Opinion ID: 1125005
Heading Depth: 2
Heading Rank: 4

Heading: DISCUSSION NCC v. NBA

Text: A threshold question in this case is whether NBA was entitled to file an interpleader. We answer in the affirmative. Both the Browns, as owners of NCC, and Mrs. Higashi assert that they are entitled to the funds in the account. NBA therefore may be subject to double or multiple liability. This satisfies the requirements for an interpleader under Civil Rule 22. [5] Although the requirements of Civil Rule 22 were satisfied, the superior court apparently was of the view that an additional prerequisite must be met before an interpleader action may be filed. The superior court cited Arizona Bank v. Wells Fargo Bank, N.A., 148 Ariz. 136, 713 P.2d 337 (App. 1985), for the proposition that, in order to maintain an interpleader action, the stakeholder must not have incurred independent liability to any claimant. The case cited by the superior court exemplifies the traditional view that there are four requirements for filing an interpleader: 1. The same thing, debt, or duty must be claimed by both or all the parties against whom the relief is demanded; 2. All their adverse titles or claims must be dependent on or be derived from a common source; 3. The person asking the relief  the plaintiff  must not have or claim any interest in the subject-matter; 4. He must have incurred no independent liability to either of the claimants; that is, he must stand perfectly indifferent between them, in the position merely of a stakeholder. 7 Wright et al., Federal Practice and Procedure § 1701 (2d ed. 1986). Civil Rule 22 expressly eliminates the first three of these requirements. Whether Civil Rule 22 has eliminated the no independent liability requirement is a question of first impression in Alaska, and other courts differ in their treatment of this issue. Wright, supra at § 1706. [6] Wright points out that [c]ontemporary procedure ... is well adapted to disposing of interpleader cases even when independent liability is asserted. Thus, there is no reason today ... for continuing to honor a limitation on the remedy that has no claim to validity other than that it is old. Id. We agree, and join the courts that have held that Civil Rule 22 eliminates the requirement that the stakeholder not be independently liable to a claimant. See Olivier v. Humble Oil & Ref. Co., 225 F. Supp. 536, 539 (E.D.La. 1963).
As mentioned above, the superior court in this case held that a stakeholder may not be held liable for damages that occur after an interpleader action is filed. The superior court's holding was incorrect inasmuch as it implies that an interpleader is a defense to independent claims against the stakeholder. It is not the function of the interpleader rule to bestow upon a stakeholder immunity from liability for damages that (1) are unrelated to the act of interpleading, but (2) happen to occur after an interpleader action is filed. In the present case, NCC claims damages for negligence, breach of contract, and breach of fiduciary duty. The alleged actions giving rise to these claims  mishandling the signature cards and failing to give notice to signators  occurred many months in advance of any competing claims to the funds. These claims are not based upon the decision to file an interpleader, and are not deficient on account of the interpleader. However, the superior court was correct to the extent that it was holding that a claimant may not seek to recover from an innocent stakeholder damages caused by the stakeholder's filing of an interpleader. Civil Rule 22 permits a stakeholder to interplead funds whenever the stakeholder may be exposed to double or multiple liability. A stakeholder who reasonably and in good faith believes that there are adverse claims to the fund cannot be held liable for invoking the protections of Civil Rule 22. A contrary result would defeat the purpose of the interpleader rule: to protect the innocent stakeholder from multiple liability. See Johnston v. All State Roofing & Paving Co., 557 P.2d 770 (Alaska 1976) (holding interpleader rules should be liberally construed); see also Wright, supra at § 1702 (purpose of interpleader is to protect stakeholder). NCC's claims for conversion and wrongful dishonor seek damages caused by NCC's inability to access its funds due to the fact that NBA decided to interplead the account. NCC may not recover under these theories.
NCC argues that, even if a stakeholder cannot be liable for damages caused by interpleading funds of disputed ownership, NBA can be held liable in the present case because NBA did not follow the requirements of AS 06.05.145. [7] NBA asserts that AS 06.05.145 does not apply to this case, as Mrs. Higashi is not an adverse claimant to the account. NBA is correct. NBA was not faced with a situation in which a stranger to the account was disputing the account holder's right to receive its money. Instead, the Browns and Mrs. Higashi both claimed an ownership interest in the company named on the account. Mr. Brown and Mrs. Higashi were both authorized signators of the account. It was not clear to NBA who represented NCC, dba Nome Liquor Store, and who was the adverse claimant. Had [NBA] guessed wrong and invoked the [adverse claim] statute against the wrong party, it still could have incurred liability. First Union Nat'l Bank of South Carolina v. FCVS Communications, VSC, 321 S.C. 496, 469 S.E.2d 613, 617 (App. 1997), cert. granted, March 5, 1997; see also AARTS Prods., Inc. v. Crocker Nat'l Bank, 179 Cal. App.3d 1061, 225 Cal. Rptr. 203, 208 (1986) (following majority rule that a named depositor is not an adverse claimant to account). NBA's decision to file an interpleader was appropriate under the circumstances of this case. NCC's claim for conversion is unfounded, and summary judgment was correct. Since the wrongful dishonor claim is premised on a check presented to the bank after the bank was aware of the competing claims to the account, summary judgment in favor of NBA on this aspect of this case was correct.
The superior court entered a directed verdict against NCC on its independent claims, relying upon a lack of evidence of any damages caused by these legal theories. However, NCC was prevented from presenting damage evidence. The superior court ruled that the bank could not be liable for damages claimed for the bank's acts after November 5 or 6, 1992, because Johnston v. All State Roofing & Paving Co., 557 P.2d 770 (Alaska 1976), prevents claimants from recovering for damages caused by filing an interpleader. NCC's complaint does seek to recover for damages caused by filing the interpleader. However these damages do not, according to NCC's complaint, arise from the interpleader, but from NBA's breach of contract, breach of fiduciary duty, and negligence. NCC claims that, but for NBA's actions, there would be no competing claims to the funds in the account, and therefore no need to interplead. NCC presented evidence that the bank did not follow proper banking procedures, and did not follow the requirements of its contract with NCC. NCC claims NBA permitted the Higashis to delete the Browns from NCC's account without documentation, and without notifying the Browns. The account agreement states, All persons authorized by the account to have access to the account of any corporation or unincorporated association must notify the bank in writing of any change in the corporate officers that would affect the terms of the contract. The superior court erred by directing a verdict on these claims for the reasons expressed above in Part IV.B. NBA cannot be held liable for damages that were caused solely by NBA's decision to interplead the funds. NBA can be liable for damages resulting from the interpleader if NCC proves NBA breached a duty which created the basis that permitted NBA to interplead the funds.
We have previously indicated that a claim for a breach of the implied covenant of good faith and fair dealing in ordinary commercial contracts sounds only in contract. State, Dep't of Natural Resources v. Transamerica Premier Ins. Co., 856 P.2d 766, 774 (Alaska 1993). Insurance contracts, because of the special relationship between the insurer and the insured, justify an action in tort for such a breach. Id. NCC states, Breach of this covenant should be actionable in tort against banks, just as it is against insurers, citing State Farm Fire & Casualty Co. v. Nicholson, 777 P.2d 1152 (Alaska 1989). NCC makes no further argument why a cause of action in tort should be extended to such contracts. NCC's argument does not persuade us that the relationship between a bank and its depositor justifies creating a tort action for the breach of the implied covenant of good faith and fair dealing.
The Browns counterclaimed against NBA, claiming damages for negligent or intentional infliction of emotional distress, and for damages arising out of liquidating personal assets to fund the Nome Liquor Store. The superior court entered summary judgment against the Browns.
The Browns' answer asserts that NBA's improper actions in freezing the account of Nome Commercial Company required the Browns to liquidate investments to fund company operations. NBA should be liable for all damages proximately caused thereby. NBA moved for summary judgment on this claim, arguing that a shareholder has no personal or individual right of action against third parties for acts which result in injury to their corporation. Arctic Contractors, Inc. v. State, 573 P.2d 1385, 1386 (Alaska 1978). In their memorandum in opposition to summary judgment, the Browns argued that they were seeking damages for injuries caused to them personally. They stated, When the Browns were required to liquidate their own investments and fall back on their personal resources, the damage was caused to them individually. Nome Commercial Company itself might have had to borrow all of the personal resources of the Browns to remain in operation, while arguably not incurring a loss in doing so. On appeal, they argue, The Browns have no quarrel with the proposition that shareholders may not sue for damage to their corporation. NCC, however, was not damaged by seizure of its bank account, to the extent it was able to borrow money from the Browns. The Browns have failed to set forth specific facts showing that NBA is not entitled to summary judgment. Alvey v. Pioneer Oilfield Serv., 648 P.2d 599, 600 (Alaska 1982). Specifically, the Browns have failed to indicate that they suffered any damages, other than damages for emotional distress, that cannot be recovered in an action by their corporation, and for which NCC is not already seeking redress. If NCC borrowed money from the Browns as a result of NBA's negligence or breach of contract, NCC would presumably be obligated to repay the loan with interest. NCC, in turn, would be able to recover from NBA any finance charges it incurred as a result of its loan from the Browns. Accordingly, the fact that the Browns lent NCC money does not entitle the Browns to recover from NBA. The Browns failed to present any evidence that would be admissible at trial of any other damages. Summary judgment was correct against the Browns on this claim. Alaska Civil Rule 56.

The Browns are seeking to recover for negligently inflicted emotional distress. This claim fails. To recover for negligent infliction of emotional distress, either the defendant must owe a preexisting duty to the plaintiff, or the plaintiff must have suffered physical injury. Chizmar v. Mackie, 896 P.2d 196, 203 (Alaska 1995). The Browns have not asserted that they were physically injured in any way. The preexisting duty may arise from a contractual relationship. Id. However, ordinary contracts do not give rise to such a duty; the only contracts that will are those that are highly personal and laden with emotion such as contracts to marry, to conduct a funeral, to sell a sealed casket, to conduct a cesarean birth, [or] to surgically rebuild a nose. Id. (quoting Hancock v. Northcutt, 808 P.2d 251, 258-59 (Alaska 1991)). A contract between a bank and its customer is not the kind of contract that is highly personal and laden with emotion. Thus, negligent infliction of emotional distress will not lie absent physical injury. See id. The superior court did not err in granting summary judgment against the Browns on this claim.
To recover damages under intentional infliction of emotional distress (IIED), the plaintiff must show severe injury. Cameron v. Beard, 864 P.2d 538, 548 (Alaska 1993). The superior court must determine as a threshold matter whether the severity of the emotional distress is sufficient to submit a claim for IIED to the jury. Chizmar, 896 P.2d at 208. The court's determination will not be overturned absent an abuse of discretion. Id. at 209. The Browns point solely to a statement in Mr. Brown's affidavit that NBA's refusal to allow them to open an account caused Carrol and me great concern for our physical safety. The court was not presented with any further evidence of emotional harm. The court did not abuse its discretion in directing a verdict against the Browns for this claim.