Judge Kerry Bensinger, Case Number: 23STCV06004, Date: 2024-02-28 Tentative Ruling

NAVIGATORS INSURANCE COMPANY’S MOTION FOR ORDER PERMITTING THE DEPOSIT OF FUNDS, DISCHARGING OF LIABILITY OF STAKEHOLDER, AND RESTRAINING ORDER; AND FOR ORDER TO SEVER CROSS-COMPLAINT

This is a breach of contract action. On March 17, 2023, Plaintiff Chimera Hypergrowth, LLC (“Chimera”) filed a Complaint against Defendants, RS Builders Inc. (“RS Builders”), RS Design Group, American Contractors Indemnity Company (“American Contractors”), Navigators Insurance Company (“Navigators”), Western Surety Company (“Western Surety”), and Juan Carlos Ramirez, for breach of contract, negligence, money had and received, and claim for recovery against contractor’s license bond, arising from the Defendants’ failure to complete renovations of Chimera’s properties in a timely manner pursuant to contract. In relevant part and as alleged, American Contractors, Western Surety, and Navigators each hold a Contractor’s Bond for RS Builders.

On May 16, 2023, Navigators filed a Cross-Complaint against RS Builders, Inc. and Juan Carlos Ramirez for indemnity.

On August 23, 2023, Plaintiff dismissed Western Surety Company and American Contractors Indemnity Company from this action.

On September 20, 2023, Chimera filed the operative First Amended Complaint (FAC) adding Chimera Management LLC and Victor Ong as plaintiffs and Christian Santibanez as a defendant in this action. The FAC also adds causes of action for breach of implied covenant of good faith and fair dealing and violation of Unfair Competition Law.

On November 30, 2023, Navigators filed this motion for an order permitting: (1) Navigators to interplead the sum of $7,500 of Navigators’ Contractor’s License Bond and be discharged from this action; and (2) that Navigators’ Cross-Complaint be severed from the instant action.

Navigators seeks to interplead the Bond funds in the sum of $7,500. Code of Civil Procedure section 386, the interpleader statute, provides two separate bases for bringing an interpleader action. Subdivision (a) of the statute pertains to a complaint in interpleader brought by a defendant “against whom an action is pending upon a contract, or for specific personal property ….” (Code Civ. Proc., § 386, subd. (a).) Subdivision (b) pertains to a complaint in interpleader brought by “[a]ny person, firm, corporation, association or other entity against whom double or multiple claims are made, or may be made, by two or more persons which are such that they may give rise to double or multiple liability ….” (Code Civ. Proc., § 386, subd. (b).)

A complaint in interpleader allows an obligor to require parties with conflicting claims to litigate those claims against each other, instead of against the obligor. (Code Civ. Proc., § 386, subd. (b).) The purpose of interpleader is to prevent a multiplicity of suits and double vexation. (City of Morgan Hill v. Brown (1999) 71 Cal.App.4th 1114, 1122.) However, an interpleader action may not be maintained upon the mere suspicion of double vexation. (Westamerica Bank v. City of Berkeley (2011) 201 Cal.App.4th 598, 607-608.) The plaintiff must allege facts showing a reasonable probability of double vexation, or a valid threat of double vexation. (Ibid.) “Where the only relief sought against one of the defendants is the payment of a stated amount of money alleged to be wrongfully withheld, such defendant may, upon affidavit that he 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, upon notice to such parties, apply to the court for an order discharging him from liability and dismissing him from the action on his depositing with the clerk of the court the amount in dispute and the court may, in its discretion, make such order.” (Code Civ. Proc., § 386.5.)

“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. [CCP §§ 386(a), 386.5]” (Weil & Brown, Civ. Proc. Before Trial (The Rutter Group 2023), ¶ 2.489.)

Here, Navigators argues it should be permitted to interplead the Bond funds because Navigators has incurred a claim arising out the execution of the Bond. There are no further claims made against Navigators. Thus, Navigators is a mere stakeholder in this action. Further, pursuant to Business & Professions Code section 7071.6 subdivision (b), the liability of a surety as to nonhomeowner claimants is limited to $7,500.

The court finds Navigators is entitled to an order permitting the interpleading of the Bond funds. The only claims asserted against Navigators arises from the issuance of the Bond to RS Builders. (See FAC, ¶ 76.) Further, Chimera is an investor, not a homeowner, and thus cannot recover more than $7,500 from the Bond if it prevails on its claims. (Horowitz Decl., ¶¶ 3-4.) As the motion is unopposed, no arguments are presented directing a different result.

Next, Navigators seeks an order severing Navigators’ Cross-Complaint for indemnity. Navigators argues severance of the Cross-Complaint will be conducive to expedition and economy only after it is determined whether any Bond monies should be paid to Chimera.

Upon a properly noticed motion of a party made no later than the close of pretrial conference, a court may bifurcate a trial into separate issues when the convenience of witnesses, the ends of justice, or the economy and efficiency of handling the litigation would be promoted thereby. (Code Civ. Proc., § 598.) The court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of any cause of action, or of any separate issue of any number of causes of action, preserving the right of trial by jury as required by the Constitution or a statute of this state or of the United States. (Code Civ. Proc., §1048, subd. (b).)

The court finds severing Navigators’ Cross-Complaint serves economy and efficiency in handling this litigation. Navigators’ claims for indemnity necessarily require a determination in the first instance that Chimera’s claims against RS Builders is meritorious. Thus, Chimera’s claims and Navigators’ claims are separate issues that may be addressed in separate trials.

Defendant/Cross-Complainant Navigators Insurance Company’s unopposed motion is GRANTED.

Kerry Bensinger

Judge of the Superior Court