Opinion
3:23-cv-01189-YY
05-20-2024
PLATTE RIVER INSURANCE COMPANY, Plaintiff, v. NELLY AKEMI YAMAKAWA, an individual; MICHAEL STEPHEN STARNES, an individual; ROGUE VALLEY MANOR, an Oregon nonprofit corporation; NORTHWEST ADVENTIST FEDERAL CREDIT UNION, an Oregon credit union; MAGNUM DRYWALL, INC., a California corporation; DENNIS M.HILLS, an individual; JESSE MECHAM, an individual; STACEY MECHAM, an individual; VEROS CREDIT, LLC, a Nevada limited liability company; LOBEL FINANCIAL CORPORATION, a California corporation; DAWN HARRISON, an individual; JOHN HARRISON, an individual; INSPIRED CONNECTIONS TRANSPORT, LLC, an Oregon limited liability company; OREGON COMMUNITY CREDIT UNION, an Oregon credit union; FRANCIS GARY PALMER, an individual; CAROL MARIE PALMER, an individual; and OREGON STATE CREDIT UNION, an Oregon credit union, Defendants.
FINDINGS AND RECOMMENDATIONS
Youlee Yim You United States Magistrate Judge
FINDINGS
Plaintiff Platte River Insurance Company has brought this interpleader action pursuant to 28 U.S.C. § 1335 pertaining to a vehicle dealer surety bond it issued to R&J Mobility Service, LLC. Compl., ECF 1. The penal sum of the bond is $50,000. Id. ¶ 18. Defendants are individuals or entities that have asserted, or may assert, claims against the bond that accrued between the second year of coverage, February 20, 2021, and February 20, 2022, or the third year of coverage, February 20, 2022, to September 15, 2022, when the bond was cancelled. Id. ¶ 20. Plaintiff contends the maximum amount of recovery is $100,000, which plaintiff has deposited into an interest-bearing court account. See Order, ECF 78.
See O.R.S. 822.030 (setting forth bond requirements to qualify for a vehicle dealer certificate). According to the Complaint, “R&J Mobility was in the business of selling new and used mobility vehicles and accessory equipment.” Compl. ¶ 15, ECF 1.
The bond was originally issued on February 20, 2020. Compl. ¶ 16, ECF 1.
Currently pending is plaintiff's “Unopposed Motion for an Order Authorizing 1) Exoneration of the Bond, and 2) Dismissal of Platte River Insurance Company,” ECF 80, which should be granted.
The motion is unopposed by the defendants who have appeared in this action. Four additional defendants were validly served, but have not appeared, and defaults have been entered against them. See Clerk's Entry Default, ECF 56, 60.
I. Jurisdiction
This court has original jurisdiction over an interpleader action when the amount in controversy is $500 or more, the case involves two or more adverse claimants of diverse citizenship, and the plaintiff has deposited the money or property subject to dispute into the registry of the court. 28 U.S.C. § 1335. Here, the amount in controversy exceeds $500, there are more than two claimants, and there is diversity of citizenship between the claimants, who are citizens of Oregon, California, Nevada, and Washington. Compl. ¶¶ 3-13, ECF 1; see State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 530 (1967) (recognizing that 28 U.S.C. § 1335 “has been uniformly construed to require only ‘minimal diversity,' that is, diversity of citizenship between two or more claimants, without regard to the circumstance that other rival claimants may be co-citizens”). Thus, this court has original jurisdiction over this interpleader action.
II. Plaintiff's Motion
Plaintiff moves for dismissal with prejudice from this action, for plaintiff and the bond to be exonerated and discharged from any liability, and for defendants to be restrained and enjoined from instituting or prosecuting any other action or proceeding against plaintiff relating to the bond. Mot., ECF 80. Plaintiff also seeks reasonable attorney's fees and costs to be paid out of the deposit it has made with the court. Id. at 2; see Abex Corp. v. Ski's Enterprises, Inc., 748 F.2d 513, 516 (9th Cir. 1984) (“[C]ourts have discretion to award attorney fees to a disinterested stakeholder in an interpleader action.”). However, plaintiff is willing to waive its fees and costs if there is no objection to the motion. Id. n. 1.
“[I]n order to avail itself of the interpleader remedy, a stakeholder must have a good faith belief that there are or may be colorable competing claims to the stake.” Michelman v. LincolnNat. Life Ins. Co., 685 F.3d 887, 894 (9th Cir. 2012). “This is not an onerous requirement.” Id.“The threshold to establish good faith is necessarily low so as not to conflict with interpleader's pragmatic purpose, which is for the stakeholder to protect itself against the problems posed by multiple claimants to a single fund.” Id. (simplified). “The possibility of double liability is only one such problem; another is the cost of litigation, which does not depend on the merits of adverse claims.” Id.
“Although an interpleading stakeholder need not sort out the merits of conflicting claims as a prerequisite to interpleader, good faith requires a real and reasonable fear of exposure to double liability or the vexation of conflicting claims.” Id. “A ‘real and reasonable fear' does not mean that the interpleading party must show that the purported adverse claimant might eventually prevail.” Id. “Rather, the stakeholder is required to demonstrate that the adverse claim has a minimal threshold level of substantiality.” Id. (simplified). “The adverse claim- whether actual or potential-must be at least colorable.” Id.
Plaintiff has met that burden here. In support of its motion, plaintiff has provided documentation showing that defendants have asserted various claims against the bond based on the failure of R&J Mobility Service to provide the claimants with clear title to the vehicles they had purchased, Friedrich Decl., Exs. C, D, F, H, I, J, K, L, O, Q, ECF 81, provide one of the claimants with the vehicle that the claimant had paid for, id., Ex. G, and make accurate representations about repairs that were performed on a vehicle. Id., Ex. C. This documentation establishes that plaintiff has a good faith belief that there are colorable competing claims. Michelman, 685 F.3d at 894.
Pursuant to 28 U.S.C. § 2361, this court “may discharge” an interpleader plaintiff “from further liability.” “[F]ederal interpleader contemplates that the stakeholder may be discharged from the litigation once the fund is deposited with the court, leaving the adverse claimants to litigate their dispute between themselves.” Walker v. Pritzker, 705 F.2d 942, 944 (7th Cir. 1983). “If an interpleading plaintiff has no interest in the stake[,] [it] should be dismissed.” SunLife Assur. Co. of Canada v. Chan's Est., No. C-03-2205 SC, 2003 WL 22227881, at *2 (N.D. Cal. Sept. 22, 2003) (quoting Metropolitan Life Insurance Co. v. Foley, No. CIV.A. 02-1479, 2002 WL 31399787 at *4 (E.D. La., Oct. 22, 2002); see also Soc'y Ins. Co. v. Nystrom, 718 Fed.Appx. 482, 484 (9th Cir. 2017) (recognizing that the “district court properly dismissed [the insurance company] with prejudice and enjoined the claimants from instituting any proceedings affecting the funds”).
Here, plaintiff has deposited the funds into a court account and claims no legal interest in the disputed funds. Thus, dismissal of plaintiff with prejudice is appropriate so that defendants can “litigate their dispute between themselves.” Walker, 705 F.2d at 944.
Additionally, this court has authority to enter an “order restraining [defendants] from instituting or prosecuting any proceeding in any State or United States court affecting the property, instrument or obligation involved in the interpleader action until further order of the court.” 28 U.S.C. § 2361. Two state actions are currently pending: Nelly Yamakawa v. Santander Consumer USA Inc. et al, Marion County Circuit Court Case No. 23CV16878, and Mechams v. R&J Mobility Service LLC et al, Marion County Circuit Court Case No. 23CV21289. Friedrich Decl., Exs. N, P, ECF 81-14, ECF 81-16. Plaintiff is a defendant in both cases. It is necessary to enjoin all defendants, including those who have filed suit in state court, from instituting or prosecuting other actions against plaintiff to fully absolve plaintiff of liability and properly resolve the competing claims between the claimants.
RECOMMENDATIONS
Plaintiff Platte River Insurance Company's Unopposed Motion for an Order Authorizing 1) Exoneration of the Bond, and 2) Dismissal of Platte River Insurance Company [80] should be granted as follows:
(1) Plaintiff should be dismissed with prejudice from this action;
(2) Plaintiff and the bond should be fully exonerated and discharged from any and all past, present, and/or future liability; and
(3) Defendants should be restrained and enjoined from instituting or prosecuting any other action or proceeding against plaintiff relating to the bond, including without limitation the state court actions entitled Nelly Yamakawa v. Santander Consumer USA Inc. et al, Marion County Circuit Court Case No. 23CV16878, and Mechams v. R&J Mobility Service LLC et al, Marion County Circuit Court Case No. 23CV21289.
SCHEDULING ORDER
These Findings and Recommendations will be referred to a district judge. Objections, if any, are due Tuesday, June 04, 2024. If no objections are filed, then the Findings and Recommendations will go under advisement on that date.
If objections are filed, then a response is due within 14 days after being served with a copy of the objections. When the response is due or filed, whichever date is earlier, the Findings and Recommendations will go under advisement.
NOTICE
These Findings and Recommendations are not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any Notice of Appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of a judgment.