Acuna v. United States of America, No. 1:2011cv00406 - Document 39 (E.D. Cal. 2012)
Court Description: AMENDED FINDINGS and RECOMMENDATIONS Granting in Part Plaintiff's Motion to Approve Settlement re 32 , signed by Magistrate Judge Jennifer L. Thurston on 12/7/2012. Referred to Judge Lawrence J. O'Neill. Objections to F&R due by 12/21/2012. (Hall, S)
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 12 I.A., by and through his guardian ad litem, ADRIANA ACUNA, Plaintiff, 13 14 v. UNITED STATES OF AMERICA, 15 Defendant. 16 ) ) ) ) ) ) ) ) ) ) Case No.: 1:11-cv-00406 - LJO - JLT AMENDED FINDINGS AND RECOMMENDATIONS GRANTING IN PART PLAINTIFF’S MOTION TO APPROVE SETTLEMENT (Doc. 32) The plaintiff (“I.A.”) is a minor appearing in this proceeding by and through his guardian ad 17 18 litem (“GAL”) Adriana Acuna. Pending before the Court is an unopposed petition for approval of 19 settlement of the minor’s claims. (Doc. 32). For the following reasons, the Court recommends 20 Plaintiff’s motion for approval of the settlement be GRANTED IN PART. 21 I. 22 Factual and Procedural History Plaintiff initiated this action against the United States of America (“Defendant” or “the 23 Government”) on March 9, 2011, pursuant to the Federal Tort Claims Act arising under 28 U.S.C. § 24 2671. (Doc. 1). Plaintiff alleged medical malpractice and personal injuries arising from “employees 25 of federally supported medical clinics.” Id. at 1. 26 According to Plaintiff, Clinica Sierra Vista was employed by Adriana Acuna “to diagnose and 27 treat her condition of pregnancy and to do all things necessary for her care and care of her baby [I.A.], 28 including, but not limited to, pre-delivery care, the delivery, and post-delivery care.” (Doc. 1 at 4-5). 1 1 Plaintiff alleged “Defendant and its agents and employees . . . negligently delivered, examined, 2 treated, cared for, diagnosed, operated upon, attended and otherwise handled and controlled the minor 3 Plaintiff herein, thereby proximately causing injuries and damages to the minor Plaintiff, including but 4 not limited to severe neurological injuries and brain damage.” Id. at 5. Specifically, Plaintiff reports 5 Clinica Sierra Vista employees “failed to diagnose and treat neonatal alloimmune thrombocytopenia 6 resulting in a massive intracranial hemorrhage that left Plaintiff with significant cognitive defects.” 7 (Doc. 32 at 2). As a result, “Plaintiff will require daily attendant care for the remainder of his life.” 8 Id. Therefore, Plaintiff sought damages for past and future medical damages, as well as damages for 9 loss of future earning and earning capacity. (Doc. 1 at 6). 10 On November 16, 2012, Plaintiff filed the motion now before the Court, asserting the parties 11 reached a settlement agreement, subject to approval of the state court and District Court. (Doc. 32). 12 Under the terms of the agreement, the Government would pay “$4,800,000, with $2,000,000 to be 13 paid in up-front cash and $2,800,000 to purchase installment refund annuity contracts paying $4,540 14 monthly for the life of [I.A.], increasing at 3 percent compounded annually after the first year of 15 payments.” Id. at 2. Defendant filed a notice of non-opposition on November 16, 2012. (Doc. 33). On November 21, 2012, the Court ordered Plaintiff to file supplemental briefing in support of 16 17 the motion, noting the information required under the Local Rules was not clearly identified in the 18 moving papers. (Doc. 34). Further, the Court noted inconsistencies with the fee request and sought 19 explanation regarding the relevance of the state court’s approval of the action. Id. at 2. In compliance 20 with the Court’s order, Plaintiff filed the supplemental brief on November 26, 2012. (Doc. 35). The Court found good cause to excuse Plaintiff’s attendance at a hearing due to his medical 21 22 fragility, and determined the matter was suitable for decision without a hearing pursuant to Local Rule 23 230(g). (Doc. 36). Accordingly, the matter was taken under submission, and the Court issued 24 Findings and Recommendations that Plaintiff’s motion be granted in part on November 28, 2012. Id. 25 Plaintiff filed objections thereto on November 29, 2012. (Doc. 37). Based upon the information 26 provided, including new costs incurred by Plaintiff’s counsel, the Court withdrew the Findings and 27 Recommendations on December 3, 2012. (Doc. 38). 28 /// 2 1 II. Settlement Approval Standards No settlement or compromise of “a claim by or against a minor or incompetent person” is 2 3 effective unless it is approved by the Court. Local Rule 202(b). The purpose of requiring the Court’s 4 approval is to provide an additional level of oversight to ensure that the child’s interests are protected. 5 Toward this end, a party seeking approval of the settlement must disclose: the age and sex of the minor, the nature of the causes of action to be settled or compromised, the facts and circumstances out of which the causes of action arose, including the time, place and persons involved, the manner in which the compromise amount . . . was determined, including such additional information as may be required to enable the Court to determine the fairness of the settlement or compromise, and, if a personal injury claim, the nature and extent of the injury with sufficient particularity to inform the Court whether the injury is temporary or permanent. 6 7 8 9 10 11 Local Rule 202(b)(2). Generally, federal courts refer to applicable state law in determining whether to 12 approve the settlement of a minor’s claims. See e.g., Walden v. Moffett, 2007 U.S. Dist. LEXIS 13 70507, at *6 (E.D. Cal. Sept. 20, 2007); MAP v. City of Bakersfield, 2009 U.S. Dist. LEXIS 7519, at 14 *5 (E.D. Cal. Jan. 23, 2009); see also Schwarzer, Tashima & Wagstaffe, California Practice Guide: 15 Federal Civil Procedure before Trial § 15:138, p. 15-48 (2010). In California, a settlement or 16 compromise of a claim of a minor is not enforceable without court approval. Cal. Prob. Code §§ 2504, 17 3600 et seq.; Cal. Code Civ. Proc. § 372 (“The guardian. . . or guardian ad litem so appearing for any 18 minor . . . shall have power, with the approval of the court in which the action or proceeding is 19 pending, to compromise the same. . .”) (emphasis added). 20 III. Discussion and Analysis 21 The petition identifies I.A. as a four-year old male born on November 6, 2008, who is suing 22 Defendant for medical malpractice and negligence for actions related to his birth, as set forth above. 23 (Doc. 32-3 at 53; Doc. 35 at 1). I.A. suffers from a brain injury that caused “permanent right-sided 24 hemiparesis, seizures and significant developmental delays.” (Doc. 32-3 at 10, 53). As a result, I.A. 25 “will require specialized medical care and 24-hour per day attendant care, 7 days weekly.” Id. at 10. 26 A. 27 Plaintiff’s GAL “approves of the settlement and requests th[e] court to approve of the 28 settlement for the minor, her child.” (Doc. 32 at 5). Under the terms of settlement, the Government Settlement Amount 3 1 has agreed to pay $4,800,000.00 to I.A. and his parents. Id. at 2. The petition proposes that 2 $250,000.00 go “to Leobardo Acuna Gutierrez and Adriana Acuna for combined waiver of a future 3 wrongful death cause of action . . .” (Doc. 32-3 at 46). Thus, the amount designated for settlement of 4 I.A.’s claims totals $4,550,000.00. Of this amount, $2,800,000.00 would be used “to purchase 5 installment refund annuity contracts” paying $4,535.65 monthly, increasing at 3 percent compounded 6 annually after the first year of payments. (Doc. 32 at 2; Doc. 32-3 at 81). The remaining funds, after 7 the deductions set forth below, will be placed into the Special Needs Trust, established by the state 8 court on November 16, 2012. (Doc. 32-3 at 55; Doc. 35 at 3). 9 Based upon the information provided in the petition and the supporting documents, and 10 considering the totality of the facts and circumstances of this case, the Court finds the settlement in the 11 amount of $4,550,000.00 is fair, reasonable, and in the best interests of the child. Accordingly, the 12 Court recommends the proposed settlement total be APPROVED. Attorney’s Fees and Costs 13 B. 14 In addition to approval of the settlement itself, any attorney’s fee to be paid for representation 15 of a minor must be approved by the court. Cal. Prob. Code § 3601. To determine whether a request 16 for attorney’s fee is reasonable, the Court may consider the time and labor required, whether the 17 minor’s representative consented to the fee, the amount of money involved and the results obtained, 18 and whether the fee is fixed, hourly, or contingent. See California Rule of Court 7.955(b). 19 The parties agreed “that any attorney’s fees owed . . . shall not exceed twenty-five percent of 20 the Settlement Amount.” (Doc. 32-3 at 59). The petition proposes $730,213.67 be paid in attorney 21 fees to Plaintiff’s counsel, the Law Offices of Bruce G. Fagel. (Doc. 35 at 2). Under the Federal Tort 22 Claims Act, a party may recover fees up to twenty-five percent of the judgment. 28 U.S.C. § 2678. 23 Because the fees requested fall within the amount specified under the Federal Tort Claims Act and 24 Plaintiff’s GAL has indicated her assent to the fee award (Doc. 32 at 5), the Court finds the fee award 25 of $730,213.67 is reasonable, and recommends the amount be GRANTED. Attorney’s Costs 26 C. 27 The parties propose “holding the sum of $100,000 for costs” in a client trust account at the 28 Law Offices of Bruce G. Fagel. (Doc. 32-3 at 46, 54). According to the parties, the attorneys incurred 4 1 costs in the amount of $84,474.30.1 (Doc. 37 at 9). As a result, counsel requests $15,525.70 in the 2 client trust account. The parties explain “money remaining in the cost reserve, less 15% attorney fees, 3 will be paid to the [I.A.] Special Needs Trust” sixty days after its approval. (Doc. 32-3 at 46, 74). 4 Counsel has provided a cost report, demonstrating expenses through November 29, 2012. 5 (Doc. 37 at 5-9). Importantly, the report identifies several costs that are not the result of claims 6 against the Government, including: October 28, 2009 November 24, 2009 December 16, 2009 August 30, 2010 November 19, 2010 January 18, 2011 February 17, 2011 7 8 9 10 11 Filing summons Service of process- County of Kern Proof of service: County of Kern Court call: case management conference Court call: case management conference Court call: case management conference Court call: case management conference $355.00 $75.00 $60.00 $65.00 $65.00 $235.00 $85.00 12 (Doc. 37 at 5-9). These costs relate only to the case against the County, and the case management 13 conferences were held in the state court.2, 3 Accordingly, the Court is not entitled to recover costs for 14 the above services, and the amount of $940.00 shall be deducted from the cost award. 15 Further, the petition has not explained the reasonableness of holding funds in a client trust 16 account, or why counsel should be entitled to earn an addition 15% on this money without regard for 17 whether any further legal efforts will be required. Accordingly, the Court recommends an award of 18 costs in the amount of $83,534.30 be GRANTED. 19 D. Medical Lien 20 21 22 23 24 25 26 27 28 1 When Plaintiff filed the motion for approval of the settlement, counsel reported costs of $72,643.76. (Doc. 32-3 at 54). No additional costs were claimed in the supplemental briefing filed on November 21, 2012. Rather, counsel asserted increased costs in the objections to the Findings and Recommendations he filed November 29, 2012. (Doc. 37). 2 The Court may take notice of facts that are capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned. Fed. R. Evid. 201(b); United States v. Bernal-Obeso, 989 F.2d 331, 333 (9th Cir. 1993). The record of a state court proceeding is a source whose accuracy cannot reasonably be questioned, and judicial notice may be taken of court records. Mullis v. United States Bank. Ct., 828 F.2d 1385, 1388 n.9 (9th Cir. 1987) ); Valerio v. Boise Cascade Corp., 80 F.R.D. 626, 635 n.1 (N.D. Cal. 1978), aff’d 645 F.2d 699 (9th Cir. 1981). Therefore, judicial notice is taken of the court’s docket in Acuna v. County of Kern, Case No. S-1500-CV-268783. 3 Counsel has failed to affirmatively represent that these costs relate only to the child’s action and do not relate to the parents’ action. Presumably, the parents have agreed to pay the costs attributable to them out of the settlement proceeds they receive. However, because counsel seeks these costs against the child, the Court accepts the implied representation of counsel—that the costs do, indeed, relate only to the child’s action—because, of course, as an officer of the Court, anything less would be a breach of ethics. 5 1 Medi-Cal advanced the cost of medical services for Plaintiff, and the State has the right to be 2 reimbursed pursuant to the California Welfare and Institutions Code. (Doc. 32-3 at 89; see also Cal. 3 Welf. & Inst. Code §§ 14124.70- 14124.794, 14024). Specifically, Medi-Cal advanced the sum of 4 $81,618.02 for Plaintiff’s medical care. (Doc. 32-3 at 89). Accordingly, Plaintiff’s counsel requests 5 this sum be deducted from the settlement fund. (Doc. 32-3 at 46). Notably, however, the Department 6 of Health Care Services notified Plaintiff’s counsel that “[r]eimbursement in the amount of $61,213.52 7 will satisfy our lien.” Id. at 89. Thus, the Court finds that the $61,213.52 amount demanded by Medi- 8 Cal is reasonable, and the Court recommends payment be made to the Department of Health and Care 9 Services in the amount of $61,213.52. Plaintiff’s counsel requests twenty-five percent of the original lien amount be paid as attorney 10 11 fees to counsel, amounting to $20,404.50, which is permitted under Cal. Welf. & Inst. Code § 12 14124.72. (Doc. 32-3 at 46). The statute provides the twenty-five percent deduction from the lien 13 “represents the . . . attorney’s fees paid by the beneficiary and that portion of the costs of litigation 14 expenses.” Cal. Welf. & Inst. Code § 14124.72(d) (emphasis added). However, counsel has failed to 15 demonstrate the child is not paying twice for the same legal effort, or that the costs awarded above do 16 not include costs related to recovery the amount due on the Medi-Cal lien. Diamond v. John Martin 17 Co., 753 F.2d 1465, 1467 (9th Cir. 1985) (“[T]he burden of proof is on the party seeking the attorney 18 fee award.”) Consequently, the Court recommends the additional award of $20,404.50 in fees and 19 costs be DENIED. 20 IV. 21 22 Findings and Recommendations Based upon the foregoing, it is HEREBY RECOMMENDED: that the petition to approve settlement of the minor’s claims be GRANTED IN PART as follows: 23 1. The settlement of $4,550,000.00 for the claims of I.A. be APPROVED; 24 2. The motion to approve attorney fees be GRANTED in the amount of $730,213.67; 25 3. The motion to approve costs be GRANTED in the amount of $83,534.30; 26 4. Payment to the Department of Health Care Services be ORDERED in the amount of 27 $61,213.52; 28 6 1 5. The balance of the initial payment amount attributable to the child ($1,750,000 of 2 $4,550,000) after the lien, fees and costs are paid—which equals $875,038.51—be 3 ORDERED deposited in the “I[ ]. A[ ]. Special Needs Trust;” and 4 6. The remainder of the settlement proceeds, $2,800,000, be ORDERED to be used to 5 purchase installment refund annuity contracts which pay at least $4,535.65 monthly and 6 increase at least by 3 percent compounded annually, after the first year of payments. 7 These findings and recommendations are submitted to the United States District Judge 8 assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B) and Rule 304 of the Local 9 Rules of Practice for the United States District Court, Eastern District of California. Within 14 days 10 after being served with these findings and recommendations, any party may file written objections 11 with the Court and serve a copy on all parties. Such a document should be captioned “Objections to 12 Magistrate Judge’s Findings and Recommendations.” The parties are advised that failure to file 13 objections within the specified time may waive the right to appeal the district judge’s order. Martinez 14 v. Ylst, 951 F.2d 1153 (9th Cir. 1991). 15 16 17 18 19 IT IS SO ORDERED. Dated: December 7, 2012 /s/ Jennifer L. Thurston UNITED STATES MAGISTRATE JUDGE DEAC_Signature-END: 9j7khijed 20 21 22 23 24 25 26 27 28 7
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