What is a Federal Interpleader Action?

Interpleader is an equitable device that allows an innocent “stakeholder to bring an action joining two or more adverse claimants to a single fund.” John Alden Life Ins. Co. v. Vanlandingham, 2006 WL 1529047, at *4 (M.D. Fla. May 30, 2006) (citing In re Mandalay Shores Co-op. Housing Ass'n, Inc., 21 F.3d 380, 383 (11th Cir.1994)). Its purpose is to protect the innocent stakeholder from the possibility of defending multiple lawsuits. Id. (citing Relistar Life Ins. Co. v. Knighten, 2005 WL 1309411, at *3 (M.D. Fla. June 1, 2005)); see also Fulton v. Kaiser Steel Corp., 397 F.2d 580, 582–83 (5th Cir. 1968) (“[T]he gist of the relief sought [in an interpleader action] is the avoidance of the burden of unnecessary litigation or the risk of loss by the establishment of multiple liability when only a single obligation is owing.”) (internal quotation marks omitted).

There are two mechanisms for bringing an interpleader action in federal court: (1) Federal Rule of Civil Procedure 22, and (2) the federal interpleader statute, 28 U.S.C. § 1335. Fulton, 397 F.2d at 582. While the former relies on the court’s diversity or federal question jurisdiction, the latter rests on its own subject matter jurisdiction authorization. State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 528 n.3 (1967) (summarizing the distinctions between rule and statutory interpleader actions); see also Metro. Life Ins. Co. v. Jackson, 2013 WL 3974674, at *3 (M.D. Fla. Aug. 1, 2013)(“Rule interpleader requires that the Court be able to exercise either diversity jurisdiction . . . or federal question jurisdiction.”) (citation omitted).

Interpleader actions normally proceed in two stages. Klayman v. Jud. Watch, Inc., 650 F. App’x 741, 643 (11th Cir. 2016) (per curiam). “At the first stage, the court determines whether interpleader is proper and ‘whether to discharge the stakeholder from further liability to the claimants.’” Ohio Nat. Life Assur. Corp. v. Langkau ex rel. Estate of Langkau, 353 F. App’x 244, 248 (11th Cir. 2009) (per curiam) (quoting Prudential Ins. Co. of Am. v. Hovis, 553 F.3d 258, 262 (3d Cir.2009)). “At the second stage, the court evaluates “‘the respective rights of the claimants to the interpleaded funds.’” Langkau, 353 F. App’x at 248 (quotation omitted). “A successful interpleader suit results in the entry of a discharge judgment on behalf of the stakeholder; once the stakeholder turns the asset over to the registry of the court, all legal obligations to the asset’s claimants are satisfied.” In re Mandalay Shores, 21 F.3d at 383.

Joel Ewusiak frequently represents beneficiaries sued in federal interpleader actions by life insurance companies who seek to deposit contested life insurance benefits with the court. Please contact Joel for legal assistance with your specific matter.