McCOMBER v. WELLS (1999)

O P I N I O N

A notary public, Chelle Wells, her employer, McCoy Motor Company dba Mills Ford, and her bond surety, Western Surety Co. (collectively Wells unless otherwise indicated), appeal from a judgment entered in favor of Lourey A. McComber in her negligence action.   Wells maintains the trial court erroneously failed to offset the jury's damages award and should have precluded Lourey from recovering noneconomic damages.   Lourey also challenges several of the trial court's rulings.   We modify the economic damage award, but otherwise affirm the judgment.

I

In 1983, Lourey and Gerald McComber bought a home in Anaheim, borrowing money from two lenders who then held the first and second trust deeds encumbering the property.   In 1985, the McCombers obtained several unsecured loans from Pioneer Bank.   Within a few months the money was spent, and the bank asked Gerald to secure the loans by signing a promissory note and a third trust deed.   Gerald agreed.

Gerald signed his and Lourey's names to the note and trust deed.   He took the documents to McCoy Motor Company and asked his friend, William Mills, to help him notarize both signatures even though Lourey was not present.   Mills had the company's notary, Chelle Wells, carry out the favor.

The bank accepted the trust deed and sent it to Richard Haly of Title Information Services Inc. (Haly) for recording.   Haly discovered the trust deed could not be recorded because title was held in Lourey's maiden name, Lourey A. Stark, but the trust deed was signed Lourey A. McComber.   Haly fixed this discrepancy by changing the description of the trustor from “Lourey A. Stark” to “Lourey A. McComber, AKA Lourey A. Stark.”   The trust deed was successfully recorded.   Subsequently, Gerald forged Lourey's name on several other documents, extending the term of the loan for several years.

In 1986, the McCombers separated and Gerald was convicted for forging and altering checks.   In 1990, Pioneer Bank sought to foreclose on the property until Lourey repaid the bank over $30,000.   Thereafter, she was unable to make payments to the holders of the first and second trust deeds and they foreclosed upon the property.

Lourey filed a negligence action against Pioneer Bank and several of its employees (collectively Pioneer Bank), Haly, and Wells.¹  Pioneer Bank cross-complained against Wells for fraud.

Within a few months, Lourey settled with Haly for $100,000 and with Pioneer Bank for $105,000.   Pioneer Bank also assigned to Lourey its cross-complaint against Wells.   The court determined both settlements were made in good faith.

In April 1994, trial began against the remaining defendants.   The court allowed Lourey to amend her complaint to allege negligent infliction of emotional distress against Wells.   The jury concluded Wells was liable and returned a special verdict, awarding Lourey $70,600 in economic damages and $83,250 in noneconomic damages.   The jury apportioned fault as follows:  Pioneer Bank, 0 percent;  Haly, 0 percent;  Lourey, 0 percent;  Wells, 33 1/3 percent;  and Gerald, 66 2/3 percent.   In addition, the jury found Gerald liable for intentional infliction of emotional distress, fraud and deceit.   However, it determined Wells's misconduct did not proximately cause Pioneer Bank's damages, so Lourey recovered nothing on those assigned claims.

II

 After the verdict, Wells argued they were entitled to a setoff for Haly's and Pioneer Bank's pre-verdict settlements.   The court disagreed, ruling, “Because the jurors were instructed in the special verdict to assess damages to the conduct of Gerald McComber;  and to assess damages to the negligence of Wells ․ there is no common sum of damages against which the good faith settlement may be set off.   Plaintiff shall have judgment against defendant Wells ․ in the sum of $153,850 plus costs.”   We agree with Wells's contention this was error.

 Code of Civil Procedure section 877 ² mandates, “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, ․ 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 greater. [¶] (b) It shall discharge the party to whom it is given from all liability for any contribution to any other parties․”  (Italics added.)   Moreover, “a nonsettling defendant [is] entitled to a setoff from plaintiff's award of economic damages in the amount of settlements paid prior to trial by other defendants, despite the jury's finding that the settling defendants had no fault for plaintiff's injuries [.]”  (Poire v. C.L. Peck/ Jones Brothers Construction Corp. (1995) 39 Cal.App.4th 1832, 1837, 46 Cal.Rptr.2d 631, italics added.)   This satisfies the fundamental goals of section 877, to preclude a double recovery arising out of the same wrong and encourage settlements.  (Id. at pp. 1839-1841, 46 Cal.Rptr.2d 631.)

In light of the above, we find section 877 applies because Lourey initially claimed all defendants were liable for negligence.   Indeed, Lourey alleged Wells's negligent conduct “set in motion a set of circumstances which in combination with the acts of the other defendants caused” her injury.   It is irrelevant the jury ultimately found the settling defendants were not negligent.

We are at a loss to understand what the trial court meant when it found the jurors failed to calculate the necessary “common sum of damages against which the good faith settlement may be offset.”   By special verdict the jury was asked to determine the amount of damages caused by Wells's negligent conduct “without taking into consideration the reduction of damages because of other persons or entities.” ³  Thus, the amount calculated, $153,850, represents the total sum of damages caused by Wells's and Gerald's negligent conduct.   It matters not that the jury determined Lourey was entitled to additional economic damages as a result of Gerald's intentional misconduct, i.e., fraud and deceit.   Section 877 applies to offset damage awards against tortfeasors claimed to be liable for the same tort.

 Accordingly, we apply the well-established formula for calculating the offset developed by the court in Espinoza v. Machonga (1992) 9 Cal.App.4th 268, 277, 11 Cal.Rptr.2d 498:  The portion of the settlement which may be set off from a judgment of economic damages is determined by application of the percentage of the economic damages award in relationship to the total award of damages.  (See, e.g., Poire v. C.L. Peck/ Jones Brothers Construction Corp., supra, 39 Cal.App.4th at p. 1841, 46 Cal.Rptr.2d 631.)   Here, the jury awarded $70,600 for economic damages, which equals 45.89 percent of the total $153,850 judgment.   Wells is entitled to offset 45.89 percent of the $205,000 pretrial settlements.   This equals $94,074.50, which is much greater than the jury's economic damage award.   Consequently, the judgment must be modified to reflect the $94,074.50 offset which reduces the economic damage award to zero.⁴

 The above ruling marks the end of Wells's victories on appeal.   We find disingenuous Wells's next argument the judgment for noneconomic damages is subject to an offset from the pretrial settlements.   All the cases upon which Wells relies when discussing economic damages also plainly say the same rules do not apply to noneconomic damages.  (Espinoza v. Machonga, supra, 9 Cal.App.4th at p. 272, 11 Cal.Rptr.2d 498;  Poire v. C.L. Peck/Jones Brothers Construction Corp., supra, 39 Cal.App.4th at p. 1838, 46 Cal.Rptr.2d 631;  Greathouse v. Amcord Inc. (1995) 35 Cal.App.4th 831, 838-839, 41 Cal.Rptr.2d 561;  Hoch v. Allied-Signal Inc. (1994) 24 Cal.App.4th 48, 67-68, 29 Cal.Rptr.2d 615.)  “Each defendant is solely responsible for its share of noneconomic damages under Civil Code section 1431.2 [Proposition 51].   Therefore, a nonsettling defendant may not receive any setoff under section 877 for the portion of a settlement by another defendant that is attributable to noneconomic damages.”  (Poire v. C.L. Peck/Jones Brothers Construction Corp., supra, 39 Cal.App.4th at p. 1838, 46 Cal.Rptr.2d 631, italics added.) ⁵

III-V **

In all other respects, the judgment is affirmed.   Each party shall bear their own costs.

FOOTNOTES

1.   Lourey also sought recovery from Western Surety, who issued Wells's notarial bond.Mills was later dismissed from the lawsuit and is not a party in this appeal.In addition to negligence, Lourey alleged causes of action for fraud, fraud in the inducement, intentional infliction of emotional distress, conspiracy to commit fraud, rescission, and slander of title.   Except as to Gerald McComber, the court granted the defendants' nonsuit as to those claims.

2.   All further statutory references are to the Code of Civil Procedure unless otherwise indicated.

3.   We note the court correctly instructed the jury an offset would occur:  “In this case the plaintiff Lourey McComber has made a settlement with Pioneer Bank and its employees and Richard Haly of Title Information Service.   If you should find that the plaintiff Lourey McComber is entitled to recover against the defendants [ ] Wells and Gerald McComber, you shall award damages to the plaintiff for the same amount you would have awarded if no such settlement had been made.  [¶] In such event the court will later deduct the amount of this settlement from the amount of your award, and your verdict will be reduced accordingly.”

4.   Wells alternatively argues their negligence did not cause Lourey to suffer any economic damages and such damages were speculative.   In light of our holding, we need not decide those issues.

5.   Civil Code section 1431.2 provides in pertinent part:  “(a) In any action for personal injury ․ based upon principles of comparative fault, the liability of each defendant for noneconomic damages shall be several only and shall not be joint.   Each defendant shall be liable only for the amount of noneconomic damages allocated to that defendant in direct proportion to that defendant's percentage of fault, and a separate judgment shall be rendered against that defendant for that amount.”

FOOTNOTE.   See footnote *, ante.

SONENSHINE, Acting P.J.

RYLAARSDAM, J., and BEDSWORTH, J., concur.