Wednesday, January 22, 2014

Error Per Se? No Way!

F.B. v. Monier, No. C063239 (D3 Jan. 9, 2014)

The court of appeal—departing from a consistent line of cases going back thirty years—holds that although it is error for a trial court not to enter a statement of decision, it is not reversible error per se. Because the failure to enter a statement of decision in this case did not prejudice the defendant, no reversal was merited. The court further holds that the plaintiff was entitled to a setoff against a prior settlement with a different defendant who allegedly caused the same injury, and on that ground substantially reduces the verdict.

Plaintiff was sexually abused by defendant, her cousin, when she was ten years old. Prior to trial, she obtained a $275,000 settlement from the defendant’s parents’ homeowners’ insurer, on the ground that the parents were negligent in their supervision. At a bench trial, the court found liability and awarded plaintiff $44,800 for lost income, $10,296 in medical specials, and $250,000 in general noneconomic damages. Although defendant requested a statement of decision under Code of Civil Procedure § 632, the court entered a judgment submitted by the plaintiff on the day after the court’s decision was announced. Defendant appealed.

Defendant argued that the failure to enter a statement of decision was per se reversible error. He was on good authority to do so. A long line of court of appeal cases going back to Miramar Hotel Corp. v. Frank B. Hall & Co., 163 Cal. App. 3d 1126, 1129 (1985), including an opinion three months ago joined by a member of this same panel, have consistently held as much. But the court here doesn’t think so. It quite convincingly explains that the statement of decision requirement is subject to Article IV, § 13 of the state constitution, which permits reversals of judgments for procedural error only in the event of miscarriages of justice, as well as Code of Civil Procedure § 475, which defines reversible error as error having some effect on the ultimate result on the case below. 

To get there, the court traces through the history of former versions of § 632, which originally required a judge presiding over a bench trial to prepare written findings. Several early California Supreme Court cases, while noting the importance of the findings to the judicial process, held that a failure to make findings was nonetheless subject to a prejudicial error analysis. Cases interpreting later interim versions of § 632 held similarly. According to the court, nothing in the 1981 amendment to § 632 that replaced the findings requirement with the statement of decision procedure merited discarding the prejudicial error analysis that applied to previous versions of the statute. Notably, the constitutional and § 475 issues had not been raised in Miramar, or in an of the cases following it. Indeed, Miramar’s per se rule appears to have arisen largely from the court’s frustration with the then-common practice of trial courts’ routinely dispensing with bench trials by minute order, ignoring the parties’ requests for statements of decision even though the statement of decision process entails minimal work for the trial courts. So the court parts ways with Miramar and the eight cases that follow it to hold that the failure to prepare a statement of decision is not, in fact, “structural error” that is grounds for per se reversal. (Justice Robie, with admirable candor, concurs to note that he joined the recent Wallis opinion where a per se rule was applied, that the prejudice argument was not raised in Wallis, and that he takes it to heart “that per se rules should be looked upon critically[.]”)

Turning to the prejudice, the court finds there isn’t any. The only reason defendant argued that a statement of decision was significant was that he claimed to be entitled to an apportionment of non-economic damages under Civil Code § 1431.2, aka Proposition 51. (Apparently plaintiff was also molested by her father and defendant wanted to argue that he was the source of her pain and suffering.) But defendant never raised the apportionment issue at trial and offered no evidence to support an apportionment, so he forfeited it. Obviously there can’t be prejudicial error due to the loss of a waived issue, so there was no need to reverse for the failure to prepare a statement of decision.

Next, the court goes on to find that substantial evidence supported most, but not all, of the award for lost wages, so it reduces that award by about $3,000. 

Finally, the court holds that the defendant was entitled to a setoff for the settlement with his parents under Code of Civil Procedure § 877. Section 877 gives a defendant the right to a setoff for the potions of prior settlements that are attributable to jointly and severally awardable damages. That the defendant did not raise this below was not fatal because—unlike the Proposition 51 argument he waived—there is good authority that says a defendant can raise § 877 apportionment post-trial. Here defendant was precluded from doing so by the failure to enter a statement of decision and the too-quick entry of judgment. (Although this seems contradictory, the difference is in an issue of proof. A Prop 51 argument requires a factual finding of proportionate fault, which requires evidence. In contrast, apportionment under § 877 is based on a formula, which can be readily applied post-trial.) 

But remand still isn’t necessary because the § 877 issue was a purely legal one that could be resolved on appeal. Defendant raised two statutory arguments against § 877 apportionment, both of which the court finds unconvincing. First, he claimed that § 877 didn’t apply because he and his parents were sued for different torts. Although § 877 refers to other defendants “claimed to be liable for the same tort,” the court reads “the same tort” colloquially, to mean “the same injury.”  Thus, that plaintiff’s legal theory against defendant (sexual battery) was different than her theory against his parents (negligent supervision) did not preclude a setoff. Second, plaintiff argued that § 877 was rendered inapplicable by § 875, which says that “[t]here shall be no right of contribution in favor of any tortfeasor who has intentionally injured the injured person.” But this argument was rejected over forty years ago, because an internally consistent reading of the statutory scheme shows the the two statutes served different purposes. Section 875 applies only to contribution between defendants, while § 877 deals with the right of a plaintiff vis a vis joint tortfeasors. The former addresses inter-defendant equities; the latter prevents double recoveries by a plaintiff. 

Thus, finding apportionment appropriate, the court applies a well-established formula. It calculates the percentage of the plaintiff’s trial award that is attributable to joint and several economic damages and then applies that percentage to the earlier settlement as the measure of the setoff.  Here, plaintiff’s specials are about 17 percent of the adjusted award, which results in a setoff of about $47,000 out of $275,000 settlement obtained from defendant’s parents. That reduces the plaintiff’s economic injury award to about $4,700, plus the $250,000 in general damages.

Reversed in part, but by no means remanded.

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