Opinion ID: 1133582
Heading Depth: 3
Heading Rank: 2

Heading: The Trial Court Correctly Conducted the Interpleader Proceedings.

Text: Noey next contends that the superior court mismanaged the interpleader proceedings. Interpleader is an equitable remedy designed to protect a stakeholder [13] from multiple liability and from the burden of defending multiple, conflicting claims. [14] It allows a plaintiff stakeholder to join in a single action all those parties who are asserting or might assert claims to a common fund held by the stakeholder. [15] In plainer terms, the stakeholder sues all those who might have claim to the money, deposits the money with the ... court, and lets the claimants litigate who is entitled to the money. [16] By forcing competing claimants to resolve among themselves what is basically their own dispute, interpleader spares stakeholders the need to decide which is the best claim and, in so doing, avoids exposing them to multiple liability. [17] Interpleader encompasses two distinct procedural stages. First, the court determines in equity the propriety of interpleading the adverse claimants and relieving the stakeholder from liability; second, it adjudicates at law, to the extent necessary, the adverse claims of the defendant claimants. [18] In this case, Noey alleges error in both stages. He complains that the court had no evidentiary basis for finding interpleader jurisdiction at the first stage; and he complains that it erred at the second stage by failing to require the interpleaded defendants to file issue-framing pleadings.
Davis's interpleader complaint alleged that he possessed money that both his client, Noey, and his co-counsel, Bledsoe, had claimed as their own. According to the complaint, Noey claimed a right to the fund as a party to the settlement; Bledsoe asserted a possessory right for legal fees owed. In answering Davis's complaint, Noey and Bledsoe both admitted these essential contentions, each asserting a claim to the disputed fund. By later requesting to withdraw from the case, Davis implicitly moved for a decree of interpleader. [19] Neither Bledsoe nor Noey objected to Davis's withdrawal. Bledsoe filed a notice of non-opposition. Though Noey opposed Davis's motion, his opposition merely sought to deflect the underlying fee dispute into arbitration. Noey never alleged that Davis had misfiled the action as an interpleader or that the court lacked authority to allow Davis's withdrawal and to proceed with adjudication of Noey's and Bledsoe's conflicting claims. Noey now argues that the trial court erred in allowing Davis to withdraw without formal proof that an interpleader action was proper. Noey maintains that interpleader was inappropriate because Bledsoe had no valid lien and thus no right to claim the specific funds held by Davis. He asserts that, at the very least, a material question of fact existed as to the validity of Bledsoe's lien. Noey contends that this factual dispute precluded summary adjudication of Davis's motion to withdraw. In essence, then, Noey's first-stage argument asserts that the court improperly granted Davis a judgment on the pleadings. This is a legal point and is subject to de novo review. [20] We conclude that the argument lacks merit. Noey builds his argument on the premise that the stakeholder in an interpleader action cannot be excused, and that the case cannot proceed as an action between two interpleaded defendants without positive proof that both defendants actually have valid claims against the disputed funds. But Noey's premise is faulty. Courts have not adopted a particular procedure for the first stage of interpleader, and the issues are typically framed by motion. [21] Courts agree that, at the first stage, the burden is on the party seeking interpleader. [22] Apparently, some jurisdictions have held that this stage of interpleader is resolved on motion for summary judgment. Others have favored a motion for judgment on the pleadings. Still others have no established procedure. [23] But regardless of this uncertainty as to applicable procedure, there appears to be general agreement that [t]he primary test for determining the propriety of interpleading ... is whether the stakeholder legitimately fears multiple vexation directed against a single fund. [24] This is an unexacting standard. [25] [T]o support an interpleader action, the adverse claims need attain only `a minimal threshold level of substantiality.' [26] In the first stage of this case, as we have already observed, the parties did not dispute the essential facts for interpleader in their pleadings. Under these circumstances, there was no reason for the court to take independent evidence: In the absence of a preliminary demonstration of the existence of relevant disputed facts no hearing was required. [27] Noey nonetheless insists that Bledsoe's lien was invalid and that the court should have recognized this invalidity sua sponte. Alaska Statute 34.35.430 provides that an attorney may assert a retaining lien upon money in the possession of the attorney belonging to the client. Noey argues that because the money in dispute was in Davis's possession when Bledsoe asserted the lien, the lien was invalid. Other jurisdictions have allowed attorneys to assert retaining liens over money in the possession of co-counsel and have held co-counsel liable for failure to protect the retaining liens. [28] Alaska has not yet decided the issue. Thus, while the validity of Bledsoe's lien may not have been certain, Davis legitimately fear[ed] multiple vexation from a single fund. Nothing further was required at the first stage of the action. Noey also argues that the lien was invalid because Bledsoe and Davis were no longer co-counsel when Davis came into possession of the funds. He argues that this was at least sufficiently in dispute to preclude summary adjudication of the first stage of interpleader. But, again, the relevant inquiry was not whether the lien was actually valid, but rather whether the lien was colorably valid so that Davis would risk liability by ignoring it. A claim of potential liability that is completely devoid of substance will not support interpleader jurisdiction. [29] On the other hand, interpleader jurisdiction is not to be denied merely because the possibility of multiple liability or multiple litigation is remote or rests on tenuous grounds. [30] In fact, a stakeholder may institute an interpleader action to avoid the trouble and expense of resisting adverse claims, even though he believes only one of them is meritorious. [31] Here, Bledsoe's lien, though not untroubled, was sufficiently colorable to support interpleader. The trial court did not err in granting Davis's motion to withdraw and allowing the case to proceed as an action between Bledsoe and Noey.
Noey argues that, once the court concluded that interpleader was appropriate, it erred in failing to require the parties to plead their claims against one another under either Alaska Civil Rule 8 or 13. [32] He maintains that the purpose of the pleadings is to provide a bright line marker for when [the judicial system] has been formally invoked; he says, [c]learly the court and the prospective defendant need a bright line which unambiguously signals the beginning of the court's involvement in a dispute and which articulates the specific claims that the plaintiff asserts. He argues that this failure deprived the court of jurisdiction to hear the dispute. Noey's argument has no merit. The jurisdiction of the court was the subject of the first stage of interpleader. Noey was served with a complaint in interpleader, which prayed that Davis be allowed to deposit the funds with the court and withdraw so that Bledsoe and Noey could argue their respective rights and priorities to this court. Noey and Bledsoe answered the complaint. Noey also acknowledged that he understood the court's order dismissing Davis from the action essentially to be a decree of interpleader, which shifted the focus of the action to the Mr. Bledsoe-Mr. Noey dispute. At the second stage of interpleader, new pleadings are unnecessary unless the remaining issues are undefined. [33] The need for further pleadings is thus a practical issue for the trial court to decide on a case-by-case basis. In the present case, Noey never expressed uncertainty about the issues involved in the underlying fee dispute. He cannot plausibly maintain that the parties' original pleadings failed to inform him of Bledsoe's claims. The court did not abuse its discretion in declining to order further pleadings.