Tuesday, May 17, 2016

Third-Party Liens Do Not Absolve Payment Obligations

Karpinski v. Smitty’s Bar, Inc., No. A143381 (D1d2 Apr. 12, 2016)

A bar and its carrier agreed to a $40k settlement of a PI case brought by a guy who got roughed up pretty bad by two dudes that got drunk there. But the bar waffled on finalizing the settlement and paying up because a federal disability program and the California crime victim’s fund had filed liens on any judgment. The bar believed that until the lien issue was resolved, a judgment entered against it could get it sideways with the lienholders. But the settlement agreement specifically put dealing with the liens at the feet of the plaintiff. So when Defendant waffled about paying before the liens were resolved, Plaintiff moved to enforce the settlement under Code of Civil Procedure § 664.6, which provides an abbreviated procedure to enforce a settlement.

The Court of Appeal holds that resolving the liens wasn’t a condition precedent to payment. It further finds that the bar’s concerns about lien liability were it to pay Plaintiff on the settlement are not well-founded. By making sure the settlement agreement put the lien issue on the plaintiff, the bar satisfied its obligations to the lienholders and didn’t have any significant risk of liability to them.


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