Cordova v. BNSF Railway CA4/2 ( 2014 )

Filed 11/6/14 Cordova v. BNSF Railway CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
RANDALL P. CORDOVA,
Plaintiff and Respondent, E056223
v. (Super.Ct.No. BCVBS08535)
BNSF RAILWAY COMPANY, OPINION
Defendant and Appellant.
APPEAL from the Superior Court of San Bernardino County. Victor R. Stull,
Judge. Affirmed.
Sims Law Firm, Selim Mounedji and John E. Stobart for Defendant and
Appellant.
Paul Andrew Burnett for Plaintiff and Respondent.
1
INTRODUCTION
Defendant and appellant BNSF Railway Company (hereafter referred to as BNSF)
appeals from an order denying its motion for entry of acknowledgement of full
satisfaction of judgment, pursuant to Code of Civil Procedure, section 724.050.1 BNSF
also contends that the court improperly allowed interest to accrue after it had tendered
payment of the judgment. We will affirm the judgment.
BACKGROUND
Plaintiff and respondent Randall P. Cordova, employed by defendant BNSF as a
carman, was injured on the job when an angle cock2 he was repairing flew off the
assembly and struck him in the face. He filed suit under the Federal Employers’ Liability
Act (45 U.S.C. § 51 et seq.), alleging several theories under which BNSF could be held
liable for negligence. The trial court granted BNSF’s motion for summary judgment.
Cordova appealed. We found that the trial court properly granted summary adjudication
as to one of the theories of negligence Cordova alleged, but we reversed and remanded
for further proceedings as to his other theories. (Cordova v. BNSF Railway Company
1 All further statutory citations refer to the Code of Civil Procedure unless another
code is specified.
We discuss the provisions of section 724.050 below.
2 An angle cock is part of an air brake system.
2
(Mar. 16, 2009, E043344) [nonpub. opn.].) The matter went to trial, and a jury awarded
Cordova $583,616, plus costs.3 Judgment was entered on December 6, 2011.
After entry of judgment, Cordova obtained a writ of execution seeking
$619,566.85, consisting of the amount of the judgment plus costs, interest, and the $25
fee for issuance of the writ. BNSF filed an ex parte motion to quash the writ. BNSF
contended that it had fully satisfied the judgment or, in the alternative, that it had partially
satisfied the judgment and that the writ failed to reflect the correct amount remaining to
be paid. BNSF had tendered to Cordova checks totaling $479,735.92, representing the
judgment minus prejudgment advances made to Cordova for which it asserted a lien,
liens on the judgment by the Railroad Retirement Board, and federal tax withholdings,
which all together totaled $142,865.93.4
In that motion, BNSF informed the court that it had sent Cordova a request that he
execute an acknowledgement of satisfaction of judgment but that pursuant to section
724.050, it was required to wait 15 days before filing a motion for entry of satisfaction of
judgment. It asked the court to quash the writ or stay execution of it until its motion for
entry of satisfaction of judgment could be heard.
In his opposition to the motion to quash the writ, Cordova stated that he had
refused to accept BNSF’s first check because it was tendered solely as full satisfaction of
3 The jury found that Cordova suffered $1,061,120 in damages but determined
that he was 45 percent at fault.
4 There are discrepancies in the amounts of the liens BNSF refers to in various
pleadings. We will assume the amounts listed in BNSF’s letter to Cordova’s attorney
explaining its calculation of the amount required to satisfy the judgment are correct.
3
the judgment but did not actually constitute full payment. He had offered to return the
check to BNSF or to destroy it, but its attorney had told him to keep the check “‘pending
resolution of the remaining issues.’”
At the hearing on the ex parte motion, the court stayed execution of the writ
pending a hearing on BNSF’s motion for acknowledgment of satisfaction of judgment.
The court stated that at that hearing it would address the issue of the offsets and whether
BNSF’s tender of payment stopped the accrual of interest. The court ordered Cordova to
return the checks to BNSF.
BNSF filed its motion for acknowledgment of full satisfaction of judgment under
section 724.050. It asserted in the motion that because of the offsets to which it was
entitled, the judgment had been satisfied in full. In his opposition to the motion, Cordova
repeated that he had refused to accept BNSF’s checks because they were tendered solely
as full satisfaction of the judgment but did not constitute full payment. He disputed the
offsets BNSF unilaterally applied. He also contended that BNSF was seeking to amend
the judgment and that the trial court had no jurisdiction to do so. He asserted that BNSF
should have sought any offsets it believed were due before entry of the judgment. In his
declaration in support of the opposition, Cordova’s attorney stated that he had returned
BNSF’s check as ordered by the trial court.
After hearing the arguments of the parties, the court took the question of
satisfaction of judgment and the accrual of interest under submission. It continued to stay
execution of the writ pending its decision.
4
On April 13, 2012, the court issued its ruling. The ruling ordered BNSF to pay
Cordova “judgment in the amount of $583,616.00, costs in the amount of $34,039.58 and
accrued interest . . . from the date of entry of judgment, December 6, 2011, until the date
the award is paid.” The ruling offered no explanation of the court’s reasoning.
BNSF filed a timely notice of appeal.
LEGAL ANALYSIS
1.
THE TRIAL COURT PROPERLY DENIED BNSF’S MOTION FOR ENTRY OF
SATISFACTION OF JUDGMENT
Preliminary Matters
We will begin our discussion by addressing and rejecting three of Cordova’s
contentions.
Section 724.050 provides that if a money judgment has been fully satisfied and the
judgment debtor has not filed an acknowledgment of satisfaction of judgment with the
court and has not complied with the judgment creditor’s demand that he do so, “the
person making the demand may apply to the court on noticed motion for an order
requiring the judgment creditor to comply with the demand. . . . If the court determines
that the judgment has been satisfied and that the judgment creditor has not complied with
the demand, the court shall either (1) order the judgment creditor to comply with the
demand or (2) order the court clerk to enter satisfaction of the judgment.” (§ 724.050,
subd. (d), italics added.) Thus, an essential element of a section 724.050 motion is a
5
showing that the judgment has in fact been satisfied. (Pierson v. Honda (1987) 194
Cal. App. 3d 1411, 1414 & fn. 4.)
Cordova contends that the court properly denied the section 724.050 motion
because BNSF had not even partially satisfied the judgment as of the date of the hearing
on the motion. Cordova had returned BNSF’s checks before BNSF filed its section
724.050 motion. Accordingly, Cordova contends, the motion necessarily failed because
no payment, not even of a disputed amount, had been made.
This argument is disingenuous, bordering on frivolous. At the hearing on BNSF’s
motion to quash the writ, the parties agreed to a further hearing to resolve the dispute as
to the sufficiency of BNSF’s tendered payment. The parties agreed that BNSF would file
and serve its section 724.050 motion and, after hearing the motion, the court would
resolve the question of the offsets BNSF asserted and determine whether the payment
BNSF had tendered did in fact satisfy the judgment. At that point, Cordova had BNSF’s
checks in his possession. BNSF offered to allow Cordova to negotiate those checks and
stated that it would not attempt to argue that by doing so, Cordova had accepted its tender
as full payment of the judgment. Cordova initially agreed to this, but then balked when
the court said that in that case, it would quash the writ. Cordova preferred to return the
checks and have the court stay execution of the writ. The court agreed to this and ordered
Cordova to return the checks to BNSF. However, the parties’ agreement to resolve the
question of the sufficiency of BNSF’s tender of performance to satisfy the judgment
remained unchanged: The parties agreed that the tender constituted at least partial
payment of the judgment, and that the only issue to be resolved was the application of the
6
offsets.5 Having agreed to this procedure, Cordova cannot defeat it simply by returning
the checks.
We also reject Cordova’s contention that BNSF’s motion was in effect an
untimely motion to amend the judgment. BNSF is not seeking to amend the judgment
but merely to offset its obligation by amounts which it contends Cordova had agreed to
pay in the event of a judgment and by amounts which it asserts it was required by law to
pay on Cordova’s behalf. “[T]he right to seek equitable setoff after the entry of judgment
has long been recognized by the California courts. . . . ‘[I]t is well settled that a court of
equity will compel a set-off when mutual demands are held under such circumstances
that one of them should be applied against the other and only the balance recovered.’”
(O'Callaghan v. Southern Pac. Co. (1962) 202 Cal. App. 2d 364, 370-371, quoting
Harrison v. Adams (1942) 20 Cal. 2d 646, 648-649.) A motion to compel
acknowledgment of satisfaction of judgment is “an entirely acceptable procedure for
balancing” offsets. (Wade v. Schrader (2008) 168 Cal. App. 4th 1039, 1048.)
Finally, we reject Cordova’s contention that BNSF was required to assert its claim
for offsets as an affirmative defense. Section 431.70, on which Cordova relies, provides
in pertinent part: “Where cross-demands for money have existed between persons at any
point in time when neither demand was barred by the statute of limitations, and an action
5 Contrary to BNSF’s contention, its unilateral decision to apply offsets which
Cordova contested did not constitute a tender of performance sufficient to discharge its
obligation. (Civ. Code, § 1486 [offer of partial performance is of no effect].) In the
absence of a judicial ruling or Cordova’s agreement on the offsets BNSF claims, BNSF’s
tender of less than the full amount of the judgment did not satisfy Code of Civil
Procedure section 724.050.
7
is thereafter commenced by one such person, the other person may assert in the answer
the defense of payment in that the two demands are compensated so far as they equal
each other, notwithstanding that an independent action asserting the person’s claim would
at the time of filing the answer be barred by the statute of limitations.” (Italics added.)
“May” is generally permissive while “shall” is generally compulsory, unless a
contrary intent appears from the context of a statute. (Marshall v. Foote (1927) 81
Cal. App. 98, 100-103.) Cordova does not provide any persuasive argument or authority
that in using the word “may” in section 431.70, the Legislature actually meant “shall” or
“must.” The cases he cites do not so hold. Rather, both merely state that section 431.70
describes “the procedure to be followed in raising setoff as a defense.” (Fassberg
Construction Co. v. Housing Authority of City of Los Angeles (2007) 152 Cal. App. 4th
720, 762; see Granberry v. Islay Investments (1995) 9 Cal. 4th 738, 744.) We understand
this to mean that section 431.70 describes the procedure to be followed if a party wishes
to raise setoff as a defense. Any other interpretation would conflict with the authorities
discussed above, which hold that a defendant may seek an equitable setoff after entry of
judgment. (See O'Callaghan v. Southern Pac. Co., supra, 202 Cal.App.2d at pp. 370-
371; Harrison v. Adams, supra, 20 Cal.2d at pp. 648-649; Wade v. Schrader, supra, 168
Cal.App.4th at p. 1048.) Moreover, after discussing section 431.70 and noting that the
defendant in that case did raise setoff as a defense, the court in Fassberg Construction
Co. v. Housing Authority of City of Los Angeles, supra, stated, “In our view, there is no
particular procedure required to invoke the equitable power of the court to effect a setoff,
when appropriate.” (Id. at p. 763.)
8
BNSF’s Contentions Fail
We now turn to BNSF’s contentions concerning the offsets.
In its motion, BNSF claimed the following offsets against the judgment:
1. $112,300 paid to Cordova under BNSF’s program of advancing living expenses
pending resolution of a claim for injury on the job;
2. $10,586.53, paid to Cordova under BNSF’s supplemental sickness payment
benefits program;
3. $3,892.57 paid by BNSF to satisfy a lien in favor of the Railroad Retirement
Board; and
4. $40,704.06 in Railroad Retirement Tax Act payroll taxes withheld by BNSF
from the judgment.6
We first address the standard of review. BNSF contends that we review de novo
the question “whether BNSF satisfied the judgment by tendering what it owed plaintiff
under the judgment less advances and withholdings” because the facts pertaining to the
claimed offsets are undisputed. The facts may be undisputed, but the underlying issue is
whether BNSF is entitled to the offsets it claims. That determination is a matter of
discretion for the trial court: “The right to offset is not absolute and may be restricted
when the failure to do so would be inequitable. . . . It follows that the trial court’s
decision [denying an offset] was one subject to an exercise of its equitable powers, and
6Some of these amounts differ from the amounts stated in BNSF’s letter to
Cordova’s attorney. (See footnote 4, ante.) Because we are affirming the denial of
BNSF’s motion, the discrepancy is not significant.
9
that the only issue before us on this appeal is whether that discretion was so abused that it
resulted in a manifest miscarriage of justice.” (Wm. R. Clarke Corp. v. Safeco Ins. Co. of
America (2000) 78 Cal. App. 4th 355, 358-359.) Accordingly, we will review the
judgment to determine whether denial of any of the offsets was an abuse of discretion.
However, because a motion pursuant to section 724.050 is an all or nothing proposition—
either the judgment was fully satisfied or it was not—in order to reverse the trial court’s
ruling, we would have to conclude that the court abused its discretion with respect to all
of the offsets BNSF claims.7 Or, stated conversely, if we find that it was not an abuse of
discretion to reject even one of the offsets BNSF claimed, we must conclude that the trial
court properly denied the motion for entry of acknowledgment of full satisfaction of
judgment.
Living Expense Advances and Supplemental Sickness Benefits
It is beyond any reasonable dispute that BNSF is entitled to an offset for the
$112,350 (or $112,300) in advances it paid to Cordova for living expenses. Cordova
signed a receipt for each such advance, and the receipts expressly acknowledged that
BNSF would recoup the advances in the event of a judgment in Cordova’s favor.
Accordingly, it would be an abuse of discretion to deny BNSF an offset for those
advances.
7 Section 724.110 provides an identical remedy for a judgment debtor who has
partially satisfied a judgment. BNSF’s motion did not seek an acknowledgment of partial
satisfaction as an alternative to acknowledgment of full satisfaction of the judgment.
10
We cannot say the same concerning the offset for the $10,586.53 in provisional
supplemental sickness benefits. The declaration of BNSF’s claims manager indicates that
those benefits were paid by “Aetna,” presumably the insurance company by that name,
under a supplemental sickness plan. The excerpt from the plan documents attached as an
exhibit to the declaration provides that benefits paid under the plan will be offset against
any judgment or settlement for personal injury obtained by the injured worker and
provides that Aetna is entitled to deduct those benefit payments “from any payment made
in any case involving a claim for loss of wages and in which the employer or a third party
may be liable for the injury.” Although this provision clearly states that Aetna has a right
to reimbursement of the benefits, it does not authorize BNSF to claim an offset on its
behalf. There is no evidence that Aetna assigned its claim to BNSF, that BNSF had
reimbursed Aetna for the benefits paid to Cordova, or that BNSF was for any other
reason entitled to claim the offset. In the absence of such evidence, BNSF’s claim
necessarily fails. Moreover, the excerpt states that “[t]he benefits and procedures set
forth in this booklet apply to disabilities which began on or after January 1, 2010.”
Cordova was injured in 2002. Accordingly, the evidence is insufficient as a matter of law
to support BNSF’s claim, and the trial court did not abuse its discretion in finding that
BNSF did not meet its burden of proof with respect to the claimed offset for those
benefits.
11
The Railroad Retirement Board (RRB) Lien
BNSF contends that it is entitled to an offset for $3,892.57, the amount required to
pay a lien in favor of the RRB for sickness benefits paid by the RRB to Cordova.
Although BNSF alludes to having paid this lien, it cites no evidence in the record that it
did so, and we are not aware of any such evidence. Cordova does not dispute that the
RRB has a lien on the judgment which must be satisfied. He argues that BNSF must
either demonstrate that it has satisfied the lien or allow him to do so. Otherwise, he
contends, he will be subjected to uncertainty as to whether the lien has been or will be
satisfied.
Title 45 United States Code section 362(o) provides as follows:
“Benefits payable to an employee with respect to days of sickness shall be payable
regardless of the liability of any person to pay damages for such infirmity. The [RRB]
shall be entitled to reimbursement from any sum or damages paid or payable to such
employee or other person through suit, compromise, settlement, judgment, or otherwise
on account of any liability (other than a liability under a health, sickness, accident, or
similar insurance policy) based upon such infirmity, to the extent that it will have paid or
will pay benefits for days of sickness resulting from such infirmity. Upon notice to the
person against whom such right or claim exists or is asserted, the [RRB] shall have a lien
upon such right or claim, any judgment obtained thereunder, and any sum or damages
paid under such right or claim, to the extent of the amount to which the [RRB] is entitled
by way of reimbursement.”
12
An injured railroad employee and the employer railroad are jointly and severally
liable for payment of the lien created by this statute. (Keith v. Burlington Northern
Railroad Co. (Mo.Ct.App. 1994) 889 S.W.2d 911, 924-925, discussing U.S. v. Atlantic
Coast Line R.R. (4th Cir. 1956) 237 F.2d 137, 139.) It would be improper to allow BNSF
an offset against the judgment without proof that it had satisfied the lien, because without
such proof, Cordova could still be liable for the amount of the lien. Accordingly, the trial
court did not abuse its discretion in finding that BNSF was not entitled to credit for the
amount owed to the RRB.
Payroll Taxes
The Railroad Retirement Tax Act (26 U.S.C. §§ 3201-3233) imposes a dual tax on
railroad employers and employees that is used to fund annuities for retired railroad
employees. Railroad employers are responsible for withholding the employee’s share
and are also required to pay both the employer’s and employee’s portions to the Internal
Revenue Service. (Hance v. Norfolk Southern Railway Co. (6th Cir. 2009) 571 F.3d 511,
522.) BNSF contends that it was entitled to an offset for $40,704.06, representing the
amount of railroad retirement taxes due from it and from Cordova, based on the full
amount of the judgment. It contends that because the jury returned a general verdict and
did not apportion the judgment between damages for time lost from work and other types
of damages, the entire judgment must be deemed compensation for time lost.
Title 45 United States Code section 231, a part of the Railroad Retirement Tax
Act, provides in part: “An employee shall be deemed to be paid ‘for time lost’ the
amount he is paid by an employer with respect to an identifiable period of absence from
13
the active service of the employer, including absence on account of personal injury, and
the amount he is paid by the employer for loss of earnings resulting from his
displacement to a less remunerative position or occupation. If a payment is made by an
employer with respect to a personal injury and includes pay for time lost, the total
payment shall be deemed to be paid for time lost unless, at the time of payment, a part of
such payment is specifically apportioned to factors other than time lost, in which event
only such part of the payment as is not so apportioned shall be deemed to be paid for
time lost.” (45 U.S.C. § 231(h)(2), italics added.)
Here, the jury returned an unapportioned general verdict. According to the
declaration of Cordova’s attorney, which was attached to his opposition to BNSF’s
section 724.050 motion, the reason that the verdict was not apportioned between
compensation for time lost and other damages was that the trial court acceded to BNSF’s
request that the jury not be given a special verdict form asking it to apportion the
damages. BNSF does not deny that it requested the unapportioned verdict; it merely
asserts that Cordova is precluded from mentioning it now because the trial court denied
his motion for new trial, which was in part based on his complaints about the verdict
form, and Cordova did not appeal. We reject this contention. Cordova is not seeking
affirmative relief; he is merely presenting an argument to demonstrate why it was not an
abuse of discretion to deny BNSF’s motion for an offset based on its withholding of
taxes.
14
We also reject the contention that because the entire judgment is subject to payroll
taxes as a matter of law, BNSF is necessarily entitled to an offset for the amount of
payroll taxes it was required to withhold. As we have discussed, BNSF’s entitlement to
the offset is a matter of equity subject to the trial court’s exercise of discretion. (Wm. R.
Clarke Corp. v. Safeco Ins. Co. of America, supra, 78 Cal.App.4th at pp. 358-359.) It
was not an abuse of discretion to refuse to allow BNSF an offset for payroll taxes when
the only reason the judgment was not apportioned between general damages and various
types of special damages, including lost past and future earnings, is that BNSF
successfully persuaded the court not to require the jury to make that apportionment, over
Cordova’s objection. BNSF created the problem, and it is not equitable to require
Cordova to accept any negative consequences.
Because the trial court did not abuse its discretion in denying BNSF three out of
the four offsets it claimed, it follows that BNSF’s motion for acknowledgment of full
satisfaction of judgment was properly denied.
2.
BNSF’S TENDER OF LESS THAN THE FULL AMOUNT OF THE JUDGMENT
DID NOT STOP THE ACCRUAL OF INTEREST
BNSF contends that the trial court erred when it ordered BNSF to pay interest
from the date of entry of the judgment. It contends that the accrual of interest stopped
when it tendered what it terms a “valid tender” of payment.
An offer of payment “duly made” stops the running of interest on a judgment or
other obligation. (Civ. Code, § 1504.) To be effective, however, the tender must
15
constitute full performance and may not impose a condition which the creditor is not
bound to accept. (Civ. Code, §§ 1486, 1494; In re Marriage of Green (2006) 143
Cal. App. 4th 1312, 1323; Mission Ins. Group, Inc. v. Merco Construction Engineers, Inc.
(1983) 147 Cal. App. 3d 1059, 1067-1068.) BNSF’s tender of less than the full amount of
the judgment did not suffice to stop the accrual of interest because it required Cordova to
accept the amount offered in full satisfaction of the judgment and to waive his right to
recover the rest of the judgment. Having found that BNSF was not entitled to full
satisfaction of the judgment by virtue of the payment it tendered, the trial court correctly
ordered BNSF to pay interest on the full amount of the judgment from the date of entry of
judgment.
CONCLUSION
The judgment is affirmed. Plaintiff and respondent Randall Cordova is awarded
costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
McKINSTER
Acting P. J.
We concur:
RICHLI
J.
MILLER
J.
16