Legal Memorandum: An Award of Attorney Fees in Interpleader Actions

Issue: In Virgin Islands court, is a plaintiff entitled to either the attorney’s fees or injunctive relief it seeks if its interpleader action is barred by laches, unclean hands, and failure to comply with the bond requirements of 28 U.S.C. 1335?

Area of Law: Litigation & Procedure
Keywords: Attorneys' fees; Interpleader action
Jurisdiction: Federal, Virgin Islands
Cited Cases: None
Cited Statutes: 28 U.S.C. 1335, 2361
Date: 03/01/2006

Attorneys’ fees are awarded only to plaintiffs who bring a “successful” interpleader.  See Murphy v. Travelers Ins. Co., 534 F.2d 1155, 1164 (5th Cir 1976) (“[A]s a general rule, when an interpleader action is successful, the court often awards costs, as well as attorney’s fees to the stakeholder.”); 7 Wright & Miller, supra, § 1719. 

Moreover, when the stakeholder is an insurer who brings the interpleader as part of it regular routine of business, courts often refuse to award the insurer its attorney’s fees because the insurer is merely doing its business in the most efficient manner and it would be inequitable to make the claimants to the fund pay for the insurer’s efficient business practice.  See Sun Life Assur. Co. v. Thomas, 735 F. Supp.730, 733 (W.D. Mich. 1990). 

Section 2361 of 28 U.S.C. permits an injunction in a statutory interpleader action “only when a deposit has been made or a bond furnished by the stakeholder as required by statute.”  7 Wright & Miller, supra, § 1717 at 659 (emphasis added); see Edner v. Mass. Mut. Life Ins. Co., 138 F.2d 327 (3d Cir. 1943) (deposit of cash surrender value of the policy is insufficient compliance with statute to permit injunction when the face amount of the policy was the amount in controversy).


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