MWE Services, Inc. et al v. California Department of Forestry and Fire Protection et al

Filing 27

ORDER signed by Judge John A. Mendez on 6/11/14 GRANTING 18 Motion to Dismiss for Lack of Jurisdiction and DENYING AS MOOT 12 Motion for Judgment; CASE CLOSED. (Meuleman, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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MWE SERVICES, INC., a
Nebraska corporation;
CHRISTOPHER J. MARTIN,

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Plaintiffs,
v.
CALIFORNIA DEPARTMENT OF
FORESTRY AND FIRE PROTECTION;
CALIFORNIA DEPARTMENT OF
CORRECTIONS; CALIFORNIA
HIGHWAY PATROL; CAMPTONVILLE
FIRE DEPARTMENT;
DOBBINS/OREGON HOUSE FIRE
PROTECTION DISTRICT; GRASS
VALLEY FIRE DEPARTMENT; LINDA
FIRE PROTECTION DISTRICT;
NORTH SAN JUAN FIRE
PROTECTION DISTRICT; PACIFIC
GAS AND ELECTRIC COMPANY;
PENN VALLEY FIRE PROTECTION
DISTRICT; UNITED STATES
DEPARTMENT OF AGRICULTURE
FOREST SERVICE; UNITED STATES
GEOLOGICAL SURVEY; and DOES 1
through 2500, inclusive,

No.

2:14-cv-00010-JAM-KJN

ORDER GRANTING DEFENDANT UNITED
STATES’ MOTION TO DISMISS AND
DENYING DEFENDANT CALIFORNIA
DEPARTMENT OF FORESTRY AND FIRE
PROTECTION’S MOTION AS MOOT

Defendants.

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Two motions are before the Court in this matter:
(1)Defendant California Department of Forestry and Fire
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Protection’s (“Cal Fire”) Motion for Judgment on the Pleadings,

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Or Alternatively, Motion to Dismiss (Doc. #12) Plaintiffs MWE

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Services, Inc. (“MWE”) and Christopher Martin’s (collectively

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“Plaintiffs”) First Amended Complaint in Interpleader (Doc. #1-1,

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Exh. A) (“FAC”); and (2) Defendants United States Department of

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Agriculture Forest Service and United States Geological Survey’s

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(collectively “United States”) Motion to Dismiss (Doc. # 18) the

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FAC for lack of Subject Matter Jurisdiction. 1

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a Reply (Doc. #23) to the United States’ motion, and the United

Cal Fire submitted

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States filed a statement of non-opposition (Doc. #20) to Cal

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Fire’s motion. Plaintiffs filed a joint and several opposition

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(Doc. #21) to both motions.

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(Doc. #24) to the opposition.

The United States filed a reply

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I.

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FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

On December 10, 2012, Plaintiffs filed the First Amended

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Complaint in Interpleader (Doc. 1-1, Exh. A) in Yuba County

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Superior Court.

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this Court on January 2, 2014.

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The United States removed the case (Doc. #1) to

According to the FAC, Plaintiff Christopher Martin is a

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resident of the State of Missouri and MWE is a corporation

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organized under the laws of the State of Nebraska.

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Plaintiffs are the insureds under a commercial general liability

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policy in which the insurer is Berkley Regional Specialty

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Insurance Company.

Id. ¶ 5.

FAC ¶¶ 1-2.

Plaintiffs allege that Defendants

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This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled
for May 21, 2014.
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have claimed or may claim that they are entitled to the funds

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from the policy, which may subject Plaintiffs to multiple

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liability under 28 U.S.C. § 1335 and Federal Rules of Civil

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Procedure Rule 22.

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from a fire that occurred in and around Yuba County, California.

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Id. ¶ 3.

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complaint against Plaintiffs for damages as a result of the fire.

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Plaintiffs claim no interest in the funds except for attorneys’

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fees and costs and request the Court to determine the persons who

Id. ¶¶ 6-7.

They indicate the claims arise

The FAC indicates that Cal Fire has already filed a

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are legally entitled to receive the funds.

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Plaintiffs state they are ready and willing to tender the funds

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to the Court “with their insurer’s consent.”

Id. ¶¶ 9-10.

Id.

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II.

OPINION

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A.

Requests for Judicial Notice

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The United States requests the Court judicially notice (Doc.

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#18-2) two documents, (1) the FAC (RJN Exh. 1) and (2) a

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complaint filed by Cal Fire against Plaintiffs for “fire

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suppression, investigation, auditing, and litigation fees and

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costs” (RJN Exh. 2).

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Generally, the Court may not consider material beyond the

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pleadings in ruling on a motion to dismiss.

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material attached to, or relied on by, the complaint so long as

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authenticity is not disputed, or matters of public record,

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provided that they are not subject to reasonable dispute.

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Sherman v. Stryker Corp., 2009 WL 2241664 at *2 (C.D. Cal. Mar.

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30, 2009) (citing Lee v. City of Los Angeles, 250 F.3d 668, 688

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(9th Cir. 2001) and Fed. R. Evid. 201).
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The exceptions are

E.g.,

The first document is

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the operative complaint in this action.

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the Court will rely on in ruling on the motions, and as such, the

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request is granted as to it.

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It is clearly a document

The second document is a complaint filed in another action

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in the Yuba County Superior Court.

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in Plaintiffs’ FAC and relied on by Plaintiffs.

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Court will take judicial notice of it.

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It is specifically referenced
As such, the

Cal Fire seeks judicial notice (Doc. #14) of four documents.
The first is the complaint already discussed above, filed by Cal

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Fire against Plaintiffs in the Yuba County Superior Court.

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other three documents concern the removal and subsequent remand

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of the other action.

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documents necessary in ruling on the motions before it, and as

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such, denies Cal Fire’s request.

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The

The Court does not find notice of these

Plaintiffs seek judicial notice (Doc. #21-4) of two

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documents.

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above.

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statement filed in connection with the other action.

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does not find either necessary in ruling on the motions currently

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before it, and therefore denies Plaintiffs’ request.

The first is their answer to the complaint noticed

The second is Plaintiff MWE’s case management conference
The Court

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B.

Legal Standard

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There are two forms of interpleader, “rule interpleader,”

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under Rule 22 of the Federal Rules of Civil Procedure, and

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“statutory interpleader,” pursuant to 28 U.S.C. § 1335.

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allow a party to file a claim for interpleader if there is a

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possibility of exposure to double or multiple liability.

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W. Coast Life Ins. Co., 688 F.3d 1004, 1009 (9th Cir. 2012).

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“The purpose of interpleader is for the stakeholder to ‘protect
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Both

Lee v.

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itself against the problems posed by multiple claimants to a

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single fund.’”

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Cir. 2010) (quoting Minn. Mut. Life Ins. Co. v. Ensley, 174 F.3d

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977, 980 (9th Cir.1999)).

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Mack v. Kuckenmeister, 619 F.3d 1010, 1024 (9th

When a person holding funds or property encounters other

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parties who are making conflicting possessory claims for those

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funds or property, he may join the parties as defendants and

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require them to litigate who is entitled to the funds or

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property.

Michelman v. Lincoln Nat. life Ins. Co., 685 F.3d 887,

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893 (9th Cir. 2012); ReliaStar Life Ins. Co. v. Northam, 2:13-CV-

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00063-TLN, 2013 WL 5703341, at *2 (E.D. Cal. 2013).

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There are some general requirements for interpleader.

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Interpleader requires that the plaintiff-stakeholder have in its

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possession, custody or control, a particular fund or property.

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Mock v. Collins, No. EDCV 04–395–VAP SGLX, 2004 WL 3619122, at *2

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(C.D. Cal. 2004); ReliaStar Life Ins., 2013 WL 5703341, at *2; 28

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U.S.C. § 1335(a).

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claims made to that same property or fund.

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at *2.

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fear of multiple liability; that is, the stakeholder must have “a

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good faith belief that there are or may be colorable competing

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claims to the stake,” based on “a real and reasonable fear of

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exposure to double liability or the vexation of conflicting

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claims.”

Further, there must be multiple, adverse
ReliaStar Life Ins.,

Finally, the plaintiff stakeholder must have a reasonable

Michelman, 685 F.3d at 894.

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C.

Analysis

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Both Cal Fire’s and the United States’ motions attack

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Plaintiffs’ FAC as failing to meet the requirements discussed

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above.

The Court first addresses the United States’ contention
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that the FAC must be dismissed because Plaintiffs do not have

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control or possession over the insurance funds that serve as the

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basis for this interpleader action.

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1.

Possession or Control

In its Motion to Dismiss, the United States contends

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Plaintiffs do not have possession or control over the policy

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proceeds at issue and therefore lack standing to bring the

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present action.

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that Plaintiffs are merely insureds named in the policy, and any

U.S. MTD at pp. 4-5.

The United States argues

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control over the policy funds is subject to the consent of the

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insurance company.

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Plaintiffs respond that they are the beneficiaries of the

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policy, are entitled to the full amount provided under it, but

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admit they can only interplead the funds “with their insurer’s

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consent.”

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insurer’s consent is “reasonably inferred” to have been given due

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to the fact that no reservation of rights exists on the policy.

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However, no legal authority supporting this specific contention

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is provided.

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decision not to reserve rights to assert coverage defenses does

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not afford the insured any control over the actual insurance

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proceeds.

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Opp. at p. 4; see also FAC ¶ 9.

They contend their

In its Reply, Cal Fire argues that an insurer’s

Cal Fire Reply at p. 3.

The Court finds Defendants’arguments persuasive. Plaintiffs

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have failed to meet this foundational element of interpleader

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actions.

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inferences, they have not adequately demonstrated that they have

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possession of the policy funds or provided evidence that their

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insurer has placed the funds within Plaintiffs’ custody or

Despite Plaintiffs’ arguments regarding reasonable

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control.

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action.

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to Dismiss, without prejudice, as Plaintiffs may at some point

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gain the necessary control over the policy funds.

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As such, they lack standing to bring this interpleader
Accordingly, the Court GRANTS the United States’ Motion

The Court need not address the United States’ remaining

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contentions in support of its motion and DENIES Cal Fire’s

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motion as moot.

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III.

ORDER

For the reasons set forth above, the Court GRANTS the United

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States’ Motion to Dismiss the FAC.

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as moot.

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IT IS SO ORDERED.
Dated:

June 11, 2014

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Cal Fire’s motion is DENIED