Judge Easterbrook and the colleagues around the U.S. Court of Appeals for that Seventh Circuit aren’t going to exercise jurisdiction more than a civil action of interpleader just on credit or offers to pay. The complaintant needs to pony in the goods.
It was the holding from the Seventh Circuit’s recent decision in Condition Farm Existence Ins. Co. v. Jonas, No. 14-1464 (seventh Cir. 12 ,. 31, 2014), a viewpoint created by Judge Easterbrook, by which Idol judges Flaum and Kanne became a member of. Particularly, 28 U.S.C. § 1335 provides federal courts with jurisdiction over certain interpleader actions, however it requires (1) minimal diversity and (2) that “the complaintant has deposited such money or property… in to the registry from the court.” Without that “cash around the barrelhead,” the Seventh Circuit held it lacked jurisdiction.
Jonas started having a dispute over reciprocal policies of existence insurance. Troy Jonas and the wife required out reciprocal policies, where each owned their very own policy, using the spouse designated because the primary beneficiary. Their kids were the secondary beneficiaries. This condition of conditions lasted before the Jonases’ divorce, when Troy grew to become who owns both policies. The beneficiary designations continued to be exactly the same.
Troy’s wife died annually later, but Condition Farm declined to pay for the claim ($a million). It worried the divorce may have had the result, under Texas law, where Troy’s wife was domiciled, of negating Troy’s designation as primary beneficiary. If that’s the case, Condition Farm owed the proceeds to Troy’s children in order to her estate, although not to Troy.
Texas law doesn’t give Condition Farm all day long to find that out, however. Texas Ins. Code § 542.060 titled Troy to 18% annually plus reasonable attorneys’ charges if payment was delayed greater than two months from the time Condition Farm received his claim. It provides that, if Condition Farm receives “notice of the adverse, genuine claim” inside the 60-day window, the insurer can steer clear of the interest and attorneys’ charges by filing an effective interpleader action within 3 months of Troy’s claim.
So it did, despite never getting received notice of some other claim. That motivated Troy to reply by requesting interest and attorneys’ charges, alleging the interpleader action was unnecessary while he was the only real claimant. The district court ruled for Condition Farm, treating the chance that Texas law may have negated the main-beneficary designation as notice of the adverse claim. After that it purchased the insurer to pay for the proceeds in to the registry from the court.
But everything was for naught. Condition Farm’s payment must have show up front under § 1335, because the statute causes it to be a jurisdictional prerequisite. The Seventh Circuit attempted to save the situation under diversity jurisdiction, but found no “controversy” under Article III, since nobody disputed Troy’s claim and also, since Texas law protects some insurance company from multiple liability under these conditions. Without jurisdiction, the Seventh Circuit held, it lacked the capacity to remand “with instructions to calculate and award attorneys’ charges and… [the 18%] interest.” (Recall that Texas law needed a correctly filed interpleader action from Condition Farm to excuse it in the punitive interest, so Troy ought to be titled to some juicy reward.)
The Seventh Circuit directed Troy to condition court and “hope[d] that what we should have stated within this opinion will let the parties to stay.Inches