Judge: Lynette Gridiron Winston, Case: 24PSCV01225, Date: 2024-10-24 Tentative Ruling

Case Number: 24PSCV01225    Hearing Date: October 24, 2024    Dept: 6

CASE NAME:  Raquel Armenta, by and through her Guardian Ad Litem Lindsay Bowman and Edward Delacruz v. Luis Toledo 

Claimant Raquel Armenta’s Petition for Approval of Compromise of Action for Person with a Disability.

TENTATIVE RULING 

The Court will CONTINUE the hearing to require Petitioner to provide the requisite 15 days’ notice by mail to the three state agencies and to submit a corrected proposed order addressing the defects noted herein. 

Petitioner is ordered to provide notice of the Court’s ruling and file proof of service of same within five days of the Court’s order. 

BACKGROUND 

This is a personal injury action. On April 17, 2024, plaintiff Raquel Armenta (Claimant), by and through her Guardian Ad Litem Lindsay Bowman (Petitioner), and plaintiff Edward Delacruz, filed this action against defendant Luis Toledo (Defendant) and Does 1 to 100, alleging causes of action for motor vehicle, general negligence, and loss of consortium. On April 17 , 2024, the Court approved Edward Delacruz’s application and order for appointment of Petitioner as guardian ad litem for Claimant. 

On September 26, 2024, Petitioner filed a petition for approval of compromise of claim or action or disposition of proceeds of judgment for minor or person with disability on behalf of Claimant. The petition is unopposed. 

LEGAL STANDARD

Court approval is required for all settlements of a minor's claim or that of a person lacking the capacity to make decisions. (Prob. Code, §§ 2504, 3500, 3600 et seq.; Code Civ. Proc., § 372; see Pearson v. Superior Court (2012) 202 Cal.App.4th 1333, 1337.) "[T]he protective role the court generally assumes in cases involving minors, [is] a role to assure that whatever is done is in the minor's best interests . . . . [I]ts primary concern is whether the compromise is sufficient to provide for the minor's injuries, care and treatment." (Goldberg v. Superior Court (1994) 23 Cal.App.4th 1378, 1382.) The same protection applies for a disabled person.

A petition for court approval of a compromise under Code of Civil Procedure section 372 must comply with California Rules of Court Rules 7.950, 7.951, and 7.952. The petition must be verified by the petitioner and contain a full disclosure of all information that has "any bearing upon the reasonableness" of the compromise or the covenant. (Cal. Rules of Court, rule 7.950.) The person compromising the claim on behalf of the person who lacks capacity, and the represented person, must attend the hearing on compromise of the claim unless the court for good cause dispenses with their personal appearance. (Cal. Rules of Court, rule 7.952(a).) An order for deposit of funds of a minor or person lacking decision-making capacity and a petition for the withdrawal of such funds must comply with California Rules of Court Rules 7.953 and 7.954. (Cal. Rules of Court, rule 3.1384; see also Super. Ct. L.A. County, Local Rules, rules 4.115-4.118.)

DISCUSSION

Form MC-350 (Rev. January 1, 2021)

The petition has been verified by Petitioner and presented on a fully completed mandatory Judicial Council Form MC-350, using the current January 1, 2021 revision. (Cal. Rule of Court Rule 7.950.) 

Settlement 

Claimant has agreed to settle her claims with Defendant in exchange for $50,000, $13,601.73 of which will go to Claimant. If approved, $10,904.79 will be paid in attorney’s fees, $6,380.82 will be paid for reimbursement of litigation costs advanced by Claimant’s attorneys, and $19,112.66 will be paid for medical expenses, leaving a balance of $13,601.73 for Claimant, to be paid to a special needs trust. 

Court approval is required for all settlements of a person with a disability. (Probate Code, §§ 3600, et seq.; Code Civ. Proc., § 372.) The Court has reviewed the proposed settlement and finds the Petition does not contain a full disclosure of all information that has any bearing upon the reasonableness of the settlement amount. It is unclear to the Court how $50,000.00 is sufficient for Claimant, who purports to have suffered a traumatic brain injury and will otherwise require 24/7 care for the rest of her life. (Petition, ¶ 8, subd. (c).) The Court will hear further from Petitioner at the hearing regarding the amount of the proposed settlement. 

Notice 

Probate Code Section 3611, subdivision (c), states: “Notice of the time and place of the hearing and a copy of the petition shall be mailed to the State Director of Health Care Services, the Director of State Hospitals, and the Director of Developmental Services at the office of each director in Sacramento at least 15 days before the hearing.” (Probate Code, § 3611, subd. (c).) No notice of the hearing or proof of service appears in the file demonstrating compliance with this requirement. Petitioner needs to correct this by providing the requisite notice to these agencies. 

Attorney's Fees

The retained attorney's information has been disclosed as required by Rule of Court 7.951. (Petition, ¶ 17, subd. (b).) There is an agreement for services provided in connection with the underlying claim. (Petition, ¶ 17, subd. (a)(2).) Copies of the agreements were submitted with the Petitions as required by Rule 7.951, subdivision (6), of the California Rules of Court. (Petition, Attach. 17a(2); Cal. Rules of Court, rule 7.951, subd. (6).)

Claimant’s counsel seeks to recover $10,904.79 in attorney fees from Claimant, i.e., 22% of $50,000.00. (Petition, ¶ 13, subd. (a); Id., Attach. 13a.) Counsel has provided a declaration addressing the reasonableness of the fee request, as required by Rule 7.955, subdivision (c), of the California Rules of Court, accounting for the factors specified in Rule 7.955, subdivision (b). (Ibid.; Cal. Rules of Court, rule 7.955, subd. (c).) Rule 7.955, subdivision (b), provides:

(b) Factors the court may consider in determining a reasonable attorney's fee. In determining a reasonable attorney's fee, the court may consider the following nonexclusive factors:

(1) The fact that a minor or person with a disability is involved and the circumstances of that minor or person with a disability.

(2) The amount of the fee in proportion to the value of the services performed.

(3) The novelty and difficulty of the questions involved and the skill required to perform the legal services properly.

(4) The amount involved and the results obtained.

(5) The time limitations or constraints imposed by the representative of the minor or person with a disability or by the circumstances.

(6) The nature and length of the professional relationship between the attorney and the representative of the minor or person with a disability.

(7) The experience, reputation, and ability of the attorney or attorneys performing the legal services.

(8) The time and labor required.

(9) The informed consent of the representative of the minor or person with a disability to the fee.

(10) The relative sophistication of the attorney and the representative of the minor or person with a disability.

(11) The likelihood, if apparent to the representative of the minor or person with a disability when the representation agreement was made, that the attorney's acceptance of the particular employment would preclude other employment.

(12) Whether the fee is fixed, hourly, or contingent.

(13) If the fee is contingent:

(A) The risk of loss borne by the attorney;

(B) The amount of costs advanced by the attorney; and

(C) The delay in payment of fees and reimbursement of costs paid by the attorney.

(14) Statutory requirements for representation agreements applicable to particular cases or claims.

(Cal. Rules of Court, rule 7.955, subd. (b).) The Court addresses these factors below.

Amount of Fee in Proportion to Value of Services Performed

Claimant’s counsel indicates that the contingency rate for the Claimant in this matter is 22%. (Petition, Attach. 13a, ¶ 4.)

Novelty and Difficulty

Claimant’s counsel indicates that the difficulty in this action involved resolving a $1.4 million self-funded ERISA lien down to $16,666.66, and a Medi-Cal lien of $379,506.72 down to $2,224.30. (Petition, Attach. 13a, ¶ 5.)

Amount Involved and Results Obtained

Claimant’s counsel indicates the gross recovery is $50,000.00 and that the contingency fee is 22%. (Petition, Attach. 13a, ¶ 4.)

Nature and Length of Professional Relationship

Claimant’s counsel indicates the firm has been representing Plaintiff since August 17, 2022 and that there was no relationship prior to that date. (Petition, Attachs. 13a, ¶ 6, and 17a(2).)

Experience, Reputation, and Ability of Counsel

Claimant’s counsel indicates having nine years of experience with complex medical malpractice and personal injury cases, with a focus on representing clients with catastrophic injuries. (Petition, Attach. 13a, ¶¶ 7, 9.)

Time and Labor Required

Claimant’s counsel provides no information about the amount of work undertaken for this case.

Acceptance of Case Precluding Other Employment

Claimant’s counsel does not address whether acceptance of this case precluded other employment.

Contingent Fee

Claimant’s counsel accepted Claimant’s case for a 39% contingency fee. (Petition, Attach. 17a.) But, given that Claimant’s counsel only seeks a 22% contingency, the Court finds Claimant’s counsel has adequately demonstrated the reasonableness of the fee award in light of the factors and circumstances in this case.

Medical Bills

Claimant incurred $1,816,754.26 in medical expenses. (Petition, ¶ 12, subd. (a).) There is an outstanding lien of $16,666.66 for an ERISA self-funded plan, $2,224.20 for Medi-Cal, and $221.80 for CEP America California. (Petition, ¶ 12, subds. (b)(2), (b)(3), (b)(5).)

Costs

Claimant’s counsel seeks to recover costs in the amount of $6,380.82. (Petition, ¶ 13, subd. (b).)

Amount to Be Paid to Claimants

The net amount to be paid to Claimant is $13,601.73. (Petitions, ¶ 15.)

Disposition of Balance of Proceeds

Petitioner requests that the net proceeds of $13,601.73 be transferred to a Special Needs Trust. (Petition, ¶ 18, subd. (b)(4).)

Special Needs Trust

When approving the establishment or funding of a special needs trust (SNT) from settlement proceeds, the Court must make the following findings under Probate Code section 3604, subdivision (b), i.e., there are factual allegations in the Petition and its attachments supporting the settlement that generally cover the requisite findings:

-          The SNT beneficiary has a disability which substantially impairs the individual’s ability to provide for her own care or custody and constitutes a substantial handicap;

-          The SNT beneficiary is likely to have special needs that will not be met without the trust; and

-          The money to be paid to the trust does not exceed the amount that appears reasonably necessary to meet the SNT beneficiary’s special needs.

The Court finds the proposed SNT meets the main requirements for court created or funded trusts. (Cal. Rules of Court, rule 7.903, subd. (c); LASC, rule 4.116, subd. (b).) But, the Court is unsure whether a Special Needs Trust is appropriate here given the small amount of net proceeds at stake. The Court will discuss this further with Petitioner at the hearing.

Trustee and Bond

The proposed initial trustee is Legacy Enhancement, a non-profit entity that hosts the pooled SNT. Normally, bond must be required of a trustee unless the trustee is a corporate fiduciary. (California Rules of Court, Rule 7.903(c)(5), Probate Code section 2320.) The proposed trustee does not meet that requirement. The Court will therefore require a $20,000.00 bond.

Court Appearance

Rule 7.952, subdivision (a), of the California Rules of Court requires attendance by the petitioner and claimant unless the court for good cause dispenses with their personal appearance. (Cal. Rules of Court, rule 7.952, subd. (a).) The Court finds that the appearances of the Claimant is not required due to Claimant’s disability. However, Petitioner’s attendance is required.

Prognosis

Claimant has a traumatic brain injury that will require 24/7 care for the rest of her life. (Petitions, ¶ 8, subd. (c).)

Proposed Order MC-351

Petitioner has filed a Proposed Order Form MC-351 for Claimant. However, paragraph 1 of the proposed order is incomplete and the proposed order does not contain the required Probate Code section 3604, subdivision (b) findings. Petitioner needs to submit a completed proposed order with those findings.

The Court also notes that proposed order does not address whether court supervision of the trust should proceed based upon the low funding amount of the trust. The Court therefore assumes that trust supervision will apply. However, filing fees in probate court, plus the costs of an accounting, would likely consume the small funding amount. The corrected proposed order will need to address this issue. 

Once the Petition is approved, the Court will require the trustee’s first accounting to be filed in the probate case within one year, which will provide an actual 14-month calendar due date. The corrected proposed order will need to address this issue. 

Additionally, when the petition is approved, the Court will set an OSC approximately 60 days out to ensure the funding of the settlement, submission of a bond, and the filing of LASC Form PRO 044 to open a trust supervision action in probate. The corrected proposed order will need to address this issue. 

Finally, the proposed order indicates that no bond is required. Given the Court’s decision to require a $20,000.00 bond, paragraph 11 of the corrected proposed order will need to be modified to comply with this bond requirement. 

CONCLUSION 

Based on the foregoing, the Court will CONTINUE the hearing to require Petitioner to provide the requisite 15 days’ notice by mail to the three state agencies and to submit a corrected proposed order addressing the defects noted herein. 

Petitioner is ordered to provide notice of the Court’s ruling and file proof of service of same within five days of the Court’s order.