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Complaint for Interpleader

November 19, 2010

By Barbara Haubrich-Hass, ACP/CAS

An interpleader action is a procedure for a stakeholder (typically an insurance company) that is holding money (typically an insurance policy) where conflicting multiple claims are being made for the same funds. The stakeholder can join the adverse claimants and force them to litigate their claims amongst themselves.

1. The stakeholder can file a Complaint in Interpleader requiring the claimants to litigate the dispute of the claims.

2. If the stakeholder has already been sued by one or more of the claimants and wants to interplead the other claimants, the stakeholder can file a verified Cross-Complaint for Interpleader joining the other claimants to the litigation.

3. If the stakeholder claims no interest in the funds, the stakeholder does not need to file an interpleader. The stakeholder may apply to the court for permission to deposit the fund with the court clerk. Upon depositing the funds with the clerk of the court, the stakeholder may obtain a discharge of all actual or potential claims against it by the adverse claimants named as defendants in the action.

When a deposit has been made, the court must, on application of any party to the action, order the deposit to be invested in an insured interest-bearing account. The interest earned is to be allocated to the parties in the same proportion as the original funds.

Example of an Interpleader: A bus and truck collided resulting in injury to more than 35 persons. Total claims exceeded $1,000,000. The truck driver had liability insurance with $20,000 policy limits. The insurance company interpleaded the $20,000. The court held statutory interpleader a proper remedy. [State Farm Fire & Cas. Co. v. Tashire (1967) 386 US 523, 87 S.Ct. 1199]

Supporting authority for this article is found in California Code of Civil Procedure § 386.

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