MFA Mutual Insurance Company v. Lusby

• Decision Date: 31 January 1969
• Docket Number: Civ. A. No. 67-C-26-R.
• Court: U.S. District Court — Western District of Virginia
• Parties: MFA MUTUAL INSURANCE COMPANY, Plaintiff, v. Roger Kent LUSBY, Robert R. McMillian, Jr., Dennis L. Fuller, Betty Carolyn Via, Dan A. Chrisman, Administrator, C. C. Lindsey, Administrator, Defendants.

295 F. Supp. 660

MFA MUTUAL INSURANCE COMPANY, Plaintiff, v. Roger Kent LUSBY, Robert R. McMillian, Jr., Dennis L. Fuller, Betty Carolyn Via, Dan A. Chrisman, Administrator, C. C. Lindsey, Administrator, Defendants.

Civ. A. No. 67-C-26-R.

United States District Court W. D. Virginia, Roanoke Division.

January 31, 1969.

COPYRIGHT MATERIAL OMITTED

Richard C. Rakes, Gentry, Locke, Rakes & Moore, Roanoke, Va., for MFA Mut. Ins. Co.

Arthur E. Smith, Roanoke, Va., for Roger Kent Lusby.

Homer C. Eliades, Hopewell, Va., for Robert R. McMillian, Jr.

Morton Honeyman, Roanoke, Va., for Betty Carolyn Via.

A. Albert Balavage, Fairfax, Va., for Dan A. Chrisman, Admin.

Walter W. Wood, Roanoke, Va., for C. C. Lindsey.

John L. Walker, Jr., Woods, Rogers, Muse, Walker & Thornton, Roanoke, Va., for State Farm.

W. H. Jolly, Kime, Jolly & Clemens, Salem, Va., for Aetna Casualty & Surety Co.

OPINION AND JUDGMENT

DALTON, Chief Judge.

MFA Mutual Insurance Co., a Missouri corporation, hereinafter referred to as MFA, has filed this complaint in the nature of interpleader against Roger Kent Lusby, hereinafter referred to as the insured, a resident of the State of Missouri, Robert R. McMillian, Jr., a resident of the State of Tennessee, Dennis L. Fuller, a resident of the State of California, Betty Carolyn Via, a resident of the State of Virginia, Dan A. Chrisman, Administrator of the Estate of Della C. Box, deceased, a resident of the State of Virginia, and C. C. Lindsey, Administrator of the Estate of Frankie Lou Farris, deceased, a resident of the State of Virginia. MFA was the automobile liability insurance carrier for Roger Kent Lusby on a liability insurance policy numbered XX-X-XXXXXX-XXX and issued to Roger Kent Lusby and/or S. T. Lusby on July 26, 1966, beginning coverage on July 19, 1966. The MFA policy limited the liability coverage to the standard $15,000 for each person, never to exceed $30,000 for each accident. On November 10, 1966, the insured, while operating the 1966 Ford described in the aforementioned policy, collided head-on with another car approximately five (5) miles west of Farmville, Virginia, on U.S. Route 460. The defendant claimants, Robert R. McMillian, Jr. and Dennis T. Fuller, were riding in the vehicle operated by the insured at the time of such accident and suffered injuries as a result thereof. Defendant claimant Betty Carolyn Via, and the two deceased, Della C. Box and Frankie Lou Farris, were injured while riding in the automobile which collided with the 1966 Ford.

Suits have heretofore been instituted against the insured by all the defendant claimants except Dennis F. Fuller, and the claims in these suits far exceed the $30,000 which is the limited insurance coverage provided in the MFA policy. In an effort to settle all possible claims against it arising out of the aforementioned automobile collision, MFA has filed this complaint in the nature of interpleader and given bond to this court in the amount of $30,000. The defendant claimant, Robert R. McMillian, Jr., filed an action against the insured in the Circuit Court of Prince George County, Virginia; the remaining three actions which have been instituted by the other defendant claimants against the insured are all pending before this court. MFA asks this court to enjoin the defendant claimants from further prosecuting the actions pending against the insured or initiating further actions arising from the automobile collision in question and further asks that the parties be directed to assert their claims in the present suit.

MFA contends that the policy of insurance issued to the insured should be void as a matter of law because the insured by his agent, S. T. Lusby, made material misrepresentations in his application for liability insurance which were relied on by MFA. Pursuant to Fed.R. Civ.P. 56 cross motions have been filed by MFA and by the intervenors, State Farm Mutual Automobile Insurance Company, the insurance carrier for Frankie Lou Farris, deceased, and Aetna Casualty and Surety Company, the insurance carrier for Betty Carolyn Via, requesting the court to enter up summary judgment as to the question of MFA's liability on the insurance policy issued to the insured. The material facts are not in dispute.

The court must first decide whether in these circumstances the action of interpleader is available to the claimant and, if so, whether the claimant should be held liable on the insurance policy issued to the insured.

JURISDICTION

The insured by counsel has moved to dismiss the complaint on the grounds that the instant action is not in the nature of interpleader but rather is in fact a motion for declaratory judgment on the insurance policy contract and that there is not sufficient diversity of citizenship because both parties to the insurance policy contract are citizens of the State of Missouri.

The true bill of interpleader historically is an action in which the plaintiff is a disinterested stakeholder who requests the court to determine which of two or more adverse claimants is rightfully entitled to the fund or property possessed by the plaintiff. On the other hand, in an action in the nature of interpleader the plaintiff is not merely an active claimant who asserts claims adverse to those of the defendant claimants. State of Texas v. State of Florida, 306 U.S. 398, 59 S.Ct. 563, 83 L.Ed. 817 (1939); 3A Moore, Federal Practice, ¶ 22.03 p. 3006. Accordingly, the present action is one in the nature of interpleader since MFA is an active claimant who denies the validity of all claims of the defendant claimants to the $30,000.

The remedy of interpleader, including the action in the nature of interpleader, has long been available in equity and is available in the United States District Courts, as expressly recognized by the rules of court. Fed.R.Civ.P. 22. The jurisdiction for actions of interpleader is expressly delineated by Congress in 28 U.S.C. § 1335 which provides in part:

(a) The district court shall have original jurisdiction of any civil action of interpleader or in the nature of interpleader * * *, if

(1) Two or more adverse claimants, of diverse citizenship as defined in section 1332 of this title, are claiming or may claim to be entitled to such money or property, * * *; and if (2) the plaintiff has deposited such money or property * * * into the registry of the court, there to abide the judgment of the court, or has given bond payable to the clerk of the court in such amount and with such surety as the court or judge may deem proper, * * *

(b) Such an action may be entertained although the titles or claims of the conflicting claimants do not have a common origin, or are not identical, but are adverse to and independent of one another.

28 U.S.C. § 1335, above partially recited, has not altered the basic nature of the remedy of interpleader which is an equitable remedy, and a statutory interpleader action is still governed by equitable principles of interpleader. Holcomb v. Aetna Life Ins. Co., 228 F.2d 75 (10th Cir. 1955), cert. denied 350 U.S. 986, 76 S.Ct. 473, 100 L.Ed. 853; Pennsylvania Fire Ins. Co. v. American Airlines, Inc., 160 F.Supp. 239 (E.D.N.Y.1960). Hence, the old equitable rule is still applicable that a resort to interpleader, an equitable remedy, must be justified by the absence of an adequate remedy at law. With few exceptions the rule is now accepted that exposure to unnecessary vexation by a multiplicity of suits is a sufficient ground for maintaining either strict interpleader or an action in the nature of interpleader. Pan American Fire & Casualty Co. v. Revere, 188 F.Supp. 474 (E.D.La.1960); John Hancock Mutual Life Ins. Co. v. Kegan et al., 22 F.Supp. 326 (D.Md.1938); 3A Moore, Federal Practice, ¶ 22.07 at 3042. Multiplicity of suits has been accepted as complete justification in Fed.R.Civ.P. 22 which provides, "(1) Persons having claims against the plaintiff may be joined as defendants and required to interplead when their claims are such that the plaintiff is or may be exposed to double or multiple liability."

The insured motion to dismiss is apparently directed to the fact that MFA is denying liability on the insurance policy thereby asserting a claim adverse to the defendant and, consequently, is not a disinterested stakeholder. As already pointed out an action in the nature of interpleader does not preclude a plaintiff from asserting an adverse claim to the money or property in dispute. A plaintiff is allowed by both 28 U.S.C. § 1335 and Fed.R.Civ.P. rule 22 to bring an action in the nature of interpleader while averring that he is not liable to any or all of the claimants.

The motion to dismiss also contends that the necessary diversity of citizenship is lacking to grant jurisdiction. The jurisdictional requirement of diversity is different in the interpleader statute, 28 U.S.C. § 1335, from the diversity requirement in the general statute 28 U.S.C. § 1332. Diversity between the plaintiff and each defendant is not necessary in a statutory interpleader action; "minimum diversity" is sufficient i. e. the only requirement is that there be at least two adverse claimants of diverse citizenship. Haynes v. Felder, 239 F.2d 868 (5th Cir. 1957); Builders and Developers Corp. v. Manassas Iron and Steel Co., 208 F.Supp. 485 (D.C.Md. 1962).

Despite one decision to the contrary in Boice v. Boice, 135 F.2d 919 (3rd Cir. 1943) it is well established that where there are two opposing claimants of diverse citizenship, as is true in the instant case, then it is permissible for the interested stakeholder to be of the same citizenship as one of the claimants. Pan American Fire & Casualty Co. v. Revere, 188 F.Supp. 474 (E.D.La.1960) and authorities therein cited.

The only other grounds of objection apparent to the court is that the remedy of interpleader should not be available to adjudicate unliquidated tort claims. The early case of American Indemnity Co. v. Hale, 71 F.Supp. 529 (W.D.Mo....