Judge: Katherine Chilton, Case: 21STLC06424, Date: 2022-12-12 Tentative Ruling

Case Number: 21STLC06424     Hearing Date: December 12, 2022    Dept: 25

PROCEEDINGS:      MOTION TO DEPOSIT AND DISCHARGE STAKEHOLDER

MOVING PARTY:   Plaintiff Old Republic Surety Company

RESP. PARTY:         None

MOTION TO DEPOSIT AND DISCHARGE STAKEHOLDER

(CCP §§ 386, 386.5)

TENTATIVE RULING:

Plaintiff Old Republic’s Motion to Deposit and Discharge Stakeholder, Request for Restraining Order, and for Attorney’s Fees and Costs is CONTINUED to JANUARY 17, 2023 at 10:00 a.m. in Department 25 at the SPRING STREET COURTHOUSE.  At least 16 court days before the next scheduled hearing, Plaintiff must file and serve supplemental papers addressing the errors discussed herein.  Failure to do so may result in the Motion being placed off calendar or 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 December 7, 2022.                       [   ] Late                      [X] None

REPLY:                     None filed as of December 7, 2022.                       [   ] Late                      [X] None

ANALYSIS:

I.                Background

On September 2, 2021, Plaintiff Old Republic Surety Company (“Plaintiff” or “Old Republic”) filed a Complaint for interpleader against Defendants Patriot Pool Builders, Inc. (“Patriot Pool”), Inderpal Butalia (“Inderpal”), Annie Butalia (“Annie”), Mila Agarpao (“Mila), Angelito Agarpao (“Angelito”), Lucy Esparza (“Lucy”), and Fernando Esparza (“Fernando”), (collectively “Defendants”).

On September 16 and 20, 2021, Plaintiff filed Amendments to the Complaint, adding Encarnacion Manahan (“Encarnacion”) as Defendant Doe 6, Nicole Sorrow (“Nicole”) as Doe 7, and Joel Manahan (“Joel”) as Doe 8.

Plaintiff also filed a Request for Dismissal of Defendants Lucy Esparza and Fernando Esparza; the Court dismissed these Defendants without prejudice on September 20, 2021.  (9-16-21 Request for Dismissal.)

On September 24, 2021, Defendants Mila and Angelito, in propria persona, filed an Answer to the Complaint.

On February 9, 2022, Plaintiff filed an Amendment to the Complaint, adding Emily Cardillo (“Emily”) as Doe 10.

On August 23, 2022, pursuant to Plaintiff’s Requests, the Court entered default against the following Defendants: Emily, Joel, Encarnacion, and Nicole.  The Court also entered default against Patriot Pool on August 26, 2022.

On September 12, 2022, Plaintiff Old Republic filed the instant Motion to Deposit and Discharge Stakeholder, Request for Restraining Order, and for Attorney’s Fees (“Motion”).

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.)

III.            Discussion

A.    Motion to Dismiss and Discharge

The subject matter of the instant Motion is a $15,000 Contractor’s State License Bond issued to Defendant Patriot Pool, as principal.  (Pagan Decl. ¶ 2.)

Plaintiff Old Republic filed a Complaint in Interpleader naming the following claimants to the bond:

1.     Inderpal Butalia (Answered)

2.     Annie Butalia (Answered)

3.     Mila Agarpao (Answered)

4.     Angelita Agarpao (Answered)

5.     Lucy Esparza (Dismissed)

6.     Fernando Esparza (Dismissed)

7.     Encarnacion Manahan (Defaulted)

8.     Nicole Sorrow (Defaulted)

9.     Joel Manahan (Defaulted)

10.  Carlo Manzueta (Not Served)

11.  Emily Cardillo (Defaulted)

(Ibid. at ¶¶ 3-4; Compl.; 9-16-21 Amends. to Compl.; 9-20-21 Amend. To Compl.; 2-9-22 Amend. To Compl.)

Plaintiff contends that “it does not know and cannot determine the respective merits of the remaining claimants which are conflicting claims against the subject bond” and finds that the interpleader is a “safe, expedient, or economical remedy.”  (Pagan Decl. ¶ 8.)  Plaintiff states that it “has no interest in the proceeds of Bond No. GCL5929346 and is a mere stakeholder with respect thereto pursuant to CCP § 386.5.”  (Ibid.)  Old Republic requests permission from the Court to deposit the $15,000 bond with the Court, less attorney’s fees and costs, and be discharged from further liability to claimants in regard to this bond.  (Mot. p. 2.)  It also requests that the Court issue a restraining order against claimants and all other persons from instituting further legal action against Old Republic with respect to this bond, pursuant to Code of Civil Procedure § 386(f).  (Ibid.) 

            As a preliminary matter, the Court notes the following deficiencies in the Motion:

            Plaintiff states that Defendants Inderpal and Annie have filed responsive pleadings to the Complaint; however, the Court is not in receipt of these pleadings.

            Plaintiff states that Carlo Manzueta has been added as Defendant Doe 9; however, no Amendment has been filed adding Carlo Manzueta as a Defendant.  Plaintiff also acknowledges that Carlo Manzueta has not been served with the Complaint.  The Court cannot grant Plaintiff’s Motion until all parties have been served with the Complaint and moving papers.

Furthermore, Plaintiff has filed Proof of Service indicating that the moving papers have been served on all parties.  The Court finds that Defendants Inderpal, Annie, Mila, Angelito, Joel, Encarnacion, Carlo, and Emily, who do not appear to be represented by attorneys, have been improperly served 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).)

For these reasons, the Court continues the hearing on the Motion and orders Plaintiff to correct the deficiencies discussed herein.

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 Old Republic requests $2000 in attorney’s fees and costs related to the interpleader.  (Pagan Decl. ¶ 6.)  The costs are as follows:

1.     $370 filing fee,

2.     $65 in service fees as to Defendant Patriot Pool,

3.     $55 in service fees as to Defendant Inderpal,

4.     $65 in service fee as to Defendant Annie,

5.     $55 in service fee as to Defendant Mila,

6.     $65 in service fee as to Defendant Angelito,

7.     $65 in service fee as to Defendant Lucy,

8.     $55 in service fee as to Defendant Fernando,

9.     $55 in service fee as to Defendant Encarnacion,

10.  $65 in service fee as to Defendant Nicole,

11.  $65 in service fee as to Defendant Joel,

12.  $65 in service fee as to Defendant Emily,

13.  $60 filing fee for the instant Motion.

(Ibid.)  Plaintiff’s counsel has attached an itemized statement containing details of the billing of attorney’s fees and states than an additional $450 in attorney’s fees is requested for filing the instant Motion.  (Ibid.; Ex. 1.)

            Given that the Court continues the hearing on the Motion, it also continues the hearing regarding the issue of attorney’s fees and costs.

IV.           Conclusion & Order

For the foregoing reasons,

Plaintiff Old Republic’s Motion for Deposit and Discharge of Stakeholder, Request for Restraining Order and for Attorney’s Fees and Costs is CONTINUED to JANUARY 17, 2023 at 10:00 a.m. in Department 25 at the SPRING STREET COURTHOUSE.  At least 16 court days before the next scheduled hearing, Plaintiff must file and serve supplemental papers addressing the errors discussed herein.  Failure to do so may result in the Motion being placed off calendar or denied.

Moving party is ordered to give notice.