Interpleading Party Held And Managed The Bond Portfolio Under An Unusual Loan Agreement.
CCP § 386.6(a) allows a court discretion to award costs and reasonable attorney’s fees to an interpleading party obtaining a discharge. Because this is an equity-driven decision-making process (Hood v. Gonzales, 43 Cal.App.5th 57, 71 (2019)), the abuse of discretion standard guides in most situations whether a grant or denial of fees is proper.
Attorney’s fees were denied to an interpleading cross-complainant in a unique bond portfolio management case, BNY Mellon Bank v. First Foundation Bank, Case No. G059083 (4th Dist., Div. 3 Sept. 9, 2021) (unpublished) [a 3-0 decision authored by Acting Presiding Justice Bedsworth]. In this sui generis factual setting, the interpleading cross-complainant had use of $5.5 million in funds for four years, with the lower court unwilling to find cross-complainant was a neutral stakeholder giving competing claims against that party by others. The lower court refused to discharge cross-complainant, preferring to dismiss the cross-complaint and deny a fee request for $450,000. The 4/3 DCA panel affirmed both determinations. With respect to fees, two reasons sustained the denial: (1) there was no discharge of cross-complainant, so the statutory condition for fees was not met; and (2) there was no abuse of discretion given that cross-complainant had the use of the $5.5 million for four years even though trying to use the interpleader action as a chip to obtain a dismissal of a voidable transfer complaint against another party (with the specter of fee exposure under section 386.6(a)).