Judge: Elaine Lu, Case: 22STCV21343, Date: 2023-08-30 Tentative Ruling

Case Number: 22STCV21343    Hearing Date: August 30, 2023    Dept: 26

Superior Court of California

County of Los Angeles

Department 26

Procedural Background

On June 30, 2022, Plaintiff LA SuperLawyers Inc. (“Plaintiff”) filed the instant interpleader action against Defendants Erika Galvan (“Erika”),[1] Victoria Torres (“Torres”), and Carlos Galvan (“Carlos”).  On July 6, 2023, Plaintiff filed a first amended complaint in interpleader against Erika, Torres, and Carlos.

On October 24, 2022, Torres filed an answer and a cross-complaint against Erika for (1) Breach of Oral Contract, (2) Fraud, and (3) Quantum Meruit.  Erika filed an answer to the First Amended Complaint in interpleader on November 23, 2022 and an answer to Torres’ Cross-Complaint on January 1, 2023.  On January 12, 2023, default was entered against Carlos as to the First Amended Complaint in interpleader.

On January 31, 2023, Plaintiff filed the instant motion to be discharged of liability as to the interpleaded funds and dismissal of Plaintiff from the interpleader action.  No opposition or reply has been filed.

Legal Standard

            Pursuant to Code of Civil Procedure section 386(b), “[a]ny person, firm, corporation, association or other entity against whom double or multiple claims are made, or may be made, by two or more persons which are such that they may give rise to double or multiple liability, may bring an action against the claimants to compel them to interplead and litigate their several claims.”  (Id.) 

“ ‘[I]nterpleader is an equitable proceeding in which the rights of the parties, as between themselves, are governed by principles of equity.’ [Citations.] ‘The purpose of interpleader is to prevent a multiplicity of suits and double vexation. [Citation.] “The right to the remedy by interpleader is founded, however, not on the consideration that a [person] may be subjected to double liability, but on the fact that he [or she] is threatened with double vexation in respect to one liability.” [Citation.]’ (City of Morgan Hill [v. Brown (1999) 71 Cal.App.4th 1114,] [(Brown)].) ‘In an interpleader action, the court initially determines the right of the plaintiff to interplead the funds; if that right is sustained, an interlocutory decree is entered which requires the defendants to interplead and litigate their claims to the funds.’ [Citation.] Then, in the second phase of an interpleader proceeding, the trial court also has ‘the power under section 386 to adjudicate the issues raised by the interpleader action including: the alleged existence of conflicting claims regarding the interpleaded funds; plaintiffs' alleged position as a disinterested mere stakeholder; and ultimately the disposition of the interpleaded funds after deducting plaintiffs' attorney fees.’ [Citation.]” (Shopoff & Cavallo LLP v. Hyon (2008) 167 Cal.App.4th 1489, 1513–1514.)

(Hood v. Gonzales (2019) 43 Cal.App.5th 57, 71–72.)

“A party to an action who follows the procedure set forth in Section 386 or 386.5 may insert in his motion, petition, complaint, or cross complaint a request for allowance of his costs and reasonable attorney fees incurred in such action. In ordering the discharge of such party, the court may, in its discretion, award such party his costs and reasonable attorney fees from the amount in dispute which has been deposited with the court.”  (CCP § 386.6(a).)  “A party shall not be denied the attorney fees authorized by subdivision (a) for the reason that he is himself an attorney, appeared in pro se, and performed his own legal services.”  (CCP § 386.6(b).)

Discussion

            Plaintiff seeks discharge from liability in the instant action, dismissal from the instant action, and attorney fees and costs of $16,901.55.  Plaintiff represented Defendant Ericka in a lawsuit against her former employer – Galvan v. Zal Industrial, et al., LASC Case No. 18STCV09959 (“Underlying Action”).  (Bloch Decl. ¶ 2, Exh. A.)  Torres – who is related to Ericka – “had a power of attorney granted by Erika in order to assist Erika in obtaining medical care, keeping medical appointments, and to assist with communications with counsel during the Lawsuit, and in attending depositions, and responding to discovery.”  (Bloch Decl. ¶ 3, Exh. B.) 

            Plaintiff observed that Carlos – Ericka’s brother – “pressured and coerced Erika, so that Erika directed [Plaintiff] to revoke the power of attorney that Torres previously had which allowed her to act on behalf of Erika, in or about May 2022.”  (Bloch Decl. ¶ 4.)  In late April 2022 -- after Plaintiff negotiated settlement terms for the Underlying Lawsuit in March and April 2022 -- Plaintiff sent the confidential settlement agreement “to Torres, as Erika's attorney-in-fact, for Erika to sign.”  (Bloch Decl. ¶ 5.)  “Within a day of transmitting the settlement agreement for signature, Erika contacted [Plaintiff] and directed [Plaintiff] to draft a revocation of Torres's power of attorney, which was executed, notarized, and returned to [Plaintiff].”  (Bloch Decl. ¶ 5.) 

            Plaintiff expressed concerns “to Erika and to Carlos, whom Erika insisted [Plaintiff’s] office include in discussions, that without a trustee or conservator to receive and administer the settlement funds, that Erika potentially risked losing her medical benefits, which she received based on her low income and disability status, and which she needed to address her various serious medical conditions, and her need for ongoing care.”  (Bloch Decl. ¶ 6.)  “Carlos came to exert greater and greater influence, if not engaging in what appeared to be potential dependent adult abuse. During one telephonic meeting, Carlos made it clear he intended to take the vast majority of the net settlement proceed monies which Erika would receive from the settlement (net of costs and attorneys fees), which caused [Plaintiff] great concern for Ericka.”  (Bloch Decl. ¶ 6.)  Carlos refused to address these concerns and refused to accept any direct responsibility as a trustee or as caregiver. Carlos did, however, insist that [Plaintiff’s] office needed to agree, without consideration, to reduce its contracted-for attorneys' fees as set forth in the written retainer agreement, and to pay out of pocket for costs incurred in litigating the Lawsuit contrary to the agreed-upon terms of the retainer agreement between Erika and [Plaintiff] that was entered into in 2018. Thus, there remains in dispute approximately $27,200.00, which remains in [Plaintiff]'s client trust account and which is set to be the subject of a non-binding LACBA-administered arbitration, but has not yet been decided. The funds may also be the subject of a separate binding arbitration, pursuant to terms of the retainer agreement between [Plaintiff’s] firm and Erika.”  (Bloch Decl. ¶ 7.)

            On June 1, 2022, Erika signed the settlement agreement for the Underlying Action.  (Bloch Decl. ¶ 8.)  “On or about June 29, 2022, Plaintiff made a formal complaint to the Los Angeles County District Attorney's office, asking for a formal investigation of Carlos for suspected dependent adult abuse. The Report ID number is 763895.”  (Bloch Decl. ¶ 9.) 

            On June 30, 2022, Plaintiff received the two settlement checks of which the smaller one was sent to Plaintiff with the remaining deposited by Plaintiff into the firm’s client trust account.  (Bloch Decl. ¶ 10.)  The undisputed net proceeds that were deposited into the client trust account of $208,800.00 have now been deposited to this Court.  (Bloch Decl. ¶ 11.)  “This deposit does not include the funds that undisputedly are a portion of the attorneys' fees and costs due Plaintiff under the executed retainer agreement between Plaintiff and Erika, and which have been transferred to Plaintiff[‘]s operating account, nor will it include the sum of approximately $27,200.00, which remains in Plaintiff[‘]s client trust account and which are the subject of a separate binding arbitration, pursuant to the retainer agreement between Plaintiff and Erika.”  (Bloch Decl. ¶ 11.)  Plaintiff states that Plaintiff has no interest in the deposited funds and that there are no liens.  Nor has Plaintiff received notice of any other claims to said funds.  (Bloch Decl. ¶ 12.) 

            Erika Galvan and Victoria Torres have filed competing claims to the settlement funds.  Moreover, the filing of the cross-complaint seeking a portion of the funds undoubtedly shows that there are competing claims and that interpleader is appropriate.  (See e.g. Hood v. Gonzales (2019) 43 Cal.App.5th 57, 71-73.)  Accordingly, the Court turns to the remaining claim for reasonable attorney’s fees and costs.  (CCP § 386.6(a).) 

            Plaintiff’s Counsel seeks to recover $16,901.55 of attorney’s fees and costs.  Plaintiff’s Counsel states that he bills at an hourly rate of $500 for the instant action and that Judge Randolph M. Hammock has previously determined Plaintiff’s Counsel’s reasonable hourly rate to be $650 in Elba Chavez v. Alicia Harooni, et al. LASC Case No. 21STCV33736.  (Berman Decl. ¶¶ 9-10.)  Plaintiff’s Counsel states that he spent 9.8 hours reviewing documents and drafting the complaint in interpleader; 1.2 hours drafting the first amended complaint; 0.8 hours in conferences with process server for service of the complaint; 0.7 hours preparing the case management conference statement; 0.3 hours reviewing the answer and cross-complaint by Defendant Torres; 1.7 hours appearing at the case management conference and teleconferencing with attorney R. Valenzuela regarding the representation of Defendant Ericka; 0.8 hours corresponding with attorney R. Valenzuela regarding Ericka’s answer; 0.2 hours reviewing Ericka’s answer; 0.8 hours preparing a case management statement and preparing an updated Request for entry of default; 1.5 hours preparing a declaration for the case management conference; 1.8 hours appearing for and preparing a notice of ruling for the January 31, 2023 case management conference; 7.8 hours preparing the instant motion; and an anticipated 3.5 hours reviewing the opposition, preparing a reply, and appearing at the hearing for the instant motion.  (Berman Decl. ¶ 9.)  Plaintiff’s Counsel further notes costs of $1,451.55 consisting of filing fees and process server fees.  (Berman Decl. ¶ 11.)

            In determining what fees are reasonable, California courts apply the “lodestar” approach. (See, e.g., Holguin v. DISH Network LLC (2014) 229 Cal.App.4th 1310, 1332.)  This inquiry “begins with the ‘lodestar,’ i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate.” (See PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.)  From there, the “[t]he lodestar figure may then be adjusted, based on consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided.” (Ibid.)  Relevant factors include: “(1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, [and] (4) the contingent nature of the fee award.” (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132.)

The Court finds that Plaintiff’s Counsel’s claimed hourly rate -- $500 per hour -- is well supported.  However, based on Plaintiff’s Counsel’s experience, the number of hours spent is not reasonable.  Little to no litigation has occurred in the instant action.  Spending 9.8 hours to prepare a five-page complaint in interpleader is slightly excessive.  Similarly, spending 7.8 hours drafting the instant motion – which mostly restates the allegations of the complaints – is slightly excessive.  Further, no opposition or reply has been filed, obviating the need to allot any time to reviewing any opposition or preparing a reply. 

Accordingly, based on the totality of the circumstances, the amount requested is slightly excessive and unsupported.  The Court finds that $12, 951.55 more accurately reflects the attorney fees and costs reasonably incurred.

Conclusion and ORDER

Based on the foregoing, Plaintiff LA SuperLawyers Inc.’s motion for an order discharging Plaintiff from liability with regard to the interpleaded funds and dismissing Plaintiff is GRANTED.

Plaintiff’s request for attorney’s fees and costs is GRANTED AS MODIFIED.

For good cause shown, relief is proper per Code of Civil Procedure sections 386 and 386.5. Plaintiff LA SuperLawyers Inc. is awarded fees and costs in the amount of $12,951.55. Within 10 days, Plaintiff is to deposit with the clerk of court $195,848.45 (the amount in dispute, $208,800.00, less attorneys’ fees and costs totaling $12,951.55). 

Plaintiff LA SuperLawyers Inc. is to be discharged from all liability and dismissed from the complaint for interpleader upon: (1) depositing with the clerk of court $195,848.45; (2) filing notice of this order and proof of service thereof on all defendants, potential claimants, and interested parties; and (3) dismissal of all unnamed Doe defendants (1 to 100) from the Complaint for Interpleader.

A hearing to determine the disposition of funds is set concurrent with the jury trial on Victoria Torres’s Cross-Complaint for February 13, 2024 at 9:30 am.  The Final Status Conference remains set for January 31, 2024 at 9:00 am.  Each claimant must file a written claim at least 15 days prior to the January 31, 2024 Final Status Conference.  (CCP § 386(d) and 128.)  All claimants must also personally appear at the January 31, 2024 Final Status Conference and February 13, 2024 jury trial and disbursement hearing.

If no appearances are made, the matter will be set for an OSC re: Escheating Funds.  CCP § 128. 

Plaintiff is ordered to prepare order and give notice of this ruling and of the January 31, 2024 Final Status Conference and February 13, 2024 jury trial and disbursement hearing to all defendants, potential claimants, and interested parties and file proof of service of such within 5 days.

DATED:  August ___, 2023                                                   ___________________________

Elaine Lu

                                                                                          Judge of the Superior Court