Interpleader and Its Place in Legal Disputes

Interpleader and Its Place in Legal Disputes

One of the biggest challenges that a bank, loan provider, trustee, or any other holder of money can face is what happens when you have multiple people who are all telling you that they are the rightful owner of the money and it should be given to them. An example would be when a bank holds money that is claimed to be owned by multiple people.

When legal claims start being threatened or filed, the last thing a holder of property wants is to face the potential for double liability or to be forced through a legal case to give property to someone only to be then sued later on by the other parties who were not given the property.

When there are multiple parties, all claiming the right to money, the answer to this dilemma is to file for Interpleader. Interpleader is a type of joinder device available in a civil action, and can be brought by either the plaintiff or the defendant. What it does is it allows the property holder, also known as the stakeholder, to bring all claimants into the same action, at the same time, instead of litigating separate claimants in multiple actions. By bringing an action for Interpleader, a stakeholder can have claimants dispute the issue among themselves, determine which claimants have a rightful claim to the property, and thus allow the stakeholder to avoid multiple liability

There are two legal authorities to bring an Interpleader action under: Federal Rule of Civil Procedure 22 and 28 U.S.C. § 1335.

Interpleader Action Under 28 U.S.C. § 1335

  1. In order for an action for Interpleader to be brought under 28 U.S.C. § 1335, at least two defendants must be citizens of different States as defined in 28 U.S.C. § 1332(a) or (c), and the value of the property in controversy must be at least $500.

Interpleader Action Under Rule 22

  1. In order for an action for Interpleader to be brought under Federal Rule 22 the case must either:
    1. arise under a federal statute, a federal treaty, and/or a provision of the United States Constitution; or
    2. meets the jurisdictional requirements of 28 U.S.C. § 1332, under which no plaintiff may be a citizen of the same State as any defendant, and the amount at stake must exceed the sum or value of $75,000:

There are two parts to an interpleader action, the first part is where the stakeholder proves to the Court that they are entitled to interpleader. The second part, if the Court agrees that the stakeholder is entitled to interpleader is for the stakeholder to deposit the disputed money with the Court. Only once the money is placed with the Court is the stakeholder able to be released from the litigation and have the parties finish the litigation amongst themselves.

If you are a stakeholder facing numerous claims from multiple parties based on property you are holding onto, interpleader may be the solution to your situation. If you need assistance with an interpleader claim, don’t hesitate, call the Law Office of Andrew Szocka at 815-455-8430 or email us at szocka@szocka.com. We would be happy to assist you with your interpleader action and any other business-related matter you may have.