Judge: John J. Kralik, Case: 23BBCV00507, Date: 2024-04-12 Tentative Ruling

Case Number: 23BBCV00507    Hearing Date: April 12, 2024    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

BACKGROUND

A.    Allegations

Plaintiff California General Underwriters Insurance Company, Inc. (“Plaintiff”) alleges that on April 11, 2022, at 10855 Hartstock St., North Hollywood, CA 91601, Defendant On Point Builders, Inc. (“On Point”) and its employees were working within the course and scope of their employment when they caused Edwina Jo Snow aka Edwina Jo Burton Snow (“the insured”) to incur monetary damages.  Plaintiffs alleges that the insured suffered in the amount of $81,526.84.  Plaintiff alleges that On Point as principal and Defendant American Contractors Indemnity Company (“ACIC”) as surety had made, executed, and delivered to the State of California, a Contractor’s License Bond.  Plaintiff seeks subrogation of the total loss against Defendants. 

The complaint, filed March 3, 2023, alleges a single cause of action for subrogation.   

B.     Relevant Background and Motion on Calendar

On October 10, 2023, the default of On Point was entered as to the complaint. 

On October 16, 2023, ACIC filed a cross-complaint against On Point, Plaintiff, and Las Palmas Silver LLC for: (1) interpleader; and (2) injunctive relief. 

On February 20, 2024, ACIC filed a motion for order that: (1) ACIC be discharged from all liability regarding the rights and obligations of the parties to this action arising out of the issuance by ACIC of a $15,000 Contractor’s License Bond, bond number 100465673, to which Cross-Defendants have made claims; (2) ACIC be awarded fees and costs in the amount of $3,000 from the penal sum of the bond and ACIC shall deposit the remaining $12,000 with the Clerk of the Court; (3) Cross-Defendants and their attorneys be restrained from instituting or further prosecuting any proceeding in any court in California for recovery against the bond; and (4) ACIC be dismissed from the present action without prejudice.   

The Court is not in receipt of an opposition brief.

LEGAL STANDARD

Business & Profession Code, § 7071.5 state:

The contractor's bond required by this article shall be executed by an admitted surety in favor of the State of California, in a form acceptable to the registrar and filed with the registrar by the licensee or applicant. The contractor's bond shall be for the benefit of the following:

(a) A homeowner contracting for home improvement upon the homeowner's personal family residence damaged as a result of a violation of this chapter by the licensee.

(b) A property owner contracting for the construction of a single-family dwelling who is damaged as a result of a violation of this chapter by the licensee. That property owner shall only recover under this subdivision if the single-family dwelling is not intended for sale or offered for sale at the time the damages were incurred.

(c) A person damaged as a result of a willful and deliberate violation of this chapter by the licensee, or by the fraud of the licensee in the execution or performance of a construction contract.

(d) An employee of the licensee damaged by the licensee's failure to pay wages.

(e) A person or entity, including a laborer described in subdivision (b) of Section 8024 of the Civil Code ….

(Bus. & Prof. Code, § 7071.5.) 

            Business & Professions Code, § 7071.6 states in relevant part:

(a) The board shall require as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, that the applicant or licensee file or have on file a contractor's bond in the sum of twenty-five thousand dollars ($25,000).

(b) Excluding the claims brought by the beneficiaries specified in subdivision (a) of Section 7071.5, the aggregate liability of a surety on claims brought against a bond required by this section shall not exceed the sum of seven thousand five hundred dollars ($7,500). The bond proceeds in excess of seven thousand five hundred dollars ($7,500) shall be reserved exclusively for the claims of the beneficiaries specified in subdivision (a) of Section 7071.5. However, nothing in this section shall be construed so as to prevent any beneficiary specified in subdivision (a) of Section 7071.5 from claiming or recovering the full measure of the bond required by this section.

(Bus. & Prof. Code, § 7071.6(a)-(b).) 

            CCP § 386(b) states in relevant part:

(b) 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.

When the person, firm, corporation, association or other entity against whom such claims are made, or may be made, is a defendant in an action brought upon one or more of such claims, it may either file a verified cross-complaint in interpleader, admitting that it has no interest in the money or property claimed, or in only a portion thereof, and alleging that all or such portion is demanded by parties to such action, and apply to the court upon notice to such parties for an order to deliver such money or property or such portion thereof to such person as the court shall direct; or may bring a separate 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).)  Subsection (f) states: “After any such complaint or cross-complaint in interpleader has been filed, the court in which it is filed may enter its order restraining all parties to the action from instituting or further prosecuting any other proceeding in any court in this state affecting the rights and obligations as between the parties to the interpleader until further order of the court.” 

            CCP § 386.5 states:

Where the only relief sought against one of the defendants is the payment of a stated amount of money alleged to be wrongfully withheld, such defendant may, upon affidavit that he is a mere stakeholder with no interest in the amount or any portion thereof and that conflicting demands have been made upon him for the amount by parties to the action, upon notice to such parties, apply to the court for an order discharging him from liability and dismissing him from the action on his depositing with the clerk of the court the amount in dispute and the court may, in its discretion, make such order.

(CCP §386.5.)

CCP § 386.6(a) states:

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. 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.

(CCP § 386.6(a).) 

DISCUSSION

            ACIC moves to be discharged from all liability regarding the $15,000 Contractor’s License Bond, an award of $3,000 in attorney’s fees and costs such that the remaining $12,000 shall be deposited with the Clerk of the Court, that ACIC be dismissed from the action, and the other parties be restrained from instituting any further action against ACIC for recovery against the bond.

            In support of the motion, ACIC provides the declaration of Tyler Hayes, a Senior Bond Claims Litigation Representative of ACIC.  (Hayes Decl., ¶1 at page 2, lines 2-6.)  Mr. Hayes states that ACIC is a licensed surety company authorized to do business in the State of California.  (Id., ¶3 at page 2, lines 13-14.)  He states that on March 20, 2020, ACIC as surety and On Point as principal made, executed, and delivered a certain Contractor’s License Bond, bond no. 100465673 in the sum of $15,000.  (Id., ¶1 at page 2, lines 17-20, Ex. A [Contractor’s Bond].)  He states that the bond was conditioned upon compliance of the principal On Point with and being subject to provisions of Division 3, Chapter 9 (commencing with section 7000) of the Business & Professions Code.  (Id., ¶6.)  The terms of the bond provide the limitation of the liability of the surety and the condition of the bond are set forth in Business & Professions Code, §§ 7071.5, 7071.6, and 7071.11.  (Id., ¶7.)  Mr. Hayes states that ACIC received multiple written demands for payment of losses/damages from the Cross-Defendants.  (Id., ¶8.)  He states that ACIC authorized its attorney to file the cross-complaint for interpleader and injunction so that Cross-Defendants’ claims could be quickly, economically, and adequately determined without prejudice to the rights of Cross-Defendants.  (Id., ¶9.)  Mr. Hayes states that ACIC has no interest in the bond funds claimed and that ACIC is a mere stakeholder.  (Id., ¶10.)  He states that ACIC cannot determine at this time how many claimants will make a demand upon the bond and cannot determine the amount which should be paid to each claimant.  (Id., ¶11.)  He states that ACIC seeks to be discharged from liability with regard to the bond and seeks recovery of $3,000 in attorney’s fees and costs from the bond amount, such that $12,000 remaining will be deposited with the Court.  (Id., ¶13.) 

            Counsel Amber N. Kim provides her declaration, stating that ACIC incurred $5,069.41 in attorney’s fees and costs to bring this action and she provides the billing accounts to show the tasks performed and the amount of time billed.  (Kim Decl., ¶4; Ex. 1 [Client Biling Ledger].)  She states that an additional hour will be incurred to review the opposition and file a reply brief and that the billing rate is at $325/hour.  (Id., ¶5.)  Nevertheless, ACIC requests $3,000 be deducted from the penal sum of the bond as reasonable attorney’s fees and costs for ACIC.  (Id., ¶11.)  

            Here, the Court finds that ACIC has established its burden in bringing this unopposed motion.  As requested, ACIC will be discharged from liability regarding the rights and obligations of the parties to this action arising out of the issuance by ACIC of a $15,000 Contractor’s License bond, bond number 100465673, to which Cross-Defendants have made claims.  The requested amount of attorney’s fees and costs in the sum of $3,000 appears to be reasonable and substantiated by Ms. Kim’s billing ledger.  (CCP § 386.6(a).)  This amount shall be taken from the $15,000 bond amount, such that the remaining bond amount of $12,000 shall be deposited with the Clerk of the Court.  Pursuant to CCP § 386(f), after ACIC’s cross-complaint has been filed, the Court may and will enter its order restraining all parties to the action from instituting or further prosecuting any other proceeding in any court in this state affecting the rights and obligations as between the parties to the interpleader until further order of the Court.  Finally, the Court dismisses ACIC from the present action without prejudice.  

CONCLUSION AND ORDER

            Defendant American Contractors Indemnity Company’s motion is granted.  As requested, ACIC will be discharged from liability regarding the rights and obligations of the parties to this action arising out of the issuance by ACIC of a $15,000 Contractor’s License bond, bond number 100465673, to which Cross-Defendants have made claims.  The request for attorney’s fees and cost in the reasonable sum of $3,000 shall be taken from the $15,000 bond amount, such that the remaining bond amount of $12,000 shall be deposited with the Clerk of the Court.  Pursuant to CCP § 386(f), after ACIC’s cross-complaint has been filed, the Court may and will enter its order restraining all parties to the action from instituting or further prosecuting any other proceeding in any court in this state affecting the rights and obligations as between the parties to the interpleader until further order of the Court.  Finally, the Court dismisses ACIC from the present action without prejudice.  

            Defendant shall provide notice of this order.

DATED:  April 12, 2024                                                        ___________________________

                                                                                          John J. Kralik

                                                                                          Judge of the Superior Court