Judge: Nathan Vu, Case: 30-2021-012297814, Date: 2022-12-19 Tentative Ruling
Please Note: The hearing on this matter is scheduled for 8:30 A.M.
Motion to Deposit and for Discharge
Defendant Old Republic Surety Company’s motion to deposit and for discharge is GRANTED in part and DENIED in part.
The Court GRANTS leave to Defendant Old Republic Surety Company to deposit with the clerk of the court bond funds in the amount of $6,400.
The Court ORDERS that Defendant Old Republic Surety Company shall be discharged from all liability asserted against Defendant Old Republic Surety Company arising from Bond Number GCL5922593.
The Court ORDERS that Defendant Old Republic Surety Company be dismissed from this action without prejudice.
The Court AWARDS to Defendant Old republic Surety Company an allowance of $1,100 for costs and reasonable attorney fees incurred in this action.
Defendant Old Republic Surety Company (Defendant Old Republic) moves 1) to deposit the full penalty of Bond Number GCL5922593 in the sum of $7,500 issued on behalf of Defendant Irie Kasinger, 2) for an order discharging Defendant Old Republic from all liability asserted against it with respect to said bond, 3) for an order restraining all parties to the action from instituting or prosecuting any proceedings affecting the rights and obligations of Defendant Old Republic and the other claimants in this action, 4) to dismiss Defendant Old Republic from any actions pending against the proceeds of said bond; and 5) for an order awarding Defendant Old Republic reasonable attorney’s fees and court costs in the sum of $1,100.
Contractor Bonds
Business and Professions Code section 7071.6 requires that each licensed contractor file or have on file a contractor’s bond in the sum of $15,000. (Bus. & Prof. Code, § 7071.6, subd. (a).) The liability of the surety issuing the bond is limited to $7,500, except when the claimant is one of the persons specified in Business and Professions Code section 7071.5, who may seek the entire amount of the bond. (Bus. & Prof. Code, § 7071.6, subd. (b).)
Section 7071.5 specifically protects:
(a) A homeowner contracting for home improvement upon the homeowner's personal family residence damaged as a result of a violation of this chapter by the licensee.
(b) A property owner contracting for the construction of a single-family dwelling who is damaged as a result of a violation of this chapter by the licensee. That property owner shall only recover under this subdivision if the single-family dwelling is not intended for sale or offered for sale at the time the damages were incurred.
(c) A person damaged as a result of a willful and deliberate violation of this chapter by the licensee, or by the fraud of the licensee in the execution or performance of a construction contract.
(Bus. & Prof. Code, § 7071.5.)
Interpleader and Deposit of Bond Funds
A surety who is sued but claims no interest in the bond funds and who wishes to avoid the open-ended costs of litigation may file a cross-complaint in interpleader and/or seek leave to deposit the bond funds with the court clerk. (See Code Civ. Proc., § 386, subds. (b) & (c); Karton v. Ari Design & Construction, Inc. (2021) 61 Cal.App.5th 734, 753.)
“After any such complaint or cross-complaint in interpleader has been filed, the court in which it is filed 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.” (Code Civ. Proc., § 386, subd. (f).) The surety may also “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.” ( (See Code Civ. Proc., § 386.5)
The court may also, in its discretion, award a discharged party its costs and reasonable attorney fees from the amount in dispute which has been deposited with the court. (Code Civ. Proc., § 386.6, subd. (a).) Recoverable fees, however, are limited to those related “solely to the pursuit of the stakeholder remedy of Code of Civil Procedure section 386, et seq. (including fees incurred to overcome resistance to the remedy).” (Sweeney v. McClaran (1976) 58 Cal.App.3d 824, 830-831.)
Merits
In this case, Defendant Old Republic filed its cross-complaint in interpleader on 03/07/2022. (See ROA #16.) Defendant Old Republic claims no interest in the $7,500 principal and that it does not know and cannot determine the respective merits of the remaining claims which are conflicting claims against the bond. (See ibid.; see also Sosa Decl., ¶ 8.)
Defendant Old Republic now seeks to deposit the amount of $7,500 (rather than the entire $15,000 amount of the bond), presumably because the beneficiary does not fall int one of the categories specified in Civil Procedure Code section 7071.5. All claimants have been served, (see Sosa Decl., ¶ 4), and no claimant has filed an opposition to the instant motion. Thus, the court has not been presented with any argument that $7,500 is not the proper amount to be deposited.
In addition, no opposition was filed and no reason was given not to discharge Defendant Old Republic from all liability asserted against it arising from Bond Number GCL5922593, or dismissing Defendant Old Republic from this action.
However, there is a related action (5 Coral Cove Wave LLC vs. Al’s Engineering, Inc., Case No. 30-2021-01236425) to this case. Thus, an order restraining all parties to this action from instituting or prosecuting any proceedings affecting the rights and obligations of Defendant Old Republic and the other claimants in this action could affect the related action.
The court therefore exercises its discretion to decline to issue such a retraining order. The effect of this will be limited, however, because the court will discharge Defendant Old Republic from liability and dismiss Defendant Old Republic from this action.
Defendant Old Republic shall give notice of this ruling.