Star Insurance Co. v. Cedar Valley Express, LLC

Brief Fact Summary.

Star Insurance Co. filed suit in federal court to implead 35 corporations that asserted claims to a surety bond for fear of being exposed to multiple lawsuits.

Synopsis of Rule of Law.

A party facing several or inconsistent claims against an individual obligation may file an action to determine the rights of all claimants if the property is worth at least $500 and there is little diversity between the opposing claimants.

Facts.

Star Insurance Co. (Star) issued a surety bond to Cedar Valley Express, LLC (Cedar Valley), with 35 corporations from 13 states asserting claims to the bond. Star filed suit in federal court to implead the claimants for fear of being subject to multiple lawsuits. Star filed a preliminary injunction to prevent the parties from filing suit in other courts.

Issue.

Whether a party facing several or inconsistent claims against an individual obligation may file an action to determine the rights of all claimants?

Held.

Yes. Star’s interpleader motion is provisionally granted because all plaintiff’s have not received notice or a chance to be heard. The motion for a preliminary injunction to ensure that the status quo is maintained while the claims are being decided.

Discussion.

Interpleader claims are available when a party faces multiple claims against a single asset and wants to have all of the claims decided in a single lawsuit. For an interpleader suit to be brought in federal court, the plaintiff must show: (1) that the subject property, or res, is worth more than $500, (2) the res was deposited with the court, and (3) at least two of the opposing claimants have diverse citizenship.