Interpleader Actions – New Jersey

When a loved one dies, disagreements may arise regarding the rightful beneficiary of a life insurance policy. These conflicts often involve family members, ex-spouses, and others connected to the deceased, and they can be emotionally charged.

In response, life insurance companies frequently file what is referred to as an interpleader action. The Law Offices of Eric Dinnocenzo is a New Jersey interpleader lawyer with extensive experience assisting clients in cases where two or more persons are fighting over a life insurance death benefit.

What occurs in a New Jersey interpleader lawsuit?

In a New Jersey interpleader case, the insurance company submits the death benefit to the court and usually withdraws from the proceedings, allowing those claiming beneficiary status to contest the matter among themselves. However, if the insurance company has acted improperly, it may remain in the lawsuit if one or more litigants make claims against it.

Insurance companies tend to file interpleader actions promptly when there are indications of competing claims. They do this to avoid the risk of potentially having to pay the same benefit multiple times—first to one claimant and later on after being sued by another. By pursuing an interpleader action, the insurer can include all potential claimants as defendants and ensure it only pays the benefit once.

Since interpleader actions are often filed in federal court, having a lawyer experienced in these matters is essential. We have considerable expertise in handling interpleader cases in New Jersey federal courts.

What grounds support an interpleader action?

A life insurance company can file an interpleader action based on 28 U.S.C. § 1335, which stipulates that (1) multiple individuals are claiming the death benefit and reside in different states, and (2) the insurance company has deposited the benefit into the court’s registry. This is known as “Statutory Interpleader.”

Alternatively, under Federal Rule of Civil Procedure 22, or “Rule Interpleader,” an insurance company may file if the death benefit exceeds $75,000, there are competing claims, and the insurer is located in a different state from the claimants.

If the criteria for either type of interpleader are not met, the case must be filed in state court.

The risk of multiple liability

Both Statutory Interpleader and Rule Interpleader share a common element: the insurance company must face a genuine risk of multiple liability from different claimants seeking the death benefit. Essentially, the insurer must recognize that paying one claimant could lead to liability for paying another. As noted by the Third Circuit Court of Appeals:

The plaintiff in an interpleader action is a stakeholder who acknowledges a potential obligation to one claimant but is apprehensive about the risk of multiple liability. Interpleader enables the stakeholder to initiate the lawsuit, deposit the funds with the court, and exit the case, leaving the claimants to resolve their disputes among themselves.

If you find yourself involved in a life insurance dispute and wish to speak to a New Jersey Interpleader Lawyer, you can contact the Law Offices of Eric Dinnocenzo at (212) 933-1675 for a complimentary consultation.