Judge: Daniel M. Crowley, Case: BC691744, Date: 2022-08-19 Tentative Ruling

Case Number: BC691744    Hearing Date: August 19, 2022    Dept: 28

Defendant West Hills Hospital and Medical Center’s Motion to Enforce Settlement

Having considered the moving, opposing and reply papers, the Court rules as follows. 

BACKGROUND

On January 25, 2018, Plaintiff Joshua Saeta (“Plaintiff”) filed this action against Defendant West Hills Hospital and Medical Center (“Defendant”) for medical negligence.

On April 27, 2018, Defendant filed an answer.

On June 10, 2022, Defendant filed a Motion to Enforce Settlement to be heard on June 30, 2022. On June 20, 2022, Plaintiff filed an opposition. On June 23, 2022, Defendant filed a reply.

At the June 30, 2022, hearing on the motion, the Court heard argument and continued the hearing on the motion to August 12, 2022. The Court also scheduled a OSC Re: Whether the Settlement is Arbitrary and Capricious to be heard on August 12, 2022, so that the Court could evaluate the merits of the settlement.

Defendant filed the opening brief on July 15, 2022. Plaintiff filed an opposition on July 29, 2022. On August 5, 2022, Defendant filed a reply.

Trial is currently scheduled for March 1, 2023. 

PARTY’S REQUESTS

Defendant requests that the Court enforce settlement.

Plaintiff requests the Court deny the motion.

LEGAL STANDARD

Code of Civil Procedure section 664.6 states:

“(a) If parties to pending litigation stipulate, in a writing signed by the parties outside of the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.”

Code of Civil Procedure section 372(a)(1) states:

“When a minor, a person who lacks legal capacity to make decisions, or a person for whom a conservator has been appointed is a party, that person shall appear either by a guardian or conservator of the estate or by guardian ad litem appointed by the court in which the action or proceeding is pending, or by a judge thereof, in each case. A guardian ad litem may be appointed in any case when it is deemed by the court in which the action or proceeding is prosecuted, or by a judge thereof, expedient to appoint a guardian ad litem to represent the minor, person lacking legal capacity to make decisions, or person for whom a conservator has been appointed, notwithstanding that the person may have a guardian or conservator of the estate and may have appeared by the guardian or conservator of the estate. The guardian or conservator of the estate or guardian ad litem so appearing for any minor, person who lacks legal capacity to make decisions, or person for whom a conservator has been appointed shall have power, with the approval of the court in which the action or proceeding is pending, to compromise the same, to agree to the order or judgment to be entered therein for or against the ward or conservatee, and to satisfy any judgment or order in favor of the ward or conservatee or release or discharge any claim of the ward or conservatee pursuant to that compromise.”

DISCUSSION

Defendant claims that the case was settled in its entirety following a mediation on July 26, 2021. (Ex. A.) The stipulation was signed by all relevant parties to the litigation.  Plaintiff’s counsel subsequently submitted a Notice of Settlement of the Entire Case. Defendant prepared and sent Plaintiff a “General Release of All Claims,” as a settlement agreement, per the terms agreed to at mediation; Plaintiff and Plaintiff’s counsel have yet to sign or return the release.

Plaintiff argues that Plaintiff repudiated the settlement before any approval by the Court. The filed notice of settlement made the settlement conditional, with a request for dismissal to be filed by February 10, 2022. According to Plaintiff, the conditions required for settlement were not met before this deadline, resulting in the settlement not being enforceable. (Declaration of Jennifer Saeta ¶ 8.; Declaration of Steven Saeta ¶ 7) Additionally, parties at the mediation state they rescinded any intent to enter into a settlement agreement. (J. Saeta Decl. ¶ 9; S. Saeta Decl. ¶ 9.) Additionally, it appears that the conservators who signed the agreement did not have prior court approval to facilitate such a claim.

Essentially, Plaintiff argues that because his guardians repudiated the settlement reached at the July 26, 2022, mediation before the Court approved it, the settlement cannot be enforced.  It is true that the Court must defer to the guardians’ decision to repudiate the settlement, but that deference is not unlimited.  The Court may still enforce the settlement if the Court finds that the repudiation is averse to the interests of the Plaintiff.  (Scruton v. Korean Air Lines Co. (1995) 39 Cal.App.4th 1596, 1608.)

In Scruton, the Court found that under California Civil Code section 372, a guardian had no power, without authorization of the trial court, to bind a minor to a compromise of their claims, and that any purported settlement entered into by the guardian was neither final nor binding until trial court approval. Hence, a settlement could be repudiated by the guardian at any time until such court approval was obtained. The Court held that the trial court considering the defendant’s motion to enforce the settlement, when faced with a rejected compromise, was required to grant the guardian some deference, and could only unilaterally enforce the settlement upon a finding that the guardian’s repudiation was averse to the best interests of the minor. Because the trial court failed to make such a finding, the trial court’s enforcement of the settlement was reversed. (Scruton v. Korean Air Lines Co. (1995) 39 Cal.App.4th 1596, 1608.)

The Scruton Court found support in the Ninth Circuit Court of Appeals' decision in Dacanay v. Mendoza (9th Cir. 1978) 573 F.2d 1075:

“Research has revealed no California cases which deal specifically with the power of a guardian ad litem to repudiate a settlement before trial court approval, or the power of the trial court to enforce a compromise of a minor's claim despite a guardian's repudiation. However, the Ninth Circuit Court of Appeals' decision in Dacanay v. Mendoza (9th Cir. 1978) 573 F.2d 1075 is squarely on point. While Dacanay involved application of Guam law, the Guam Code of Civil Procedure section 372 is patterned after and closely follows the language of California's section 372 (573 F.2d at p. 10787), and so it is persuasive authority.”

(Scruton v. Korean Air Lines Co. (1995) 39 Cal.App.4th 1596, 1604.)

In, Dacanay, the Court noted that the power of a guardian to repudiate a settlement was limited, however. 

“Our holding does not imply that guardian ad litem may capriciously frustrate the efforts of the adversary of a minor litigant to negotiate a fair settlement. As emphasized above, the binding characteristic of the settlement derives from the approval of the court and not from the consent of the guardian ad litem, who is but an officer of the court. Therefore, an obdurate guardian ad litem cannot with impunity foreclose the court from directing a proposed settlement; otherwise, the court's jurisdiction over the minor as a ward of the court would be surrendered to one of the court's own officers.

(Dacanay v. Mendoza (9th Cir. 1978) 573 F.2d 1075, 1080.)

Therefore, under Scruton and Dacanay, a finding that a guardian effectively repudiated a settlement does not end the court's inquiry. Rather, even though a guardian may make a timely repudiation, the trial court may unilaterally enforce the compromise if the court finds the guardian acted arbitrarily, capriciously, and inimical to the plaintiff’s best interest. Scruton, supra, 39 Cal. App. 4th at 1607, 1608; Dacanay, supra, 573 F.2d at 1080.
            At the June 30, 2022, hearing, the Court requested briefing on the issue of whether in repudiating the subject settlement, Plaintiff’s guardians acted arbitrarily, capriciously, or inimical to the Plaintiff’s interests.  Defendant filed a brief explaining that the Plaintiff’s guardians had agreed to a settlement of $4,250,000, from which $709,166.67 in attorney’s fees would be paid, as well as a MediCal lien of approximately $623,761 and a MediCare lien of approximately $41,715, each of which would be subject to negotiation between Plaintiff and MediCal or MediCare. The net settlement to Plaintiff, therefore, would be+/- $3,00’0,000. Defendant explained that the value of Plaintiffs settlement is impacted by Plaintiff’s life expectancy. Plaintiff argued that Plaintiff would live until 2036. The Defendant's expert projects his life expectancy at an additional 7-8 years, i.e., to about 2029.  Defendant argued that most of Plaintiff’s ongoing medical needs be covered by medical insurance, apart from home nursing care if he continues to reside at the family home. Prior to Covid, he had been residing at Healthy Life Congregate Care in Simi Valley, which was paid for through his Social Security payments, at a total cost of about $2,000/month. Defendant argued that the cost of Plaintiffs true medical and care needs is best reflected by the MediCare and MediCal liens in the case, which are $623,761 (MediCal) and $41,715 (MediCare) during the 4 ½ 11 years from Feb. 2017 - July 2021, averaging about $147,000/year. Defendant argues that the pending settlement more than covers those care needs, especially with a guaranteed annuity, with significant money left over.

Plaintiff’s brief did not address the merits or lack thereof of the settlement sought to be repudiated, and, instead, focuses simply on the point that a settlement cannot be enforced absent the Court’s approval of it.  The parties were ordered to show cause on August 11, 2022, why the settlement was arbitrary or capricious.  The order should have been to show cause as to whether the guardians’ repudiation of the settlement was arbitrary or capricious, but the outcome is the same – in essence, the Court requested briefing on the issues presented in Scruton, supra, 39 Cal. App. 4th at 1607, 1608; Dacanay, supra, 573 F.2d at 1080.  Plaintiff’s brief failed to present any fact or argument on the merits of the issues as to why the settlement should not be enforced or why the guardians’ repudiation of the settlement was not arbitrary, capricious, or inimical to the Plaintiff’s best interest.  Accordingly, the Court is left with Defendant’s presentation, and the Court can only find that the guardians’ repudiation of the settlement was arbitrary, capricious, and inimical to the Plaintiff’s best interests.

CONCLUSION

Defendant’s Motion to Enforce Settlement is GRANTED.  Plaintiff is ordered to file an MC-350 petition seeking approval of the settlement and an MC-351 order.  The hearing on the motion to approve the settlement shall be on September 16, 2022, at 1:30 p.m. in Dept. 28.

All other future dates are advanced and vacated.  Discovery is cut-off. 

            Moving party is ordered to give notice of this ruling.                  

Moving Party is ordered to file the proof of service of this ruling with the Court within five days.

The parties are directed to the header of this tentative ruling for further instructions.