Interpleader Proceedings Require an Attorney

interpleader paralegal
Interpleader Proceedings Deposit Funds With the Court

In Interpleader Proceedings Insurance Company Attorneys Will Deposit Funds With the Court to Avoid Liability and Penalties


One of my first big assignments as a contract litigation paralegal was working on an interpleader in an insurance company dispute over life insurance proceeds in a murder suicide. The heirs rightfully received the live insurance proceeds. But not before the insurance company lawyers were awarded a large portion in attorney fees. 

An interpleader is a state or federal civil procedure whereby a person or entity holding money to which conflicting claims are being made by others, can join the adverse claimants and force them to litigate their claims among themselves.  For example, a life insurance company does not know if a pay out due to suicide goes to the estate and therefore needs a probate opened, or if the funds can be disbursed directly to the named beneficiaries. The insurance company deposits the funds with the court to avoid liability in making a wrong decision.  Other examples are escrow holders who receive conflicting instructions from the parties to the sale. A complaint-in-intervention is filed by the plaintiff-in-intervention with the Los Angeles Superior Court.

Once the stakeholder’s right to interplead is established and she deposits the money in court, she may be discharged from any liability to any of the claimants to the disputed funds. This enables the stakeholder to avoid multiplicity of actions, and the risk of inconsistent results if each of the claimants were to sue her separately.


An interpleader action is traditionally viewed as two suits:


One between the stakeholder and the claimants to determine the stakeholder’s right to interplead and the other among the claimants to determine who shall receive the funds interpleaded . . . As against the stakeholder, claimants may raise only matters which go to whether the suit is properly one for interpleader, i.e., whether the elements of an interpleader action are present.

Interpleader is proper whenever double or multiple claims are asserted . . . by two or more persons . . . such that they may expose (the person against whom the claims are asserted) . . . to double or multiple liability . . . CCP §386(b).

The true test of suitability for interpleader is the stakeholder’s disavowal of interest in the property sought to be interpleaded, coupled with the perceived ability of the court to resolve the entire controversy as to entitlement to the money without need for the stakeholder to be a party to the suit



The stakeholder (party against whom conflicting claims are being made) may interplead the money in several ways.


Interpleader by Complaint:

The stakeholder may take the initiative and file a lawsuit against the various conflicting claimants, requiring them to litigate their respective claims to the money or property she holds.

A two-step procedure is generally followed:

  • First, the court must determine whether plaintiff may bring the suit and force the claimants to interplead; and
  • Second, if it is so determined, the court will discharge plaintiff from liability and then determine the rights of the various claimants to the property that has been deposited with the court.

Pleading: The stakeholder may simply allege that he or she is holding money or property to which others are making conflicting demands; that she is unable to determine the validity of the respective claims, and fears exposure to multiple liability if he or she delivers the money or property to any of the claimants; and therefore requests a court order determining to whom the money belongs.