Judge: Katherine Chilton, Case: 21STLC07971, Date: 2022-09-19 Tentative Ruling

Case Number: 21STLC07971    Hearing Date: September 19, 2022    Dept: 25

PROCEEDINGS:      MOTION TO DEPOSIT STAKEHOLDER AND DISCHARGE LIABILITY

MOVING PARTY:   Plaintiff Old Republic Surety Company

RESP. PARTY:         None

MOTION TO DEPOSIT AND DISCHARGE LIABILITY

(CCP §§ 386, 386.5)

TENTATIVE RULING:

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 NOVEMBER 1, 2022 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

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

OPPOSITION:          None filed as of September 15, 2022                      [   ] Late                      [X] None

REPLY:                     None filed as of September 15, 2022                      [   ] Late                      [X] None

ANALYSIS:

I.                Background

On November 5, 2021, Plaintiff Old Republic Surety Company (“Plaintiff” or “Old Republic”) filed a Verified Complaint for Interpleader against Defendants Arlico (“Arlico”), Sato Ramon[1], Inc. (“Sato Ramon”), and RC Downey Landing, LLC (“RC”), (collectively “Defendants”).

On June 22, 2022, based on Plaintiff’s request, the Court dismissed Defendant Arlico from the case.  (6-15-22 Request for Dismissal.)

On June 28, 2022, based on Plaintiff’s request, the Court entered default against Defendants Sato Ramon and RC.  (6-28-22 Request: Sato Ramon; 6-28-22 Request: RC Downey Landing.)

On June 29, 2022, Plaintiff Old Republic filed the instant Motion to Deposit and Discharge by Stakeholder and Request for Attorney’s Fees (the “Motion).

No opposition was filed.

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 $7,500 Contractor’s State License Bond issued to Defendant Arlico.  (Pagan Decl. ¶ 2.)  Plaintiff Old Republic filed a verified Complaint in Interpleader naming the claimants to the bond – Arlico, Sato Ramon, Inc., and RC Downey Landing, LLC.  (Ibid. at ¶¶ 3-4; Compl.)  Defendant Arlico was dismissed from the case and default was entered against Defendants Sato Ramon and RC.  (Ibid.)

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. GCL5921832 and is a mere stakeholder with respect thereto pursuant to CCP § 386.5.”  (Ibid.)  Old Republic requests permission from the Court to deposit the $7,500 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).  (Pagan Decl. ¶ 9; Mot. p. 3.)

Code of Civil Procedure § 386(a) requires that each adverse claimant to the funds be served with Notice of the Motion.  Here, Proof of Service filed by Plaintiff with the Motion indicates that Defendant Sato Ramon was served as the same address as listed in the California Secretary of State, Business Search for agent of service, 5620 Halifax Rd, Arcadia, CA 91007.  (CA Secretary of State, Business Search: Sato Ramen, Inc. (4770620).)  The Court notes that Plaintiff has been incorrectly referring to the business as “Sato Ramon, Inc.” instead of “Sato Ramen, Inc.”  (Ibid.)  The Court orders Plaintiff to re-serve Defendant using the correct name.

With regard to Defendant RC, the address listed on the Proof of Service for Defendant RC, “8855 Apollo Way, Suite 220, Downey, CA 90242” does not appear on the CA Secretary of State’s website as an address for service and is also inconsistent with the address Plaintiff listed on the Proof of Service for the Complaint.  (CA Secretary of State, Business Search: RC Downey Landing, LLC. (202106410625); 12-8-21 Proof of Mailing.)  The Proof of Service also indicates that Defendants were served by electronic transmission; however, self-represented parties “are to be served by non-electronic methods unless they affirmatively consent to electronic service.”  (Cal. Rules of Court., rule 2.251(c)(3)(B).)

Given that it is unclear whether Defendant RC was served with the Motion and Notice of Motion at the correct address for service, the Court continues the hearing on the Motion to allow Plaintiff an opportunity to serve Defendant RC at the correct address for service or provide the Court with supplemental briefing regarding why the address listed on the Proof of Service for the Motion is proper.

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 $2,000.00 in attorney’s fees and costs related to the interpleader.  (Pagan Decl. ¶ 6.)  The costs are as follows: $225 in filing fees, $75 in service fees as to Defendant Arlico, $200 in service fees as to Defendant Sato Ramon, Inc., $65 in service fees as to Defendant RC Downey Landing, and $60 in filing fees for the instant Motion.  (Ibid.)  Plaintiff’s counsel has attached an itemized statement containing details of the billing of attorney’s fees and states that an additional $450 will be billed for the preparation of the moving papers.  (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 NOVEMBER 1, 2022 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.