United States District Court, S.D. California
ORDER ON MOTION TO APPROVE COMPROMISE OF MINORS'
CLAIMS [Doc. No. 26]
Ann Bencivengo, United States District Judge
February 6, 2018, counsel for Plaintiffs filed a Motion to
Approve Compromise of Minors' Claims. [Doc. No. 26.] On
February 13, 2018, Magistrate Judge Schopler issued a Report
and Recommendation (“Report”). [Doc. No. 28.] The
Report recommended that the motion be granted and the
proposed settlement amount of $8, 000 to each minor be
approved as fair and reasonable. [Report at 2.] The Report
ordered that any objections were to be filed by February 27,
2018. [Id. at 3.] On February 15, 2018, this Court
requested and subsequently received a copy of the settlement.
[Doc. Nos. 29, 32-33.] To date, no objection or requests for
an extension of time in which to file an objection have been
Rule of Civil Procedure 72 and 28 U.S.C. § 636(b)(1)
provide the district court's duties concerning a
magistrate judge's report and recommendation. The
district court judge may accept, reject, or modify, in whole
or in party, the findings or recommendations made by the
magistrate judge. Fed.R.Civ.P. 72(b)(3); 28 U.S.C. §
636(b)(1). “When no timely objection is filed, the
court need only satisfy itself that there is no clear error
on the face of the record in order to accept the
recommendation.” Fed.R.Civ.P. 72 advisory
committee's note (citing Campbel v. U.S. Dist.
Court, 501 F.2d 196, 206 (9th Cir. 1974)).
reviewed the Report, the Court concludes the Magistrate Judge
incorrectly determined that the settlement between the minor
Plaintiffs M.C and J.C. and Defendants is fair, reasonable,
and in the best interests of the minor Plaintiffs. As
required by Local Rule 17.1, the Court has reviewed the
structural components of the settlement and finds it lacking
in specificity. Therefore, the Court is not satisfied
that the settlement agreement protects the minors'
interests. See also Salmeron v. United States, 724
F.2d 1357, 1363 (9th Cir. 1983) (holding that “a court
must independently investigate and evaluate any compromise or
settlement of a minor's claims to assure itself that the
minor's interests are protected, even if the settlement
has been recommended or negotiated by the minor's parent
or guardian ad litem”).
the proposed settlement provides that a total settlement
amount will be paid to all three Plaintiffs in exchange for
their agreement “that their portion of the Settlement
Sum compensates them for any and all claims of alleged
economic damages, relocation fees, personal injuries,
injuries to reputation, attorneys' fees, emotional pain
and suffering and penalties claimed to have been caused by
Defendant's alleged conduct.” [Doc. No. 33 at 2.]
However, the agreement does not provide how this lump sum
shall be divided amongst the individual plaintiffs.
Plaintiffs' counsel has submitted the declarations of
himself and the minors' mother, Isaura Cortes, attesting
that the minor plaintiffs M.C. and J.C. will each receive a
payment in the amount of $8, 000. This is not sufficient. The
specific amounts each individual Plaintiff will receive must
be memorialized in writing and signed by all parties.
the proposed settlement simply provides that a check for the
total settlement amount will be made out to the “Law
Offices of Stuart Fagan Client-Trust Account” yet
provides no details as to the method of deposit or
disbursement. [Doc. No. 33 at 3.] In general, Local Rule 17.1
incorporates California Probate Code section 3600 et.
seq. regarding the various alternatives available to
hold the funds of a settlement of a minor or incompetent. One
such alternative, provided under California Probate Code
section 3600 et. seq. is a blocked account. The
California Code provides that upon petition by the
guardian/guardian ad litem on behalf of the minor child or
incompetent, the funds may be deposited in an insured account
or a deferred annuity subject to withdrawal only upon Court
Order. See CAL. PROB. CODE § 3602(c)(1).
Plaintiffs' guardian attests that the settlement comports
with this provision by providing that the proceeds of the
settlement will be placed in an “interest-bearing FDIC
or NCUA insured account held in the name of said minors from
which no withdrawals shall be made without a court order
until the minor children reach the ages of majority.”
[Doc. No. 26-2 at ¶ 7.] But, such a declaration is
insufficient to bind the parties. Details regarding how the
minors' funds will be deposited, held and maintained for
the minors must be included within the settlement.
the Court hereby (1) REJECTS Magistrate
Judge Schopler's Report and Recommendation [Doc. No 28];
and (2) DENIES the Motion for Approval of
Minors Compromise of Claims [Doc. No. 26]. Once the parties
have entered a new agreement, or provided an addendum to the
current agreement designed to fix the deficiencies noted
above, including the proposed allocation for attorney's
fees and costs, it shall be reviewed by Judge Schopler and a
second Report shall be issued.
 This requires the court question if
the settlement is in the best interests of the minor or
incompetent and consider not only the fairness of the
settlement, but the structure and manner of the plan for the
payment and distribution of the assets for the benefit of the
minor or incompetent. Under the Rule, parties must submit the
settlement to a magistrate judge for preliminary review of
the structural components. See CivLR 17(a)
(“All settlements ...