SUPERIOR COURT OF THE STATE OF CALIFORNIA  

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT 

 

 

1. Background 

Plaintiff Sean Rashti (“Plaintiff”) filed this action against Defendant Tony Wank for damages arising out of a motor vehicle accident. On January 9, 2021, Defendant Tony Wank (“decedent”) passed away. On June 6, 2022, Plaintiff filed a First Amended Complaint (“FAC”) replacing Tony Wank with the Estate of Wank (“Defendant”) as a defendant.  

On September 17, 2020, Plaintiff filed a substitution of attorney, in which Koorosh K. Shahrokh, Esq. of National Choice Lawyers was to represent Plaintiff in this action.  

On October 14, 2021, Plaintiff filed a Notice of Settlement. 

On October 29, 2021, the Notice of Settlement was withdrawn.  

On November 9, 2021, Plaintiff filed another substitution of attorney, in which Plaintiff would be representing himself.  

Now, Defendant moves for leave to file a cross-complaint in interpleader against Plaintiff and Plaintiff’s former counsel (“Shahrokh”), and moves to deposit the settlement funds with the Court.  

 

2. Legal Standard 

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 of 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 of Civ. Proc., § 386, subd. (b).)    

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.  (For example, an escrowholder who receives conflicting demands from the parties to the escrow regarding the funds or documents he or she holds.)  (Hancock Oil Co. v. Hopkins (1944) 24 Cal.2d 497, 508; City of Morgan Hill v. Brown (1999) 71 Cal.App.4th 1114, 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. (State Farm Fire & Cas. Co. v. Pietak (2001) 90 Cal.App.4th 600, 612.) 

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.) 

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.)¿ 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.) 

“Typical” situations permitting interpleader include “a bank escrow holder faced with conflicting claims of vendor, purchaser and purchaser's assignee; an escrow holder of a fund where one claimant notified the escrow holder that the contract was cancelled and nothing should be paid to the other claimant; and an insurance company admitting liability under a life insurance policy where conflicting claims to the proceeds existed.” (Pacific Loan Mgmt., supra, 196 Cal.App.3d at 1490.) Other situations in which a court properly permitted a stakeholder to proceed in interpleader to obtain an adjudication of conflicting claims include conflicting claims made on an insurance company for proceeds of an insurance police [In re Peterson (2007) 156 CA4th 676, 681–682, (interpleader action brought by insurance company when administrator of decedent's estate and named beneficiary claimed entitlement to proceeds of life insurance policy)]; conflicting claims made against an attorney who has been retained to distribute personal injury settlement funds (See Hood v Gonzales (2019) 43 CA5th 57, 73, 80); Conflicting claims made on an escrow holder for funds held on deposit (See Contra Costa County Title Co. v Waloff (1960) 184 CA2d 59, 61–62). 

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.) 

Therefore, the procedural requirements are: (1) The motion must be supported by an affidavit by the stakeholder establishing¿the ground for interpleader.¿ (CCP¿§§ 386(a), 386.5.) and (2) Notice of the motion must be served on each of the adverse claimants to the funds or property. (CCP §§ 386(a), 386.5.).  

   

3. Discussion 

Defendant provides that on September 17, 2020, Plaintiff substituted Shahrokh of National Choice Lawyers into the action as his attorney of record. During Shahrokh’s representation of Plaintiff, the parties reached a settlement agreement, which was then subsequently withdrawn. Thereafter, Shahrokh was substituted out of the case and Shahrokh put Defendant on notice of his firm’s attorney lien on any recovery. (Mot. Exh. G.) On November 10, 2022, Plaintiff, in pro per, entered into an agreement with Defendant to settle the case for $50,000, which is Defendant’s policy limit. On November 17, 2022, Defendant forwarded a settlement draft to Plaintiff for the amount made out to both Plaintiff and National Choice Lawyers. (Mot. Exh. I.) Defense counsel avers that he spoke with Plaintiff and with Shahrokh, who each advised defense counsel that they were unable to resolve National Choice Lawyers’ lien. (Decl. Lee ¶ 10.) Defense counsel declares that on November 30, 2022, he e-mailed both Plaintiff and Shahrokh requesting that they reach an agreement by December 5, 2022, or that Defendant would seek to interplead the settlement funds with the Court. (Ibid.) To date, defense counsel avers that neither Plaintiff or Shahrokh advised defense counsel as to whether a settlement agreement was reached regarding the attorney lien. In support of these contentions, Defendants provide a letter from Shahrokh/National Choice Lawyers advising that there is an attorney lien. 

The motion is supported by an affidavit establishing ground for interpleader and notice was served on each adverse claimant, namely Plaintiff and Shahrokh/National Choice Lawyers. However, an interpleader action may not be maintained on mere suspicion and facts must be alleged showing a reasonable probability of double vexation or a valid threat of double vexation. Defense counsel’s declaration provides that, as of the date of the filing of the instant motion on January 17, 2023, neither Plaintiff or Shahrokh advised him if an agreement had been reached. However, it has been seven months since, and the Court would like to hear more from defense counsel as to whether defense counsel actively reached out to both Plaintiff and Shahrokh in the interim and the responses received, if any, before the Court will grant Defendant’s request to file the proposed cross-complaint in interpleader and deposit the interpleader funds with the Court. Assuming the Court is satisfied with defense counsel’s representations, the motion will be granted.  

 

Moving party is ordered to give notice.   

 

PLEASE TAKE NOTICE: 

Dated this 14th day of August 2023