Texas Appeals Court Supports State Farm Interpleader Action in $800K Life Policy Dispute

The Texas Tenth Court of Appeals recently upheld the dismissal of a lawsuit against State Farm Life Insurance Company in a dispute involving competing claims to life insurance policy proceeds. The case involves two State Farm policies worth over $800,000, with conflicting claims from the named beneficiary Scarlett Robbins and the deceased policyholder Howard LeJeune's estate. Following LeJeune's death, Robbins claimed the proceeds while the estate contested the payout during probate proceedings.

State Farm responded by filing a federal interpleader action, a legal process allowing insurers to deposit the disputed funds with the court and avoid direct liability while the rightful beneficiary is determined. Robbins filed a separate lawsuit alleging breach of contract and violations of the Texas Prompt Pay Act. However, the appellate court affirmed the trial court's dismissal of Robbins’ claims, ruling that State Farm’s interpleader filing satisfied its legal obligations.

The court also considered Robbins' objections regarding notice for the hearing and found that she had received adequate opportunity to respond. This ruling highlights the effectiveness of interpleader actions as a defense strategy for insurers facing contested claims. It underscores the importance of such procedures in mitigating risk for insurers during beneficiary disputes, particularly when probate and settlements complicate ownership rights.

For insurance claims professionals and legal teams, the decision reinforces the protective role of interpleader when handling high-value life insurance policy claims under conflicting ownership claims. This case also illustrates how insurers can maintain compliance and reduce exposure to liability by utilizing court-mediated fund deposits amidst dispute.

State Farm's involvement concludes with the dismissal, but the underlying contest over policy proceeds will proceed in federal court where Robbins and the estate will litigate entitlement. This case serves as a practical reference for insurer claims management, regulatory compliance, and legal risk mitigation strategies in similar high-value contested scenarios.