UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

 

______________________________

)

COMPANION PROPERTY & )

CASUALTY INSURANCE CO., )

)

Plaintiff, )

)

v. ) Civil Action No. 13-436 (RWR)

)

APEX SERVICE, INC., et al., )

)

Defendant. )

______________________________)

MEMORANDUM OPINION

Companion Property & Casualty Insurance Co. (“Companion”) 

filed a complaint and action of interpleader to determine the 

proper distribution of the proceeds of payment bond number 

00010501 (the “Payment Bond”) among Apex Service, Inc. (“Apex”) 

and all other potential claimants. Compl. at 4, 7, 10. The 

matter was referred to Magistrate Judge Alan Kay, who issued a 

report and recommendation finding that Companion should be 

discharged from the action, Companion should receive attorneys’ 

fees and costs, and the remaining sum of the Payment Bond should 

be disbursed to Apex. Report and Recommendation (“R&R”) at 16. 

Because no party has objected to the report and recommendation, 

Companion appropriately filed this action of interpleader as a 

disinterested stakeholder, the recommended award of fees and 

costs is fair, and Apex is the sole remaining interpleader 
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defendant, Magistrate Judge Kay’s recommendations will be 

adopted.1

BACKGROUND

Apex entered into a construction contract with the District 

of Columbia Department of Real Estate Services, Contracting and 

Procurement Division for expansion of the Emergency Operations 

Center at the Unified Communication Center. R&R at 2. Apex 

then entered into a subcontract with Niyyah Electrical 

Contractors, LLC (“Niyyah”) to furnish labor, materials, and 

equipment for certain electrical work on the project. Id. As a 

condition of the subcontract, and under D.C. Code § 2-201.01, on 

August 1, 2011, Niyyah obtained the Payment Bond from Companion 

with a total value of $289,972.00.2

 Id. at 2-3.

On March 29, 2012, Apex terminated Niyyah’s subcontract as 

a result of a dispute that arose regarding performance of 

Niyyah’s subcontract work, payment of laborers, and payment for 

certain equipment, materials, and supplies. Id. at 3. Apex 

asserted a claim against the Payment Bond as a result of 

payments it made to Niyyah employees, subcontractors, and 

 1 Apex requests a hearing on the R&R. That request will be 

denied as moot.

2 Footnote five of the R&R contains a typographical error 

stating that the total value of the Payment Bond is $292,972.00. 

R&R at 6 n.5. However, the remainder of the R&R correctly 

reflects that the total value is $289,972.00 and all derivative 

calculations are correctly made in relation to the correct total 

value.
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suppliers for work completed or materials provided prior to the 

subcontract’s termination. Id. Companion also received claims 

from a number of sub-subcontractors and suppliers. Id.

Because of multiple outstanding and anticipated claims 

against the Payment Bond totaling at least $499,534.18, 

Companion requested an order for interpleader and deposited the 

value of the Payment Bond in the Court’s registry. Id. at 10. 

Companion also asked that the defendants be enjoined from 

bringing an action against it under the Payment Bond. Id.

Branch Group, Inc. t/a Rexel (“Branch”) filed an answer to 

the complaint on May 1, 2013, claiming it is owed $38,300.42 for 

“outstanding invoices incurred by Niyyah[.]” Branch Answer 

at 5. Additionally, Lawrence D. Scott, a former Niyyah 

employee, filed a pro se motion for unpaid wages on January 10, 

2014, seeking approximately $14,500.003 of the Payment Bond 

funds. Scott Mot. Unpaid Wages at 1. On December 26, 2013,

Companion and Apex filed a stipulation agreeing that Companion 

should be discharged from liability under the Payment Bond, that 

Companion should be reimbursed $12,000.00 for attorneys’ fees 

and expenses, and that Apex should be awarded the remainder of 

 3 The motion states that Scott received $7,800.00 but that 

the total should have been about $25,000. Scott Mot. Unpaid 

Wages at 1. The motion thus asks for Scott to receive about 

$17,200.00. Id. However, at oral argument before Magistrate 

Judge Kay, Scott stated that he was paid $10,500.00. R&R at 2. 

The magistrate judge therefore concluded that Scott requests

only $14,500.00. Id. at 15.
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the Payment Bond funds. Companion & Apex Stipulation at 1. The 

magistrate judge found that all potential claimants who have 

filed answers except for Apex, Scott, and Branch have settled or 

otherwise relinquished their claims to the Payment Bond funds. 

R&R at 2.

DISCUSSION

A district judge may designate a magistrate judge to 

conduct hearings and submit findings of fact and recommendations 

for the disposition of pretrial motions. 28 U.S.C. 

§ 636(b)(1)(B) (2014); LCvR 72.3(a) (2014); see Elgin v. Dep’t 

of Treasury, 132 S. Ct. 2126, 2138 (2012)(noting that Congress 

has vested “reviewable factfinding authority” in magistrate 

judges by authorizing them to “make findings of fact relevant to 

dispositive pretrial motions”). Absent clear error, if no party 

has made an objection to the magistrate judge’s recommendation 

within fourteen days, a district court judge may accept, reject, 

or modify, in whole, or in part, the findings or 

recommendations. 28 U.S.C. § 636(b)(1)(C); LCvR 72.3(b); see

Powell v. Bureau of Prisons, 927 F.2d 1239, 1248 (D.C. Cir. 

1991) (finding that it is appropriate for a district court judge 

to adopt a magistrate judge’s report and recommendation under a 

clear error standard of review if no objections were received). 
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I. FEDERAL INTERPLEADER UNDER 28 U.S.C. § 1335

The magistrate judge found that Companion should be 

discharged from liability because the court has jurisdiction to 

hear the case and Companion is a disinterested stakeholder. R&R

at 5-6. The magistrate judge acknowledged that jurisdiction 

exists under 28 U.S.C. § 1335 because “‘the value of the 

property exceeds $500, two or more claimants are diverse, and 

Companion has deposited the property into the registry of the 

court.’” Id. at 5 (quoting 7/17/2013 Order at 1); see 28 U.S.C. 

§ 1335 (2014) (providing the requirements for district court 

jurisdiction over interpleader actions). A plaintiffstakeholder may be discharged from liability if it is 

disinterested and it meets the statutory requirements of 28 

U.S.C. § 1335. R&R at 4-5; see Star Ins. Co. v. Cedar Valley 

Express, LLC, 273 F. Supp. 2d 38, 40 n.2 (D.D.C. 2002) (noting 

that if “a court determines that interpleader is appropriate

[under § 1335], it may discharge the stakeholder-plaintiff from 

the action if it is disinterested in the distribution of the

[interpleader funds]”). The magistrate judge found that

Companion is a disinterested stakeholder because it does not 

make a claim to the Payment Bond funds, except for attorneys’ 

fees and costs, which do not make an “otherwise disinterested 

stakeholder an interested stakeholder.” R&R at 5-6 (citing 

Orseck, P.A. v. Servicios Legals De Mesoamerica S. De R.L., 699 
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F. Supp. 2d 1344, 1349 (S.D. Fla. 2010); WRIGHT & MILLER, Federal 

Practice and Procedure § 1719 (3d. ed. 2013)). The magistrate 

judge correctly concluded that, as a disinterested stakeholder 

in a properly submitted interpleader action, Companion should be 

discharged from further liability with prejudice. That portion 

of the report and recommendation will be adopted. 

II. EQUITABLE DISTRIBUTION OF INTERPLEADER FUNDS

A. Interpleader defendants

In its complaint, Companion named as defendants Apex, 

Branch, District of Columbia Department of Employment Services, 

Graybar Electric Co., Inc., “Jane Doe, Inc., A-Z,” United 

Rentals (North America), Inc. (“United Rentals”), UR Merger Sub 

Corporation,4 “John Doe, A-Z,”5 Michael Garrett, Kevin Maloy, 

Derrick Manigualt, Jeffery Norwood, Lawrence Scott, Robert 

Stroman, Reginald Thomas, Yull Travers, and Kenneth Williams. 

Compl. at 1-4. 

The magistrate judge found that only Apex, Branch, and 

Scott continue to make a claim against the interpleader funds. 

R&R at 7. Graybar Electric Co, Inc. and former Niyyah employees 

 4 UR Merger Sub Corporation was the former name of United 

Rentals, Companion Mem. Supp. Mot. Discharge at 3, so this 

entity will be referred to as United Rentals. 

5 “John Doe, A-Z” and “Jane Doe, Inc., A-Z” were included to 

account for “any remaining unknown claimants[,] which 

[Companion] properly informed of the action via public notice.” 

R&R at 7.
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Garrett, Maloy, Manigualt, Norwood, Scott, Stroman, Thomas, 

Travers, and Williams signed documents releasing Companion from 

liability in exchange for payments from Apex. Companion Mem. 

Supp. Mot. Discharge at 10-11. United Rentals forfeited its

right to make a claim against the funds because it defaulted

when it failed to file any responsive pleading. R&R at 14; see

Fed. R. Civ. P. 12(a)(1)(A)(i), 55(a) (2014) (providing a 

defendant 21 days to serve an answer and indicating that “the 

clerk must enter the party’s default[]” when “failure [to serve 

an answer] is shown by affidavit or otherwise”); Companion Mem. 

Supp. Mot. Discharge at 11 n.6 (“United Rentals’ Payment Bond 

claim is also forfeited because it failed to file a responsive 

pleading[.]”). Finally, the District of Columbia Department of 

Employment Services was dismissed from the case by joint

stipulation. Joint Stipulation of Dismissal at 1.

Although Scott signed a release on August 30, 2013,

Companion Mot. Discharge, Ex. E at 6; R&R at 14 n.15, he filed a 

motion for unpaid wages on January 10, 2014. Scott Mot. Unpaid 

Wages at 1. Additionally, Branch continues to assert a claim of 

$38,300.42 against the interpleader funds. Branch Opp’n to Mot. 

to Strike at 3. Apex asserts that it should receive the total 

value of the payment bond, less Companion’s attorneys’ fees and 

costs. Companion & Apex Stipulation at 1.
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1. Lawrence D. Scott

Scott signed a document releasing any future claim on the 

interpleader funds and the magistrate judge noted that Scott’s

motion for unpaid wages did not provide any reason why the

release would be “invalid or inapplicable.” R&R at 14. As a 

contract, the release binds Scott to its terms unless an 

essential element is missing. See Henke v. United States Dep’t 

of Commerce, 83 F.3d 1445, 1450 (D.C. Cir. 1996) (stating that 

the “essential elements” of a contract are “competent parties, 

lawful subject matter, legal consideration, mutuality of assent 

and mutuality of obligation.”); Wolcott v. Ginsburg, 697 F. 

Supp. 540, 544 (D.D.C. 1988) (confirming that, when determining 

whether the terms of a release are binding, “releases are to be 

treated as contracts, and general contract principles apply.”). 

Scott does not address the release or assert that it is missing 

any of the elements of a valid contract. Thus, the magistrate 

judge’s recommendation to deny Scott’s motion for unpaid wages 

and to grant Apex’s motion to strike Scott’s motion will be 

adopted.6

 6 After Scott failed to respond to Apex’s motion to dismiss 

within the allotted time, Apex filed a second motion to strike 

Scott’s motion. See Apex Mot. to Strike or Dismiss Scott Mot. 

at 2. The magistrate judge correctly concluded that the second 

motion could be denied as moot because Apex’s first motion to 

strike should be granted. R&R at 15. 
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2. Branch

The terms of the Payment Bond required any action asserting 

a claim against the Bond to be filed within one year of when

“the last labor or service was performed by anyone or the last 

materials or equipment were furnished by anyone under the 

Construction Contract.” Compl., Ex. 1 at 3; see R&R at 9-10. 

Under the terms of the Payment Bond, the “Construction Contract” 

is the subcontract between Niyyah and Apex. Compl., Ex. 1 at 1, 

3; see R&R at 9. Further, the subcontract between Niyyah and 

Apex was terminated on March 29, 2012, so Branch had to initiate

its suit by March 29, 2013.7 See R&R at 9-10. By Branch’s own 

admission, the suit was initiated when Companion filed the 

interpleader action on April 4, 2013. Id. at 12. The 

magistrate judge correctly concluded that Branch’s claim against

the interpleader funds is time-barred, and that Apex’s motion to 

 7 Also, the magistrate judge determined that under D.C. Code 

§ 2-201.02, any action had to be initiated within one year of 

when “the last labor or material was supplied by the claimant.” 

R&R at 12. Branch was a subcontractor to Niyyah, so it could no 

longer perform labor under the contract after Niyyah’s contract 

was terminated on March 29, 2012. Id. Thus, a suit had to be 

brought by March 29, 2013 under D.C. Code § 2-201.02 as well as 

under the Payment Bond. Accordingly, D.C. Code § 2-201.02 is 

immaterial because the terms of the Payment Bond apply, absent 

any conflict with local law. Id. at 11 n.11; see McDonald v. 

Thompson, 184 U.S. 71, 74 (1902) (finding that the distinction 

between whether an obligation was incurred by statute or under a 

contract was immaterial when both required that an action be 

initiated within four years).
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dismiss Branch’s claim should be granted. R&R at 11, 16. That 

portion of the Recommendation will be adopted. 

3. Apex

The magistrate judge found that Apex is the sole remaining 

interpleader defendant and Apex has already paid other 

interpleader defendants from its own money. See id. at 13, 16. 

He concluded that Apex should receive at least the remaining 

interpleader funds, less Companion’s attorneys’ fees and costs.

Id. The total payment bond value is $289,972.00 and Companion 

has requested $12,000.00 in attorneys’ fees and costs. Id.

at 16. Therefore, Apex would receive either $277,972.00 or, if 

Companion were not awarded attorneys’ fees and costs, the full 

$289,972.00 Payment Bond value. Id. As is explained below, 

Companion will be awarded attorneys’ fees and costs, leaving 

$277,972.00 for Apex.

B. Companion

Companion moved to be discharged from further liability on 

the Payment Bond and sought an award of $18,822.50 in attorneys’ 

fees and $2,441.04 in costs. Companion Mem. Supp. Mot. 

Discharge at 9. Companion & Apex later stipulated to a $12,000

award of attorneys’ fees and costs to Companion. Stipulation 

between Companion & Apex at 1.

A court may “award attorneys’ fees and costs [from the 

interpleader funds] to [a disinterested] plaintiff stakeholder 
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in an interpleader action[] whenever it is fair and equitable to 

do so.” Id. (citing Aaron v. Mahl, 550 F.3d 659, 667 (7th Cir. 

2008); Rhoades v. Casey, 196 F.3d 592, 603 (5th Cir. 1999); WRIGHT 

& MILLER at § 1719). Under the circumstances, the magistrate 

judge fairly concluded that $12,000.00 is a reasonable amount to 

award in attorneys’ fees and costs to Companion, especially 

where Apex and Companion agreed to it, and Apex is the sole 

remaining interpleader defendant. R&R at 6; Stipulation between 

Companion & Apex at 1; see Discussion supra Part II(A); cf.

Immigration & Naturalization Service v. Jean, 496 U.S. 154, 155, 

160 (1990) (acknowledging that parties can stipulate to the 

amount received in reasonable attorneys’ fees under the Equal 

Access to Justice Act). Accordingly, the magistrate judge’s

recommendation that Companion be awarded $12,000.00 in 

attorneys’ fees and costs and that Apex receive the remaining

$277,972.00 will be adopted. 

CONCLUSION

No party objected to the report and recommendation. 

Companion is a disinterested stakeholder and the recommended 

award of attorneys’ fees and costs is fair. Apex, as the sole 

remaining claimant, is entitled to the remaining Payment Bond 

value. Therefore, Magistrate Judge Kay’s report and 

recommendation is adopted in full. An appropriate final order 

accompanies this Memorandum Opinion.
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SIGNED this 29th day of December, 2014.

____________________________

RICHARD W. ROBERTS

Chief Judge

/s/
UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

 

______________________________

)

COMPANION PROPERTY & )

CASUALTY INSURANCE CO., )

)

Plaintiff, )

)

v. ) Civil Action No. 13-436 (RWR)

)

APEX SERVICE, INC., et al., )

)

Defendant. )

______________________________)

FINAL ORDER

For the reasons set forth in the accompanying Memorandum 

Opinion, it is hereby

ORDERED that Companion’s motion [47] for discharge, 

attorneys’ fees and costs, and distribution be, and hereby is, 

GRANTED as follows: Companion is discharged from further 

liability under the Payment Bond with prejudice and is awarded 

$12,000 in attorneys’ fees and costs from the Payment Bond 

funds. The remainder of the Payment Bond funds shall be

disbursed to Apex in the amount of $277,972.00. It is further

ORDERED that Lawrence Scott’s motion [50] for unpaid wages 

be, and hereby is, DENIED. It is further

ORDERED that Apex’s motion [51] to strike or, in the 

alternative, to dismiss the claim of Lawrence Scott be, and 

hereby is, GRANTED. It is further
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ORDERED that Apex’s motion [52] for entry of an order 

striking or dismissing Lawrence Scott’s motion for unpaid wages 

and to direct court disbursement of registry funds be, and 

hereby is, DENIED as moot. It is further

ORDERED that the stipulation [49] between Companion and 

Apex be, and hereby is, APPROVED. It is further

ORDERED that Apex’s motion [53] to strike or, in the 

alternative, to dismiss the claim of Branch be, and hereby is, 

GRANTED. It is further

ORDERED that Apex’s request [57] for a hearing be, and 

hereby is, DENIED as moot.

This is a final, appealable Order.

SIGNED this 29th day of December, 2014.

____________________________

RICHARD W. ROBERTS

Chief Judge

/s/