Opinion ID: 3047474
Heading Depth: 3
Heading Rank: 1

Heading: Was the Interpleader Action Properly

Text: Brought? The District Court concluded that this “case presents the perfect utilization of an interpleader” because Prudential “was presented with competing claims for the life insurance proceeds of Shall.” Hovis, 2007 WL 312504, at . Hovis does not dispute that, at the time Prudential filed for interpleader, it was facing competing claims to the insurance proceeds. Rather, his argument is that Prudential is at fault for allowing things to get to that point. Therefore, he contends, Prudential was ineligible for interpleader relief of any kind, as it was not an “innocent stakeholder.” See Farmers Irrigating Ditch & Reservoir Co. v. Kane, 845 F.2d 229, 232 (10th Cir. 1988) (explaining that “[t]he typical plaintiff in interpleader is an innocent stakeholder who is subject to competing claims”). 11 It is true that, “[b]ecause interpleader is an equitable proceeding, it is subject to dismissal based on equitable doctrines.” U.S. Fire Ins. Co. v. Abestospray, Inc., 182 F.3d 201, 208 (3d Cir. 1999); see also High Technology, 497 F.3d at 641 (noting that among the issues relevant to whether interpleader has been properly invoked is “whether any equitable concerns prevent the use of interpleader”). Indeed, “[i]t is a general rule that a party seeking interpleader must be free from blame in causing the controversy, and where he stands as a wrongdoer with respect to the subject matter of the suit . . . , he cannot have relief by interpleader.” Farmers Irrigating Ditch, 845 F.2d at 232. Here, however, it is difficult to see how Prudential is in any way to “blame [for] causing the controversy.” Id. What Hovis is essentially arguing is that, by failing to process Shall’s request to change the owner and beneficiary of her policy quickly, Prudential created circumstances in which there were competing claims to the proceeds. But this argument is premised on the strange idea that the controversy over entitlement to the funds was caused by Prudential’s failure to pay out the proceeds to Hovis before Potter found out about Shall’s request to have the owner and beneficiary of her policy changed, rather than the unmistakable appearance of impropriety surrounding that request. There is every indication that, had Prudential expedited its investigation and paid out the proceeds to Hovis, it would have faced a suit from Potter and his sister relating to the same 12 funds. Potter said as much in his deposition testimony. Thus, insofar as there was a genuine dispute over entitlement to the insurance proceeds, and Prudential was not to blame for its existence, the interpleader action was properly brought.4 Whether bringing that action immunized Prudential against Hovis’s counterclaims is a separate issue, to be addressed in the next section. But Prudential was certainly entitled to some measure of interpleader protection.