Interpleader

Civil procedure in the United States
Federal Rules of Civil Procedure Doctrines of civil procedure Jurisdiction Subject-matter jurisdiction Diversity jurisdiction Personal jurisdiction Removal jurisdiction Venue Change of venue Forum non conveniens Pleadings Service of process Complaint Cause of action Case Information Statement Class action Class Action Fairness Act of 2005 Demurrer Answer Affirmative defense Reply Counterclaim Crossclaim Joinder Indispensable party Impleader Interpleader Intervention Other Motions Pre-trial procedure Discovery Initial Conference Interrogatories Depositions Request for Admissions Request for production Resolution without trial Default judgment Summary judgment Voluntary dismissal Involuntary dismissal Settlement Trial Parties Plaintiff Defendant Pro Se Jury Voir dire Burden of proof Judgment Judgment as a matter of law (JMOL) Renewed JMOL (JNOV) Motion to set aside judgment New trial Remedy Injunction Damages Attorney's fees American rule English rule Declaratory judgment Appeal Mandamus Certiorari
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Interpleader is a form of action originally developed under equity jurisprudence. It allows a plaintiff to initiate a lawsuit in order to compel two or more other parties to litigate a dispute. An interpleader action originates when the plaintiff holds property on behalf of another, but does not know to whom the property should be transferred. It is often used to resolve disputes arising under insurance contracts.

Usage

In an interpleader action, the party initiating the litigation, normally the plaintiff, is termed the stakeholder. The money or other property in controversy is called the res. All defendants having a possible interest in the subject matter of the case are called claimants. In some jurisdictions, the plaintiff is referred to as the plaintiff-in-interpleader and each claimant a claimant-in-interpleader.

Application

For example, suppose a person dies with a life insurance policy. However, the insurance company knows there will be a dispute over who should receive the proceeds. The insurance company can file an interpleader action. The insurance company is the stakeholder, the claimants are the persons who might be beneficiaries under the policy, and the cash value of the policy benefit is the res. Under the proceeding as originally developed, the stakeholder would deposit the res with the court, and then the defendants would have their claims adjudicated by the court. Statutory modifications to the procedure (varying, of course, by jurisdiction) sometimes allow the stakeholder to retain the res pending final disposition of the case. Typically, once the stakeholder deposits the res into the court (for example, the face value of the insurance policy), the stakeholder is released from the action and the claimants proceed against each other to determine which of them is legally entitled to the res. Except for the denominations of the parties, the action proceeds for the most part as other civil lawsuits in the same jurisdiction.

In some jurisdictions, the res will earn interest at the legal rate until disbursed. The successful claimant is entitled to the interest as well as the principal.

History

Formerly a plaintiff had to disavow any claim to the res in order to avail himself of the interpleader remedy, but this requirement has also been relaxed or abolished in most jurisdictions. A plaintiff may now argue that neither of the claimants has a right to the property at issue. For example, a person dies with a life insurance policy that excludes coverage for suicide. Two people come forward claiming to be the beneficiary named in the policy. The insurance company believes that the deceased committed suicide, but the claimants believe the death was by accident. The insurance company could interplead the two claimants and simultaneously deny the claims.

Different types of interpleader in U.S. practice

Interpleader actions in the United States district courts are authorized by 28 U.S.C. § 1335. This is known as statutory interpleader. Statutory interpleader is different from rule interpleader. Statutory interpleader allows for a stakeholder to have broader federal jurisdiction.

Interpleader is also allowed by the Federal Rules of Civil Procedure Rule 22. Rule 22 is known as rule interpleader. Rule interpleader is allowed where there is complete diversity and the amount in controversy exceeds $75,000. These requirements satisfy 28 U.S.C. § 1332. Rule interpleader gives fewer rights to a stakeholder than statutory interpleader.

There is a federal interpleader statute exception where "minimal diversity" and an amount in controversy of $500 or more are sufficient to confer jurisdiction.

See [1] for the Federal Rules of Civil Procedure.

Rule 22. Interpleader (Current Version)

(a)Grounds.

(1) By a Plaintiff. Persons with claims that may expose a plaintiff to double or multiple liability may be joined as defendants and required to interplead. Joinder for interpleader is proper even though: (A) the claims of the several claimants, or the titles on which their claims depend, lack a common origin or are adverse and independent rather than identical; or (B) the plaintiff denies liability in whole or in part to any or all of the claimants.
(2) By a Defendant. A defendant exposed to similar liability may seek interpleader through a crossclaim or counterclaim.

(b) Relation to Other Rules and Statutes.

This rule supplements – and does not limit – the joinder of parties allowed by Rule 20. The remedy this rule provides is in addition to – and does not supersede or limit – the remedy provided by 28 U.S.C. § 1335, 1397, and 2361. An action under those statutes must be conducted under these rules.