Judge: Peter A. Hernandez, Case: 20STCV34867, Date: 2024-08-26 Tentative Ruling

The Court often posts its tentative several days in advance of the hearing. Please re-check the tentative rulings the day before the hearing to be sure that the Court has not revised the ruling since the time it was posted.

Please call the clerk at (213) 633-0154 by 4:00 pm. the court day before the hearing if you wish to submit on the tentative.

Case Number: 20STCV34867    Hearing Date: August 26, 2024    Dept: 34

Allstate Insurance Company, et al v. Simon Gamzaletova et al. (20STCV34867)

1.         The Motion to Enter Judgment Pursuant to Code of Civil Procedure § 664.6 is GRANTED

2.         The Motion for the Allocation of Settlement Proceeds is GRANTED

Background

            On September 11, 2020, Plaintiffs Allstate Insurance Company, Allstate Indemnity Company, and Allstate Northbrook Indemnity Company (collectively “Plaintiffs”) filed as qui tam relators on behalf of the People of the State of California their Complaint against Defendants Simon Gamzaletova (“S. Gamzaletova”), Reymond Gamzaletova (“R. Gamzaletova”), Farideh Kohan (“Kohan”), Mustafa Asghari (“Asghari”), West Valley MRI, Inc. (“West Valley MRI”), and SoCal Imaging (“SoCal Imaging”) on causes of action for violations of the California Insurance Frauds Prevention Act and the California Unfair Competition Law. 

            On September 13, 2022, Plaintiffs amended their First Amended Complaint by substituting George Mednik, M.D. (“G. Mednik”), Ranon Udkoff, M.D. (“R. Udkoff”), Sepehr Katiraie, M.D. (“Katiraie”), Lynwood Medical Imaging, Inc. (“Lynwood Medical”), Udkoff Medical Imaging Corporation (“Udkoff Medical”), and Mednik Medical Corporation (“Mednik Medical”) for previously unidentified defendants. On December 27, 2022, Katiraie and Lynwood Medical agreed to pay a total of $50,000 to Plaintiffs to settle the matter. On November 28, 2023, G. Mednik, Mednik Medical agreed to pay a total of $395,000 to Plaintiffs to settle the matter. The same day, R. Udkoff and Udkoff Medical agreed to pay a total of $105,000 to Plaintiffs to settle the matter.

            On February 22, 2023, Plaintiffs filed their Second Amended Complaint which is the operative complaint.

            On January 18, 2024, the first day trial was to begin, R. Gamzaletova, Kohan, Asghari, West Valley MRI, and SoCal Imaging (collectively, the “Defendants”) agreed to pay a total of $1,600,000 to Plaintiffs to settle the matter. (Hasegawa Decl.¶ 2.) The settlement agreement was executed on March 21, 2024, and personally signed by each of the West Valley Defendants. (Hasegawa Decl. at ¶ 4, Ex. A.)

            After the moving papers for this motion were filed, Defendants made additional payments of $20,000 on June 21, 2024, and $10,000 on June 24, 2024. Of the $1.6 million owed under the Settlement Agreement, Defendants have now paid a total of $530,000.  (Reply Hasegawa Decl. at ¶ 2.)

1.         Motion to Enter Judgment Pursuant to Code of Civil Procedure § 664.6

Legal Standard

            Under section 664.6 of the Code of Civil Procedure, the court may enforce a settlement agreement made during pending litigation if the parties entered into the agreement either orally before the court or in writing outside the presence of the court. (Code Civ. Proc. § 664.6; Kirby v. Southern California Edison Co., (2000) 78 Cal.App.4th 840, 845.) The court may enter judgment under the settlement as long as the terms are sufficiently definite for the court to give them exact meaning. (Weddington Productions, Inc. v. Flick, (1998) 60 Cal.App.4th 793, 810-812.) The judge ruling on a motion under section 664.6 may consider oral testimony, documentary testimony, or declarations, and the judge may resolve disputed factual issues that arise out of the settlement agreement. (See Corkland v. Boscoe (1984) 156 Cal. App. 3d 989, 994.)

            For a court to enforce a settlement agreement between parties in a litigated action, two requirements must be met: (1) contract formation between parties and (2) “a writing signed by the parties which contains the material terms” that are “express[ed] . . . in a reasonably definite manner.” (Weddington Prod., Inc., 60 Cal. App. 4th at 811-14, 816 (quotation marks omitted) (citations omitted).) Furthermore, for a settlement agreement to be enforceable under the “summary procedures” of Code of Civil Procedure § 664.6, “a written settlement agreement [must be] signed personally by the litigant.” (Davidson v. Super. Ct. (1999) 70 Cal. App. 4th 514, 517 (citing Levy v. Super. Ct. (1995) 10 Cal. 4th 578, 580).)

Discussion

            Plaintiffs seeks entry of judgment for the balance of $1,070,000 because Defendants failed to make their monthly payments as described in the Settlement Agreement.

            Here, on January 18, 2024, the first day trial was to begin, Plaintiffs and Defendants  agreed to a settlement. (Hasegawa Decl.¶ 2.) The original settlement terms read onto the record included a total settlement amount of $1,600,000 with a lump-sum payment of $750,000 due on March 18, 2024, and the balance to be paid in installments over 36 months. (Hasegawa Decl. at ¶ 3.) To ensure payment of the initial lump sum, trial was continued to March 25, 2024, and a status conference was set for March 18, 2024. (Hasegawa Decl. at ¶ 5)

            Because Defendants had trouble coming up with the lump-sum payment in time, the parties entered into a written settlement agreement breaking up the $1,600,000 total settlement amount as follows: lump-sum payment of $400,000 by March 18, 2024, lump-sum payment of $350,000 by April 5, 2024, and the remaining $850,000 to be paid in monthly installments of $23,611.22 over 36 months, beginning April 1, 2024. (Hasegawa Decl. at ¶ 4, Ex. A.) In exchange, Plaintiffs agreed to release the Defendants from the claims in this action upon full payment. (Hasegawa Decl. at ¶ 4., Ex. A at p. 3 ¶ 2.1)

            The settlement agreement was executed on March 21, 2024, and personally signed by each of the Defendants. (Hasegawa Decl. at ¶ 4, Ex. A.) The status conference was then continued to April 17, 2024, to allow the Defendants additional time to complete the initial lump-sum payments. (Hasegawa Decl. at ¶ 5.) By the April 17 status conference, the Defendants had only paid $500,000 of the $750,00 lump-sum payments. (Hasegawa Decl. at ¶ 6.) Their counsel, Michael Khouri, advised that the Defendants would pay $100,000 by April 19, 2024, $150,000 by May 15, 2024, and that installment payments would begin on June 1, 2024. (Hasegawa Decl. at ¶ 6.) While Plaintiffs did not waive any of its rights under the settlement agreement, it was willing to see if the Defendants could bring their payments up to date. (Hasegawa Decl. at ¶ 6.) The status conference was continued to May 17, 2024, to accommodate this. (Hasegawa Decl. at ¶ 6.) By the May 17, 2024, status conference, the Defendants still had not made any further payments but were still representing through counsel that they were making efforts to comply and the status conference was continued to June 17, 2024. (Hasegawa Decl. at ¶ 7.)

            Allstate has not received any further payments. (Hasegawa Decl. at ¶ 8.) Thus far, Defendants have paid $500,000 of the $750,000 in lump-sum payments and have yet to pay any of the monthly installment payments. (Hasegawa Decl. at ¶ 18.)

            The Settlement Agreement includes the following provision:

The undersigned SETTLING PARTIES stipulate and agree that pursuant to California Code of Civil Procedure Section 664.6 the court shall retain jurisdiction over the SETTLING PARTIES until there is full performance of the terms of the settlement and this AGREEMENT.” (Settlement Agreement ¶ 2.6.) The Settlement Agreement further states “The failure to make any of the payments on or before the due date in accordance with the terms and conditions of this AGREEMENT shall constitute a material breach of this AGREEMENT, and Allstate shall have the right to accelerate the entire remaining unpaid balance of the SETTLEMENT AMOUNT and proceed with the foreclosure under the Deed of Trust, and/or any and all other remedies available under applicable law, including but not limited to the prosecution of the Lawsuit.

(Settlement Agreement ¶ 2.4.2)

            Therefore, the Court grants the unopposed Motion to Enforce Settlement. Judgment is entered against Defendants Simon Gamzaletova, Reymond Gamzaletova, Farideh Kohan, Mustafa Ashgari, West Valley MRI, Inc., and SoCal Imaging, jointly or severally in the amount of $1,070,000, with interest on the judgment according to the laws of the State of California.

2.         Motion for the Allocation of Settlement Proceeds

Legal Standard

            In a qui tam action brought under Insurance Code section 1871.7, Plaintiffs as Relator can apply for and be awarded all of the settlement proceeds of a qui tam action. (See Ins. Code § 1871.7(e)(4).) Allocating the funds pursuant to the statute is also within the court’s inherent powers to administer and dispose of suits before it. (Cottle v. Super. Ct. (1992) 3 Cal.App.4th 1367, 1376-77.) Under Insurance Code section 1871.7, the local district attorney and State of California have the right to intervene. (Ins. Code § 1871.7(e)(4).) If neither choose to proceed with the action, “the person bringing the action shall have the right to conduct the action.” (Ins. Code § 1871.7(e)(4)(B).) That includes the right to settle the case. (Ins. Code § 1871.7(g)(2)(A).)

Discussion

Here, Plaintiffs’ counsel performed significant work in investigating and prosecuting this matter, preparing for trial, negotiating the four settlement agreements, and enforcing settlement. This case was complex, involving twelve defendants and 623 alleged fraudulent claims. Thoroughly investigating, understanding, and then prosecuting this scheme thus required substantial time and effort. (Hasegawa Decl. ¶¶ 5-13; 15-44.) Moreover, “[f]ollowing extensive discovery in the case, Knox Ricksen began conducting informal settlement negotiations as well as attending two mediation sessions. The mediations required considerable preparation and 40 pages of briefing total. Plaintiffs, Katiraie and Lynwood Medical ultimately negotiated a settlement in December 2022. Plaintiffs then reached a settlement with G. Mednik, Mednik Medical, R. Udkoff and Udkoff Medical in November 2023.

But not until the morning of trial were Plaintiffs able to reach a settlement with the Defendants in January 2024. Knox Ricksen prepared the settlement documents for all four settlements. Each of the four settlements involved fairly complex legal and factual questions and required substantial work, including addressing Defendants’ fairly extensive redlines to the agreements.” (Id. at ¶ 26.) Additionally, “[Plaintiffs] has continued to incur legal fees following the settlements of all Defendants. For one, preparation of this Declaration and the accompanying motion required several hours of reviewing invoices spanning a five-year period.” (Id. at ¶ 29.)  Notably, no opposition was filed.

Accordingly, the court GRANTS the Motion for the Allocation of Settlement Proceeds.