Judge Curtis A. Kin, Case Number: 22STCP04327, Date: 2023-10-19 Tentative Ruling

Judge: Curtis A. Kin, Case: 22STCP04327, Date: 2023-10-19 Tentative Ruling

Case Number: 22STCP04327 Hearing Date: October 19, 2023 Dept: 82

MOTION TO ENFORCE SETTLEMENT

Date: 10/19/23 (1:30 PM)

Case: Rosa M. Vargas v. Los Angeles County Metropolitan Transportation Authority (22STCP04327)

TENTATIV RULING:

Petitioner Rosa M. Vargas moves to enforce the Settlement Agreement and Release (“Settlement Agreement”) to which the parties agreed. (Gleizer Decl. ¶ 10 & Ex. A.)

The Settlement Agreement requires respondent Los Angeles County Metropolitan Transportation Authority to deliver a check for $21,000 payable to counsel for petitioner within 30 days of execution of the agreement. (Id. at ¶ 2.) The Settlement Agreement was executed on July 24, 2023. (Id. ¶ 10 & Ex. A.)

Respondent maintains that it cannot issue a check until it receives a W-9 from petitioner. (Id. ¶ 20, 21 & Exs. E, F.) Petitioner provided the W-9 of her counsel on the ground that only counsel’s W-9 is required. (Id. ¶ 16 & Ex. C.)

Petitioner is correct that the Settlement Agreement does not require her to provide a W-9, notwithstanding respondent’s argument that it is legally required to obtain the W-9.

“As a general rule, ‘all applicable laws in existence when an agreement is made, which laws the parties are presumed to know and to have had in mind, necessarily enter into the contract and form a part of it, without any stipulation to that effect, as if they were expressly referred to and incorporated.’ [Citation.]” (Swenson v. File (1970) 3 Cal.3d 389, 393.) Respondent thus contends that it requires a W-9 so that it has petitioner’s Taxpayer Identification Number. Otherwise, according to respondent, it would be obligated to withhold a certain percentage of the “reportable payment,” thereby preventing respondent from paying the full settlement amount. (26 U.S.C. [Internal Revenue Code, or “IRC”] § 3406(a)(1) [“In the case of any reportable payment, if—(A)the payee fails to furnish his TIN to the payor in the manner required….then the payor shall deduct and withhold from such payment a tax equal to the product of the fourth lowest rate of tax applicable under section 1(c) and such payment”].)

Reportable payments required to be shown on a return include payments under IRC § 6045. (IRC § 3406(b)(3).) Payments to attorneys are included under IRC § 6045(f). As noted above, petitioner’s counsel has already provided a W-9 to respondent. Portions of payments to the attorneys that are reportable under IRC § 6041(a) are governed by IRC § 6041(a) and 26 C.F.R. [Treasury Regulations] § 1.6041-1(a)(1)(iii), not IRC § 6045(f). (IRC § 6045(f)(2)(B).) Under IRC § 6041(a), all persons making payment to another person of $600 or more in any taxable year must furnish a return to the Internal Revenue Service. The question thus posed here is whether any portion of the payment under the Settlement Agreement belongs to petitioner.

Petitioner maintains that the payment is to her counsel because the check is payable to counsel and the Settlement Agreement was reached to avoid having to litigate a motion for attorney’s fees. (Gleizer Decl. ¶ 10 & Ex. A at ¶ E [“Whereas, the Parties recognize the uncertainties and costs of litigation, including litigating a motion for attorneys’ fees, and now desire to resolve, compromise, and settle the claims and controversies between and among them….”], ¶ 2 [check payable to counsel].)

The Settlement Agreement does state that the payment to counsel is “in full and complete satisfaction of any and all claims for compensation and costs that Vargas has or may have arising from the Action.” (Id. at ¶ 2.) However, the Petition in the instant proceeding was brought pursuant to the California Public Records Act (“CPRA”). (Pet. ¶¶ 39, 43, 45, 48.) The only relief petitioner could receive under the CPRA is disclosure of records. (Gov. Code § 7923.100.) Petitioner may not recover damages or any other compensation under the CPRA.

Respondent cites Treasury Regulation § 1.6041-1(a)(1)(iii) for the assertion that it is required to report the payment under the Settlement Agreement as a payment to petitioner, in addition to petitioner’s attorney. The portion of the regulation cited by respondent states: “Thus, a person who, in the course of a trade or business, pays $600 of taxable damages to a claimant by paying that amount to the claimant's attorney is required to file an information return under section 6041 with respect to the claimant, as well as another information return under section 6045(f) with respect to the claimant's attorney.” (Treas. Reg. § 1.6041-1(a)(1)(iii).) However, for the reasons stated above, the settlement payment does not constitute damages.

The only monetary payment allowed under the CPRA is payment of attorney fees and costs. (Gov. Code § 7923.115(a).) Attorney fees awarded under statute vest in the attorney, not the litigant. (See Flannery v. Prentice (2001) 26 Cal.4th 572, 586 [finding fees awarded under Gov. Code § 12965 belong to attorney]; Aerotek, Inc. v. Johnson Group Staffing Company, Inc. (2020) 54 Cal.App.5th 670, 677 [finding fees awarded under Civ. Code § 3426.4 belong to attorney].) Respondent argues that Flannery and Aerotek do not address payments under settlement agreements. While respondent is correct, the fact remains that the Settlement Agreement resolves the instant Petition brought under the CPRA and under the CPRA, the only monetary payment allowed is for attorney fees. (Gleizer Decl. ¶ 10 & Ex. A at ¶¶ A, 2.)

Based on the foregoing, the Court finds that petitioner is not required to provide a W-9. Accordingly, the motion is GRANTED.

With respect to petitioner’s request for $14,000 in additional attorney fees and $26 in additional costs (Gleizer Decl. ¶¶ 25-27 & Ex. I), respondent does not dispute that a prevailing petitioner under the CPRA can seek fees connected to recovering fees. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1133 [“[A]n attorney fee award should ordinarily include compensation for all the hours reasonably spent, including those relating solely to the fee”].) However, the 27 hours total that counsel for petitioner claims in connection with this motion is unreasonable. The Court finds instead that petitioner is entitled to an additional fee award based on 5 hours at $500 per hour, plus $26 in costs, for a total of $2,526.

Respondent Los Angeles County Metropolitan Transportation Authority is ordered to pay $23,526.00 ($21,000 settlement payment + $2,526 fee motion) to counsel for petitioner, Impact Attorneys, PC, within five (5) court days hereof.