Scottrade v. Davenport
1:11-cv-00003
D. Mont.Apr 26, 2011Background
- Interpleader action filed by Scottrade under Rule 22 and 28 U.S.C. § 1335 to resolve ownership of deceased James LeFeber's TOD account proceeds.
- TOD Plan named Kristine Davenport to receive 16% but Davenport claims a 2007 agreement gives her the entire account.
- Funds are held in the Court registry pending ownership determination.
- Davenport opposes Scottrade’s request for attorney fees; other claimants consent to fees.
- Court previously left the LeFeber funds in registry under a February 11, 2011 order; Scottrade seeks $6,142.53 in fees and dismissal with prejudice.
- Court must decide whether Scottrade is entitled to attorney fees and whether Scottrade should be dismissed from the action.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Scottrade is entitled to attorney fees in interpleader. | Scottrade—fees justified for interpleader costs and discharging liability. | Davenport—fees improper or excessive; may discourage other claimants. | Yes; fees awarded for costs and filing, not merits. |
| Whether Scottrade should be dismissed with prejudice. | Dismissal appropriate after fees and release from liability. | Dismissal would prejudice Davenport’s remaining claims. | Yes; Scottrade dismissed with prejudice. |
| Whether the fee award should be borne by remaining parties. | Remain bound by distribution of fund to fund beneficiaries. | Liability to be allocated among other claimants. | Reserved ruling on allocation of fees among parties. |
| Whether Scottrade acted properly by interpleading rather than promptly paying Davenport. | Interpleader prudent to prevent dissipation and multiple suits. | Action used to escape liability improperly. | Interpleader proper; action maintained. |
Key Cases Cited
- Septembertide Pub., B.V. v. Stein and Day, Inc., 884 F.2d 675 (2d Cir. 1989) (requirements for interpleader fee entitlement)
- Trustees of Directors Guild of America-Producer Pension Benefits v. Tise, 234 F.3d 415 (9th Cir. 2000) (limits on attorney-fee awards in interpleader actions)
- Schirmer Stevedoring Co. Ltd. v. Seaboard Stevedoring Corp., 306 F.2d 188 (9th Cir. 1962) (interpleader fees are for costs, not merits defense)
- Lutheran Brotherhood v. Comyne, 216 F.Supp.2d 859 (E.D.Wis. 2002) (dismissal with prejudice appropriate when interpleader proper)