Brief Fact Summary.
Plaintiff filed an interpleader action, listing Defendants as defendants, to determine who should receive the proceeds of the life insurance policy. Defendant Davis moved to dismiss the lawsuit based on a lack of jurisdiction.
Synopsis of Rule of Law.
Federal subject-matter jurisdiction over interpleader actions may be based on either 28 U.S.C. § 1335, or on one of the general statutory grants of federal jurisdiction, such as diversity jurisdiction, using FRCP Rule 22.
Rather, the third party may give up the property and be relieved from further actions concerning the matter, leaving the court to resolve the dispute between the persons claiming an interest in the disputed property.View Full Point of Law
Plaintiff filed this interpleader action naming Defendants as defendants to determine who should receive the proceeds of the life insurance policy. At issue is a life insurance policy with a face value of $ 95,000.00 insuring the life of Mr. Davis. The named beneficiary of the policy, Defendant Davis, was arrested and charged with killing Mr. Davis. Pursuant to Louisiana law, a beneficiary of the life insurance policy couldn’t recover proceeds if she was deemed-to have been criminally responsible for the death, disablement, or injury of the insured, or judicially determined to have participated in the intentional, unjustified killing of the insured. If the primary beneficiary is disqualified, and there is no contingent beneficiary, the life insurance proceeds are to be paid to the estate of the insured. Plaintiff was a corporation with its principal place of business in Mississippi. Defendants were citizens of Louisiana. Defendant Davis asserted that pursuant to 28 U.S.C.A. § 1335, there must be complete diversity between defendant claimants, not between the stake holder (Farm Bureau) and the defendants. Plaintiff asserted that the original complaint set forth, although, it did not specifically plead, general diversity jurisdiction as the basis for jurisdiction, as there was diversity between Plaintiff and Defendants, and an excess of $ 75,000 in controversy. The amended complaint specifically pled general diversity as the basis for jurisdiction.
May federal subject-matter jurisdiction over interpleader actions be based on either 28 U.S.C. § 1335, or on one of the general statutory grants of federal jurisdiction, such as diversity jurisdiction, using FRCP Rule 22?
Yes. The court dismissed Defendant Davis’ motion, holding that federal subject-matter jurisdiction may be based on general diversity jurisdiction and the requirement for general diversity jurisdiction was satisfied in the case.
Federal subject-matter jurisdiction over interpleader actions may be based on either 28 U.S.C. § 1335, or on one of the general statutory grants of federal jurisdiction, such as diversity jurisdiction, using FRCP Rule 22. The statutory interpleader provisions (28 U.S.C. § 1335) grants subject-matter jurisdiction if the amount in controversy equals $500 or more and the claimants are minimally diverse. FRCP Rule 22 (i.e., rule interpleader) is a procedural device and does not independently grant subject matter jurisdiction. However, the general subject-matter jurisdiction statutory provisions apply, including diversity jurisdiction. Diversity jurisdiction grants subject-matter jurisdiction if the amount in controversy exceeds $75,000 and there is complete diversity between defendants and plaintiff.
Here, Plaintiff sought to give up the proceeds of the life insurance policy and allow the court to resolve the dispute between Defendants. The two defendant claimants were not diverse, so there was no federal subject-matter jurisdiction under 28 U.S.C. § 1335. However, the amount in controversy exceeded the amount of $75,000, and Plaintiff was completely diverse from Defendants. Therefore, subject-matter jurisdiction exists under diversity jurisdiction. Therefore, Defendant Davis’ motion to dismiss is denied.