Judge: Mark E. Windham, Case: 23STLC06298, Date: 2024-05-28 Tentative Ruling

Case Number: 23STLC06298    Hearing Date: May 28, 2024    Dept: 26

The North River Ins. Co. v. Davuljyan, et al.

MOTION FOR ORDER TO DEPOSIT INTERPLEADER FUNDS, FOR DISCHARGE OF STAKEHOLDER, RESTRAINING ORDER AND ATTORNEY’S FEES

(CCP §§ 386, 386.5)

TENTATIVE RULING:

Plaintiff The North River Insurance Company’s Motion to Deposit Bond Funds, for Exoneration of Surety Bond, and for Award of Attorney’s Fees is GRANTED. PLAINTIFF IS TO DEPOSIT THE INTERPLEADER FUNDS OF $20,481.50 WITHIN 20 DAYS OF THIS ORDER.

PLAINTIFF IS AWARDED ATTORNEY’S FEES AND COSTS OF $4,518.5. THE TRIAL / HEARING ON DISBURSEMENT OF FUNDS OR FOR ORDER ESCHEATING THE FUNDS ACCORDING TO LAW REMAINS SET FOR MARCH 28, 2025 AT 8:30 AM IN DEPARTMENT 26 IN THE SPRING STREET COURTHOUSE. CLAIMS WITH RESPECT TO THE INTERPLEADER FUNDS ARE TO BE FILED AND SERVED BY DECEMBER 30, 2024.

ANALYSIS:

On September 29, 2023, Plaintiff The North River Insurance Company (“Plaintiff”) initiated this interpleader action against Defendants Timeless Construction Group, Inc. (“Defendant Timeless”), Eduard Davuljyan (“Defendant Davuljyan”), Laurence Hill (“Defendant Hill”), and Sam Malekan (“Defendant Malekan”).

Defendants Davuljyan and Timeless filed an answer and cross-complaint for declaratory relief and breach of contract on November 29, 2023. Plaintiff was dismissed from the cross-complaint on January 8, 2024. Defendants Susan Moore (“Defendant Moore”) and Trey Alexander (“Defendant Alexander”) were added to the action on February 9, 2024. Proofs of service of the Summons and Complaint have been filed with respect to Defendants Hill, Moore, and Alexander, who have yet to file responsive pleadings. Defendant Malekan filed an answer on March 22, 2024.

The Complaint alleges that this action arises from a dispute over Construction Bond No. Bond No. 04-CF605026 (the “Bond”) in the penal sum of $25,000.00. (Compl., ¶8.) Defendant Davuljyan allegedly agreed to indemnify Plaintiff in exchange for the issuance of the Bond pursuant to an Application and Indemnity Agreement (“the Indemnity Agreement”). (Id. at ¶7 and Exh. 1.) The Bond was issued with Defendant Timeless named as the principal. (Id. at ¶8.) After the Bond was issued, the remaining Defendants made claims against the Bond. (Id. at ¶9.) Defendants Davuljyan and Timeless are liable to Plaintiff for its expenses, costs and attorney’s fees arising out of issuance of the Bond. (Id. at ¶¶10-11.)

Plaintiff filed the instant Motion to Deposit Bond Funds, for Exoneration of Surety Bond, and for Award of Attorney’s Fees on March 14, 2024. Defendants Timeless and Davuljyan filed an opposition on May 15, 2024 and Plaintiff replied on May 20, 2024.

Legal Standard

Interpleader is a procedure whereby a person holding money or personal property to which conflicting claims are being made by others, or may be made, can join the adverse claimants and force them to litigate their claims among themselves. (Code Civ. Proc., § 386, subd. (b).) Hancock Oil Co. v. Hopkins (1944) 24 Cal.2d 497, 508 (i.e., an escrow-holder who receives conflicting demands from the parties to the escrow regarding the funds or documents he or she holds); City of Morgan Hill v. Brown (1999) 71 Cal.App.4th 1114, 1122.)

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 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.)

The stakeholder may seek reimbursement for its costs and reasonable attorneys’ fees incurred. 

(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. (Ibid.) Ultimately, such payment may be charged to one or more of the adverse claimants in the final judgment. (Code Civ. Proc., § 386.6.) Finally, the Court may issue an “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.” (Code Civ. Proc., § 386, subd. (f).)

Discussion

Substantively, Plaintiff contends that cannot determine the validity of the conflicting demands that have been made on the construction bond by Defendants Hill, Malekan, Moore, and Alexander. (Motion, Nail Decl., ¶4.) In opposition, Defendants Timeless and Davuljyan contend that no substantiated claims have been made on the Bond and that they were unaware of Plaintiff’s intent to pay on the Bond. (Opp., Davuljyan Decl., ¶¶27-29.) Defendants Timeless and Davuljyan also dispute the merits of the purported claims against the Bond. (Id. at ¶¶28-29.) As pointed out in Plaintiff’s reply, however, the interpleader process does not depend on the merits of the claims against the disputed funds, or whether there has been a determination of liability. (Code Civ. Proc., § 386, subd. (b).) Upon deposit of the funds to the court, Plaintiff may be discharged from further liability. (Code Civ. Proc., §§ 386, 386.5.)

Furthermore, Plaintiff is entitled to move to recover the fees and costs expended bringing this interpleader action. (Code Civ. Proc., § 386.6, subd. (a).) Fees sought in the amount of $3,426.50 are substantiated by Plaintiff’s attorney’s billing records and are reasonable in both rate and number of hours billed. (Motion, Nail Decl., Exh. 3.) The costs of $1,092.00 are likewise supported in the billing statement. (Ibid.)

Conclusion

Plaintiff The North River Insurance Company’s Motion to Deposit Bond Funds, for Exoneration of Surety Bond, and for Award of Attorney’s Fees is GRANTED. PLAINTIFF IS TO DEPOSIT THE INTERPLEADER FUNDS OF $20,481.50 WITHIN 20 DAYS OF THIS ORDER.

PLAINTIFF IS AWARDED ATTORNEY’S FEES AND COSTS OF $4,518.5. THE TRIAL / HEARING ON DISBURSEMENT OF FUNDS OR FOR ORDER ESCHEATING THE FUNDS ACCORDING TO LAW REMAINS SET FOR MARCH 28, 2025 AT 8:30 AM IN DEPARTMENT 26 IN THE SPRING STREET COURTHOUSE. CLAIMS WITH RESPECT TO THE INTERPLEADER FUNDS ARE TO BE FILED AND SERVED BY DECEMBER 30, 2024.

Court clerk to give notice to all parties, claimants, and interested parties.