Interpleader in State Court

Why some cases are in state court

Federal courts can hear interpleader under 28 U.S.C. § 1335 when there are adverse claimants “of diverse citizenship,” or under Rule 22 when there is another basis for federal jurisdiction. See statutory versus Rule 22 interpleader. When those requirements are not met, or when the stakeholder prefers, the case is filed in state court. State court can also be where a related probate or divorce case is already pending. A federal court may also decline a case that turns on a divorce decree: in a Massachusetts interpleader, the court dismissed under the domestic-relations exception because deciding it required construing a probate court divorce decree.

Examples of state rules

Texas. Rule 43 allows persons “having claims against the plaintiff” to 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.” It is not an objection that the claims “do not have a common origin or are not identical.” A defendant exposed to similar liability “may obtain such interpleader by way of cross-claim or counterclaim.”¹

New York. Under CPLR 1006, a stakeholder is “a person who is or may be exposed to multiple liability as the result of adverse claims,” and “may commence an action of interpleader against two or more claimants.” A defendant who is sued can also bring in another claimant. After the time for all parties to plead has expired, the stakeholder may move to be discharged, and the court may require the money to be paid into court and may charge just expenses and costs against it. The rule also caps the interest a stakeholder owes, absent agreement, at a rate tied to the Federal Reserve Bank of New York’s lowest discount rate.² New York also has insurance-law provisions on interest that can matter in life insurance cases. See discharge, fees, and interest.

Florida. Florida’s Rules of Civil Procedure include an interpleader rule, Rule 1.240. Check the current text of the rule before relying on any summary of it.

Other states have their own rules, and some follow the wording of Federal Rule 22 closely. Read the rule in the state where the case is filed.

Deadlines differ

Do not assume the federal 21-day answer deadline applies. In Texas, the citation directs the defendant to answer “on or before 10:00 a.m. on the Monday next after the expiration of twenty days after the date of service.”³ The papers you are served with should state the deadline. If they do not, ask the court clerk.

Moving a case to federal court

A state civil action that a federal court could have heard “may be removed by the defendant or the defendants” to federal court.⁴ The notice of removal generally “shall be filed within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading.”⁵ Whether removal is possible in a particular interpleader depends on the jurisdictional facts.

When related state cases are already pending

A federal interpleader often runs alongside probate, family-court or other state cases about the same death, and a claimant may ask the federal court to stay its case or step aside. MetLife v. Lawless, a New Jersey federal case, is a leading example of a court refusing to do so. The insured had changed the beneficiary of three group life insurance plans from earlier employers to his wife about nine months before he died in March 2019. His former spouse relied on their marital settlement agreement, which she said required him to keep life insurance for her and their two children, and the former spouse, the insured’s brother and the children pressed undue influence, lack of capacity and related claims in the state probate court and in the former spouse’s reopened divorce case. The insurer filed its federal interpleader on June 13, 2019, naming all of them. The former spouse and the brother moved to stay it pending the state cases, and the children joined.⁶

On November 15, 2019, the magistrate judge denied the stay without prejudice:

• The standard. The court applied the discretionary Brillhart/Wilton standard, which the Third Circuit adopted for interpleader in NYLife Distributors, Inc. v. Adherence Group, Inc., 72 F.3d 371 (3d Cir. 1995), rather than the narrower Colorado River “exceptional circumstances” test, and it also weighed the stay factors drawn from Landis v. North American Co., 299 U.S. 248 (1936).⁶
• Not parallel. The family-court case sought damages for breach of the settlement agreement rather than a change of beneficiary, so it was not parallel. The probate case covered the claimants’ dispute, but the insurer was not a party to it, and “the unavailability of interpleader relief in state court is of sufficient magnitude to prevent the Court from finding this action parallel to the Probate Action” (slip op. at 14).⁶
• A stay would defeat the statute. Even if the cases were parallel, a stay would “deprive MetLife of access to expeditious interpleader relief as provided for by Congress” (at 2) and “leave MetLife in limbo while the state action is decided” (at 14).⁶

The court said its analysis “may be different” once the case moved past the interpleader stage. Three weeks later it entered a consent order discharging the insurer, the plans and the employers upon deposit and enjoining further suits against them.⁷ The insurer deposited the benefits on January 6, 2020, and the claimants then settled their federal and state claims together; the court approved the settlement for the minor children in April 2020.⁸ See divorce and beneficiary designations for the outcome.

A federal court can also step aside entirely when the state case is broader. In Security Life of Denver Ins. Co. v. Hersko (E.D.N.Y. 2026), the insurer filed a Rule 22 interpleader in July 2024 over a policy on a third person’s life. One brother’s lawyer had written to the insurer claiming that he beneficially owned the policy, and the other brother, as trustee of the family trust, claimed that the trust was the rightful beneficiary. The court let the insurer deposit $6,194,306.97. The brothers were already litigating a partnership dispute in Kings County Supreme Court, where one side relied on a religious instrument describing them as equal partners in investments that included life insurance on other people, and the other side contended that the instrument was unenforceable. After the first brother died, his estate moved to dismiss.⁹

On March 30, 2026, the court dismissed the federal case without prejudice under the Colorado River abstention doctrine:

• Parallel. The most recent state case was “nearly identical to this case, as it involves the same parties and the same specific dispute” over the policy proceeds (slip op. at 11).⁹
• Piecemeal litigation. The court called avoiding piecemeal litigation “[b]y far the most important factor.” If it decided the beneficiary and the state court later divided the brothers’ assets differently, “those inconsistent judgments will result in potentially irreparable harm and additional litigation” (at 14).⁹
• State law and an adequate state forum. The claims were “quintessential state law claims” about contracts, trusts and estates, set against “an extremely complex litigation history” in the state court (at 15–16). That court was “uniquely positioned” to decide who was entitled to the proceeds, and the insurer could join the state case or file its own interpleader there under the CPLR and seek consolidation (at 16–17).⁹

The court directed the clerk to return the deposit, with accrued interest, to the insurer (at 18–19).⁹ The contrast with Lawless lies in the state proceedings. In Lawless, the insurer was not a party to the probate case and interpleader relief was unavailable there. In Hersko, the state case would settle the larger accounting between the brothers on which the policy dispute depended, and the insurer could seek interpleader relief in that court.

What stays the same

Whatever the court, the basic stages are similar: the stakeholder files and often deposits the money, claimants answer and state their claims, the stakeholder may be discharged, and the court decides who is entitled to the fund. See named in an interpleader and handling an interpleader without a lawyer.

Footnotes

1. Tex. R. Civ. P. 43. Texas Judicial Branch. ↩

2. N.Y. C.P.L.R. 1006(a), (b), (f). Justia. ↩

3. Tex. R. Civ. P. 99(b). Texas Judicial Branch. ↩

4. 28 U.S.C. § 1441(a). Cornell LII. ↩

5. 28 U.S.C. § 1446(b)(1). Cornell LII. ↩

6. Metropolitan Life Ins. Co. v. Lawless, No. 3:19-cv-13688-MAS-ZNQ (D.N.J. Nov. 15, 2019), ECF No. 39 (memorandum opinion and order denying stay), at 2, 10–14. ↩ ↩² ↩³ ↩⁴

7. Metropolitan Life Ins. Co. v. Lawless, No. 3:19-cv-13688-MAS-ZNQ (D.N.J. filed Dec. 5, 2019), ECF No. 46 (consent order providing interpleader relief). ↩

8. Metropolitan Life Ins. Co. v. Lawless, No. 3:19-cv-13688-ZNQ (D.N.J. Apr. 27, 2020), ECF No. 72 (final judgment and order of interpleader disbursement), at 2, court judgment (PDF). ↩

9. Security Life of Denver Ins. Co. v. Hersko, No. 1:24-cv-05215-HG-LKE (E.D.N.Y. Mar. 30, 2026), ECF No. 91 (memorandum and order), at 2–5, 9, 11, 14–19, court order (PDF); Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817–18 (1976). ↩ ↩² ↩³ ↩⁴ ↩⁵