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PRIMA OIL GAS COMPANY, Plaintiff, vs. TED'S FACTORING SERVICE; SR COMPANY; FIRST INTERSTATE BANK OF COMMERCE; et. al., Defendants.

ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGEMENT

WILLIAM F. DOWNES, Chief United States District Judge

This matter comes before the Court on Plaintiff's Motion for Summary Judgement. The Court, having reviewed the materials submitted in support of and in opposition to the Motion and being otherwise fully advised, FINDS and ORDERS as follows:

BACKGROUND

This dispute arises due to the construction of a pipeline in Campbell County, Wyoming. On October 1, 2000, the Plaintiff, Prima Oil Gas Inc. (Prima), entered into a construction contract with SR Company, LLC, (Sr Company), whereby SR Company agreed to perform various services associated with building the pipeline. As a result of their work, SR Company generated a number of invoices. Prima now owes SR Company for those invoices totaling approximately $238,792.59. In June 2000, SR Company informed Prima to pay funds due and owing to Ted's Factoring Service. Prima complied with these instructions and made a number of payments to Ted's Factoring Service.

Beginning in August 2001, Prima began to receive notice from other parties making claims on SR Company's accounts receivable. Specifically, Prima received a letter from Daniel Bailey notifying Prima of pending litigation, and notification of a temporary restraining order prohibiting SR Company from transferring assets outside the ordinary course of business. Prima then received correspondence from First Interstate Bank detailing the fact that SR Company had defaulted on a number of loans. In addition, Prima also received a demand from SR Company that funds should once again be paid directly to the company instead of Ted's Factoring Service.

As a result of these competing claims, Prima filed a complaint requesting interpleader. The entire amount due SR Company was deposited with this Court on November 13, 2001. Answers claiming entitlement to the interpleader fund were filed by: Ted's Factoring Service; E-Z Cash; First Interstate Bank; Farmers Cooperative Ass'n.; and the Internal Revenue Service.

STANDARD OF REVIEW

"By its very terms, [the Rule 56(c)] standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there is no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original).

The trial court decides which facts are material as a matter of law. "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgement. . . . [W]hile the materiality determination rests on the substantive law, it is the substantive law's identification of which facts are critical and which facts are irrelevant that governs." Id. at 248; see also Carey v. United States Postal Serv., 812 F.2d 621, 623 (10th Cir. 1987). The relevant inquiry is "whether it is so one-sided that one party must prevail as a matter of law." Id. at 623. In considering a party's motion for summary judgement, the court must examine all evidence in the light most favorable to the non-moving party. Barber v. General Elec. Co., 648 F.2d 1272, 1276 n. 1 (10th Cir. 1981). However, "[w]hen a motion for summary judgement is made and supported as provided in [Rule 56], an adverse party may not rest upon mere allegations or denials of the adverse party's pleadings, but the adverse party's response, by affidavits or otherwise provided in [Rule 56], must set forth specific facts showing that there is a genuine issue for trial." FED.R.CIV.P. 56(e).

DISCUSSION

Interpleader:

Rule 22 of the Federal Rules of Civil Procedure provides "[p]ersons having claims against the plaintiff may be joined as defendants and required to interplead when their claims are such that the plaintiff is or may be exposed to double or multiple liability." FED.R.Civ.P. 22. "The primary test for determining the propriety of interpleading the adverse claimants and discharging the stakeholder . . . is whether the stakeholder legitimately fears multiple vexation directed against a single fund." 7 CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 1704 (3d ed. 2001). Furthermore, "[i]nterpleader is a remedial joinder device that is efficient and avoids multiple liability and inconsistent obligations. These salutary principles compel courts to construe interpleader provisions liberally." See MOORE'S FEDERAL PRACTICE 3D, § 22.03[1][h] (citations omitted).

It appears from the pleadings that Prima has never disputed the fact that it owes approximately $238,792.59. In fact, Prima has deposited this sum with the Court by their own volition. Prima has also received several demands for this sum of money. Specifically, one letter from Mr. Bailey and another from First Interstate Bank notifying Prima of pending litigation and allegations of the misappropriation of funds. Clearly, Prima is subject to multiple liability or inconsistent obligations if the parties contesting these funds are not joined.

This Court agrees with the Plaintiff — the core policy behind interpleader is to permit a party such as Prima to avoid multiple claims against the same funds and to permit a court to determine relative priorities. If this Court was to deny interpleader, Prima might be subject to five different obligations. Thus, this Court finds interpleader is appropriate in this case.

After a court concludes that the case is a proper interpleader action, the next step requires a determination of the respective rights of the claimants to the interpleader funds. However, if the stakeholder is disinterested, i.e., does not contest the right to acquire a portion of the interpleader funds, and there is no remaining liability, the stakeholder should be discharged from the case. MOORE'S FEDERAL PRACTICE 3D, § 22.03[2][a]. As stated above, this action is appropriate for interpleader. In addition, it is undisputed that Prima is a disinterested stakeholder as evidenced by Prima's deposit of the interpleader funds with this Court. Moreover, Prima makes no claim to the disputed funds. Accordingly, this Court finds that Prima should be discharged from this action due to a lack of liability beyond the interpleader funds.

Counterclaim of Ted's Factoring Service.

Ted's Factoring Service filed a counterclaim against Prima alleging that because SR Company assigned their accounts receivable to Ted's Factoring Service, Prima is liable for those accounts totaling $72,864.25. In June 2000, Prima was notified that "Payment on all invoices from our company [SR Company] are to be made payable and mailed directly to: Ted's Factoring Services . . ." ( See Brady Aff.) After receiving this notification, Prima complied with the instructions by making a number of payments directly to Ted's Factoring Service. Shortly after a number of these payments were made, SR Company, contrary to the previous directions, directed Prima to pay the owed funds directly to SR Company rather than Ted's Factoring Service. Prima again complied with these new instructions, and is now subject to a counterclaim under the theory that an obligation was created merely because they were advised of the assignment.

This claim is without merit. This Court cannot impose an obligation on Prima to fulfill SR Company's debts in the absence of an agreement. The only contract that Prima entered into was with SR Company for the construction of a pipeline. Prima never entered into any contractual arrangement with Ted's Factoring Service. In the absence of a contractual obligation, this Court will not create an independent duty out of the mere fact that Prima was notified of the assignment. Because Ted's Factoring Service can cite no independent duty that Prima owes outside the construction contract with SR Company and the resulting invoices, it has failed to state a claim for any monies other than those that have been paid to this Court. Accordingly, the counterclaim is dismissed.

Attorney Fees:

Plaintiff correctly argues that this Court, when faced with an interpleader action, may grant reasonable attorneys' fees "in favor of a stakeholder who: (1) is `disinterested' (i.e., does not itself claim entitlement to any of the interplead fund); (2) concedes its liability in full; (3) deposits the disputed fund in court; and (4) seeks discharge." United Bank of Denver, Nat'l. Assoc. v. Oxford Properties, Inc., 683 F. Supp. 755, 756 (D.Colo. 1988) (citations omitted). It is undisputed that Prima fulfills all four of these requirements. However, collection of attorneys' fees out of an interpleader fund is not a matter of right, but rather lies within the discretion of this Court. Id. at 756.

The United States argues that the an interpleader fund that is subject to a Federal Tax Lien cannot be reduced by an award of attorneys' fees in favor of the stakeholder. Chevron U.S.A., Inc. v. May Oilfield Services, Inc., 739 F.2d 498 (10th Cir. 1984). The court in that case held that because Cheveron's suit was brought well after the tax lien was perfected and there were insufficient interpleader funds to fulfill the tax lien, the trial court erred in awarding attorneys' fees. Id. at 498. In the case at bar, although there is some dispute as to the relative priorities regarding the tax lien, there can be no dispute that this suit was brought after the tax lien was perfected. In addition, the parties have conceded that First Interstate Bank's secured claims are superior. Thus, payment to First Interstate Bank will leave insufficient funds to fulfill the tax lien. Accordingly, this Court denies the request for attorneys' fees on the basis that there will be insufficient funds to satisfy the federal tax lien in full.

THEREFORE it is hereby ORDERED that Plaintiff's request for attorneys' fees is DENIED. It is furthered ORDERED that Plaintiff's request for interpleader and discharge is GRANTED. It is further ORDERED that Plaintiff's request to dismiss the Counterclaim is GRANTED.

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PRIMA OIL GAS COMPANY v. TED'S FACTORING SERVICE, (D.Wyo. 2002)
(Oct 9, 2002)