The High Cost of Settlement

The trial court did not abuse its discretion when it reduced a $200,000 judgment to zero on account of plaintiff's settlement with other defendants who were liable for the same injury, but who committed different torts, said the Fourth District Court of Appeal in Oliveira v. Kiesler (June 15, 2012, G045721), __ Cal.App.4th __ [2012 DJDAR 7941].

Following the death of her husband, plaintiff sued her sons-in-law and her attorneys for establishing a trust which severed the joint tenancies in plaintiff's and decedent's real properties, transferred decedent's interests to the trust, and left all of the trust property to the sons-in-law.  Plaintiff, who otherwise would have acquired title to all of the properties on her husband's death, brought suit against her sons-in-law to invalidate the trust and against her attorneys for failure to disclose that the execution of the trust and the deeds would be to her disadvantage.

Plaintiff settled with her sons-in-law, agreeing to dismiss her complaint in return for their transferring their interests in one of the properties to her, selling a second property and giving one-half of the proceeds to her, a motor home, a boat, a motorcycle, six other vehicles, and certain antiques and furniture.  The case proceeded to trial against the defendant attorneys, and the jury awarded plaintiff $200,000.

Defendant attorneys objected to plaintiff's proposed $200,000 judgment, contending that an offset was required by Code of Civil Procedure §877.  They argued that the amount of the settlement with the sons-in-law exceeded $200,000 and that the judgment should be reduced to zero.  Plaintiff argued that the defendants were not "claimed to be liable for the same tort," and that §877 was, therefore, inapplicable.  The trial court reduced the judgment to zero.

The reduction was proper, said the court of appeal.  Although the defendants were not charged with the same torts, §877 has been construed to apply to all tortfeasors joined in a single action whose acts concurred to produce the injuries to plaintiff.  When multiple defendants are responsible for the same compensatory damages, said the court, a setoff for a settlement is mandatory.  It was the plaintiff's burden on appeal to present an adequate record for review, and because the record failed to establish the amount of the settlement, the trial court's conclusion that it exceeded the verdict was affirmed.