The A-21-828840-C interpleader action was filed in bad faith

The facts of this case, considered within the context of the Nevada case law articulated below in the www.casetext.com AI-assisted legal research memo, show the A-21-828840-C case, was filed for an improper purpose.

The research memo lists three main ways of assessing if an interpleader action was filed in bad faith:

delay in filing the action
the stakeholder is not disinterested
the filer knew, or should have known, the defendants don’t have valid competing claims

the Plaintiff Red Rock partnership subsidiary of firstService Residential, Nevada LLC did not have standing as it had instructed its attorney, Steven Scow to file the action on 8/28/14 and had given him a check to Clark County district Court to deposit $57,282.32 designated as “excess funds 2763 White Sage” for interpleader
the filer attorney Steven Scow was not disinterested as he concealed from the court that he had disobeyed his client Red Rock’s instructions to deposit $57,282.32 with the court on 8/28/14 and Scow concealed that Red Rock had taken all fees it was legally permitted pursuant to NRS 116.31164(3)(c )(1)(2)(2013) prior to the 8/21/14 date the check was made out to the court designated as “excess”
the filer attorney Steven Scow, who may be one of the unidentified Red Rock partners, converted the funds to an account under his personal proprietary control rather than distribute them to the rightful owner six years earlier as required by law and as he had been instructed by his client
the filer attorney Steven Scow knew there was only one defendant that had a valid recorded claim to the interpleaded proceeds after June 3, 2019, and the research memo lists filing an action when you know that there are no competing claims is an indicator of bad faith

Casetext.com Legal Research Memo

Question Presented

What would constitute direct evidence that an interpleader action was filed in bad faith?

Answer

There are a number of potential indicators of bad faith in filing an interpleader action, including: delay in filing the action, filing an action that does not meet the requirements for interpleader, acting in bad faith to create the controversy necessitating the interpleader, or lacking a good faith belief that there are competing claims to the stake.

Analysis

One potential indicator of bad faith in filing an interpleader action is delay in filing the action. As the court in Pruco Life Ins. Co. v. Killingsworth noted, a stakeholder’s delay in filing an interpleader action may show bad faith, even if the action is ultimately filed correctly. Additionally, as the court in Principal Life Ins. Co. v. Calloway discussed, an interpleader action must meet certain requirements in order to be proper, and a filing that does not meet these requirements could be evidence of bad faith.

Another potential indicator of bad faith is if the stakeholder acted in bad faith to create the controversy necessitating the interpleader. As the court in Raymond James & Assocs. v. Bassford noted, the stakeholder must have a “good faith belief” that there are competing claims to the stake in order to file an interpleader action, and the absence of such a belief could be evidence of bad faith. Additionally, as the court in Michelman v. Lincoln Nat’l Life Ins. Co. held, the stakeholder must have a good faith belief that there are or may be colorable competing claims to the stake in order to avail itself of the interpleader remedy.

Finally, as the court in Sun Life Assur. Co. v. Sampson discussed, a court may deny an award of fees and costs to a stakeholder in an interpleader action if the stakeholder has acted in bad faith. This could include contributing to the need for interpleader by acting in bad faith or by unduly delaying in seeking relief.

Cases (40)

Pruco Life Ins. Co. v. Killingsworth, CIVIL ACTION NO. 5:19-cv-55-DCB-MTP (S.D. Miss. Nov. 26, 2019)

The case discusses the possibility that a delay in filing an interpleader action may show bad faith, even if the action is ultimately filed correctly.

“A stakeholder’s delay in filing an interpleader action may show bad faith, even where the interpleader action is rightly filed. See Steinberg’s Dept. Store, Inc. v. Hartford Fire Ins. Co., 407 N.E.2d 124 (Ill. Ct. App. 1980).”

“However, an inadequate investigation of a claim or inaction may constitute bad faith. See James v. State Farm Mut. Auto. Ins. Co., 743 F.3d 65 (5th Cir. 2014)(finding evidence that an insurer was inactive or did nothing meaningful to investigate the claim for several months, including the period after the suit was filed, could support a jury finding of bad faith). When a company decides to pursue its equitable remedy in interpleader, it should act with a “reasonable degree of promptness and with reasonable diligence.” John Hancock Mut. Life Ins. Co. v. Doran, 138 F.Supp. 47, 49 (S.D. NY 1958).”

Principal Life Ins. Co. v. Calloway, Case No. 1:19-cv-00147-DAD-SKO (E.D. Cal. Feb. 23, 2021)

The case discusses the requirements for a proper interpleader action, which could be used to argue that a filing that does not meet these requirements was made in bad faith.

“Thus, interpleader is proper. 2. Propriety of Discharge and Dismissal If the court determines that an interpleader is proper, it may discharge the stakeholder from further liability.”

“”A court should readily discharge a disinterested stakeholder from further liability absent a stakeholder’s bad faith in commencing an interpleader action, potential independent liability to a claimant, or failure to satisfy requirements of rule or statutory interpleader.” OM Financial Life Ins. Co. v. Helton, No. 2:09-cv-01989 WBS EFB, 2010 WL 3825655, at *3 (E.D. Cal. Sept. 28, 2010).”

Great Am. Life Ins. Co. v. Hollick, Case No.: 17-cv-1288-AJB-WVG (S.D. Cal. Feb. 5, 2018)

The case discusses the possibility of bad faith in commencing an interpleader action, and provides a standard for determining whether the stakeholder is acting in bad faith.

“OM Financial Life Ins. Co. v. Helton, No. CIV. 2:09-1989 WBS EFB, 2010 WL 3825655, at *3 (E.D. Cal. Sept. 28, 2010) (citations omitted).”

“Auth., 700 F.2d 91, 96 (2d Cir. 1983) (holding that a disinterested stakeholder may be discharged unless the action was brought in bad faith).”

Great Am. Life Ins. Co. v. Brown-Kingston, Case No. 2:18-cv-02783-MCE-KJN (E.D. Cal. May. 13, 2019)

The case discusses the possibility of bad faith in commencing an interpleader action, and provides a citation to an authority that addresses the issue in more detail.

“OM Financial Life Ins. Co. v. Helton, No. 2:09-cv-01989 WBS EFB, 2010 WL 3825655, at *3 (E.D. Cal. Sept. 28, 2010) (citations omitted). GALIC argues it is a disinterested stakeholder who brought this action in good faith, thus should be discharged from liability. See New York Life Ins. Co. v. Connecticut Dev.”

State Auto Prop. & Cas. Ins. Co. v. Burnett, NO. 3:16-CV-73-DMB-JMV (N.D. Miss. Sep. 29, 2017)

The authority discusses the possibility of a court denying or delaying the discharge of a stakeholder in an interpleader action if there are “serious charges that the stakeholder commenced the action in bad faith.”

“A court may nevertheless delay or deny discharge of the stakeholder if there are “serious charges that the stakeholder commenced the action in bad faith.” Underwriters Grp., Inc., 2006 WL 1852254, at *5 (citing Mendez v. Teachers Ins. & Annuity Assoc., 982 F.2d 783, 788 (2nd Cir. 1992)).”

Sun Life Assur. Co. v. Sampson, 556 F.3d 6 (1st Cir. 2009)

The authority discusses the circumstances under which a court may deny an award of fees and costs to a stakeholder in an interpleader action, including when the stakeholder has acted in bad faith.

“The test is not satisfied if the stakeholder has contributed to the need for interpleader by acting in bad faith or by unduly delaying in seeking relief. Id. at 682 (footnotes omitted); see also Septembertide Publ’g, B.V. v. Stein Day, Inc., 884 F.2d 675, 683 (2d Cir. 1989); Ferber Co. v. Ondrick, 310 F.2d 462, 467 (1st Cir. 1962) (recognizing that fees in an inter-pleader action are “usually awarded . . . to compensate a totally disinterested stake-holder who [has] been . . . subjected to conflicting claims through no fault of his own”).”

“Sampson attempts to fit this case into two categories where the inter-pleading party is not usually allowed fees: (1) where the party acts in bad faith; and/or (2) where the interpleader is not disinterested, but benefits (beyond resolution of the issue) from the litigation. See Ferber, 310 F.2d at 467 (upholding the denial of fees where the “great bulk” of a party’s efforts were devoted to addressing a counterclaim as to which it was “in no way disinterested”); First Interstate Bank of Or, N.A v. United States, 891 F.Supp. 543, 548 (D.Or. 1995) (citing Schirmer Stevedoring Co. v. Seaboard Stevedoring Corp., 306 F.2d 188, 194-95 (9th Cir. 1962)) (noting that courts “routinely” award fees to a disinterested stakeholder “absent a showing of bad faith”); see also generally 7 Wright, Miller Kane, supra, § 1719, at 684-86.”

First Interstate Bancsystem, Inc. v. Afraid, CV 19-10-BLG-SPW (D. Mont. Feb. 14, 2019)

The case discusses the requirement that a stakeholder must have a “good faith belief” that there are competing claims to the stake in order to file an interpleader action, which implies that the absence of such a belief could be evidence of bad faith.

“Moreover, “in order to avail itself of the interpleader remedy, a stakeholder must have a good faith belief that there are or may be colorable competing claims to the stake.” Michelman v. Lincoln Nat.”

Steinberg’s Dept. Store v. Hartford Fire Ins. Co., 407 N.E.2d 124 (Ill. App. Ct. 1980)

The case discusses the question of whether an interpleader action was filed in good faith, and identifies factors that could suggest bad faith, such as the withdrawal of a claim and the potential for the interpleader to force a settlement.

“It is further argued that once the claim was withdrawn, Hartford was no longer justified in withholding payment of the $30,000, and the interpleader action was not, therefore, filed in good faith.”

“As indications of bad faith, Steinberg’s cites the June 22 letter from the Bank withdrawing its claim to the insurance proceeds and also contends that, under the law of Illinois, the named insured is the only party entitled to the proceeds of a fire insurance policy in the absence of a policy provision to the contrary. ( La Salle Extension University, Inc. v. B.F. Shaw Printing Co. (1965), 62 Ill.”

“Also persuasive is the fact that Hartford delayed payment for 13 months, allegedly to force Steinberg’s to settle with the Bank from its own funds without compensation from Hartford. Thus, even though the trial court ruled that interpleader was rightfully filed, Hartford’s delay could nevertheless have been in bad faith.”

Michelman v. Lincoln Nat’l Life Ins. Co., 685 F.3d 887 (9th Cir. 2012)

This case discusses the good faith requirement for filing an interpleader action, and provides guidance on what might constitute bad faith.

“See, e.g., Aaron v. Mahl, 550 F.3d 659, 663 (7th Cir.2008); CNA Ins. Cos. v. Waters, 926 F.2d 247, 251 (3d Cir.1991).”

“Therefore, we agree with the principle articulated in Lee and now expressly hold that in order to avail itself of the interpleader remedy, a stakeholder must have a good faith belief that there are or may be colorable competing claims to the stake.”

“Mack v. Kuckenmeister, 619 F.3d 1010, 1024 (9th Cir.2010) (quoting Ensley, 174 F.3d at 980).”

Maraist Law Firm, P.A. v. Coates, 21-CV-81467-AMC/BER (S.D. Fla. Jul. 6, 2022)

This case discusses the requirements for filing an interpleader action and the circumstances under which a court may impose sanctions for filing a frivolous claim. It specifically addresses the need for an identifiable res and the existence of multiple claimants, both of which are relevant to determining whether an interpleader action was filed in bad faith.

“I agree that Count VII was objectively frivolous. First, there was no adequate identifiable financial res to support an interpleader action against any of the Movants. See ECF No. 110 ¶ 57.”

“Persisting in this claim was frivolous and violated Rule 11 as to all Movants.”

“Maraist argues that it conducted proper diligence before filing the interpleader cause of action. ECF No. 113 at 5-6.”

“A reasonably diligent researcher would have uncovered these principles and realized that they precluded interpleading the funds and thumb drive in this case.”

Mendez v. Teachers Ins. and Annuity Ass’n, 982 F.2d 783 (2d Cir. 1992)

“New York Life Ins. Co., supra, 700 F.2d at 96.”

“In view of Mendez’ plain entitlement to the proceeds, TIAA-CREF’s delay in commencing an interpleader action clearly was unreasonable and impliedly was commenced in bad faith. TIAA-CREF has given us no reason for concluding that the district court’s decision denying TIAA-CREF’s motion for discharge was an abuse of discretion.”

Prudential Ins. Co. v. Hovis, 553 F.3d 258 (3d Cir. 2009)

“Faced with competing claims to the proceeds of a $100,000 life insurance policy, Prudential Insurance Company of America filed an interpleader complaint against the claimants, seeking to deposit the disputed sum with the District Court and withdraw from the proceedings. One of the claimants, Robert C. Hovis, then counter-claimed, alleging that Prudential had acted negligently and in bad faith in its handling of the policy changes that led to the dispute.”

“Prudential then decided to pursue an interpleader action, rather than resolve who was entitled to the funds.”

“Shortly thereafter, Hovis reached a settlement with Potter and Gerski for distribution of the insurance proceeds.”

“The Court also granted summary judgment to Prudential on Hovis’s counter-claims on the ground that the appropriateness of Prudential’s interpleader action shielded it from any liability relating to its failure to resolve the dispute over the interpleaded funds.”

QBE Specialty Ins. Co. v. Kane, CIVIL 22-00450 SOM-KJM (D. Haw. Jan. 27, 2023)

“Airborne Wireless Network, 2018 WL 6016994, at *3. That is not so here. Multiple adverse claims have already been filed against QBE.”

“This case differs significantly from Bierman, which involved a putative claimant the court concluded would never file a claim because it was a corporation owned by the interpleader-plaintiff. 246 F.2d at 203. This case is also distinguishable from Beardslee, in which the supposedly adverse claimant had never asserted a right to the stake and there was no readily apparent basis for such a claim. 216 F.2d at 461.”

“As a result, the court denied the request for interpleader, finding an absence of good faith.”

Raymond James & Assocs. v. Bassford, 2:21-cv-01825-DCN (D.S.C. Mar. 7, 2022)

“DISCUSSION Since Patricia’s motion to enjoin Scott under the interpleader statute depends on the existence of a valid interpleader action, the court first addresses Raymond James’s motion for interpleader before turning to the motion to enjoin. The court ultimately finds that Raymond James has instituted a proper interpleader action, and accordingly, the court enjoins Scott and Patricia from continuing or pursuing any claims related to the interpleaded funds. A. Motion for Interpleader 1. Subject-Matter Jurisdiction “Interpleader is a procedural device that allows a disinterested stakeholder to bring a single action joining two or more adverse claimants to a single fund.” Sec.”

“Fort Dearborn Life Ins. Co. v. Turner for A.R.Y., 2006 WL 8438341, at *5 (E.D. N.C. Dec. 19, 2006); see also Lee, 688 F.3d at 1012 (observing that “many courts have held that those who have acted in bad faith to create a controversy over the stake may not claim the protection of interpleader” and collecting cases); 44B Am. Jur. 2d Interpleader § 7 (“The equitable doctrine of ‘clean hands’ applies to interpleader actions. The party seeking interpleader must do equity, not have caused the conflicting claims, and be free from blame in causing the controversy.”).”

Wilton Reassurance Life Co. of N.Y. v. Engelhardt, Civil Action 21-09968 (D.N.J. Apr. 28, 2022)

“At the first stage, “the court determines whether the interpleader complaint was properly brought and whether to discharge the stakeholder from further liability to the claimants.” Prudential Ins. Co. of Am. v. Hovis, 553 F.3d 258, 262 (3d Cir. 2009).”

“Id. at 263 (alteration in original) (quoting Farmers Irrigating Ditch & Reservoir Co. v. Kane, 845 F.2d 229, 232 (10th Cir. 1988)). The Third Circuit had difficulty in seeing how Prudential was “in any way to ‘blame [for] causing the controversy.’” Hovis, 553 F.3d at 263 (alteration in original) (quoting Farmers Irrigating Ditch, 845 F.2d at 232).”

“Hovis, 553 F.3d at 263. The court in Hovis reasoned that even if Prudential had proceeded faster, there was every indication it would have been sued by Potter and Gerski for the funds.”

Sevelitte v. The Guardian Life Ins. Co. of Am., 55 F.4th 71 (1st Cir. 2022)

“Lee, 688 F.3d at 1012 ; see also, e.g., Hovis, 553 F.3d at 263 (“[A] party seeking interpleader must be free from blame in causing the controversy ….” (quoting Farmers Irrigating Ditch & Reservoir Co. v. Kane, 845 F.2d 229, 232 (10th Cir. 1988) )); Primerica Life Ins. Co. v. Woodall, 975 F.3d 697, 700 (8th Cir. 2020) (“[I]f the party asserting the right to interpleader[ ] … has acted unfairly to create the underlying conflict necessitating interpleader relief, then that party may not use the interpleader procedure as a shield ….”). Here, though, Renee has failed to plausibly allege any bad faith by Guardian. The Divorce Agreement, not Guardian, is responsible for creating the ambiguity as to the beneficiary designation, and Guardian never denied liability under the Policy; Guardian merely sought to resolve the ambiguity by making Robyn aware of the Estate’s potential claim and ultimately seeking interpleader.”

Transamerica Life Ins. Co. v. Shubin, CASE NO. 1:11-cv-01958-LJO-SKO (E.D. Cal. Jul. 10, 2012)

“”In an interpleader action, the ‘stakeholder’ of a sum of money sues all those who might have claim to the money, deposits the money with the district court, and lets the claimants litigate who is entitled to the money.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1265 (9th Cir. 1992). As such, the stakeholder forces the potential claimants to litigate who is properly entitled to the fund.”

“”Interpleader’s primary purpose is not to compensate, but rather to protect stakeholders from multiple liability as well as from the expense of multiple litigation.” Aetna Life Ins. Co. v. Bayona, 223 F.3d 1030, 1034 (9th Cir. 2000) (explaining that interpleaders are “governed by equitable principles”) (citations omitted). “Procedurally, an interpleader action encompasses two stages.”

“The second stage involves an adjudication of the adverse claims of the defendant claimants.””

Am. Gen. Life Ins. Co. v. Brown, DOCKET NO. 3:20-cv-00394-FDW-DSC (W.D.N.C. Feb. 12, 2021)

“Interpleader is appropriate when parties are engaged in a dispute about proceeds that remain in the hands of a third party who is willing to surrender such proceeds. See Equitable Life Assurance Soc’y. v. Jones, 679 F.2d 356, 358 n.2 (4th Cir.1982) (citations omitted).”

“Equitable concerns generally include the stakeholder acting in bad faith or unreasonable delay in bringing an interpleader action. Banner Life, 2011 WL 4565352, at *6.”

Lehto v. Allstate Ins. Co., 31 Cal.App.4th 60 (Cal. Ct. App. 1994)

“This is precisely what an insurer is required to do. (3) Plaintiff also theorized that Allstate’s conduct in filing and prosecuting the interpleader action constituted bad faith, relying on National Life Accident Ins. Co. v. Edwards (1981) 119 Cal.App.3d 326 [ 174 Cal.Rptr. 31] and Kelly v. Farmers Ins. Exchange (1987) 194 Cal.App.3d 1 [ 239 Cal.Rptr. 259].”

“It recognized, however, that the filing of an interpleader action will not sanitize a claim that is being prosecuted in bad faith.”

“While the filing of the interpleader action would not absolve Allstate of liability had it refused in bad faith to offer the policy limits to the Carbajals’ claimants, the filing of the interpleader, standing alone, cannot itself constitute an act of bad faith.”

“This situation is readily distinguishable from that of Allstate, which faced multiple bona fide claims against the Carbajals’ limited policy.”

“In fact, the interpleader action here had the intended result: It awarded plaintiff, the most seriously injured of the claimants, the $25,000 per person limit under the policy.”

Methven and Associates Professional Corporation v. Paradies-Stroud, No. C 13-01079 JSW (N.D. Cal. Jan. 21, 2014)

“The Stroud Defendants further argue that Plaintiff cannot maintain this interpleader action because it was brought in bad faith and because Plaintiff delayed too long before filing it. The authority to which the Stroud Defendants do not support these propositions.”

“Moreover, the Stroud Defendants have not demonstrated that filing the interpleader action, as opposed to giving the property directly to Ms. Stroud, was done in bad faith.”

Captain v. United Ohio Insurance Company, 2010 Ohio 2691 (Ohio Ct. App. 2010)

“Hoskins, supra, at 277, citing Hart, supra, at 188. Thus, to withstand United Ohio’s properly supported motion for summary judgment, the Appellants had to oppose the motion with evidence tending to show United Ohio arbitrarily or capriciously handled the claims against Willey. The term “arbitrary” means “without fair, solid, and substantial cause and without reason given; without any reasonable cause; * * * fixed or done capriciously or at pleasure; without adequate determining principle; not founded in the nature of things; nonrational; not done or acting according to reason or judgment; depending on the will alone; absolutely in power; capriciously; tyrannical; despotic.” 4D Investments, Inc. v. City of Oxford (Jan. 11, 1999), Warren App.”

“They essentially argue that the court utilized an improper legal standard to decide United Ohio’s summary judgment motion, i.e. it adopted a per se rule that filing an interpleader action is not bad faith. Instead, they argue the court should have considered whether the Appellants’ opposed the summary judgment motion with evidence tending to show United Ohio lacked a reasonable justification for its actions.”

Allstate Insurance v. Miller, 125 Nev. Adv. Op. No. 28, 49760 (2009), 212 P.3d 318 (Nev. 2009)

“Unless the policy says otherwise, an insurer does not have an independent duty to file an interpleader action on behalf of an insured. Nor is an insurer required to agree to a proposed stipulated judgment between the insured and the claimant if that stipulated judgment is beyond the policy limits.”

Cluck v. Mack, 489 S.W.2d 8 (Ark. 1973)

“In the answer she made the following allegations of bad faith: This interpleader action was filed in bad faith by the plaintiff for purposes of harassment and reducing the net amount of money which Margaret Ann Mack might obtain to go on her judgment of 10-7-70 against Charles Donald Cluck as evidenced by the following prior acts of this plaintiff: This plaintiff answered Margaret Ann Mack’s garnishment under her 10-7-70 judgment on Dec. 7, 1971, by claiming any money it held for or on behalf of Charles Donald Cluck was “contingent” on premiums being paid in full to 12-28-71 (when, in truth, said premiums were then fully paid to that date); and on any cash reserves under said policy not being depleted by loans to the insured (when, in truth.) the insured had never applied for any loan prior to service of the Writ); and on the insured being alive on 12-28-71 (a mere 21 days after the answer was filed). The answer of Charles Donald Cluck, filed April 7, 1972, asserted his claim to the fund and asked that both Blanche L. Cluck and Margaret Ann Mack be enjoined from the issuance of further writs of garnishment against the insurance policy proceeds.”

“The allegations in the complaint were not sustained by evidence — at least no evidence of any lack of good faith in the filing of the bill of interpleader was ever produced. The mere fact that an alleged claimant did not appear did not show lack of good faith on the part of the insurance company, and the fact that the claim of one or more of them turned out to be without merit, is not of controlling importance and is insufficient to furnish any basis for an inference that the filing was not in good faith, particularly in view of the fact that Blanche L. Cluck had, by one of the writs of garnishment asserted a claim to the proceeds.”

“Goad v. Goad, 238 Ark. 12, 377 S.W.2d 822.”

State Farm Life Ins. Co. v. Murphy, No. 2:15-cv-04793-DCN (D.S.C. Oct. 12, 2017)

“As explained in more depth in section III.2, the court finds that State Farm did not file its interpleader action without good cause or in bad faith.”

“The court can imagine a scenario where an insurer’s conduct in creating competing claims and delaying payments to a named beneficiary in the context of an interpleader action rises to the level of a viable bad faith claim. However, those facts are not present here.”

“Courts have been clear that where there is a reasonable ground for contesting a claim, and the court accepts the filing of the interpleader action, the insurer has not acted in bad faith by filing an interpleader claim. For example, in Minnesota Mutual Life Insurance Co. v. Ensley, 174 F.3d 977 (9th Cir. 1999), the Ninth Circuit upheld a district court’s determination that the insurer had acted reasonably in interpleading the policy benefits given its good faith belief that it faced the possibility of multiple claims.”

Nylife Distributors, Inc. v. Adherence Group, 72 F.3d 371 (3d Cir. 1995)

“Hence, one of two related questions we face is whether under section 1335, the district courts retain their traditional equitable discretion when deciding whether to hear a statutory interpleader case or defer to a state court; and the other is whether the district courts have a “virtually unflagging obligation” to exercise their section 1335 jurisdiction. In this regard, we find the Supreme Court’s decision in Weinberger v. Romeo-Barcelo, 456 U.S. 305 (1982), instructive.”

“See Bowles, 321 U.S. at 329. In support of their argument that the exceptional circumstances test set forth in Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976), should guide a district court’s decision to dismiss a federal interpleader action in favor of pending state proceedings, Gerasolo and Bleach rely heavily on section 1335(a), which states in pertinent part that “[t]he district courts shall have original jurisdiction of any civil action of interpleader or in the nature of interpleader. . . .” 28 U.S.C. §(s) 1335(a) (1993) (emphasis added).”

“On remand, the district court should determine, as a threshold matter, whether the state court action is indeed “parallel”; that is, whether it encompasses the competing claims to the Mainstay Mutual Fund monies that are raised here.”

Hicks v. Gabor, 354 Ga. App. 714 (Ga. Ct. App. 2020)

“On March 23, 2018, AOIC filed the instant Complaint for Interpleader and to Discharge Surety and Cancel the Bond. In the Complaint, AOIC stated that the claims against the Bond exceeded its remaining balance and asked the trial court to determine how to distribute the funds.”

“However, this is an interpleader action. The relevant interpleader statute, OCGA § 23-3-90 (a), states: Whenever a person is possessed of property or funds or owes a debt or duty, to which more than one person lays claim of such a character as to render it doubtful or dangerous for the holder to act, he may apply to equity to compel the claimants to interplead.”

“First, it must be determined whether the complainant had a right to interplead, and second, the interpleading defendants are required to litigate matters in dispute between themselves.”

Scruggs v. Merkel Cocke, 2000 CA 1370 (Miss. 2001)

“Since the claim filed by Merkel Cocke addressed the same parties and controversy as the action previously filed by SMBD in Jackson County Chancery Court, Merkel Cocke’s claim for interpleader should have been filed as a compulsory counterclaim in the Jackson County Chancery Court action pursuant to M.R.C.P. 13(a). In other words, we find that the interpled funds should have been pled as a compulsory counterclaim in the Jackson County Chancery Court litigation rather than filed as multiple litigation involving the same parties and controversies in another chancery court in another county.”

“As previously stated, we find that the Coahoma County Chancery Court erred in allowing Merkel Cocke to proceed with the interpleader and further erred in releasing Merkel Cocke from all liability in connection with the interpled funds. ¶ 26. The Coahoma County Chancery Court granted Merkel Cocke attorney fees against SMBD.”

“In Brown v. Hartford Ins. Co ., 606 So.2d 122, 127 (Miss. 1992), this Court stated: Sanctions are appropriate when a claim is either frivolous or filed for harassment value. . . . When a party espouses a viable legal theory, MRCP 11 sanctions are inappropriate.”

Midland Nat’l Life Ins. Co. v. Ingersoll, Case No. 13-C-1081 (E.D. Wis. Dec. 18, 2014)

“In recent years, several courts have held that a disinterested stakeholder should not obtain a fee award if filing the interpleader action could be viewed as part of the stakeholder’s normal or ordinary course of business. See, e.g., Minn. Mut. Life Ins. Co. v. Gustafson, 415 F. Supp. 615, 618-19 (N.D. Ill. 1976); Moore’s, supra; Wright et al., supra. These courts also hold that interpleader actions are generally part of the ordinary course of the insurance business. Chase Manhattan, 21 F.3d at 383; Gustafson, 415 F. Supp. at 618-19; Moore’s, supra; Wright et al., supra. This exception to the rule of awarding attorneys’ fees to a disinterested stakeholder appears to stem from Judge Friendly’s opinion in Travelers Indemnity Co. v. Israel, 354 F.2d 488 (2d Cir. 1965). In that case, the court held that a district court did not abuse its discretion in refusing to award fees to several insurance companies who initiated an interpleader action.”

Indianapolis Colts v. Mayor City Council, 775 F.2d 177 (7th Cir. 1985)

“The Second Circuit, interpreting the amended rule, declared that Rule 11 is violated where, “after reasonable inquiry, a competent attorney could not form a reasonable belief that the pleading is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification or reversal of existing law,” or “when it appears that a pleading has been interposed for any improper purpose.” Eastway Construction Corp. v. City of New York, 762 F.2d 243, 254 (2d Cir. 1985).”

“We must reiterate that in denying Baltimore’s motion for attorneys’ fees, the district court specifically found that Indianapolis had not acted with an improper purpose, and nothing in the record indicates that this conclusion was erroneous. Moreover, the above discussion establishing the justiciability of Indianapolis’ interpleader claim supports the district court’s finding that the claim was not filed for an improper purpose.”

“Clearly, the exercise of one’s legal rights to have a dispute resolved in federal court is not an abuse of the judicial process.”

Metropolitan Life v. Price, 501 F.3d 271 (3d Cir. 2007)

“MetLife stated that if the claimants did not resolve the matter amicably, it would bring suit. Price’s widow and the children negotiated, but they failed to reach an agreement.”

“The plaintiff in an interpleader action is a stakeholder that admits it is liable to one of the claimants, but fears the prospect of multiple liability. Interpleader allows the stakeholder to file suit, deposit the property with the court, and withdraw from the proceedings. The competing claimants are left to litigate between themselves.”

New York Life Ins. Co. v. Connecticut Dev. Auth, 700 F.2d 91 (2d Cir. 1983)

“Judgment discharging the stakeholder in an interpleader action may, of course, be delayed or denied if there are serious charges that the stakeholder commenced the action in bad faith.”

“In the present action, Sterling’s opposition to New York Life’s injunction motion charged that New York Life had listed CDA and MECCO as beneficiaries of the policies without Sterling’s knowledge or consent (Owens Aff. ¶ 7), for reasons of its own “greed and self-interest” ( id. ¶ 23). Had CDA or MECCO participated in the action and contested Sterling’s right to receive the cash surrender value of the policies, and had Sterling pursued his assertions as to New York Life’s bad faith, the district court would have been required to deal with these contentions in determining whether New York Life was entitled to any discharge from liability.”

Farmers Ins. Co. v. Romas, 947 P.2d 754 (Wash. Ct. App. 1997)

“On July 27, 1994, Farmers filed a complaint for interpleader on the grounds that Mr. Romas and the Paradiso Estate are both claiming that the other party was the driver at the time of the accident. Each is claiming entitlement to the $25,000 liability policy proceeds.”

“The complaint prays for declaratory relief asking the court to find that because Farmers deposited the funds with the court it has fulfilled its duty to defend either Mr. Romas as the named insured and/or the Paradiso Estate as the permissive insured.”

“In this case, Farmers would have a duty to defend both parties because both parties fit the definition of an insured person as established by case law.”

“However, the unilateral payment of policy limits into the registry of the court does not in and of itself relieve an insurer of its duty to defend. Viking, 57 Wn. App. at 349.”

AEG Westinghouse Transportation Systems, Inc. v. OEM Industrial Corp. (In re OEM Industrial Corp.), 135 B.R. 247 (Bankr. W.D. Pa. 1991)

“Furthermore, where the stakeholder has been dilatory in seeking judicial relief, and is thus culpable as to the difficulties encountered, an award may be denied. See John Hancock Mutual Life Ins. Co. v. Doran, 138 F. Supp. at 49 (“within one month after . . . realizing its predicament, [stakeholder] should have decided on a cause of action”). In the instant case, AEG did not seek to interplead for several months after the bankruptcy was filed. Although the parties were attempting to work out a settlement during this time, AEG was aware of all claims against it even before the bankruptcy was filed. The interpleader cause of action is designed specifically to limit a stakeholder’s exposure to liability.”

Trs. of the Elec. Workers Health & Welfare Trust v. F.A.S.T. Sys., Inc., 2:12-CV-148 JCM (CWH) (D. Nev. Jun. 27, 2013)

“Federal courts have the inherent power to punish conduct which abuses the judicial process, including accessing attorneys’ fees when a party has “acted in bad faith, vexatiously, wantonly, or for oppressive reasons.” Chambers v. NSDCO, Inc., 501 U.S. 32, 45-46 (1991) (citation omitted). When imposing sanctions under its inherent authority, a court must make an explicit finding of bad faith or willful misconduct.”

“An award of attorneys’ fees pursuant to the court’s inherent power is appropriate when plaintiff has acted in bad faith, has willfully abused the judicial process or has willfully disobeyed a court order.”

“Servs., Inc. v. Batarse, 115 F.3d 644, 648 (9th Cir. 1997) (“a finding of bad faith is warranted where an attorney ‘knowingly or recklessly raises a frivolous argument, or argues a meritorious claim for the purpose of harassing an opponent'”) (citation omitted).”

Shayne v. Discover Bank, C. A. 8:21–cv-03544-BHH-KFM (D.S.C. Jan. 26, 2022)

“There are seven motions pending before the court, including two by Discover and five by the plaintiff. Discover argues that this matter should be dismissed based upon res judicata as well as the pending New Jersey Interpleader Action (doc. 6). Discover also seeks sanctions pursuant to Rule 11 of the Federal Rules of Civil Procedure from the plaintiff for having to defend this lawsuit (doc. 16).”

“Discover asserts that the plaintiff’s lawsuit was filed for an improper purpose, because it was filed to harass Discover and violates the Interpleader Order (id.). For relief, Discover seeks to recover attorney’s fees and costs for defending this action as well as an order enjoining the plaintiff from filing future litigation regarding the Discover accounts in question in this court (id. at 5).”

Yonko v. W. Coast Life Ins. Co., CIVIL ACTION NO. 1:20-CV-00109-GNS-HBB (W.D. Ky. Apr. 15, 2021)

“B. Motion to Dismiss In both suits, Robert alleged breach of contract and bad faith claims against West Coast Life pursuant to O.C.G.A. § 33-4-6. In the Western District of Kentucky, West Coast Life moved to dismiss Robert’s bad faith claim. (Def.’s Mot. Dismiss, DN 39). Motions pursuant to Fed.”

“”[O]rdinarily, the question of good or bad faith is for the jury, but when there is no evidence of unfounded reason for the nonpayment, or if the issue of liability is close, the court should disallow imposition of bad faith penalties.” Amica Mut. Ins. Co. v. Sanders, 779 S.E.2d 459, 463 (Ga. Ct. App. 2015) (alteration in original) (internal quotation marks omitted) (citation omitted). Robert acknowledges failing to satisfy the sixty-day notice provision.”

“Even construing Robert’s allegations in the light most favorable to him, his counterclaim does not support a reasonable inference that West Coast Life’s refusal to pay under the Policy was frivolous and unfounded.”

Sun Life Assurance Co. of Canada v. Bew, 530 F. Supp. 2d 773 (E.D. Va. 2007)

“In order to avoid liability from conflicting claims, a disinterested stakeholder, such as the Plaintiffs, that had issued an insurance policy or managed an investment account, may interplead contested funds into a court’s registry to resolve the issue of proper distribution. The disinterested shareholder can then procure a judicial order for discharge from future liability. Fed.R.Civ.P. 22; Reliastar Life Ins. Co. of N.Y. v. LeMone, No. Civ.A. 7:05CV00545, 2006 WL 733968, at *10 (W.D.Va.”

“Furthermore, attorneys’ fees and costs may be awarded to a stakeholder in an interpleader action based on the rationale that the stakeholder, “by seeking resolution of the multiple claims to the proceeds, benefits the claimants, and . . . should not have to absorb attorneys’ fees in avoiding the possibility of multiple litigation.” Reliastar Life Ins. Co. of N.Y., 2006 WL 733968, at *9 (citations omitted).”

Wackeen v. Malis, 97 Cal.App.4th 429 (Cal. Ct. App. 2002)

“The plaintiff in this state interpleader suit was the law firm McIntyre, Borges Burns, LLP. The defendants were Torrance Management Company, Inc., REM Ltd., and The Foundation for Thoroughbred Sciences, Inc. The case settled when Torrance Management Company, Inc. waived a claim to the interpleaded trust deed and stipulated that the other two defendants in that case were entitled to sole possession of the deed. The plaintiff in the federal interpleader case was Torrance Management Company, Inc. The defendants were Moran, a William Malis, the United States of America, and others.”

The Bd. of Trs. of the Leland Stanford Junior Univ. v. Chiang Fang Chi-Yi, 13-cv-04383-BLF (N.D. Cal. Aug. 22, 2022)

“Life Ins., 2007 WL 4209405, at *2. The Court may also “enter its order restraining [all claimants] from instituting or prosecuting any proceeding in any State or United States court affecting the property . . . involved in the interpleader action” and “discharge the plaintiff from further liability.” 28 U.S.C. § 2361; see also In re 1563 28th Ave., San Francisco, CA 94112, 333 F.R.D. 630, 635 (N.D. Cal. 2019).”

Republic of the Phil. v. Pimentel, 553 U.S. 851 (2008)

Statutes (3)

Section 815 ILCS 340/8, 815 ILCS 340/8

“Any claim by a consumer which is found by the court to have been filed in bad faith or solely for the purpose of harassment, or in complete absence of a justifiable issue of either law or fact raised by the consumer, shall result in the consumer being liable for all costs and reasonable attorney’s fees incurred by the manufacturer or its agent, as a direct result of the bad faith claim. 815 ILCS 340/8 P.A. 85-894.”

Section 624.155 – Civil remedy, Fla. Stat. § 624.155

“The insurer files an interpleader action under the Florida Rules of Civil Procedure. If the claims of the competing third-party claimants are found to be in excess of the policy limits, the third-party claimants are entitled to a prorated share of the policy limits as determined by the trier of fact. An insurer’s interpleader action does not alter or amend the insurer’s obligation to defend its insured. (b) Pursuant to binding arbitration that has been agreed to by the insurer and the third-party claimants, the insurer makes the entire amount of the policy limits available for payment to the competing third-party claimants before a qualified arbitrator agreed to by the insurer and such third-party claimants at the expense of the insurer.”

Section 231:6F – Costs, expenses and interest for insubstantial, frivolous or bad faith claims or defenses, Mass. Gen. Laws ch. 231 § 6F

Regulation (1)

Section ATCP 1.33 – Costs upon frivolous claim, Wis. Admin. Code ATCP § ATCP 1.33

“The action, claim or defense was initiated or pursued in bad faith, solely for the purpose of harassing or maliciously injuring another. (b) The party or party’s attorney knew or should have known that the action, claim or defense was without any reasonable basis in law or equity, and could not be supported by a good faith argument for an extension, modification, or reversal of existing law. (3) If an administrative law judge issues an order under sub. (1) against a party other than a public agency, the administrative law judge may assess those costs against the party or the party’s attorney, or may allocate the cost assessment between the party and the party’s attorney. Wis.”

Analyses (9)

Sweeping Changes To “Bad Faith” In Florida

“Additionally, if two or more third-party claimants present competing claims arising out of a single occurrence, which when totaled may exceed the available policy limits of one or more of the insured parties, an insurer is not liable beyond payment of the available policy limits if the insurer, within ninety (90) days of receiving the claims, files an interpleader action and provides the policy limits to the court. The trier of fact then determines the amount of the policy limits to distribute to each claimant.”

Chris Lazarini Discusses Financial Institution’s Fiduciary Duty to Beneficiary

“UBS filed an interpleader action against Defendant and the person whom the client attempted to name as primary beneficiary on the accounts already distributed. Asserting her beneficiary status, Defendant counterclaimed and cross-claimed.”

“Upon the client’s death, UBS became a trustee, which is a fiduciary under New York law, holding the assets for Defendant’s sole benefit. As such, UBS owed Defendant at least a duty of due care, which it allegedly failed to meet in refusing to provide Defendant with information and in delaying distribution.”

“EIC: Interpleader actions, while casting the holder of the corpus as neutral, are fraught with liability issues for the actions taken by the holder.”

Florida Enacts Broad Insurance Reforms Focusing on Bad Faith

“The insurer will not be liable beyond the policy limit if, within 90 days after receiving notice of the competing claims in excess of the policy limit, the insurer either: Files an interpleader action in a Florida court for the policy limit. Upon agreement between the insurer and claimants, makes the policy limit available and submits the matter to binding arbitration. A third-party claimant whose claim is resolved in arbitration must execute and deliver a general release to the insured party whose claim is resolved by the proceeding.”

Florida Enacts Major Tort Reform and Bad-Faith Insurance Claim Legislation

“Under these safe harbors, an insurer can avoid bad-faith liability by making use of interpleader or arbitration procedures set forth in the bill. The bill also repeals sections of the Florida Statutes that previously allowed insureds to recover attorneys’ fees when prevailing in certain insurance coverage disputes.”

Florida’s Most Comprehensive Tort Reform in Decades and What it Means for Insurers and Bad Faith Law

“An insurer is not liable beyond the available policy limits for failure to pay all or any portion of a policy limit to the third-party claimants if, within 90 days after receiving notice of the competing claims, the insurer complies with one of the following: The insurer files an interpleader action under the Florida Rules of Civil Procedure. If the claims of competing third-party claimants are found to be in excess of an insurer’s policy limits, the third-party claimants will be entitled to a prorated share of the policy limits determined by a trier of fact.”

Interpleader with a Side of Motion for More Definite Statement

“In Meyer, the court found the facts did not support either statutory or rule-based interpleader. Meyer was not at risk for multiple or inconsistent judgments as the only parties claiming right to the funds in question were Defendants, who are clearly related and not adverse. As the court aptly noted, either the Defendants were entitled to the funds or they were not.”

The Wrong Way for a Trustee to Interplead Foreclosure Sale Proceeds

“The court ruled that an interpleader complaint must show that “the defendants make conflicting claims” to the disputed funds, and that the plaintiff “cannot safely determine which claim is valid.” The court found that these conditions were not present in this case.”

“Under section 2924k, a trustee must distribute proceeds from a foreclosure sale in the following order of priority: (1) costs and expenses of the sale; (2) payment of the debt secured by the deed of trust; (3) payment of any junior liens or encumbrances; and (4) payment to the trustor (who is normally the borrower). Placer applied the sale proceeds in accordance with numbers 1 through 3 on that statutory priority list, but failed to pay the remaining proceeds to Aflalo.”

“Lesson Under thePlacer Title opinion, interpleading surplus proceeds from a foreclosure sale is NOT appropriate where there are no competing recorded claims before the sale, and where section 2924k clearly requires the surplus proceeds be given to the trustor. [View source.]”

The Impact of Florida’s Tort Reform Bill on Insurance Litigation

“If two or more third party claimants have competing claims arising out of a single occurrence, which in total may exceed the insured’s available policy limits, the insurer does not commit bad faith by failing to pay if, within 90 days after receiving notice of the competing claims, the insurer either files an interpleader action or follows the arbitration procedures outlined in the bill.”

Key issues for policyholders under Florida’s new tort reform bill

“Also included are two new procedural devices for cases involving multiple completing claims against an insured (or insureds). Under new § 624.155(6), an insurer can now shield itself from bad faith exposure by either (a) filing an interpleader action to determine the claimants’ prorated share of the policy limits, or (b) entering into a binding arbitration proceeding agreed to by the insurer and the claimants, where a “qualified arbitrator” (paid for by the insurer) determines the claimants’ prorated share of the policy limits.”

Judge Peterson forgot I was the victim and thinks Scow did nothing wrong keeping the excess proceeds from the HOA sale for 8+years

What the law requires

What interpleader standard is

“Legal Standard “In an interpleader action, the ‘stakeholder’ of a sum of money sues all those who might have a claim to the money, deposits the money with the district court, and lets the claimants litigate who is entitled to the money.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1265 (9th Cir. 1992)

“Accordingly, many courts have held that those who have acted in bad faith to create a controversy over the stake may not claim the protection of interpleader. See, e.g., Kent v. N. Cal. Reg’l Office of Am. Friends Serv. Comm., 497 F.2d 1325, 1328 (9th Cir.1974) (“Interpleader, which is an equitable remedy, is not available to one who has voluntarily accepted funds knowing they are subject to competing claims.”) (citations omitted); Farmers Irrigating Ditch & Reservoir Co. v. Kane, 845 F.2d 229, 232 (10th Cir.1988) (“It is the general rule that a party seeking interpleader must be free from blame in causing the controversy, and where he stands as a wrongdoer with respect to the subject matter of the suit or any of the claimants, he cannot have relief by interpleader.”) (collecting cases); see also44B Am. Jur. 2d Interpleader § 7 (“The equitable doctrine of ‘clean hands’ applies to interpleader actions.”

Rule 22 of the Federal Rules of Civil Procedure allows interpleader of disputed funds where a Plaintiff is subject to double or multiple liability. Perfekt Mktg., LLC v. Luxury Vacation Deals, LLC, 2015 WL 10012987, at *2 (D. Nev. Nov. 16, 2015). The purpose of the interpleader is for the stakeholder to “protect itself against the problems posed by multiple claimants to a single fund.” Lee v. W. Coast Life Ins. Co., 688 F.3d 1004, 1009 (9th Cir. 2012).

What interpleader asks the court to do

An interpleader action typically involves two stages. Id. In the first stage, the district court decides whether the requirements for a rule or statutory interpleader action have been met by determining if there is a single fund at issue and whether there are adverse claimants to that fund. Id. If the Court finds that the interpleader action has been properly brought, it then makes a determination of the respective rights of the claimants. Id.”)

What the facts here are

Red Rock instructed Steven Scow to interplead $57,282.32 on 8/28/14 which was declared “excess funds” after Red Rock took its fees and the HOA had been paid in full. Red Rock did not have standing in 2021 to file an interpleader action.

Steven Scow concealed his and other’s wrongdoing

Steven Scow concealed his possession of the money and its location. He hid the fact that all named defendants had released their liens before the conclusion of the first action. Scow obscured his obstruction of my claim for the proceeds in the first action by refusing to provide them during mediation. He also hindered my second civil claim for the proceeds by filing a motion to dismiss it with prejudice, citing res judicata and the failure to include the HOA as a necessary party.

Scow further obscured his interference with my quiet title claims in the first two actions by providing inaccurate, incomplete, false, and falsified Red Rock foreclosure records. This prevented the sale from being entirely voided and allowed Nationstar and its co-conspirators to commit fraud on the court by having the sale declared valid regarding the sub-priority.

The attorneys perpetrated fraud on the court, covering up that Red Rock rejected assessments that cured the default three times, the sale would have been fairly voided in its entirety in the 1st action, and we would not be still litigating four years later without a judge ever looking at the evidence.

I was the sole claimant after June 3, 2019

3/12/15 Wells Fargo released the lien of the 2nd deed of trust

3/28/17 Gordon B. Hansen Trust closed and assigned its title interest to sole beneficiary Nona Tobin as an individual

6/3/19 Nationstar released the lien of the 1st deed of trust

What Judge Peterson believes despite the law and the facts supported by the evidence

She believes there is some unwritten law that says Red Rock doesn’t have to distribute the proceeds after the sale if someone might try to unwind the sale years later.

Judge Peterson buys into Red Rock’s argument so much she argues for them.

Judge Peterson’s argument matches Nationstar’s 4/26/21 argument also when she allowed multiple disinterested entities to oppose the funds being distributed to the sole claimant.

I didn’t file any quiet title claims against Nationstar in the 1st action and Nationstar didn’t file any against me.

I wanted the sale to be void to return to our respective positions. Nationstar filed for summary judgment against the Hansen trust, but not against me as an individual, met ex arte with the judge, got me removed as an individual party and got all my evidence suppressed, lied to the court to say that it was BANA’s successor in interest, then rescinded that claim a week after the end of discover, filed motion after motion to prevent me from being able to return to my pro se status to be able to represent myself or to be the real party in interest after the Hansen Trust was closed, made a fraudulent side deal with Jimijack, filed motions to have me declared a vexatious litigant, opposed the excess proceeds to be distributed to me as the sole claimant, and on and on and on.

Why? Because Nationstar had no standing to foreclose

Because if the sale were voided in its entirety, than Nationstar would have to prove based on evidence that it actually had NRS 104.3301 standing to foreclose, and we both knew it couldn’t.

Thus, by eliminating my involvement, Nationstar obtained $355,000 for releasing the lien on the 1st deed of trust, which they falsely claimed to own from non-party Joel A. Stokes, on June 3, 2019, just two days prior to the show trial in the 1st action – a trial that neither Joel Stokes nor Nationstar were required to attend, and from which I was barred – all documentary evidence and witnesses were excluded.

For the result of a meritless interpleader action to be the preclusion of all the victim’s claims and the imposition of a vexatious litigant restrictive order for forced defense against entities who have no standing is unfair and disproportionate.

Judge Peterson’s bias gifted the case to my opponents

Steven Scow filed the interpleader action knowing it was meritless

Link to previous blogs (ScaStrong.com/tag/interpleader) on how this interpleader action was filed in bad faith because the law required ALL proceeds be distributed AFTER THE SALE, no one but me had standing to make a claim after June 3, 2019 and Scow got my 6/3/20 civil claim for the proceeds dismissed with prejudice before he sued me and four other defendants without standing on February 16, 2021 to interplead the excess proceeds he should have distributed in 2014.

Interpleader requires single fund, neutral stakeholder, and adverse claimants

This case: wrongfully withheld funds, misidentified, implicated holder joined by disinterested opponents to attack single claimant with standing

Pruco Life Ins. Co. v. Martin, Case No.: 2:11-cv-00186-GMN-GWF, at *2 (D. Nev. Aug. 16, 2011) (“Procedurally, an interpleader action encompasses two stages: First the district court decides whether the requirements for rule or statutory interpleader action have been met by determining if there is a single fund at issue and whether there are adverse claims to the fund. In the second stage the court makes a determination of the respective rights of the claimants. Mack v. Kuckenmeister, 619 F.3d 1010, 1023-24 (9th Cir. 2010). (citing Rhoades v. Casey, 196 F.3d 593 (5th Cir. 1999)). 28 U.S.C. § 1335 allows a stakeholder, “to file an interpleader action to protect itself against the problems posed by multiple claimants to a single fund.” Minnesota Mutual Life Ins. Co. v. Ensley, 174 F.3d 977, 980 (9th Cir. 1999). ”)

Nevada case law supports sanctions for filing a meritless interpleader action knowing there is only one claimant and the other have no standing

Filing a meritless interpleader action could be sanctionable if the filer attorney has knowingly unlawfully held one person’s money and the other defendants have no standing to make a claim. Sanctions may be appropriate if the filer acted in bad faith, recklessly, or vexatiously, or if the action is frivolous, unreasonable, or groundless.

Michelman v. Lincoln Nat’l Life Ins. Co., 685 F.3d 887, 889 (9th Cir. 2012) (“Interpleader is proper when a stakeholder has at least a good faith belief that there are conflicting colorable claims.”)

“See Tise, 234 F.3d at 426-27; Wells Fargo Bank v. PACCAR Fin. Corp., No. 1:08-CV-00904 AWI SMS, 2009 WL 211386, at *2 (E.D.Cal. Jan. 28, 2009). Further, “[b]ecause the interpleader plaintiff is supposed to be disinterested in the ultimate disposition of the fund, attorneys’ fee awards are properly limited to those fees that are incurred in filing the action and pursuing the plan’s release from liability, not in litigating the merits of the adverse claimants’ positions.””

Several of the cases cited here suggest that filing a meritless interpleader action could be sanctionable. For example, in Lee v. W. Coast Life Ins. Co., the Ninth Circuit discussed the principle that interpleader is not available to a party who has knowingly accepted funds subject to competing claims. This suggests that if an attorney files an interpleader action knowing that one of the defendants has no standing to make a claim, the attorney could be subject to sanctions. Additionally, in Mayorga v. Ronaldo, the court discussed its authority to sanction an attorney for bad faith conduct, including under 28 U.S.C. § 1927, which authorizes an award of fees and costs against an attorney whose reckless conduct causes a litigant to incur them. This authority could be used to argue that filing a meritless interpleader action could be sanctionable if the filer acted in bad faith, recklessly, or vexatiously. Several other cases, such as Crawford v. Smith’s Food & Drug Store, Inc. and Pac. Gas & Elec. Co. v. Seiu Local 24/7, discuss the circumstances under which attorneys’ fees may be awarded as a sanction for bad faith conduct. These cases suggest that sanctions may be appropriate if the interpleader action is frivolous, unreasonable, or groundless.

Equitable doctrine of ‘clean hands’ applies to interpleader actions

Lee v. W. Coast Life Ins. Co., 688 F.3d 1004, 1012 (9th Cir. 2012) (““It is generally recognized that interpleader ‘developed in equity and is governed by equitable principles.’ ” Aetna Life Ins. Co. v. Bayona,223 F.3d 1030, 1033–34 (9th Cir.2000) (quoting Lummis v. White,629 F.2d 397, 399 (5th Cir.1980), rev’d on other grounds by Cory v. White,457 U.S. 85, 102 S.Ct. 2325, 72 L.Ed.2d 694 (1982); Metro. Life Ins. Co. v. Marsh,119 F.3d 415, 418 (6th Cir.1997) (“[I]nterpleader is fundamentally equitable in nature.”)). Accordingly, many courts have held that those who have acted in bad faith to create a controversy over the stake may not claim the protection of interpleader. See, e.g., Kent v. N. Cal. Reg’l Office of Am. Friends Serv. Comm.,497 F.2d 1325, 1328 (9th Cir.1974) (“Interpleader, which is an equitable remedy, is not available to one who has voluntarily accepted funds knowing they are subject to competing claims.”) (citations omitted); Farmers Irrigating Ditch & Reservoir Co. v. Kane,845 F.2d 229, 232 (10th Cir.1988) (“It is the general rule that a party seeking interpleader must be free from blame in causing the controversy, and where he stands as a wrongdoer with respect to the subject matter of the suit or any of the claimants, he cannot have relief by interpleader.”) (collecting cases); see also44B Am. Jur. 2d Interpleader § 7 (“The equitable doctrine of ‘clean hands’ applies to interpleader actions. The party seeking interpleader must do equity, not have caused the conflicting claims, and be free from blame in causing the controversy.”) (footnotes omitted).”)

Scow used interpleader to cover up his wrongdoing

On 2/16/21 Scow, concealed that he personally had unlawfully withheld the excess proceeds that Red Rock had instructed him to remit to the court on 8/28/14.

This is conversion, not interpleader

Scow caused summons to be served in the name of his client, Plaintiff FirstService Residential Nevada LLC (EIN 88-0358132) dba Red Rock Financial Services, a partnership (“Red Rock”)(whose partners he refused to disclose in discovery in the 1st action) when he knew Red Rock had no standing to file an interpleader complaint as it didn’t have the money and it didn’t face adverse competing interests. Scow served five defendants knowing that four of the five defendants had no standing to claim the interpleaded funds.

I know of no legal way for Scow to take a check made out to the court and transfer it under his own personal proprietary control, particularly since Red rock ceased to be a fiduciary agent for Sun City Anthem in 2015. Under the bylaws of that HOA, Red Rock had to surrender all of the funds that it had on account collected under the statutory authority of SCA to the SCA Board in April 2015.

Nevertheless, Judge Peterson insisted that this was an ordinary interpleader action and I was not allowed to have any other claims against Steven Scow.

Scow unlawfully withheld $3,500 from the $57,282.32 that Red Rock had designated as “excess funds” knowing that the statute specifically does not authorize any attorney fees to be deducted from the amount designated as “excess” to file an interpleader complaint.

Judge Peterson, by granting a non-party’s motion, dismissed my 3/8/21 AACC, all counter- and cross-claims and affirmative defenses, including unclean hands, with prejudice, without requiring Red Rock to respond

On 3/8/21 I, Nona Tobin, as an individual, filed the only timely answer, affirmative defenses, and compulsory counterclaims, including a claim for the proceeds. My 19 affirmative defenses listed unclean hands at number 11.

Failure to state a claim
Estoppel
Fraud NRS 207.360 (9)(30)(35), NRS 205.395, NRS 205.377, NRS 205.330, NRS 205.405, NRS 111.175,
Illegality NRS 207.230
Waiver
Failure to join a necessary party
General and equitable defenses
Priority
False claims to title (NRS 205.395, NRS 205.377)
Violation of Covenant of good faith (NRS 116.1113)
Equitable doctrines (unclean hands, NRS 207.360 (9)(30)(35)
Acceptance (distribution of proceeds)
Waiver and Estoppel (Red Rock & Nationstar)
Fraudulent Misrepresentation and fraudulent concealment NRS 205.405, NRCP 11.pdf
Failure to mitigate damages
Unconstitutional (Due process clauses)
Statutory violations (NRS 116.31031, NRS 116.31162 – NRS 116.31168 (2013), NRS 116.3102, NRS 116.31083, NRS 116.31085, NRS 38.310
Rejection of two super-priority payments (SCA 513 and SCA 302)
Violations of HOA CC&Rs owner protections (CC&Rs 7.4 Compliance & Enforcement; CC&Rs 16: Dispute Resolution and Limitation on Litigation

Judge Peterson did not dismiss Nationstar and Wells Fargo when they failed to make any compulsory counter-claims and did not answer my cross-claims

On 4/12/21, I filed a motion for an order to distribute the proceeds with interest to me as the sole claimant but Judge Peterson disregarded the law and let disinterested entities oppose me

On 4/26/21/ Judge Peterson let non-claimants Nationstar and Wells Fargo oppose the funds going to the sole claimant as long as I had other claims

Judge Peterson let Red Rock join the disinterested banks’ opposition even though Red Rock was supposed to be neutral

Red Rock’s/Scow’s true motives, and the banks’ collusion, for not distributing the proceeds after the sale, should now be apparent, but in case it’s not I’ll do a separate blog on that.

Scow knows that the banks are not going to make a claim for the proceeds and that if he can keep the owner from making a claim, then he can keep them, and the money trail will be virtually impossible to follow.

Being forced to pay attorney fees to Scow given his bad faith conduct is just plain wrong. He should be audited to account for the excess proceeds that were not distributed after the red Rock sales.

Mayorga v. Ronaldo, 2:19-cv-00168-JAD-DJA, at *2 (D. Nev. Feb. 14, 2023) (“The American Rule recognizes that each party in litigation must bear its own attorney’s fees in the absence of a rule, statute, or contract authorizing an award of fees.”)

“Courts usually award attorneys’ fees to the plaintiff in interpleader actions absent a showing of bad faith. Schirmer Stevedoring Co. v. Seaboard Stevedoring Corp., 306 F.2d 188, 194-95 (9th Cir. 1962).” Here, however, bad faith abounds, and attorney fees are definitely not appropriate.

Judge Peterson’s impartiality can reasonably be questioned by declaring Red Rock LLC was a party

The court can’t render judgment for or against a non-party

Moore v. Univ. Med. Ctr. of S. Nev., No. 69367, at *2 (Nev. App. Jan. 13, 2017) (“the district court entered judgment on this un-asserted claim without conducting a trial (and without employing any recognized trial substitute such as NRCP 12(c) or 56). Instead, the court simply resolved all pending factual and legal disputes on its own, in chambers, without hearing the sworn testimony of any witnesses, without applying any rules of evidence or any recognized procedures for admitting evidence, without permitting the parties to assert any objections to any evidence, without permitting any cross-examination of any witness by any party, and without identifying the legal standards used to resolve any factual or legal disputes, and without entering findings of fact and conclusions of law.”)

Moore v. Univ. Med. Ctr. of S. Nev., No. 69367, at *2 (Nev. App. Jan. 13, 2017) (“The district court clearly erred by failing to apply the Nevada Revised Statutes, the Nevada Rules of Civil Procedure, and applicable precedent from our supreme court, and by entering judgment without a trial in favor of a party that never even pled a claim for relief”)

Moore v. Univ. Med. Ctr. of S. Nev., No. 69367, at *3 n.2 (Nev. App. Jan. 13, 2017) (“Booke was not a party to the case, and the court therefore lacked jurisdiction to enter any judgment against him. See NRCP 4(d); Schwob v. Hemsath, 98 Nev. 293, 294, 646 P.2d 1212, 1212 (1982) (“Without proper service of process the district court acquires no. jurisdiction over a party.”) (citing Brockbank v. District Court, 65 Nev. 781, 201 P.2d 299 (1948); State v. District Court, 51 Nev. 206, 273 P. 659 (1929)). ”)

“A district court may render judgment for or against a person only where the court has jurisdiction over the parties. C.H.A. Venture v. G. C. Wallace Consulting Eng’rs, Inc., 106 Nev. 381, 383, 794 P.2d 707, 708 (1990). Thus, a court may not enter a judgment for or against a nonparty.”

NRCP 10(a)(1) The complaint must name all the parties

10(a) Caption; Names of Parties. Every pleading must have a caption with the court’s name, the county, a title, a case number, and a Rule 7(a) designation. The caption of the complaint must name all the parties; the caption of other pleadings, after naming the first party on each side, may refer generally to other parties.
NRCP Rule 10. Form of Pleadings

Pacific States Sec. Co. v. District Court, 48 Nev. 53 (Nev. 1924)

“Parties are those who are named as such in the record, and who are properly served with process, or enter their appearance. 20 R.C.L. p. 662; Womach v. City of St. Joseph, 201 Mo. 467, 100 S.W. 443, 10 L.R.A. (N.S.) 140.”

A party must file an appearance, and no attorney ever appeared for Red Rock LLC

A court does not have jurisdiction over non-parties

I.C.A.N. Foods, Inc. v. Sheppard (In re Aboud Inter Vivos Trust), 314 P.3d 941, 946 (Nev. 2013) (“Young v. Nev. Title Co., 103 Nev. 436, 442, 744 P.2d 902, 905 (1987) (“A court does not have jurisdiction to enter judgment for or against one who is not a party to the action.””)

Red Rock LLC did not intervene as a timely motion and an interest in the proceedings would have been required.

Non-party Red Rock LLC never timely filed the required NRCP 24(a)(2) motion to intervene. It could not assert it had an interest it did not have relating to the property or transaction that is the subject of the action, i.e., it never had any relationship to the HOA, the interpleaded proceeds, or this dispute, other than sharing an attorney and a similar name with the Plaintiff.

The 2/3/21 complaint must identify ALL the parties per NRCP 10a1 and Red Rock LLC is NOT named as the Plaintiff

Red Rock LLC did not serve any summons to claim relief as the plaintiff

I filed the only counter- and cross-claims, and I did not serve any claims against Red Rock LLC.

C.H.A. Venture v. G.C. Wallace Consulting Eng’rs, Inc., 106 Nev. 381, 384, 794 P.2d 707, 709 (1990) (“Personal service or a legally provided substitute must still occur in order to obtain jurisdiction over a party.”). Moreover, “[a] district court is empowered to render a judgment either for or against a person or entity only if it has jurisdiction over the parties and the subject matter,” and a district court cannot exercise personal jurisdiction over a party—even one with actual notice of the proceedings—unless that party has first been adequately served.

Red Rock LLC is not, therefore, a counter-defendant just because Scow added an LLC designation to counter-defendant in the caption.

No party timely responded to my 3/8/21 claims so I filed 1st 4/12/21 motion for the proceeds

No party timely (NRCP 12(a)(1)(B) responded to my 3/8/21 claims so I filed a 4/15/21 motion for summary judgment

Counter -claims require a timely responsive pleading (NRCP 12(a)(1)(B))

(B) A party must serve an answer to a counterclaim or crossclaim within 21 days after being served with the pleading that states the counterclaim or crossclaim.
Rule 12.(a) Time to Serve a Responsive Pleading.

4/16/21 Scow filed a rogue, unsupported NRCP 12(b)(5) motion to dismiss on behalf of non-party Red Rock LLC the day after I filed my MSJ because no party filed a timely answer to my 3/8/21 AACC.

12/28/21 Non-party Red Rock LLC filed an improper opposition to my motion for an evidentiary hearing and a motion for vexatious litigant restrictive order against me and motions for attorneys fees when it had no standing to be in the case

6/13/22 Non-party Red Rock LLC filed an improper opposition to my 2nd motion for the proceeds with interest and penalties for being wrongfully withheld 8+ years and another motion for a vexatious litigant restrictive order against me for moving to correct the orders for the party identification and another motion for legal fees.

Judge Peterson granted the non-party’s 6/13/22 motion for attorney fees but Scow didn’t accurately write the 1/9/23 order

I insisted that my opposition be added and a corrected order was filed on 1/16/23

1/23/23 I filed motion to reconsider this 1/16/23 order because it was granting the motion of a non-party and because it did not deny my prior 6/27/22 motion to strike the rogue filings of non-party Red Rock LLC in an written appealable order.

State, Div. Child Fam. Servs. v. Dist. Ct., 120 Nev. 445, 452 (Nev. 2004) (“[p]rior to the entry of a final judgment the district court remains free to reconsider and issue a written judgment different from its oral pronouncement.” Consequently, we stated that “[a]n oral pronouncement of judgment is not valid for any purpose; therefore, only a written judgment has any effect, and only a written judgment may be appealed.””)

2/10/23 I filed an order granting these motions as unopposed

2/15/23 court denied because of ex parte hearing I knew nothing about

Judge Peterson just ex parte declared “Red Rock is a party” and I’m a vexatious litigant and the court rules don’t apply to my opponents

1/23/23 motions ask for equal treatment of non-parties to fairly end this dispute

Judge Peterson allowed Scow to write the order. The order misrepresents the motion to reconsider as “frivolous” and violating the court’s admonitions.

It is not improper to move to strike the rogue filings of a non-party. It is asking for equal treatment.

Red Rock did not have standing to file an interpleader complaint

Legal standard for interpleader was not met

“Legal Standard “In an interpleader action, the ‘stakeholder’ of a sum of money sues all those who might have claim to the money, deposits the money with the district court, and lets the claimants litigate who is entitled to the money.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1265 (9th Cir. 1992)

Guardian Life Ins. Co. of Am. v. Pundyk, No. 2:16-cv-01196-APG-GWF, at *2-3 (D. Nev. Jan. 4, 2017) (“District courts have original jurisdiction over interpleader actions involving $500 or more in controversy if “two or more adverse claimants, of diverse citizenship…are claiming or may claim to be entitled to such money or property…” 28 U.S.C. § 1335(a).

All proceeds were legally required to be distributed AFTER THE SALE in 2014.

rrfs 047

The interpleader complaint in 2021 was meritless.

Steven Scow filed for interpleader in 2021 when his client FirstService Residential dba Red Rock Financial Services (EIN 88-0358-132) instructed him to remit a check designated as excess proceeds to the court as the law required.

In 2021 Steven Scow did not deposit the stale 2014 check to the court nor did he admit he had defied the law and his client’s instructions for seven years.

2/3/21 Scow filed the complaint knowing Red Rock did not have standing to file for interpleader in 2021 when he had been instructed to remit the funds to court on 8/28/14.

“Legal Standard “In an interpleader action, the ‘stakeholder’ of a sum of money sues all those who might have claim to the money, deposits the money with the district court, and lets the claimants litigate who is entitled to the money.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1265 (9th Cir. 1992)

High Noon at Arlington Ranch Homeowners Ass’n, Nonprofit Corp. v. Eighth Judicial Dist. Court of State, 402 P.3d 639, 645-46 (Nev. 2017) (“Under Nevada law, an action must be commenced by the real party in interest—”one who possesses the right to enforce the claim and has a significant interest in the litigation.” Szilagyi v. Testa , 99 Nev. 834, 838, 673 P.2d 495, 498 (1983) ; see NRCP 17(a). Generally, a party has standing to assert only its own rights and cannot raise the claims of a third party not before the court. Deal v. 999 Lakeshore Ass’n , 94 Nev. 301, 304, 579 P.2d 775, 777 (1978)”)

Stockmeier v. State, Dep’t of Corrections, 122 Nev. 385, 393 (Nev. 2006) (“This court has a “long history of requiring an actual justiciable controversy as a predicate to judicial relief.” In cases for declaratory relief and where constitutional matters arise, this court has required plaintiffs to meet increased jurisdictional standing requirements. However, where the Legislature has provided the people of Nevada with certain statutory rights, we have not required constitutional standing to assert such rights but instead have examined the language of the statute itself to determine whether the plaintiff had standing to sue.”)

My 3/28/17 deed made me the only one with with standing to assert a claim for the proceeds as all other liens were released by mid-2019 before the 1st action was decided.

3/30/17 Republic Services released both its garbage liens due to the 3-year statute of limitations on non-enforcement.

2/17/21 Republic Services filed a disclaimer of interest and withdrew from the lawsuit the day after it was served

6/3/19 Nationstar released the lien of the Western Thrift & Loan 1st deed of trust

Two days before the quiet title trial in the first action, Nationstar recorded a release of the lien of the first deed of trust, delivering the property free and clear to Joel A. Stokes, a non-party individual. In return for recording this unauthorized lien release, Nationstar received $355,000. As a result, Joel A. Stokes and Sandra F. Stokes, trustees of the Jimijack Irrevocable Trust, gained quiet title in the first action’s trial, despite the fact that Jimijack’s deed, inadmissible as evidence and leqally insufficient to hold or transfer title, had been covertly quitclaimed to the non-party before the trial. The trial did not consider evidence as mandated by NRS 40.110.

3/12/15 Wells Fargo released the lien of the Wells Fargo 2nd deed of trust

Link to 3/12/15 PDF of Wells Fargo’s 2nd deed of trust lien release

Wells Fargo was not involved in the first two actions. The bank filed an IRS Form 1099-C to cancel the outstanding $15,000 debt on the line of credit after the borrower, Gordon Bruce Hansen, passed away on January 14, 2012. However, they didn’t release the lien until a few months after the HOA sale. Wells Fargo never asserted to be the beneficiary of Hansen’s July 22, 2004, first deed of trust, and was likely unaware of Bank of America’s recorded corporate assignment of its non-existent interest.

Additionally, Wells Fargo probably didn’t know that debt buyer Nationstar intermittently claimed to service the loan on their behalf, or that Akerman LLP alleged that they were authorized to represent Wells Fargo in the A-21-828840-C interpleader action.

NRS 116.31164(3)(2013) vs. NRCP 22: Interpleader vs. HOA bylaws prohibiting delegation

NRS 116.31164(3) (2013) duties after the sale

NRS 116.31164(3) (2013) defines ministerial duties mandated on a debt collector after conducting an HOA foreclosure sale. Red Rock did not comply with 3(b) or 3(c ) after Red Rock sold 2763 White Sage without statutorily required notice to Nona Tobin on 8/15/14.

Rule 22. Interpleader

(a) Grounds.
(1) By a Plaintiff. Persons with claims that may expose a plaintiff to double or multiple liability may be joined as defendants and required to interplead. Joinder for interpleader is proper even though:
(A) the claims of the several claimants, or the titles on which their claims depend, lack a common origin or are adverse and independent rather than identical; or
(B) the plaintiff denies liability in whole or in part to any or all of the claimants.
(2) By a Defendant. A defendant exposed to similar liability may seek interpleader through a crossclaim or counterclaim.
(b) Relation to Other Rules and Statutes. This rule supplements — and does not limit — the joinder of parties allowed by Rule 20. The remedy this rule provides is in addition to — and does not supersede or limit — the remedy provided by any Nevada statute authorizing interpleader. These rules apply to any action brought under statutory interpleader provisions, except as otherwise provided by Rule 81.
NRCP 22

Why interpleader was an abuse of process

NRCP 22 was corruptly utilized by Plaintiff Red Rock after unlawfully holding the sale proceeds for more than six years. Red Rock had no legitimate grounds for filing the interpleader action. Red Rock was not exposed to any liability as there were no recorded claims for those proceeds other than Nona Tobin’s 3/28/17 deed. Red Rock filed the interpleader complaint for improper purposes, including, but not limited to, the obstruction of the fair, evidence-based adjudication of Nona Tobin’s claims for quiet title and equitable relief.

What do HOA bylaws have to do with it?

NRS Chapter 116 is the chapter of the Nevada Revised Statutes that governs homeowners associations AKA “common-interest communities”.

NRS 116.3106 defines mandatory provisions that must be included in an HOA’s bylaws.

NRS 116.3106(1)(d) requires that an HOA’s bylaws define what an HOA Board of Directors can delegate

NRS 116.3106 Bylaws.

1. The bylaws of the association must:
(d) Specify the powers the executive board or the officers of the association may delegate to other persons or to a community manager;
NRS 116.3106(1)(d)

Sun City Anthem bylaws 3.20/3.18 prohibit delegation of these duties:

Relevance to Red Rock’s misappropriation of the proceeds of the sale

Bylaws 3.18(b) levying and collecting assessments

SCA bylaws 3.18 (b) prohibited the Sun City Anthem Board from delegating policy control over “levying and collecting assessments”, but handled control of the debt collection and foreclosure function over to Red Rock based on the advice of its managing agent, FirstService Residential (FSR) who unjustly profited by misinforming the volunteer members of the HOA Board about their fiduciary duty to the HOA and to the common good of the membership at large.

Over-delegation caused by undisclosed conflict of interest

FirstService Residential (FSR) was both on contract with Sun City Anthem to be the managing agent and held the NRS 649 debt collection license doing business as Red Rock Financial Services, a partnership (EIN 88-0358132)

Link to FSR-SCA 3/31/14 management agreement

Link to RMI-SCA 1/1/10 management agreement is relevant only insofar as the HOA signed the contract with FSR after its agent RMI management, LLC was purchased by, or merged with, or somehow or another, morphed into FSR.

Secondly, this financial conflict of interest is relevant in that it allowed the agents to control all the records in a manner that allowed them to cover up the misappropriation of funds as well as the wrongful foreclosure of a dozen Sun City Anthem homes in 2014 when the transfer of managing agents occurred.

Bylaws 3.18(e) depositing funds in an approved bank and using funds to operate the HOA

Red Rock did not deposit the funds collected anywhere that they were used for the operation of the HOA.

The funds should have been placed in a Sun City Anthem Trust Account and certainly not in a Red Rock Financial Services Trust Account.

Bylaws 3.18(g) opening bank accounts and designating signatories required

Red Rock did not comply with these SCA bylaws restrictions on the proper depositing of these funds into an account where the Sun City Anthem Board controls the signatories.

The Sun City Anthem Board is ultimately accountable for the funds collected on behalf of the HOA under the HOA’s statutory authority. The bylaws provision was obviously required in order to prevent the very type of conversion that FSR dba Red Rock perpetrated here.

By not complying with the bylaws, the proceeds of this sale and at least a dozen other Sun City Anthem foreclosures were retained in an unaudited, unsupervised account, misnamed as an “attorney trust account”. None of these funds were under the proper control of the HOA Board. These funds, belonging to Sun City Anthem, were wrongly under the proprietary control of a partnership with undisclosed partners, Red Rock Financial Services EIN 88-0358132 and/or Steven Scow, an individual, and/or Koch & Scow LLC.

Red Rock agent/employee Christie Marling instructed Steven Scow to deposit the “excess” proceeds of the sale with the court for interpleader on 8/28/14. Steven Scow did not do it.

Bylaws 3.18(i) enforcing the governing documents, bringing legal proceedings, providing due process guaranteed by CC&Rs 7.4

Neither the Sun City Anthem Board nor the SCA managing agent FSR nor the SCA debt collector FSR dba Red Rock complied with CC&Rs 7.4 when they imposed the sanction of foreclosure on the alleged violation of delinquent assessments.

None of the notice and due process required by the HOA’s CC&Rs were provided prior to selling 2763 White Sage as the sanction for an alleged violation of $2,200 delinquent assessments.

Further, the assessments were only delinquent due to the malicious misconduct of the HOA’s agents, FSR and FSR dba Red Rock, who THREE TIMES misapplied or rejected payments of assessments prior to the sale, and then lied and falsified documents to cover up their crime.

Red Rock and HOA attorneys conspired to defraud the HOA homeowners regarding multiple secret Sun City Anthem foreclosures

Link to 4/27/12 Red Rock-SCA debt collection agreement (concealed in discovery)

Red Rock attorney Steven Scow refused to produce the applicable debt collection contract or any contract.

SCA attorney David Occhoa produced the wrong contract.

SCA

Counter-claim vs. Red Rock Financial Services

Factual allegations

Plaintiff RRFS knows that all the liens recorded related to named Defendants other than Nona Tobin, i.e., Republic Services, Wells Fargo, and Nationstar have been released on 3/30/17, 8/17/04, 3/12/15, and 6/3/19, respectively. See Exhibit 1: APN 191-13-811-052 Clark County Property Record and allegations of fraud vs. all parties
The HOA sale was void as payments and tenders after 7/1/12 were rejected, misappropriated, misrepresented, and/or concealed. Default did not occur as described in the 3/12/13 Notice of default or as recited in the 8/22/14 foreclosure deed. See Exhibit 2: The sale was void for rejection of assessment payments.
The Default was cured three times, but RRFS kept pursuing the predatory path to unwarranted, unjustly profitable foreclosure. See Exhibit 3: the alleged default was cured three times.
There was no valid authorization of the sale, but RRFS disclosed deceptive and falsified documents to create the misrepresentation of reality. See Exhibit 4: The HOA Board did not authorize the sale by valid corporate action.
Required notices were not provided, but RRFS falsified records to cover it up. See Exhibit 5: Required notices were not provided, but it was covered up by falsified records.
SCA Board imposed the ultimate sanction against the estate of the deceased homeowner, but RRFS and SCA attorneys concealed and misrepresented material facts and the law to cover it up. See Exhibit 6: The HOA Board imposed the ultimate sanction for an alleged violation of the governing documents with NO due process.
Bank of America never was the beneficiary of the Hansen deed of trust, but committed mortgage servicing fraud, refused to let two fair market value sales close escrow, refused to take the title on a deed in lieu, took possession without foreclosing, and used attorney Rock K. Jung to covertly tender delinquent assessments to circumvent the owner’s rights under the PUD Rider remedies (f) to confiscate her property without foreclosing. See Exhibit 7: Neither Bank of America nor Nationstar ever owned the disputed Hansen deed of trust, but tried to steal the property.
Many examples of RRFS’s corrupt business practices exist of keeping fraudulent books, scrubbing page numbers from ledgers, combined unrelated documents to rewrite history, scrubbing dates from emails, not documenting Board actions, and much more. See Exhibit 8: Examples of Red Rock’s corrupt business practices.
All opposing counsels in all the litigation over the title to this one property made misrepresentations in their court filings and made oral misstatements of materials facts and law at hearings. See Exhibit 9: Attorneys’ lack of candor to the tribunal.
The proceeds of the sale were not distributed in 2014 and RRFS’s complaint for interpleader in 2021 was filed in bad faith. See Exhibit 10: The proceeds of the sale were not distributed pursuant to NRS 116.31164(3) (2013)
RRFS concealed the 4/27/12 debt collection contract that requires RRFS to indemnify the HOA and has been unjustly enriched thereby well over $100,000 in fees and considerably more in undistributed proceeds. RRFS did not participate in NRS 38.310 mediation in good faith. See Exhibit 11: Red Rock’s fraud, unfairness and oppression
In case A-19-799890-C, Brody Wight knowingly filed a motion to dismiss Nona Tobin’s claims pursuant to NRCP (b)(5) and NRCP (b)(6) that was totally unwarranted, harassing, disruptive of the administration of justice, not supported by facts or law, and filed solely for the improper purpose of preventing discovery of the crimes of his law firm and its clients. See Exhibit 12: Attorney interference in the administration of justice.
None of the opposing counsels have acted in good faith in compliance with the ethic standard of their profession. All have failed in their duty of candor to the court, wasted millions of dollars in judicial resources, and have engaged in criminal conduct to further the criminal conduct of their clients. See Exhibit 13: Lack of professional ethics and good faith.
Attorneys have knowingly presented false evidence into the court record in discovery. See Exhibit 14: Presented false evidence to cover up crime.
Nationstar and RRFS conspired to conceal the manner in which RRFS covertly rejected Nationstar’s $1100 offer to close the MZK sale. Civil Conspiracy. See Exhibit 15: Civil conspiracy to cover up racketeering warrants punitive damages.
Exhibit 16 Republic Services lien releases
Exhibit 17 Nona Tobin’s standing as an individual
Exhibit 18 Relevant statutes and regulations
Exhibit 19 Relevant HOA governing document provisions
Exhibit 20 Administrative complaints
Exhibit 21 Nevada court cases regarding the wrongful foreclosure of 2763 White Sage
Exhibit 22 Nona Tobin’s 1/31/17 cross-claim vs Sun City Anthem, DOEs & ROEs excerpts: statement of facts, 5th cause of action: unjust enrichment, identification of parties

First cause of action: Interpleader

The court must find that the proceeds of the 8/15/14 must be distributed to the only claimant, Nona Tobin, immediately with interest, sanctions and penalties for failure to comply with the statutory requirement to distribute the proceeds immediately after the sale.

Red Rock did not comply with the statute

RRFS’s agent/employee Christie Marling was the “person who conducted the sale”.

NRS 116.31164(3) (2013) defines Christie Marling’s ministerial duties following the sale

RRFS 052 shows Christie Marling COMPLIED with 3(a) and sent a foreclosure deed to the purchaser.

Ombudsman’s records show that Christie marling DID NOT COMPLY with 3(b) as no foreclosure deed was sent to the Ombudsman following the unnoticed 8/15/4 sale.

RRFS 047 and RRFS 048 show that Christie Marling TRIED TO COMPLY with 3(c) by instructing Steven Scow to deposit the funds with the court for interpleader.

Steven Scow DID NOT COMPLY with 3(c) and did not deposit the funds with the court as instructed by the person who conducted the sale.

Steven Scow DID NOT COMPLY with SCA bylaws to deposit the funds in an account controlled by the SCA Board when he did not deposit the funds with the court and he did not distribute them according to the statute.

Second cause of action:

Unjust enrichment or Conversion

1. Link to HOA bylaws restriction on delegation of control over funds collected for the HOA

2. Page 1336 Resident Transaction Report 8/27/14 ledger entry $2,701.04 paid the HOA in full, but RRFS provided falsified ledgers in response to subpoena.

3. Excerpt of 10/15/14 email shows RRFS rebuffed my attempt to make a claim for the excess proceeds by saying it was deposited with the court.

4. Link to 4/27/12 RRFS debt collection contract that was concealed in discovery that contains the unenforced indemnify provision that Red Rock has unjustly profited from at the expense of Sun City Anthem homeowners.

5. Link to Red Rock’s duplicitous 6/23/20 motion to dismiss my quiet title and unjust enrichment claims per NRCP 12(b)(5) and NRCP 12(b)(6)

6. Link to Red Rock’s duplicitous 2/15/21 interpleader complaint

Third cause of action: Racketeering

COUNTER-DEFENDANT RRFS AND CROSS-DEFENDANT NATIONSTAR engaged in racketeering activities as defined in NRS 207.360 and a racketeering enterprise as is defined in NRS 207.380;
COUNTER-DEFENDANT RRFS AND CROSS-DEFENDANT NATIONSTAR, acting directly, and in conspiracy with one another or through their syndicate(s), participated directly in racketeering activity by engaging in at least two crimes related to racketeering;
COUNTER-DEFENDANT RRFS AND CROSS-DEFENDANT NATIONSTAR’s activities have the same or similar pattern, intent, results, accomplices, victims, or methods of commission, or otherwise interrelated by distinguishing characteristics and are not isolated events;
COUNTER-DEFENDANT RRFS AND CROSS-DEFENDANT NATIONSTAR acquired or maintained directly or indirectly an interest in, or control of, any enterprise, or defendants are employed by or associated with any enterprise to conduct or participate directly or indirectly in the affairs of the enterprise through a racketeering activity;
COUNTER-CLAIMANT AND CROSS CLAIMANT NONA TOBIN’s injuries flow from the defendant’s violation of a predicate Nevada RICO act;
NONA TOBIN’s injury was be proximately caused by the defendant’s violation of the predicate act;
NONA TOBIN’s did not participate in the commission of the predicate act; and
NONA TOBIN’s is entitled to institute a civil action for recovery of treble damages proximately caused by the RICO violations. NRS 207.470(1).
COUNTER-DEFENDANT RRFS conspired with, aided and abetted CROSS-DEFENDANT NATIONSTAR, and many other lenders, to perpetrate a fraud on the court with a quid pro quo of Nationstar’s (and fill-in-the-blank OTHER LENDER’S NAME)’s not asserting a claim for the excess proceeds so Koch & Scow could keep whatever proceeds they wanted without fear of audit or challenge.

Prayer for relief

COUNTER-CLAIMANT AND CROSS CLAIMANT NONA TOBIN repeats, realleges, and incorporates herein by this reference the allegations hereinabove inclusively as though set forth at length and in full herein.
This counterclaim has been necessitated by the COUNTER-DEFENDANT RRFS’s AND CROSS-DEFENDANT NATIONSTAR’s bad faith conduct.
Pursuant to Nevada law, COUNTER-CLAIMANT AND CROSS CLAIMANT NONA TOBIN’s may recover her attorney fees as special damages because she was required to file this suit as a result of COUNTER-DEFENDANT RRFS AND CROSS-DEFENDANT NATIONSTAR’ intentional conduct.[1]

COUNTER-CLAIMANT AND CROSS CLAIMANT NONA TOBIN petitions the Court to declare:

that the disputed HOA sale is void due to fraud in the execution by Red Rock Financial Services;
that the disputed HOA sale did not extinguish the GBH Trust’s, nor its successor in interest’s rights to title;
that Nona Tobin is entitled to the $57,282 undistributed proceeds of the sale with six+ plus years interest and exemplary penalties pursuant to NRS 42.005.
that sanctions are appropriate vs. RRFS for its fraudulent conduct of HOA foreclosures sales;
that sanctions are appropriate vs. RRFS for its falsification of records to evade detection of misappropriation of funds;
that sanctions are appropriate vs. RRFS for its retention of proprietary control of the proceeds of the foreclosure of the subject property, and of approximately a dozen other Sun City Anthem 2014 foreclosures, when RRFS knew, or should have known that the HOA Board was prohibited by Sun City Anthems bylaws from delegating proprietary control over funds collected for the sole and exclusive benefit of the association;
that sanctions are appropriate vs. RRFS for its failure distribute foreclosure proceeds timely after the sales, as mandated by NRS 116.31164(3):
that sanctions are appropriate vs. RRFS for Koch & Scow’s unsupervised, unaudited retention of the funds of many, many HOA foreclosures allowed attorney trust fund violations to go undetected;
Koch & Scow’s filed its unwarranted 6/23/20 motion to dismiss, its 8/3/20 reply in support, and its 12/3/20 motion to dismiss, knowing that all these filings contained many misrepresentations of material facts for which there was no factual support or evidence, defied NRCP 11 (b)(3), Nevada Rules of Professional Conduct 3.3 (candor to the tribunal), 3.4 (fairness to opposing counsel), 3.5A (relations with opposing counsel), 4.1 (truthfulness in statements to others), 4.4 (respect for the rights of third persons) and ABA (1992) Standards for Imposing Lawyer Sanctions 6.1 (False statements, fraud, and misrepresentation).
that sanctions are appropriate vs. RRFS for its misappropriation of funds, covert rejection of assessments, falsification of records that allowed the unjust enrichment of undisclosed partners and co-conspirators;
that Nona Tobin is entitled to treble damages for the fraudulent confiscation of the subject property, valued on 12/27/19 at $505,000 property pursuant to NRS 207.470(1) as RRFS’s actions on the dozen 2014 unnoticed foreclosures constitute racketeering;
that sanctions are appropriate pursuant to NRS 18.010(2) vs. RRFS for its filing the improper interpleader action with penalties as all other named defendants’ liens have been released and Nationstar mortgage is judicially estopped from claiming it ever was the beneficial owner of the Hansen deed of trust;
that Nona Tobin, an individual’s, 3/28/17 deed is the sole valid title claim;
that Jimijack’s defective, 6/9/15 deed was inadmissible as evidence to support its title claim pursuant to NRS 111.345;
that the Joel Stokes-Civic Financial Services “agreement”, recorded on 5/23/19, and misrepresented to Judge Kishner on 5/21/19 as the Nationstar-Jimijack settlement was fraud on the court and sanctionable conduct pursuant to ;
that sanctions are appropriate vs. Nationstar and its Akerman attorneys pursuant to NRCP 11 (b)(1)(2)(3)(4) (misrepresentations in court filings), Nevada Rules of Professional Conduct 3.3 (candor to the tribunal), 3.4 (fairness to opposing counsel), 3.5A (relations with opposing counsel), 4.1 (truthfulness in statements to others), 4.4 (respect for the rights of third persons) and ABA (1992) Standards for Imposing Lawyer Sanctions 6.1 (False statements, fraud, and misrepresentation).
To declare that Joel Stokes’ deed, recorded on 5/1/19, was void as Jimijack had no interest to convey and that this transfer prior to the 6/5/19 trial was for the corrupt purpose of deceiving the court into allowing Joel Stokes and Nationstar to perpetrate a fraud on the court;
That Nona Tobin is entitled to recoup treble damages pursuant to NRS 207.470 (1) and (4);
That Nona Tobin is entitled to is entitled to recoup damages equivalent to five years of rental income from Jimijack;
that Nationstar Mortgage LLC’s (Herein “NSM” or “Nationstar”) claims to own the beneficial interest of the disputed Western Thrift Deed of Trust (Herein “DOT”) are false and sanctionable under NRS 205.395, NRS 205.377, NRS 207.400 and that Nona Tobin is entitled to treble damages by their misconduct pursuant to NRS 207.470;
that all instruments, encumbrances and assignments, and expungements of lis pendens that were improperly and/or unlawfully notarized, executed or recorded to create false claims, or were done for the improper purpose of abrogating Tobin’s rights during the pendency of litigation, and/or prior to the adjudication of Plaintiff’s claims in this instant action, are cancelled and declared without legal force and effect; and
that attorneys pay Tobin’s attorney fees and costs as a sanction pursuant to NRCP 11(b)(1)(3) and/or NRS 18.010(2)

[1] Sandy Valley Assocs. v. Sky Ranch Estates Owners Ass’n, 117 Nev. 948, 958, 35 P.3d 964, 970 (2001), citing American Fed. Musicians v. Reno’s Riverside, 86 Nev. 695, 475 P.2d 220 (1970).

Cause of Action: Conversion

According to Jay Young, Nevada Law Blog:

In Nevada, the elements for a claim of conversion are:

A distinct and intentional act of dominion by one which is wrongfully exerted over the property of another;
Act committed in denial of, or inconsistent with the rightful owner’s use and enjoyment of the property;
Act committed in derogation, exclusion, or defiance of the owner’s rights or titled in the property; and
Causation and damages

M.C. Multi-Family Development, L.L.C. v. Crestdale Assoc., Ltd., 193 P.3d 536, 543 (Nev., 2008); Evans v. Dean Witter Reynolds, 5 P.3d 1043 (Nev. 2000); Bader v. Cerri, 96 Nev. 352, 609 P.2d 314 (1980); Wantz v. Redfield, 74 Nev. 196 (1958); Boylan v. Huguet, 8 Nev. 345 (1873).