Campos v. Oppenheimer Funds Distributor

Filed 8/12/09 Campos v. Oppenheimer Funds Distributor CA2/8

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

APPEAL from an order of the Superior Court of Los Angeles County, Kenneth R. Freeman, Judge. Dismissed.

Frank P. Rosen for Plaintiff and Appellant.

Paul, Hastings, Janofsky & Walker, Jamie Broder and John S. Durrant for Defendant and Respondent.

* * * * * *

Appellant Mark Campos appeals the trial courts order regarding dismissal, interpleading funds held by respondent Oppenheimer Funds Distributor, Inc. (OFDI), and granting OFDI attorney fees and costs. While the order issued by the trial court is somewhat unclear, we conclude that the order is not a final judgment with respect to OFDI and therefore dismiss the appeal.

FACTS^[1]

Appellant invested some funds into a 401(k) retirement plan through his then employer, MCM Wire and Cable, Inc., now American Harness Manufacturing, Inc. (MCM). MCM deposited its retirement plan account funds with OFDI through Bisys Retirement Solutions, Inc. (Bisys), the third party administrator of the funds. As third party administrator, Bisys kept a record of plan participants and the extent of their ownerships in the retirement plan account funds. Cynthia Monje (Monje) and Michael Monje, now deceased, were the principals of MCM. Monje was designated as the corporate administrator for the plan.^[2] Bisys cancelled the plan because MCM failed to pay its employer contribution portion into the retirement plan or to pay the administration fees charged by Bisys. Appellant asked Monje to provide the required corporate resolution for appellants funds to be returned to him, but she refused to cooperate. Appellant therefore was unable to obtain release of his funds from the plan.

Appellant demanded that OFDI release his 401(k) funds, but OFDI asserted without the corporate resolution it did not have authority to release the funds under federal regulations.

PROCEDURAL HISTORY

Appellant filed an action against MCM, Monje, Bisys, the estate of Michael Monje and OFDI. The complaint sought, among other things, a mandatory injunction to release all the funds in the MCM retirement plan to appellant, a declaration that the funds belong to appellant, recovery of the funds under common counts and for an accounting.

Only OFDI and Bisys responded to the complaint. OFDI responded to the complaint by filing a cross-complaint in interpleader and a motion for dismissal from the action and order interpleading the funds. Appellant answered the cross-complaint and opposed the motion for dismissal.

The trial court orally ruled on OFDIs motion on June 26, 2007. The court granted the motion to dismiss and directed OFDI to give notice of its ruling. A minute order reflecting the courts ruling was entered on June 26, 2007, and OFDI gave notice of the courts ruling on the same day.

On August 24, 2007, appellant filed a notice of appeal purporting to appeal from the court order.

The court subsequently signed and entered a written order entitled Order Regarding Motion for Dismissal on November 1, 2007.^[3] The order declared that OFDIs motion was a proper interpleader action, and the court deemed the MCM Account to have been interpleaded though it shall remain in the physical custody of [OFDI] pending further order of the Court. The order directed OFDI not to permit any redemption of shares in the MCM Account or any transfer of the accounts contents until the court has determined the rightful owner. Under the order, OFDI may continue to charge its customary fees for maintaining the MCM Account and is required to make any necessary arrangement for the liquidation and delivery of the contents of the fund once the court determines the rightful owner. The court awarded OFDI attorney fees and costs in a certain sum, to be deducted from the retirement plan account prior to the delivery of the funds to the rightful owner.

DISCUSSION

THE APPEAL MUST BE DISMISSED BECAUSE IT WAS TAKEN FROM A NONAPPEALABLE ORDER

Interpleader is an equitable proceeding by which an obligor who is a mere stakeholder may compel conflicting claimants to money or property to interplead and litigate the claims among themselves instead of separately against the obligor. . . . After admitting liability and depositing the money or property with the court, the obligor is discharged from liability and freed from the necessity of participating in the litigation between the claimants. (4 Witkin, Cal. Procedure (5th ed. 2008) Pleading, 237, p. 317; see Code Civ. Proc., 386.)^[4] Subdivision (b) of section 386 allows a person or entity against whom double or multiple claims are made, or may be made, to file a verified cross-complaint in interpleader, admitting that it has no interest in the money or property claimed, or in only a portion thereof, and alleging that all or such portion is demanded by parties to such action, and apply to the court upon notice to such parties for an order to deliver such money or property or such portion thereof to such person as the court shall direct . . . .

A stakeholder may apply to the court for an order discharging it from liability and dismissing the stakeholder from the action on deposit of the amount in dispute in cases when the only relief sought against the stakeholder is the payment of a stated amount of money alleged to be wrongfully withheld. ( 386.5.) An interpleader action may be brought even if the claims are unliquidated and no liability as to the party bringing the action or filing a cross-complaint for interpleader has yet to arise. ( 386, subd. (b).)

Under section 386.1, when a deposit is made under section 386, the court shall, upon the application of any party to the action, order such deposit to be invested in an insured interest-bearing account, and [i]nterest on such amount shall be allocated to the parties in the same proportion as the original funds are allocated.

The issue whether the interpleader statutes require a physical deposit of disputed funds, and 401(k) funds in particular, with the court presents an interesting issue but one not properly presented here.

1. Appealability

In his opening brief, appellant asserted the trial courts order regarding motion for dismissal is appealable under section 904.1, subdivision (a)(1) and California Rules of Court, rule 8.204(a)(2)(B). Section 904.1, subdivision (a)(1) makes appealable a judgment, except . . . an interlocutory judgment, other than [exceptions not relevant here] . . . . Rule 8.204(a)(2)(B) simply requires that the appellant explain in the opening brief why the order appealed from is appealable. In this case, appellant circuitously asserts an appeal is in order in that OFDI was not a true stakeholder because there were no conflicting claims to the funds at issue.^[5]

After the parties filed their briefs regarding the merits of this appeal, we asked the parties to file supplemental briefs addressing the issue whether the order regarding motion for dismissal entered in this case is an appealable order. Each party filed a supplemental brief, and we have considered the points, authorities and arguments advanced by each party on the issue.

We conclude the trial courts order regarding motion for dismissal is not appealable and the appeal must be dismissed.

A judgment rendered after a trial and a determination of most of the issues, which leaves some judicial act yet to be done, is interlocutory and not appealable unless it falls within specified statutory exceptions not applicable here. (See 9 Witkin, Cal. Procedure, supra, Appeal, 136, p. 209.) An order or judgment granting a motion, complaint or cross-complaint for interpleader is just such an interlocutory judgment.

Justice Jefferson explained the reasoning underlying this rule in Lincoln Nat. Life Ins. Co. v. Mitchell (1974) 41 Cal.App.3d 16, a case in which an appeal was taken from a judgment of interpleader: In California, the interpleader procedure is viewed as two suits in one. . . . The first step is a trial or hearing by the court on the issue of the [interpleader] plaintiffs right to interplead. If the proof is sufficient (or the right is admitted by failure to object or by stipulation . . .), the court makes an interlocutory order. This directs the plaintiff stakeholder to deposit the amount or deliver the property, and requires the defendant claimants to interplead and litigate their claims among themselves. Such interlocutory orders, concerning the substitution of parties in a suit, have been regarded as nonappealable until such time as a final judgment has been entered disposing of the claims of the remaining litigants. (Id. at p. 19, citations omitted.) Mitchell therefore held a judgment of interpleader that discharged the plaintiff in interpleader and left the claimants to settle the disposition of insurance proceeds between themselves to be interlocutory and nonappealable. (Id. at p. 20.) The court stated the judgment of interpleader was reviewable on appeal only after the ultimate resolution of the claims. (Ibid.)

As the Supreme Court explained in Camp v. Oakland Mortgage etc. Co. (1928) 205 Cal. 380, 381, an order granting a motion brought pursuant to section 386 provides for a substitution of defendants under certain circumstances and for the discharge and dismissal from the action of the defendant upon its depositing into court money or other personal property in dispute. Such an order has none of the essential characteristics of a final judgment. It is not to be executed by a writ or other process; nor is any act required of any of the parties by the doing of which he will be injured in the meantime, in the sense, at least, that he will be finally deprived of any substantial personal or property right, or suffer an invasion thereof, unless he can prosecute an appeal directly from the order itself. (Camp, supra, at p. 382; see also Chitwood v. County of Los Angeles (1971) 14 Cal.App.3d 522, 528 [appeal from order denying leave to amend complaint by substitution of parties dismissed]; Knoff v. City etc. of San Francisco (1969) 1 Cal.App.3d 184, 206 [same]; Neilsen v. Saylors (1956) 146 Cal.App.2d 139, 140-141 [order vacating order in interpleader not appealable]; Cassidy v. Norton (1914) 25 Cal.App. 433, 435 [order substituting parties reviewable on appeal from final judgment].) Appellant suggests the circumstances here are similar to the facts in Sweeney v. McClaran (1976) 58 Cal.App.3d 824, 827-828, a case in which all claimants to the funds in dispute concurred in the dismissal of the stakeholder, limiting the appeal solely to the trial courts order to pay attorney fees and costs. Unlike Sweeney, however, appellants appeal is taken from the order granting the motion for interpleader as well as the order awarding attorney fees and costs.

The Order Regarding Motion for Dismissal does not completely dismiss OFDI from the action but imposes significant restrictions on OFDI, which, as OFDIs counsel conceded at oral argument, remains subject to the jurisdiction of the court. The order therefore is not a final order of dismissal but rather a nonappealable interlocutory order.

2. Petition for Writ of Mandate

Appellant requests that, if this court determines the case at bench is nonappealable, we treat his appeal as a writ petition.

Writ review is extraordinary, and appellate courts will exercise such discretionary power, allowing a litigant to cut into line ahead of other litigants waiting upon determination of their postjudgment appeals, only upon certain showings. (Omaha Indemnity Co. v. Superior Court (1989) 209 Cal.App.3d 1266, 1273-1274; accord, Roden v. AmerisourceBergen Corp. (2005) 130 Cal.App.4th 211, 218.) Appellant has made no such showing. For example, he has not shown the matter at issue is of widespread interest rather than of interest to the limited community of 401(k) fund holders and those litigating against them. There is no showing the issue presents a significant and novel constitutional issue rather than a narrow procedural one or that the trial courts order deprived appellant an opportunity to present a substantial portion of his cause of action. The record before us does not indicate there are conflicting trial court interpretations of the law requiring a resolution of the conflict, rather than the consistent, practical approach taken by the court order below and by orders of other trial courts of which the superior court took judicial notice. It has not been shown that the trial courts order is clearly erroneous as a matter of law or substantially prejudices appellants case.

Appellant states if the court were to dismiss his appeal, he will not have the opportunity to determine the amount of funds held by OFDI. He also argues he will be deprived of the right to discovery if OFDI is dismissed as a party. As OFDI points out, appellant may still serve nonparty subpoenas on OFDI, and, to the extent such subpoenas are proper, receive documents through that mechanism. We also note that, pursuant to the courts written order, OFDI is still subject to the jurisdiction of the trial court. Further, appellant admits that Bisys, the administrator of the funds, is still a party in this action. Consequently, if appellant returns to the trial court, he can presumably establish through discovery of Bisys that he is the owner of some or all of the contents of the MCM 401(k) retirement plan account. Appellant therefore has not shown he cannot obtain appropriate or complete relief if he returns to the superior court.

Appellant complains that the funds have been depreciating in value as a result of the current economic situation, and to delay a resolution further by requiring him to return to the trial court would cause him prejudice. That is not necessarily the case. As OFDI notes, the order being appealed from was entered in November 2007, and appellants concern about investment losses rings hollow by his silence over the past year and a half.

A petitioner must show he acted in a timely manner, an essential requirement in seeking writ relief. (See Volkswagen of America, Inc. v. Superior Court (2001) 94 Cal.App.4th 695, 701-702.) Appellant here delayed unnecessarily in prosecuting his appeal, having requested and been granted a number of extensions during its pendency.

3. Attorney Fees and Costs

OFDI requests an award of fees and costs on appeal to the extent the appeal is found improper and is dismissed. OFDI has not provided any argument or legal authority for this request and merely requests leave to file a memorandum of fees and costs following dismissal.

Section 386.6, subdivision (a) provides that [a] party to an action who follows the procedure set forth in Section 386 or 386.5 may insert in his motion, petition, complaint, or cross complaint a request for allowance of his costs and reasonable attorney fees incurred in such action. . . . As prevailing party, OFDI is entitled to recover costs on appeal. (Cal. Rules of Court, Rule 8.278(a)(1), (2).) In light of OFDIs failure to provide any argument or authority to justify the award of attorney fees on appeal, we deny such request, without prejudice to OFDIs seeking such fees in the trial court. (Lincoln Nat. Life Ins. Co. v. Mitchell, supra, 41 Cal.App.3d at p. 20 [remanding case to trial court for award of attorney fees, if any, deemed reasonable and proper for defending appeal]; see Banning v. Newdow (2004) 119 Cal.App.4th 438, 458-459 [attorney fees on appeal denied without prejudice to application to trial court].)

DISPOSITION

The appeal is dismissed. OFDI shall recover costs on appeal, and the matter is remanded to the trial court for determination of whether OFDI should recover attorney fees on appeal and, if so, the reasonable amount of such fees.

FLIER, Acting P. J.

We concur:

BIGELOW, J.

BENDIX, J.^*

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^[1] The facts are taken primarily from the complaint and OFDIs motion for dismissal.

^[2] A corporate plan administrator controls the movement of funds into and out of the 401(k) account. If a participant wishes to withdraw money from his or her 401(k) fund, the corporate plan administrator authorizes the withdrawal. When a company establishes a 401(k) plan with OFDI, contributions to the plan are invested in funds under the name of the 401(k) plan, rather than any individual participant in the plan. OFDI maintains records of only the total amount deposited in the 401(k) retirement plan account.

If an individual withdraws funds from a 401(k) account, the funds must be rolled over into an IRA (individual retirement account) within 60 days, or the plan participant may become obligated to pay state and federal income taxes as well as penalties on the amount withdrawn unless the participant meets certain criteria.

^[3] We deem appellants appeal to be taken from this subsequent written order. (Cal. Rules of Court, rule 8.104(e) & (f).)

^[4] All further statutory references are to the Code of Civil Procedure. Section 386, subdivision (a), provides in part that [a] defendant, against whom an action is pending upon a contract, or for specific personal property, may, at any time before answer, upon affidavit that a person not a party to the action makes against him, and without any collusion with him, a demand upon such contract, or for such property, upon notice to such person and the adverse party, apply to the court for an order to substitute such person in his place, and discharge him from liability to either party, on his depositing in court the amount claimed on the contract, or delivering the property or its value to such person as the court may direct; and the court may, in its discretion, make the order; or such defendant may file a verified cross-complaint in interpleader . . . .

^[5] Alternatively, appellant argues in his opening brief that, by the time this appeal reaches the hearing stage, all other parties will have been dismissed or have had judgments entered against them. However, we review the state of the record as of the time the trial court rendered its order, and not some subsequent date. (People v. Leonard (2007) 40 Cal.4th 1370, 1393 [we review the appellate record for error, without considering matters not presented to the trial court]; see 909.)

^* Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.