Judge: James L. Crandall, Case: 21-1181913, Date: 2022-08-04 Tentative Ruling
1. Motion for Attorney Fees
2. Motion for Leave to File Amended Cross-Complaint
Plaintiff Eagle Community Credit Union (“Eagle”) moves to dismiss itself as plaintiff from this interpleader action and for an award of $11,116.50 in attorney’s fees and $1,152.53 in costs to be paid by the disputed funds, which have been deposited with the court.
Eagle has filed a complaint-in-interpleader against Defendants Catalina Cruse (“Cruse”) and Christina A. Collins (“Collins”), alleging that it is holding funds in a bank account that belongs to Michael D. Hooton (“Hooton”), over which Cruse and Collins claim ownership.
Collins has cross-complained against Cruse for the right to the funds, which Cruse has answered.
The interpleader statute permits “[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, [to] bring an action against the claimants to compel them to interplead and litigate their several claims.” (Code Civ. Proc., § 386, subd. (b).)
“An interpleader action is an equitable proceeding. [Citations.] 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. Upon an admission of liability and deposit of monies with the court, the plaintiff then may be discharged from liability and dismissed from the interpleader action. [Citations.] The effect of such an order is to preserve the fund, discharge the stakeholder from further liability, and to keep the fund in the court's custody until the rights of the potential claimants of the monies can be adjudicated. [Citations.] Thus, 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. [Citations]” (Dial 800 v. Fesbinder (2004) 118 Cal.App.4th 32, 42-43.)
A party that initiates an interpleader action under section 386 “may insert in his … 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. At the time of final judgment in the action the court may make such further provision for assumption of such costs and attorney fees by one or more of the adverse claimants as may appear proper. (Code Civ. Proc., § 386.6.; Southern California Gas Co. v. Flannery (2014) 232 Cal.App.4th 477, 492 [trial court has discretion to award a wide variety of litigation expenses under section 386.6 so long as the court finds they are sufficiently connected to the process of depositing contested funds with the court and seeking discharge from liability, including costs and attorney fees for work “in connection with preparing the complaint in interpleader, attending various hearings and the mandatory settlement conference, opposing defendant's anti-SLAPP motion and preparing the discharge motion.”]; MDQ, LLC v. Gilbert, Kelly, Crowley & Jennett LLP (2019) 32 Cal.App.5th 702, 712-713 [court has the discretion to order any attorney fee award to an interpleader plaintiff be paid by an adverse claimant instead of from the interpleaded funds].)
In support of its motion, Eagle submitted a declaration from its attorney, Duane Tyler. Tyler states:
He was admitted to practice in 1990 and his hourly rate is $350. [Tyler decl., ¶ 3]
Attached as Exhibit A is the contemporaneous cost report for this matter, which show a total cost of $1,052.53. [Tyler decl., 4]
Attached as Exhibit B is the attorney’s fees report. [Tyler decl., ¶ 5]
The fees incurred for initiating the interpleader action and reviewing Collins’ and Cruses’ answers are $2,709. [Tyler decl., ¶ 5]
The fees incurred for responding to Collins’ cross-complaint are $4,602.50. [Tyler decl., ¶ 6]
The fees incurred to oppose Collins’ motion to vacate the order on Eagle’s demurrer are $2,405. [Tyler decl., ¶ 7]
The fees incurred for the fees the instant motion are $1,400. [Tyler decl., ¶ 7]
In 1983, Michael Hooton (“Hooton”) opened an account at Eagle. He was not married at the time and the account signature card listed Collins as the sole beneficiary. [Tyler decl., ¶ 11]
According to Cruse, she met Hooton in 1990 and married him in 2014. [Tyler decl., ¶ 11]
Hooten died on July 30, 2020. At that time, Eagle’s records still showed Collins as the beneficiary of Hooton’s account. Eagle contacted Collins and she asserted through counsel that she was entitled to the funds. Cruse also contacted Eagle and asserted through counsel that she was entitled to the funds because they are VA disability benefits to which she is entitled to as Hooton’s surviving spouse. Cruse provided Eagle with a VA spousal benefit letter. [Tyler decl., ¶ 12]
As a result of the conflicting claims, Eagle placed a hold on the account to allow time for Collins and Cruse to resolve their dispute and present Eagle with consistent instructions. Eagle informed Collins and Cruse’s respective counsel that it would file an interpleader action if consistent instructions were not received. [Tyler decl., ¶ 13]
Although the attorneys were able to negotiate a proposed settlement, Collins later refused to settle, apparently based on the advice of Frederic Collins, a third party. As a result, Eagle filed the instant action. [Tyler decl., ¶ 14]
Frederic Collins caused Collins to file a cross-complaint against Eagle, claiming that the interpleader action should not have been filed due to Collins being named as the beneficiary of the account. Eagle met and conferred with Collins before filing its demurrer to explain that the cross-complaint was not permitted. The meet and confer was unsuccessful and Eagle filed its demurrer. [Tyler decl., ¶ 14-15]
Collins did not oppose the demurrer and the court sustained it with leave to amend. Eagle served Collins with a notice of ruling. Instead of filing an amended cross-complaint, Collins filed a frivolous motion to vacate the court’s order. The court denied the motion. [Tyler decl., ¶ 15-16]
By way of its interpleader complaint, Eagle has alleged that it has no interest in the funds in Hooton’s account and that there is a dispute between Collins and Cruse as to who has the right to the funds.
Collins and Cruse have answered the complaint. Collins filed a cross-complained against Cruse to litigate the issue of who has the right to the funds, and Cruse has answered.
Neither Collins nor Cruse opposed this motion. Eagle has demonstrated the right to interplead and has deposited the funds with the clerk of the court. Therefore, Eagle’s motion to dismiss is GRANTED.
As for Eagle’s motion for attorney’s fees and costs, the court has reviewed the fees and costs submitted by Eagle and finds that the costs incurred, as well as the attorney time spent and the hourly rate, are reasonable and sufficiently connected with the interpleader process. The request for attorney’s fees and costs is GRANTED in the amount of $11,116.50 in attorney’s fees and $1,152.53, to be paid out of the deposited funds.
Based on Eagle’s representations, it appears that Collins’ conduct was the driving force behind Eagle’s need to interplead and Eagle’s defense of Collins’ meritless cross-complaint against it. Collins did not file an opposition to dispute Eagle’s representations of what transpired. Therefore, should Cruse prevail against Collins, Cruse is entitled to reimbursement from Collins for Eagle’s fees and costs.
Eagle to give notice of ruling.
2.Motion to file 1st amended cross complaint
Cross-Complainant Christine A. Collins fka Christine A. La Peer (“Collins”) moves for leave to file a First Amended Cross-Complaint.
“The court may, in furtherance of justice, and on any terms as may be proper, …allow a party to amend any pleading or proceeding by adding or striking out the name of any party, or by correcting a mistake in the name of a party, or a mistake in any other respect; and may, upon like terms, enlarge the time for answer or demurrer. The court may likewise, in its discretion, after notice to the adverse party, allow, upon any terms as may be just, an amendment to any pleading or proceeding in other particulars.” (Code Civ. Proc., § 473, subd. (a).)
On September 23, 2021, the court sustained Eagle’s demurrer to the cross-complaint with 20 days leave to amend. Collins did not timely amend. Instead, on November 17, 2021, she moved to set aside the court’s September 23, 2021 order. While the motion was pending, Collins filed a First Amended Cross-Complaint on March 18, 2022.
In this motion, Collins admits that she did not timely amend. She asserts, under Code of Civil Procedure section 473, subdivision (a), that the court may allow her leave to amend in furtherance of justice so that she will not lose her right to have this dispute decided without a judicial determination. She did not provide any other reason why the court should provide leave to amend. She did not cite to any authority to support a request for leave to amend after a party fails to amend after given time to do so when a demurrer was sustained.
Furthermore, there is no need for Collins to file an amended cross-complaint against Eagle, which is only for a single cause of action for declaratory relief.
Eagle filed this interpleader action in order to have Collins and Cruse to litigate their claim for the bank account because they could not resolve the dispute amongst themselves. Eagle otherwise has no interest in the case.
Collins already has a cross-complaint against Cruse in which she seeks, among other things, declaratory relief as to the ownership of the account, and Cruse had answered.
Therefore, the motion for leave to file a First Amended Cross-Complaint is DENIED.
The First Amended Cross-Complaint, filed on March 18, 2022 is ORDERED STRICKEN as filed in violation of the court’s prior order.
Clerk to give notice of ruling.
Future hearing events
8/26/22 – MSC
9/26/22 – Jury Trial