Opinion
B224241
09-06-2011
APEX DEVELOPMENT, INC., Plaintiff and Appellant, v. S.C. ANDERSON, INC., et al., Defendants and Respondents.
Law Offices of Michael P. Ribons and Michael P. Ribons for Plaintiff and Appellant. Law Office of Ray T. Mullen and Ray T. Mullen for Defendants and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC 376143)
APPEAL from a judgment of the Superior Court for the County of Los Angeles. Amy D. Hogue, Judge. Reversed and remanded.
Law Offices of Michael P. Ribons and Michael P. Ribons for Plaintiff and Appellant.
Law Office of Ray T. Mullen and Ray T. Mullen for Defendants and Respondents.
INTRODUCTION
This case involves a lawsuit by a subcontractor (plaintiff Apex Development, Inc.) for monies claimed to be due from the general contractor (defendant S.C. Anderson, Inc.) in connection with the plaintiff's work on a parking and public safety facility at California State University, Northridge (Cal. State Northridge). In special verdicts, the jury found there were written and oral contracts; plaintiff did all the significant things the contracts required it to do, and so did defendant; and defendant did not request any extra services. The jury found plaintiff did not suffer any damages.
At first, it may seem simple to conclude that, since plaintiff sought damages of more than $245,000 but recovered nothing, defendant must be the prevailing party. But, because of action taken by defendant on the eve of trial, things said to the jury during the trial, and the court's responses to questions posed by the jury during deliberations, considerable doubt was cast on this apparently straightforward result. Just before the trial began, the court allowed defendant to "interplead" about $91,000 (which defendant said were "undisputed funds," while at the same time saying the deposit was "not to be construed as an admission of liability or obligation"). The jury was told that defendant's position was that plaintiff was "still owed approximately $83,000, but is not owed any additional funds." And, in response to jury questions, the court told the jury that defendant was responsible to pay plaintiff "at least $83,206.80, and that sum has been deposited with the court."
In the end -- some nine months after the jury's verdict and after making and vacating orders with a contrary result -- the trial court entered judgment nunc pro tunc on the jury's verdict. The judgment stated that, based on the jury's findings, plaintiff was to recover nothing from defendants, and defendants were the prevailing parties and entitled to recover their costs and attorney fees. Plaintiff's motions for a new trial and judgment notwithstanding the verdict (JNOV) were denied. Plaintiff appealed.
We conclude the trial court should have granted plaintiff's motion for a new trial on the ground of irregularity in the proceedings. The irregularity originated in the improper use of the interpleader statute and continued throughout the trial as defendant gave the jury (and the court) the impression that the funds deposited with the court (or a substantial part of those funds) were owed and would be paid to plaintiff. However, it later developed that defendant's interpleader was a strategic ploy to hedge its bets: If the jury awarded the amount of the interpled funds, defendant could claim that plaintiff had not prevailed or at least could benefit from Code of Civil Procedure section 998, since defendant had offered to compromise for $102,000. If the jury awarded nothing, in the belief no more was owed than the amount deposited in court, defendant could claim it had prevailed and was entitled to sweep back the funds into its own coffers. Because of the irregularity resulting from defendant's abuse of the interpleader statutes, plaintiff was denied a fair trial.
FACTS
1. The Background Facts
The pertinent facts on this appeal are those relating to the $91,000 defendant deposited with the court. Plaintiff does not otherwise challenge the sufficiency of the evidence justifying the jury's findings that no breach of contract occurred.
The jury answered "yes" to the question, "Did [plaintiff] do all, or substantially all, of the significant things that the written and/or oral contract required it to do?" The jury answered "no" to the question, "Did [defendant] fail to do something that the written and/or oral contract required it to do?"
Plaintiff claimed it was entitled to monies for various "change order requests" and other work it did that it contended was not covered by its bid or the subcontract price. Plaintiff's total claim at trial was for $191,719 (down from the $245,000 it claimed in its complaint, which included monies for work it never did). The $191,719 total included an "undisputed" $83,000 -- undisputed at least in the sense that it was part of the original contract price, and plaintiff competently performed the work for which it was due. The evidence also showed that the reason this final $83,000 had not been paid was because plaintiff did not provide "certified payroll records" and conditional lien releases that defendant required as a condition precedent to making payments to its subcontractors. Instead of providing the releases, plaintiff issued a "stop notice" -- in the amount of $245,000 -- which had the effect of preventing the owner (Cal State Northridge) from paying the prime contractor (defendant) until defendant provided a bond to cover the claim. Then, plaintiff filed this lawsuit for $245,000.
2. The Trial Proceedings
On the day trial began, defendant filed an "ex parte application to interplead money," asking the court "to allow the Interpleader of Money [$91,306.80] into the Court for placement into an interest-bearing blocked account pending the completion of the Trial . . . ." The application said that defendant had "previously attempted to remit such amount of undisputed funds to Plaintiff conditioned only upon the release and/or modification of Plaintiff's Stop Notice," but that plaintiff refused to provide a release or modification. Defendant asked the court to allow the deposit "in the interest of avoiding further controversy and mitigating any claimed interest, damages, fees and costs . . . ." Defendant's application to interplead money was expressly based upon Code of Civil Procedure section 386.
The trial court granted defendant's application, ordering defense counsel to deliver $91,306.80 for deposit with the clerk, to be distributed only upon further order of the court, and that (as also stated in defendant's application) "this interpleader is not to be construed as an admission of liability or obligation of [defendant] and is not to be considered as a waiver of any rights, defenses and/or remedies of [defendant] related to these proceedings and the underlying facts and claims."
The clerk read the prospective jurors this agreed statement of the case:
"This case arises out of a subcontract agreement between the plaintiff and defendant to build a large block wall for Cal State Northridge. This building was to house the on-campus police station. [¶] The defendant . . . is the contractor that hired plaintiff . . . to build this block wall. [Plaintiff] completed the construction as requested. [¶] [Plaintiff] claims they were not paid for the completed construction according to contract and change orders submitted to [defendant]. [¶] [Defendant] claims that [plaintiff] is still owed approximately $83,000, but is not owed any additional funds."The court then observed, "So the parties agree that there's 83,000 owed. It's what's above that that we're having a trial about?" and defense counsel answered, "Correct."
In opening statement, plaintiff's counsel said:
"If that were not enough, believe it or not, there is an undisputed amount due here. [Defendant] has agreed and has posted an amount, just today actually, of approximately $91,000, agreeing that they owe [plaintiff] that money. The real dispute is why haven't they paid this sooner? And that's a big question."
Counsel concluded his opening by asking for an award of $191,719, stating, "And for the record, that includes the amount that Apex [sic] deposited today with the court."
Defense counsel stated in opening:
"We're not debating that we owed him the $78,000. We don't debate that we owed him another 4,600 for a joint check we sent to Apex that apparently never got cashed, and we only found out a month or so ago, so we bumped it from 78,000 to 83[,000]. We're not debating the fact that originally, we made a $8,100 arithmetic error that Apex accepted and was willing to do the job at 517[,000], but okay, we'll even dump the $8,100 in there so that we can pay into the court the 91,306.80, I think, that we interplead. [¶] And the point is it goes to the court so we can find out what you people will determine, who's entitled to all of that money? Are they entitled to all of it, including the 8,100 that was our arithmetic error, but that they said, fine, we'll do it for 517[,000]? Are we entitled to offsets for some of our adjustments that you're going to hear testimony for? [¶] And more importantly, are they entitled to all of these change order requests, which is the reason that we're actually here?"Defense counsel also said, "We're not trying to get away with anything. We're just trying to put an end to this. Let's pay him the money, let's go back, let's get the rest of our work done." And, "It wasn't [defendant]'s fault for not paying it. We were prevented from paying it by the actions of [plaintiff]."
There were references to the deposited money during testimony. While cross-examining plaintiff's president, defense counsel asked, "And that's the amount [$91,306.80] that has been paid in to satisfy your claim, only including the 8,100 math error; correct?" Again, during redirect examination of a defense witness, defense counsel asked, "And in terms of the final payment to [plaintiff] that wasn't paid because the stop notice was impacting the release of that fund, wasn't it?" The witness replied, "That's correct," and counsel then asked, "And eventually, as the court started [sic],the money -the undisputed money -- in fact, including the $8100 mistake, that was paid into the court, wasn't it?" The witness replied, "That's correct."
At the conclusion of trial, both parties stipulated to the acceptability of the jury instructions and the special verdict form.
In its instructions to the jury, the court described plaintiff's claim that defendant breached the contract by failing to pay for services rendered, and said: "[Plaintiff] claims that [defendant's] breach of this contract caused harm to [plaintiff] for which [defendant] should pay. [Defendant] agrees that it owes some money to [plaintiff] but denies that it owes the amount sought by [plaintiff]."
In closing argument, plaintiff's counsel said:
"Another issue that I think is really important to recognize, [defendant] admits they owe [plaintiff] money. 91 grand, by the way. It's a lot of money. What did they do? They are not going to pay it. Walk in on the first day of court and submit a check and go that whole route."And:
"The clerical issue [the $8,100] isn't an error anymore. They admit they owe it. You can drop that out. They admit they owe a full 91 grand. That's an issue to be decided, whether or not that's right or wrong. That's a decision for you to make. . . ."Plaintiff's counsel concluded by asking for an award "in the amount of $191,719," which included the approximately $91,000 paid into court.
In the defendant's closing argument, after stating that defendant had been paying plaintiff "all the way along as soon as we got the [certified payroll records] and the releases," counsel continued:
"We paid and we deposited $91,306.80. We explained how that was arrived at. We had the original 78,000 that we said would have been the total amount he was owed, but even then it wouldn't have been owed until the retentions were released which again we couldn't get released until we posted a bond around his stop notice that stopped the money from being released. We did that. We turned around and we got that release. . . .
"And so we went ahead and we brought that to their attention last month. Came back and said, okay, we're going to bump this from 78,000 up to 83 to account for that check to make sure and then we also said, you know, fine. We did an $8100 mistake on the adding. We'll put that in there too. So we bumped it to the 91,000. Did we give it to [plaintiff]? No. We still haven't gotten a release from [plaintiff]. It's been two years, and we haven't gotten a release from him.
"He sued us [for $245,000]. . . . And we had to defend it, we put the money into the court. The reason is quite simple. Because at the end of the day when you're given the instructions and you're given verdict forms it's not a matter that we owe [plaintiff] the money. It's a matter that yes, we owed -- past tense -- back in April we owed money to [plaintiff]. He [plaintiff] prevented the payment to us. He caused us to come here.
". . . We've got offsets that are going to be in the verdict forms and on top of that the idea is we don't owe him all of that money. We owe him some of that money and we tried to give it to him. We couldn't give it to him. He refused it. And he should not be given the additional relief he requests by turning around and saying somehow we did it."
During their deliberations, the jury asked three questions.
The first question was, "Is the [approximate] $91,000 that [defendant] gave to the court absolutely going to [plaintiff] despite our findings?" The answer given to the jury was, "It will depend on the jury's findings" (or "No, it depends upon your findings").
The second question (submitted along with the first question) was, "Based on our group responses to Question 7 and 13, we are to skip to Question 21 [plaintiff's total damages]. Question 21 asks us to total Questions 12 & 16 or 20, all of which we were instructed to skip. What should we do?" The answer was, "If you have not entered any sums in 12, 16, or 20, enter a 0 in Question 21."
Question 7 asked if defendant failed to do something the contract required it to do (the answer was "no"), and Question 13 asked if defendant requested plaintiff to perform services beyond those required under the contract (and the answer was "no"). Question 21 asked for plaintiff's total damages -- either the sum of Questions 12 and 16 (plaintiff's damages for harm caused by defendant's unexcused or partially excused failure to perform and the reasonable value of extra services performed by plaintiff), or the answer to Question 20 (the reasonable value of unpaid services plaintiff performed).
The two answers were given and the jury was released for lunch. Then, a third question was posed: "If we answer Question 21 with 'zero,' does [plaintiff] still receive the agreed amount of $91,000 that the court is holding?" The answer was, "The parties have stipulated and agreed that [defendant] is responsible for a sum of at least $83,206.80, and that sum has been deposited with the court." (During the discussion among counsel and the court about how to answer the question, the court asked defense counsel, "In other words, you stand ready to pay that [the $83,000 figure], your client does, as of right now?" and defense counsel replied, "Our client stands ready to have a judgment entered in that amount.")
Defense counsel told the court that "the reason we paid it into the court was to ensure the fact that if we were vindicated on this, that we would have some avenue out there to be determined as prevailing party so that we could recover fees."
While the court and counsel were discussing the answer, the jury buzzed twice, "which indicates a verdict." The court said, "I want the answer [to the third question] to go in first. I want them to consider and think about it. And then if they -- if they still have a verdict, or if and when they have a verdict, to please buzz again."
A recess was taken, and then the jury was brought out and the verdict (as previously described) was read. The court asked if counsel wished to have the jury polled, and both counsel declined. Counsel waived reading of the verdict as recorded. The court asked if there were any reason not to discharge the jury; defense counsel said "None I can think of," and plaintiff's counsel said, "No, Your Honor."
3. Postverdict Proceedings
The jury rendered its verdict on April 29, 2009. Thereafter:
On May 22, 2009, plaintiff objected to defendant's proposed judgment (which is not in the record, but which apparently indicated plaintiff would take nothing and defendants were to recover attorney fees and costs). Plaintiff contended the verdict was ambiguous because it failed to identify who was to receive the monies defendant deposited, and the jury rendered its verdict only after the jury questions were answered to the effect that defendant was responsible for at least $83,000. Plaintiff submitted a proposed judgment in its favor, ordering the release to plaintiff of the $91,306.80 plus interest and attorney fees and costs.
On June 24, 2009, the trial court issued an order directing payment and release of the deposited funds. The court ordered the county auditor or controller to draw a warrant for $8,100 plus interest in favor of defendant, and $83,206.80 plus interest to plaintiff.
The order stated that both parties claimed an interest in the money deposited, "which was regularly tried and adjudicated on April 29, 2009, at which time Judgment was rendered."
Defendant then made an ex parte request that the order for release of the funds be vacated or stayed "until such time as the Judgment has been finalized, any post-judgment motions resolved and any appeal . . . completed."
On July 7, 2009, the trial court denied defendant's ex parte application, stating that its "judgment for $83,206.80 stands and its order releasing that sum to [plaintiff] and the balance of $8,100 to [defendant] also stands, with each party to bear its own fees and costs." The court "clarifie[d] that its judgment is based on the parties' stipulation [that defendant was responsible for at least $83,206.80] rather than any finding that [defendant] breached the contract for services. Indeed, based on the stipulation, the jury found that no one prevailed on the contract claim: [plaintiff] adequately performed and [defendant] did not breach. This finding effectively precludes either side from recovering attorneys' fees or costs from the other."
On July 10, 2009, on defendant's ex parte application for reconsideration and to set attorney fees, the court "vacated and/or modified" its June 24 and July 7 orders, staying the release of the funds and setting a hearing on defendant's motion for attorney fees. Defendant's motion contended that defendant was the prevailing party as a matter of law on the contract claim and that plaintiff's rejection of defendant's offer to compromise for $102,000 under Code of Civil Procedure section 998 entitled it to postoffer attorney fees.
On September 4, 2009, the court found defendants were not the prevailing parties, "[s]ince the court has determined that the jury's verdict and the parties' stipulation requires [defendant] to pay money to [plaintiff] . . . ." But a further hearing was required to determine whether defendant could recover its postoffer costs and expert witness fees. Also, the court stated that its July 7, 2009 order suggesting neither side could recover attorney fees was incorrect, and plaintiff could file a motion for costs and attorney fees if it wished. Another flurry of pleadings followed, with plaintiff contending it was the prevailing party and was entitled to a statutory penalty as well as prejudgment interest, attorney fees and costs.
At a hearing on January 15, 2010, the court announced it had reconsidered and determined that its September 4, 2009 order was wrong ("based only on the papers filed in connection with the defendants' motion to be determined the prevailing party and nothing filed since"), and that it would "enter a judgment for $0, and grant the defendants' motion to be the prevailing party." The court did so "without prejudice to any effort by the plaintiff to enforce a stipulation or otherwise address that issue. In other words, the only thing I'm deciding is that the verdict said zero, and I have to enter a judgment that says zero."
The court continued: "I think . . . it's a little bit of hubris for the court to decide what the jury was thinking. You know, I have an opinion about what the jury was thinking when it said zero, and I have an opinion about how to interpret the questions and answers that happened on that chaotic day, but I think it's a little bit of hubris for the court to do that when we didn't poll the jurors, we didn't ask them what they were thinking, and we let them go."
Accordingly, on February 3, 2010, judgment was entered that plaintiff recover nothing from defendant; that defendants were the prevailing parties entitled to recover their costs and attorney fees; and that the judgment "shall be entered nunc pro tunc as of April 29, 2009, without prejudice to the Parties' rights to bring their respective post-trial motions within [60] days of the date of filing of the Notice of Entry of Judgment herein."
Plaintiffs filed motions for JNOV and for a new trial. The trial court denied the motions, and this appeal followed.
DISCUSSION
We conclude the trial court should have granted plaintiff's motion for a new trial because there was an "irregularity in the proceedings" that prevented plaintiff from having a fair trial. (Code Civ. Proc., § 657, subd. 1.)
1. The Law
A verdict or decision may be vacated in whole or in part, and a new trial granted on all or part of the issues, for several specified causes "materially affecting the substantial rights" of a party. (Code Civ. Proc., § 657.) These causes include "[i]rregularity in the proceedings of the court, jury or adverse party, or any order of the court or abuse of discretion by which either party was prevented from having a fair trial" (id., § 657, subd. 1), as well as inadequate damages and insufficiency of the evidence to justify the verdict. (Id., § 657, subds. 5 & 6.)
The trial judge has "a wide discretion" in ruling on a new trial motion, and on appeal we give "great deference" to its exercise of that discretion. (City of Los Angeles v. Decker (1977) 18 Cal.3d 860, 871-872.) "An abuse of discretion occurs if, in light of the applicable law and considering all of the relevant circumstances, the court's decision exceeds the bounds of reason and results in a miscarriage of justice." (Fassberg Construction Co. v. Housing Authority of City of Los Angeles (2007) 152 Cal.App.4th 720, 752.) In reviewing an order denying a new trial, "we must fulfill our obligation of reviewing the entire record, including the evidence, so as to make an independent determination as to whether the error was prejudicial." (City of Los Angeles v. Decker, at p. 872.)
2. This Case
Plaintiff sought a new trial on multiple grounds, including irregularity in the proceedings caused by defendant. Plaintiff contended that interpleader was not the proper method to deposit funds with the court, interpleader is available only to a disinterested stakeholder with no claim to the funds, and use of the interpleader procedure "tainted the proceedings to such an extent that the only remedy is a new trial . . . ." The trial court ultimately rejected that contention.
At the first hearing on the new trial motion, the court had not received defendant's opposition. The court indicated its tentative thinking "was to offer a new trial, or in the alternative an additur of the interpled funds, quote/unquote interpled." The court's view was "that there's really no substantial evidence supporting the jury's verdict," because "the jury was informed specifically throughout the trial and just before issuing the verdict that the plaintiff would get paid for the underlying work."
Further: "My question is, though, why shouldn't I grant the new trial? I mean there really is I think a bit of a mess created by the, quote, interpled funds, closed quote, our information to the jury that he was entitled to certain sums and so on. [¶] It seems to me the only way to resolve it is to grant the new trial." Defense counsel replied, "It might come to that. I wish it didn't." And after further argument, the court said, "[M]y strong tentative and my feeling from the beginning when the jury came in was that we're going to need a new trial."
At the next hearing, however, the court denied the new trial motion. The court indicated it had read the entire trial transcript and could find no basis for a new trial, including irregularity in the proceedings. Among other things, the court said:
"[Counsel for the defense] was careful all the way along to make a record that, sure, we owe the money, but they've never given us the payroll, they've never given us the, you know, the release of liens for the progress payments."The court pointed to the first jury question -- whether the $91,000 deposited in court was "absolutely going to [plaintiff] despite our findings," and the answer, "No, it depends upon your findings." The court stated that this was "consistent with the jury's decision that having heard from [plaintiff's president], they understood that if they awarded zero damages, it meant zero damages, and not an award of the amounts in the interpled funds." However, the court incorrectly and repeatedly described this question as the "last question that the jury asked," while it was actually the first question, and it was the court's answer to the last question that underscores the irregularity in the proceedings. The last question was whether plaintiff would "still receive the agreed amount of $91,000" if the jury answered Question 21 (plaintiff's total damages) with zero -- and the answer was that the parties had "stipulated and agreed" that defendant was responsible for at least $83,206.80, "and that sum has been deposited with the court."
The court also addressed the sufficiency of the evidence as to damages, "the only other basis [for a new trial] that I could think would apply . . . ." On that point, the court stated:
"I think there's ample evidence in the record that would support the jury's conclusion that, hey, [plaintiff's president] was stubborn, he didn't give the documentation that they asked for. The money has been sitting there, and he chose to litigate rather than to simply provide the documents that would have allowed it."
In short, the trial court was of the view that the $91,000 was "addressed implicitly" in the special verdict question whether defendant failed to do something that the contracts required it to do, to which the jury answered "no."
We conclude the trial court had it right the first time: a new trial is required. There was indeed an "[i]rregularity in the proceedings," emanating from defendant's improper use of interpleader. The irregularity permeated the proceedings, from the beginning with the agreed statement of the case to the end with the response to the jury's final question -- the jury was repeatedly told defendant was responsible for at least $83,000.
The existence of an irregularity in the proceedings is demonstrated first by the law governing interpleader. That law simply does not, as the trial court stated, "basically say[] any time the court wants to preserve funds and keep the funds custody until matters can be adjudicated, it can do that."
Certainly, the scope of interpleader has been "broadened and enlarged," as the Supreme Court told us more than 65 years ago. (Hancock Oil Co. v. Hopkins (1944) 24 Cal.2d 497, 508 (Hancock Oil) [Code Civ. Proc., § 386 "broadened the remedy of interpleader"]; see also City of Morgan Hill v. Brown (1999) 71 Cal.App.4th 1114, 1122- 1123 (Morgan Hill)[giving examples, including that privity between claimants is no longer required, and interpleader may be permitted "even though one claimant seeks part of the fund and the other claimant seeks the entire fund amount"].) And, partial interpleader, "where the obligor admits some liability but makes a partial claim or asserts a partial interest, is also allowed." (Morgan Hill, at p. 1123, citing Code Civ. Proc., § 386.)
The statute states that the defendant in an action on a contract or for specific personal property "may file a verified cross-complaint in interpleader, admitting that he has no interest in such amount or such property claimed, or in a portion of such amount or such property and alleging that all or such portion of the amount or property is demanded by parties to such action or cross-action and apply to the court upon notice to such parties for an order to deliver such property or portion thereof or its value to such person as the court shall direct." (Code Civ. Proc., § 386, subd. (a).) The statute also states that "[t]he applicant or interpleading party may deny liability in whole or in part to any or all of the claimants," but this provision applies to an entity "against whom double or multiple claims are made, or may be made, by two or more persons which are such that they may give rise to double or multiple liability . . . ." (Id., § 386, subd. (b).)
But none of these cases dispenses with the fundamental principle that interpleader is available where there are conflicting claims by parties other than the stakeholder to the interpleaded funds. And none of them dispenses with the principle that the stakeholder claims no interest in at least some portion of the funds deposited. Here, the defendant asked to interplead funds to which there was only one "claimant" and to which defendant now claims complete entitlement. This is contrary to the very purpose of interpleader. (See Hancock Oil, supra, 24 Cal.2d at p. 508 [the purpose of interpleader "is to avoid a multiplicity of suits and prevent vexatious litigation"]; Morgan Hill, supra, 71 Cal.App.4th at p. 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.'"]; Pacific Loan Management Corp. v. Superior Court (1987) 196 Cal.App.3d 1485, 1489-1490 ["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 the suit."].)
In short, defendant's ex parte "application to interplead money" under the authority of Code of Civil Procedure section 386, and the court's "order granting ex parte application to interplead money" -- both containing statements that "this interpleader is not to be construed as an admission of liability or obligation of [defendant]" -- amounted to an abuse of the interpleader statute and created irregularities in all the proceedings that followed. (Code Civ. Proc., § 657, subd. 1; cf. Sandco American, Inc. v. Notrica (1990) 216 Cal.App.3d 1495, 1507 [an order "having the effect of cutting off discovery at a time earlier than the time allowed by law to conduct discovery can be an 'irregularity in the proceedings of the court' within the meaning of section 657, subdivision 1"].)
This initial irregularity was compounded from the beginning to the end of the proceedings. The agreed statement of the case told prospective jurors that defendant "claims that [plaintiff] is still owed approximately $83,000, but is not owed any additional funds." Defense counsel confirmed in the presence of the prospective jurors the trial court's statement that "the parties agree that there's 83,000 owed." Defense counsel's questions to witnesses during the trial referred to "the amount [$91,306.80] that has been paid in to satisfy [plaintiff's] claim" and "the money -- the undisputed money -- . . . that was paid into the court . . . ." And the answer to the jury's final question was that the parties "stipulated and agreed" that defendant was "responsible for a sum of at least $83,206.80, and that sum has been deposited with the court."
Thus, throughout the trial the defendant gave the jury the impression that the funds deposited with the court (or a substantial part of those funds) were owed to plaintiff. Defendant also gave that same impression to the court, observing in response to its questions just before the verdict came in that "[o]ur client stands ready to have a judgment entered in that [$83,000] amount." Now, defendant coyly claims these concessions were "only intended to confirm that the $83,000.00 amount . . . was the amount that ' would have been owed' to [plaintiff] had it complied with the contract requirements and not filed suit . . . ." (Italics added.) But nothing in defendant's statements to the jury (see pp. 5 & 6-7, ante)made plain that defendant contended it should be excused from paying plaintiff the monies deposited in court because of plaintiff's obstreperousness. Indeed, even defendant's closing argument uses the present tense: "[W]e don't owe him all of that money. We owe him some of that money and we tried to give it to him. We couldn't give it to him. He refused it. And he should not be given the additional relief he requests by turning around and saying somehow we did it." (Italics added.)
In short, defendant (1) abused the interpleader procedure, the core of which includes "the stakeholder's disavowal of interest" (Pacific Loan Management Corp. v. Superior Court, supra, 196 Cal.App.3d at p. 1489) in at least part of the interpleaded funds, and (2) appeared to disavow its interest in at least $83,000 of the deposited funds throughout the proceedings. A judgment that nevertheless results in the repatriation of those disavowed funds to the defendant is demonstrably the result of an "[i]rregularity in the proceedings" that requires a new trial.
Defendant resists the conclusion that a new trial is necessary by contending that, while the deposit of the funds was incorrectly classified as an interpleader, it was intended "to be more in the nature of a deposit, with a specific reservation of rights" that was permissible under Code of Civil Procedure section 572 (section 572), and that any irregularity in the proceedings was "invited by [plaintiff's trial] counsel," who "knew of the express conditions of the deposit and never objected thereto . . . ." But this is nothing more than revisionist history, and the irregularity cannot be laid at plaintiff's door, as it lies directly at the feet of defendant.
First, defendant cannot rely on section 572, which was neither relied on nor mentioned at any time by anyone, including the trial court, until almost a year after the jury's verdict, when plaintiff referred to section 572 in its new trial motion. To suggest that the existence of section 572 could somehow post hoc excise the irregularity generated by use of the interpleader statute is simply wrong. In any event, the applicability of section 572 -- which permits the court to order a deposit under specified circumstances -- would itself have been a dubious proposition. (Cf. In re Elias (1962) 209 Cal.App.2d 262, 273-274 ["'in all cases when [an order under section 572] may be made it must appear that the party holds the money as trustee, or that it "belongs or is due to another party"'"; where there was no admission in the pleadings, no proof that defendants owed any amount to the plaintiff or anyone else, and no proof that any trust existed, "the court was without jurisdiction to order the deposit with the clerk" (id. at p. 275)].)
Section 572 states: "When it is admitted by the pleadings, or shown upon the examination of a party to the action, that he or she has in his or her possession, or under his or her control, any money or other thing capable of delivery, which, being the subject of litigation, is held by him or her as trustee for another party, or which belongs or which is due to another party or which should, under the circumstances of the case be held by the court pending final disposition of the action, the court may order the same, upon motion, to be deposited in court or delivered to such party, upon those conditions that may be just, subject to the further direction of the court."
Second, the irregularity was not "invited by" plaintiff's trial counsel by virtue of his failure to object to the conditions of the deposit. The "express conditions of the deposit" are not clear at all. The court's order that the interpleader "is not to be construed as an admission of liability or obligation of [defendant] and is not to be considered as a waiver of any rights, defenses and/or remedies of [defendant] related to these proceedings and the underlying facts and claims" is utterly confusing in the context of interpleader. This statement could simply mean defendant was not conceding it owed the entire amount deposited (and indeed the parties presented evidence relating to the portions in excess of the $83,000 amount), and/or it could mean (as defendant also asserted at trial) that defendant claimed certain offsets to the amounts otherwise due to plaintiff. But the "condition" does not expressly state -- and, as we have seen, interpleader is inconsistent with -- any claim of entitlement to the entire interpleaded fund.
Moreover, defendant filed its ex parte interpleader application, and it was granted, on the same day trial began and on the same day the prospective jurors were told that defendant's position was that plaintiff "is still owed approximately $83,000, but is not owed any additional funds." Indeed, the trial court asked plaintiff's counsel if he had "any opposition to the ex parte [application to interplead]," and he answered in the negative, after the jurors were told that the parties agreed "that there's 83,000 owed." The irregularity in the proceedings was the defendant's use of interpleader procedures in derogation of their essential purpose -- "to prevent a multiplicity of suits and double vexation" (Morgan Hill, supra, 71 Cal.App.4th at p. 1122) -- and in derogation of fundamental elements of interpleader -- multiple claimants and a disinterested stakeholder. We have no doubt that, because of this irregularity, plaintiff was denied a fair trial (Code Civ. Proc., § 657, subd. 1), with a jury properly advised that defendant was, after all, claiming entitlement to the entirety of the funds on deposit with the court.
Plaintiff also contends the trial court abused its discretion in denying plaintiff's motion for JNOV, and that this court should order the trial court to enter judgment in plaintiff's favor for $91,306.80. (See Code Civ. Proc., § 629.) But on the highly irregular record before us, we cannot say as a matter of law that plaintiff was entitled to judgment in the amount of $91,306.80; we can only say that because of the irregularities resulting from defendant's abuse of the interpleader process, the damages issues were not properly presented to the jury.
DISPOSITION
The judgment is reversed and the cause is remanded to the trial court for a new trial. Apex Development, Inc., is to recover its costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
GRIMES, J. We concur:
BIGELOW, P. J.
RUBIN, J.