Interpleader Actions – New York

The Law Offices of Eric Dinnocenzo are New York Interpleader Lawyers who have litigated an array of life insurance beneficiary disputes.

After a loved one passes away, there may be a disagreement about who is the proper life insurance beneficiary. These controversies frequently involve family members, former spouses, and other persons with a relationship to the insured. These can be hotly contested cases that bring up strong emotions.

Often these cases end up in court when the insurance company files what is called an interpleader action. We have significant experience representing persons in New York interpleader actions who were both named and unnamed beneficiaries.

What happens in a New York interpleader lawsuit?

In an interpleader action filed in a New York court, the insurance company deposits the death benefit into court and then typically gets dismissed from the case so that those claiming beneficiary status can litigate against one another. The exception is if the life insurance company was negligent or engaged in wrongdoing, in which case one or more litigants may assert claims against it and it will remain in the lawsuit.

Insurance companies are often quick to file interpleaders when there is an indication that they face competing claims for the death benefit. They seek to avoid a situation where they pay the funds to one person and then later are sued by another claimant—resulting in the possibility that they will have to pay the same death benefit twice. By filing an interpleader action, the life insurance company can name all potential claimants as defendants and exit the case, ensuring that it only has to pay a single death benefit.

Since interpleader actions are frequently filed in federal court, it is important to have a lawyer who is accustomed to its practices and procedures. We have litigated scores of interpleader cases in New York federal courts.

What authorizes an interpleader action?

A statutory basis for a life insurance company to file an interpleader action is under 28 U.S.C. § 1335 which requires that (1) two or more persons are claiming the death benefit and reside in different states, and (2) the insurance company has deposited the death benefit into the court registry. This is referred to as “Statutory Interpleader.”

Another basis for a life insurance company to file an interpleader action in federal court is under Federal Rule of Civil Procedure 22, referred to as “Rule Interpleader.” Under F.R.C.P. Rule 22, a life insurance company generally may file an interpleader action if the death benefit is greater than $75,000, it faces multiple claims for the death benefit, and the life insurance company is based in a different state than where the claimants reside.

If the requirements for either “Statutory Interpleader” or “Rule Interpleader” are not present, the life insurance company must file the case in state court.

The threat of multiple liability

A commonality between Statutory Interpleader and Rule Interpleader is that the life insurance company must face the threat of multiple liability from two or more claimants seeking the death benefit. That is, the life insurance company must be presented with a real risk that if it chooses to pay the death benefit to one claimant, it could later end up being liable to the other claimant. As put by the Second Circuit Court of Appeals: “The stakeholder should not be obliged at its peril to determine which of two claimants has the better claim.”

If you would like to consult with a New York Life Insurance Interpleader Attorney, you can call the Law Offices of Eric Dinnocenzo at (212)933-1675 for a free consultation.