Response Reply

Cal. Super. - 6th Dist.April 1, 2021

Electronically Filed by Superior Court of CA, County of Santa Clara, on 10/19/2021 11:07 AM Reviewed By: F. Miller Case #21CV381434 Envelope: 7491424 21CV381434 Santa Clara - Civil F. Miller SKAGGSIFAUCETTELLP #MN \DOOQO‘xUI 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JASON M. SKAGGS (NO. 202190) SKAGGS FAUCETTE LLP Email: jason@skaggsfaucette.com 530 Lytton Avenue, 2nd Floor Palo Alto, CA 94301 Telephone: 650/617-3226 Facmmile: 650/644-0200 Attorneys for Defendant KATIERINE STRATTON AS TRUSTEE OF STRATTON SURVIVORS TRUST A AND AS TRUSTEE OF THE STRATTON BYPASS TRUST SUPERIOR COURT OF CALIFORNIA SANTA CLARA COUNTY MCPHARLIN SPRINKLES AND THOMAS N0. 210V381434 LLP, KATHERINE STRATTON’S REPLY Plaintiffs, MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF v. DEMURRER TO COMPLAINT OF PLAINTIFF MCPHARLIN SPRI N Kl .ES VASILI STRATTON, an individual, AND THOMAS LLP KATHERINE STRATTON AS TRUSTEE OF STRATTON SURVIVORS TRUST A, Time: 9:00 am. KATHERINE STRATTON AS TRUSTEE Date: October 26, 2021 OF THE STRATTON BYPASS Dept: 2 TRUST,THALIA STRATTON AS Judge: Hon. Drew Takaichi TRUSTEE OF THE STRATTON GRANDCHILDREN’S TRUST, SAMOS ENTERPRISES, LLC, a California limited liability company; and DOES 1 through 25, inclusive Defendants. REPLYWA ISO K. STRATTON DEMURRER SKAGGSIFAUCETI'ELLP UI-bbJN \OOOQON 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS INTRODUCTION ................................................................................................................. 1 LEGAL ARGUMENT ..................................................................................................................... 1 I. McPharlin’s Interpleader Action Is Not Valid Because An Interpleader Action May Not be Maintained Upon The Mere Pretext Or Suspicion Of Double Vexation, Which Is A11 McPharlin Has Pled Here............................................................................................... 1 II. McPharlin’s Other Arguments Lack Merit. ............................................................................. 3 III. The Demurrer Should Be Granted Without Leave T0 Amend And The $2.2 Million Should be Disbursed To Katherine. ......................................................................................... 4 CONCLUSION .................................................................................................................................. 4 REPLY MPA ISO K. STRATTON DEMURRER -1- SKAGGSIFAUCETTELLP #0.) COOQQ 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Cases City ofMorgan Hill v. Brown, 71 Cal. App. 4th 1114 (1999) ............................................................ 3 Placer Foreclosure, Inc. v. Aflalo, 23 Cal. App. 5th 1109 (2018) ............................................. 1, 3, 4 Westamerz'ca Bank v. City ofBerkeley, 201 Cal. App. 4th 598 (201 1) ..................................... 1, 2, 3 REPLY MPA ISO K. STRATTON DEMURRER -ii- SKAGGSIFAUCETTELLP \OOOQOUILbJNr-I NNNNNNNNNr-I-tr-tr-twp-AHHHH OOQONUI-PUJNHO\DOOQO\M#UJNHO INTRODUCTION The briefs filed by the parties on the demurrer of Defendant Katherine Stratton (“Katherine“), to the interpleader complaint 0f Plaintiff McPharlin Sprinkles and Thomas LLP (“McPharlin”) have distilled the dispute 0n this motion to one issue: whether the holder of funds (here, McPharlin) pleads a valid claim for interpleader Where one party (here, Katherine) demands those funds and another party Who has not previously claimed a right t0 the funds (here, Vasili) responds t0 the suggestion 0f an interpleader by simply stating that it agreed that the funds should be interpleaded and that this is the “best method t0 proceed with,” While never actually asserting any claim to the fimds, much less a basis for asserting the claim. Because the Ianswer to that question is “n0,” the demurrer should be granted and McPharlin should be ordered t0 release the funds that indisputably belong t0 Katherine forthwith. LEGAL ARGUMENT I. McPharlin’s Interpleader Action Is Not Valid Because An Interpleader Action May Not be Maintained Upon The Mere Pretext Or Suspicion Of Double Vexation, Which Is All McPharlin Has Pled Here. The parties agree that the fundamental requirement bring an interpleader claim is that “[t]he complaint must show that the defendants make conflicting claims t0 the subj ect matter, and that the plaintiff cannot safely determine Which claim is valid and offers to deposit the money in court.” See Open. Br. at 4 (citing Placer Foreclosure, Inc. v. Aflalo, 23 Cal. App. 5th 1109, 1113 (2018)); Opp. Br. at 5-6 (complaint in interpleader much show that the defendants make conflicting claims to the subj ect matter) (citing Westamerica Bank v. City 0f Berkeley, 201 Cal. App. 4th 598 (2011)). However, “an interpleader action may not be maintained upon the mere pretext 0r suspicion of double vexation.” Placer, 23 Cal. App. 5th at 1 1 13. In assessing the sufficiency 0f McPharlin’s allegations, McPharlin does not and cannot challenge the settled law from its own case (Westamerica) that “[t]he well-pled allegations that we accept as true necessarily include the contents 0f any exhibits attached t0 the lDue to common last name (Stratton) ofmany ofthe parties, they Will be referenced herein by their first names to avoid confusion, with n0 disrespect intended. REPLY MPA ISO K. STRATTON DEMURRER -1- SKAGGSIFAUCETTELLP U1¥UJN QON 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 complaint. Indeed, the contents of an incorporated document . . . Will take precedence over and supersede any inconsistent 0r contrary allegations set out in the pleading. In the case 0f such a conflict, we will look solely t0 the attached exhibit.” Westamerica Bank v. City 0f Berkeley, 201 Cal. App. 4th 598, 607 (201 1). Here, the allegations 0f the complaint including the exhibits show that: On March 11, 2021, Katherine, through her counsel, inquired as to whether McPharlin was holding the funds subject t0 some authorization 0r agreement of Which he was not aware, and McPharlin did not identify any such authorization 0r agreement, and further did not identify any conflicting claims t0 the funds, but stated that Katherine’s request for the funds would need t0 be agreed upon by the other parties 0r McPharlin would interplead the funds. Complaint 1116 & Ex. D. On March 15, 2021, counsel for Katherine sent a letter t0 all parties, including Michael Arellanez (counsel for Vasili Stratton) and Daniel Mash of McPharlin, demanding release 0f Katherine’s funds. Complaint 111 7 & Ex. E. On March 22, 2021, still without receiving ANY substantive response from Mr. Arellanez, much less notice 0f a conflicting claim, McPharlin stated that it had received conflicting and uncertain instructions from the parties and that he was obligated t0 interplead the funds-however, the allegations 0fthe complaint show that this is not true. Complaint 1H 7, 18 (“On March 18, 202 1 , Mr. Arellanez told Daniel J. Mash he had t0 discuss the matter with his client. As 0fMarch 22, 202 1, Mr. Arellanez had not further contacted Daniel J. Mash”) & EX. F On March 22, 202 1 , after McPharlin falsely stated that it had received conflicting claims to the funds and was obligated to interplead them, Mr. Arellanez sent a letter stating that “We are in agreement with Mr. Mash that the claims and funds should be interplead With the Court. Based [sic] Mr. Skaggs’ unilateral request we feel this is the best method t0 proceed With. Complaint 1119 & Ex. G (third page 0f exhibit). Mr. Arellanez’s email is the sole basis for McPharlin’s assertion that there are conflicting REPLY MPA ISO K. STRATTON DEMURRER -2- SKAGGSIFAUCETTELLP h \OOONONUI 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 claims. See Complaint 1119. But the law as cited by both parties (Placer and Westamerz’ca) requires that there be conflicting claims, not just one parties’ statement that that an interpleader is “the best method t0 proceed with.” Complaint 1119 & EX. G. There is simply nothing in the complaint any indication by Vasili of a conflicting claim, much less the basis for such a claim? Thus, this is exactly the type 0f “mere pretext 0r suspicion 0f double vexation” that the law says is insufficient t0 support an interpleader claim. Placer, 23 Cal. App. 5‘“ at 1113. Indeed, as mentioned in the Opening Brief, allowing a party t0 force an interpleader action merely by agreeing that it is a good idea without actually providing any basis for a purportedly conflicting claim would allow a party to keep money from a party legally entitled t0 it-here, it would allow Vasili t0 keep money from Kathy Without ever asserting a conflicting claim to that money. See Open. Br. at 7 & n. 4 (citing City ofMorgan Hill v. Brown, 71 Cal. App. 4th 1 1 14, 1 126 (1999)). McPharlin provides n0 response t0 this argument, and none exists. II. McPharlin’s Other Arguments Lack Merit. McPharlin also objects to certain other arguments made by Katherine in her demurrer, asserting that the arguments are outside the scope ofthe complaint. Opp. Br. at 8-9. Katherine attempted t0 anticipate arguments that McPharlin might raise given prior discussions with McPharlin. See Open. Br. at 5-7. Since McPharlin did not ultimately raises these arguments, we do not need t0 discuss them further. Finally, McPharlin quibbles with the placement 0f its name in the caption of the demurrer. We are quite certain that McPharlin has determined that, as the only plaintiff in this case and as the only plaintiff in the caption of the demurrer, it is McPharlin’s complaint that is subject t0 demurrer. We trust that the title of this reply brief that specifies McPharlin’s name has eliminated any purported confusion in this regard. 2A5 discussed at length in the opening brief, and not challenged 0r even addressed by McPharlin, the fact that the parties are currently in litigation is not sufficient t0 sustain an interpleader action. See Open. Br. at 5-7 (discussing Placer, Which, in turn, discusses Westamerica); see also id. at 7 (“possible eventual right” to disputed funds does not support an interpleader claim) (citing City ofMorgan Hill, 71 Cal. App. 4th at 1126). REPLY MPA ISO K. STRATTON DEMURRER -3- SKAGGSIFAUCETTELLP \OOOQON 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 III. The Demurrer Should Be Granted Without Leave T0 Amend And The $2.2 Million Should be Disbursed T0 Katherine. In order. to be granted leave to amend, McPharlin has the burden t0 demonstrate a reasonable possibility that the defect can by cured by amendment. Placer, 23 Cal. App. 5th at 1 1 17. McPharlin has not satisfied this burden. Accordingly, as in Placer, the demurrer should be granted Without leave t0 amend and the court should release the $2.2 million t0 Katherine forthwith. Id. W For the foregoing reasons, Katherine respectfully requests that the Court grant the demurrer t0 the interpleader claim against her With respect to the $2.2 million and release those funds t0 her. DATED: October 19, 2021. Respectfully, By: . SKAGGS Attorney for Plaintiff Katherine Stratton, Trustee Of The Stratton Survivor’s Trust A REPLY MPA ISO K. STRATTON DEMURRER -4-