OLD REPUBLIC SURETY COMPANY, A CORPORATION VS USNO CONTACTING SERVICES INC., ET AL.

Tentative Rulings

Case Number: 19STLC03707    Hearing Date: February 13, 2020    Dept: 25

DISBURSEMENT OF FUNDS

(CCP § 386)

TENTATIVE RULING:

The Hearing on Disbursement of Funds is PLACED OFF CALENDAR. Trial date remains scheduled for October 13, 2020 at 8:30 a.m. in Department 25.

ANALYSIS:

1. Background & Discussion

On April 16, 2019, Plaintiff Old Republic Surety Company (“Plaintiff”) filed this interpleader action against Defendants USNO Contracting Services, Inc. dba Uptown Solar (“USNO”), Diana Caldas (“Caldas”), and Eulalio Nunez (“Nunez”). On May 31, 2019, Defendant Caldas filed an Answer and a Cross-Complaint against Defendant USNO. On July 8, 2019, Default was entered as to Defendants USNO and Nunez. On July 12, 2019, Plaintiff filed an Amendment to the Complaint to name Doe 6 as Sheila Rad (“Rad”). On August 21, 2019, default was entered as to Defendant Rad.

On September 17, 2019, Plaintiff filed the instant Motion to Deposit by Stakeholder, for Discharge of Stakeholder, and Request for Attorney’s Fees (the “Motion”). On December 19, 2019, the Court granted Plaintiff’s Motion. The Court also vacated the default entered as to Defendant Rad and ordered her to file an Answer within 30 days. (12/19/19 Minute Order.) The Court scheduled a disbursement hearing for February 13, 2020, but stated that if the parties lodged a stipulation regarding the disbursement of the interpleader funds and the order was approved by the Court, no appearances would be necessary at the disbursement hearing date. (Ibid.) The parties did not file a stipulation. On December 20, 2019, Defendant Rad filed an Answer.

Here, both Defendant Caldas and Defendant Rad state in their Answer they seek the bond funds. Code of Civil Procedure section 386, subdivision (e) provides that conflicting claims to deposited funds “shall be deemed issues triable by the court, and such issues may be first tried.”

Accordingly, Defendant Caldas and Defendant Rad’s competing claims will be resolved at trial, which is currently set for October 13, 2020.

1. Conclusion & Order

For the foregoing reasons, the Hearing on Disbursement of Funds is PLACED OFF CALENDAR. Trial date remains scheduled for October 13, 2020 at 8:30 a.m. in Department 25.

Court Clerk to give notice.

Case Number: 19STLC03707    Hearing Date: December 09, 2019    Dept: 94

Old Republic Surety Co. v. USNO Contacting Services, Inc., et al.

MOTION TO DEPOSIT FEES, DISCHARGE LIABILITY AND RECOVER FEES

(CCP §§ 386, 386.5)

TENTATIVE RULING:

Plaintiff Old Republic Surety Company’s Motion to Deposit by Stakeholder and for Discharge of Stakeholder is GRANTED. INTERPLEADER FUNDS OF $13,000.00 TO BE DEPOSITED WITH TEN (10) DAYS.

ANALYSIS:

On April 16, 2019, Plaintiff Old Republic Surety Company (“Plaintiff”) filed this action for interpleader with respect to claims against a construction bond issued to Defendant USNO Contracting Services, Inc. dba Uptown Solar (“USNO”). Plaintiff alleges that Defendants Diana Caldas (“Caldas”), Eulalio Nunez (“Nunez”), and Does 6 through 75 have made claims with respect to the bond issued to UNSO. On May 31, 2019, Caldas filed an Answer and Cross-Complaint for (1) breach of contract; (2) unfair competition; (3) violation of Bus. & Profs. Code § 7071.5. The first two causes of action in the Cross-Complaint are against UNSO; the third cause of action is against Plaintiff.

Having failed to respond to the Complaint, the Court entered default against UNSO and Nunez on July 8, 2019. On July 12, 2019, Plaintiff added Sheila Rad (“Rad”) as a defendant to the action. The Court entered Rad’s default on August 21, 2019.

Plaintiff filed the instant Motion to Deposit, for Discharge of Stakeholder, and Request for Attorney’s Fees on September 17, 2019. To date, no opposition has been filed.

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 CA4th 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 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 CA4th 857, 874; City of Morgan Hill v. Brown, supra, 71 CA4th 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 CA4th 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), 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.] (Those who are not parties to the action will have to be served personally.)

The stakeholder may seek reimbursement for its costs and reasonable attorneys’ fees incurred. [UAP-Columbus JV 326132 v. Nesbitt (1991) 234 CA3d 1028, 1036.] The court may (discretionary) order payment thereof out of the funds deposited by the stakeholder. (Ultimately, such payment may be charged to one or more of the adverse claimants in the final judgment.) [CCP § 386.6.]

Discussion

Plaintiff’s request to be discharged from liability is granted. As all claimants have been served with the Summons and Complaint, served with the instant motion, are in default, or were dismissed from the action, relief is proper. (Code Civ. Proc., §§ 386 and 386.5.) The subject matter of this action is $15,000.00. Currently, Plaintiff cannot determine the validity of the conflicting demands that have been made. (Motion, Sosa Decl., ¶¶4-8 and Exh. 2.) Upon deposit of the funds to the court, Plaintiff may be discharged from further liability and the Court enters a restraining order to prevent the prosecution of other actions affecting the rights and obligations as between the parties to the interpleader. (Code Civ. Proc., §§ 386.5, 386, subd. (f).) Furthermore, the fees and costs sought by Plaintiff are proper. Plaintiff’s counsel has expended substantial attorneys’ fees and costs bringing this action and protecting itself from liability. Specifically, Plaintiff’s counsel filed the instant action and motion, served all Defendants, will appear at the instant hearing, will deposit the bond, and has sought to preserve the surplus funds. (Motion, Sosa Decl., ¶10 and Exh. 1.) Therefore, fees and costs are awarded in the amount of $2,000.00. (Ibid.) Plaintiff is to deposit the funds of $13,000.00 within 10 days of receipt of this order.

Plaintiff Old Republic Surety Company’s Motion to Deposit by Stakeholder and for Discharge of Stakeholder is GRANTED. INTERPLEADER FUNDS OF $13,000.00 TO BE DEPOSITED WITH TEN (10) DAYS.

Trial date remains scheduled for October 13, 2020 at 8:30 am in Department 94.

Moving party to give notice.