Interpleader/Disputed Ownership Funds
Money paid into the court that is subject to dispute as to who is the rightful owner of the money is referred to as “interpleader” or “stakeholder” funds. The IRS refers to these funds as “disputed ownership” funds.
The funds are subject to certain tax administration requirements proscribed by the IRS. So that the court does not have to comply with these complicated IRS requirements, the Administrative Office will ensure that the IRS requirements are satisfied.
To allow the AO to perform this function for the court, special docketing events have been created. The AO will perform a “sweep” to check for these special docketing events. The special docketing events will only be available in adversary proceedings (not in the main case.) The special docketing events will be available in CM/ECF on April 1, 2017.
Docketing Events Summary: The process will typically begin with the filing of a Motion for Interpleader Deposit followed by an Order on Motion for Interpleader Deposit. (In the alternative, a sua sponte or agreed Order Authorizing Interpleader Deposit could be entered.) When the deposit of money is received by the court, the Interpleader Deposit Received [court event] must be used. This is the first of two special docketing events that will be captured by the AO’s sweep. Once the judge has determined who is the rightful owner of the funds, a Motion for Interpleader Disbursement will typically be filed, followed by an Order on Motion for Interpleader Disbursement. (In the alternative, a sua sponte or agreed Order Authorizing Motion for Interpleader Disbursement may be entered.) When the deposit of money is disbursed by the court, the Interpleader Disbursement Completed [court event] must be used. This is the second of two special docketing events that will be captured by the AO’s sweep.
It will be helpful to the court if counsel alerts chambers and/or the clerk’s office when it is anticipated that stakeholder funds are at issue. See General Order 23-2 Order Regarding Deposit and Investment of Registry Funds.