JOE KLEIN ET AL VS ALBERT MALKA ET AL

Tentative Rulings

Case Number: BC498733    Hearing Date: July 07, 2020    Dept: 61

Defendant Ben Safyari’s Motion for Additional Offset is DENIED.

1. MOTION FOR OFFSET

“Where a release, dismissal with or without prejudice, or a covenant not to sue or not to enforce judgment is given in good faith before verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the same tort, or to one or more other co-obligors mutually subject to contribution rights, it shall have the following effect: (a) It shall not discharge any other such party from liability unless its terms so provide, but it shall reduce the claims against the others in the amount stipulated by the release, the dismissal or the covenant, or in the amount of the consideration paid for it, whichever is the greater.” (Code Civ. Proc., § 877.)

“The offset provided for in section 877 assures that a plaintiff will not be enriched unjustly by a double recovery, collecting part of his total claim from one joint tortfeasor and all of his claim from another.” (Reed v. Wilson (1999) 73 Cal.App.4th 439, 444.) It is “proper to exclude evidence of the pretrial settlement by one joint tortfeasor from the jury's consideration, leaving it to the court to apply Code of Civil Procedure section 877 to reduce the verdict.” (Knox v. County of Los Angeles (“Knox”) (1980) 109 Cal.App.3d 825, 834–35.)

Section 877 “does not require any defendant to prove that settling codefendants were in fact liable, only that they were ‘claimed to be liable’ for the same tort.” (Knox, supra, 109 Cal.App.3d at p. 833.) In Know, the Complaint alleges that the settling codefendant engaged in a conspiracy and joint venture with nonsettling defendants and that they were agents of the nonsettling defendants relating to the allegations at hand. (Id. at pp. 832–833.)

The burden of establishing the value of a settlement is properly placed on plaintiffs. (See Garcia v. Duro Dyne Corp. (2007) 156 Cal.App.4th 92, 106.) “[T]he amount of the setoff is, in the absence of a stipulation, ‘the amount of the consideration paid for [the release or dismissal].’ But the amount of consideration paid within the meaning of section 877, subdivision (a) is not necessarily the amount of money paid. Often ‘the amount of the offset is clouded by injection of noncash consideration into the settlement.’ [Citations.] ‘In a situation where the cash amount of the settlement does not dictate the amount of the offset, the settling parties must include an allocation or a valuation in their agreement.’ [Citation.]” (Franklin Mint Co. v. Superior Court (2005) 130 Cal.App.4th 1550, 1557.)

This court on December 6, 2016, granted in part Safyari’s motion for an offset. The court declined to grant Safyari a $757,000 offset based on value that Klein purportedly received from the settlement for “Klein’s pre-joint venture investment expenses.” (12/6/2016 Order at p. 10.) Safyari justified the value of the claimed offset by citing the “final waterfall repayment of the funds from the sale of the Multiview properties, which are split 50/50 between ADY and Klein ‘as a return of their capital investment in the project and the Property and a return thereon.’” (Ibid.) The court, however, declined to award this offset, as it was grounded on “anticipated future recovery,” particularly the “future sale of the property, plus four separate repayments through the ‘waterfall’ before any funds would go to Klein to repay his capital investment.” (Id. at p. 11.) The court nonetheless “retain[ed] jurisdiction to further amend the Judgment upon sale of the properties.” (Id. at p. 11.)

Safyari now moves for a total of $428,000 in additional offsets, representing $127,000 in offsets purportedly resulting from Klein’s settlement with ADY and the sale of the properties since the court’s December 2016 order, and $301,000 in equitable offsets resulting from Klein’s purported refusal to honor the promissory notes that Safyari holds against him. (Motion at p. 6.)

The parties dispute whether this court has jurisdiction to order the requested offsets, based on the appeal that Safyari now seeks against the judgment he now seeks to amend. “[T]he perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order, but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.” (Code Civ. Proc. § 916, subd. (a).)

The purpose of the automatic stay provision of section 916, subdivision (a) is to protect the appellate court's jurisdiction by preserving the status quo until the appeal is decided. The [automatic stay] prevents the trial court from rendering an appeal futile by altering the appealed judgment or order by conducting other proceedings that may affect it.

To accomplish this purpose, section 916, subdivision (a) stays all further trial court proceedings upon the matters embraced in or affected by the appeal. In determining whether a proceeding is embraced in or affected by the appeal, we must consider the appeal and its possible outcomes in relation to the proceeding and its possible results. Whether a matter is ‘embraced’ in or ‘affected’ by a judgment [or order] within the meaning of [section 916] depends on whether postjudgment [or postorder] proceedings on the matter would have any effect on the ‘effectiveness' of the appeal. If so, the proceedings are stayed; if not, the proceedings are permitted.

The fact that the postjudgment or postorder proceeding may render the appeal moot is not, by itself, enough to establish that the proceeding affects the effectiveness of the appeal and should be stayed under section 916. Rather, something more is needed. For example, the trial court proceeding must directly or indirectly seek to enforce, vacate or modify [the] appealed judgment or order. Or the proceeding must substantially interfere with the appellate court's ability to conduct the appeal.

(Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4^th 180, 189–90, internal quotation marks and citations omitted.)

Safyari argues that this court possesses jurisdiction to grant his offsets because the motion concerns a matter collateral to the judgment that does not compromise the effectiveness of the pending appeal, and alternatively because the present motion is in reality one to enforce the judgment, not alter it. (Motion at pp. 9–13.)

This court lacks jurisdiction to hear the motion, and both arguments fail. Safyari relies on cases holding that a court may rule on collateral matters, like attorney fees and costs, while an appeal is pending. (See Bankes v. Lucas (1992) 9 Cal.App.4^th 365, 368–69) But Safyari here does not seek a post-judgment award of fees, but rather to amend the judgment currently on appeal to reflect certain desired offsets. This is something that the court lacks jurisdiction to do. (See Laidlaw Waste Systems, Inc. v. Bay Cities Services, Inc. (1996) 43 Cal.App.4^th 630, 641 [“After perfection of an appeal, the trial court may not vacate or amend a judgment or order valid on its face, or do any other act which would affect the rights of the parties or the condition of the subject matter.”] internal quotation marks omitted.) This court may not even “cure any purported defect in the judgment or order appealed from.” (Varian Medical Systems, Inc., supra, 35 Cal.4^th at p. 197.) Although Safyari purports to rely upon this court’s order of December 2016 (entered before the appeal was filed) in which the court retained jurisdiction to hear further arguments as to offsets after the relevant properties were sold, the court expressly characterized its jurisdiction as being “to further amend the Judgment upon sale of the properties.” (12/6/2016 Order at p. 11, italics added.) The court previously recognized that the claimed offsets were amendments to the judgment, and the court may not amend the judgment that is currently on appeal, especially when the damage items to be off-set (such as the $300,000 promissory notes) are those very same items for which Safyari seeks relief on appeal.

Nor may Safyari characterize the present matter as one to enforce the judgment. The reason this matter concerns “enforcement” under Safyari’s argument is because the amount of the judgment determines the amount that Klein may seek to collect from Safyari in enforcement proceedings. (Motion at pp. 12–13.)[1] But it is generally true that substantive amendments to a judgment may mitigate a party’s ability to enforce it; that does not make proceedings to amend the judgment into enforcement proceedings.

Accordingly, Safyari’s Motion for Offsets is DENIED.