Kyle Klein et al vs KHP III Goleta LLC et al

Case Number

21CV03096

Case Type

Hearing Date / Time

Fri, 12/01/2023 - 10:00

Nature of Proceedings

Minor's Compromise

Tentative Ruling

For all reasons discussed herein, the petition for approval of compromise of claim or action for minor, filed by petitioner and guardian ad litem Kyle Klein, is granted. The court authorizes and directs attorney’s fees as approved herein to be paid from the settlement proceeds to be delivered to petitioner in accordance with this ruling. The balance of the proceeds of the settlement, as further described herein, may be paid or delivered to petitioner and guardian ad litem Kyle Klein in accordance with this ruling and on the terms and under the conditions set forth in Probate Code sections 3401 and 3402.

Background:

This action was filed by plaintiffs Kyle Klein (Kyle), Alexandra Klein (Alexandra), and Charlie Klein, a minor by and through her guardian ad litem Kyle Klein (Charlie) (collectively, plaintiffs), on August 3, 2021. (Note: Due to common familial surnames, the court will refer to all plaintiffs, collectively, as plaintiffs and individually by their first names to avoid confusion. No disrespect is intended.) As alleged in the complaint filed by plaintiffs:

From August 27, 2020, through August 31, 2020, plaintiffs were guests at the Kimpton Goodland (the hotel) under the terms of a hotel rental agreement with defendants KHP III Goleta, LLC (the LLC) and Kimpton Hotel & Restaurant Group, LLC (Kimpton) (collectively, defendants). The hotel is located at 5650 Calle Real in Goleta, California (the hotel premises), and is owned or managed by defendants. While staying in room 177 of the hotel, plaintiffs noticed a bed bug infestation. As a result of the infestation and defendants’ failure to maintain the hotel and hotel rooms in a safe and habitable condition and to inspect or make repairs, plaintiffs suffered bed bug bites, skin rash, allergic reaction, pain, scarring, property damage, illness, sleeplessness, humiliation, grief, and anxiety, among other things.

The complaint alleges nine causes of action against defendants: (1) statutory violations of habitability (Civil Code section 1941.1 and Health and Safety Code section 17920.3); (2) battery; (3) habitability (negligence and negligence per se); (4) nuisance; (5) intentional infliction of emotional distress; (6) negligent infliction of emotional distress; (7) breach of contract; (8) breach of covenant of quiet enjoyment; and (9) fraudulent concealment.

On December 19, 2022, defendants filed a demurrer to the complaint and a motion to strike allegations of punitive damages and plaintiffs’ requests for attorney’s fees.

On April 5, 2023, the parties filed a joint stipulation to continue the hearing on defendants’ demurrer and motion to strike, stating that the parties have agreed to submit the matter to private mediation. On April 6, 2023, the court entered an order approving the parties’ joint stipulation and continuing the hearing on the demurrer and motion to strike to June 23, 2023.

On June 13, 2023, defendants filed a notice requesting that the court take the demurrer and motion to strike off-calendar. Also on June 13, 2023, plaintiffs filed a notice of conditional settlement of the entire case.

On September 18, 2023, Kyle, as Charlie’s parent and guardian ad litem, filed a verified petition for approval of a compromise of the claim or action for Charlie (the petition). In support of the petition, Kyle submits the declaration of his counsel Brian J. Virag. No party has filed an opposition to the petition.

The Petition:

In the verified petition, Kyle (also referred to herein as petitioner) asserts that Charlie is currently three years of age. Kyle states that the nature of the incident at issue is a bed bug infestation that occurred on August 27, 2020, at the hotel premises. Charlie sustained bed bug bites as a result of the incident. Kyle and Alexandra were also involved in the incident. Charlie did not receive any care or treatment for the bed bug bites. Petitioner states that Charlie has recovered completely from the effects of the bed bug bites and that there are no permanent injuries.

Attached to the petition is a letter dated September 15, 2023, from Charlie’s primary care provider at Arbor Medical Partners. The provider states that any bed bug bites that Charlie would have had from the incident have resolved.

Petitioner Kyle asserts that he has made a careful and diligent inquiry and investigation into the facts and circumstances of the incident in which Charlie sustained the bed bug bites, the responsibility for the incident, and the nature, extent, and seriousness of Charlie’s injuries. Petitioner understands that if the compromise proposed in the petition is approved by the court and consummated, Charlie will be forever barred from seeking any further recovery of compensation from defendants even if Charlie’s injuries turn out to be more serious than they now appear.

To settle this matter, defendants have offered to pay to Charlie the amount of $500, to be paid by defendants globally in one lump payment. To settle the claims arising out of the same incident that resulted in Charlie’s injuries, defendants in this matter have also offered to pay $35,000 to petitioner and Alexandra. The settlement payment to petitioner and Alexandra is to be apportioned and distributed as follows: $17,250 to Kyle and $17,500 to Alexandra. Petitioner does not have a claim against the recovery of Charlie other than for reimbursement of fees or expenses paid by petitioner as addressed below.

Petitioner is a plaintiff in this action with Charlie. Petitioner’s counsel states that each plaintiff has unique special damages. (Petition, Attachment 11b3.) Due to the unique nature of bed bug claims, the majority of expenses and physical and mental injuries are born by the parent or adult guardian including rents paid, property damage, cleaning expenses. (Ibid.) Therefore, there exists a money disparity. (Ibid.) Counsel further asserts that because defendants have made a global settlement resolving the entire action, petitioner’s claim and its disposition has no negative effect on the proposed compromise. (Ibid.)

The reason for the apportionment of settlement payments between petitioner, Alexandra, and Charlie is because at the time of the incident, Charlie was 5 months old. (Petition, Attachment 11b6.) Kyle and Alexandra suffered damages including bed bug bites throughout the body, itching, swellings, stress, anxiety, irritation, helplessness, and sleeplessness. (Ibid.) Kyle and Alexandra’s mental and emotional injuries are ongoing. (Ibid) Therefore, the majority of expenses and injuries were born by Kyle and Alexandra as they expended money for the property damages, replacement costs, cleaning expenses, and mental injuries. (Ibid.)

There are no medical expenses or statutory or contractual liens to be paid or reimbursed from the settlement proceeds.

The amount of attorney’s fees for which court approval is requested is $125. The declaration of counsel Brian J. Virag is attached to the petition. Counsel declares that he has been practicing bed bug litigation, which counsel describes as a “niche” area of law, for over ten years. (Petition, Attachment 13A at ¶ 9(c)-(d) & (g).) Counsel has been working on this case without payment since July 2021, and bore the risk of loss due to the contingent fee. (Id. at ¶ 9(f), (k) & (l).) Counsel’s recognition in the industry impacted the value of Charlie’s settlement (Id. at ¶ 9(g).) Counsel reduced his fee of 45 percent per a retainer agreement to 25 percent for Charlie’s settlement. (Id. at ¶¶ 9(c) & (j).) Counsel further declares that petitioner has agreed that a 25 percent attorney’s fee on Charlie’s settlement is reasonable. (Id. at ¶ 9(j).)

A copy of a written Attorney-Client Fee Agreement (the fee agreement) initialed and signed by Kyle (petitioner), Alexandra, and counsel is attached to the petition. Pursuant to the terms of the fee agreement, Kyle agreed to pay to counsel 40 percent of the total amount recovered if the matter settled without a lawsuit or arbitration, and 45 percent of the total amount recovered after commencement of a lawsuit, arbitration, or mediation. The fee agreement further provides that in the event recovery includes an award of attorney’s fees and costs, counsel could recover the greater of the entire award or the contingency percentage of the total amount recovered. The terms of the fee agreement also require counsel to advance all reasonably necessary expenses of the litigation which Kyle is responsible to repay out of Kyle’s portion of the recovery. The fee agreement also sets forth counsel’s current hourly rates.

Counsel did not become concerned with this matter directly or indirectly at the instance of a party against whom the claim is asserted or a party’s insurance carrier. Counsel has not received attorney’s fees or other compensation in addition to that requested in the petition for services provided in connection with the claim giving rise to this petition.

Counsel also represents Kyle and Alexandra. Counsel expects to receive attorney’s fees from Kyle in the amount of $7,762.50 and from Alexandra in the amount of $7,762.50, in addition to that requested in the petition, for services provided in connection with the claim giving rise to the petition. Counsel expects to receive these additional attorney’s fees in September or October 2023.

The net balance of the proceeds remaining for Charlie after payment of all requested fees and expenses is $375. In the Summary section (item no. 16), the petition lists gross settlement proceeds of $500, from which attorney’s fees totaling $125 will be deducted, for a balance of $375.

There is no guardianship or conservator of the estate of Charlie. Petitioner requests that the court order disposition of the balance of the proceeds of the settlement, in the amount of $375, to be paid or delivered to Kyle, Charlie’s parent, without bond, on the terms and under the conditions specified in Probate Code sections 3401 through 3402. Petitioner requests that the court approve the delivery of a check in the amount of $375 to Kyle whose address is 9359 E. Windrose Dr., Scottsdale, AZ 85260.

Analysis:

A guardian ad litem appearing for a minor in any action may, with the court’s approval, settle the action. (Code Civ. Proc., § 372, subd. (a)(3); see also Prob. Code, § 3500, subd. (a)(1), (b), (d) [if a minor with a disputed claim for damages does not have a guardian of the estate, the minor’s parents may compromise the claim upon approval of the court].) The requirement that “the proposed compromise of a minor’s claim be approved by the trial court exist[s] to protect the best interests of the minor” by “adding an extra layer of scrutiny to the settlement of the minor’s claims.” (Pearson v. Superior Court (2012) 202 Cal.App.4th 1333, 1338, 1339.)

“A petition for court approval of a compromise or covenant not to sue under Code of Civil Procedure section 372 must comply with rules 7.950 or 7.950.5, 7.951, and 7.952. (Cal Rules of Court, rule 3.1384(a).) The petition must be submitted on a completed and approved Judicial Council form, must be verified by the petitioner, and “. . . must contain a full disclosure of all information that has any bearing on the reasonableness of the compromise, covenant, settlement, or disposition.” (Cal. Rules of Court, rule 7.950; Barnes v. Western Heritage Ins. Co. (2013) 217 Cal.App.4th 249, 256, fn 4.) If the petitioner has been represented by an attorney in preparing the petition, the petition must also disclose the information described in California Rules of Court, rule 7.951(1) through (6), and the petitioner and the minor must attend the hearing unless the court for good cause dispenses with their appearance. (Cal. Rules of Court, rules 7.951; 7.952(a).) The court may also require the presence and testimony of witnesses. (Cal. Rules of Court, rule 7.952(b).)

The court has reviewed the petition and its attached documentation, including the declarations of counsel and Attachments 8a, 11b3, 11b6, 13A, 17a, 17e, and 18b5. The petition is submitted on the required mandatory Judicial Council form, is verified, and includes sufficient information bearing on the reasonableness of the settlement described herein. The petition also discloses the information required by California Rules of Court, rule 7.951. In addition, the evidence presented in the petition demonstrates that Charlie did not sustain injuries resulting from the bed bug infestation.

The court finds that the amount of $500 to settle Charlie’s claims in this matter is both reasonable and appropriate, and in Charlie’s best interests. The court further finds that the attorneys’ fees requested in the petition for prosecuting and settling Charlie’s claims ($125) are reasonable and appropriate.

For all reasons discussed above, the court will grant the petition, and authorize and direct that attorney’s fees as approved herein in the amount of $125 shall be paid from the settlement proceeds to be delivered to Kyle for the benefit of Charlie, as provided in the petition. (See Prob. Code, § 3601, subd. (a).) The balance of the proceeds of the settlement the amount of $375 may be paid or delivered to petitioner at the address stated in the petition and on the terms and under the conditions set forth in Probate Code sections 3401 and 3402.