The opinion of the court was delivered by: Sandra M. Snyder United States Magistrate Judge
AMENDED FINDINGS AND RECOMMENDATION RE: PETITION FOR COMPROMISE OF DISPUTED CLAIMS OF MINOR (Docs. 187, 183), SETTING NEW DUE DATE FOR FILING OF OBJECTIONS DUE DATE: JUNE 30, 2009
Plaintiffs are proceeding with a civil action in this Court. The matter has been referred to the Magistrate Judge pursuant to 28 U.S.C. § 636(b) and Local Rules 72-302 and 72-303. Pending before the Court is Plaintiff's petition for approval of compromise of disputed claims of the minor Plaintiff, filed on April 29, 2009, with exhibits that include the minor's compromise form and attachments.
The petition came on regularly for hearing on May 29, 2009, at 9:30 a.m. in Courtroom 7 before the Honorable Sandra M. Snyder, United States Magistrate Judge. Kevin G. Little appeared on behalf of Plaintiff, and Celene Resong appeared on behalf of Defendant Fresno Community Hospital and Medical Center (FCHMC). The minor's natural mother, who functions as the minor's legal representative, represented the minor's interests and appeared as the minor's general guardian. After argument and supplemental briefing, the matter was submitted to the Court.*fn1
The Court has reviewed the relevant portions of the file and petition for compromise, which pursuant to Local Rule 17-202(b)(2), include the age and gender of the minor; the nature of the claims to be settled or compromised; the facts and circumstances out of which the claims arose, including the time, place, and persons involved; the manner in which the compromise amount or other consideration was determined; and additional information as is required to enable the Court to determine the fairness of the settlement, such as the nature, extent and permanence of the injury in a personal injury case. Further, the Court has considered the minor's counsel's disclosure of interest and the terms of counsel's compensation.
At the hearing, the attendance of the minor was excused. The legal representative was sworn and questioned by her counsel and by the Court to ensure that she understood each and every term of the settlement agreement, was satisfied that the settlement was fair for the minor, and that the settlement was being entered without any reservations whatsoever.
A district court has the power to make such orders as it deems proper for the protection of an infant or incompetent. Fed. R. Civ. P. 17(c). A claim by or against a minor or incompetent person may not be settled or compromised without a court order by the assigned judge who approves the settlement or compromise. Local Rule 17-202. Federal Courts generally require that claims by minors and incompetents be settled in accordance with applicable state law. William W. Schwarzer, A. Wallace Tashima & James M. Wagstaffe, California Practice Guide: Federal Civil Procedure Before Trial § 15:137 (2001).
In California, court approval is required before a settlement or compromise of the claim of a minor or incompetent is enforceable. Cal. Prob. Code §§ 2504, 3500, 3600-12; Cal. Code Civ. Proc. § 372; see also Robert I. Weil & Ira A. Brown, Jr., California Practice Guide: Civil Procedure Before Trial § 12.572 (2001).
Further, if the minor or incompetent is represented by an appointed representative pursuant to appropriate state law, the settlement shall first be approved by the state court having jurisdiction over the personal representative unless the action is one in which the United States courts have exclusive jurisdiction. Local Rule 17-202 (b)(1). Here, the minor is represented by the minor's natural mother, and not by a formally appointed representative pursuant to appropriate state law. Therefore, it does not appear that approval of the state court is required before the Court may consider this petition.
In California, attorney's fees, reasonable expenses, and court costs to be paid out of settlement proceeds must be approved by the court. Cal. Fam. Code § 6602; Cal. Prob. Code § 3601.
When money or property is recovered on behalf of a minor or incompetent person, the money or property will be 1) disbursed to the representative pursuant to state law upon a showing that he is the duly qualified representative under state law, 2) disbursed otherwise pursuant to state law, or 3) disbursed pursuant to such other order as the Court deems proper for the protection of the minor or incompetent person. Local Rule 17-202(e). In California, settlement proceeds not exceeding $5,000.00 may be ordered to be paid to the custodial parent to be held in trust until the minor reaches majority. Cal. Prob. Code §§ 3611(e), 3401. Settlements of less than $20,000.00 may be ordered held on conditions as the court in its discretion determines to be in the best interest of the minor or incompetent person. Cal. Prob. Code § 3611(d). In all other circumstances, the proceeds must be paid to the guardian or conservator or be deposited in a banking institution with withdrawals to be approved by the court. Cal. Prob. Code §§ 3611, 3413.
All applications for orders authorizing interim disbursements shall be heard by the appropriate state court judge or by the assigned Magistrate Judge; if a state court hearing is held regarding interim disbursements, a copy of the order shall be filed with the Court with a copy to the Magistrate Judge and shall be reviewed by the Magistrate Judge in accordance with subsection (b)(1) of Local Rule 17-202. Local Rule 17-202(f).
After the money or other property is paid or delivered to a settling parent, the parent may execute a full release and satisfaction or a covenant not to sue or enforce judgment. Cal. Probate Code § 3500.
In the present case, the legal representative agreed upon settlement, fees, and costs as follows: for the minor Plaintiff Christina Romar, a gross settlement amount of $230,000.00, less medical expenses to be paid from the proceeds of settlement in the amount of $10,871.41, consisting of medical liens remaining after negotiated reductions of $80,107.08, and less reasonable costs of $15,319.37 as itemized in attachment 14 to the petition, and less $76,666.67 (one-third, or thirty-three and one-third per cent) in attorney's fees, for a total net settlement of $127,142.55. This amount will be transferred to the trustee of a special needs trust under Probate Code sections 3602(d), 3604, and 3611(d) for the for the sole benefit of the minor with a disability and the minor's maintenance and care, which is pending finalization and Court approval.
With respect to the amount of attorney's fees, the Court notes that the Receipt of Payment and Release of All Claims attached to the petition specifies that the settlement amount is in consideration of a release of all claims arising out of or connected to the minor's emergency department visits at FCHMC during December 2002 that gave rise to this lawsuit. (Receipt of Payment and Release of All Claims p. 1, Doc. 183-3, p. 16.) The document states that the release was executed as a compromise of a disputed claim or claims. (Id. pp. 2- 3 Doc. 183-3, pp. 17-18.) There is ...