Judge: Katherine Chilton, Case: 21STLC02069, Date: 2023-03-07 Tentative Ruling

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Case Number: 21STLC02069     Hearing Date: March 7, 2023    Dept: 25

PROCEEDINGS:      MOTION TO DISCHARGE PLAINTIFF AND FOR ATTORNEY’S FEES

MOVING PARTY:   Plaintiff McMurray Henriks, LLP

RESP. PARTY:         None

MOTION TO DISCHARGE PLAINTIFF; ALLOWANCE OF ATTORNEY’S FEES

(CCP §§ 386, 386.5)

TENTATIVE RULING:

Plaintiff McMurray’ Henriks, LLP’s Motion to Discharge Plaintiff and Request for Attorney’s Fees and Costs is DENIED.

SERVICE: 

[X] Proof of Service Timely Filed (CRC, rule 3.1300)                 OK

[X] Correct Address (CCP §§ 1013, 1013a)                                                 NOT OK[1]

[X] 16/21 Court Days Lapsed (CCP §§ 12c, 1005(b))                     OK

OPPOSITION:          None filed as of March 5, 2023.               [   ] Late                      [X] None

REPLY:                     None filed as of March 5, 2023.               [   ] Late                      [X] None

ANALYSIS:

I.                Background

On March 11, 2021, Plaintiff McMurray Henriks, LLP (“Plaintiff” or “McMurray”) filed a Complaint in Interpleader against Defendants Michael Hunt (“Hunt”), Department of Health Care Services (“DHS”), Prohealth Advanced Imaging Medical Group, Inc. (“Prohealth”), and Behrooz Broukhim, M.D., Inc. (“Behrooz”), (collectively “Defendants”).

On April 8, 2021, Defendant Hunt, in propria persona, filed an Answer to the Complaint.

On April 12, 2021, Plaintiff filed a Notice of Deposit of Interpleaded Funds with the Clerk of the Court, indicating that Plaintiff had deposited the interpleaded funds of $10,000.

On April 26, 2021, Defendant Behrooz, in propria persona, filed a General Denial to the Complaint.

On November 23, 2022, Plaintiff filed the instant Motion for Discharge and Allowance of Attorney’s Fees and Costs (“Motion”).

On December 16, 2022, pursuant to Plaintiff’s request, the Court dismissed Defendant Prohealth with prejudice.  (12-15-22 Request for Dismissal.)

II.              Legal Standard

Interpleader is a procedure whereby a person holding money or personal property to which conflicting claims are being made by others, can join the adverse claimants and force them to litigate their claims among themselves.  (See Code of Civ. Proc. § 386; Hancock Oil Co. v. Hopkins (1944) 24 Cal. 2d 497, 508; City of Morgan Hill v. Brown (1999) 71 Cal.App.4th 1114, 1122-23.)

Once the stakeholder’s right to interplead is established, and he or she deposits the money or personal property in court, he or she may be discharged from liability to any of the claimants.  This enables the stakeholder to avoid a multiplicity of actions, and the risk of inconsistent results if each of the claimants were to sue him or her separately.  (Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 874; City of Morgan Hill, supra, 71 Cal.App.4th at 1122.)

“An interpleader action is traditionally viewed as two suits: one between the stakeholder and the claimants to determine the stakeholder's right to interplead, and the other among the claimants to determine who shall receive the funds interpleaded ... As against the stakeholder, claimants may raise only matters which go to whether the suit is properly one for interpleader; i.e., whether the elements of an interpleader action are present.”  (State Farm Fire & Cas. Co. v. Pietak (2001) 90 Cal.App.4th 600, 612.)

If the defendant-stakeholder claims no interest in the funds or property held, he or she need not file an interpleader cross-complaint.  He or she may simply apply to the court for permission to deposit the money or property with the court clerk, and for an order discharging him or her from further liability to the adverse claimants.  Such order will also substitute the adverse claimants as parties to the action; or, if only money is involved, simply dismiss the stakeholder.  (Code Civ. Proc., §§ 386(a), 386.5.)  The motion must be supported by an affidavit by the stakeholder establishing the ground for interpleader.  (Code Civ. Proc., § 386(a).)  The supporting affidavit must also state that the moving party 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…”  (Code Civ. Proc., § 386.5.)  Notice of the motion must be served on each of the adverse claimants to the funds or property.  (Code Civ. Proc., §§ 386(a), 386.5.)  “Where a deposit has been made pursuant to Section 386, the court shall, upon the application of any party to the action, order such deposit to be invested in an insured interest-bearing account.”  (Code Civ. Proc., § 386.1.)

Pursuant to § 386(f), the court may also “enter 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.”  (Cal. Civ. Proc. § 386(f).)

The stakeholder may seek reimbursement for its costs and reasonable attorneys’ fees incurred.  (Code Civ. Proc., § 386.6; UAP-Columbus JV 326132 v. Nesbitt (1991) 234 Cal.App.3d 1028, 1036.)  The court may order payment thereof out of the funds deposited by the stakeholder. (Code Civ. Proc., § 386.6.). Per Wells Fargo Bank v. Zinnel (2004), 125 Cal. App. 4th 393, however, the stakeholder must deposit funds with the Court to be entitled to attorneys’ fees; the stakeholder cannot just withhold its fees pending a decision by the Court.

III.            Discussion

A.    Motion to Deposit and Discharge

Plaintiff McMurray moves for a court order discharging Plaintiff of its liability to Defendants with respect to the interpleaded funds, which have been deposited with the Court, dismissing Plaintiff from the action, compelling Defendants to litigate their claims, and awarding Plaintiff reasonable attorney’s fees and costs in the amount of $5,991.08, to be paid from the deposited funds.  (Mot. p. 2.)

Plaintiff previously represented Defendant Hunt in an underlying personal injury lawsuit.  (Henriks Decl. ¶ 2, Ex. 1.)  The lawsuit was settled for $15,000, with $5,000 paid to Plaintiff for attorney’s fees; the amount of attorney’s fees is not at issue in the instant action.  (Ibid. ¶¶ 3, 5-6, Ex. 2.)  The remaining $10,000 of the settlement proceeds is to be paid to Defendant Hunt, “subject to the claims of purported lienholders” Behrooz, Prohealth, and DHS.  (Ibid. at ¶¶ 4, 7-9, Exs. 3-5.)  The Court notes that, based on Plaintiff’s request, the Court dismissed Defendant Prohealth on December 16, 2022.  (12-15-22 Request for Dismissal.)

Plaintiff argues that there are “competing claims of Mr. Hunt and of the purported lienholders for the remaining $10,000.00 of the settlement proceeds.”  (Ibid. at ¶¶ 11, 14-15.)  Plaintiff states that it “is unable to determine which of the defendants’ claims is/are valid” and “it claims no interest in the deposited funds, except for reasonable costs incurred by Plaintiff in connection with the underlying representation and this proceeding.”  (Ibid. at ¶¶ 16-17.)  Plaintiff has filed a Complaint in Interpleader and deposited the $10,000 settlement proceeds.  (Ibid. at ¶ 13, Ex. 6.)

In his Answer, Defendant Hunt disputes the alleged liens.  (Hunt Decl. ¶ 2b-d.)  Defendant also states that he did not agree to Plaintiff retaining attorney’s fees of $5,000 from the funds.  (Ibid. at ¶ 2e.)  In an interpleader action, “plaintiff must be a disinterested stakeholder and the amount to be deposited in court cannot be litigated. Uncertainty about the amount of the interest on an obligation would be fatal to the action.”  (Williams v. Gilmore (1942) 51 Cal.App.2d 684, 688.)  Here, there is a dispute regarding the amount of funds subject to the interpleader.  Therefore, the Court finds that interpleader is not proper.

The Court also notes that self-represented Defendant Behrooz has been improperly served with the moving papers by electronic transmission.  Code of Civil Procedure § 1010.6 authorizes service of documents by electronic service (service by e-mail) in certain enumerated circumstances.  Code of Civil Procedure § 1010.6(a)(2)(A)(ii) provides, “[f]or cases filed on or after January 1, 2019, if a document may be served by mail, express mail, overnight delivery, or facsimile transmission, electronic service of the document is authorized” only: (1) “if a party . . . has expressly consented to receive electronic service in that specific action”, (2) “if . . . the court has ordered electronic service on a represented party or other represented person under subdivision (c) or (d)”, or (3) “if . . . the document is served electronically pursuant to the procedures specified in subdivision (e)”, that is, electronic service is made upon a party who is represented by counsel.  (Code Civ. Proc., §§ 1010.6(a)(2)(A)(ii), (c), (d), (e).)

Accordingly, Plaintiff’s Motion is DENIED.

B.    Attorney’s Fees and Costs

The stakeholder may seek reimbursement for its costs and reasonable attorneys’ fees incurred.  (Code Civ. Proc. § 386.6; UAP-Columbus JV 326132 v. Nesbitt (1991) 234 Cal.App.3d 1028, 1036.)  The court may order payment thereof out of the funds deposited by the stakeholder.  (Code Civ. Proc. § 386.6.)

            Plaintiff seeks “attorney’s fees and costs in connection with the underlying representation and in connection with the preparation, filing, and prosecution of this interpleader action.  (Henriks Decl. ¶ 18.)  Plaintiff’s counsel is a litigator of 15 years with extensive experience in various matters and her billing rate is $450 per hour.  (Ibid. at ¶¶ 19-20.)  She requests attorney’s fees of $5,175 as follows: reviewing the underlying case (1 hour), research for the complaint (0.75 hours), drafting the complaint (2.25 hours), hearing on September 8, 2022 (1 hour), drafting notice and declaration (1 hour), research for motion (0.75 hours), drafting motion (2.75 hours), hearing on November 29, 2022 (1 hour), and hearing on March 7, 2023 (1 hour) for a total of 11.5 hours.

            Plaintiff requests the following costs:

a.      Medical records - $333.15

b.     Police reports - $27

c.      Filing/trans. fees, complaint - $238.45

d.     Service of process (Hunt): $110.00

e.      Service of process (DHCS): $8.25

f.      Service of process (Broukhim): $2.00

g.     Service of process (ProHealth): $0.00

h.     Postage: $0.51

i.       Filing/trans. fees, pos: $7.26

j.       Filing/trans. fees, declaration: $7.26

k.     Filing/trans. fees, motion: $61.65

l.       Filing/trans. fees, motion: $20.55

(Ibid. at ¶¶ 21-22, Exs. 7-8.)

            Courts have generally found that attorney’s fees are not allowable as costs in cases in which attorneys bring actions in interpleader by representing themselves.  (Los Angeles Trust & Sav. Bank v. Ward (1925) 197 Cal. 103; O'Connell v. Zimmerman (1958) 157 Cal.App.2d 330.)

            Moreover, the Court denies Plaintiff’s Motion due to the dispute regarding the amount of funds subject to the interpleader.  Therefore, Plaintiff’s request for attorney’s fees and costs is also DENIED.

IV.           Conclusion & Order

For the foregoing reasons,

Plaintiff McMurray’ Henriks, LLP’s Motion to Discharge Plaintiff and Request for Attorney’s Fees and Costs is DENIED.

Moving party is ordered to give notice.