Appeals Regarding Interpleader and Intervention of Parties

Interpleader is a procedural device whereby a party holding money or property concededly belonging to another may join in a single suit two or more parties asserting mutually exclusive claims to the fund.  The stakeholder is thereby freed from the threat of multiple liability and/or the vexation of multiple lawsuits.[i]

Requisite to the maintenance of an interpleader action is that the stakeholder be subject to multiple adverse claims against a single fund or liability.[ii]  Ordinarily, the appealability of orders passing upon a motion to interplead claimants to the property in suit depends upon whether or not the order attempts to dispose of any substantive right of the parties.  Hence, an interpleader action is appealable only if dispose off the rights and liabilities of all the parties.  Thus, the dismissal of one defendant from an interpleader action is not appealable as a final order and the interpleader action continues without the dismissed defendant.

Also, an intervenor, whether by right or by permission, normally has the right to appeal an adverse final judgment by a trial court.[iii]  Hence, an order allowing state court litigants to intervene in an action in federal court where intervention is sought after the underlying controversy has been concluded solely to modify a protective order sealing access to records that would be germane to the intervenors’ state court actions on a similar issue.”[iv]

In order to intervene as of right each of the four requirements of the rule must be met: (1) the application for intervention must be timely; (2) the applicant must have an interest relating to the property or transaction which is the subject of the action; (3) the applicant must be so situated that the disposition of the action may, as a practical matter, impair or impede his ability to protect that interest; (4) the applicant’s interest must be inadequately represented by the existing parties to the suit.”[v]

Upon timely application anyone may be permitted to intervene in an action: (1) when a statute of the United States confers  a conditional right to intervene; or (2) when an applicant’s claim or defense and the main action have a question of law or fact in common . . . . In exercising its discretion the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.[vi]  Permissive intervention is wholly discretionary with the district court even though there is a common question of law or fact, or the requirements of Fed. R. Civ. P. 24(b) are otherwise satisfied.[vii]

Similarly, an order denying intervention is not appealable if other remedies are available to the intervener and unless it would be a practical denial of relief to which the petitioner for intervention is entitled and can obtain in no other way. [viii]

The right to intervene in a pending lawsuit is given in furtherance of speedy disposition of suits and to prevent multiplicity of actions[ix] and a statute permitting an interlocutory appeal does not apply to a case commenced before the statute’s effective date.

[i] Gaines v. Sunray Oil Co., 539 F.2d 1136, 1141 (8th Cir. Ark. 1976)

[ii] General Electric Credit Corp. v. Grubbs , 447 F.2d 286 (5th Cir. 1971)

[iii] Fishgold v. Sullivan Drydock & Repair Corp., 328 U.S. 275, 280-283 (1946)

[iv] United Nuclear Corp. v. Cranford Ins. Co., 905 F.2d 1424 (10th Cir. 1990).

[v] Bush v. Viterna, 740 F.2d 350, 354 (5th Cir. Tex. 1984)

[vi] Fed.R.Civ.P. 24(b)(2)

[vii] Woolen v. Surtran Taxicabs, 684 F.2d 324 (5th Cir. Tex. 1982)

[viii] Boise Cascade Corp. v. East Stroudsburg Sav. Asso., 300 Pa. Super. 279 (Pa. Super. Ct. 1982)

[ix] Metromedia Long Distance, Inc. v. Hughes, 810 S.W.2d 494 (Tex. App. San Antonio 1991)


Inside Appeals Regarding Interpleader and Intervention of Parties