Contractor took money and ran. I eventually obtained a judgment by default for $50k. Now I am going after the bond of $12,500 but there is another claimant, who originally claimed 20k but now is saying 60k. He did not initiate any court action. He is also over seas and will not return to US for court.
The other claimant wants to split the pot 50/50 but since I have more damages and a court judgment I feel like I am entitled to all of it. The surety lawyer says he will file an interpleader motion and let the court decide. Here are my questions:
1. How much will his attorney fees and court costs be, on average? I know this comes out of the bond.
2. How does the court decide how much each party gets? Factors, etc.
3. Does each party have to be present in court for the hearing?
I have this exact situation come up many times. At some point, the surety company will file an interpleader action, deposit what is left with the court, and let the court figure out how to distribute the funds.
I would expect that the surety will take $1500-2000 out for their fees and costs - maybe more.
The court usually asks the parties to reach an agreement and asks one of the attorneys to take the leading oar on negotiating an agreement. If the parties can't/don't/won't agree, then the court may take the amount of everyone's claim into account when determining how much each will get. Honestly, your default judgment, because it was a default, will not necessarily mean that a judge gives you full credit for $50,000.
The parties do not have to be present. Judges will often decide without a hearing, especially if the parties submit briefs.
If one of the parties is served but does not appear in the case, the judge could decide to give it all to the party that did appear, or divide the bond amount appropriately and hold onto the other claimant's share. I have seen that exact scenario.
To put it bluntly, neither you or the other claimant will probably get the entire bond amount. If you don't resolve it soon, you could risk getting even less, especially if other people put in claims. Getting around $6,000 now may be the best you will be able to do. If it goes to interpleader, you might end up with less than $6,000, will have to wait longer, and will incur filing fees.
The law says the bond proceeds will be split among valid claimants. If the surety files an interpleader action, any claimant who doesn't file a proper written response will be defaulted out of the case. This means that if the other claimant doesn't hire an attorney and file a proper timely response and you do, the surety will pay you and not the other claimant, assuming you can prove your case. You need to consult with an experienced construction attorney as soon as possible.
I have been involved in a number of these cases. Fees could exceed $2000+, but the interpleader complaint is largely a boiler plate form so I wouldn't expect much more in attorneys fees unless the attorney isn't a regular representative of the bonding companies.
Regarding the "Factors" the Court can look in to the merit and amount of each of the claims presented , but the depth of that analysis varies somewhat. Most courts end up dividing pro rata based on the value of each meritorious claim.
You need to be practical, at the end of the day you are arguing over a very small sum, and for that reason you need to keep a very close eye on your legal expenses in pursuing the money. (For example, after attorney's fees both the bonding company and your own filing fees (assuming you are able to draft/file/serve your own pleadings without attorney assistance, that $12,000 is likely to be about $9,000, and if there is any merit to the other parties claim, you should be practical in assuming the Court will probably divide some of the money off to the other claimant. If the other claimant is proposing a 50/50 split, and his/her claim is legitimate to some degree, you are probably spending your time arguing over a difference of $3,000 or less (ie the difference between $5,000 and $8,000). How much of your time and money is that $3,000 worth?
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