Judge Katherine Chilton, Case 22STLC03567 2023-05-18 Tentative Ruling

Judge: Katherine Chilton, Case: 22STLC03567, Date: 2023-05-18 Tentative Ruling

Case Number: 22STLC03567 Hearing Date: May 18, 2023 Dept: 25

PROCEEDINGS: MOTION TO COMPEL ARBITRATION

MOVING PARTY: Defendant Montana Marketing and Sales, Inc.

RESP. PARTY: None

MOTION TO COMPEL ARBITRATION

(CCP §§ 1281.2)

TENTATIVE RULING:

Defendant Montana Marketing and Sales, Inc.’s Motion to Compel Arbitration of Defendants Steve and Tereza Walleman is MOOT.

Defendant Montana Marketing and Sales, Inc.’s Motion to Compel Arbitration of Defendants Rosa and Bertha Saenz is DENIED.

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: None filed as of May 16, 2023. [ ] Late [X] None

REPLY: None filed as of May 16, 2023. [ ] Late [X] None

ANALYSIS:

I. Background

On May 26, 2022, Plaintiff Old Republic Surety Company (“Plaintiff” or “Old Republic”) filed an action in interpleader against Defendants Montana Marketing and Sales, Inc., dba AAA Green Builders (“Montana Marketing”), Alicia Whitman (“Alicia”), Jorge Ocedgueda (“Jorge”), Marlene Ocedgueda (“Marlene”), Damien Oregel (“Damien”), Sharina Oregel (“Sharina”), Christopher Taublee (“Christopher”), and Gricelda Escobar (“Gricelda”), (collectively “Defendants”).

Since filing the initial Complaint, Plaintiff amended the Complaint to add the following Defendants Steve Walleman (“Steve”) and Tereza Walleman (“Tereza”) (on June 10, 2022); April Davison (“April”), Barbara Hurr (“Barbara”), and Jack Hurr (“Jack”) (on June 21, 2022); and Rosa Saenz Kollar (“Rosa”) and Bertha Saenz (“Bertha”) (on July 27, 2022).

Plaintiff has also requested dismissal of several Defendants. Pursuant to Plaintiff’s requests, the Court has dismissed the following Defendants: Alicia Whitman and Christopher Taulbee (on June 23, 2022); April Davison (on July 25, 2022); and Barbara Hurr and Jack Hurr (on August 10, 2022). (6-17-22 Request for Dismissal; 7-21-22 Request for Dismissal; 8-2-22 Request for Dismissal.)

On July 29, 2022, Defendants Damien and Sharina Oregel, in propria persona, filed a General Denial.

On September 30, 2022, based on Plaintiff’s request, Defendants Damien and Sharina were dismissed without prejudice. (9-30-22 Request for Dismissal.)

On October 3, 2022, the Court denied Defendant Montana’s Motion to Compel Arbitration and Stay Proceedings, filed on July 5, 2022. (10-3-22 Minute Order.) The Court found that Montana failed to show that there was any agreement on the basis of which Plaintiff Old Republic could be compelled to arbitration. (Ibid.) Montana also did not establish that any of the claimants/Defendants could be compelled to arbitration because it did not file any admissible evidence to show the existence of an agreement between Montana and the claimants/Defendants. (10-3-22 Minute Order.) Moreover, the Court noted that in order to compel arbitration of any claimant, Montana Marketing had to “first establish the existence of a dispute through its own cause of action against the Defendant/claimant.” (Ibid.)

On October 12, 2022, based on Plaintiff’s request, Defendants Jorge and Marlene were dismissed without prejudice. (10-11-22 Request for Dismissal.)

Furthermore, on October 11, 2022, based on Plaintiff’s request, the Court entered default against the following Defendants: Steve, Tereza, Rosa, Gricelda, and Bertha. (10-11-22 Requests for Entry of Default.)

On October 31, 2022, Plaintiff filed a Motion to Deposit and Discharge Stakeholder and Request for Attorney’s Fees (“Motion”). On February 28, 2023, the Court continued the hearing on the Motion because Defendant Montana Marketing had appeared in the case but had not been served with the Summons and Complaint. (2-28-23 Minute Order.) On March 1 and 20, 2023, Plaintiff filed Proof of Service indicating that Defendant Montana Marketing was served through its counsel of record. Plaintiff also filed proof that all parties were served with an updated Notice. (3-1-23 Notice Amended.) On March 24, 2023, Defendant Montana Marketing filed an Opposition to Plaintiff’s Motion to Deposit and Discharge Stakeholder (“Opposition”).

On March 14, 2023, Defendants Rosa Saenz Kollar and Bertha Saenz filed Motions to Set Aside/Vacate Default entered against them. On April 11, 2023, Defendants Rosa and Bertha filed a Stipulation to Set Aside Entry of Default against them, signed by moving Defendants and Plaintiff Old Republic. On April 14, 2023, Defendant Rosa and Defendant Bertha, each filed an Answer to the Complaint.

On March 22, 2023, Defendant Montana Marketing filed the instant Motion to Compel Arbitration (“Motion”). No opposition has been filed.

On April 18, 2023, the Court again continued the hearing on the Motion to Deposit and Discharge Stakeholder to be heard together with Defendant Montana Marketing’s Motion to Compel Arbitration. (4-18-23 Minute Order.)

On May 3, 2023, based on Plaintiff’s request, the Court dismissed Defendants Steve and Tereza Walleman with prejudice. (5-3-23 Request for Dismissal.)

II.Legal Standard

Pursuant to Code of Civil Procedure § 1281.2, generally, on a petition to compel arbitration, the court must grant the petition unless it finds either (1) no written agreement to arbitrate exists; (2)¿the right to compel arbitration has been waived; (3) grounds exist for revocation of the agreement; or (4) litigation is pending that may render the arbitration unnecessary or create conflicting¿rulings on common issues.

When seeking to compel arbitration, the initial burden lies with the moving party to demonstrate the existence of a valid arbitration agreement by preponderance of evidence. (Ruiz v. Moss Bros. Auto Group (2014) 232 Cal.App.4th 836, 841-42; Gamboa v. Northeast Community Clinic (2021), 72 Cal.App.5th 158, 164-65.) It is sufficient for the moving party to produce a copy of the arbitration agreement or set forth the agreement’s provisions. (Gamboa, 72 Cal.App.5th at 165.) The burden then shifts to the opposing party to prove by a preponderance of evidence any defense to enforcement of the contract or the arbitration clause. (Ruiz, 232 Cal.App.4th at 842; Gamboa, 72 Cal.App.5th at 165.) Subsequently, the moving party must establish with the preponderance of admissible evidence a valid arbitration agreement between the parties. (Ibid.) The trial court then weighs all the evidence submitted and uses its discretion to make a final determination. (Ibid.) “California law, ‘like [federal law], reflects a strong policy favoring arbitration agreements and requires close judicial scrutiny of waiver claims.’” (Wagner Const. Co. v. Pacific Mechanical Corp. (2007) 41 Cal.4th 19, 31.)

If the court orders arbitration, then the court shall stay the action until arbitration is completed. (See Code Civ. Proc., § 1281.4.)

II. Discussion

Defendant Montana Marketing brings the instant Motion seeking to compel arbitration between Montana Marketing and Defendants Rosa and Bertha Saenz and Steve and Tereza Walleman. (Mot. p. 1.) Montana Marketing also requests that the Court stay the proceedings pending the results of the arbitration. (Ibid.) The Court notes that Defendants Steve and Tereza Walleman were dismissed with prejudice on May 3, 2023. (5-3-23 Request for Dismissal.) Thus, the Court will only address Montana Marketing’s Motion as to Defendants Rosa and Bertha.

The Court finds that Defendant Montana Marketing has submitted unauthenticated and thus, inadmissible evidence to demonstrate the existence of an agreement between Montana Marketing and Defendants Rosa and Bertha. Furthermore, the Complaint filed in the instant case is an action in interpleader and does not establish any dispute between Montana Marketing and Defendants Rosa and Bertha that would be subject to arbitration. In order to compel arbitration of any claimant, Montana Marketing must first establish the existence of a dispute through its own cause of action against the Defendant/claimant. For this reason, Montana Marketing’s Motion to Compel Defendants Rosa and Bertha Saenz to Arbitration is DENIED.

III. Conclusion & Order

For the foregoing reasons,

Defendant Montana Marketing and Sales, Inc.’s Motion to Compel Arbitration of Defendants Steve and Tereza Walleman is MOOT.

Defendant Montana Marketing and Sales, Inc.’s Motion to Compel Arbitration of Defendants Rose and Bertha Saenz is DENIED.

Moving party is ordered to give notice.

PROCEEDINGS: MOTION TO DEPOSIT AND DISCHARGE STAKEHOLDER

MOVING PARTY: Plaintiff Old Republic Surety Company

RESP. PARTY: Defendant Montana Marketing and Sales, Inc.

MOTION TO DEPOSIT AND DISCHARGE STAKEHOLDER

(CCP §§ 386, 386.5)

TENTATIVE RULING:

Plaintiff Old Republic’s Motion for Deposit and Discharge of Stakeholder and for Restraining Order is GRANTED, contingent on Old Republic’s deposit of funds with the Court in the amount of $15,000.00. Interpleader funds of $15,000.00 are to be deposited within ten (10) days of receipt of this order. Old Republic is awarded $2,000.00 in attorney’s fees and costs, to be reimbursed from the $15,000.00 in interpleader funds deposited. Old Republic is also 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.

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 March 24, 2023. [ ] Late [ ] None

REPLY: None filed as of April 14, 2023. [ ] Late [X] None

ANALYSIS:

I. Background

Since filing the initial Complaint, Plaintiff has amended the Complaint to add the following Defendants Steve Walleman (“Steve”) and Tereza Walleman (“Tereza”) (on June 10, 2022); April Davison (“April”), Barbara Hurr (“Barbara”), and Jack Hurr (“Jack”) (on June 21, 2022); and Rosa Saenz Kollar (“Rosa”) and Bertha Saenz (“Bertha”) (on July 27, 2022).

On July 29, 2022, Defendants Damien and Sharina Oregel, in propria persona, filed a General Denial.

On September 30, 2022, based on Plaintiff’s request, Defendants Damien and Sharina were dismissed without prejudice. (9-30-22 Request for Dismissal.)

On October 3, 2022, the Court denied Defendant Montana’s Motion to Compel Arbitration and Stay Proceedings, filed on July 5, 2022. (10-3-22 Minute Order.)

On October 12, 2022, based on Plaintiff’s request, Defendants Jorge and Marlene were dismissed without prejudice. (10-11-22 Request for Dismissal.)

On December 2, 2022, the Court found that Los Angeles Superior Court Cases No. 22STCV23991 and No. 22STLC03567 are not related within the meaning of California Rules of Court, rule 3.300(a). (12-2-22 Minute Order.)

On March 22, 2023, Defendant Montana Marketing filed a Motion to Compel Arbitration.

On May 3, 2023, based on Plaintiff’s request, the Court dismissed Defendants Steve and Tereza Walleman with prejudice. (5-3-23 Request for Dismissal.)

On May 18, 2023, the Court denied Defendant Montana Marketing’s Motion to Compel Arbitration. (5-18-23 Minute Order re: MTC Arb.)

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

The subject matter of the instant Motion is a $15,000 Contractor’s State License Bond issued to Defendant Montana Marketing and Sales, Inc., dba AAA Green Builders, as principal. (Pagan Decl. ¶ 2.)

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

1. Montana Marketing and Sales, Inc. (Served)

2. Alicia Whitman (Dismissed)

3. Jorge Ocegueda (Dismissed)

4. Marlene Ocegueda (Dismissed)

5. Damien Oregel (Dismissed)

6. Sharina Oregel (Dismissed)

7. Christopher Taulbee (Dismissed)

8. Gricelda Escobar (Defaulted)

9. Steve Walleman (Dismissed)

10. Tereza Walleman (Dismissed)

11. April Davison (Dismissed)

12. Jack Hurr (Dismissed)

13. Barbara Hurr (Dismissed)

14. Bertha Saenz (Answered)

15. Rosa Saenz Kollar (Answered)

(Ibid. at ¶¶ 3-4.)

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. WCL5923595 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. at p. 3.)

On February 28, 2023, the Court found that Plaintiff’s Motion complies with all procedural requirements. (2-28-23 Minute Order.) However, despite acknowledging that Defendant Montana Marketing had appeared in the case, Plaintiff had not filed proof that Defendant had been served with the Summons and Complaint. (Ibid.; Pagan Decl. ¶¶ 4a, 5.) The Court noted that it could not grant the Motion until all parties had been served with the Complaint and moving papers and continued the hearing on the Motion. (Ibid.)

On March 1 and 20, 2023, Plaintiff filed proof of serving Defendant Montana Marketing with the Summons and Complaint.

On March 24, 2023, Defendant Montana Marketing filed an Opposition to the Motion. Defendant argues that “[t]he interpleader is not ripe for adjudication” and thus, “it would be unjust to allow the stake holder/plaintiff to deposit funds and obtain attorney fees from the bond holder where no legitimate claim exists to the funds.” (Oppos. pp. 1-2.) Defendant states that if its Motion to Compel Arbitration, calendared for May 18, 2023, is granted, the instant Motion “will be rendered moot.” (Ibid. at p. 2.) However, if the instant hearing is continued to coincide with the hearing on the Motion to Compel, “neither plaintiff nor the defendants will suffer any detriment or prejudice.” (Ibid.) Accordingly, Defendant requests that the Court continue the hearing on the instant Motion to May 18, 2023. (Ibid.) For this reason, the Court continued the hearing from April 18 to May 18, 2023, to be heard with Montana Marketing’s Motion to Compel Arbitration. (4-18-23 Minute Order.)

On May 18, 2023, the Court denied Defendant Montana Marketing’s Motion to Compel Arbitration, finding that it failed to present admissible evidence showing that remaining Defendants Rosa and Bertha Saenz could be compelled to arbitration. (5-18-23 Minute Order re: MTC Arb.) The Court also noted that Montana Marketing had to first establish the existence of a dispute through its own cause of action against remaining Defendants/claimants. (Ibid.)

Given that Defendant’s Motion to Compel Arbitration was denied and Plaintiff has satisfied all requirements for the instant Motion, the Court GRANTS Plaintiff Old Republic’s Motion to Deposit and Discharge Stakeholder. The Court also grants Plaintiff’s request for a restraining order.

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:

1. $370 filing fee,

2. $0 in service fees as to Defendant Montana Marketing;

3. $0 in service fees as to Defendant Alicia Whitman;

4. $0 in service fees as to Defendant Jorge Ocegueda;

5. $0 in service fees as to Defendant Marlene Ocegueda;

6. $125 in service fees as to Defendant Damien Oregel;

7. $85 in service fees as to Defendant Sharina Oregel;

8. $0 in service fees as to Defendant Christopher Taulbee;

9. $70 in service fees as to Defendant Gricelda Escobar;

10. $55 in service fees as to Defendant Steve Walleman;

11. $55 in service fees as to Defendant Tereza Walleman;

12. $75 in service fees as to Defendant April Davison;

13. $70 in service fees as to Defendant Jack Hurr;

14. $70 in service fees as to Defendant Barbara Hurr;

15. $65 in service fees as to Defendant Bertha Saenz;

16. $75 in service fees as to Defendant Rosa Saenz Kollar;

17. $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 $450.00 in attorney’s fees will be billed for filing the instant Motion. (Ibid.; Ex. 1.) Plaintiff has incurred attorneys fees and costs well in excess of the $2,000.00 it requests.

The Court finds the request to be reasonable and awards attorney’s fees and costs in the amount of $2,000.00, to be reimbursed from the interpleader funds after they are deposited with the Court.

IV. Conclusion & Order

For the foregoing reasons,

Plaintiff Old Republic’s Motion for Deposit and Discharge of Stakeholder and for Restraining Order is GRANTED, contingent on Old Republic’s deposit of funds with the Court in the amount of $15,000. Interpleader funds of $15,000 are to be deposited within ten (10) days of receipt of this order. Old Republic is awarded $2,000.00 in attorney’s fees and costs, to be reimbursed from the $15,000.00 in interpleader funds deposited. Old Republic is also 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.

Moving party is ordered to give notice.