Zions Bancorporation N.A., dba California Bank & Trust v. RMS Cloud North America, LLC, RMS North America, LLC, et al.

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 ZIONS BANCORPORATION N.A., dba Case No.: 24-cv-2275-AJB-MMP CALIFORNIA BANK & TRUST, a Utah 12 ORDER: corporation,

13 (1) GRANTING RMS NA, INC. AND 14 Plaintiff, REZA PAYDAR’S MOTION TO STAY AND RETAIN FUNDS (Doc. No. 49) 15 v.

16 RMS CLOUD NORTH AMERICA, LLC, (2) DENYING RMS CLOUD NORTH a Delaware limited liability company; AMERICA, LLC’S MOTION FOR 17 RMS NORTH AMERICA, LLC, a DISBURSEMENT OF FUNDS (Doc. No. 18 Delaware limited liability company, et al., 50)

19 Defendants. (3) STAYING CASE PENDING 20 RESOLUTION OF STATE COURT ACTION 21 22 23 Before the Court are two motions: (1) RMS NA, Inc. and Reza Paydar’s (“RMS 24 NA”) Motion to Stay the Interpleader Action and Retain the Funds, or in the Alternative, 25 Transfer the Funds (Doc. No. 49) and (2) RMS Cloud North America LLC’s (“RMS 26 Cloud”) Motion for Disbursement of Interpleaded Funds (Doc. No. 50). The Court finds 27 the matters suitable for determination on the papers and without oral argument, pursuant 28 to Local Civil Rule 7.1.d.1. 1 I. BACKGROUND 2 A. The Related Action 3 On August 1, 2024, RMS NA filed a complaint against RMS (AUS) PTY LTD 4 (“RMS Australia”), RMS GLOBAL PTY LTD (“RMS Global”), P & J Buttigieg Nominees 5 Pty Ltd, Peter Anthony Buttigieg, Jennifer Lynn Buttigieg, Ascott 2 Pte Ltd, and Advent 6 Partners 3 Fund LP (collectively, the “Defendants”), asserting claims for breach of 7 contract, breach of fiduciary duty, intentional interference with contract, negligent 8 interference with contract, fraud, and declaratory relief (the “Related Action”). RMS NA, 9 Inc. v. RMS (AUS) PTY LTD, No. 3:24-cv-1366-AJB-MMP (S.D. Cal. Aug. 1, 2024). 10 RMS NA filed an amended complaint on November 27, 2024. RMS NA, No. 24-cv-1366- 11 AJB-MMP, First Amended Complaint, Doc. No. 49. And a second amended complaint on 12 March 11, 2025. RMS NA, No. 3:24-cv-1366-AJB-MMP, Second Amended Complaint, 13 Doc. No. 67. 14 On April 1, 2025, Defendants in the Related Action filed two motions to dismiss 15 RMS NA’s Second Amended Complaint pursuant to Federal Rules of Civil Procedure 16 12(b)(1) for lack of subject matter jurisdiction and 12(b)6) for failure to state a claim. 17 RMS NA, No. 24-cv-1366-AJB-MMP, Motions to Dismiss, Doc. Nos. 70; 71. The Court 18 granted the motions to dismiss, finding the parties in the Related Action were not diverse. 19 RMS NA, No. 24-cv-1366-AJB-MMP, Order Granting Motions to Dismiss, Doc. No. 84. 20 On November 25, 2025, RMS NA refiled its complaint in the Superior Court of the State 21 of California against the same defendants and asserting the same causes of action as those 22 alleged in the Related Action. (Doc. No. 49-1 at 4.) 23 B. The Interpleader Action 24 The instant interpleader action arises from a dispute over ownership of funds held in 25 two commercial checking accounts maintained by Zions Bancorporation, N.A. d/b/a 26 California Bank & Trust (“CB&T”) (the “Disputed Accounts”) (“Interpleader Action”). 27 (Doc. No. 7–8.) RMS North America, LLC (“RMS North America”) is a CB&T business 28 1 customer that maintained the Disputed Accounts at CB&T’s La Jolla branch pursuant to 2 CB&T’s Deposit Account Agreement. (Id.) 3 In September 2024, CB&T was notified of a dispute regarding ownership of the 4 Disputed Accounts. (Doc. No. 1 ¶ 9.) On September 20, 2024, RMS North America 5 requested that CB&T place a debit block on the accounts, advising CB&T of an ongoing 6 ownership dispute. (Id.) In accordance with its Deposit Account Agreement, CB&T placed 7 a hold on the accounts. (Id.) Shortly thereafter, conflicting demands were made on the 8 accounts. (Id. ¶ 11–12.) On September 25, 2024, Mr. Peter Buttigieg, a defendant in the 9 Related Action, sought restoration of access to the accounts. (Id. ¶ 11.) CB&T directed Mr. 10 Buttigieg to resolve the issue with RMS North America pursuant to the Deposit Account 11 Agreements. (Id. ¶ 11.) On October 7, 2024, RMS Cloud notified CB&T that RMS Cloud 12 was the lawful owner of the Disputed Accounts pursuant to an Asset Purchase Agreement, 13 purportedly effective September 20, 2024. (Id. ¶ 12.) RMS Cloud further asserted that RMS 14 North America had been dissolved. (Id. ¶ 13.) CB&T was subsequently notified that the 15 Related Action was filed concerning, among other issues, the parties’ respective rights to 16 the Disputed Accounts. (Id. ¶ 10.) 17 Faced with these competing claims and the risk of multiple liability, CB&T 18 determined that it could not safely disburse the funds without judicial intervention. (Id. 19 ¶ 17.) Thus, on December 5, 2024, CB&T filed the instant action in interpleader against 20 RMS, RMS Cloud, and RMS North America (collectively, “Defendants-in-Interpleader”) 21 arising from competing claims to the Disputed Accounts. (Doc. No. 1.) 22 Only July 11, 2025, at the Early Neutral Evaluation before Magistrate Judge 23 Michelle M. Pettit, the parties jointly moved to stay the Interpleader Action pending 24 resolution of motions to dismiss filed in the Related Action. (Doc. No. 37.) The Court 25 granted the parties’ joint motion and stayed the Interpleader Action on July 14, 2025. (Doc. 26 No. 38.) 27 On August 1, 2025, the parties to the Interpleader Action stipulated and jointly 28 requested that the Court enter an order directing CB&T to deposit the funds from the 1 Disputed Accounts with the Court, less $17,500; discharge CB&T from the action; dismiss 2 RMS Cloud’s counterclaim against CB&T with prejudice; and withdraw CB&T’s pending 3 motion. (Doc. No. 39.) On August 5, 2025, the Court entered an order providing that: 4 (1) CB&T would deposit the funds from the Disputed Accounts, less $17,500, into the 5 Court’s registry; (2) upon receipt of the funds, CB&T would be discharged from the 6 litigation, and its motion to deposit funds and for judgment in interpleader would be 7 deemed withdrawn; (3) RMS Cloud’s counterclaim against CB&T was dismissed with 8 prejudice; and (4) RMS Cloud’s remaining claims against RMS NA would remain stayed. 9 (Doc No. 40.) On August 18, 2025, CB&T filed a declaration stating that it would deposit 10 $579,045.27, the funds from the Disputed Accounts, with the Clerk of the Court. (Doc. No. 11 42.) And on August 25, 2025, consistent with that declaration, the Court ordered CB&T to 12 deposit $579,045.27 with the Clerk as interpleader funds (the “Interpleaded Funds”). (Doc. 13 No. 43.) 14 On November 19, 2025, the Court issued an order setting a show cause hearing as 15 to why the Interpleader Action should not be dismissed in light of the resolution of the 16 Related Action. (Doc. No. 45.) The Court held the show cause hearing on December 11, 17 2025. (Doc. No. 48.) The pending motions follow. 18 II. DISCUSSION 19 A. Jurisdiction Over the Interpleaded Funds 20 RMS Cloud argues that it is the only party claiming entitlement to the Interpleader 21 Funds. (Doc. No. 50-1 at 3.) Thus, because the federal interpleader statute, 28 U.S.C. 22 § 1335, only permits the Court to address disputes between “two or more adverse 23 claimants” that “are claiming or may claim to be entitled” to money or property, the Court 24 lacks jurisdiction, this case should be dismissed, and the Interpleaded Funds be released to 25 RMS Cloud. (Id. at 2–3 (citing 28 U.S.C. § 1335(a)(1)).) 26 RMS counters, stating that it has “always asserted its entitlement to the 27 [I]nterpleaded [F]unds—first by way of a district court action, then vis-à-vis a state court 28 action.” (Doc. No. 52 (emphasis in original).) RMS argues that because this Court 1 “exercises supreme control over the funds in its registry, it should retain the [Interpleaded] 2 Funds and stay the interpleader action to preserve the status quo while the Parties’ dispute 3 is adjudicated in state court.” (Doc. No. 49-1 at 5.) According to RMS, the Court assumed 4 in rem jurisdiction over the Interpleader Funds when CB&T deposited the funds into the 5 Court’s registry. Once deposited, the Court’s authority attached to the res itself and 6 continues regardless of the subsequent dismissal of the Related Action. (Id.) The Court 7 agrees. 8 As an initial matter, the Court finds RMS Cloud’s argument that there are not two 9 or more adverse claimants claiming entitlement of Interpleaded Funds unpersuasive. As a 10 former member of RMS North America, RMS essentially asserted a claim to the 11 Interpleaded Funds through the Related Action. RMS has maintained that “RMS North 12 America, LLC was fraudulently terminated and some of its assets were fraudulently 13 transferred to RMS Cloud North America, LLC and others.” (Doc. No. 9 ¶ 3.) Because 14 “[t]he court’s jurisdiction under the interpleader statute extends to potential, as well as 15 actual, claims” the Court finds it has jurisdiction over this action. Minnesota Mut. Life Ins. 16 Co. v. Ensley, 174 F.3d 977, 980 (9th Cir. 1999) (emphasis added). 17 Moreover, once the Interpleaded Funds were deposited into the Court’s registry, the 18 funds became subject to the Court’s continuing in rem jurisdiction. “Funds deposited in the 19 registry of a federal district court are in custodia legis.” United States v. Rubenstein, 971 20 F.2d 288, 294 (9th Cir. 1992). As such, the district court’s control over the funds is virtually 21 supreme. Id. (citing U.S. v. Van Cauwenberghe, 934 F.2d 1048, 1062; Landau v. Vallen, 22 895 F.2d 888, 893–94). Delivery of funds deposited with the court are to be made “under 23 the direction of the court.” 28 U.S.C. § 2041. And “[n]o money deposited under section 24 2041 of this title shall be withdrawn except by order of court.” 28 U.S.C. § 2042. 25 Here, it is undisputed that the Interpleader Funds were deposited into the Court’s 26 registry pursuant to the parties’ stipulation and Court Order. (See Doc. Nos. 49 at 3–4; 50-1 27 at 5.) Thus, the Court’s jurisdiction over the funds persists until the Court orders 28 1 distribution of the funds. Accordingly, the Court retains authority to control and preserve 2 the Interpleader Funds. 3 B. Motion to Stay 4 The Court finds that a stay is appropriate. “Under Colorado River, considerations of 5 wise judicial administration, giving regard to conservation of judicial resources and 6 comprehensive disposition of litigation, may justify a decision by the district court to stay 7 federal proceedings pending the resolution of concurrent state court proceedings involving 8 the same matter.” Holder v. Holder, 305 F.3d 854, 867 (9th Cir. 2002) (internal quotation 9 marks and citations omitted). The doctrine applies only when the state and federal actions 10 are “substantially similar.” Nakash v. Marciano, 882 F.2d 1411, 1416 (9th Cir. 1989). 11 When that threshold requirement is satisfied, courts in the Ninth Circuit apply an 12 eight-factor test to determine whether to decline jurisdiction: 13 (1) which court first assumed jurisdiction over any property at stake; (2) the inconvenience of the federal forum; (3) the desire to avoid piecemeal 14 litigation; (4) the order in which the forums obtained jurisdiction; (5) whether 15 federal law or state law provides the rule of decision on the merits; (6) whether the state court proceedings can adequately protect the rights of the federal 16 litigants; (7) the desire to avoid forum shopping; and (8) whether the state 17 court proceedings will resolve all issues before the federal court. 18 R.R. St. & Co. Inc. v. Transp. Ins. Co., 656 F.3d 966, 978–79 (9th Cir. 2011). 19 Here, the state court action involves substantially similar issues and provides an 20 adequate forum for resolution of those issues. RMS Cloud argues that this action should 21 not be stayed because RMS “cannot make their threshold showing that the California state 22 court action will necessarily resolve the issues in this action.” (Doc. No. 51.) However, this 23 argument is undercut by RMS Cloud’s previous agreement to stay the Interpleader Action 24 pending resolution of the motions to dismiss in the Related Action. (See Doc. No. 37.) 25 Indeed, determining entitlement of the Interpleaded Funds necessarily turns on the outcome 26 of the state court action. Staying this case while retaining the funds in the Court’s registry 27 preserves the status quo, avoids duplicative litigation, and ensures that the funds remain 28 under judicial control pending final adjudication. The Court further finds that transfer of 1 funds to the state court is unnecessary at this time, as retention adequately protects the 2 interests of all parties. 3 CONCLUSION 4 For the foregoing reasons, the Court ORDERS as follows: 5 1. RMS Cloud North America LLC’s Motion for Disbursement of Interpleaded 6 || Funds is DENIED (Doc. No. 50); 7 2. RMS NA, Inc. and Reza Paydar’s Motion to Stay is GRANTED (Doc. 8 || No. 49); 9 3. This action is STAYED pending final resolution of the related state court 10 || proceeding; 11 4. The Clerk of Court will retain the Interpleaded Funds in the Court’s registry 12 |} until further order of this Court; and 13 5. The parties must file a joint status report within 14 days of final resolution of 14 || the state court action. 15 IT IS SO ORDERED. 16 || Dated: March 27, 2026 © ¢ 7 Hon. Anthony J.Battaglia 18 United States District Judge 19 20 21 22 23 24 25 26 27 28