FEDERAL INTERPLEADER ATTORNEY FEE AWARD SURVIVES CHALLENGE

A federal district judge in Dallas recently upheld an award of attorney fees in an interpleader action, rejecting a claimant's challenge.  In Jackson Nat'l Life Ins. Co. v. Dobbins, 2016 WL 4268770 (N.D. Texas Aug. 15, 2016), a set of claimants argued the carrier should not be awarded attorney fees in an interpleader action when the claim is of a type that arises in the ordinary course of business, an argument which would presumably mean an insurance carrier could never recover fees in an interpleader, since resolving claims is part of an insurer's ordinary business. The court rejected this position, essentially holding that while such a rule may be fine for other federal circuits and other states, it is not Fifth Circuit law.  The court ordered the carrier to submit evidence supporting its fee application, since it had not done so initially.

The court's other significant holding addressed the scope of the discharge to which an interpleader is entitled. Some of the claimants argued the carrier should not be discharged at all because they had counterclaims against the carrier. The court noted the mere existence of a counterclaim or possible counterclaim does not necessarily preclude discharge in interpleader, and that the discharge the stakeholder receives is only as broad as the claimants' rights to the property at issue. Thus, if a claimant has independent grounds for a claim against the carrier, the claimant may bring a separate suit for claims that are unrelated to the policy proceeds.