State Farm Fire & Casualty Co. v. Tashire

Facts

A Greyhound bus collided with a pickup truck, killing two passengers on the bus and injuring thirty-three others, including the bus driver, driver of another car and its passenger. One of the dead passengers and ten of the injured were Canadian citizens and the rest of the individuals were United States citizens. Litigation began when four of the injured passengers filed suit in California state courts, seeking damages in excess of one million dollars. The defendants were Greyhound Lines, Inc., a California corporation; Nauta, the bus driver; Clark, the driver of the other car; and Glasgow, the passenger of the other car who was also the car’s owner (Defendants). The individual Defendants were residents of Oregon. Before the trial, Plaintiff, an Illinois company, brought this action of interpleader in the United States District Court for the District of Oregon. Plaintiff’s complaint stated at the time of the car accident, it had an insurance policy with Clark, the driver of the car, which provided for bodily injury liability up to $10,000 per person and $20,000 per occurrence and for legal representation of the driver. It further alleged that the damages sought in suits filed in California far exceeded the amount of its maximize liability under the policy in aggregate. Thus, Plaintiff paid $20,000 to the court and asked the court to require all claimants to establish claims against Clark and insurer in this proceeding, and to discharge Plaintiff from all further obligations under Clark’s policy. Plaintiff alternatively expressed conviction that the policy issued to Clark excluded coverage for accidents resulting from his operation of a truck that belonged to someone else and was being used in the business of another. The complaint requested that the court find that the insurer had no duty to Clark and refund the $20,000. Clark, Nauta, Glasgow, Greyhound Lines and the prospective claimants were joined as defendants. Jurisdiction was based on Rule 22 of the Federal Rules of Civil Procedure, the federal interpleader statute and diversity. An injunction sought by Plaintiff was granted by the Untied States District Court for the District of Oregon which provided that all suits against Clark, State Farm, Greyhound, and Nauta be prosecuted in the interpleader proceeding. On interlocutory appeal, Court of Appeals for the Ninth Circuit reversed and  concluded that interpleader was not available in the circumstances of this case. The Supreme Court of the United States granted certiorari to resolve the conflict of grounds for granting interpleader and to consider the administration of federal interpleader.