Opinion
No. 2:19-cv-00942-JAM
07-21-2020
ANDREW FURIA, Plaintiff, v. SUSANNE MARIE MCGREW, an individual; LAURIE HIRSCH, an individual; PURHYDRO, LLC, a Nevada corporation; WELLS FARGO BANK NATIONAL ASSOCIATION; BANK OF AMERICA, NATIONAL ASSOCIATION; JPMORGAN CHASE BANK, National ASSOCIATION; and DOES 1 through 50, inclusive, Defendants. And Related Actions.
ORDER GRANTING THE BANK OF AMERICA AND WELLS FARGO BANK'S MOTIONS TO DISMISS
On November 26, 2019, the Court granted Bank of America, N.A. ("Bank of America" or "BofA") and Wells Fargo Bank's, N.A. ("Wells Fargo") (collectively "the Banks") joint motion to intervene, as they possessed the disputed funds at the heart of this litigation. See Order Granting Mot. to Intervene, ECF No. 36. The Banks have since deposited the disputed funds with the Court. They now move to be discharged from the suit and to be reimbursed for the attorneys' fees and costs incurred by interpleading the funds. BofA's Mot., ECF No. 97; see also Wells Fargo's Mot., ECF No. 96. Plaintiff Andrew Furia ("Plaintiff") and Defendant Laurie Hirsch ("Hirsch") oppose the motions only as to reimbursement for attorney's fees. See Plf's Opp'n, ECF No. 109; see also Hirsch's Opp'n, ECF No. 111. For the reasons stated below, the Court GRANTS the Banks' motions but DEFERS assessment and allocation of the fees until all claims have been resolved.
This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled for June 16, 2020. --------
I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND
On March 25, 2019, Plaintiff deposited $340,000 into a Wells Fargo checking account he jointly held with his then girlfriend, Defendant Susanne Marie McGrew ("McGrew"). BofA Mot. at 3. He also executed a Relationship Change Application, giving McGrew the ability to withdraw the money. Plf's Opp'n at 7.
McGrew withdrew the entire balance of the joint account ($324,918.27) while Plaintiff was away on April 8, 2019. Id. She deposited the funds into her own personal Wells Fargo account and obtained two cashier's checks made payable to herself—one for $300,000 and the other for $24,918.27. Id. Plaintiff discovered the withdrawal the same day and immediately contacted Wells Fargo. Id. After many conversations with the bank, Wells Fargo informed Plaintiff that their hands were tied because he had given McGrew authorization to withdraw the funds when he made the relationship change. Id. at 6.
Plaintiff filed a complaint in the Superior Court of California, County of El Dorado, against McGrew two days later, seeking to recover the disputed funds. BofA Mot. at 1. Plaintiff was able to obtain a Temporary Restraining Order("TRO") the next day to freeze McGrew's personal Wells Fargo account. Id. But the TRO was to no avail, since she had already deposited the cashier's checks into her Bank of America account. Id. A week later, the court issued a second TRO and ordered Wells Fargo to turn over information about the disbursement of the contested funds. Id. Based on that information, Plaintiff obtained a third TRO to freeze all of McGrew's Bank of America accounts. Plf's Opp'n at 10. But Bank of America was only able to freeze $2,364.69. Id.
The court issued a fourth TRO, so Plaintiff could obtain information from Bank of America regarding the disputed funds. Id. Plaintiff learned that McGrew had transferred at total of $321,000 from her Bank of America accounts to her sister Hirsch's accounts. BofA Mot. at 2. Hirsch then transferred $20,000 to her Wells Fargo account, and purchased a cashier's check in the amount of $300,936.94. Id. She then bought two more cashier checks with these funds: (1) one payable to Defendant PurHydro, LLC in the amount of $100,000, and (2) one payable to Little Trouble LLC in the amount of $200,936.94. Id. Pursuant to the fourth TRO, Bank of America placed holds on McGrew and Hirsch's accounts and successfully stopped payment on the cashier's check to Little Trouble LLC. Id. However, the cashier's check to PurHydro, LLC was deposited at JP Morgan Chase before Bank of America could stop payment. Id.
On May 1, 2019, Plaintiff amended his complaint to join Hirsch, PurHydro, LLC, and the Banks (including JP Morgan Chase) as Defendants. Notice of Removal, Ex. B, First Amended Verified Complaint ("FAC"), ECF No. 1. But Plaintiff did not assert any causes of action against the Banks. Id. McGrew then removed the case to this Court. Notice of Removal ¶ 6. Soon after, Plaintiff dismissed the Banks as defendants. Amended Notice of Voluntary Dismissal, ECF No. 8.
Despite being dismissed, the Banks continuously urged Plaintiff, Hirsch, and McGrew, to stipulate to the interpleading of the funds with the Court. BofA Mot. at 3. The Banks' requests were ignored and they were forced to move to intervene for the purpose of interpleading the funds themselves. Mot. to Intervene, ECF No. 20. The Court granted the motion. Order, ECF No. 36. The Banks subsequently filed their Crossclaims and Counterclaims for interpleader, ECF Nos. 38-40, and filed motions to deposit the contested funds into the registry of the Court, ECF Nos. 39-41. The Court granted these motions as well, ECF No. 53, and the funds were ultimately deposited with the Court.
II. OPINION
A. Request for Judicial Notice
Plaintiff asks the Court to take judicial notice of the Wyoming Secretary of State's Webpages related to the business filings of Little Trouble LLC. Req. for Judicial Notice ("RJN"), ECF No. 110; see also Plf's Opp'n, Exh. K, ECF No. 109-13. Neither Hirsch nor the Banks oppose this request.
Under Federal Rule of Evidence 201, a district court may take judicial notice of a fact that is "not subject to reasonable dispute because it can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b)(2). Because these documents "are not subject to reasonable dispute and their authenticity is not in question," the Court will take judicial notice of them. Trudeau v. Google LLC, 349 F. Supp. 3d 869, 876 (N.D. Cal. 2018). However, the Court can take notice of the existence of these documents but not of the truths asserted in them. Id.
B. Legal Standard
"An interpleader action typically involves two stages." Mack v. Kuckenmeister, 619 F.3d 1010, 1023 (9th Cir. 2010)(citations omitted). First, the district court determines whether the requirements for an interpleader action have been met. Id. To make this determination the court looks to whether there is a single fund at issue and adverse claimants to that fund. Id. If the interpleader action is proper, the Court then determines "the respective rights of the claimants." Id. at 1023-24.
Once the interpleader action has been properly brought and the funds have been deposited, "the court should readily discharge a stakeholder absent bad faith or delay by the stakeholder." Metropolitan Life Ins. Co v. Billini, No. CIV. S-06-02918-WBS-KJM, 2007 WL 4209405, at *2 (E.D. Cal. Nov. 27, 2007). The court also has discretion "to award attorney fees to a disinterested stakeholder in an interpleader action." Id. at *3 (quoting Abex Corp. v. Ski's Enters., Inc., 748 F.2d 513, 516 (9th Cir. 1984)).
C. Analysis
1. Discharge
The Banks seek to be discharged from this suit since they have "disclaimed any interest in the stake and ha[ve] deposited the contested funds with the Court." BofA Mot. at 4; Wells Fargo Mot. at 3. Plaintiff and Hirsch do not oppose. See Plf's Opp'n at 4; see also Hirsch's Opp'n at 3. Because the opposing parties concede and dismissal is proper, the Court GRANTS the Banks' request to be discharged from this action.
2. Attorneys' Fees
The Banks seek a total of $42, 051.76 in combined legal fees. Reply at 1. Plaintiff and Hirsch oppose, arguing that intervention was not necessary and that the fees are unreasonable. See Hirsch Opp'n at 2; See also Plf's Opp'n at 4.
a. Proper and Necessary
Plaintiff argues that "the Banks' improper addition of McGrew to Plaintiff's account and their delays in freezing or failure to claw back funds, prevents any award of fees." Plf's Opp'n at 15. Hirsch argues reimbursement of fees is improper because she planned to intervene, so it was unnecessary for the Banks to interplead the funds. Hirsch Opp'n at 2. The Court finds all these arguments to be unpersuasive.
First, Plaintiff's arguments fail because they are not grounded on any legal authority. He argues the "whole fiasco" could have been avoided if the Banks had simply advised him against granting McGrew with authorization to withdraw funds. Plf's Opp'n at 18. But he cites no authority to support his contention that the Banks are to blame here. Instead, as the Banks point out, that McGrew had the rightful authority to withdraw the funds is "no one's fault but [Plaintiff's] own." Reply at 5. Plaintiff signed the relationship change application, thereby acknowledging that he understood and agreed to be bound by that agreement. Id. Under that agreement, it is clear that a joint accountholder has the authority to "withdraw and transfer funds, make payments, or close the account." Id. (citing Lee v. Yang, 111 Cal. App. 4th 481, 490-493 (2003)).
As for Plaintiff's second argument, Wells Fargo was not able to initially claw back or freeze McGrew's account because it was served with the first TRO days after the funds had already been transferred to Bank of America. Reply at 5. Bank of America was only able to claw back the $200,936.94 cashier's check to Little Trouble, LLC, because the payment had not yet made it to a different bank by the time the Fourth TRO was issued. BofA Mot. at 2. Plaintiff also fails, once again, to cite any authority in support of his argument that the Banks were required to comply differently to the multiple TRO's than they did
Hirsch's arguments are equally unpersuasive. Hirsch first argues that the Banks' intervention was unnecessary because she planned to interplead the funds herself. Hirsch' Opp'n at 5. However, she did not file a request to amend her answer to include interpleader claims until October 14, 2019—four months after her initial answer and two weeks after the Banks had filed their motion to intervene. Reply at 6-7. Moreover, Hirsch's accounts did not contain the majority of the funds. Id. at 7. The $200,936.94 that she tried to send to Little Trouble were held "in suspense" after Bank of America stopped the payment. Id. Lastly, Hirsch might not have been able to meet the interpleader requirements. Id.; see Lee v. W. Coast Life Ins. Co., 688 F.3d 1004, 1012 (9th Cir. 2012)("[T]hose who have acted in bad faith to create a controversy over the stake may not claim the protection of interpleader.").
Accordingly, the Court finds the Banks are entitled to reimbursement because their intervention was necessary and proper under the circumstances.
b. Reasonableness of Fees
The Court has discretion over "[t]he amount of fees to be awarded in an interpleader action." Trs. of Dirs. Guild of Am-Producer Pension Benefits Plans v. Tise, 234 F.3d 415, 426 (9th Cir. 2000). Interpleader plaintiffs are entitled to attorneys' fees since "the plaintiff benefits all parties 'by promoting early litigation on the ownership of the fund, thus preventing dissipation.'" Id. (quoting Shirmer Stevedoring Co. Ltd. v. Seabord Stevedoring Corp., 306 F.2d 188, 193 (9th Cir. 1962)).
Since the interpleader plaintiff is supposed to be disinterested in the disposition of the funds, fees are limited to those "incurred in filing the action and pursuing the plan's release from liability." Id. Expenses that may be reimbursed include: "preparing the complaint, obtaining service of process on the claimants fund, and preparing an order discharging the plaintiff from liability and dismissing it from the action." Id. at 427. Because the scope of fees is limited, attorneys' fee awards are "typically modest." Id. Lastly, since the fees are paid from the interpleader funds themselves, "there is an important policy interest in seeing that the fee award does not deplete the fund at the expense of the party who is ultimately deemed entitled to it." Id.
The Banks seek the following in attorneys' fees and costs: (1) $20,769.08 for Wells Fargo and (2) $21,282.68 for Bank of America. Reply at 2. Both Plaintiff and Hirsch argue that these fees are unreasonable. The Court disagrees.
First, Plaintiff and Hirsch argue the fee amount is unreasonable because the filings for the Banks are "nearly identical." Hirsch Opp'n at 7; Plf's Opp'n at 192. But as the Banks' detailed billing entries show, each bank was only billed for half of the time spent on any work applicable to both Banks. Reply at 4. In other words, the Banks split the bill 50-50. The attorneys thus did not charge twice the amount in fees for doing identical work, as Plaintiff and Hirsch attempt to argue.
Plaintiff also argues that "since [the Banks] are routinely confronted with competing claims to funds held in joint accounts," their award should reflect those "inevitable and normal risks" they assume. Plf's Opp'n at 17. Plaintiff relies on Fidelity Nat'l Co. v. U.S. Small Bus. Admin., which stated that "courts have declined to award attorneys fees'" to stakeholders that face multiple claims in their ordinary course of business. No. 2:13-cv-02030-KJM-AC, 2014 WL 6390275, at *3-4 (E.D. Cal. 2014). But Fidelity concerns claims to insurance proceeds—insurers regularly assume the risk of competing claims. Unlike insurers, the Banks are not regularly in this business. Reply at 4. And even though the stakeholder in Fidelity did assume such risk in its ordinary course of business, the court nevertheless awarded attorneys' fees. 2014 WL 6390275 at *5.
Hirsch also argues that the Banks should not be compensated for fees associated with their motion for intervention. Hirsch Opp'n at 6. Hirsch argues these fees are not recoverable under Tise. But the list of compensable expenses in Tise is not exhaustive. Reply at 2. The court in Tise did however differentiate between fees "litigating the merits of the adverse claimants' positions" and those fees incurred in "filing the action and pursuing the plan's release from liability." 234 F.3d at 426. Only the latter may properly be awarded. And here, the Banks motion for intervention falls within that category. Unlike the pension plan in Tise, the Banks did not "oppose the [plaintiff's] entitlement to the funds . . . [and did not] [] tak[e] sides." Id. at 427. Instead, the motion to intervene was made so they could file their interpleader claims and obtain a release from liability.
Lastly, Hirsch argues that the fees sought are unreasonable because Wells Fargo is seeking $700 more than it interpleaded, and the attorneys' fees combined compose 19% of the fees both Banks deposited with the Court. Hirsch Opp'n at 6-7. She contends being awarded such a high percentage of the funds is in no way "modest" and therefore goes against the important policy interest against depleting the fund. Id. The Banks argue that while they recognize this important policy interest, the amount of fees sought is proper here because this "has not been a typical interpleader case." Reply at 3. Moreover, they argue $42,051.76 (the total amount sought) will not significantly deplete fund of $223,413.96, plus accrued interest. Id. The Court agrees.
Courts consider a number of factors in determining the fair award of attorneys' fees and costs: (1) the complexity of the case; (2) unique services the stakeholder provided; (3) the stakeholder's good faith and diligence ; (4) "whether the services rendered benefited the stakeholder;" and (5) "whether the claimants improperly protracted the proceedings." Fidelity, 2014 WL 6390275, at *4. All of these factors weigh in favor of awarding the Banks the amount in fees requested. The case was complex—the Banks were required to respond to four TRO's, had to freeze multiple accounts, were added to the suit and then dismissed, and later had to move to intervene so they could finally interplead the funds. BofA Mot. at 9. They also provided unique services since they were the only parties that actually possessed the funds. Id. Moreover, they acted in good faith, and did not benefit from this lawsuit. Id. at 8-9.
Most importantly, the Banks only seek to recover fees for the costs directly related to their intervention and interpleader. Id. at 11. In fact, the attorneys' fees the Banks have incurred since the start of this litigation are much higher than what they seek to recover. Reply at 2. And while neither Plaintiff nor Hirsch dispute this, it is worth mentioning that the hourly rates of the attorneys are reasonable. The supervising attorney in this case billed between $388 and $400 an hour, and all other associates billed between $265 to $315 an hour. See Melamed Decl. in Support of Banks' Mot's, ECF No. 98, ¶¶ 6-11. As the Banks attorneys' point out, these rates are in line with those charged for attorneys of comparable experience within this Court's district. See Smothers v. NorthStar Alarm Servs., LLC, 2:17-cv-00548-KJM-KJN, 2020 WL 1532058, at *9-10(E.D. Cal. March 31, 2020)(finding rates of $300 per hour for associates with fewer than three years of experience, and between $495-$695 per hour for partners with 11 to 30 years of experience to be reasonable). Accordingly, the Court GRANTS the Banks' request to be awarded attorneys' fees in the amount they requested.
c. Stay of Award
Plaintiff asks the Court to stay payment of the fees awarded until all competing claims to the funds are resolved. "Courts occasionally defer assessment of attorneys' fees until resolution of the claims." Fidelity, 2014 WL 6390275, at *5. The Court "has discretion to assess fees from the interpleaded funds, as a cost to the losing claimant, or divide them among the claimants." Id.
The Banks argue this action is usually only taken under exceptional circumstances. Reply at 8. But they concede that the Court can award the Banks their fees and costs now, and then charge the amounts to the responsible claimant when the claims are finally resolved. Id. The Court finds this is the most equitable course of action. Accordingly, the Court DEFERS its determination of the allocation of this award until resolution of all claims against the funds.
III. ORDER
For the reasons set forth above, the Court GRANTS the Banks' Motions to be discharged from this suit and to be awarded attorneys' fees and costs in the amount of $20,769.08 to Wells Fargo Bank and $21,282.68 to Bank of America. The Court DEFERS assessment and allocation of the fees and costs awarded until the resolution of all claims.
IT IS SO ORDERED. Dated: July 21, 2020
/s/ _________
JOHN A. MENDEZ,
UNITED STATES DISTRICT JUDGE