Canal Insurance v. Tackett

Opinion

HULL, J.

Defendant Billie Tackett appeals from an order awarding plaintiff Canal Insurance Company attorney fees from interest that had accrued on interpleader funds deposited with the court. Defendant contends that (1) plaintiff did not give the requisite notice for its fee motion and (2) an award of fees from interest on interpleader funds is statutorily prohibited. This latter point is dispositive, and we reverse the trial court’s order.

Facts And Procedural History

Defendant was one of several people injured in a vehicle accident caused by the driver of a tractor-trailer rig. A number of lawsuits were filed in Lassen County, two of which were consolidated—case Nos. 31217 and 35101. Case No. 35101 was dismissed with prejudice and is not at issue in this appeal.

Plaintiff, the insurance carrier for the truck driver’s employer, filed a complaint in interpleader and deposited the $1 million policy limit with the court clerk. The court subsequently ordered the clerk to place these funds in an interest-bearing account, adding that “the interest on such amount to be allocated to the parties in the same proportion as the original funds are hereafter allocated.”

On September 20, 2002, after lengthy discussions, the parties stipulated to a settlement. The judgment, entered two months later on November 26, 2002, discharged plaintiff from liability and allocated the funds in the interpleader account among the 14 claimants, including defendant. These funds then totaled approximately $1,015,000. The judgment stated that any party “not specifically mentioned in [this allocation] is deemed to have waived his, her or its right to a share of the interpled funds deposited in this action.”

On February 28, 2003, plaintiff filed a motion for attorney fees and costs “from the interest accrued since the last Settlement Conference held on September 20, 2002 . . . .” Plaintiff asked that this award “be distributed from the excess interest over and above the $1,015,998 distribution already paid to the Interpleader Defendants . . . .” Plaintiff asserted that it never intended “to

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waive costs and attorneys’ fees associated with the interpleader action,” but that at the end of the marathon settlement conference on September 20, it “agreed to waive its costs at that point only if that move would completely settle the matter. Attorney’s fees and costs at that time were in the tens of thousands of dollars. Costs, including reporting fees and medical records, were in excess of ten thousand dollars. The agreement to waive costs at that point was given only for the agreement that Judgment be signed immediately, the potential claims against [plaintiff’s] insureds be dismissed, and that distribution of the funds occur immediately.” Plaintiff sent out a proposed judgment on October 1, 2002, but defendant balked at signing the agreement while she investigated other possible insurance coverage. Plaintiff asserted that due to this conduct, it “was unnecessarily forced to incur additional attorney’s fees and costs” between September 20, 2002, and November 26, 2002, the date judgment was finally entered.