Judge: Upinder S. Kalra, Case: 22STCV29690, Date: 2023-04-04 Tentative Ruling

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Case Number: 22STCV29690    Hearing Date: April 4, 2023    Dept: 51

Tentative Ruling

Judge Upinder S. Kalra, Department 51

HEARING DATE:   April 4, 2023                                      

CASE NAME:           L.A. Roofing Materials, Inc., v. Blancie Junior Guy, et al.

CASE NO.:                22STCV29690

MOTION FOR ORDER FOR DEPOSIT OF FUNDS AND DISCHARGE OF STAKEHOLDERS

MOVING PARTY: Cross-Complainant Old Republic Surety Company

RESPONDING PARTY(S): Plaintiff L.A. Roofing Materials, Inc., filed a Notice of Non-Opposition. None as of March 30, 2023, as to remaining Defendants.

REQUESTED RELIEF:

1.      An order authorizing Moving Defendant to deposit with the Clerk of Court $7,500, the full penalty of Bond No. GCL5424998.

2.      An order discharging Moving Defendant from liability.

3.      An order restraining others from instituting or prosecuting any proceedings affecting the rights and obligations of Moving Defendant with respect to all claims under the Bond No. GCL5424998.

4.      A judgment of dismissal as to Moving Defendant.

5.      An order awarding Moving Defendant $1,000 in attorneys’ fees.

TENTATIVE RULING:

1.      Motion for Order for Deposit of Funds with the Clerk of Court is GRANTED.

2.      Motion for discharging Moving Defendants from liability is GRANTED.

3.      Motion for Order restraining others is GRANTED.

4.      Dismissal as to Moving Defendants is GRANTED.

5.      An order awarding Moving Defendants $1,000 in attorneys’ fees is GRANTED.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

On September 12, 2022, Plaintiff L.A. Roofing Materials, Inc. (“Plaintiff”) filed a complaint against Defendants Blancie Junior Guy, Blancie Junior Guy, doing business as B&G Roofing, and Old Republic Surety Company (“Defendants.”) The complaint alleged six causes of action: (1) Breach of Contract, (2) Quantum Meruit, (3) Open Book Account, (4) Account Stated, (5) Recovery on Personal Guaranty, and (6) Recovery on License Bond. The complaint alleges that Plaintiff entered an agreement with Defendant B&G Roofing to allow Defendant to purchase materials from Plaintiff on a credit basis. Defendant order additional materials from Plaintiff and promised to pay. Defendant breached the agreement by failing to pay the sum due totaling $87,570.54.

On October 4, 2022, Defendant Old Republic Surety Company filed a General Denial and a Cross-Complaint.

On November 1, 2022, Cross-Defendant L.A. Roofing Materials, Inc., filed an Answer to the Cross-Complaint.

On December 6, 2022, Cross-Complainant filed the current Motion for Order to Deposition by Stakeholder and Discharge of Stakeholder. Plaintiff/Cross-Defendant L.A. Roofing Materials, Inc., filed a Notice of Non-Opposition. As of March 30, 2023, Defendant/Cross-Defendants Blancie Junior Guy, individually and doing business as B&G Roofing have not filed an Opposition.

On January 19, 2023, Cross-Complainant filed a Request for Entry of Default as to Blancie Junior Guy, individually and doing business as B&G Roofing, which was GRANTED.  

LEGAL STANDARD:

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 C2d 497, 508; City of Morgan Hill v. Brown (1999) 71 Cal.App.4th 1114, 1122.) 

Once the stakeholder’s right to interplead is established, and he or she deposits the money or personal property in court, he or she may be discharged from liability to any of the claimants. This enables the stakeholder to avoid a 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 v. Brown, supra, 71 Cal.App.4th at 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 ... As against the stakeholder, claimants may raise only matters which go to whether the suit is properly one for interpleader; i.e., whether the elements of an interpleader action are present.” (State Farm Fire & Cas. Co. v. Pietak (2001) 90 Cal.App.4th 600, 612.) 

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, subd. (a), 386.5.) The motion must be supported by an affidavit by the stakeholder establishing the ground for interpleader. (Code Civ. Proc., § 386, Subd. (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, subd. (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.)  

The stakeholder may seek reimbursement for its costs and reasonable attorneys’ fees incurred.  (UAPColumbus JV 326132 v. Nesbitt (1991) 234 Cal.App.3d 1028, 1036.) The court may order payment thereof out of the funds deposited by the stakeholder. (Code Civ. Proc., § 386.6.) 

ANALYSIS:

Moving Defendant Old Republic Surety Company (“Old Republic”) moves to have the court allow Old Republic to deposit $7,500 with the Court, discharge Old Republic from any further liability, issue an order restraining claimants from instituting or prosecuting any proceedings affecting the rights and obligations of Old Republic with respect to all claimants under Bond No. GCL5424998, and award attorneys’ fees totaling $1,000.

The issue in this matter concerns a Contractor’s License Bond, which was issued to Blancie Junior Guy, individually and doing business as B&G Roofing. The bond provides that the total liability of the Surety shall not exceed $7,500. Between 2004 and 2016, the penal sum increased various times from $7,500 to $15,000 for the benefit of the homeowner/claimants only. (Memorandum 2: 5-11.) Here, Old Republic has received multiple claims against its bond from Plaintiff/Cross-Defendant L.A. Roofing Materials, Inc., and Defendant/Cross-Defendant Blancie Junior Guy, individually and doing business as B&G Roofing, “who has not authorized Old Republic to pay L.A. Roofing Materials, Inc., the bond.” (Memorandum 2: 25-28.) Plaintiff’s claim totals $87,570.54, which greatly exceeds to the penal sum of $7,500. Defendant/Cross-Complainant Old Republic asserts that “it does not know and cannot determine the respective merits of the remaining claimants which are conflicting claims against the subject bond…and Old Republic has no interest in the proceeds of Bond No. GCL5424998 and is a mere stakeholder with respect thereto pursuant to CCO § 386.5.” (Dec. Sosa ¶ 8.)

On December 19, 2022, Plaintiff/Cross-Defendant L.A. Roofing Materials, Inc., filed a non-opposition to the current motion. On January 19, 2023, Cross-Complainant filed a Request for Entry of Default as to Defendant Blancie Junior Guy, which was GRANTED. On March 17, 2023, Plaintiff/Cross-Defendant filed a Request for Entry of Default as to Defendant Blancie Junior Guy, which was GRANTED.

The proof of service attached to the current motion indicates that Plaintiff was served at the Law Offices of Abdulaziz, Grossbart & Rudman. It also states that Defendant Blancie Junior Guy was served a courtesy copy at the address for B&G Roofing in Ontario, California. This address is the same address used by the process server when serving the Cross-Complaint and Summons.

The Court finds that Old Republic has satisfied all requirements for the instant Motion. Old Republic has indicated it is a mere stakeholder without any interest in the bond, there are conflicting claims on that bond, and the parties have been served with notice of the current motion.

Cross-Complaint Old Republic’s Motion to Deposit and Discharge Stakeholder is GRANTED.

Attorneys’ Fees:

Under CCP § 386.6, a party may seek attorneys’ fees, after following the procedures in CCP §§ 386 or 386.5. The court, in its discretion, may award “costs and reasonable attorney fees from the amount in dispute which has been deposited with the court.” (CCP § 386.6(a).)

As the court in Sweeney stated, “fees must be limited to those incurred only in pursuit of the stakeholder's remedy, whether by complaint or cross-complaint.” (Sweeney v. McClaran (1976) 58 Cal.App.3d 824, 830.)

Here, Old Republic requests $1,000 in fees, although the requested fees exceed $1,000. This number is based on the $435 filing fee, $95 service fees, $60 filing fee, and attorney’s fees attached as Exhibit 1 that total $1,076.47, and $450 for preparing this motion. However, Old Republic requests $1,000 for attorney’s fees and costs pursuant to CCP § 386.6, but “specifically reserves it rights to seek recovery for all attorney’s fees and costs incurred directly from Principal (Blancie Junior Guy.)”

“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.” (CCP § 386.6(a).) The Court finds the request to be reasonable and awards attorney’s fees and costs of $1,000 to be deducted from the interpleader funds prior to their deposit with the court, resulting in a net deposit of $6,500.

Request for Attorney’s Fees and Costs is GRANTED, contingent on Cross-Complainant depositing $6,500 with the Court.

CONCLUSION:

            For the foregoing reasons, the Court decides the pending motion as follows:

Motion for Order for Authorizing Depositing of Funds and Discharging Shareholders is GRANTED.

Motion for Discharging Moving Defendant from Liability is GRANTED.

Motion for Order restraining others is GRANTED.

Dismissal as to Moving Defendant is GRANTED.

Request for Attorney’s Fees of $1,000 is GRANTED.

Moving party is to give notice.

IT IS SO ORDERED.

Dated:             April 4, 2023               _________________________________                                                                                                                  Upinder S. Kalra

                                                                                    Judge of the Superior Court