Pan American Fire & Casualty Co. v. Revere
188 F.Supp. 474 (E.D. La. 1960)
A truck hit a schoolbus,
killing a bunch of people. Some other cars couldn't stop in time and got
into a secondary accident, injuring more people. A bunch of people
started suing the owner of the truck, or more accurately the insurance
company that insured the truck (Pan American).
Pan American instituted an interpleader action. They basically said that they insured
the truck owner for a maximum of $100k. They put the $100k in escrow and
asked the Court to join all
of the lawsuits into one, and tell Pan American who to give what % of the
$100k to. One of the claimants (Revere) made a motion to dismiss.
Btw, Pan American (and the truck
owner) also denied all liability to the claimants. Admitting liability
would amount to a concession that the driver was negligent and that would expose them to very large
personal liability judgments.
The Federal Trial Court found for Pan American and allowed the
case to proceed.
The Trial Court recognized that
the idea of an interpleader is
that someone is in danger of being compelled to pay the same debt twice.
That is not what this case is about. Here Pan American is trying to use
the interpleader rules
because they have a fixed the limits of liability.
Basically, although Pan
American might be forced to pay multiple claims to multiple people, they
never have to pay the same claim
twice. Each claim is independent.
However, the Court found
that an insurer with limited contractual liability who faces claims in
excess of his policy limits is "exposed" to paying more than what they
are legally required to pay, so that should count under Rule 22.
If the claims were allowed
to proceed as different cases, each court could order Pan American to
pay $100k to each defendant.
These are unliquidated
tort claims, and at the Time Revere made his motion the
Court had no way of knowing how much recovery each plaintiff would eventually get.
Some of the claimants had
already sued in State Court, but the Trial Court ruled that they had
the authority to take those cases out of State Court and join them into the Federal proceeding under 28
U.S.C. § 2283(2).
28 U.S.C. § 2283(2) allows a Federal Court to stop a State Court
from hearing a claim related to an interpleader, "Where
the issuance of an injunction by the Federal Court is necessary in aid
of its jurisdiction"
There are two mechanisms
one can use for initiating an interpleader. Using 28 U.S.C. § 1335 is a stautory
interpleader. The other uses Rule
22, and is a rule interpleader. Since this case was brought using Rule 22, it
was debatable whether you could invoke provisions of 28 U.S.C. § 1335 like this. The Court found they could.
Then the Court ruled
that, according to Rule 22, the
lawsuit could only be brought in Texas (where Pan American was located)
and could not join anyone outside of Texas jurisdiction.
Unfortunately, most of the claimants were from other States. But, that
jurisdictional issue does not apply for 28 U.S.C. § 1335 lawsuits. So, the Court changed the
basis of the lawsuit from a Rule 22 action to a 28 U.S.C. § 1335 action and allowed the lawsuit to proceed.