Judge: Katherine Chilton, Case: 22STLC00912, Date: 2022-10-31 Tentative Ruling

Case Number: 22STLC00912     Hearing Date: October 31, 2022    Dept: 25

PROCEEDINGS:      MOTION TO DEPOSIT AND DISCHARGE STAKEHOLDER

MOVING PARTY:   Plaintiff Old Republic Surety Company

RESP. PARTY:         Defendant Noho Constructors

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 GRANTED, contingent on Old Republic’s deposit of funds with the Court in the amount of $13,000.00.  Interpleader funds of $13,000.00 are to be deposited within thirty (30) days of receipt of this order.

SERVICE: 

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

[X] Correct Address (CCP §§ 1013, 1013a)                                                 OK

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

OPPOSITION:          Filed on September 1, 2022.                           [X] Late                       [   ] None

REPLY:                     None filed as of October 24, 2022                      [   ] Late                      [X] None

ANALYSIS:

I.                Background

On February 14, 2022, Plaintiff Old Republic Surety Company (“Plaintiff” or “Old Republic”) filed a Complaint for interpleader against Defendants Charles Vernon Schafer, individually and dba Rescue Rain Gutters (“Schafer” or “Rescue Rain”), Noho Constructors (“Noho”), and Karen Schetter (“Schetter”), (collectively “Defendants”).

            Defendants Schetter and Noho filed Answers to the Complaint on May 9 and May 19, 2022, respectively.

On June 28, 2022, Plaintiff Old Republic filed the instant Motion to Deposit and Discharge Stakeholder, Request for Restraining Order, and for Attorney’s Fees (“Motion”).  On September 1, 2022, Defendant Noho filed an Opposition to the Motion (“Opposition”).  No reply has been filed.

On September 15, 2022, the Court noted that Defendant Schafer, dba Rescue Rain, had not been served with the Summons, Complaint, and had been improperly served with the instant Motion and Notice by electronic transmission.  (9-15-22 Minute Order.)  The Court continued the hearing on the instant Motion and set a hearing for Order to Show Cause Why Sanctions Shall Not Be Imposed for Failure to Serve Defendant Schafer, individually, and dba Rescue Rain Gutters.  (Ibid.)

On September 16, 2022, Plaintiff filed a Request for Dismissal of Defendant Schafer, individually, and dba Rescue Rain Gutters, from the case.  (9-16-22 Request for Dismissal).  Accordingly, Defendant Schafer, dba Rescue Rain, was dismissed without prejudice on the same day.  (Ibid.)

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 Schafer, individually and dba Rescue Rain Gutters (“Rescue Rain”), as principal.  (Pagan Decl. ¶ 2.)

Plaintiff Old Republic filed a verified Complaint in Interpleader naming the claimants to the bond – Schafer, individually and dba Rescue Rain Gutters, Noho Constructors, and Schetter.  (Ibid. at ¶¶ 3-4; 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. at ¶ 8.)  Plaintiff states that it “has no interest in the proceeds of Bond No. GCL5922507 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).  (Mot. p. 3.) 

On September 15, 2022, the Court, in its discretion, accepted Defendant Noho’s late-filed Opposition.  (9-15-22 Minute Order; Code of Civ. Proc. § 1005(b); Cal. Rules of Court, rule 3.1300(d).)  In its Opposition, Defendant Noho requested that either Plaintiff or the Court, through its inherent authority, dismiss Defendant Schafer, individually and dba Rescue Rain, pursuant to Code of Civil Procedure § 583.250 and California Rules of Court, Rule 3.110(b), because said Defendant has not been served with the Complaint.  (Oppos. pp. 1-2.)  Following the dismissal, the remaining defendants would discuss settlement of the $7,500.00 license bond.  (Ibid. at p. 2.)

            The Court noted that Defendant Schafer had not been served with the Summons and Complaint and was improperly served with the Notice and Motion through electronic transmission.  (9-15-22 Minute Order.)  For this reason, the Court continued the hearing on the instant Motion and sets a hearing on Order to Show Cause Why Sanctions Shall Not Be Imposed for Failure to Serve Defendant Schafer, individually, and dba Rescue Rain Gutters.  (Ibid.)

            On September 16, 2022, pursuant to Plaintiff’s request, Defendant Schafer, individually, and dba Rescue Rain Gutters, was dismissed from the case without prejudice.  (9-16-22 Request for Dismissal.)  All other Defendants were served with a Notice of Ruling, indicating that the hearing on the Motion had been continued.  (9-16-22 Notice of Ruling.)

            The Court finds that Old Republic has satisfied all requirements for the instant Motion.  Thus, Plaintiff is entitled to be dismissed and discharged from liability once it deposits the funds with the clerk of the Court.  Furthermore, Old Republic is entitled to an order restraining all parties “from instituting or further prosecuting any other proceeding” related to Old Republic’s rights and obligations under the bond.

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: $370 in filing fees, $68 in service fees as to Defendant Schafer, individually, and dba Rescue Rain, $65 in service fees as to Defendant Noho, $68 in service fees as to Defendant Schetter, 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.)

The Court finds the request to be reasonable and awards attorney’s fees and costs of $2,000, to be deducted from the interpleader funds prior to their deposit with the Court, resulting in a net deposit of $13,000.00.

IV.           Conclusion & Order

For the foregoing reasons,

Plaintiff Old Republic’s Motion to Deposit and Discharge Stakeholder, Request for Restraining Order, and for Attorney’s Fees and Costs is GRANTED, contingent on Old Republic’s deposit of funds with the Court in the amount of $13,000.00.  Interpleader funds of $13,000.00 are to be deposited within thirty (30) days of receipt of this order.

Moving party is ordered to give notice.