Benchmark Insurance Company v. SUNZ Insurance Company

Background

Benchmark Insurance Company filed an interpleader action under 28 U.S.C. §§ 1335 and 2361. In an interpleader action, a party holding disputed funds asks the court to resolve competing claims to those funds. Benchmark alleged that it held $20,533,594 in excess collateral that it intended to deposit with the court.

SUNZ Insurance Company moved to compel Benchmark to deposit the excess collateral. The parties also disputed the amount Benchmark was required to deposit and whether Benchmark could use certain trust assets for the deposit. Benchmark later filed its own motion for permission to deposit the interpleader funds. Benchmark also asked the court to dismiss it from the action, discharge it from liability, and prevent the defendant-claimants from pursuing proceedings concerning the funds.

Analysis

The court explained that a plaintiff in an interpleader action under 28 U.S.C. § 1335 must deposit the disputed money into the court’s registry. The court also noted that the District of Minnesota’s local rules require a motion for permission to deposit funds, a completed registry-deposit information form, and a proposed order.

Because Benchmark had filed the required motion for permission to deposit the funds, the court denied SUNZ’s motion to compel as moot. The court stated that denying the motion as moot did not decide or express a view on the arguments SUNZ made in its reply brief. SUNZ could raise those arguments in response to Benchmark’s motion.

Disposition

The court ordered that SUNZ Insurance Company’s Motion to Compel Deposit of Interpleader Funds was DENIED AS MOOT. The court ordered briefing on Benchmark’s Motion for Leave to Deposit Interpleader Funds and Discharge under the local rules and stated that a hearing could be scheduled after briefing if the court considered one appropriate. Prior consistent orders remained in effect.