Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-00268/USCOURTS-casd-3_12-cv-00268-4/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1335 Interpleader Action

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

GENOMATICA, INC.,

Plaintiff,

v.

ICELANDIC GENOMIC VENTURES

HOLDING, S.A.R.L. et al.,

Defendants,

 

AND RELATED COUNTERCLAIMS

AND CROSS-CLAIMS.

 

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Case No. 3:12-cv-0268-GPC-BGS

ORDER GRANTING IN PART

AND DENYING IN PART

GENOMATICA, INC.’S MOTION

FOR ATTORNEY FEES

(ECF NO. 70)

This is an interpleader action in which Genomatica, Inc. (“Genomatica”) asserts

it is an innocent stakeholder in a dispute over the ownership of certain shares of its

stock. (ECF No. 1.) In its Complaint, Genomatica alleged a dispute had arisen

between Iceland Genomic Ventures Holding S.à.R.L. (“IGVH”), on the one hand, and

Iceland Genomic Partners (“IGP”), on the other hand. (Id.)

On May 22, 2012, IGVH filed an answer to Genomatica’s Complaint, also

asserting counterclaims against Genomatica and cross-claims against IGP, Tryggvi

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Petursson (“Petursson”), and Iceland Genomic Venture Partners, S.A. (“IGVP”) (all

three collectively, “Petursson Defendants”). (ECF No. 7.)

On July 10, 2012, IGP filed an answer to Genomatica’s Complaint. (ECF No.

18.) The Petursson Defendants, however, never responded to IGVH’s cross-claims. 

Accordingly, this Court entered default judgment on IGVH’s cross-claims against the

Petursson Defendants on January 31, 2013. (ECF No. 60.)

On March 21, the Court granted Genomatica’s Motion to Dismiss & Discharge,

denied IGVH’s initial Motion for Summary Judgment, and granted Genomatica’s

Motion to Dismiss IGVH’s Counterclaims. (ECF No. 64.) In granting Genomatica’s

Motion to Dismiss & Discharge, the Court required Genomatica to deposit with the

Clerk of Court the shares that were actually in dispute, to wit, the 400,000 shares

retitled in the names of the Petursson Defendants. Genomatica deposited said shares

on March 29, 2013. (ECF No. 67.)

The Court further directed IGVH to take the necessary steps to dispose of this

interpleader action. Thus, on April 12, 2013, IGVH filed its second motion for

summary judgment, in which it asks the Court to enter judgment in IGVH’s favor as

to ownership of the disputed Genomatica shares. (ECF No. 74.)

On July 29, 2013, the court issued an order that, among other things, granted

IGVH’s Motion for Summary Judgment. (ECF Nos. 81, 82.) This order concluded the

interpleader action and directed that Genomatica re-title the deposited shares of stock

in IGVH’s name.

Remaining is Genomatica’s Motion for AttorneyFees (“Fee Motion”). (ECFNo.

70.) IGVH filed a response in opposition to the Fee Motion, (ECF No. 76), and

Genomatica filed a reply, (ECF No. 78). The Court deems the Fee Motion suitable for

disposition without oral argument. See CivLR 7.1.d.1.

DISCUSSION

I. Legal Standard

“Generally, courts have discretion to award attorney fees to a disinterested

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stakeholder in an interpleader action.” Abex Corp. v. Ski’s Enters., Inc., 748 F.2d 513,

516 (9th Cir. 1984). “The amount of fees to be awarded in an interpleader action is

committed to the sound discretion of the district court.” Trs. Dirs. Guild Am. v. Tise,

234 F.3d 415, 426 (9th Cir. 2000) (affirming district court’s award of $3,000 in

attorney fees where interpleader plaintiff requested $97,000). “[F]ee awards are

properly limited to those fees that are incurred in filing the action and pursuing the

plan’s release from liability . . . . includ[ing], for example, preparing the complaint,

obtaining service of process on the claimants to the fund, and preparing an order

discharging the plaintifffromliability and dismissing itfromthe action.” Id. at 426-27. 

These fees “are typically modest.” Id. at 427. Though, larger amounts have been

awarded where claimants have filed “unusual, generally not well-taken pleadings.” 

Equitable Life Assurance Soc. U.S. v. DeGeorge, 2006 WL 4704613, at *4 (C.D. Cal.

Aug. 28, 2006).1

An award of feesistypically “paid from the interpleaded fund itself.” Id. at 427. 

The Court, however, “has discretion to award attorney fees and costs: (1) against the

losing claimants as costs to such claimants, (2) from the fund payable to the winning

claimants, or (3) by dividing the fees among the claimants.” Nestle Beverage Co. v.

Bayerische Vereinsbank S.A., 1993 WL 96584, at *3 (N.D. Cal. Mar. 24, 1993) (citing

Schirmer Stevedoring Co., Ltd. v. Seaboard Stevedoring Corp., 306 F.2d 188, 194 (9th

Cir. 1962). “The prevailing approach in most cases is to tax the plaintiff-ininterpleader’s fees against the losing claimant.” Chase Inv. Servs. Corp. v. Law

Offices Jon Divens & Assocs., LLC, 748 F. Supp. 2d 1145, 1183 (C.D. Cal. 2010). 

This “provid[es] a mechanism for vexatious claimants to incur the costs of their

meritless claims.” Michelman v. Lincoln Nat’l Life Ins. Co., 685 F.3d 887, 898 (9th

Cir. 2012).

See also Sun Life Assurance Co. Canada v. Estage of Chan, 2003 WL 22227881, at *3 (N.D. 1

Cal. Sept. 22, 2003) (awarding interpleader fees in addition to fees spent opposing probate petition

filed in an attempt to preempt the interpleader action); see also Prudential Ins. Co. v. Burress, 181 F.

Supp. 391 (S.D. Cal. 1960) (denying request for attorney fees from prevailing claimant where

interpleader action arose from misconduct by defaulting defendant).

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Further, “if there is a conflict between plaintiff and the interpleaded parties,

either as to the correctness of the amount deposited or as to any interest of plaintiff in

the fund, the court may not, in the absence of special circumstances, award attorney

fees for the services of his attorneys in connection with such contest.” Schirmer, 306

F.2d at 195. 

In Schirmer, the claimant argued the stakeholder should not be discharged from

the interpleader because it had deposited the wrong amount with the court. The court

found that the claimant’s arguments against the stakeholder were not plainly frivolous

or made in bad faith. The court thus declined to award the stakeholder any fees

incurred in connection with the stakeholder’s contest with the claimant, awarding the

stakeholder only the fees it incurred in filing the interpleader complaint and obtaining

discharge.

II. Analysis

In addition to attorney fees incurred in connection with filing its Complaint

($9,396.00) and obtaining service of process on IGVH and the Petursson Defendants

($2,140.00), Genomatica argues it is entitled to attorney feesfrom IGVH ($92, 973.55)

because it “wasforced to go well beyond what is normally required to obtain discharge

from liability due to IGVH’s unjustifiable attempts to keep Genomatica in the action.”

Genomatica further argues it is entitled to fees incurred in connection with dismissing

IGVH’s Counterclaims ($64,087.45) because they “had absolutely no merit and were

asserted only to keep Genomatica a party to the action.” In that vein, Genomatica

claims IGVH asserted its Counterclaims in bad faith. Genomatica further asserts it

should be awarded its fees in preparing the instant Fee Motion ($31,731.00). Lastly,

Genomatica argues it should be awarded its costs ($396.20). In total, Genomatica

seeks $200,724.20 in attorney fees and costs.

IGVH asserts in response that its initial motion for summary judgment and its

Counterclaims were not frivolous, meant to protract the litigation, or made in bad faith. 

As to its initial motion for summary judgment, IGVH asserts it was attempting to fully

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resolve the necessity for an interpleader action by seeking a judgment that it owned the

disputed shares. IGVH asserts it is appropriate for a claimant in some instances to

move for dismissal of an interpleader action where there is no legitimate competing

claim to the allegedly disputed property and that its initial motion for summary

judgment was an appropriate vehicle to conclude the interpleader action early on in the

litigation. As to its Counterclaims, IGVH asserts it had a good faith basis to believe

that Genomatica breached a fiduciary duty and was negligent in re-titling the disputed

shares to the Petursson Defendants.

IGVH assertsthat, if Genomatica isto recover attorney fees, they should be from

the Petursson Defendants. IGVH further asserts that Genomatica’s claimed fees are

neither modest nor reasonable, citing, for example, the fact that over 128 hours alone

were spent on Genomatica’s Motion to Dismiss IGVH’s Counterclaims.

In reply, Genomatica asserts that, at a minimum, the Court should award fees

jointly and severally against both IGVH and the Petursson Defendants.

Here, the Court first notes that IGVH isthe winning claimant in thisinterpleader

action. Thus, to assess fees against IGVH, the Court would have to find IGVH

unreasonably protracted thislitigation, filed frivolous motions/pleadings, and/or acted

in bad faith. The Court finds IGVH’s actions did not unreasonably protract this

litigation. While IGVH’s efforts to avoid the interpleader action by filing its initial

summary judgment motion were unsuccessful and not in accord with routine

interpleader practice, the Court credits IGVH’s attempt to quickly resolve any dispute

by arguing the Petersson Defendants were not valid claimants and by seeking a

judgment of ownership over the Genomatica shares. Similarly, the Court finds that,

while IGVH’s Counterclaims were ultimately dismissed, its Counterclaims were not

completely devoid ofmerit and were largely dismissed per IGVH’s mistake in asserting

its claims against Genomatica itself. Thus, it cannot be said that IGVH’s filings were

frivolous. The Court further finds there is no evidence that IGVH acted in bad faith. 

Moreover, the Court finds the facts here resemble those in Schirmer to the extent that

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IGVH, a claimant, disputed the actions of Genomatica, the stakeholder, and to the

extent Genomatica incurred the majority of its fees in connection with that conflict. 

Thus, Genomatica is not entitled to an award of attorney fees from IGVH.

While Genomatica claims an award of fees against the Petursson Defendants

would be a pyrrhic victory, the Court finds that is the most equitable decision in these

circumstances. The Court will thus award Genomatica the fees and costs it incurred

in filing the interpleader action and obtaining service of process, and a portion of the

fees it incurred in seeking discharge from the interpleader portion of this case, in the

amount of $20,000.00. The Petursson Defendants shall be solely liable for these

attorney fees and costs.

CONCLUSION

Based on the foregoing, Genomatica’s Fee Motion, (ECF No. 70), is GRANTED

IN PART and DENIED IN PART. The Fee Motion is granted to the extent that the

Court awards Genomatica $20,000.00 in fees. The Fee Motion is denied to the extent

the Court does not award Genomatica the full amount of its requested fees and to the

extent that the Court awards those fees solely against the Petursson Defendants. The

hearing on the Fee Motion, currently set for August 16, 2013, is VACATED.

IT IS SO ORDERED.

DATED: August 15, 2013

HON. GONZALO P. CURIEL

United States District Judge

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