Interpleader, Prevailing Party: 2/7 DCA Affirms Trial Court’s Denial Of Attorney Fees And Costs Sought Against Interpleading Plaintiff By Defendant Who Obtained Summary Judgment

Defendant In An Interpleader Action Cannot Be The Prevailing Party As To The Interpleader Because There Are No True Adverse Interests, And Claims Of Collusion Between Between Interpleader And Other Defendant Must Be Made During Initial Phase Of Proceeding.

            In Grupo Deco California v. Downs, Case Nos. B305748/B308965 (2d Dist., Div. 7 October 17, 2022) (unpublished), commercial tenant filed a complaint in interpleader against the two separate parties claiming entitlement to the rent payments – the trustee of a revocable trust, and an LLC.  After the trial court ruled in favor of the Trustee, granting her motion for summary judgment, she moved pursuant to the lease agreement and Code Civ. Proc. §§ 1032 and 1033.5 as the prevailing party for attorney fees and costs jointly and severally against the LLC and the interpleader plaintiff/stakeholder. The trial court awarded some fees/costs against the LLC, but ruled that fees/costs were not recoverable against the interpleader – finding that a defendant in an interpleader action cannot be the prevailing party “because there are no true adverse interests”; and because there was no net monetary recovery against interpleader.  Trustee appealed.

            The 2/7 DCA agreed with the trial court’s finding and affirmed – citing its holding in Cantu v. Resolution Trust Corp., 4 Cal.App.4^th 857, 881 (1992) [“An interpleader action is not adversarial as between a claimant and the stakeholder and, hence, Cantu [the claimant] could not prevail against Lincoln [the stakeholder], or vice versa.”]. 

            The panel also found, just as the trial court had, that Trustee was not entitled to fees based on her argument that interpleader had colluded with the LLC.  “[A]n interpleader action may not be maintained ‘“upon the mere pretext or suspicion of double vexation.”’’’ (Placer Foreclosure, Inc. v. Aflalo, 23 Cal.App.5th 1109, 1113(2018); accord, Westamerica Bank v. City of Berkeley, 201 Cal.App.4th 598, 608 (2011) [the interpleader plaintiff “‘must allege facts showing a reasonable probability of double vexation’ [citation] or a ‘valid threat of double vexation’”].)  However, such a challenge or objection is forfeited if it is not made during the initial phase of the proceeding.  Nothing in the record indicated that Trustee ever demurred to the complaint in interpleader or formally challenged interpleader’s right to interplead the rent funds.