Judge Holly J. Fujie, Case Number: 22TLC04451, Date: 2024-05-29 Tentative Ruling

MOVING PARTIES: Defendant/Cross-Complainants Ryan Junsay (“Junsay”), Wendy Delgado (“Delgado”), Verbhert Malilim (“Malilim”) and Princess Malilim (“Princess”)[1]

The Court has considered the moving papers. No opposition or reply papers were filed.

Plaintiff Old Republic Surety Company issued Bond No. GCL5921726 in the amount of $15,000 in consideration of an application filed by Defendant California Pool Men, Inc. (“California”). Plaintiff received claims against the bond from Defendants Junsay, Delgado, Malilim and Princess. Defendant California instructed Plaintiff not to pay Defendants Junsay, Delgado, Malilim or Princess’ claims. In response, Plaintiff filed this action in interpleader on July 6, 2022.

On September 15, 2022, Princess and Malilim filed a cross-complaint against Defendants California, Andrew O’Neill (“O’Neill”), Adam Aguirre (“Aguirre”), Anthony Aguirre (“Anthony”), Hthiku Oneill (“Oneill”), Robert Vega (“Vega”) and Plaintiff alleging (1) interpleader; (2) breach of contract; (3) breach of covenant to perform work in good and competent manner; (4) breach of covenant of good faith and fair dealing; (5) fraud-misrepresentation; (6) negligent misrepresentation (“Malilim Cross-Complaint”).

On September 15, 2022, Delgado and Junsay filed a cross-complaint against California, O’Neill, Aguirre, Anthony, Oneill, Vega and Plaintiff alleging (1) interpleader; (2) breach of contract; (3) breach of covenant to perform work in good and competent manner; (4) breach of covenant of good faith and fair dealing; (5) fraud-misrepresentation; (6) negligent misrepresentation.

On July 26, 2023, the Court granted Plaintiff’s Motion for Order to Deposit by Stakeholder, for Discharge of Stakeholder and Request for Attorney’s Fees. The motion was unopposed.

On January 3, 2024, the Court entered dismissals of Delgado and Junsay’s cross-complaint and the Malilim cross-complaint. On March 12, 2024, the Court set aside those dismissals and reinstated the cross-complaints.

“Any 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…The action of interpleader may be maintained although the claims have not a common origin, are not identical but are adverse to and independent of one another, or the claims are unliquidated and no liability on the part of the party bringing the action or filing the cross-complaint has arisen. The applicant or interpleading party may deny liability in whole or in part to any or all of the claimants. The applicant or interpleading party may join as a defendant in such action any other party against whom claims are made by one or more of the claimants or such other party may interplead by cross-complaint; provided, however, that such claims arise out of the same transaction or occurrence.” (CCP §386(b).) “Except in cases where by the law a right to a jury trial is now given, conflicting claims to funds or property or the value thereof so deposited or delivered shall be deemed issues triable by the court, and such issues may be first tried.” (CCP §386(e).)

“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. Then, in the second phase of an interpleader proceeding, the trial court also has the power under Code of Civil Procedure 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.” (Southern California Gas Co. v. Flannery (2014) 232 Cal.App.4^th 477, 487.)

Moving parties fail to establish entitlement to distribution of the funds as requested

Defendants Junsay, Delgado, Mailim and Princess ask that the court distribute the interplead funds to them equally. According to Defendants, they agree that they should each receive an equal share of the interpleaded funds and they are represented by the same counsel.

Absent from the motion, however, is any signed stipulation by all parties. Moving parties are essentially asking the court to enter a judgment awarding each of them an equal share of the interpleaded funds. Such a request would require submission of a Stipulated Judgment.

Moving parties also fail to cite any authority that would allow them to obtain a judgment in this matter by way of a “Motion for Order to Distribute Funds.” “The interpleader proceeding is traditionally viewed as two lawsuits in one. The first dispute is between the stakeholder and the claimants to determine the right to interplead the funds. The second dispute to be resolved is who is to receive the interpleaded funds.” (Dial 800 v. Fesbinder (2004) 118 Cal.App.4th 32, 43.) Resolution of the conflicting claims in the “second lawsuit” can be done summarily by a motion for summary judgment. (City of Morgan Hill v. Brown (1999) 71 Cal.App.4^th 1114, 1127 (“there is no basis for Seltzer’s suggestion that completion of stage one…prevents summary disposition of stage two”) (affirming order granting summary judgment of law firm claimant to interpleaded funds).)

Defendants rely on Nationwide Mut. Fire Ins. Co. v. Eason (“Nationwide”) (1984) 736 F.2d 130 to support their position that they are entitled to disbursement of funds. Nationwide is federal authority interpreting federal bankruptcy law and is inapposite. Moreover, the quote relied on by Defendants addresses a situation that does not exist here: “Following the default of the named defendants, the trustee was the single remaining claimant to the fund. Although interpleader is proper only where there are two or more claimants to a fund, we do not think that the court in this case was bound to dismiss the action following the entry of the default judgment. Clearly, if all but one named interpleader defendant defaulted, the remaining defendant would be entitled to the fund.” (Nationwide, supra, 736 F.2d at 133, fn. 4.)

Here, there are still four claimants to the interpleaded funds. Even if they are all in agreement regarding the amount they should each receive from the interpleaded funds, there is not “a single remaining claimant to the fund.” (Id.)

While summary judgment of competing claims is allowed, moving parties fail to cite any authority that would permit resolution of conflicting claims on a simple motion for disbursement. To the extent Defendants have reached an agreement regarding their respective shares of the interpleaded funds, they must submit a Stipulated Judgment to the court.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Hon. Holly J. Fujie

Judge of the Superior Court

[1] The Court refers to certain individuals with the same last name by their first name to distinguish them in this order and not from any intended disrespect.