Judge: Theresa M. Traber, Case: 22STCV07164, Date: 2023-02-07 Tentative Ruling
Case Number: 22STCV07164 Hearing Date: February 7, 2023 Dept: 47
Tentative Ruling
Judge Theresa M. Traber, Department 47
HEARING DATE: February 7, 2023 TRIAL
DATE: NOT SET
CASE: Americo Financial Life and Annuity Ins.
Co. v. Michelle Lyn Smallwood, et al.
CASE NO.: 21STCV07164 
REQUEST
FOR DISMISSAL IN COMPLIANCE WITH COURT ORDER
MOVING PARTY: Plaintiff Americo Financial Life & Annuity Ins.
Co.
RESPONDING PARTY(S): No response on
eCourt as of 1/11/23
STATEMENT
OF MATERIAL FACTS AND/OR PROCEEDINGS:
This is an action for statutory interpleader to deposit disputed proceeds
from a set of annuity contracts.
Plaintiff requests dismissal
pursuant to the November 1, 2021 order of the Court.
TENTATIVE RULING:
On November 1, 2021, the Court
entered an order granting Plaintiff’s request for leave to deposit interpleader
funds. (November 1, 2021 Minute Order.) The Court ordered that Plaintiff was to
deposit funds in the amount of $369,347.16 with the Court within 30 days of the
Court’s order. (Id.) The Court further ordered that, upon confirmation
of Plaintiff’s deposit of those funds, Plaintiff would be discharged from
further liability and dismissed as a party in this proceeding.
Pursuant to the terms of the
Court’s order, Plaintiff filed a Notice of Deposit Interpleader Funds on
December 15, 2021. (December 15 2021 Notice of Deposit.) Attached to the Notice
as Exhibit B was Plaintiff’s receipt for the deposit, totaling the ordered
amount of $369,347.16. (Id. Exh. B.)
On November 7, 2022, Plaintiff
filed a request for dismissal in compliance with the November 1, 2021
order. At a subsequent Case Management
Conference on November 18, 2022, Defendant, in propria persona, orally
requested permission to file an opposition to the request. The Court scheduled
the hearing on this matter for January 13, 2023 and ordered that Defendant’s
opposition was to be filed and served by January 3, 2023, with a reply to be
served and filed per code. (November 18, 2022 Minute Order.) At the January 13
hearing, Defendant, who had not filed an opposition, requested a further
continuance to permit a response. The Court granted this request. (January 13,
2023 Minute Order.) Defendant’s opposition was filed February 1, 2023.
In her opposition, Defendant
contends that Plaintiff engaged in misconduct relating to the disputed funds
and claims to entitlement.
“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.” (Code Civ. Proc., § 386(b).) “When a person may be
subject to conflicting claims for money or property, the person may bring an
interpleader action to compel the claimants to litigate their claims among
themselves. (Id.) Once the person admits liability and deposits the
money with the court, he or she is discharged from liability and freed from the
obligation of participating in the litigation between the claimants.
[Citations.] The purpose of interpleader is to prevent a multiplicity of suits
and double vexation. [Citation.]” (City of Morgan Hill v. Brown (1999)
71 Cal.App.4th 1114, 1122.) “In an interpleader action, the court initially
determines the right of the plaintiff to interplead the funds; if that right is
sustained, an interlocutory decree is entered which requires the defendants to
interplead and litigate their claims to the funds. Upon an admission of
liability and deposit of monies with the court, the plaintiff may then be
discharged from liability and dismissed from the interpleader action.
[Citations.] The effect of such an order is to preserve the fund, discharge the
stakeholder from further liability, and to keep the fund in the court's custody
until the rights of potential claimants of the monies can be adjudicated.
[Citations.] Thus, the interpleader proceeding is traditionally viewed as two
lawsuits in one. The first dispute is between the stakeholder and the claimants
to determine the right to interplead the funds. The second dispute to be
resolved is who is to receive the interpleaded funds. [Citations.]” (Dial
800 v. Fesbinder (2004) 118 Cal.App.4th 32, 42–43.)
“The
determination of the propriety of interpleader has turned on whether the
stakeholder is truly a disinterested party, whose discharge still leaves
parties in litigation with substantial rights to be resolved with respect to
the property in question.” (Lincoln Nat. Life Ins. Co. v. Mitchell
(1974) 41 Cal.App.3d 16, 20.) A party who is not disinterested may not
interplead. (See, e.g., Philips v. Barton (1962) 207 Cal.App.2d 488,
495.)
The case
that appears most directly on point regarding a challenge to an interpleader is
State Farm Fire & Casualty Co. v. Pietak, a 2001 appellate case from
the Third District. In that case, an insured defendant moved to reopen an
interpleader action so that he could file a cross-complaint against the
insurance company, alleging bad faith. (90 Cal.App.4th 600, 606-608.) The
defendant sought relief under Code of Civil Procedure section 473(b),
contending that his legal counsel had made a mistake of law in failing to
realize that, if an interpleader defendant wishes to oppose an interpleader
action, a cross-complaint is compulsory. (Id. at 611.) The Court of Appeal
reviewed the language of the statute and accompanying precedent, noting that
the court in several cases has addressed the merits of claims raised by
claimants against stakeholders in interpleader actions as cross-complaints,
without addressing the propriety of including those claims in the first place.
(Id. at 613-14; see also Pacific Loan Management Corp. v. Superior
Court (1987) 196 Cal.App.3d 1485, 1489; Royal Ins. Co. v. Cole (1993)
13 Cal.App.4th 880-81, 883-90; National Life & Accident Ins.
Co. v. Edwards (1981) 119 Cal.App.3d 326, 329-30.) The Court of Appeal also
examined several older California Supreme Court decisions that appear to stand
for the position that these claims are not permissible, noting that it is
plausible that the defendant’s cross-complaint was precluded. (Id. at
612-13; see also Los Angeles v. Amidor (1903) 140 Cal.400; Conner v.
Bank of Bakersfield (1917) 174 Cal.400.) Ultimately, the Pietak
court concluded that the failure of defendant’s counsel to recognize that a
cross-complaint was compulsory was excusable, because, even if defendant’s
counsel had conducted thorough legal research on the topic, the question of
whether a cross-complaint is compulsory (or even permitted) is complex and
debatable. (Pietak, supra, 90 Cal.App.4th at 615.) The Pietak
court therefore held that relief under section 473(b) was warranted. (Id.)
Here,
Defendant filed an answer to the Complaint on July 20, 2021, asserting many of
the same essential facts that are asserted in her opposition. But Defendant has
not filed a pleading directly asserting any affirmative claims of wrongdoing by
Plaintiff. As Defendant’s claims go to the question of whether Plaintiff is
truly a disinterested party for whom interpleader is proper, it is the Court’s
view that these allegations should be fully set forth in a cross-complaint for
consideration on the merits. This conclusion is in line with recent precedent
demonstrating that a cross-complaint is the preferred method of litigating
these issues. (See, e.g, State Farm Fire & Casualty Co. v. Pietak, supra.)
The Court
will therefore permit Defendant to seek leave through a noticed motion to file
a cross-complaint and continue this matter to coincide with the hearing on that
motion.
Defendant
is ordered to file and serve a motion for leave to file a cross-complaint on or
before March 7, 2023.
The Court
sets a hearing on Defendant’s Motion for Leave to File a Cross-Complaint for
April 7, 2023 at 9:00 AM.
Plaintiff’s
Request for Dismissal is, therefore, CONTINUED to April 7, 2023, at 9:00 AM.
Moving Party to give notice.
//
//
IT IS SO ORDERED.
Dated: February 7, 2023 ___________________________________
Theresa
M. Traber
Judge
of the Superior Court