice. As grounds therefore, Zurich states as follows:

Certificate of Conferral Pursuant to D.C. COLO.L.Civ.R 7.1

The undersigned Counsels certify that they conferred with Counsel for all Defendants,

who do not oppose the requested relief.

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1. Zurich initiated this action by filing a Complaint for Interpleader and Declaratory

Relief under to 28 U.S.C. § 1335 to resolve a dispute between rival beneficiary claimants to the

proceeds for certain Supplemental AD&D benefits under a Group Accident Policy GTU

8364499 (the “Policy”) issued to nonparty Anadarko Petroleum Corporation (“Anadarko”) as the

Policyholder. This interpleader action was instituted due to Plaintiff’s uncertainty as to whom to

pay the proceeds of the Policy.

2. Zurich subsequently filed a First Amended Complaint (Doc. 024) adding two

additional defendants who have indicated that they might make a claim against the Policy. (Doc

024, FAC, at ¶24).

3. In the First Amended Complaint, Zurich seeks, among other things, to interplead

the rival claims to the proceeds under the Policy, an order restraining defendants from instituting

or proceeding with any action in any State or federal court against Zurich for recovery of any

amounts under the Policy, an order declaring that Zurich has fulfilled its obligations to each and

every person and/or entity that could make a claim to the proceeds of the Policy, and to be

dismissed from this action and discharged from any further liability for the benefits due under

the Policy. (Doc. 024)

FACTUAL BACKGROUND

4. In August of 2018, nonparty Chris Watts (“CW”) killed his wife, Shannan Watts

(“SW”), and their two minor children, Celeste Cathryn Watts (“CCW”) and Bella Marie Watts

(“BW”). CW pleaded guilty to, and was convicted of, multiple counts of murder in the first

degree for the killings and is now serving life in prison. (Doc. 024 at ¶ 10).

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5. At the time of the killings, CW was employed by Anadarko. Through that

employment, CW was eligible to participate in certain employee benefit programs, including one

for Supplemental AD&D Coverage. CW chose to participate in that Supplemental AD&D

coverage at the Principal Sum of $500,000 for the accidental death benefit. CW listed SW,

CCW and BW as dependents and designated SW as the primary 100% beneficiary for that

coverage. (Doc. 024 at ¶¶ 11-15). A copy of CW’s Employee Administration Summary was

attached as Exhibit A to the First Amended Complaint.

6. Defendants are Franklin Rzucek individually and as personal representative of the

estate of SW, Sandra Rzucek, Ronnie Watts and Cindy Watts. (Doc. 024 at ¶¶ 2-5).

7. The Rzuceks are the parents of decedent SW and grandparents of decedents BW

and CCW. The Watts are the parents of the imprisoned CW and the grandparents of decedents

BW and CCW. (Doc. 024 at ¶¶ 6-7).

THE POLICY

8. Zurich issued Group Accident Policy GTU 8364499 (the “Policy”) to Anadarko.

A copy of the Policy was attached as Exhibit B to the First Amended Complaint. (Doc. 024 at

¶16).

9. CW was the “Insured” as defined in the Policy, while SW, CCW and BW were all

“Covered Persons” and “Covered Dependents” as defined in the Policy. (Doc. 024 at ¶19).

10. The Policy set the Principal Sum for a Covered Dependent as a specified

percentage of the Insured’s Principal Sum. The Principal Sum for SW as the spouse of CW was

60% of CW’s Principal Sum, or $300,000. The Principal Sum for CCW and BW as Dependent

Children of CW was 15% of CW’s Principal Sum, or $75,000 each. (Doc. 024 at ¶¶18-22).

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11. Zurich has acknowledged that the sum of $450,000 is payable under the Policy for

the deaths of SW, CCW and BW. However, multiple claimants seek payment of this sum. (Doc.

024).

12. Under the terms of the Policy, when there is a Covered Loss that is the death of a

Covered Person other than the Insured, payment “will be paid to the Insured,” who is in this case

CW. The Policy further provides that, “[i]f the Insured pre-deceases or dies at the same time as

the Covered Person other than the Insured, the benefit will be paid to the beneficiary, unless . . .

the beneficiary is no longer living at the time of death.” SW was the beneficiary, but she is

deceased. The Policy further provides that, in such cases, “the benefits will be paid to the

Insured’s estate.” (Doc. 024 at ¶¶30-31).

13. Under the terms of the Policy, if applied as written, the benefits for the deaths of

SW, CCW and BW would be paid to CW. (Doc. 024 at ¶31).

THE SLAYER STATUTE

14. Colorado prohibits the wrongful acquisition of property by someone who commits

a felonious killing by statute. See CO. ST. §15-11-803 (the “Statute”).

15. The Statute focuses upon the effect of a “governing instrument,” which is defined

to mean an instrument executed by the decedent. There is no governing instrument here, as the

application/request for Supplemental AD&D and the beneficiary designation were executed by

CW and not by any decedent.

16. Subsection (6) of the Statute contains the general guiding principle that a killer

may not profit from his wrong even if the specific terms (such as the effect of a governing

instrument) of the Statute do not apply.

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17. CW as a “killer” may not acquire benefits owed for the deaths of SW, CCW and

BW under this guiding principle set forth in the Statute.

18. Even if the Statute did not prohibit him from receiving the benefits under the

Policy, CW has waived any interest in any insurance benefits. To the extent he is able to

exercise control over disposition of such proceeds, he has directed that such benefits be paid to

SW’s estate, which is one of the defendant claimants. The Statute does not address whether

following such direction by a killer would constitute an improper wrongful acquisition of an

interest by that killer. (Doc. 024 at ¶40).

19. The Statute also provides that a killer forfeits any benefits with respect to a

decedent’s estate, and that any intestate share that would otherwise go to the killer passes as if

the killer had disclaimed his intestate share.

20. As CW has no living descendants and spouse, any disclaimed share of an intestate

estate would go to his parents, who are defendant-claimants in this action. (Doc. 024 at ¶ 41).

THE CLAIMS AGAINST ZURICH

21. The estate of SW, through defendant Rzucek as personal representative, has made

a claim for the full benefits owed under the Policy ($450,000) for all three deaths. (Doc. 024 at ¶

42; Doc. 020).

22. The Watts defendants have also made a claim for the full benefits owed under the

Policy ($450,000) for all three deaths. (Doc. 024 at ¶ 43; Doc. 020)

23. The Rzuceks in their individual capacities have also made a claim for the benefits

owed under the Policy. (Doc. 024 at ¶ 44).

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INTERPLEADER

24. Fed. R. Civ. P. 22 allows a plaintiff to join as defendants persons with “claims

that may expose a plaintiff to double or multiple liability.” This rule supplements the remedy

provided by 28 U.S.C. § 1335 and § 2361. Section 1335 gives this Court original jurisdiction

over any civil action of interpleader where a party having issued a policy of insurance in the

amount of $500 or more and where two or more claimants of adverse citizenship are claiming the

benefits of that policy. Here, the Rzuceks and the Watts are citizens of North Carolina, while the

estate of Shannan Watts is a Colorado estate. Only this minimal diversity is required. See State

Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 531 (1967). Further, the benefits payable under

the Policy exceed $500.

25. Under 28 U.S.C. § 2361, the Court may enter an order restraining claimants from

instituting or prosecuting any action in any State or United States court affecting the Policy

involved in this interpleader action, may discharge the plaintiff from further liability, and may

make the injunction permanent.

26. Interpleader affords a party exposed to the vexation of defending multiple claims

to a limited fund under its control a procedure to settle the controversy and satisfy its obligation

in a single proceeding. See In re Millennium Multiple Employer Welfare Ben. Plan, 772 F.3d

634, 639 (10th Cir. 2014).

27. An interpleader action typically proceeds in two stages. See Baruth v. Stellar

Recovery, Inc., 2019 WL 4597871, 2 (D. Colo 2019), citing United States v. High Tech. Prods.,

Inc., 497 F.3d 537, 641 (6th Cir. 2007). In the first stage, the Court must determine if it has

jurisdiction, and if the stakeholder has properly invoked interpleader due to facing multiple

liability. In the second stage, the Court determines the respective rights of the claimants to the

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funds at stake. This motion addresses only the first stage. Zurich is a disinterested stakeholder

seeking to pay the Policy proceeds into the Court’s registry and to be discharged from any

further obligation under the Policy.

28. Zurich, as a disinterested stakeholder of the insurance proceeds, seeks to

discharge its liability by depositing into the Court’s registry the insurance proceeds in the amount

of four hundred fifty thousand dollars ($450,000) and to be discharged of all liability under the

Policy for the deaths of SW, CCW and BW.

29. Although an interpleader plaintiff who is disinterested and seeks discharge upon

depositing the funds into court is typically granted attorney’s fees, Zurich is not seeking

attorney’s fees in this action.

30. Pursuant to Rule 67 of the Federal Rules of Civil Procedure and

D.C.COLO.LCivR 46.1(A)(1), the Court may direct that the Clerk of the Court receive the

proceeds in dispute and hold them in any interest-bearing account until they are distributed

pursuant to the Court’s Order.

31. A proposed Order is tendered herewith.

WHEREFORE, Plaintiff Zurich American Insurance Company respectfully requests

that the Court enter an Order directing that:

a. Zurich deposit the Policy’s proceeds of $450,000 with the Clerk of the

Court for the Clerk to deposit those proceeds into the Court’s registry to be held in an

interest-bearing account pending the determination of the interpleader action;

b. Zurich is discharged from any and all liability whatsoever related to the

Policy for the deaths of SW, CCW and BW;

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c. Defendants are permanently enjoined from instituting or proceeding with

any action in any State or Federal Court against Zurich for recovery of any amounts

under the Policy;

d. Zurich has fulfilled its obligations to each and every person and/or entity

that could make a claim to the proceeds of the Policy;

e. Zurich is dismissed, with prejudice, from this action upon payment of the

Policy proceeds of $450,000 into the registry of the Court;

f. This dismissal is conditioned upon Zurich’s compliance with all

subsequent orders of this Court in this action; and,

g. This dismissal does not affect the claims of interpleading Defendants with

respect to disposition of the Policy proceeds after payment into the Court’s registry. This

action shall continue as among Defendants.

Respectfully submitted this 11th day of August, 2020.

KUTAK ROCK LLP

By: s/ David E. Kay

David E. Kay
1801 California Street, Suite 3000
Denver, CO 80202
Telephone: (303) 297-2400
Facsimile: (303) 292-7799
david.kay@kutakrock.com
KUTAK ROCK LLP

By: s/ M. Courtney Koger

M. Courtney Koger
2300 Main Street, Suite 800
Kansas City, MO 64108
Telephone: (816) 960-0090
Facsimile: (816) 960-0041
courtney.koger@kutakrock.com

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CERTIFICATE OF SERVICE

I hereby certify that on August 11, 2020. I electronically filed foregoing UNOPPOSED
MOTION TO INTERPLEAD FUNDS INTO THE COURT’S REGISTRY, FOR
DISMISSAL WITH PREJUDICE AND FOR PERMANENT INJUNCTION with the Clerk
of the Court using the CM/ECF system which will send notification to the following attorneys of
record:

Brad L. Hoffman and Elyse K. Ritchie

Grant & Hoffman Law Firm, P.C.
821 9th Street
Greeley, CO 80631
bhoffman@grantandhoffmanlaw.com
eritchie@grantandhoffmanlaw.com
Attorneys for Defendants Franklin Rzucek
and Sandra Rzucek, individually and for
the Estate of Shannan Watts

Aaron Belzer and Ashlee Hoffmann

Burnham Law
2760 29th Street, Suite 1E
Boulder, CO 80301
aaron@burnhamlaw.com
ashlee@burnhamlaw.com
Attorneys for Defendants Ronnie and Cindy Watts

s/ Patricia Krakowski
Patricia Krakowski

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