Judge: Katherine Chilton, Case: 21STLC06815, Date: 2023-02-23 Tentative Ruling

Case Number: 21STLC06815     Hearing Date: February 23, 2023    Dept: 25

PROCEEDINGS:      MOTION FOR DISBURSEMENT OF INTERPLEADER FUNDS

MOVING PARTY:   Defendants Adam and Sarin Mikaelian

RESP. PARTY:         None

MOTION FOR DISBURSEMENT OF INTERPLEADER FUNDS

(CCP §§ 386, 386.5)

TENTATIVE RULING:

Defendants Adam and Sarin Mikaelians’ Motion for Disbursement of Interpleader Funds is CONTINUED TO APRIL 27, 2023 at 10:00 a.m. in Department 25 at the SPRING STREET COURTHOUSE.  At least 16 court days before the next scheduled hearing, Defendants must file and serve supplemental papers as requested herein.  Failure to do so may result in this Motion being placed off calendar or denied.

SERVICE: 

[X] Proof of Service Timely Filed (CRC, rule 3.1300)                 NOT OK

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

[X] 16/21 Court Days Lapsed (CCP §§ 12c, 1005(b))                     NOT OK

OPPOSITION:          None filed as of February 20, 2023.                     [   ] Late                      [X] None

REPLY:                     None filed as of February 20, 2023.                     [   ] Late                      [X] None

ANALYSIS:

I.                Background

On September 20, 2021, Plaintiff Old Republic Surety Company (“Plaintiff” or “Old Republic”) filed a Verified Complaint for Interpleader against Defendants Vibe Solar (“Vibe Solar”), Adam and Sarin Mikaelian (“the Mikaelians”), and Daniel Williams (“Williams”), (collectively “Defendants”).

On November 19, 2021, the Mikaelians filed a joint Answer to the Complaint.  On the same day, they filed a Cross-Complaint against Defendant Vibe Solar for violation of Business and Professions Code § 17200, breach of contract, fraud – intentional misrepresentation, and fraud-negligent misrepresentation.

On December 15, 2021, pursuant to Plaintiff’s request, the Court entered default judgment against Defendants Vibe Solar and Williams.

On March 30, 2022, the Court granted Plaintiff Old Republic’s Motion to Deposit and Discharge Stakeholder, filed on January 3, 2022.  (3-30-22 Minute Order.)  The Court also granted Plaintiff’s request for attorney’s fees and costs in the amount of $2,000.00 and ordered Plaintiff to deposit the remaining interpleader funds of $13,000.00 with the Court within 10 days of notice of the Order.  (Ibid.)

On September 21, 2022, the Mikaelians filed the instant Motion for Disbursement of Interpleader Funds (“Motion”).  On November 14, 2022, moving Defendants also filed a Notice of Non-Opposition indicating that no opposition had been filed to the Motion.  On November 18, 2022, the Court, on its own motion, continued the hearing on the Motion to February 23, 2023.  (11-18-22 Minute Order.)

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.)

Once the Court determines that the plaintiff does indeed have a right to interplead the funds, the parties must litigate their claims to the funds.  (Southern California Gas Co. v. Flannery (2014) 232 Cal.App.4th 477, 487.)  In the second phase of the interpleader procedure, the trial court has the authority, under Code of Civil Procedure § 386, to adjudicate the issues raised in the interpleader action including (1) the existence of conflicting claims; (2) the plaintiff’s alleged position as a disinterested stakeholder; and (3) the disposition of the interpleaded funds minus plaintiff’s attorney’s fees.  (Ibid.)

III.            Discussion

The subject of this action is a $15,000.00 Contractor’s State License Bond issued to Defendant Vibe Solar as the principal.  (Compl. ¶¶ 6-7.)  On September 20, 2021, Plaintiff filed a Complaint in Interpleader against Defendants Vibe Solar, Adam and Sarin Mikaelian, and Daniel Williams.  The Mikaelians filed an Answer to the Complaint on November 19, 2021, as well as a Cross-Complaint against Defendant Vibe Solar.  On December 15, 2021, the Court, pursuant to Plaintiff’s request, entered default against Defendants Vibe Solar and Williams.  On March 30, 2022, the Court granted Plaintiff’s Motion to Deposit and Discharge Stakeholder, filed on January 3, 2022.  (3-30-22 Minute Order.)  The Court also granted Plaintiff’s request for attorney’s fees and costs in the amount of $2,000.00 and ordered Plaintiff to deposit the remaining interpleader funds of $13,000.00 with the Court within 10 days of notice of the Order.  (Ibid.)

On September 21, 2022, Mikaelians filed the instant Motion for Disbursement of Interplead Funds (“Motion”).  On November 14, 2022, Defendants also filed a Notice of Non-Opposition indicating that no opposition had been filed to the Motion.  On November 18, 2022, the Court, on its own motion, continued the hearing on the Motion to February 23, 2023.  (11-18-22 Minute Order.)

The Mikaelians argue that because Defendant Vibe Solar and Williams defaulted on December 15, 2021, the Mikaelians “are the only parties with any claims filed in response to Old Republic’s Complaint for Interpleader.”  (Mot. p. 3.)  Although the Mikaelians are the only remaining potential claimants to the subject interpleaded funds, they must still demonstrate that they are entitled to those funds.  Defendants have not submitted any evidence to support their claim and demonstrate that they are entitled to the funds.

Accordingly, the hearing on the Motion is CONTINUED so that the moving Defendants may submit supporting documentary evidence demonstrating that they are entitled to the disbursement of interpleaded funds.

In addition, the Court notes that the Mikaelians have included a claim for relief in their cross-complaint for a violation of Business & Professions Code Section 17200 and have requested injunctive relief.  This Limited Civil Jurisdiction Court does not have authority to grant permanent injunctions so if the Mikaelians intend to pursue that claim, this case will have to be sent to Department 1 for reassignment.  The Mikaelians should be prepared to address this issue at the next hearing.

IV.           Conclusion & Order

For the foregoing reasons,

Defendants Adam and Sarin Mikaelians’ Motion for Disbursement of Interpleader Funds is CONTINUED TO APRIL 27, 2023 at 10:00 a.m. in Department 25 at the SPRING STREET COURTHOUSE.  At least 16 court days before the next scheduled hearing, Defendants must file and serve supplemental papers as requested herein.  Failure to do so may result in this Motion being placed off calendar or denied.

Moving party is ordered to give notice.