Judge: Daniel M. Crowley, Case: BC691744, Date: 2022-10-05 Tentative Ruling

Case Number: BC691744    Hearing Date: October 5, 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.

The case was mediated in July 2021.

In October 2021, Plaintiff obtained new counsel.

On June 10, 2022, Defendant filed a Motion to Enforce Settlement to be heard on June 30, 2022. The Court continued the hearing on the motion to August 12, 2022. On June 20, 2022, Plaintiff filed an opposition. On June 23, 2022, Defendant filed a reply.

The Court also scheduled a hearing on an Order to Show Cause 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 an opposition.

The Court continued both hearings to October 5, 2022, so that parties could file supplemental briefs. Plaintiff submitted a brief on September 19, 2022. Defendant filed a reply on September 28, 2022. On September 30, 2022, Plaintiff 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.

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+/- $3,000,000.  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 original 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, from the Court’s perspective, the outcome was 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 issued a tentative ruling finding that it was 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. At the August 11, 2022 hearing, the Court concluded that Plaintiff had misunderstood his task in briefing the issue.  Accordingly, the Court invited further briefing on the issue, which both side have provided.

The question before the Court is whether Plaintiff’s representative’s repudiation of the proposed settlement was arbitrary, capricious, or inimical to the best interest of Plaintiff. (Scruton v. Korean Air Lines Co., Ltd. (1995) 39 CA4th 1596, 1608.) Plaintiff argues that the repudiation was not arbitrary, and instead was based on the best interests of Plaintiff based on known figured to both parties.  At the first mediation, Plaintiff suggested damages totaled $31,000,000.00, primarily based upon a loss of earnings and benefits claim of $12,107,856.00 and a life care plan of $15,444,527.00. At the second mediation, Plaintiff’s Guardian ad Litem “work[ed] out number on the fly,” and did not utilize a renewed life care plan or presentation. Plaintiff’s representatives felt that they were pressured into settlement without being able to conduct research into the actual damages associated with Plaintiff’s injury.

Plaintiff argues that even under Defendant’s projection for life expectancy for 7-8 years, actual expenditures would total $12,000,000.00. This is three times the total proposed settlement of $4,250,000.00.

Defendant argues that the agreed upon settlement is in Plaintiff’s best interest. Defendant states that based upon Plaintiff’s liens from February 2017 to October 2019, future medical expenses were estimated at about $131,086.00 per year. Additionally, the settlement was to be placed in a SNT which would unable Plaintiff to benefit from the trust without losing his MediCare, Supplemental Security Income, and other government disability benefits. Additionally, Plaintiff can purchase an annuity from the settlement proceeds.

The Court finds that while Plaintiff has no guarantee of obtaining a better settlement, or, even, of obtaining a better result at trial, Plaintiff’s new counsel’s repudiation of the settlement was not arbitrary, capricious or inimical to his Plaintiff’s best interests. Plaintiff’s representatives believe, based upon previously calculated healthcare costs, that the settlement if insufficient to provide care for Plaintiff. The decision to repudiate the settlement was based on these costs—even if Defendant disagrees with Plaintiff’s calculations, there is a sufficient factual basis to find the decision was not arbitrary, capricious, or inimical to Plaintiff’s best interests. Plaintiff’s representatives believe the amount is not enough to provide proper care to Plaintiff and seek a larger settlement in order to better care for Plaintiff. The Court denies the motion.

CONCLUSION

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

            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.