Judge Thomas Falls, Case 21PSCV00368 2022-11-22 Tentative Ruling

Judge: Thomas Falls, Case: 21PSCV00368, Date: 2022-11-22 Tentative Ruling

Case Number: 21PSCV00368 Hearing Date: November 22, 2022 Dept: R

THE GREEN HOME SHOWROOM, A CALIFORNIA CORPORATION. vs DIVERSIFIED CONSTRUCTION & ENGINEERING GROUP INC. A CALIFORNIA CORPORATION, et al

(21PSCV00368)

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Defendant/Cross-Complainant American Contractors Indemnity Company’s MOTION FOR ORDER OF DISCHARGE AND AWARD OF COSTS AND ATTORNEY’S FEES AND ORDER FOR DEPOSIT; AND FOR DIMSISSAL OF ACIC FROM CROSS-COMPLAINT

Responding Party: Unopposed

Tentative Ruling

Defendant/Cross-Complainant’s MOTION FOR ORDER OF DISCHARGE AND AWARD OF COSTS AND ATTORNEY’S FEES AND ORDER FOR DEPOSIT; AND FOR DIMSISSAL OF ACIC FROM CROSS-COMPLAINT is GRANTED.

Background

This is a case for breach of contract, negligence, and unfair business practices. Plaintiff The Green Home Showroom alleges the following against Defendants Diversified Construction & Engineering Group, Inc. (“Diversified”), and American Contractors Indemnity Company (“ACIC”): Plaintiff and Diversified entered into a contract where Diversified would build a structure but Diversified abandoned the project. ACIC issued a contractor’s bond to Diversified, as surety for the benefit of all persons damaged as a result of Diversified’s failure to meet its contractual obligations.

On May 10, 2021, Plaintiff filed complaint for four causes of action: (1) Breach of Construction Contract; (2) Negligence; (3) Unfair Business Practices Business and Professions Code 17200; and (4) Recovery on Surety Bond.

On June 22, 2021, Defendants filed their answer.

On June 22, 2021, Diversified filed a Cross-Complaint against Plaintiff for breach of contract and quantum meruit.

On September 1, 2021, Plaintiff filed its answer to Diversified’s Cross-Complaint.

On March 23, 2022, ACIC filed its Cross-Complaint against The Green Home Showroom, Pablo Padilla, and Diversified (collectively “Cross-Defendants”) for interpleader and injunctive relief.

On May 5, 2022, Diversified filed its answer to ACIC’s Cross-Complaint.

On May 13, 2022, Pablo Padilla filed his answer to ACIC’s Cross-Complaint.

As of November 17, 2022, The Green Home Showroom has not filed its answer to ACIC’s Cross-Complaint.

On July 7, 2022, ACIC filed this instant motion.

Legal Standard

“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.)

Judicial Notice

The Court grants all of ACIC’s requests for Judicial Notice under Evidence Code, section 452 and 453.

Discussion

ACIC seeks an Order that (1) ACIC be discharged from all liability regarding the rights and obligations of the parties to this action arising out of the issuance by ACIC of a Contractor’s License bond, bond number 100324447, to which the above-named Cross-Defendants have made claims; (2) ACIC be awarded costs in the amount of $1,500.00 from the penal sum of the bond, and ACIC shall deposit the remaining $6,000.00 with the Clerk of the Court; (3) that Cross-Defendants, and each of them, and their respective attorneys, be restrained from instituting or further prosecuting any other proceeding in any court in California for recovery against the bond; and (4) ACIC be permitted to dismiss itself from the cross-complaint without prejudice.

In support of its motion, ACIC argues that (1) the aggregate liability of the surety is limited to $7,500 because Cross-Defendants are not beneficiaries specified in Business & Professions Code section 7071.5; (2) interpleader is appropriate because there are multiple claims that may give rise to multiple liability and ACIC is a mere stakeholder without any interest in the sum of money; (3) the Court is entitled to order restraining all Cross-Defendants from instituting or further prosecuting any other proceeding against ACIC under Code of Civil Procedure section 386; and (4) it is entitled to a statutory allowance for reasonable attorney’s fees incurred under Code of Civil Procedure section 386.6.

ACIC does not specify which Cross-Complaint it be permitted to dismiss itself from without prejudice, so the Court cannot rule on this at this time.

(1) Aggregate Liability of Surety

Business & Professions Code section 7071.6 subdivision (b) states: “Excluding the claims brought by the beneficiaries specified in subdivision (a) of Section 7071.5, the aggregate liability of a surety on claims brought against a bond required by this section shall not exceed the sum of seven thousand five hundred dollars ($7,500)….” Beneficiaries under subdivision (a) of Section 7071.5 include “homeowner[s] contracting for home improvement upon the homeowners[’] personal family residence damaged as a result of a violation of this chapter by the licensee.”

Here, the Court finds that Cross-Defendants are not beneficiaries under subdivision (a) of section 7071.5 of the Business & Professions Code. Cross-Defendant The Green Home Showroom is not a homeowner contracting for home improvement on its personal family residence because it alleged in its Complaint that it is “a licensed General building, and a California Corporation.” Cross-Defendant Pablo Padilla is not a homeowner contracting for home improvement on his personal family residence because he was served at 738 E. Alisal St. Covina, CA 91723, which he confirmed was his primary residence by email. Padilla also confirmed by email that he never lived at 303 E. Cannon Ave., San Dimas, CA 91773, which is subject property of the claim made against the license bond. Cross-Defendant Diversified is not a homeowner contracting for home improvement on its personal family residence because The Green Home Showroom alleged it was a registered California corporation, which entered into a contract to build a structure for The Green Home Showroom. Thus, under Business & Professions Code section 7071.6 subdivision (b), ACIC’s aggregate liability of surety is $7,500.

(2) Interpleader

Interpleader is appropriate whenever “double or multiple claims are made … by two or more persons … such that they may [expose the person against whom the claims are asserted] to double or multiple liability.” (Code of Civ. Proc., § 386(b), F. Interpleader, Cal. Prac. Guide Civ. Pro. Before Trial Ch. 2-F.) If a stakeholder has already been sued by one or more of the adverse claimants, the defendant-stakeholder may file a verified interpleader cross-complaint joining the other adverse claimants, with allegations similar to the complaint in intervention. (Ibid.) The defendant-stakeholder may also move for an order of discharge from liability if the defendant-stakeholder claims no interest in the funds or property held. (Code of Civ. Proc., §§ 386(a), 386.5, F. Interpleader, Cal. Prac. Guide Civ. Pro. Before Trial Ch. 2-F.) “Such order will also substitute the adverse claimants as parties to the action; or, if only money is involved, simply dismiss the stakeholder.” (Ibid.) “In either event, the motion must be supported by an affidavit by the stakeholder establishing the ground for interpleader, and notice of the motion must be served on each of the adverse claimants to the funds or property.” (Ibid.)

Here, the Court finds that ACIC’s motion for an order of discharge from liability is appropriate because ACIC claims no interest in the $7,500 sum of the bond and claims that it received multiple written demands for payment of losses and/or damages from Cross-Defendants. (Sabanac Decl. ¶ 9.) ACIC has supported its motion with an affidavit establishing the ground for interpleader. (See Sabanac Decl.) ACIC has also properly served Cross-Defendants and given them notice of this instant motion. (Mot., Proof of Serv.) Thus, ACIC is entitled to an order discharging it from further liability to the adverse claimants. The Court GRANTS ACIC’s request contingent on ACIC’s deposit of the bond amount with the Court.

(3) Restraining Order

“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.)

“In the complaint in interpleader, a plaintiff stakeholder must allege facts showing a reasonable probability that the plaintiff will be subject to double claims that might give rise to double liability.” (Farmers New World Life Ins. Co. v. Rees (2013) 219 Cal.App.4th 307, 316-317.)

Here, the Court finds that ACIC has not sufficiently shown that there is a reasonable probability that it will be subject to a multiplicity of claims much less an actual danger as ACIC claims. In ACIC’s supporting declaration for this instant motion and in ACIC’s Cross-Complaint, ACIC conclusory states that it received multiple written demands for payment of losses and/or damages from Cross-Defendants without including any specific facts. ACIC does not cite to any actual cases filed nor attach exhibits showing what claims were filed against it. However, given that Cross-Defendants have not opposed this motion, the Court GRANTS ACIC’s request, subject to change pending the hearing. Furthermore, the grant of the restraining order is contingent on ACIC’s deposit of the bond amount with the Court.

(4) Attorney’s Fees

“A party to an action who follows the procedure set forth in Section 386 or 386.5 may insert in his motion, petition, complaint, or cross complaint a request for allowance of his costs and reasonable attorney fees incurred in such action. In ordering the discharge of such party, the court may, in its discretion, award such party his costs and reasonable attorney fees from the amount in dispute which has been deposited with the court. At the time of final judgment in the action the court may make such further provision for assumption of such costs and attorney fees by one or more of the adverse claimants as may appear proper.” (Code Civ. Proc., § 386.6(a).) A “reasonable” hourly rate is the prevailing rate charged by attorneys of similar skill and experience in the relevant community. (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.)

Here, the Court finds that ACIC is entitled to a reimbursement for its costs and reasonable attorney fees incurred in seeking an order under Code of Civil Procedure section 386. Counsel for ACIC seeks $1,500 in attorney’s fees for the instant motion, but Counsel does not provide a calculation or breakdown of the hours. Although Counsel has provided a copy of the client ledger, this shows only the total amount of fees and costs in bringing the action and does not provide a calculation for the $1,500 ACIC requests. It appears from the ledger that Counsel charges $275 per hour, but Counsel does not state why this is a reasonable rate. Utilizing a Lodestar approach, and in view of the totality of the circumstances, the Court finds that the total and reasonable amount of attorney’s fees and costs incurred for the work performed in connection with the pending motion is $250 (2 hours at $125/hour). Fees are payable within 20 days of the date of the hearing.

Conclusion

Based on the foregoing, the motion is GRANTED as to discharging ACIC’s liability arising out of the issuance by ACIC of a Contractor’s License bond and as to an order restraining all Cross-Defendants from instituting or further prosecuting any other proceeding against ACIC, both of which are contingent on ACIC’s deposit of the bond amount with the Court.