FEDERAL ESCROW, A CALIFORNIA CORPORATION VS MY HOME GROUP REAL ESTATE INC, A CALIFORNIA CORPORATION, ET AL.

Tentative Rulings

Case Number: 19STLC01577    Hearing Date: February 27, 2020    Dept: 25

MOTION FOR DISCHARGE AND DISMISSAL FROM INTERPLEADER ACTION AND FOR ATTORNEY FEES AND COSTS

(CCP §§ 386, 386.5, 386.6)

TENTATIVE RULING:

Plaintiff Federal Escrow, Inc.’s Motion for Discharge and Dismissal from Interpleader Action is GRANTED. In addition, Plaintiff’s request for Attorney Fees and Costs is GRANTED in the amount of $7,891.51.

Trial date remains scheduled for August 13, 2020 at 8:30 a.m. in Department 25 at the SPRING STREET COURTHOUSE.

ANALYSIS:

I. Background

On February 14, 2019, Plaintiff Federal Escrow, Inc. (“Plaintiff”) filed this action for interpleader against Defendants My Home Group Real Estate, Inc. (“MHG”), Lowell & Vanderbilt, Inc. (“L&V”), Cesar Melendrez (“Melendrez”), David S. Cooper (“Cooper”), and Janelle Roberts (“Roberts”).

This action arose from a dispute over which party is entitled to funds on deposit with Plaintiff for Escrow No. 207880-RA opened on or about December 14, 2018, in the amount of $14,390.00 for the purchase of a property. (Compl., ¶ 25.) Cooper, Roberts, and L&V signed a Common Disbursement Authorization, which identified Melendrez as an agent of L&V and authorized a $13,500.00 commission to L&V and Melendrez and $890.00 in fees payable to MHG and L&V. (Id., ¶ 14.) On or about January 11, 2019, escrow for the sale of the property closed. (Id., ¶ 16.) Plaintiff received a written demand that all amounts payable to L&V be paid to MHG instead, accusing L&V of breach of contract and fraud. (Id., ¶¶ 16, 19.) Plaintiff believes any payment to Melendrez would be illegal under Business & Professions Code, section 10137. (Id., ¶ 18.)

Default was entered against L&V, Roberts, and Cooper on July 24, 2019, and against Melendrez on August 7, 2019.

On August 21, 2019, Plaintiff filed the instant Motion for Discharge and Dismissal from Interpleader Action and for Attorney Fees and Costs (the “Motion”). On December 18, 2019, Plaintiff filed a Request for Dismissal of Roberts and Cooper.

On January 7, 2020, the Court continued the hearing on this Motion because the supporting affidavits did not state Plaintiff was a mere stakeholder with no interest in the funds as required by Code of Civil Procedure section 386.5 and because the Notice of Motion and Motion were not served on L&V and Melendrez. (1/7/20 Minute Order.)

On January 7, 2020, Plaintiff filed a proof of service demonstrating that, on that same day, MHG, Roberts, Cooper, L&V, and Melendrez were all served with Notice of Motion and Motion. (1/7/2020 Proof of Service.) Plaintiff also filed a Supplemental Declaration of Anita Lombardi stating that Plaintiff is a mere stakeholder and has no interest in the funds. (Lombardi Supp. Decl., ¶ 7.)

II. 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 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. (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. (UAP-Columbus 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.)

III. Discussion

Plaintiff requests that it be discharged and dismissed from the action. All claimants have been served with the Summons and Complaint and are in default or have been dismissed from this action. (Mot., Camarena Decl., ¶¶ 4-5.) The subject matter of this action is $14,390.00. Plaintiff states conflicting demands have been made upon it for the funds it currently holds, and it cannot determine the validity of said conflicting demands. (Mot., Arriaga Decl., ¶¶ 3-4.) Plaintiff also states it has no interest in the disputed funds and that it is a mere stakeholder. (Lombardi Supp. Decl., ¶ 7.) No parties have opposed the Motion to argue otherwise.

As the funds of $14,390.00 have already been deposited with the Court, Plaintiff is discharged from further liability. (Code Civ. Proc., §§ 386.5, 386, subd. (f).)

Furthermore, Plaintiff requests fees and costs as permitted by statute in the amount of $7,891.51, which consists of $6,182.50 in attorney time and $1,709.01 in expenses. (Mot., Camarena Decl., ¶¶ 8-10, Exh. 3.) After reviewing the invoice and breakdown of charges, the Court awards Plaintiff fees and costs of $7,891.51.

IV. Conclusion & Order

Based on the foregoing, Plaintiff Federal Escrow, Inc.’s Motion for Discharge and Dismissal from Interpleader Action is GRANTED. In addition, Plaintiff’s request for Attorney Fees and Costs is also GRANTED in the amount of $7,891.51.

Trial date remains scheduled for August 13, 2020 at 8:30 a.m. in Department 25 at the SPRING STREET COURTHOUSE.

Moving party is ordered to give notice.

Case Number: 19STLC01577    Hearing Date: January 07, 2020    Dept: 94

MOTION FOR DISCHARGE AND DISMISSAL FROM INTERPLEADER ACTION AND FOR ATTORNEY FEES AND COSTS

(CCP §§ 386, 386.6)

TENTATIVE RULING:

Based on the foregoing, Plaintiff Federal Escrow, Inc.’s Motion for Discharge and Dismissal from Interpleader Action and for Attorney Fees and Costs is CONTINUED TO FEB. 27, at 10:30 a.m. in Department 94.

ANALYSIS:

I. Background

On February 14, 2019, Plaintiff Federal Escrow, Inc. (“Plaintiff”) filed this action for interpleader against Defendants My Home Group Real Estate, Inc. (“MHG”), Lowell & Vanderbilt, Inc. (“L&V”), Cesar Melendrez (“Melendrez”), David S. Cooper (“Cooper”), and Janelle Roberts (“Roberts”).

This action arose from a dispute over which party is entitled to funds on deposit with Plaintiff for Escrow No. 207880-RA opened on or about December 14, 2018, in the amount of $14,390.00 for the purchase of a property. (Compl., ¶ 25.) Cooper, Roberts, and L&V signed a Common Disbursement Authorization, which identified Melendrez as an agent of L&V and authorized a $13,500.00 commission to L&V and Melendrez and $890.00 in fees payable to MHG and L&V. (Id., ¶ 14.) On or about January 11, 2019, escrow for the sale of the property closed. (Id., ¶ 16.) Plaintiff received a written demand that all amounts payable to L&V be paid to MHG instead, accusing L&V of breach of contract and fraud. (Id., ¶¶ 16, 19.) Plaintiff believes any payment to Melendrez would be illegal under Business & Professions Code, section 10137. (Id., ¶ 18.)

On February 19, 2019, Plaintiff filed an Application for Order Requiring Plaintiff to Deposit Interpled Funds with Court and For Court Clerk to Accept Deposit and Deposit Funds in Interest Bearing Account.

Default was entered against L&V, Roberts, and Cooper on July 24, 2019, and against Melendrez on August 7, 2019.

On August 21, 2019, Plaintiff filed the instant Motion for Discharge and Dismissal from Interpleader Action and Attorney Fees and Costs (the “Motion”). On December 18, 2019, Plaintiff filed a Request for Dismissal of Roberts and Cooper.

To date, no opposition or reply briefs have been filed.

II. 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 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.)

The stakeholder may seek reimbursement for its costs and reasonable attorneys’ fees incurred. (UAP-Columbus 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.)

III. Discussion

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.)

Here, Plaintiff requests the Court grant the Application for Order Requiring Plaintiff to Deposit Interpled Funds with Court and for Court Clerk to Accept Deposit and Deposit Funds in Interest Bearing Account (the “Application”) filed on February 19, 2019. The Application remains pending in this Department as of January 2, 2020. Plaintiff’s request is GRANTED.

Plaintiff also requests that it be discharged and dismissed from the action. All claimants have been served with the Summons and Complaint and are in default or have been dismissed from this action. (Mot., Camarena Decl., ¶¶ 4-5.) Plaintiff states conflicting demands have been made upon it for the funds it currently holds. (Mot., Arriaga Decl., ¶¶ 3-4.) Plaintiff also states it has no interest in the disputed funds. (Mot., p. 5.) .) No parties have opposed the Motion to argue otherwise.

However, neither of the two supporting affidavits Plaintiff submits state Plaintiff is a mere stakeholder with no interest in the funds as required by Code of Civil Procedure section 386.5. In addition, the proof of service filed by Plaintiffs lists only MHG as having been served with this Motion. Notice and Motion should also have been served on L&V and Melendrez as claimants to the funds. (Code Civ. Proc., §§ 386, subd. (a), 386.5.)

IV. Conclusion & Order

Based on the foregoing, Plaintiff Federal Escrow, Inc.’s Motion for Discharge and Dismissal from Interpleader Action and for Attorney Fees and Costs is CONTINUED TO FEB. 27, 2020 at 10:30  a.m. in Department 94.

At least 16 court days prior to the continued hearing date, Plaintiff is to file proof of service of the Notice of Motion and Motion as to Defendants L&V and Melendrez or dismiss them from this action. Plaintiff is also to file and serve supplemental papers addressing the deficiency of the supporting affidavits as stated herein. Failure to comply with the Court’s orders may result in the Motion being placed off calendar or denied.

Court clerk to give notice.