Case Name: CYPRESS MEDIA, INC. V. GLOBAL PUBLISHING, INC., ET AL.
Case No: 1-13-CV-241762
Date: May 15, 2014
Time: 9:00 a.m.
Dept: 8

Defendant T&G 2009, LLC (“T&G”) moves the Court for an order directing plaintiff Cypress Media, Inc. (“Cypress”) to pay T&G interest in the amount of $4,925.35, attorney’s fees of $11,772.21, and costs of $652.40. Concerning the request for interest, T&G asserts that, because Cypress failed to deposit the disputed funds with the Court in accordance with the interpleader statute (Code Civ. Proc. [“CCP”], § 386), Cypress must pay interest on the debt it concededly owes to T&G. As to the request for attorney’s fees and costs, T&G claims entitlement to the award on two grounds. First, T&G contends that it is the prevailing party under CCP sections 1032 and 1033.5, which authorizes an award of costs, including attorney’s fees, to prevailing parties. Second, T&G argues that Cypress is contractually obligated to pay attorney’s fees and costs.

T&G’s motion is GRANTED IN PART and DENIED IN PART.

The motion is GRANTED as to T&G’s request for interest. CCP section 386 governs interpleader actions. The statue permits, but does not mandate, the plaintiff stakeholder to deposit the funds it admits to be payable with the court at the time the plaintiff files the action in interpleader. (CCP, § 386, subd. (c) [“Any amount which a plaintiff . . . admits to be payable may be deposited by him with the clerk of the court at the time of the filing of the complaint . . . without first obtaining an order of the court. . . .”].) If the stakeholder does deposit the funds with the court, “[a]ny interest on amounts deposited . . . shall cease to accrue after the date of such deposit or delivery.” (Id., emphasis added.) The negative implication of the statute is that interest continues to accrue if the funds are not deposited with the Court. T&G is therefore entitled to an award of interest.

T&G claims that the interest rate should be calculated at 1% per month from the date of each of the invoices to February 26, 2014 (the date when Cypress wrote T&G a check for $23,500.00). The rate of 1% per month is the rate set forth in the terms and conditions applicable to the products purchased by Cypress. Cypress contends that it is not bound by the 1% interest rate because it appears in the promissory note between T&G and Global Publishing, Inc., not GP Distribution Group, Inc., which is the company that Cypress bought the products from. The Court need not make a factual determination as to the issue of whether a valid contract exists between Cypress and T&G. The California Supreme Court has held that a claimant may not change the character of an interpleader action by asserting a contract claim (even if related to the interpleaded funds) against the stakeholder. (See Conner v. Bank of Bakersfield (1917) 174 Cal. 400, 403.) Thus, T&G is entitled to an award of interest at the statutory rate of 10% per annum in accordance with Civil Code section 3289. Because the parties have not discussed what the amount of interest would be under section 3289, and because there are multiple invoices involved, T&G shall submit a proposed order in accordance with California Rules of Court, rule 3.1312 re-calculating the interest to which it is entitled under Civil Code section 3289.
T&G’s request for attorney’s fees and costs is DENIED. CCP section 1032 provides, in part, that, “[e]xcept as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” (CCP, § 1032, subd. (b), emphasis added.) CCP section 1033.5 provides that “attorney’s fees” are allowable as costs under section 1032. (CCP, § 1033.5, subd. (a)(10).)

T&G’s request for attorney’s fees and costs as a prevailing party goes to the heart of the parties’ misunderstanding of the nature of interpleader actions. The court of appeal addressed a similar issue in Cantu v. Resolution Trust Corporation (1992) 4 Cal.App.4th 857. In that case, following the dismissal of an interpleader action, one of the claimants in the interpleader action filed a separate lawsuit against the stakeholder. In the separate lawsuit, the claimant alleged that he was improperly included in the interpleader action and that there was no dispute as to who was rightfully entitled to the stake. Based on these allegations, the claimant sought damages against the stakeholder for malicious prosecution. (Id., at pp. 871-872.) As part of his case, the claimant asserted that he “prevailed” in the interpleader action because the stakeholder dismissed him as a claimant. (Id., at p. 880.)

The court held as a matter of law that a claimant cannot be considered a prevailing party vis-à-vis the stakeholder in an interpleader action. (Id., at p. 881.) According to the court of appeal, “[a]s between an interpleader plaintiff and the named claimants, an interpleader action simply is not adversarial—the interpleader plaintiff attempts to offer money to the named claimants, not take money away.” (Id., at pp. 881-882.) Given the non-adversarial nature of interpleader actions as between the stakeholder and claimants, the court held that the claimant could not be considered a prevailing party. (Id.)

The holding in Cantu is dispositive of T&G’s request for attorney’s fees and costs under Code of Civil Procedure section 1032, which only authorizes costs, including attorney’s fees, to prevailing parties. Because interpleader actions are not adversarial as between the stakeholder and the claimants, T&G cannot be considered a prevailing party against Cypress within the meaning of Code of Civil Procedure section 1032.