Tuesday, December 30, 2014

Interpleader Action Dodges SLAPP Motion

Southern California Gas Co. v. Flannery, B249616 (D2d5 Dec. 16, 2014)

After a utility settled a case against two individuals, their former joint counsel began demanding a share of the settlement proceeds. He put a lien on any recovery. To resolve the dispute, the utility filed an interpleader and deposited the settlement res with the court. At a status hearing that was attended by counsel for the former attorney, the court set a hearing for the utility’s motion for discharge. The attorney didn’t oppose the discharge motion, but the day before the hearing was to occur, he filed an anti-SLAPP motion, which was technically his first appearance in the case.  Both motions were continued to a later hearing, and the trial court ultimately granted the discharge, awarded attorneys’ fees under Code of Civil Procedure § 386.6, and denied the anti-SLAPP motion. The attorney appealed.

In a somewhat unusual move, the court of appeal ducks the first part of the anti-SLAPP analysis—whether the interpleader action arise from protected petitioning activity—and finds that the utility established it was likely to succeed on the merits. Indeed, not only did the utility show a probability of prevailing, it actually prevailed in the interpleader. That being the case, there was no reason* to reach the first issue.

Here, the standards for interpleader were met. There were disputed claims to the settlement funds and a risk of multiple liability. Because the attorney had put a lien on the proceeds, the utility risked liability for tortious interference if it just paid the funds to the individuals and their new attorneys. Further, the utility disavowed any further interest in the funds. It was not required to settle the differences between the various claimants to the fund.

Finally, the discharge and fee award were proper. The attorney was not denied due process by the timing of the motion. His counsel was at the hearing where the motion was set and received service of the notice papers. He had ample time to oppose the motion. And although he never did, the court addressed his arguments anyway, since they were all raised in his anti-SLAPP papers. The fact that he didn’t formally appear until he filed the anti-SLAPP motion was of no moment. The court thus had authority to enter the discharge order and award fees under § 386.6, even though the dispute between the claimants was ongoing. And as to the fee award, the $81k awarded by the trial court was reasonable.


*Although, following a bunch of recent anti-SLAPP cases involving activities that don't arise frombut are tangentially related tolitigation, it would not have been too hard to say that an interpleader does not arise from protected activity because the liability-creating conduct at issue is just competing claims to the same pot of money. That those claims are based on settlement proceeds does not bring this case into the ambit of a SLAPP.

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