Business Partnership Disputes – Interpleader…Get Help!
It’s time for the fun lawyer word that comes up often in business partnership disputes: Interpleader. It is not something that people often think about, but when an Asset Holder (bank, insurance company, escrow company, or business) has stewardship of an asset (most often money) that is owned by a business, and the business partners in that business are fighting over who should get the asset, how does the Asset Holder determine who should get the asset?
In these situations, the Asset Holder can file an Interpleader action with the Court so that they can determine what to do with the asset. So what are some things you should look out for in an Interpleader action?
1. What are the rules for Interpleader actions?
The Arizona Rules of Civil Procedure, Rule 22, gives a breakdown of when an Interpleader action is appropriate, and what its purpose is. Specifically, the rule says:
Generally. Interpleader is a procedure where one holding money or property subject to adverse claims
2. Did the Asset Holder who filed an Interpleader action commit wrong before the Interpleader action?
One issue that often comes up in an Interpleader is whether the Asset Holder is actually responsible for doing something wrong before filing the Interpleader action. When an Interpleader is filed, the Asset Holder will usually request to be released from any wrongdoing relating to the asset as allowed under Rule 22 (b):
(b) Release from Liability upon Deposit or Delivery.A party requesting Interpleader under Rule 22(a) may move the court for an order discharging that party from liability to the claimants.
If the Asset Holder is partially to blame for the issues taking place with the asset, then you do not want to allow them to be released from wrongdoing by the court.
3. Can one of the business partners file an Interpleader on their own instead of waiting for the Asset Holder?
Rule 22 allows for any person involved in litigation to file an Interpleader action. Specifically, the rule says:
By a Plaintiff. A plaintiff may join as a defendant anyone who asserts or may assert a claim to the money or property.
By a Defendant. A defendant may seek Interpleader through a crossclaim or counterclaim.
4. Who gets the asset?
There are two options that can occur when an Interpleader action arises. The Court can require that either the Asset Holder deposit the asset at issue with the court or the Asset Holder delivers the asset as the court directs.
This means that the Court can either hold the assets in its possession, or it can direct that the assets be delivered to one of the parties claiming ownership.
5. What to look out for?
Interpleader actions are often part of a much bigger legal dispute between business partners. For example, one business partner may be alleging fraud, breach of fiduciary duty, embezzlement, or any number of claims against the other. In these events, you may have what is called “mandatory claims” that must be raised at the Interpleader stage, or else they are lost.
You may have also heard the expression that possession is 9/10ths of the law. While it is not quite that dramatic, when an individual gains possession of an asset from an Interpleader action, this can be a huge victory. Because of this, fighting over the deposit of funds in an Interpleader action is critical to the potential success of a matter.
Contact Counxel Legal Firm
We are here to simplify your legal experience. We understand that Interpleader actions are complicated. If you have an issue where an asset (including money) is subject to an Interpleader action, then give the Counxel Legal Firm team a call at 480-536-6122 or email us at intake@counxel.com.
This article is intended for informational purposes only and does not constitute legal advice for your specific situation. Use of and access to this article does not create an attorney-client relationship between you and Counxel Legal Firm. Please contact intake@counxel.com or 480-536-6122 to request specific information for your situation.
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