Judge: Monica Bachner, Case: 19STCV04131, Date: 2022-08-22 Tentative Ruling

Department 71: Attorneys who elect to submit on these published tentative rulings, without making an appearance at the hearing, may so notify the Court by communicating this to the Department's staff at (213) 830-0771 before the set hearing time.  See, e.g., CRC Rule 324(b).   All parties are otherwise encouraged to appear by Court Call for all matters.

Case Number: 19STCV04131    Hearing Date: August 22, 2022    Dept: 71

Superior Court of California

County of Los Angeles

DEPARTMENT 71

TENTATIVE RULING

Petitioners’ petitions to approve minors’ compromises are granted.  An Order to Show Cause as to Proof of Purchase of the Annuities is scheduled for ______________. 

Petitioner Julia Flores Sanchez (“Sanchez”), on behalf of Claimant Gabriela Esther Flores (“Gabriela”) and Petitioner Ma Adela Flores-Sanchez (“Florez-Sanchez”), on behalf of Claimant Jonathan Romualdo (“Jonathan”) petition the Court to approve minors’ compromises in the settlement of the instant action. 

I.                Background

On February 6, 2019, Petitioners Sanchez and Flores-Sanchez (collectively, “Petitioners”), individually and each as a guardian ad litem for Gabriela and Jonathan (collectively, “Claimants”), together with other named plaintiffs (collectively, “Plaintiffs”) filed a complaint against Defendants Fernando L. Salcedo (“Fernando”) and Carmen H. Salcedo (“Carmen”) individually and as trustees of the Salcedo Family Trust U/D/T dated February 19, 1997 (“Trust”), 685 W 4^th Street SP, LLC (“685 LLC”), and 225 W. 25^th, LLC (“225 LLC”) (collectively, “Defendants”) for causes of action based on habitability issues in real property located at 225 W. 25^th Street, Los Angeles, California, 90007 (“Property”), in which Plaintiffs were tenants.  On May 12, 2021, Plaintiffs filed a Doe Amendment to the complaint naming Ronald Mayer (“Mayer”), as an individual, as DOE 2. On March 30, 2022, Plaintiffs filed their first amended complaint (“FAC”) in the action.  The Court notes the FAC names “SIOF 2 Properties, LLC” (“SIOF”) as a defendant, based on it being the current name of 685 LLC, which changed its business name to SIOF.  (FAC ¶6.)  Pursuant to the instant petitions Defendants have agreed to pay Plaintiffs to settle the claims.  (Petitions, ¶¶10, 11.) 

A settlement was reached on pursuant to which Defendants agreed to pay a total of $1,975,000 to the 11 plaintiffs, nine adults (including one minor who aged out) and two minors. Defendants’ total settlement is to be distributed by having the gross settlement amount of $50,000 for each minor, less 25% attorneys’ fees (in the amount of $12,500), resulting in a net amount of $37,500 for each minor, with the remaining $1,825,000 to be paid to eight of the adults (less attorneys’ fees at the rate of 45% and costs) and the final $50,000 to be paid to the minor who aged out, also less attorneys’ fees in the amount of $12,500.  (Decl. of Castelblanco ¶9.) All procedural requirements have been met, as Petitioners have completed a Judicial Council form MC-350 on behalf of each Claimant, signed by Petitioners as well as Form MC-351 on Claimants’ behalf. 

II.             Legal Standard

Compromises of disputed claims brought by minors are governed in part by C.C.P. §372.  The statute allows a guardian ad litem to appear in court on behalf of a minor claimant and gives the guardian ad litem the power to compromise the minor’s claim “with the approval of the court in which the action or proceeding is pending.”  A petition for court approval of a compromise must be verified by the petitioner and must contain a full disclosure of all information that has any bearing upon the reasonableness of the compromise or covenant.  (CRC Rule 7.950.)  CRC Rule 7.952(a) requires the attendance of the petitioner and claimant at the hearing on the compromise of the claim unless the court for good causes dispenses with their personal appearance.

“Neither section 372 nor the California Rules of Court (rules 7.950 & 7.952) contemplates a noticed motion and adversary hearing when court approval of a minor’s compromise is sought. Although we need not decide the question, it would appear that a petition to approve or disapprove a minor’s compromise may be decided by the superior court, ex parte, in chambers.”  (Pearson v. Superior Court (2012) 202 Cal. App. 4th 1333, 1337.) 

CRC Rule 7.955(a) requires the Court to use “a reasonable fee standard” when approving and allowing the amount of attorneys’ fees payable from money to be paid for the benefit of a person with a disability and requires that the Court “give consideration to the terms of any representation agreement made between the attorney and the representative of the minor… and evaluate the agreement based on the facts and circumstances existing at the time the agreement was made, except where the attorney and the representative of the minor… contemplated that the attorney's fee would be affected by later events.” 

CRC Rule 7.955(b) sets forth fourteen nonexclusive factors the Court may consider in determining a reasonable attorney’s fee.  CRC Rule 7.955(c) requires that a petition requesting Court approval and allowance of an attorney’s fee under 7.955(a) must include a declaration from the attorney that addresses the factors listed in 7.955(b) that are applicable to the matter before the Court.

III.            Analysis

Petitioners seeks court approval for a settlement under which Claimants would receive $50,000 each.  Attorneys’ fees in the amount of $12,500, representing 25% of Claimants’ settlements, will be deducted from Claimants’ settlement amounts.  As such, Claimants’ net proceeds are $37,500.  (Petitions ¶16.) 

The Court notes the operative FAC and Petitions indicate that at the time the case was filed, Plaintiff Rigoberto Hipolito (“Hipolito” or “aged-out minor plaintiff”) was a minor plaintiff; however, he has since aged out of minor status, and as such, a petition for approval of minor’s compromise has not been filed as to his share of the settlement.  However, Plaintiffs’ counsel asserts that Hipolito will receive a $50,000 payment from which $12,500 in attorneys’ fees will be deducted, resulting in a net $37,500 payment.  (Decl. of Castelblanco ¶9.) 

This is a habitability suit, in which Claimants lived in uninhabitable conditions including faulty plumbing, deteriorated walls and ceilings, poor maintenance, and infestations of cockroaches, bed bugs, and mice which caused injuries including bug bites, loss of sleep, loss of appetite, and emotional distress, and which symptoms were treated with medication and rest.  (Petitions, ¶¶5-7; Decl. of Sanchez ¶¶3-4; Decl. of Flores-Sanchez ¶¶3-4.)  Claimants have recovered from these injuries with no permanent injuries.  (Petitions ¶8.) 

Having reviewed the petitions, the Court finds that the settlement is fair considering the risk of going to trial and the alleged injuries sustained by Plaintiffs. 

Petitioners have satisfied the requirements under CRC Rule 7.950 by disclosing information that bears upon the reasonableness of the compromise.  (Decl. of Castelblanco ¶¶5-8.)  Petitioners also submitted a declaration explaining the basis for the attorneys’ fees request, which is a 45% rate for Petitioners and the other adult plaintiffs and a 25% rate for Claimants (minor plaintiffs and the aged-out minor plaintiff) and in which all costs are borne by the adult plaintiffs, such that the effective rate of the entire case is approximately 43.48% instead of the 45% set forth in the Attorney-Client Contingency Fee Agreement, which provides for a 45% contingency fee on any recovery obtained on behalf of the clients, and in which the percentage for minor plaintiffs is limited to the amount allowed under California law and as approved by the Court. (Decl. of Castelblanco ¶¶9-12; Petitions, Attachments 17a ¶3 at pg. 2.)

Petitioners’ counsel declares the attorneys’ fees are reasonable as per CRC Rule 7.955 for the following reasons: (1) the action relates to habitability issues and counsel has handled hundreds of similar cases and has extensive experience; (2) there are 11 plaintiffs, two of whom are still minors, and counsel is charging the adults a 45% contingency fee, noting that if there had been no recovery, there would have been no attorney fee charge; (3) counsel is charging 25% contingency fee for the minors and the aged-out minor plaintiff, with all costs borne by the adults; (4) counsel has represented Plaintiffs since July 14, 2018, during which time counsel attempted assisting Plaintiffs with housing conditions and the parties engaged in extensive litigation including: (a) inspections of the Property, (b) subpoenas to government agencies and Defendants’ maintenance and pest control agents, (c) written discovery to all plaintiffs and defendants, (d) discovery conferences with Defendants, (e) hundreds of photographs and videos taken, and (f) investigation into Defendants’ business practices and expert visits; and (5) Defendants did not concede liability and were prepared to proceed to trial in the matter.  (Decl. of Castelblanco ¶12.)  The Court finds the attorneys’ fees request is reasonable considering the work performed by Plaintiffs’ counsel Eric E. Castelblanco (“Castelblanco”).

The settlement agreement appears reasonable.  Petitioners, the parents of Claimants, and the other adult plaintiffs are to receive more in settlement because a material component of the damages they sustained was their frustration in approaching management and trying to have the problems fixed, being forced to engage in self-help, complaining to the City and County inspectors, and most significantly, the frustration of seeing Claimants live in substandard conditions.  (Decl. of Castelblanco ¶7.)  In addition, Petitioners were working to pay monthly rent, put food on the table, and undertook the responsibility of taking care of the minors and, accordingly Plaintiffs’ counsel believes it is reasonable to allocate less of the settlement proceeds to the minors.  (Decl. of Castelblanco ¶¶7-8.)  Castelblanco also declares that the settlement proceeds, after deduction of the amount to the minors, are to be distributed to Petitioners and as such, Claimants will benefit immediately from settlement proceeds provided to Petitioners.  (Decl. of Castelblanco ¶11.)  Finally, all costs are being borne by the adult plaintiffs.  (Decl. of Castelblance ¶ 12(c).)

The settlement’s attorneys’ fees award is based on a 45% contingency fee for the adult plaintiff and a 25% contingency fee for the minor plaintiffs, with an additional award of costs in the amount of $48,992 to be deducted from adult plaintiffs’ settlement award, such that no costs are deducted from Claimants’ awards.  (Decl. of Castelblanco ¶10.)  The Court finds the 25% contingency fee is reasonable and supported considering the services performed by Plaintiffs’ counsel. 

As required by CRC Rule 7.952, Petitioner and the Claimants are required to attend the hearing on the petitions.  The Court will therefore require attendance at the hearing in order to grant the petitions.

IV.          Conclusion

Based on the foregoing, the petitions to approve the minor’s compromises are granted.  An Order to Show Cause as to Proof of Purchase of the Annuities is scheduled for _____________________. 

Dated:  August ____, 2022

Hon. Monica Bachner

Judge of the Superior Court