Statutory Interpleader in Federal Court - a Cure for Conflicting Claims

By Stephens, E. Ford | Defense Counsel Journal, April 2014 | Go to article overview

Statutory Interpleader in Federal Court - a Cure for Conflicting Claims


Stephens, E. Ford, Defense Counsel Journal


This article originally appeared in the January 2014 Insurance and Reinsurance Committee newsletter.

ENTITIES such as banks, escrow agents, and insurers that hold assets or proceeds on behalf of others can find themselves dealing with claimants competing for the same funds. An interpleader allows a stakeholder that "fears the prospect of multiple liability to file suit, deposit the property with the court, and withdraw from the proceedings." (1) Courts typically describe the threshold for bringing such an action this way: "So long as there exists a 'real and reasonable fear of exposure to double liability or the vexation of conflicting claims, jurisdiction in interpleader is not dependent upon the merits of the claims of the parties interpleaded.'" (2)

There are two types of interpleaders in the federal courts. Perhaps the more commonly used interpleader is provided by Fed.R.Civ.P. 22 and known as "rule interpleader." The other is authorized by 28 U.S.C. [section] 1335, and known as "statutory interpleader." This article provides an overview of some of the characteristics of the latter. Statutory interpleader has different provisions relating to subject matter jurisdiction and personal jurisdiction than rule interpleader, while sharing some of the same procedural elements.

A statutory interpleader is allowed when "[t]wo or more adverse claimants, of diverse citizenship as defined in subsection (a) or (d) of [28 U.S.C. [section] 1332], are claiming or may claim to be entitled to such money or property, or to any one or more of the benefits arising by virtue of any note, bond, certificate, policy or other instrument, or arising by virtue of any such obligation." (3) As suggested by the language in the statute (i.e., "are claiming or may claim"), the actual assertion of competing claims typically is not a prerequisite to filing an interpleader. (4)

Unlike an interpleader action based upon Fed.R.Civ.P. 22, which requires that the court otherwise have subject matter jurisdiction (such as diversity jurisdiction under 28 U.S.C. [section] 1332), (5) statutory interpleader provides its own jurisdiction. First, with statutory interpleader, the amount in controversy can be less than $75,000; the res can be as small as $500. (6) Second, a stakeholder does not need to establish complete diversity for statutory interpleader. There need be only two adverse claimants of diverse citizenship as defined in 28 U.S.C. [section] 1332, who are claiming or may claim to be entitled to the funds at issue. (7) This is referred to as minimal diversity, "[t]hat is, diversity of citizenship between two or more claimants without regard to the circumstances that other rival claimants may be cocitizens." (8) Indeed, courts have noted that there need not be diversity between the stakeholder and all of the claimants as long as minimal diversity exists between at least two of the claimants. (9)

Third, a prerequisite for jurisdiction under 28 U.S.C. [section] 1335(a)(2) is that a stakeholder must deposit with the court either the funds at issue or a bond payable to the clerk of the court in such amount and with surety as required by the court. It creates a jurisdictional defect when a stakeholder fails to deposit the funds in question into the registry of a court, but the stakeholder can cure that defect. (10) This simultaneous deposit requirement can present a bit of a "chicken and egg" situation; the funds must be deposited into the court for the court to have jurisdiction, but Fed.R.Civ.P. 67, which governs the deposit of funds into court, requires that the party making such a deposit provide "notice to every other party" and secure "leave of court." (11) One way to deal with this situation is to file, along with a complaint for interpleader, a draft order to deposit the funds as well as the funds themselves. Counsel should consider contacting the clerk's office before filing to make sure that the draft order has the necessary language about how the court will hold the funds. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Statutory Interpleader in Federal Court - a Cure for Conflicting Claims
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.