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The Indiana Court of Appeals upheld an interpleader order allowing a home buyer to deposit with the court an arbitration award due the home builder, thus enabling the home buyer to avoid double liability to the subcontractors who had not been paid. In affirming the order, the Court rejected the builder’s argument that the interpleader complaint was an impermissible attempt to modify the award.
In Delta Building Group, Inc. v. Laurenzano, No. 55A04-0611-CV-653, 2007 WL 2811081, (Ind. Ct. App. Sept. 28, 2007), Laurenzano and Delta entered into a construction contract that contained an arbitration agreement. Later, Laurenzano fired Delta and initiated arbitration. Following a hearing, the arbitrator issued a net award of $45,804.01 in Delta’s favor.
There were third-party contractors looking to Laurenzano for payment of money that was already paid or due Delta, so instead of paying the arbitration award, Laurenzano filed a complaint for interpleader and deposited the award into court. In response, Delta filed a motion to confirm the award and argued that Laurenzano’s interpleader complaint was an impermissible attempt to modify the arbitration award.
The trial court ruled that the arbitrator had made specific findings which warranted an order for interpleader. Specifically, the trial court found that the arbitrator had rolled all amounts due to the subcontractors into the calculation of the net award. Moreover, the trial court ordered that some of the funds deposited with the court should be distributed to the subcontractors.
On appeal, the Court found no error in the trial court’s interpleader order or in its direct distribution of award proceeds to the subcontractors. Despite the urging of Delta, the Court refused to hold that an interpleader order constituted an impermissible modification of the arbitration award. The Court was especially swayed by the fact that Laurenzano did not dispute the arbitration agreement, the award, or the arbitrability of the claims, but only wanted assurance that the award would be paid to the parties who were owed.
As the Court observed, absent the interpleader order, there was a real danger that Delta would fail to pay the subcontractors and expose Laurenzano to multiple liability, a danger which warranted the order.
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