Star Insurance Co. v. Cedar Valley Express, LLC

Brief Fact Summary.

Thirty-five corporations asserted claims to a surety bond Plaintiff had issued to Defendant. Plaintiff filed suit in federal court to interplead the claimants and filed a preliminary injunction to stop other suits regarding the bond.

Synopsis of Rule of Law.

An interpleader is proper under 28 U.S.C. § 1335 when a party faces multiple claims involving property worth more than $500, the property is deposited in the court registry, and the minimally diverse adverse claimants are given notice and an opportunity to be heard.

Facts.

Star Insurance Co. (Plaintiff) issued a surety bond to Cedar Valley Express, LLC (Defendant). Thirty-five corporations asserted claims to the bond, exceeding the bond’s value. Plaintiff moved to interplead the claimants in federal court under the Federal Interpleader Act, 28 U.S.C. § 1335, to avoid multiple lawsuits. Plaintiff also moved for a preliminary injunction to stop the claimants from filing suits related to the bond in other courts.

Issue.

Is a motion to interplead proper, where the plaintiff is exposed to multiple claims involving a single piece of property? Is a preliminary injunction proper before interpleaded claimants have been given notice and an opportunity to be heard?

Held.

Yes, the motion to interplead and the preliminary injunction is proper.

Discussion.

Here, the Court granted the interpleader because Plaintiff properly deposited the $10,000 value of the bond with the court registry and the claimants appeared to be citizens of different states and asserted adverse claims against the bond. The Court also granted the preliminary injunction. Each motion was granted provisionally, until the claimants were given notice of the lawsuit and an opportunity to be heard.