Bradley J. Reed
Attorney for the Appellants
Tabitha and Amanda Kackley
E. Kay Fuller
Martin & Seibert, L.C.
Martinsburg, West Virginia
Attorney for the Appellee
Oak Casualty Insurance Co.
JUSTICE DAVIS delivered the Opinion of the Court.
JUDGE GARY L. JOHNSON, sitting by temporary assignment.
JUSTICE SCOTT did not participate.
1. Where the issue on an appeal from the circuit court is clearly a
question of law or involving an interpretation of a statute, we apply a de novo standard of
review. Syllabus point 1, Chrystal R.M. v. Charlie A.L., 194 W. Va. 138, 459 S.E.2d
2. In an interpleader action filed by an insurance company seeking the
orderly contest of insurance proceeds arising from automobile liability coverage, which
proceeds are insufficient to cover all claims resulting from an accident involving its
insured, the circuit court may not restrict an interpleader defendant's right to file a lawsuit
against the insured tortfeasor to determine the liability of that person or entity for the
Minors who were injured in an automobile accident appeal a final decision of the Circuit Court of Mineral County rendered in an interpleader action initiated by Oak Casualty Insurance Company for the purpose of distributing the proceeds of an insurance policy issued to the driver of one of the automobiles involved in the collision. The final order of the circuit court is challenged insofar as it ordered the minors, through their legal guardian, to release Oak Casualty's insured from all liability resulting from the accident. We conclude that the circuit court was without authority to restrict an interpleader defendant's right to file a lawsuit against an insured tortfeasor to determine the liability of that person or entity for the underlying accident.
Prior to addressing the proposed division of the insurance proceeds, the
circuit court appointed Patrick Nield, Sheriff of Mineral County, as guardian for the minor
claimants. In addition, the court appointed David Webb as their guardian ad litem. The
court then addressed the proposed division on September 24, 1998. At that time, the court
instructed each interpleader defendant to assert, within fifteen days, any and all claims they
had against either Oak Casualty or Paula Kackley. The court further directed counsel for
the minor claimants to show cause why the court should not require a release of Oak
Casualty and its insured, Kackley.
In response to the court's orders, counsel for the minor claimants argued that
Kackley should not be released from liability because (1) she could not be a party to the
interpleader action due to her interest in the controversy among the claimants, (2) Oak
Casualty did not need a release in favor of Kackley in order to withdraw from defending
claims against her arising from the accident, and (3) the minor claimant's right to proceed
against Kackley for their uncompensated damages should not be extinguished as Kackley
could earn, gain or win funds in the future.See footnote 5
Oak Casualty filed a response in part
admitting that Paula Kackley should not be released from liability, but indicating that any
judgment against her would be non-collectible.
On November 4, 1998, the court approved the proposed distribution of the
insurance funds and took up the issue of whether Oak Casualty and Kackley should be
released from liability. The guardian ad litem for the minor claimants recommended that
Kackley not be released from liability for the girls' injuries resulting from the accident.
The circuit court accepted and adopted the recommendations of the guardian ad litem.
Nevertheless, the court entered a final order requiring full releases of all claims in favor
of both Oak Casualty and Kackley. The minor claimants objected to the portion of the
final order releasing Kackley from liability and filed a motion for reconsideration. By
order entered November 20, 1998, the circuit court denied the motion for reconsideration.
It is from this order that the minor claimant's now appeal.
Our review of a denial of a motion to reconsider is for an abuse of discretion. See Browder v. Director, Dep't of Corrections, 434 U.S. 257, 263 n. 7, 98 S. Ct. 556, 560 n.7, 54 L. Ed. 2d 521, 530 n.7 (1978); Johnson v. Nedeff, 192 W. Va. 260, 266, 452 S.E.2d 63, 69 (1994); Robinson v. McKinney, 189 W. Va. 459, 465, 432 S.E.2d 543, 549 (1993); Syl., Ross v. Ross, 187 W. Va. 68, 415 S.E.2d 614 (1992); Syl. pt. 5, Toler v. Shelton, 157 W. Va. 778, 204 S.E.2d 85 (1974); Syl., Intercity Realty Co. v. Gibson, 154 W. Va. 369, 175 S.E.2d 452 (1970).
Powderidge Unit Owners Ass'n v. Highland Properties, Ltd., 196 W. Va. 692, 705, 474 S.E.2d 872, 885 (1996). This standard notwithstanding, the specific issue before us, whether the trial court erred in ordering that Oak Casualty's insured, Kackley, be released from all liability arising from the accident underlying the interpleader proceeding, is a question of law which we will review de novo. Where the issue on an appeal from the circuit court is clearly a question of law or involving an interpretation of a statute, we apply a de novo standard of review. Syl. pt. 1, Chrystal R.M. v. Charlie A.L., 194 W. Va. 138, 459 S.E.2d 415 (1995). With due regard for these rules, we proceed to consider the substantive issue before us.
The United States Supreme Court has previously addressed a similar issue
in a case with factual circumstances that were more complex than the case at bar. State
Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 87 S. Ct. 1199, 18 L. Ed. 2d 270
(1967). We look to federal law for guidance as Rule 22 of the West Virginia Rules of
Civil Procedure is identical to Rule 22(1) of the Federal Rules of Civil Procedure.See footnote 6
fact that Tashire addresses interpleader in the context of the federal statute, 28 U.S.C. §
1335, rather than under Rule 22, is of no concern with respect to the issue herein
addressed because the federal interpleader statute deals primarily with matters related to
federal jurisdiction, venue and service of process. As one state court relying on federal
law to interpret its own interpleader rule has recognized:
A distinction is made in the federal courts between statutory interpleader, authorized by 28 U.S.C. § 1335, and rule interpleader, authorized by rule 22(1) F. R. Civ. P. See 7 Wright & Miller, Federal Practice and Procedure, Civil § 1703, p. 365.See footnote 7 6 The distinctions between the two relate primarily to jurisdiction, the amount in controversy, citizenship of litigants, venue, and service of process. For the most part, these differences do not concern us.
Club Exch. Corp. v. Searing, 222 Kan. 659, 662, 567 P.2d 1353, 1356-57 (1977) (footnote added). Therefore, we proceed to consider Tashire along with other federal authority.
The facts underlying Tashire involved a collision between a Greyhound bus
and a pickup truck in which thirty-four bus passengers and the bus driver were either
injured or killed. Four of the injured passengers filed suit seeking more than $1,000,000
in damages from Greyhound Lines, Inc., the bus driver, the driver of the pickup and the
owner of the pickup.
Thereafter, State Farm Fire & Casualty Co. (hereinafter State Farm), who
insured the driver of the pickup, brought an action in the nature of interpleaderSee footnote 8
to deposit with the court $20,000, which represented its maximum liability for personal
injuries resulting from the collision under the policy it issued to the pickup truck driver.
State Farm asked the trial court, inter alia, to require all claimants to establish their
claims against [its insured] and [State Farm] in this single proceeding and in no other.
Tashire at 526, 87 S. Ct. at 1201, 18 L. Ed. 2d at 273. Upon requests made by State
Farm and Greyhound, the court granted an injunction providing that all suits against State
Farm, the pickup truck driver, Greyhound and the bus driver be prosecuted in the
interpleader proceeding. Id. at 528, 87 S. Ct. at 1202, 18 L. Ed. 2d at 274.
The order was ultimately appealed to the United States Supreme Court,
where the Court concluded that State Farm was not entitled to an order both enjoining
prosecution of suits against it outside the confines of the interpleader proceeding and also
extending such protection to its insured, the alleged tortfeasor. Id. at 533, 87 S. Ct. at
1205, 18 L. Ed. 2d at 277. In reaching this conclusion, the Supreme Court explained:
Here, the scope of the litigation, in terms of parties and claims, was vastly more extensive than the confines of the fund, the deposited proceeds of the insurance policy. In these circumstances, the mere existence of such a fund cannot, by the use of interpleader, be employed to accomplish purposes that exceed the needs of orderly contest with respect to the fund.
Id. at 533-34, 87 S. Ct. at 1205, 18 L. Ed. 2d at 277 (emphasis added).See footnote 9 8 The Court further reasoned that [t]he circumstance that one of the prospective defendants happens to have an insurance policy is a fortuitous event which should not of itself shape the nature of the ensuing litigation. Id. at 534-35, 87 S. Ct. at 1206, 18 L. Ed. 2d at 278. The Court also described the extent to which an insurance company's interests are protected in an interpleader action:
State Farm's interest in this case, which is the fulcrum of the interpleader procedure, is confined to its $20,000 fund. That interest receives full vindication when the court restrains claimants from seeking to enforce against the insurance company any judgment obtained against its insured, except in the interpleader proceeding itself.
Id. at 535, 87 S. Ct. at 1206, 18 L. Ed. 2d at 278. Finally, the court observed the limits its decision placed upon the usefulness of utilizing interpleader to avoid multiple litigation:
We recognize, of course, that our view of interpleader means that it cannot be used to solve all the vexing problems of multiparty litigation arising out of a mass tort. But interpleader was never intended to perform such a function, to be an all-purpose bill of peace. Had it been so intended, careful provision would necessarily have been made to insure that a party with little or no interest in the outcome of a complex controversy should not strip truly interested parties of substantial rights -- such as the right to choose the forum in which to establish their claims, subject to generally applicable rules of jurisdiction, venue, service of process, removal, and change of venue. None of the legislative and academic sponsors of a modern federal interpleader device viewed their accomplishment as a bill of peace, capable of sweeping dozens of lawsuits out of the various state and federal courts in which they were brought and into a single interpleader proceeding.
Id. at 535-36, 87 S. Ct. at 1206, 18 L. Ed. 2d at 278 (footnote omitted).
Although Tashire was a complex case that involved numerous claimants and
potential defendants, other courts addressing cases involving factual circumstances more
closely related to the case sub judice have relied upon Tashire and recognized that the
scope of an interpleader action is limited to disputes involving the interpleaded stake.
The United States District Court for the Eastern District of Virginia
addressed whether it was proper for an interpleader court to enjoin outside suits against an
insured in a case involving an accident between a tractor-trailer and a van that was
carrying ten passengers. Carolina Cas. Ins. Co. v. Mares, 826 F. Supp. 149 (E.D. Va.
1993). The owner of the tractor-trailer had purchased liability insurance from Carolina
Casualty. The Mares court, relying on Tashire, denied Carolina Casualty's motion for an
injunction prohibiting actions against its insured, and the employee/driver of its insured,
that merely [sought] to establish their liability but which [did] not seek to reach the fund
which [was] the subject matter of [the interpleader] action. Id. at 155.
Similarly, National Indemnity Co. v. Grimm involved a multi-vehicle
collision which included a truck that was owned by Krogers, Inc., and operated by an
employee of Krogers. 760 F. Supp. 489 (W.D.P.A. 1991). As a result of the collision,
two individuals were killed and three others were injured. After four lawsuits claiming
damages from the accident were filed against Krogers, National Indemnity Co., who had
provided Krogers with a policy insurance that would cover the collision, recognized that
the claims against Krogers would exceed the $1,000,000 single limit of liability contained
in the Krogers policy. Consequently, National initiated an interpleader action and
requested, in part, that the interpleader defendants be enjoined from pursuing
enforcement of any judgments they obtain in any of the underlying lawsuits presently
pending . . . [and] in any other proceeding aside from this action. Grimm, 760 F. Supp.
at 492. The United States District Court for the Western District of Pennsylvania declared
There can be little question that a variety of adverse claims arising out of this accident will exceed the policy limits as set forth above. Under these circumstances we are bound by the Tashire Court decision wherein the Supreme Court, in a statutory interpleader action under 28 U.S.C. § 1335, found that when interpleader is sought against persons with unliquidated tort claims against the insured, the claimants may be enjoined from asserting their rights to the proceeds of the insurance policy except within the interpleader action, but they cannot be enjoined from establishing their claims against the insured in a forum of their own choosing. [Tashire] at 533, 87 S. Ct. at 1205.
Id. (emphasis added). The court then concluded [w]ere we to grant the relief requested, that being an Order which would extend protection to plaintiff's insured, the alleged tortfeasor, we would accomplish purposes that exceed the orderly contest with respect to the fund. Id. at 493.
Another case that is comparable to the case sub judice was decided in the
United States District Court for the Southern District of Mississippi. Mid-American
Indem. Co. v. McMahan, 666 F. Supp. 926 (S.D. Miss. 1987). In McMahan, the
tortfeasor was driving under the influence of alcohol and collided with another vehicle.
Three of the occupants of the struck vehicle were killed and a fourth occupant was
seriously injured. A liability insurance policy covering the automobile driven by the
tortfeasor was provided by Mid-American. The limit of liability under that policy was
$10,000 per person and $20,000 per occurrence. Because the potential claims resulting
from the accident were expected to greatly exceed the liability limits of the policy, Mid-
American initiated an action for interpleader and requested an order enjoining [an] action
presently pending against [the tortfeasor/driver], together with any actions which may be
instituted against either him or [his wife] . . . . McMahan at 929. The district court
denied the motion and observed [t]he United States Supreme Court has recognized that
injunctive relief, while available to restrain actions affecting the fund, is not available to
enjoin prosecution of suits outside the bounds of the interpleader proceeding, a proscription
which includes suits against the insured. Id. (citing Tashire).
Likewise, in Maryland Casualty Co. v. Sauter, 344 F. Supp. 433 (N.D.
Miss. 1972), Edward Issa, while driving an automobile for which he had purchased
liability insurance coverage from Maryland Casualty, struck another automobile seriously
injuring the four occupants of that automobile. The four occupants subsequently asserted
claims against Issa that exceeded his liability insurance coverage. Consequently, Maryland
Casualty interpleaded the limits of Issa's policy naming, among others, the four injured
occupants as defendants. Issa sought to intervene in the interpleader action and asserted
that all litigation between the parties should be conducted within the confines of one
action. Sauter at 436. Relying on the Supreme Court's decision in Tashire, the United
States District Court for the Northern District of Mississippi concluded that [t]he fact that
Maryland [Casualty] properly invoked the interpleader jurisdiction of this court under
Section 1335, does not, however, entitle Maryland [Casualty] to an order both enjoining
prosecution of suits against it outside the confines of the interpleader proceeding, and also
extending such protection to Issa, its insured. Id.See footnote 10
The Supreme Court of Kansas has also reached the conclusion that law suits
against an insured may not be enjoined in an interpleader action instituted by an insurer.
In Club Exchange Corp. v. Searing, 222 Kan. 659, 567 P.2d 1353 (1977), Club Exchange
Corp. insured both drivers who were involved in a two-automobile accident. After
determining that the claims for damages would exceed the liability limits of the relevant
policies, Club Exchange instituted an interpleader action seeking a determination of its
total liability and ask[ing] that it be permitted to pay that amount into court and be released
from all further liability on its policies. Searing at 660-61, 567 P.2d at 1355. In addition,
Club Exchange requested a temporary injunction to prevent the defendants from
instituting separate lawsuits. Id.at 661, 567 P.2d at 1355. In reaching it's holding that
[i]nterpleader does not limit the filing of lawsuits by the claimants directly against third-
party tortfeasors or against the stakeholder's insured, Syl. pt. 7, Searing, the court,
relying on Tashire, explained that:
interpleader is a joinder device whereby all of those who claim some interest in a particular fund (the stake) may be joined in the action, and may there assert and litigate their claims against the fund. Interpleader protects the stakeholder from multiple suits, and from determining at its peril the validity and priority of disputed claims; it also protects the claimants by bringing them together in one action so that a fair and equitable distribution of the fund may be made.
. . . .
But interpleader does not, and restraining orders and injunctions granted by the interpleader court should not, limit the filing of lawsuits by the claimants against third-party tortfeasors or against the plaintiff's insured.
Id. at 664-65, 567 P.2d at 1358.
In light of the foregoing authority, it is clear that any restrictions on legal actions imposed by an interpleader court must be limited to actions involving the interpleaded stake. In an interpleader action, a court may not restrict the injured parties from pursuing law suits against an alleged tortfeasor to establish the liability of that person or entity. We therefore hold that in an interpleader action filed by an insurance company seeking the orderly contest of insurance proceeds arising from automobile liability coverage, which proceeds are insufficient to cover all claims resulting from an accident involving its insured, the circuit court may not restrict an interpleader defendant's right to file a lawsuit against the insured tortfeasor to determine the liability of that person or entity for the underlying accident.See footnote 11 10
Here, the circuit court erred as a matter of law when it restricted the minor claimants' rights to sue Kackley by requiring them to release Kackley from all claims arising from the underlying automobile accident. For this reason, we find that the circuit court abused its discretion in denying the minor claimants' motion for reconsideration, which was based solely upon the portion of the court's order pertaining to the release.
Persons having claims against the plaintiff may 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 ground for objection to
the joinder that the claims of the several claimants or the titles
on which their claims depend do not have a common origin or
are not identical but are adverse to and independent of one
another, or that the plaintiff avers that the plaintiff is not liable
in whole or in part to any or all of the claimants. A defendant
exposed to similar liability may obtain such interpleader by
way of cross-claim or counterclaim. The provisions of this
rule supplement and do not in any way limit the joinder of
parties permitted in Rule 20.
W. Va. Code § 56-10-1 (1953) (Repl. Vol. 1997) also addresses interpleader and similarly fails to expressly address releasing an insured. We note, however, that to any extent that W. Va. Code § 56-10-1 may be in conflict with W. Va. R. Civ. P. Rule 22, it has been superseded. See Syl. pt. 10, Teter v. Old Colony Co., 190 W. Va. 711, 441 S.E.2d 728 (1994) ('Under Article VIII, Section 8 [and Section 3] of the Constitution of West Virginia (commonly known as the Judicial Reorganization Amendment), administrative rules promulgated by the Supreme Court of Appeals of West Virginia have the force and effect of statutory law and operate to supersede any law that is in conflict with them. Syl. Pt. 1, Stern Brothers, Inc. v. McClure, 160 W. Va. 567, 236 S.E.2d 222 (1977).' Syllabus Point 2, Bennett v. Warner, 179 W. Va. 742, 372 S.E.2d 920 (1988).).
federal jurisdiction and is not related to the issue before us.
A bill of interpleader and bill in the nature of interpleader are
governed by the same general principles except that in [the]
bill of interpleader the plaintiff has no interest in the property
held, whereas in the bill in the nature of interpleader the
plaintiff need not be without interest in property claimed by
45 Am. Jur. 2d Interpleader § 1, at 455 (1999) (footnote omitted). See also 10B Michie's Jur. Interpleader § 3, at 427 (1995) (The only material difference between a bill in the nature of a bill of interpleader and a bill of interpleader, pointed out by the courts and the law writers, is that in a bill in the nature of a bill of interpleader, the plaintiff may show that he has an interest in the subject matter of the controversy between the defendants. (footnote omitted)).
There are situations, of a type not present here, where
the effect of interpleader is to confine the total litigation to a
single forum and proceeding. One such case is where a
stakeholder, faced with rival claims to the fund itself,
acknowledges--or denies--his liability to one or the other of the
claimants. In this situation, the fund itself is the target of the
claimants. It marks the outer limits of the controversy. It is,
therefore, reasonable and sensible that interpleader, in
discharge of its office to protect the fund, should also protect
the stakeholder from vexatious and multiple litigation.
Id. at 534, 87 S. Ct. at 1201, __ L. Ed. 2d at __ (footnote omitted). The case sub judice is not the type described by the Tashire Court as one in which enjoining suits outside the interpleader action may be appropriate. For an example of that type of case see Provident Mutual Life Insurance Co. of Philadelphia v. Ehrlich, 508 F. 2d 129 (3d Cir. 1975).
from receiving disbursement of his or her portion of the fund until after a judgment has
been rendered in favor of such claimant and against the insured. To support this position,
Oak Casualty cites United Services Automobile Ass'n Property and Casualty Insurance v.
Lacy, 1991 WL 68905 (Del. Super. 1991). Oak Casualty does not cite to any other
authority for this proposition and we are aware of none. Furthermore, Lacy was not
handed down by the Delaware Supreme Court, but is an unreported decision of an inferior
Delaware court. Consequently, we decline to follow this authority, which we find to be
In addition, Oak Casualty attempts to raise additional issues that are beyond the scope of the interpleader action and/or were not addressed by the trial court. Such issues are not properly before this court and will not be addressed. See Stonebraker v. Zinn, 169 W. Va. 259, 266, 286 S.E.2d 911, 915 (1982) (It is a well established principle that this Court will not decide nonjurisdictional questions which have not been raised in the court below. West Virginia Department of Highways v. Delta Concrete Co.,  W. Va. , 268 S.E.2d 124 (1980); Dixon v. American Indus. Leasing Co., 157 W. Va. 735, 205 S.E.2d 4 (1974); Shaw v. Shaw, 155 W. Va. 712, 187 S.E.2d 124 (1972).).