Judge: Lisa R. Jaskol, Case: 19STCV25734, Date: 2023-07-12 Tentative Ruling
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Case Number: 19STCV25734 Hearing Date: August 7, 2023 Dept: 28
Having considered the petitioning papers, the Court rules as follows.
BACKGROUND
On July 23, 2019, Plaintiff A.M. (“Plaintiff”) filed this action against Defendants Watch Club, Inc. (“WC”), Reading for Education, LLC (“RFE”) and ASD.com, Inc. (“ASD”) for strict products liability and negligence.
On October 23, 2020, Plaintiff filed a First Amended Complaint.
On May 26, 2021, RFE and ASD filed an answer. On June 7, 2021, WC filed an answer.
On May 13, 2022, RFE and ASD filed a Cross-Complaint against Cross-Defendant WC for total equitable indemnity, contribution based on comparative fault, declaratory relief and negligence. On June 22, 2022, WC filed an answer.
Plaintiff, W.C., and RFE have tentatively settled the action for a gross amount of $1.25 million. On May 16, 2023, Petitioner Joseph Raymond Marlow (“Petitioner”), A.M.’s parent and guardian ad litem, filed a petition to approve minor's compromise to be heard on June 14, 2023. The Court continued the hearing to July 12, 2023. Petitioner proposes to distribute the net settlement proceeds into a special need trust (SNT) for the benefit of Plaintiff. On July 12, 2023, the Court held a hearing on the petition to confirm minor’s compromise with special needs trust. The Court continued the hearing to August 7, 2023 so that Petitioner could (1) provide the required 15 days’ mailed notice to three state agencies and file proof of service on the agencies with the Court, (2) resolve a discrepancy in the amounts Petitioner was asking the Court to authorize the trustee to pay California trust specialist counsel and Georgia specialist counsel, and (3) modify the amount of the attorney fee award on the proposed order consistent with the Court’s order.
No trial date is currently set.
PARTY’S REQUEST
Petitioner asks the Court to approve the petition to approve the compromise of Plaintiff’s disputed claim.
DISCUSSION
A. Trustee and bond
The SNT instrument states that First National Trust Company will be the SNT trustee.
Normally, bond is required for a trustee unless the trustee is a corporate fiduciary. (Cal. Rules of Court, rule 7.903(c)(5); Prob. Code, § 2320.) The proposed trustee meets that requirement and a bond is not required.
B. Notice
When a party seeks approval of a SNT, the party must provide notice of the hearing and service of the petition on three state agencies: the Department of Mental Health, the Department of Developmental Services, and the Department of Health Care Services. (Prob. Code, §§ 3602, subd. (f), 3611, subd. (c).) A proof of service filed on July 12, 2023 shows that this service and notice are now complete.
C. The proposed order
Petitioner submitted a new proposed order on July 25, 2023. Petitioner must correct the continued hearing date on the new proposed order at Section 1b and add the judicial officer at Section 1c (order pdf at p. 1).
In the petition, Petitioner states that the net settlement proceeds will be $637,808.97 and that this amount will be funded into the SNT. (Petition, sections 16f and 18b(4), Court’s pdf at pp. 6 and 8.) The new proposed order states that the net settlement proceeds and SNT funding will be $787,182.20. (Order, Sections 8b and 8b(2), order pdf at p .3) This is a $149,373.23 increase (compared to the previously-submitted proposed order) which appears to be caused by a reduction of Plaintiff’s counsel fees from $500,000 to $375,000 and the elimination of the $24,373.23 cost reimbursement initially requested in the petition (stated at petition, Section 14a(3) and itemized at Attachment 13b (Court’s pdf at pp. 6 and 33)). The Court asks that Petitioner's counsel be prepared to address these figures at the hearing.
D.
Other issues
Petitioner requests that the Court grant authority for the trustee to pay $6,610 and $3,200 to California trust specialist counsel and $4,810 to Georgia specialist counsel for eventual transfer of the trust action there. Petitioner clarified this request in counsel’s declaration filed on July 25, 2023 as $3,200 to Hook Law Center for initial preparation of the SNT instrument, $1,800 plus $4,810 ($6,610 total) to Georgia counsel, and $6,120 to The Dale Law Firm for securing approval of the SNT. The newly submitted proposed order contains those figures at p. 6. The total fee amount for SNT-related activities would be $15,930, which does not include Plaintiff’s counsel fees and is well above the usual $3,500-$6,500 range for SNT-related fees requested and approved in these petitions. The Court understands there may be additional complexities here relating to the intent to transfer the trust administration to Georgia. The Court asks that Petitioner's counsel be prepared to address this request at the hearing.
An
accounting is required in one year. The due date for the accounting is October 7, 2024.
CONCLUSION
Subject to counsel's responses to the Court's requests to address matters specified above, the Court GRANTS the Petition to Approve Compromise of Pending Action of Minor A.M. filed by Petitioner Joseph Raymond Marlow. The net balance is ordered distributed according to the SNT instrument.
Petitioner is ordered to give notice of this ruling.
Petitioner is ordered to file the proof of service of this ruling with the Court within five days.