McNelis v. County of El Dorado ( 2023 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 ANNE MCNELIS, individually and as No. 2:22-cv-00369-DJC-JDP Guardian ad litem for L.N. and L.N., a 12 minor, 13 Plaintiff, ORDER APPROVING MINOR’S COMPROMISE 14 v. 15 COUNTY OF EL DORADO, KIMBERLY PIERCE, CAITLYN HAYDEN, 16 SAMANTHA DODGE, and DOES 1–10, inclusive, 17 Defendants. 18 19 20 On July 5, 2023, Anne McNelis, Plaintiff, filed an Ex-Parte Petition for Approval 21 of Minor’s Compromise on behalf of her daughter, L.N., as Guardian ad litem. (See Ex- 22 Parte Pet. for Approval of Minor’s Compromise (ECF No. 36) [hereinafter Petition or 23 Pet.].) The County of El Dorado, Kimberly Pierce, Caitlyn Hayden, and Samantha 24 Hodge (“Defendants”) filed a Joint Statement of Non-Opposition. (See ECF No. 37.) 25 For the reasons discussed below, the Court GRANTS Plaintiff’s Ex-Parte Petition and 26 APPROVES L.N.’s Minor’s Compromise. The Court will require Plaintiffs’ counsel to 27 inform the Court as to the final terms of the annuity once it has been funded. (See Ex. 28 A (ECF No. 36-1 at 9–10) [hereinafter Petition Exhibit A or Ex. A]). 1 BACKGROUND 2 This section 1983 case involving purely federal claims (see Compl. (ECF No. 1) 3 ¶¶ 2–3, 210–23, 224–33, 234–42) and accompanying Minor’s Compromise stem from 4 the allegedly unlawful removal of L.N. from her mother, Anne McNelis. (See Pet. at 2.) 5 In short, Anne McNelis originally had custody of L.N. until L.N.’s biological father and 6 Anne McNelis’s former partner, Paul Nuesmeyer, conspired with his friend to fabricate 7 referrals containing allegations of abuse to Child Protective Services (“CPS”). (See 8 Compl. ¶¶ 20, 29, 39–47, 59–97, 101–06,165, 179.) Because of these referrals, CPS, 9 through Defendants Pierce, Hayden, and Hodge, eventually removed L.N. from Anne 10 McNelis on February 27, 2020. (See id. ¶¶ 108–18, 116–28.) After Defendants 11 removed L.N. from Anne McNelis, L.N. temporarily stayed in a foster shelter. (See id. 12 ¶¶ 128, 142.) Nuesmeyer, with the help of his friend, then obtained custody of L.N. 13 from March 2020 until June 2021 when Anne McNelis regained custody of L.N. (See 14 id. ¶¶ 157–61, 192–93.) As a result of the allegedly unlawful removal, Anne McNelis 15 incurred substantial financial and reputational costs, and “L.N. has suffered 16 depression, sleeplessness, and social anxiety[,]” her grades have suffered, and she has 17 been subject to school intervention (Compl. ¶¶ 206–08). 18 Following these events, Anne McNelis filed the Complaint on February 25, 19 2022. (See Compl. at 42.) The County of El Dorado and Hodge filed Answers to the 20 Complaint on May 31, 2022. (See ECF Nos. 16 and 17.) Hayden and Pierce filed a 21 Motion to Dismiss on the same day, arguing that the Complaint pleaded insufficient 22 facts tying them specifically to the allegedly unlawful removal and subsequent events. 23 (See ECF No. 15 at 2.) On December 30th, the Motion to Dismiss was denied and 24 Hayden and Pierce were ordered to file their Answers. (See ECF No. 27.) Hayden and 25 Pierce did so on January 19, 2023. (See ECF No. 29.) 26 Anne McNelis, via counsel, filed the instant Petition on July 5, 2023. (See Pet.) 27 The Petition contained a declaration from Attorney Robert Powell (see Decl. of Robert 28 Powell (ECF No. 36-1 at 1–8) [hereinafter Powell Declaration or Powell Decl.]), an 1 exhibit providing confirmation of L.N.’s structured settlement annuity (see Ex. A), and 2 three declarations from attorneys that have worked with Plaintiffs’ counsel in support 3 of the attorneys’ fees request (see Ex. B (ECF No. 36-1 at 11–29). Defendants jointly 4 filed a Statement of Non-Opposition the next day. (See ECF No. 37.) 5 The terms of the Minor’s Compromise include a $48,000 award to L.N. out of a 6 $400,000 gross payout from Defendants. (See Pet. at 6.) Consistent with California 7 law, Anne McNelis has decided that it was in the best interests of L.N. to use the 8 proceeds to fund future periodic payments. (See id.; Powell Decl. ¶ 17.) The entire 9 $48,000 will be placed in a structured settlement annuity that will pay L.N. one lump- 10 sum payment of $20,000 on her eighteenth birthday, with monthly checks exceeding 11 $500 beginning the following year on L.N.’s nineteenth birthday and guaranteed for at 12 least the next five years. (See Pet. at 6.) In total, L.N. will receive more than the 13 $48,000 initially awarded to her, and she is currently projected to obtain over $63,000 14 after the final payment occurs. (See id.; Ex. A.) 15 As for the rest of the award, Anne McNelis agreed to retain Plaintiffs’ counsel for 16 a contingency fee of 40% taken from the gross award of $400,000, with Anne McNelis 17 to take the remainder after the $48,000 is subtracted to fund L.N.’s structured 18 settlement annuity. (See Pet. at 6–7; Powell Decl. ¶ 7, 23.) In plain terms, of the 19 $400,000 award, L.N. takes $48,000, Anne McNelis takes $192,000, and Plaintiffs’ 20 counsel takes $160,000. (See Pet. at 2.) Anne McNelis paid for all costs associated 21 with litigating the case, and she incurred costs related to visitation fees, totaling more 22 than $90,000 according to the Petition.1 (See Pet. at 7–8; Powell Decl. ¶ 28.) 23 Therefore, there would be no further deductions from the total amounts listed of 24 $48,000 to L.N., $160,000 to Plaintiffs’ counsel, and $192,000 to Anne McNelis. 25 However, Anne McNelis has agreed that should L.N. “require any further therapy or 26 1 The Complaint described Anne McNellis as “also incur[ing] legal costs in excess of $130,000, 27 professionally supervised visitation costs of approximately $10,400, expert witness fees, custody evaluation fees, ongoing therapy and counseling costs, and out of pocket medical expenses.” (Compl. 28 ¶ 206.) 1 treatment as a result of the damages she suffered as a result of the conduct 2 complained of herein, Ms. McNelis will be responsible . . . without any claim for 3 reimbursement from L.N.’s portion.” (Powell Decl. ¶ 31; see also Pet. at 7–8 (“Ms. 4 McNelis will undoubtedly utilize monies from her settlement proceeds for the benefit 5 of L.N., as she is still a child in her mother’s care.”).) 6 DISCUSSION 7 I. Legal Standard 8 “No claim by or against a minor or incompetent person may be settled or 9 compromised absent an order by the Court approving the settlement or 10 compromise.” E.D. Cal. R. 202(b) (Mar. 1, 2022). The Local Rules require that the 11 motion for approval of a proposed minor’s compromise disclose, among other things: 12 (1) the age and sex of the minor; (2) the nature of the causes of action to be settled or 13 compromised; (3) the facts and circumstances out of which the causes of action arose, 14 including the time, place and persons involved; (4) the manner in which the 15 compromise amount or other consideration was determined, including such 16 additional information as may be required to enable the Court to determine the 17 fairness of the settlement or compromise amount; and (5) if a personal injury claim, 18 the nature and extent of the injury with sufficient particularity to inform the Court 19 whether the injury is temporary or permanent. See E.D. Cal. R. 202(b)(2). 20 The Ninth Circuit held in Robidoux v. Rosengren, 638 F.3d 1177, 1181 (9th Cir. 21 2011) that Federal Rule of Civil Procedure 17(c) imposes a “special duty” on district 22 courts approving a minor’s compromise. “[T]his special duty requires a district court 23 to ‘conduct its own inquiry to determine whether the settlement serves the best 24 interests of the minor.’” Id. (citations omitted). However, this “special duty” has a 25 limited scope of review, only asking “whether the net recovery of each minor plaintiff 26 is fair and reasonable, without regard to the amount received by adult co-plaintiffs 27 and what they have agreed to pay plaintiff’s counsel.” Id. at 1182. “If the net recovery 28 of each minor plaintiff under the proposed settlement is fair and reasonable, the 1 district court should approve the settlement as presented . . . .” Id. In making this 2 determination, “courts typically consider such information as the relative worth of the 3 settlement amount, the circumstances of the settlement, counsel’s explanation of their 4 views and experiences in litigating these types of actions, and other similar 5 compromises that have been approved by courts.” Rivett v. United States, No. 2:21- 6 cv-00717-DAD-AC, 2023 WL 4238909, at *2 (E.D. Cal. June 28, 2023) (collecting cases 7 where the procedural posture was considered, the fact that the settlement occurred at 8 a court-supervised settlement conference was considered, and other compromises 9 were considered). 10 II. Analysis 11 The Petition itself omits some information required under the Local Rules, but 12 all of the relevant information is provided by reference or by independent review of 13 materials in the docket, which other courts have found non-fatal. See, e.g., McCue v. 14 South Fork Union Sch. Dist., No. 1:10-CV-00233-LJO, 2012 WL 2995666, at *3–4 (E.D. 15 Cal. July 23, 2012) (noting that “[t]he Court was able to dig through the filings and 16 determine” the required information in a case involving Plaintiffs’ counsel here). For 17 the first requirement, L.N. is a biological female that is twelve years old, turning 18 thirteen in November. (See Compl. ¶ 6; Ex. A.) For the second requirement, this case 19 generally involves the allegedly unlawful removal of L.N. from her mother, Anne 20 McNelis, on February 27, 2020, resulting in violations of the Fourth and Fourteenth 21 Amendments. (See Pet. at 2 (citing Compl.).) For the fifth requirement, this case did 22 not allege a personal injury claim. 23 Regarding the third requirement for the facts and circumstances out of which 24 the cause of action arose, including the time, place and persons involved, the Petition 25 references the Complaint for its discussion of the allegations, as this case did not 26 involve extensive discovery. In brief, Defendants Hayden and Hodge investigated 27 referrals to CPS regarding L.N.’s father, Nuesmeyer, beginning in 2018, but these 28 referrals led to no conclusive results from CPS. (See ECF No. 19 at 2–4.) In May 2019, 1 Nuesmeyer allegedly concocted a scheme with a family friend to fabricate allegations 2 of abuse and mistreatment permitted or perpetrated by Anne McNelis against her 3 children to obtain custody of them from her, including claiming that one of Anne 4 McNelis’s other children sexually molested L.N. (See id. at 2–7.) Defendants ignored 5 subsequent referrals regarding Nuesmeyer’s care (or lack thereof) for Anne McNelis’s 6 children while Defendants pursued fabricated referrals regarding Anne McNelis, 7 leading ultimately to the removal of L.N. from Anne McNelis on February 27, 2020. 8 (See id. at 4–8.) L.N. then stayed briefly at New Morning Youth Shelter, was subjected 9 to multiple interrogations by Defendants to which Anne McNelis did not consent, and 10 was given to Nuesmeyer’s custody after Nuesmeyer’s friend continued to intervene 11 and Defendants began to intervene. (See id. at 8–11.) 12 While in Nuesmeyer’s custody, L.N. and her siblings are alleged to have 13 endured abuse and neglect. (See Compl. ¶¶ 181, 195.) The Complaint specifically 14 alleges that, after L.N.’s unlawful removal from Anne McNelis, Nuesmeyer “hurt [L.N.’s] 15 leg for telling” Anne McNelis something, which later required a brace; that Nuesmeyer 16 and his then-girlfriend Jessica withheld food from L.N. and starved her to the point 17 that L.N.’s doctor made a CPS referral, worried that L.N. was anorexic; that L.N. 18 “decompensated after being placed in NUESMEYER’s care[ ] [and] began to have 19 injuries including burn marks, bruises, and what L.N. describes as hickeys” all of which 20 culminated in L.N. refusing to see Nuesmeyer or his then-girlfriend Jessica as of the 21 filing of the Complaint. (See Compl. ¶¶ 166, 172, 182–87, 195, 204, 208.) 22 For the fourth requirement, for the terms of the settlement, Defendants agreed 23 to settle all claims against them with all Plaintiffs, “which includes appeal rights of 24 Plaintiffs and attorney fee claims,” for $400,000.” (Pet. at 2.) Because of the pre- 25 existing retainer agreement, Plaintiffs’ counsel propose to take 40% from the 26 $400,000 gross settlement award ($160,000), leaving $240,000 to distribute between 27 Anne McNelis and L.N. (See Pet. at 6–7.) The Petition approved by Anne McNelis asks 28 that she receive $192,000 and L.N. receive the remaining 48,000. The Petition justifies 1 this split because L.N. will continue to benefit from her mother’s net settlement 2 proceeds as Anne McNelis still cares for L.N. (See Pet. at 7.) The Petition suggests 3 that “L.N.’s damages (particularly psychological) are not as extensive as they otherwise 4 might be for this type of case — where a child is removed unlawfully from the care and 5 custody of their parents or parent.” (See Pet. at 7; Powell Decl. ¶ 17 (stating the 6 same).) The Petition argues that though L.N. was removed from her mother, “she was 7 never subjected to foster care or the foster care system to any egregious degree[,]” 8 and “was then placed in the care of her father . . . a much more supportive and less 9 psychologically damaging environment than she had been placed with a stranger in 10 foster care.” (Pet. at. 7; also Powell Decl. ¶ 17 (stating the same).) 11 Attorney Powell explained his conclusions that L.N.’s net recovery under 12 Robidoux, that the contingency fee request, and that the ultimate distribution of the 13 gross settlement award, are all fair and reasonable in his Declaration. Attorney Powell 14 declared that “Plaintiff Anne McNelis, individually and in the capacity as guardian ad 15 litem for her daughter, L.N., freely and voluntarily entered into an arm’s-length 16 attorney-client contract with [his] firm[,]” which led Anne McNelis to enter into an 17 “arm’s-length retainer agreement with [his] firm . . . .” (Powell Decl. ¶¶ 23, 26.) He 18 stated that he usually applies a fee of at least 35% and claims that fees of 50% are not 19 uncommon. (See Powell Decl. ¶ 16.) Attorney Powell gave the standard arguments 20 why contingency rates are normally higher because of the inherent risk, particularly in 21 civil rights cases where recovery is not guaranteed. (See Powell Decl. ¶¶ 11–14.) He 22 provided several declarations submitted with an attorneys’ fee motion following a trial 23 in 2018 that a judge in the Northern District of California2 approved, granting an 24 “hourly fee at $600 an hour.” (Powell Decl. ¶ 18; see Ex. B (providing declarations in 25 support of Plaintiffs’ counsel’s motion for attorneys’ fees and costs (ECF Nos. 196-16, 26 27 2 Attorney Powell claims that a judge in the Southern District of California approved the minor’s compromise and attorneys’ fee request, but Morales clearly arose in the Northern District of California. 28 (See Powell Decl. ¶ 18.) 1 196-18, and 197-19) in Morales v. County of Mendocino, No. 3:16-cv-02429-EMC 2 (N.D. Cal. May 16, 2018)).) He stated that he “along with [his] staff and my associated 3 Counsel Samuel H. Park, spent hundreds of hours litigating this matter since the case 4 was filed in February of 2022.” (Powell Decl. ¶ 29.) Finally, he repeated the 5 arguments in the Petition minimizing the harm L.N. experienced to justify the reduced 6 amount to her. (See Powell Decl. ¶¶ 17, 28, 31–32.) 7 As for the fairness and reasonableness of the net settlement to L.N., Plaintiffs’ 8 counsel provided no helpful information, such as citations to cases involving similar 9 facts. Contrast with Nunes v. Cnty. of Stanislaus, No. 1:17-cv-00633-DAD-SAB, 2022 10 WL 1744942, at *5 (E.D. Cal. May 31, 2022) (collecting cases provided to justify 11 settlement in another case involving Plaintiffs’ counsel), R. and R. adopted, No. 1:17- 12 cv-00633-DAD-SAB, 2022 WL 2213989 (E.D. Cal. June 21, 2022). However, other 13 courts have recognized that few cases appear involving the allegedly unlawful 14 removal of a child from their family. See, e.g., Minors P.H. v. Cnty. of Riverside, No. 15 5:15-cv-00890-VAP-SPx, 2020 WL 10893001, at *3 (C.D. Cal. Mar. 30, 2020) (citations 16 omitted) (citing cases looking to wrongful death cases for an appropriate 17 comparison). To determine the fairness and reasonableness of the net settlement to 18 L.N., the Court reviewed several cases involving unlawful removals, see, e.g., Carefoot 19 v. Cnty. of Kearn, No. 1:17-cv-00456-AWI-JLT, 2019 WL 3026989, at *1 (E.D. Cal. July 20 11, 2019); M.R. v. City of Los Angeles, et al., No. CV 16-8087-DMG (JPRx), 2018 WL 21 1912861 (C.D. Cal. Apr. 13, 2018); wrongful deaths, see, e.g., E.R. v. Cnty. of 22 Stanislaus, No. 1:14-cv-00662-DAD-SKO, 2016 WL 3354334, at *3 (E.D. Cal. June 16, 23 2016); Doe ex rel. Scott v. Gill, No. C 11-4759 CW, 2012 WL 1939612, at *1 (N.D. Cal. 24 May 29, 2012); and sexual misconduct, see Allstate Ins. Co. v. Doe 1, No. 19-cv-1402- 25 JM-AGS, 2020 WL 7258724, at *1 (S.D. Cal. Dec. 10, 2020), R. and R. adopted, No. 19- 26 cv-1402-JM-AGS, 2021 WL 8153630 (S.D. Cal. Jan. 8, 2021); Doe by and through Doe 27 v. Clark Cnty., No. 2:17-cv-02380-MMD-PAL, 2019 WL 266286, at *1 (D. Nev. Jan. 18, 28 2019). 1 From this review, the Court is troubled by counsel’s requested 40% 2 contingency fee in this case, given the general consensus in this District that 25% is a 3 reasonable amount and the established benchmark for attorney’s fees in contingency 4 cases involving minors. See, e.g., McCue, 2012 WL 2995666, at *6; Rivett, 2023 WL 5 4238909, at *3 (citing cases from 2007, 2008, and 2013); Chance v. Prudential Ins. Co. 6 of Am., No. 1:15-cv-1889-DAD-JLT, 2016 WL 3538345, at *3 (E.D. Cal. June 29, 2016) 7 (collecting cases). While the Court has no doubt that Attorney Powell is an 8 experienced litigator in this area (see Powell Decl. ¶ 19), it was Attorney Park that 9 signed the Complaint and the Opposition to the Motion to Dismiss. Finally, the Court 10 notes that the Motion to Dismiss constituted the only contested motion practice 11 before this Court, and that it appears that the parties only engaged in six months’ 12 worth of discovery since the Answer was filed in this case. Given a review of the full 13 record available to the Court, a fee award of $160,000 could be considered excessive. 14 Ultimately, however, this Court’s focus is limited to “whether the net recovery of 15 each minor plaintiff is fair and reasonable, without regard to the amount received by 16 adult co-plaintiffs and what they have agreed to pay plaintiff’s counsel.” Robidoux, 17 638 F.3d at 1182. Based on the Court’s independent review of the cases cited supra, 18 the Court finds that $48,000 as an initial award that can grow to exceed $60,000 is a 19 fair and reasonable amount in light of the facts of the case, L.N.’s specific claim, and 20 recovery in similar cases. Compare with Carefoot, 2019 WL 3026989, at *2–3 (minor in 21 an unlawful removal case receiving $11,500); M.R., 2018 WL 1912861 (minor in an 22 unlawful removal case receiving $130,000); E.R., 2016 WL 3354334, at *3 (four minors 23 in a wrongful death case receiving $19,000); Doe ex rel. Scott, 2012 WL 1939612, at 24 *1 (minor in a wrongful death case receiving $7,188.85); Doe by and through Doe, 25 2019 WL 266286, at *2 (minor that was sexually assaulted in a group home setting 26 receiving $28,341.18). Contrast with Allstate Ins. Co., 2020 WL 7158724, at *3 (minor 27 at time but young adult over eighteen years old at time of award in a case involving 28 sexual misconduct receiving $75,000). Key for this Court finding that this award is fair 1 | and reasonable is that there are no substantive allegations about sexual abuse 2 | suffered by L.N. following her unlawful removal, thus making the unlawful removal 3 | cases the more apt comparison because that appears to be the primary harm alleged 4 | and suffered here. In the unlawful removal cases, recovery normally spans the low 5 | four-digit and five-digit range (ranging from $7,000 to $28,000 with an outlier of 6 | $130,000). Therefore, L.N.’s initial award of $48,000 seems fair and reasonable in 7 | light of the facts of the case, L.N.’s specific claim, and recovery in similar cases. 8 CONCLUSION 9 For the foregoing reasons, the Court GRANTS Anne McNelis’s Ex-Parte Petition 10 | for Approval of Minor’s Compromise for L.N (ECF No. 36). Plaintiffs’ counsel is 11 | instructed to proceed with obtaining the structured settlement as per the terms in 12 | Petition Exhibit A, and Plaintiffs’ counsel is ORDERED to provide a report to the Court 13 | within 30 days of the annuity being funded with the following information: (1) the 14 | expected total payout; (2) the number of months L.N. is expected to receive monthly 15 | payments; (3) how much those monthly payments will be; and (4) when those 16 | payments will end. 17 18 IT |S SO ORDERED. 19 | Dated: _September 5, 2023 _ Bel Lbrat Hon. Daniel labretta 20 UNITED STATES DISTRICT JUDGE 21 22 23 24 25 26 27 28 Af\