Judge: Michael P. Linfield, Case: 22STCV18273, Date: 2022-12-20 Tentative Ruling
Case Number: 22STCV18273 Hearing Date: December 20, 2022 Dept: 34
SUBJECT: Demurrer
Moving Party: Defendant
Harvey Bookstein
Resp. Party: Plaintiff DLK Ventures, LLC
Defendant Bookstein’s Demurrer is OVERRULED.
BACKGROUND:
On September 19,
2022, Plaintiff filed its Notice of Related Case.
On September 30,
2022, Plaintiff filed its First Amended Complaint in Interpleader against
Defendants Harvey Bookstein, Lisa Optican, and Jennifer Franklin.
On November 16, 2022,
Defendant Bookstein filed his Demurrer to the First Amended Complaint in
Interpleader.
On December 6, 2022,
Plaintiff filed its Opposition.
On December 13, 2022,
Defendant filed its Reply.
ANALYSIS:
I.
Legal
Standard for a Demurrer
A demurrer is a pleading used to test the legal sufficiency of other
pleadings. It raises issues of law, not fact, regarding the form or content of
the opposing party’s pleading. It is not the function of the demurrer to
challenge the truthfulness of the complaint; and for the purpose of the ruling
on the demurrer, all facts pleaded in the complaint are assumed to be true,
however improbable they may be. (Code Civ. Proc., §§ 422.10, 589.)
A demurrer can be used only to challenge defects that appear on the
face of the pleading under attack; or from matters outside the pleading that
are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311.) No
other extrinsic evidence can be considered (i.e., no “speaking demurrers”). A
demurrer is brought under Code of Civil Procedure section 430.10 (grounds),
section 430.30 (as to any matter on its face or from which judicial notice may
be taken), and section 430.50(a) (can be taken to the entire complaint or any
cause of action within).
A demurrer may be brought under Code of Civil Procedure section 430.10,
subdivision (e) if insufficient facts are stated to support the cause of action
asserted. A demurrer for uncertainty (Code of Civil Procedure section 430.10,
subdivision (f)), is disfavored and will only be sustained where the pleading
is so bad that defendant cannot reasonably respond—i.e., cannot reasonably
determine what issues must be admitted or denied, or what counts or claims are
directed against him/her. (Khoury v. Maly's of Calif., Inc. (1993) 14
Cal.App.4th 612, 616.) Moreover, even if the pleading is somewhat vague,
“ambiguities can be clarified under modern discovery procedures.” (Id.)
II.
Discussion
Defendant demurs as to the entire
First Amended Complaint pursuant to Code of Civil Procedure section 1714.10,
subdivision (a), on the grounds that it fails to state a claim upon which
relief can be granted. (Demurrer, p. 1:5–7.)
A. Legal
Standard for a Complaint in Interpleader
“Any 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, may bring an action against
the claimants to compel them to interplead and litigate their several claims. .
. .
“The action of
interpleader may be maintained although the claims have not a common origin,
are not identical but are adverse to and independent of one another, or the
claims are unliquidated and no liability on the part of the party bringing the
action or filing the cross-complaint has arisen. . . .”
(Code Civ. Proc., § 386, subd. (b).)
“The right to the
remedy by interpleader is founded, however, not on the consideration that a man
may be subjected to double liability, but on the fact that he is threatened
with double vexation in respect to one liability.” (Pfister v. Wade (1880)
56 Cal.43, 47.)
Moreover, a
plaintiff bringing an action in interpleader “must allege facts showing a
reasonable probability of double vexation.” (Hancock Oil Co. v. Hopkins (1944)
24 Cal.2d 497, 510.)
“Although section 386 has broadened the scope of the
interpleader remedy, it is still required that the claimants seek the same
thing, debt, or duty.” (City of Morgan Hill v. Brown (1999) 71
Cal.App.4th 1114, 1123.)
B. Analysis
Plaintiff alleges the following in
its First Amended Complaint: (1) that Non-Party Donna Kaplan created a trust
(The Donna L. Kaplan Insurance Trust of 2007); (2) that Defendants Lisa Optican
and Jennifer Franklin, who are Non-Party Donna Kaplan’s daughters, are the sole
beneficiaries of the trust; (3) that Plaintiff is to give 25% of the
distributions directly to Defendant Optican, 25% of the distributions directly
to Defendant Franklin, and 50% of the distribution to the trustee of the trust
(Defendant Bookstein); (4) that there are concerns Defendant Bookstein has been
misusing the trust funds; (5) that Defendants Optican and Franklin do not trust
Defendant Bookstein as Trustee and wish to have all of Plaintiff’s
distributions sent directly to them; and (6) that Non-Party Kaplan, Defendant
Optican, and Defendant Franklin have filed suit in probate court to remove
Defendant Bookstein as Trustee. (First Amended Complaint, ¶¶ 5–13, 17, 19–20.)
Defendant argues: (1) that the First
Amended Complaint fails to allege any conflicting claims or a reasonable
probability of double vexation required for an interpleader; and (2) that the
beneficiaries cannot force an interpleader by merely questioning a trustee’s
distributions. (Demurrer, pp. 8:9–10, 9:20–21.)
In support of his arguments,
Defendant relies heavily on City of Morgan v. Brown (1999) 71
Cal.App.4th 1114 and Westamerica Bank v. City of Berkeley (2011) 201
Cal.App.4th 598. In City of Morgan, the Court of Appeal affirmed summary
judgment where the interpleaded parties “asserted the right to different
things, debts or duties owed from different obligors.” (City of Morgan, supra, at 1123.) In Westamerica, the Court of Appeal affirmed the trial court’s
sustaining without leave to amend a demurrer because a contractual clause
holding harmless the interpleading party meant that there was no reasonable
probability of double vexation for the interpleading party. (Westamerica,
supra, at 613, 614–15.)
Plaintiffs oppose the Demurrer,
arguing that Plaintiff “is subject to double vexation from Defendant Bookstein
as trustee of the Kaplan Trust, and [Defendant] Optican and [Defendant]
Franklin as beneficiaries of the Trust and part owners of [Plaintiff]. All
parties have a dispute over the same funds, which are the DLK distributions of
$137,000.04.” (Opposition, p. 8:5–8.) Notably, Plaintiff admits in its
Opposition that Defendants Optican and Franklin are part owners of Plaintiff
and that they have directed it to not disburse funds to Defendant Bookstein. (Id.
at p. 7:1–5.)
Defendant argues in its Reply: (1)
that the opposition does not dispute that Defendant is exclusively entitled to
50% of DLK Ventures’ Distributions; (2) that the allegations made first in the
Opposition should be disregarded; (3) that the allegations made in the
Opposition fail to satisfy the interpleader standard; and (4) that the
Opposition fails to establish the Beneficiaries’ right to any distributions
from the Trust. (Reply, pp. 4:17–18, 5:15–16, 7:13–14.)
The Court believes that Plaintiff
has the better argument.
First, unlike in Westamerica,
there is no indicia here that Plaintiff DLK Ventures, LLC has the benefit of a
“hold harmless” clause. Because Plaintiff appears to have multiple part-owners,
including Non-Party Kaplan, this is not a case where Plaintiff is merely an
alter ego of any party. It is not implausible or improbable that at least one
of Plaintiff’s co-owners would engage in litigation on their own behalf and
against the interest of Plaintiff.
Second, the Court of Appeal has
explicitly held that trust beneficiaries may “bring an action against third
parties who actively participate in a trustee’s breach of trust.” (Wolf v.
Mitchell (1999) 76 Cal.App.4th 1030, 1033.) The benefit of standing here
for the Beneficiaries increases the probability of double vexation absent this
interpleader claim.
Finally, Defendant Bookstein
confuses the relevant standard. The standard is not whether Plaintiff (or even
Defendants Optican and Franklin) have admitted (or as is the case here, have
failed to deny) that Defendant Bookstein should receive money in his role as
Trustee. Rather, the standard is whether Plaintiff is facing or has a
reasonable probability of facing multiple claims with respect to one liability.
(Code Civ. Proc., § 386, subd. (b); Hancock Oil Co., supra, at
510; Pfister, supra, at 47.)
For the purposes of the Demurrer on
a complaint in interpleader, these allegations are sufficient for the Court to
find a reasonable probability of double vexation with respect to one liability.
To wit, if Plaintiff were to distribute the $137,000.04 to Defendant Bookstein
in his current capacity as Trustee, there is a reasonable probability that
Defendant Optican and/or Defendant Franklin would sue Plaintiff; yet if
Plaintiff were not to distribute the $137,000.04 to Defendant Bookstein in his
capacity as Trustee, there is a reasonable probability that he would sue
Plaintiff regarding this same amount.
The Court finds that the allegations
Plaintiff makes in its First Amended Complaint meet the relevant standard.
The Court OVERRULES the Demurrer.
III.
Conclusion
Defendant Bookstein’s Demurrer is OVERRULED.