Brief Fact Summary.
Petitioner brought an interpleader action, requesting that all lawsuits involving their insurance coverage of the truck driver be consolidated into one proceeding.
Synopsis of Rule of Law.
Under 28 U.S.C. § 1335, an insurance company does not have to wait for claimants to obtain a judgment against the insured before interpleading the group.
However, a reasonable and sensible effect of interpleader may protect a stakeholder from vexatious and multiple litigation where a stakeholder, faced with rival claims to the fund itself, acknowledges â or denies â his liability to one or the other of the claimants, i.e. when the fund itself is the target of the claimants.View Full Point of Law
Four bus passengers (Respondents) injured when a bus collided with a truck sued Greyhound Lines Inc., the bus driver, the truck driver, and the truck owner, in California state court. Before this lawsuit went to trial, State Farm Fire & Causality Co. (Petitioner) brought an interpleader action in federal court requesting that all actions brought against it through the insurance policy Plaintiff had with the truck driver be consolidated into this one proceeding.
Is an insurance company required to wait until all persons asserting claims have reduced judgments before bringing an interpleader action?
No, the insurance company is not required to wait. The decision of the Court of Appeals is reversed and the case remanded.
First, the Court ruled that 28 U.S.C. § 1335 required only minimal diversity of citizenship and thus was proper in federal Court. The Court determined that under the language of 28 U.S.C. § 1335, the Petitioner did not have to wait for the claims to be reduced to a judgment before bringing an interpleader. However, the Court further determined that the lower court exceeded its authority in extending the injunction to Greyhound Lines Inc., the bus driver, and the truck driver because they were not related to the claims against the insurance fund.