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Pan American Fire & Casualty Co. v. Revere

United States District Court for the Eastern District of Louisiana · Civil Procedure

Civil ProcedureInterpleaderJurisdictionVenueService of ProcessInjunctionsJury TrialInterpleader Act

Facts

A tractor-trailer collided head-on with a school bus in Louisiana, killing the bus driver and three children and injuring many others; a second collision immediately followed, injuring another passenger. The tractor's liability insurer alleged that three suits had already been filed and numerous additional claims had been made or were expected, all potentially reaching beyond the policy limits of $100,000. The insurer deposited a bond in the amount of the policy limits, stated it had no further claim to that deposited sum, but denied liability because admitting liability would imply its insured's negligence and expose the insured to a deficiency judgment. One claimant challenged the insurer's use of interpleader.

Issue

May an automobile liability insurer invoke interpleader when it faces multiple unliquidated tort claims arising from one accident that may exceed its limited policy proceeds, even though the insurer denies liability and the claims have not yet been reduced to judgment? If so, may the court proceed under Rule 22, the Interpleader Act, or only under the Act given venue and service complications?

Rule

Interpleader, whether strict or in the nature of interpleader, requires no special equitable ground beyond exposure to double or multiple vexation arising from competing claims to the same limited fund. A liability insurer with limited contractual exposure may invoke interpleader when multiple actual or potential adverse claims may exceed policy limits, including unliquidated tort claims; legal issues such as liability and damages may be submitted to a jury, while the court may reserve allocation of an insufficient fund. However, when claimants are not all within the district and venue and service cannot be satisfied under Rule 22, the action is maintainable only under the Interpleader Act, which supplies special venue, nationwide service, and express authority to enjoin other proceedings.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Pine Harbor Indemnity issued a $75,000 auto liability policy to a delivery company in Georgia. After a pileup outside Savannah injured eight people, three lawsuits were filed, several other injured passengers sent demand letters, and the insurer reasonably believes the total claims will far exceed the policy limits; it deposits a bond for the policy amount but denies liability.

Is interpleader most likely available to the insurer?

Explanation. The majority held that a liability insurer may invoke interpleader when multiple actual or potential tort claims may exceed a limited policy fund. It rejected the arguments that the insurer must admit liability and that unliquidated tort claims are categorically outside interpleader. The key is exposure to multiple vexation and competition for the same insufficient fund. (Derived from Pan American Fire & Casualty Co. v. Revere (n.d.).)