Court Opinion

ID: 9881668
Source: CourtListenerOpinion
Date Created: 2023-10-03 17:19:35.030298+00
Date Added: 2024-06-11T14:14:02.433645
License: Public Domain

Filed 10/3/23 Nunes v. Knudson CA2/6

   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                         DIVISION SIX

 CRAIG NUNES,                                                   2d Civ. No. B322325
                                                             (Super. Ct. No. 20CV-0490)
      Plaintiff and Appellant,                                (San Luis Obispo County)

 v.

 MATT KNUDSON et al.,

      Defendants and Respondents.

       Appellant Craig Nunes and respondent Matt Knudson co-
owned Premier Refinishing, Inc., a franchisee of Nufinishpro
Franchising LLC. Nunes agreed to buy Knudson’s shares of
stock for $148,000. Nufinishpro withheld consent for the stock
sale and accused Knudson of setting up a competing business in
violation of the franchise agreement signed by Nunes and
Knudson. It claimed the right to collect the $148,000 Nunes had
agreed to pay Knudson for his stock. Caught between Knudson
and Nufinishpro, Nunes filed this interpleader action.
       The trial court sustained Knudson’s demurrer to Nunes’s
second amended complaint in interpleader without leave to
amend. It found Nunes failed to sufficiently plead that Knudson
and Nufinishpro sought “the same thing, debt, or duty,” a
common law prerequisite for interpleader. We affirm the
judgment of dismissal entered after the order sustaining the
demurrer.
              FACTS AND PROCEDURAL HISTORY
       Premier Refinishing, Inc. entered into a franchise
agreement with respondent Nufinishpro Franchising LLC in
2018. The franchise agreement gave Premier the exclusive right
to provide bathroom refinishing services in the San Luis Obispo
area using Nufinishpro’s proprietary coating process. Nunes and
Knudson owned Premier and signed the franchise agreement on
the corporation’s behalf.
       The franchise agreement required Premier to operate
pursuant to a detailed manual and to buy specific equipment and
products from Nufinishpro. It prohibited marketing outside the
designated territory. The agreement also required Nufinishpro’s
written consent before “any assignment, transfer, sale or
encumbrance” of Premier’s shares of stock.” This included
transactions involving the “addition, withdrawal, or expulsion of
any equity or other owner” of Premier.
       Nunes agreed to buy Knudson’s 50 percent interest in
Premier when Knudson moved to Idaho in 2020. They signed a
purchase agreement setting a price of $148,000 for Knudson’s
5000 shares of common stock. A dispute then arose when
Nufinishpro accused Knudson of starting a competing business in
Idaho, then trying to “extricate” himself from the franchise
agreement by selling his interest in Premier to Nunes. It refused
its consent to a stock transfer unless Nunes paid the purchase
price to Nufinishpro instead of Knudson. Knudson demanded
Nunes honor the purchase agreement and pay him.
       Nunes filed this interpleader action and deposited $148,000
with the court. Knudson demurred three times on the grounds

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Nunes failed to state a claim for interpleader. The trial court
sustained the third demurrer without leave to amend and
dismissed the Second Amended Complaint. Related actions
among the parties remain pending but are not at issue in this
appeal.1
                           DISCUSSION
                        Standard of Review
       We review the judgment of dismissal after the order
sustaining the demurrer de novo. (Westamerica Bank v. City of
Berkeley (2011) 201 Cal.App.4th 598, 606-607 (Westamerica).)
We decide independently whether the second amended complaint
states a cause of action for interpleader, deeming true all
material facts properly pled. (Ibid.) “Where written documents
are the foundation of an action and are attached to the complaint
and incorporated therein by reference, they become a part of the
complaint and may be considered on demurrer.” (City of Pomona
v. Superior Court (2001) 89 Cal.App.4th 793, 800.)
                       Actions in Interpleader
       “Any person, firm, corporation, association or other entity
against whom double or multiple claims are made, or may be
made, by two or more persons which are such that they may give
rise to double or multiple liability, may bring an action against
the claimants to compel them to interplead and litigate their

      1 Nufinishpro sued Knudson in San Diego for violations of

the California Uniform Trade Secrets Act and other causes of
action arising from his activities in Idaho. (Davis v. Knudson
(Super. Ct. San Diego County, 2020, No. 37-2020-00032097-CU-
BT-CTL).) In addition, Knudson filed a separate action for
breach of contract against Nunes after the interpleader action
was dismissed. Knudson v. Nunes (Super. Ct. San Luis Obispo
County, 2023, No. 23CV-0382). We grant Nunes’s August 8, 2023
request for judicial notice of Knudson’s action.

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several claims.” (Code Civ. Proc., § 386, subd. (b).) “[T]he
interpleader proceeding is traditionally viewed as two lawsuits in
one. The first dispute is between the stakeholder and the
claimants to determine the right to interplead the funds. The
second dispute to be resolved is who is to receive the interpleaded
funds.” (Dial 800 v. Fesbinder (2004) 118 Cal.App.4th 32, 43.)
      A plaintiff in interpleader must show “‘the defendants
make conflicting claims to [the subject matter], and that the
[plaintiff] cannot safely determine which claim is valid and offers
to deposit the money in court . . . .’” (Westamerica, supra, 201
Cal.App.4th at pp. 607-608, quoting 4 Witkin, Cal. Procedure (5th
ed. 2008) Pleading, § 248, p. 327.) “The right to the remedy of
interpleader is founded on the consideration that a person is
threatened not just with double liability, but with double
vexation in respect to one liability.” (Westamerica, at p. 608.)
The complaint must allege facts showing a “reasonable
probability of double vexation” (Hancock Oil Co. v. Hopkins
(1944) 24 Cal.2d 497, 510) or, as more recently described, a “valid
threat of double vexation.” (City of Morgan Hill v. Brown (1999)
71 Cal.App.4th 1114, 1126 (Morgan Hill).) “[A]n interpleader
action . . . may not be maintained ‘upon the mere . . . suspicion of
double vexation.’” (Westamerica, at p. 608, quoting Hancock Oil
Co., at p. 510.)
     Demurrer to Second Amended Complaint in Interpleader
      In sustaining Knudson’s demurrer, the trial court
determined Nunes failed to allege facts establishing his right to
interplead the stock purchase funds. The court’s analysis focused
on the common law requirement that interpleader claimants
“seek the same thing, debt, or duty.” (See Morgan Hill, supra, 71
Cal.App.4th at p. 1123 [“Although section 386 has broadened the
scope of the interpleader remedy, it is still required that the
claimants seek the same thing, debt, or duty”].) The court found

                                 4
the competing claims to be “two different liabilities, based on
different contracts.”
       We agree interpleader is not appropriate. Knudson seeks
the $148,000 Nunes owes under the purchase agreement as
consideration for Knudson’s shares in Premier. Nufinishpro’s
cross-complaint seeks these funds to satisfy, in whole or in part,
unspecified damages flowing from Knudson’s breach of the
franchise agreement and related torts. (See Morgan Hill, supra,
71 Cal.App.4th at pp. 1125-1126 [plaintiff city “not faced with a
valid threat of double vexation” because claimant attorney had no
right to collect or encumber fees incurred by city under fee
agreement with attorney’s former law firm].) “Interpleader
speaks of conflicting claims against the same obligor over the
same fund; not on the possible eventual right to a judgment that
might be satisfied out of that fund.” (Id. p. 1126.)
       Knudson acknowledges in briefing that Nufinishpro’s
reluctance to better articulate its claim to the purchase funds has
hindered Nunes’s attempts to plead a viable interpleader action.
“With no help from [Nufinishpro] about the basis of its claim to
[the] money,” Knudson states, “Nunes has fabricated a host of
‘potential’ claims for [Nufinishpro], his business partner.” This is
not important. We assume true Nunes’s allegations that paying
Knudson may trigger a dispute with Nufinishpro. This is the
consequence of the parties’ broader contractual entanglements,
not of any valid claim of Nufinishpro to the proceeds Knudson is
entitled to receive in exchange for his interest in Premier. “The
fact that there may be an interplay between the two contracts,”
the trial court correctly observed, did not “provide a path to an
interpleader action.”
       Although there is no evidence Nunes sought interpleader as
a de facto attachment at Nufinishpro’s behest, like plaintiff in
Morgan Hill, we agree with the trial court’s observation that

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allowing Nunes to interplead would nevertheless “‘constitute a
form of prejudgment attachment’” encumbering funds due to
Knudson. (See Morgan Hill, supra, 71 Cal.App.4th at p. 1126
[city’s interpleader action “likely stemmed from its continuing
relationship” with claimant attorney, who also helped city
prepare complaint against competing claimant law firm].)
                           DISPOSITION
       The judgment of dismissal following the order sustaining
Knudson’s demurrer to the second amended complaint is
affirmed. Respondents shall recover their costs on appeal.
       NOT TO BE PUBLISHED.

                                    CODY, J.

We concur:

     GILBERT, P.J.

     YEGAN, J.

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                    Tana L. Coates, Judge
           Superior Court County of San Luis Obispo
               ______________________________

     Law Offices of Jane Heath, Jane E. Heath, for Plaintiff and
Appellant.
     Carmel & Naccasha, Michael M. McMahon, for Defendant
and Respondent Matt Knudson.
     No appearance for Defendant and Respondent Nufinishpro
Franchising, LLP.