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. (Hancock Oil Co. v. Hopkins (1944) 24 Cal.2d 497, 508; City of Morgan Hill v. Brown (1999) 71 Cal.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 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.4th 857, 874; City of Morgan Hill v. Brown, supra, 71 Cal.4th at 1122.)

“The right to the remedy by interpleader is founded... not on the consideration that a [person] may be subjected to double liability, but on the fact that he is threatened with double vexation in respect to one liability.” (Southern California Gas Company v. Flannery (2014) 232 Cal.App.4th 477, 487.)

The Court’s Decision

“An interpleader action is an equitable proceeding. In an interpleader action, the court initially determines the right of the plaintiff to interplead the funds; if that right is sustained, an interlocutory decree is entered which requires the defendants to interplead and litigate their claims to the funds. Upon an admission of liability and deposit of monies with the court, the plaintiff then may be discharged from liability and dismissed from the interpleader action. The effect of such an order is to preserve the fund, discharge the stakeholder from further liability, and to keep the fund in the court’s custody until the rights of the potential claimants of the monies can be adjudicated.” (Virtanen v. O’Connell (2006) 140 Cal.App.4th 688, 698; Westamerica Bank v. City of Berkeley (2011) 201 Cal.App.4th 598, 607.)

“[I]n the second phase of an interpleader proceeding, the trial court also has ‘the power under [Code of Civil Procedure] section 386 to adjudicate the issues raised by the interpleader action including: the alleged existence of conflicting claims regarding the interpleaded funds; plaintiffs' alleged position as a disinterested mere stakeholder; and ultimately the disposition of the interpleaded funds after deducting plaintiffs’ attorney fees.’” (Flannery, supra, 232 Cal.App.4th p. 487.)

How to Structure the Motion

“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 Ca.4th 600, 612; Dial 800 v. Fesbinder (2004) 118 Cal.App.4th 32, 43.)

“The true test of suitability for interpleader is the stakeholder’s disavowal of interest in the property sought to be interpleaded, coupled with the perceived ability of the court to resolve the entire controversy as to entitlement to that property without need for the stakeholder to be a party to suit. [I]f the relations of the parties are such that the court’s decision would determine the responsibility of the [interpleader plaintiff], he is for the purposes and within the scope of the code section authorizing interpleader a mere stake-holder.” (Southern California Gas. Co. v. Flannery (2014) 232 Cal. App. 4th 486-487.)

“An interpleader action, however, may not be maintained ‘upon the mere pretext or suspicion of double vexation; [the plaintiff] must allege facts showing a reasonable probability of double vexation[,]’ or a ‘valid threat of double vexation.’” (Westamerica Bank, supra, 201 Cal.App.4th at 608.)

A complaint in interpleader must be made against multiple claimants. (Code of Civ. Proc., § 386(b).)

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. (Code of Civ. Proc., § 386(a).)

Monetary Awards

The stakeholder may seek reimbursement for his or her costs and reasonable attorneys’ fees incurred. (UAP-Columbus JV 326132 v. Nesbitt (1991) 234 Ca3d 1028, 1036.)