Double Liability & Conflicting Claims
Huron Consulting Group, Huron Consulting Services and Wellspring Management Services (the Huron defendants) filed a motion to dismiss the complaint for interpleader. Additionally, the plaintiff, Executive Risk Indemnity (Executive) filed a motion for summary judgment.
The Interpleader Act (28 USC 1335) provides that a court may have jurisdiction over interpleader actions which are filed by a party who owns an insurance policy with a value over $500, when two or more adverse parties who have diversity in citizenship are claiming to be entitled to the insurance proceeds. In this type of situation, the money must be deposited with the court’s registry. Here, Executive deposited the policy amount into the court’s registry and the amount at stake exceeds $500. Further, diversity of citizenship exists and the Huron defendants are in dispute with David Speltz and Timothy Weis over the $2 million policy.
Huron based its motion to dismiss on the fact that Executive had not named two other parties in the suit. However, non-claimaints are not required to be added to an interpleader action. To determine if the insurer is subject to equitable relief, there must be a “real and reasonable fear of double liability or conflicting claims”. Aaron v. Mahl, 550 F.3d 659, 663 (7th Cir.2008)
When an insurer is faced with excessive litigation in several cases over a single fund, if the insurer meets the jurisdictional requirements, equitable relief may be granted. The court found that the elements of the Interpleader Act were met which therefore defeated Huron’s motion to dismiss. Regarding Executive’s summary judgment motion, the court granted the motion because Executive had deposited the amount of the policy ($2 million) with the court and met the other requirements under the Interpleader Act. This allows for the parties in dispute to solve the issue with the court, instead of involving and using Executive’s resources in the legal process. Additionally, the Act prevents Executive from being placed in the middle of what could be a long, drawn out lawsuit.
Therefore, the court granted Executive’s motion for summary judgment and denied the Huron defendant’s motion to dismiss.
Executive Risk Indem. Inc. v. Speltz & Weis, LLC Not Reported in F.Supp.2d, 2009 WL 3380972 N.D.Ill.,2009. October 16, 2009
