Judge: Virginia Keeny, Case: 22VECV01536, Date: 2023-05-08 Tentative Ruling

Case Number: 22VECV01536    Hearing Date: May 8, 2023    Dept: W

ALEN COHEN, et al. v. MOSHE ZEMACH, et al.

MOTION TO DEPOSIT BY STAKEHOLDER and FOR DISCHARGE OF STAKEHOLDER

Date of Hearing:        May 8, 2023                                       Trial Date:       None set.

Department:              W                                                         Case No.:        22VECV01536

Moving Party:            Defendant and Cross-Complainant The Ohio Casualty Insurance Company

Responding Party:     Plaintiffs Alen Cohen and Nastran Cohen  

BACKGROUND

On October 11, 2022, Plaintiffs Alen Cohen and Nastran Cohen filed a complaint against Defendants Moshe Zemach, David Zemach, Maya Librush, Oded Zemach, Livinit Up, LLC, UrbinoConstruction Services LLC, IO Lifetime Builders, Inc., Chai Group, LLC, Serrano Demolition, Inc., Expert Decking and Waterproofing, Inc., and The Ohio Casualty Insurance Company, asserting causes of action for (1) Breach of Contract; (2) Breach of Contract; (3) Negligence; (4) Negligence; (5) Negligence; (6) Breach of Express Warranty; (7) Breach of Implied Warranty; (8) Violations of Civil Code Sections 895, et seq.; (9) Intentional Misrepresentation; (10) Negligent Misrepresentation; (11) Promissory Fraud; (12) Breach of Contract; (13) Breach of Contract; (14) Recovery on Contractor’s Bond; (15) Declaratory Relief; and (16) Rescission. Plaintiffs filed a first amended complaint on March 21, 2023.

Plaintiffs allege Defendants LivinIt Up, LLC, Moshe Zemach, David Zemach, Maya Librush, Oded Zemach, UrbinoConstruction Services, LLC, IO Lifetime Builders, Inc., and Chai Group, LLC (“Zemach Defendants”) misrepresented the condition of certain real property sold to Plaintiffs. The Zemach Defendants purchased the real property in 2015 and substantially remodeled the property, but nonetheless sold it as brand new construction.  Plaintiffs further allege Serrano Demolition was not a licensed contractor nor otherwise qualified to perform the required work and caused damaged to the property. Plaintiffs further allege Defendant Expert Decking and Waterproofing not only delayed substantial completion of its scope of work, Defendant Expert Decking also defectively and negligently performed its work, causing Plaintiffs to sustain even further damages.

On January 3, 2023, Expert Decking and Watering Proofing, Inc. filed a cross-complaint against Roes 1 -100 for (1) equitable indemnity; (2) contribution; (3) comparatrive fault; and (4) declaratory relief.

The Ohio Casualty Insurance Company filed a cross-complaint on February 24, 2023 against Expert Decking, Alen Cohen, and Nastran Cohen for interpleader.

Moshe Zemach, David Zemach, and Livinit Up filed a cross-complaint against Serrano Demolition, Inc., Expert Decking and Water Proofing, Inc. and James West on April 21, 2023 for equitable indemnity, contribution, declaratory relief.

[Tentative] Ruling

Defendant and Cross-Complainant The Ohio Casualty Insurance Company’s Motion to Deposit By Stakeholder and for Discharge of Stakeholder is Granted.

discussion

The Ohio Casualty Insurance Company motions for an Order of Deposit, Restraining Order, Interpleader and Attorney’s Fees.

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 escrow holder 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.¿ (CCP §§ 386(a), 386.5.) The motion must be supported by an affidavit by the stakeholder establishing the ground for interpleader. (CCP § 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…” (CCP § 386.5.) Notice of the motion must be served on each of the adverse claimants to the funds or property. (CCP §§ 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.” (CCP § 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. (CCP § 386.6.)¿

The Ohio Casualty Insurance Company moves to have the court allow Ohio Casualty Insurance Company to deposit $15,000.00 with the court, discharge Ohio Casualty from any further liability, issue an order restraining claimants from instituting or prosecuting any proceedings affecting the rights and obligations of Ohio Casualty with respect to all claimants under Bond No. 662502C, and award attorneys’ fees totaling $1,750.00.   

In opposition, Plaintiffs argue the Ohio Casualty Insurance Company’s Motion to deposit the full penal sum of $15,000 of Bond No. 66250C is an unlawful attempt by Cross-Complainant to avoid honoring its legal obligation to the Bond’s beneficiaries, the Cohens. Specifically, the Cohens are the only known beneficiaries of the bond and there are no competing claims on the bond. As a result, Plaintiffs contend Cross-Complainants are not entitled to attorney fees and even if the court were to grant the motion, it is Expert Decking who would be obligated to pay the attorney fees.

The court finds that The Ohio Casualty Insurance Company has satisfied all requirements for the instant Motion. The Ohio Casualty Insurance Company 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. Although Plaintiffs claim there are the only known beneficiaries and there are no competing claims on the bond, Expert Decking is a proper party under Code of Civil Procedure section 386. As noted by Cross-Complainants, “[i]nterpleader is proper regardless of the nature or source of the conflicting claims. Under modern law, the conflicting claims need not be of common origin; i.e., they may arise from completely independent dealings with the stakeholder. They may arise from contract, property or other transactions of any kind. They may be liquidated or unliquidated in amount; and the stakeholder's liability on the claims need not have yet arisen. [CCP § 386(b); City of Morgan Hill v. Brown (1999) 71 CA4th 1114, 1123, 84 CR2d 361, 366]” (F. Interpleader, Cal. Prac. Guide Civ. Pro. Before Trial Ch. 2-F.) The court in Karton v. Ari Design and Construction, Inc. (2021) 61 Cal.App.5th 734,753 found a surety may interplead the principal amount of its bond. Moreover, Expert Decking’s claims are adverse to Plaintiffs even if they did not file a claim as they may have to reimburse Ohio for payments made.

As noted above, Code of Civil Procedure section §386(f) provides, “[a]fter 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 proceedings in this State affecting the rights and obligations as between the parties to the interpleader until further order of the Court.”

Ohio requests the court enter a restraining order preventing the parties from instituting or further prosecuting any other proceeding in any other court in the State of California, or any other jurisdiction, affecting the rights and obligations between the parties to Bond No. 662502C. The court grants this request. 

Attorneys’ Fees

Ohio may recover its attorneys’ fees and costs from the disputed funds per CCP §386.6(a).  Ohio requests the court award a “statutory allowance” of $1,750.00 to cover costs and attorney’s fees. Ohio provides an accounting of attorney’s fees and costs incurred. (Sosa Decl., Exh. 1.)  Ohio may recover its identified costs in the amount of $1,750.00.  

The attorney fees are to be paid out of the deposited funds.

Based on the foregoing, Ohio’s motion for deposit of stakeholder is granted.