Co. of Santa Clara v. Escobar

Filed 1/29/16
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
COUNTY OF SANTA CLARA, H038121
(Santa Clara County
Plaintiff and Appellant, Super. Ct. No. 1-11-CV201680)
v.
JAVIER ESCOBAR et al.,
Defendants and Respondents.
Government Code section 23004.1 provides a means for counties to obtain
recompense for medical treatment rendered at county expense to persons injured through
the torts of others. The statute grants counties a direct right of action against the
tortfeasor, as well a lien on any judgment secured by the injured person against the
tortfeasor. The question presented by this, the first of three related appeals, is what
happens to the county’s direct right of action against the tortfeasor when the injured
person obtains a judgment against the tortfeasor, the county duly asserts its lien, and the
tortfeasor issues a check in the amount of the lien, but makes it payable jointly to the
county and the injured person, who refuses to endorse the check over to the county?
Here the county filed a new suit seeking to assert its statutory cause of action against the
tortfeasor. The trial court held in essence that the county’s cause of action had been
extinguished by the injured person’s judgment and that the only remedy against the
tortfeasor was to apply to the court that rendered the judgment for assistance in enforcing
the lien. We hold that, on the contrary, an adjudicated tortfeasor holding disputed funds
it knows are encumbered by a public hospital lien cannot avoid liability by simply turning
control of the funds over to the injured person. It must instead avail itself of the
procedures provided for neutral stakeholders caught between rival claimants—most
obviously the device of interpleader, under which it can deposit the disputed funds in
court, requiring the contestants to appear and present their claims. What it cannot do is
simply shirk its statutory obligations by turning disputed funds over to the injured person
in a check payable to both contestants. By doing so it satisfies neither the judgment nor
the lien, and it remains subject to the statutory liability in favor of the county unless and
until the county recovers the amount to which it is entitled under the statute.
Accordingly, the trial court here erred by sustaining the tortfeasor’s demurrer, and the
resulting judgment must be reversed.
BACKGROUND1
Because the matter arose on demurrer, we accept as true all well-pleaded
allegations of the complaint—in this instance, the first amended complaint filed by
plaintiff County of Santa Clara (County) on September 23, 2011, against Javier Escobar,
Jose Tinoco, and Fresh Express, Inc. (Fresh Express). It is there alleged that on
September 23, 2009, Tinoco, while employed by Fresh Express, injured Escobar by
negligently operating a vehicle. Escobar thereafter received treatment at Santa Clara
Valley Medical Center, a hospital owned and operated by plaintiff County. The
reasonable value of the care and services provided by County is alleged to be
$1,249,545.38. Escobar sued Tinoco and Fresh Express in Monterey County Superior
Court, where he eventually recovered a judgment for $5,689.624.87. County asserted a
1
On our own motion, we take judicial notice of the records in Escobar v. Fresh
Express, Inc.; County of Santa Clara (Jan. 28, 2016, H038185) [nonpub. opn.] (Escobar
II), and County of Santa Clara v. Escobar (Jan. 28, 2016, H039600) [nonpub. opn.]
(Escobar III), insofar as they assist in providing a complete picture of the procedural
background for the present appeal.
2
lien against the judgment pursuant to Government Code section 23004.1 (section
23004.1). Escobar’s attorney, who had stipulated at trial that County’s bill reflected
reasonable and necessary charges, now contended that County was not entitled to the full
amount of its bill but only to some lesser amount in accordance with schedules
promulgated by the Workers Compensation Appeals Board (WCAB or Board). Fresh
Express did not pay County, but instead delivered a check in the amount of
$1,249,545.38 to Escobar’s attorney, Joseph Carcione, Jr., payable to both County and
Carcione’s firm.
Based on these allegations, County asserted the following causes of action:
(1) Against Fresh Express, for statutory liability pursuant to section 23004.1; (2) against
Fresh Express and Escobar for money had and received; (3) against Escobar for value of
services rendered (quantum meruit); (4) against Escobar, for imposition of a constructive
trust; and (5) against all defendants, for declaratory relief.
Fresh Express demurred generally to the complaint, arguing that it could have no
further liability in the matter because an acknowledgment of satisfaction of judgment had
been entered in the Monterey court. It also contended that Escobar’s injuries had arisen
out his employment, such that exclusive jurisdiction over the controversy lay in the
WCAB.
The trial court sustained the demurrer without leave to amend, ruling that in view
of Escobar’s successful prosecution of his claim, “the County can no longer pursue its
own action against Fresh Express . . . , but must instead seek enforcement of the lien,”
which the court ruled County could only do in the Monterey court. County filed this
timely appeal.
3
DISCUSSION2
I. Actual Controversy
Fresh Express first contends that its demurrer was well taken because there was no
actual controversy between it and County. This argument fails for a number of reasons.
First, the requirement of an actual controversy is peculiar to a cause of action for
declaratory relief. (See Code Civ. Proc., § 1060; Wilson & Wilson v. City Council of
Redwood City (2011) 191 Cal. App. 4th 1559, 1582.) County also asserted claims against
Fresh Express for damages, which are unaffected by the presence or absence of an
“actual controversy.” Further, an actual controversy obviously does exist between
County and Fresh Express. County contends that Fresh Express remains liable to it
despite its various efforts to obstruct County’s claims, while Fresh Express contends that
it discharged its entire responsibility in the matter by surrendering the disputed funds, or
a check representing them, to Escobar’s attorney. It may be questionable whether the
declaratory relief cause of action really adds anything to County’s claims for damages,
but we have no doubt that it alleges an actual and present controversy. Fresh Express
offers no coherent argument to the contrary.
However, if Fresh Express’s underlying argument on this point were sound, it
might indeed support a conclusion that County is not entitled to a favorable declaration—
or other relief—because of its position as a subrogee of Escobar, who has assertedly
exclused Fresh Express from further liability by acknowledging satisfaction of the
judgment. As formulated in Fresh Express’s brief, the argument seems to flow as
follows: (1) County was subrogated to Escobar’s claim against Fresh Express; (2) as a
2
On County’s motion to consolidate this appeal with Escobar II, supra, we
ordered the matters considered together for purposes of briefing, oral argument, and
decision. On further review we have concluded that despite their common factual
background, each case presents more unique issues than shared ones, warranting separate
opinions. We vacate our previous order insofar as it directed otherwise.
4
subrogor, County stood in Escobar’s shoes and was subject to any defense Fresh Express
could raise against Escobar; (3) having acknowledged satisfaction of judgment, Escobar
would be barred from obtaining any further relief against Fresh Express; (4) therefore,
“the County by operation of law also has no controversy with Fresh Express.”
This argument cannot be sustained. The first of its flaws is that the record
contains no competent evidence that Escobar has ever acknowledged satisfaction of the
judgment. So far as we can determine, all copies of the acknowledgment in this record—
and in the records of the two companion appeals—reflect the satisfaction of a judgment
in favor not of Escobar, but of Jose Guadalupe Montoya-Medina, a co-plaintiff in the
Monterey action. Because this deficiency has gone unremarked by the parties, however,
we place little weight on it.
More tellingly, even if factually grounded in matters cognizable on demurrer, the
argument fails to sustain the conclusion that County is not entitled to relief. Fresh
Express cites Patent Scaffolding Co. v. William Simpson Construction Co. (1967) 256
Cal. App. 2d 506, 510, for the proposition that “any defense that can be asserted against a
subrogor can also be asserted against a subrogee.” What that decision really says is that
“generally, any defenses or counterclaims which could have been asserted against the
subrogor-insured can also be asserted against the subrogee-insurer.” (Ibid., italics
added.) The “generally” is critical here, for one well-known exception to the rule is that
the subrogor (here, Escobar) cannot defeat the subrogee’s (County’s) claim by conniving
with the third party (Fresh Express) to cut off the subrogee’s rights. “ ‘[W]here the
tortfeasor [i.e., third party] obtains a release from the insured [subrogor] with knowledge
that the latter has already been indemnified by the insurer [subrogee], such release of the
tortfeasor does not bar the right of subrogation of the insurer.’ [Citations.]”
(Conservatorship of Edwards (1988) 198 Cal. App. 3d 1176, 1184.) Although County has
not, technically speaking, indemnified Escobar, we think that distinction is
5
inconsequential. The argument asserted by Fresh Express rests entirely on statutory
language declaring County subrogated to Escobar’s rights. (Section 23004.1, subd. (a).)3
Fresh Express cannot assert defenses arising from that language without also accepting
the limitations imposed on those defenses by principles of subrogation. Fresh Express
has failed to establish that those principles pose any impediment to County’s claims. (Cf.
State Bar of California v. Statile (2008) 168 Cal. App. 4th 650, 666 [expressing doubt,
despite statutory language of subrogation, that “unilateral action” by attorney, or
agreement between attorney and aggrieved clients, could “alter” attorney’s “statutory
obligation” to reimburse client security fund for sums paid to clients].)
II. Statutory Cause of Action
A. Introduction
The trial court sustained Fresh Express’s demurrer on the rationale that by virtue
of the judgment in Escobar’s case, County’s only extant remedy against Fresh Express is
to seek to enforce County’s judgment lien in that action—which, the court implicitly
concluded, could only be done in the Monterey court, where the judgment was rendered.
County contends that, on the contrary, it is entitled to pursue a statutory cause of action
against Fresh Express under section 23004.1 unless and until its lien is satisfied.
Since the question turns on the meaning and effect of a statute, “[w]e begin with the
fundamental rule that a court ‘should ascertain the intent of the Legislature so as to
effectuate the purpose of the law.’ [Citation.] In determining such intent ‘[t]he court
turns first to the words themselves for the answer.’ [Citation.].” (Moyer v. Workmen’s
Comp. Appeals Bd. (1973) 10 Cal. 3d 222, 230.) “[I]f those words have a well-
3
The parties have made nothing of the statute’s disjunctive language, i.e., “the
county shall have a right to recover from said third person the reasonable value of the
care and treatment so furnished . . . , or shall, as to this right, be subrogated to any right
or claim that the injured or diseased person . . . has against such third person . . . .”
(§ 23004.1, subd. (a), italics added.)
6
established meaning . . . , there is no need for construction and courts should not indulge
in it.” (Arnett v. Dal Cielo (1996) 14 Cal. 4th 4, 24 (Arnett); see Yassin v. Solis (2010)
184 Cal. App. 4th 524, 531, quoting People v. Allegheny Casualty Co. (2007) 41 Cal. 4th
704, 708-709 [“ ‘If the language contains no ambiguity, we presume the Legislature
meant what it said, and the plain meaning of the statute governs. [Citation.]’ ”].)
As most pertinent here, section 23004.1 grants counties “a right to recover” from a
tortfeasor the reasonable value of medical services rendered by the county to a person
injured by the tortfeasor. (Section 23004.1, subd. (a).) It authorizes the county to file
suit on its own behalf, but goes on to state that if the injured person brings an action, “the
county’s right of action shall abate during the pendency of such action, and continue as a
first lien against any judgment recovered by the injured or diseased person.” (Id., subd.
(b), italics added.)4 Determination of the questions before us requires closer examination
4
Section 23004.1 provides, “(a) Subject to the provisions of Section 23004.3, in
any case in which the county is authorized or required by law to furnish hospital,
medical, surgical, or dental care and treatment, including prostheses and medical
appliances, to a person who is injured or suffers a disease, under circumstances creating a
tort liability upon some third person to pay damages therefor, the county shall have a
right to recover from said third person the reasonable value of the care and treatment so
furnished or to be furnished, or shall, as to this right, be subrogated to any right or claim
that the injured or diseased person, his guardian, personal representative, estate, or
survivors has against such third person to the extent of the reasonable value of the care
and treatment so furnished or to be furnished.
“(b) The county may, to enforce such rights, institute and prosecute legal proceedings
against the third person who is liable for the injury or disease in the appropriate court,
either in its own name or in the name of the injured person, his guardian, personal
representative, estate, or survivors. Such action shall be commenced within the period
prescribed in Section 340 of the Code of Civil Procedure. In the event that the injured
person, his guardian, personal representative, estate, survivors, or either of them brings an
action for damages against the third person who is liable for the injury or disease, the
county’s right of action shall abate during the pendency of such action, and continue as a
first lien against any judgment recovered by the injured or diseased person, his guardian,
personal representative, estate, or survivors, against the third person who is liable for the
injury or disease, to the extent of the reasonable value of the care and treatment so
7
of these two clauses, i.e., “[a county’s] right of action . . . shall abate during the pendency
of such action” (the abatement clause), and “[it] shall . . . continue as a first lien against
any judgment . . . .” (the lien clause).
B. Abatement Clause
Standing alone, the abatement clause is wholly unambiguous: It means that the
county’s right of action against the tortfeasor is suspended for the duration of the injured
person’s suit. To speak of “abating” a right of action is to use a settled term of legal art,
which courts will construe according to its accepted specialized meaning. (See Arnett,
supra, 14 Cal.4th at p. 19 [“when a word used in a statute has a well-established legal
meaning, it will be given that meaning in construing the statute”]; see ibid., quoting
Bradley v. United States (1973) 410 U.S. 605, 609 [“Rather than using terms in their
everyday sense, ‘[t]he law uses familiar legal expressions in their familiar legal
sense.’ ”]; Creutz v. Superior Court (1996) 49 Cal. App. 4th 822, 829 [“when the
Legislature uses a term of art, a court construing that use must assume that the
Legislature was aware of the ramifications of its choice of language”]; Texas Commerce
Bank v. Garamendi (1992) 11 Cal. App. 4th 460, 475 [unless a contrary intention is
“clearly indicated by the statute,” courts will presume Legislature intended legal,
technical, or commercial terms of art to convey “their established legal or technical
meanings”].)
To “abate” a right of action is to suspend its prosecution due to some impediment
that, without defeating the underlying cause of action, prevents the present maintenance
furnished or to be furnished. When the third person who is liable is insured, the county
shall notify the third person’s insurer, when known to the county, in writing of the lien
within 30 days following the filing of the action by the injured or diseased person, his
guardian, personal representative, estate, or survivors, against the third person who is
liable for the injury or disease; provided, however, that failure to so notify the insurer
shall not prejudice the claim or cause of action of the injured or diseased person, his
guardian, personal representative, estate, or survivors, or the county.”
8
of suit.5 The suspension may be accomplished by a variety of procedures. Traditionally,
if an action was found subject to abatement it was dismissed without prejudice.
(Drummond v. Desmarais (2009) 176 Cal. App. 4th 439, 458-459; see, e.g., Kroff v.
Larson (1985) 167 Cal. App. 3d 857, 861 [judgment on demurrer based on prematurity of
action “does not act as a bar to a subsequent suit”].) Some cases have suggested that
abatement is properly effected by granting a continuance of the abated action. (E.g.,
Colvig v. RKO General, Inc. (1965) 232 Cal. App. 2d 56, 71 [“Where the plea is sustained
the order should be merely an abatement or continuance of the second action, and it is
error to give judgment for the defendant on the merits.”]; Neblett v. Pacific Mut. Life Ins.
Co. of Cal. (1943) 22 Cal. 2d 393, 400 [“Pendency of an appeal in one action is not a bar
to the maintenance of a second action raising similar issues if, as here, no abatement or
continuance is sought at trial of the second action.”]; Pellissier v. Title Guarantee &
Trust Co. (1929) 208 Cal. 172, 184 [if judgment in first action is on appeal, prevailing
5
This usage flatly contradicts the assertion by Fresh Express’s attorney at the
hearing on the demurrer that when a right of action is abated, it “become[s] void.”
Of course, “abate” has a number of other meanings in other settings, some of
which may more nearly approach the meaning asserted by counsel. Thus the
amelioration of a nuisance or similar condition is referred to as “abatement.” (Code Civ.
Proc., § 731; Pen. Code, §§ 11200 et seq.; Flahive v. City of Dana Point (1999) 72
Cal. App. 4th 241, 244; cf. Health & Saf. Code, § 40001, subd. (b) [authorizing adoption
of rules for “the prevention and abatement of air pollution episodes”].) When an estate
lacks sufficient assets to fulfill a bequest, the bequest is said to be “abated.” (See Prob.
Code, §§ 21400-21406; Estate of Buck (1948) 32 Cal. 2d 372, 376.) Criminal punishment
is also said to be “abate[d]” when it is reduced to reflect legislative changes intended to
operate retroactively. (People v. Roman (2001) 92 Cal. App. 4th 141, 146.) On the other
hand, “abate” is also used to describe the temporary suspension of a legal process, such
the statute of limitations. (See Black’s Law Dict. (10th ed. 2014), p. 1716, col. 1
[defining “toll”: “(Of a time period, esp. a statutory one) to stop the running of; to abate
.”]; Don Johnson Productions, Inc. v. Rysher Entertainment
(2012) 209 Cal. App. 4th 919, 934 (dis. opn. of Mosk, J.), quoting Garner, Dict. of Modern
Legal Usage (2d ed. 1995), p. 884 [to same effect].)
9
party “may in a subsequent action plead [the] prior action in abatement, and lay the
foundation for securing a continuance of the trial of the second action until the final
determination of the first”].)
In one particular situation—where the cause of abatement is the pendency of
another lawsuit on the same cause of action—a statute prescribes entry of an
interlocutory judgment suspending proceedings “until the final determination of th[e]
other action.” (Code Civ. Proc., § 597.) This provision “ ‘permit[s] the trial court to
retain jurisdiction over the subsequent action.’ ” (Branson v. Sun-Diamond Growers
(1994) 24 Cal. App. 4th 327, 336, fn. 2, quoting Lord v. Garland (1946) 27 Cal. 2d 840,
851.) Then, if “ ‘the prior litigation is not determined upon the merits, the trial court
should hear and decide the rights of the parties in accordance with the issues presented by
the pleadings in the second action.’ ” (Ibid.)
Where another mode of abatement is not already prescribed, modern authorities
generally favor a simple stay, to be lifted if and when the cause of abatement dissipates.
(Drummond v. Desmarais, supra, 176 Cal. App. 4th 439, [458-459]; People ex rel.
Garamendi v. American Autoplan, Inc. (1993) 20 Cal. App. 4th 760, 771 [“Where
abatement is required, the second action should be stayed, not dismissed.”]; Plant
Insulation Co. v. Fibreboard Corp. (1990) 224 Cal. App. 3d 781, 792 [because there was
“no reason to divest the court of jurisdiction over appellant’s action until a final
determination” was obtained in related matter, “the instant action should have been
stayed rather than dismissed”].) Indeed, in this context “abate” and “stay” are often
viewed as synonymous, or virtually so. (See People ex rel. Garamendi v. American
Autoplan, Inc., supra, 20 Cal. App. 4th 760, 771, fn. 9 [referring to “motions to abate or
stay” in earlier decisions]; Brock v. Kaiser Foundation Hospitals (1992) 10 Cal. App. 4th
1790, 1796 [“Once a court grants the petition to compel arbitration and stays the action at
law, the action at law sits in the twilight zone of abatement . . . .”]; Yarbrough v. Superior
10
Court (1985) 39 Cal. 3d 197, 204 [alluding to procedures for determining incarcerated
litigant’s right to appointed counsel “when abatement or stay of the litigation is
contemplated”]; Muller v. Tanner (1969) 2 Cal. App. 3d 438, 443, fn. 4 [in context of plea
of other action pending, “the word abate is used in the sense of a stay of proceedings to
await the determination of the prior action on the merits”]; id. at p. 444 [distinguishing
dismissal order made to control proceedings from “abatement or stay” to be dissolved
upon failure to resolve first action on merits]; Precision Automotive v. Northern Ins. Co.
of New York (1967) 252 Cal. App. 2d 1036, 1042 [“this second action should not be
terminated . . . at the present time but should only be abated until the issues in the first
action have been finally determined”]; id. at p. 1044 [trial court directed to “stay[]” action
“until the final determination of the first action or until the further order of court”]; Leeds
v. Superior Court In and For Los Angeles County (1965) 231 Cal. App. 2d 723, 724,
quoting Tinney v. Tinney (1963) 211 Cal. App. 2d 548, 553 [“ ‘The trial court properly
acted within its discretion when it chose not to abate or stay the instant action.’ ”]; Karp
v. Dunn (1964) 229 Cal. App. 2d 192, 195 [in view of earlier action, present matter
“should not be terminated at the present time . . . but should only be abated until the
issues in the first action have been finally determined”]; id. at p. 196 [trial court directed
to “stay[]” action “until the final determination of the first action”]; Muller v. Muller
(1960) 179 Cal. App. 2d 815, 818 [duration of “stay by way of abatement” was properly
excluded in determining whether action had been pending for five years when dismissal
sought for failure to prosecute]; Kalmus v. Kalmus (1951) 103 Cal. App. 2d 405, 416
[referring to “the rule which applies between courts of different states with reference to
‘abatement’ of or ‘stay of proceedings’ by reason of the pendency of two actions
predicated on the same cause of action”], disapproved on another point in Hudson v.
Hudson (1959) 52 Cal. 2d 735, 739.)
11
Whatever the precise mechanism for effecting abatement, it possesses two critical
features: it is not a disposition on the merits, and it does not, in most cases, preclude
further proceedings on the underlying cause of action.6 (See 3 Witkin, Cal. Procedure,
supra, § 12, p. 73 [“[A] pending action may be stayed or ‘abated’ (usually temporarily
only) for certain defects in pleading or parties . . . .”].) This contingent and impermanent
character is deeply embedded in historic usage. Pre-code pleading practice recognized a
number of special “pleas in abatement” by which various non-merits objections could be
lodged at the outset of litigation; these were subject to strict rules, most notably that they
must be specially asserted before the submission of any other defensive pleading. (See 5
Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 1129, p. 556.)7 Nothing remains of
6
Of course, abatement will effect a permanent disposition when the actuating
cause can never be lifted. Thus “when a defendant in a criminal action dies pending
appeal from his conviction, the death permanently abates all further proceedings.”
(People v. Schaefer (2012) 208 Cal. App. 4th 1283, 1287.) Traditionally, death of a party
also abated a civil action; but if the underlying cause of action survived, the action could
be “revived” by substituting the decedent’s personal representative into the case. (See 3
Witkin, Cal. Procedure (5th ed. 2008) Actions, §§ 12 et seq., pp. 73 et seq.; Comment, 4
West. New Eng. L.Rev. 261, 265.) It is now declared by statute that no civil action is
“abated” in these circumstances “if the cause of action survives.” (Code Civ. Proc.,
§ 377.21.) In other cases, implicitly, the action is still abated—and as in the criminal
context, that disposition is necessarily permanent.
7
A plea in abatement was distinguished from a plea in bar, which asserted some
fatal, incurable obstacle to recovery. The distinction is concisely illustrated by the rule
under which the plea of another action pending on the same cause of action (a plea in
abatement) may ripen into res judicata (a plea in bar) if the first action produces a final
judgment on the merits. (E.g., Branson v. Sun-Diamond Growers, supra, 24 Cal.App.4th
at p. 336, fn. 2, quoting Lord v. Garland, supra, 27 Cal. 2d 840, 851, italics omitted [“ ‘If
a judgment upon the merits is rendered in the suit first commenced, the party asserting
the plea in abatement should be granted leave to amend to plead the res judicata effect of
the judgment in bar of the subsequent action.”]; Security Trust & Sav. Bank v. Claussen
(1919) 44 Cal. App. 730, 733 [“If final, the judgment could be interposed as a plea in bar,
and if pending on appeal therefrom by plaintiff, then as a plea in abatement . . . .”];
Pioneer Truck Co. v. Clark (1919) 44 Cal. App. 477, 480 [“A plea in abatement could be
interposed in such second and subsequent actions until the first judgment had become
12
these strictures except that such objections are sometimes said to be “ ‘ “not favored in
law,” ’ ” “ ‘ “strictly construed,” ’ ” and easily forfeited. (Color-Vue, Inc. v. Abrams
(1996) 44 Cal. App. 4th 1599, 1604; see In re Conservatorship of Oliver (1962) 203
Cal. App. 2d 678, 686 [objection that claim for attorney fees was premature was plea in
abatement that could not be raised for first time on appeal]; Stewart v. San Fernando
Refining Co. (1937) 22 Cal. App. 2d 661, 663 [no abuse of discretion in refusing leave to
amend answer to assert failure to perfect fictitious business name; defense “was a plea in
abatement” and, as such, “not favored in law”]; but see Conservatorship of Pacheco
(1990) 224 Cal. App. 3d 171, 176 [noting criticism of rule].) Most or all of the objections
are still recognized, however, and the term “plea in abatement” is still commonly used to
describe them. (5 Witkin, Cal. Procedure, supra, § 1129, p. 556, citing Code Civ. Proc.,
§ 597; see, e.g., Cal-Western Business Services, Inc. v. Corning Capital Group (2013)
221 Cal. App. 4th 304, 312 [“A defense based on a suspended corporation’s lack of
capacity to sue ‘ “is a plea in abatement . . . .” ’ ”]; Tabarrejo v. Superior Court (2014)
232 Cal. App. 4th 849, 867 [lack of standing goes to right to relief and, as such, “is not a
plea in abatement, as is lack of capacity to sue”]; Dial 800 v. Fesbinder (2004) 118
Cal. App. 4th 32, 45 [“Th[e] assertion of a contractual arbitration agreement constitutes a
‘plea in abatement’ of the action at law.”]; O’Flaherty v. Belgum (2004) 115 Cal. App. 4th
1044, 1093 [same, failure to obtain leave to sue receiver]; Fireman’s Fund Ins. Co. v.
Sparks Const., Inc. (2004) 114 Cal. App. 4th 1135, 1148 [defect in service of process];
Kroff v. Larson, supra, 167 Cal. App. 3d 857, 861 [prematurity of attorney’s suit to
recover costs advanced to client in pending action].)
final, and a plea in bar then made.”].) This terminology still reverberates in Code of Civil
Procedure section 597, which authorizes the separate trial of any defense “not involving
the merits of the plaintiff’s cause of action but constituting a bar or ground of abatement
to the prosecution thereof.”
13
It is an essential characteristic of a plea in abatement that it will not usually
prevent the plaintiff from prosecuting the abated cause of action if and when the occasion
for abatement is removed. “ ‘A plea in abatement, without disputing the justness of
plaintiff’s claim, objects to the place, mode, or time of asserting it and requires pro hac
vice that the judgment be given for the defendant, leaving it open to renew the suit in
another place, or form, or at another time.’ ” (V & P Trading Co., Inc. v. United Charter,
LLC (2012) 212 Cal. App. 4th 126, 133, quoting Nevills v. Shortridge (1905) 146 Cal. 277,
278; see Black’s Law Dict. (10th ed. 2014) p. 1338, col. 1 [“A defendant who
successfully asserts a plea in abatement leaves the claim open for continuation in the
current action or reassertion in a later action if the defect is cured.”].) As another panel
of this court has noted, such a plea “ ‘ “is essentially a request—not that an action be
terminated—but that it be continued until such time as there has been a disposition of the
first action.” [Citation.]’ ” (Shaw v. County of Santa Cruz (2008) 170 Cal. App. 4th 229,
253, fn. 26, quoting Lawyers Title Ins. Corp. v. Superior Court (1984) 151 Cal. App. 3d
455, 459.)
Standing alone, then, section 23004.1’s reference to “abate[ment]” strongly
suggests that the Legislature did not intend the injured person’s bringing of suit to
permanently bar the county’s prosecution of its own right of action, but only that it would
suspend that right for the stated period of time, i.e., “during the pendency of [the injured
person’s] action.” (Section 23004.1, subd. (b).) The specification of a duration is further
evidence that the Legislature did not intend the county’s right of action to terminate, but
only to be held in abeyance until the injured person’s action is no longer pending. “An
action is deemed to be pending from the time of its commencement until its final
determination upon appeal, or until the time for appeal has passed, unless the judgment is
sooner satisfied.” (Code Civ. Proc., § 1049.) Obviously, if the lawsuit results in
satisfaction of the county’s claims, there is no occasion for the county to proceed further
14
against the tortfeasor, and any attempt to do so will be barred on various grounds,
including the general prohibition on multiple and duplicative recoveries. But the
reference to abatement during the pendency of the lawsuit strongly implies that if the suit
ends without satisfaction of the county’s lien, the county’s own right of action is
“revived.” (See Black’s Law Dictionary (10th ed. 2014) pp. 195-196 [defining “bill of
revivor” as “[a] bill filed for the purpose of reviving and continuing a suit in equity when
the suit has been abated before final consummation”]; id. at p. 1515, col. 1 [“revivor” as
“[a] proceeding to revive an action ended because of either the death of one of the parties
or some other circumstance”].)8
Here the court initially entered judgment on December 14, 2010, and awarded
certain costs on April 5, 2011. If the cost award effected an amendment of the
judgment—a question we need not address—Escobar’s action remained pending until the
time to appeal from the latter order expired. (Code Civ. Proc., § 1049.) That would have
occurred no later than 180 days after the order was made (Cal. Rules of Court, rule
8.104(a)(1)(C)), or October 2, 2011, a Sunday, making October 3, 2011, the last day
Fresh Express could have appealed. The action therefore ceased to be pending as of
October 4, 2011.
Ironically, County apparently commenced this action before that date, meaning
that a plea in abatement might have lain against its complaint, when filed, on the ground
that the action was premature under the terms of section 23004.1. But the cause for
abatement lifted no later than October 4, which was 17 days before Fresh Express
demurred to County’s complaint, and more than three months before the demurrer was
heard. A plea in abatement is good only as long as the triggering condition lasts. When
8
Witkin criticizes the language of “abatement and revival” where the triggering
cause is the death of a party. (3 Witkin, Cal. Procedure, supra, § 12, p. 74.) It seems
perfectly apt, however, in the present context.
15
the plea rests on the pendency of another action, it must be rejected if the action is no
longer pending at the time the plea is considered—regardless of the state of affairs when
the action was filed. (See Karp v. Dunn, supra, 229 Cal. App. 2d 192, 195 [dismissal of
first action “before any trial of the second action[] completely dispose[s] of the plea of
another action pending”].)
The statute’s abatement clause was given its natural meaning in Mares v.
Baughman (2001) 92 Cal. App. 4th 672, 679, which County has cited for the proposition
that an injured person’s lawsuit merely suspends, but does not extinguish, a county’s
right of action under section 23004.1. The question in that case was whether, in a case
covered by section 23004.1, a county may assert a lien against the proceeds of a
settlement between the injured person and the tortfeasor. The court held that the statute
itself did not create a lien in that circumstance because it provides only for a lien “against
any judgment.” (Section 23004.1, subd. (b).) More pertinently for our purposes, the
court also rejected an argument that unless the county were granted an equitable lien
against the settlement, it would be “unable to recover for the medical services provided.”9
(Mares v. Baughman, supra, 92 Cal.App.4th at p. 679.) The court noted that the county’s
right of action under section 23004.1 was “abated only during the pendency of an action
by the injured person . . . . Once the action is no longer pending, should an amount
remain due and owing to County for those services, it may pursue its own action.”10
9
An “equitable lien” is a remedy allowed when equity and good conscience
dictates that a charge should be imposed upon particular property. (See Campbell v.
Superior Court (2005) 132 Cal. App. 4th 904, 912; Farmers Ins. Exchange v. Zerin (1997)
53 Cal. App. 4th 445, 453.)
10
The court did not suggest, and we do not mean to suggest, that the disposition
of the injured person’s action could have no effect on a county’s right of action. If the
injured person’s claims were rejected in a final judgment on the merits, that adjudication
would presumably bind the county. Indeed, this may have been the intended effect of the
statute’s reference to subrogation. Implicit in the court’s holding, however, was the
proposition that a tortfeasor who settled with the injured person, without including the
16
(Mares, supra, at p. 678.) In other words, the county had an adequate remedy in its
statutory cause of action, which was revived when the tort action failed to produce a
judgment to which a lien could attach. Here, the same reading of the abatement clause
supports the conclusion that County was entitled to proceed upon its statutory right of
action when Fresh Express failed to pay it the liened amount.
C. Lien Clause
The trial court concluded in essence that once a county’s lien has attached to a
judgment, as it did here, the county’s independent right of action ceases to exist. The
court distinguished Mares v. Baughman, supra, 92 Cal. App. 4th 672, on the ground that
the lawsuit there settled before any judgment was entered. The court did not articulate its
reasoning beyond the observation that because Escobar’s action had yielded “a judgment
on which the County can assert a lien and on which it did, in fact, assert a lien . . . , the
County can no longer pursue its own action against Fresh Express . . . , but must instead
seek enforcement of the lien.”
Nothing in the language of the statute supports this conclusion unless it is the lien
clause, under which a county’s right of action, having been abated by the injured person’s
suit, “shall . . . continue as a first lien against any judgment . . . .” (Section 23004.1,
subd. (b).) The trial court apparently took this language to mean in essence that a
county’s right of action continues only as a lien. It is of course a “cardinal rule” of
statutory construction that a law “ ‘is to be interpreted by the language in which it is
written, and courts are no more at liberty to add provisions to what is therein declared in
definite language than they are to disregard any of its express provisions.’ ” (Wells
county, would thereby run the risk that the county might then prosecute its own cause of
action under Section 23004.1. The net effect is to encourage the tortfeasor and the
injured person to include the county in any settlement negotiations—an effect the
Legislature may be readily inferred to have intended.
17
Fargo Bank v. Superior Court (1991) 53 Cal. 3d 1082, 1097, quoting People v. Campbell
(1902) 138 Cal. 11, 15; see Code Civ. Proc., § 1858 [not the office of a court to “insert
what has been omitted, or to omit what has been inserted”].) Nothing in the language of
the statute “declare[s] in definite language” that the lien, once attached, is all that remains
of the county’s original right of action.
On the other hand, the construction employed in the lien clause (“continues as a
first lien”) is unusual, and might support an argument that the statute is ambiguous on this
point. On the one hand, the common meaning of “continue” is “to remain in existence:
ENDURE.” (Merriam-Webster’s Collegiate Dict. (10th ed. 2001) p. 250.) To that extent
the clause suggests that the county’s right of action persists, notwithstanding the
existence of a lien. However the statute goes on to provide that the right of action
continues “as a first lien.” It is something of an oxymoron to say that a thing continues
as a different thing. Insofar as the original thing continues, it remains in existence; yet
insofar as it becomes something else it has, in at least some sense, ceased to exist. Many
would consider it imprecise, if not wrong, to say that a caterpillar continues as a butterfly,
or an acorn as an oak. The original thing becomes or transforms into something else and,
to that extent, no longer exists. Once they have metamorphosed into their mature forms,
the acorn and the caterpillar are gone. To say that they “continue as” those forms is at
best only a rough approximation of the facts—a usage perhaps tolerable for a poetic
purpose, but having no proper place in a context demanding precision and concreteness,
such as the creation of legal rights and relations.
Nonetheless we note that such a construction is sometimes used, however
imprecisely, to convey in common speech the idea of a transformation into something
new which replaces the original. (See Montreal Expos – Wikipedia, the free
encyclopedia (as of Jan. 28, 2015) [“The team left Montreal following the 2004
season as the franchise was relocated to Washington, D.C. and continues on as the
Washington Nationals.”].) This empirical linguistic observation, however, provides no
assistance here because the phrase says nothing, by itself, about the permanence of the
transformation. We sometimes say that a thing “continues as” something different, while
contemplating that it will, or can, resume its original form. (See, e.g., California State
Route 1 – Wikipedia, the free encyclopedia, (as of Jan. 28, 2016), fns. omitted [“At the interchange with
Highway 156 near Castroville, Highway 1 continues north as a two-lane rural road to
Moss Landing. [¶] Highway 1 becomes a freeway once again just before entering into
Santa Cruz County.”].) Thus, nothing in common usage dictates that when a county’s
right of action “continue[s] as” a lien, the antecedent right of action ceases permanently
to exist. Accepting provisionally that the statute is ambiguous with respect to whether a
county’s right of action can survive the creation of a lien on the injured person’s
judgment, the ambiguity cannot be resolved within the four corners of the statute. We
therefore turn to such extrinsic indicia of legislative intent as we have found.
D. Words Not Chosen
Although the surest guide to legislative intent will almost always be the language
actually used by the Legislature, it may also be useful to consider language not used,
particularly when it appears that the Legislature could have easily expressed the intention
for which a party contends. (In re Marriage of Smith (1982) 135 Cal. App. 3d 543, 551,
fn. 15, 419, quoting Frankfurter, Some Reflections on the Reading of Statutes (1947) 47
Col.L.Rev. 527, 536 [“ ‘One more caution is relevant when one is admonished to listen
attentively to what a statute says. One must also listen attentively to what it does not
say.’ ”]; see, e.g., People v. Johnson (2015) 60 Cal. 4th 966, 991 [“If the Legislature had
intended such a meaning, it could easily have said so.”]; Riverside County Sheriff’s Dept.
19
v. Stiglitz (2014) 60 Cal. 4th 624, 632 [had Legislature intended to require certain motions
to be heard in superior court, “it could easily have said so.”]; Flowers v. Prasad (2015)
238 Cal. App. 4th 930, 941-942 [if Legislature’s intent was to bar disabled persons from
seeking damages under statute, “it could have simply stated that prohibition”]; MacIsaac
v. Waste Management Collection and Recycling, Inc. (2005) 134 Cal. App. 4th 1076, 1086
[“The Legislature might easily have chosen to define ‘layoff’ in language that would
yield MacIsaac’s desired interpretation.”].)
Here there are many ways the Legislature could have expressed the intention
imputed to the statute by the trial court. It might have inserted the term “only,” as we
have already suggested. It might have used a term like “exclusive” to describe the lien
remedy. It might have specified that the prescribed abatement of the county’s right of
action would end, and the right of action revive, only if the injured person’s action
terminated otherwise than by a judgment on the merits.
Perhaps the most concise means of expressing the intention found by the trial
court would have been to say that upon entry of a judgment in favor of the injured person,
a county’s statutory right of action “merges” into the lien. This usage is common in
several areas of civil procedure. Thus, under one aspect of res judicata doctrine, “a claim
presented and reduced to judgment merges with the judgment and is thereby superseded.
[Citation.] The claimant’s remedy thereafter is to enforce the judgment; he may not
reassert the claim.” (Passanisi v. Merit-McBride Realtors, Inc. (1987) 190 Cal. App. 3d
1496, 1510.) A similar usage appears in the concept of the merger of estates, under
which two lesser interests in the same property may “merge” into a single greater interest
when both become vested in the same person. (See Davis v. Randall (1897) 117 Cal. 12,
16-17 [noting limitations on rule].) A kind of hybrid of these usages appears in rules
declaring that various types of liens, often auxiliary to collection of a debt or prospective
judgment, “merge” into later arising liens, or the judgment engendering them. Thus an
20
attachment lien, which is imposed on specific property in a pending lawsuit to aid in
enforcement of an eventual judgment, is said to be “merged in the lien of the judgment in
the case of real property or with the lien of a writ of execution in the case of personal
property.” (Durkin v. Durkin (1955) 133 Cal. App. 2d 283, 294; see Balzano v. Traeger
(1928) 93 Cal. App. 640, 643; Bagley v. Ward (1869) 37 Cal. 121, 131; but see Brun v.
Evans (1925) 197 Cal. 439, 442 [“it does not necessarily follow . . . that the attachment
lien becomes so completely extinguished thereby that it cannot thereafter be revived or
‘unscrambled’ from the judgment under any circumstances or for any purpose”]; cf. Riley
v. Nance (1893) 97 Cal. 203, 204-205 [attachment lien could not merge into judgment
lien, and thus was not extinguished as to particular property, where defendant conveyed
property to a third party during suit].)
None of these rules applies here by its own terms. When this action was filed,
neither County’s right of action nor its lien could have merged into a judgment, for
County had never obtained a judgment; it possessed only an abated right of action against
Fresh Express, and a lien on Escobar’s judgment. Nor was there any second estate into
which County’s lien could merge. We allude to these rules only because if the
Legislature had wished to make the statutory lien a county’s exclusive remedy against a
tortfeasor, the language of merger would have been a concise way of doing so. The
Legislature is certainly familiar with this terminology; it has declared on several
occasions that certain auxiliary liens will not merge into a judgment. (E.g., Civ. Code,
§ 3061.6, subd. (e) [suit may be brought on debt giving rise to agricultural laborer’s lien,
“and the judgment . . . shall not be construed to impair or merge any lien held by the
plaintiff”]; Civ. Code, § 3065a [same, logger’s lien]; Civ. Code, § 8468, subd. (b)
[mechanic’s lien]; Food & Agr. Code, § 55648 [agricultural producer’s lien]; Food &
Agr. Code, § 55703 [lien on livestock sold to meatpacker].) It has used this terminology
similarly in other contexts. (E.g., Fam. Code, § 2128, subd. (b) [preserves “contract
21
remedies” in context of marital dissolution “where the contract has not been merged or
incorporated into a judgment”]; Pub. Res. Code, § 5003.7, subd. (c) [state park
department’s lien on property for unpaid utility services “continue[s] in effect for four
years . . . unless sooner extinguished by payment, satisfaction, or merger in judgment of
foreclosure”].) And this terminology appeared in statutes long before 1967, when
section 23004.1 was adopted. (See Stats. 1951, ch. 1159, § 1, pp. 2954-2955 [enacting
former Code Civ. Proc., § 1200, predecessor to Civ. Code, § 8468, subd. (b), concerning
mechanic’s lien]; Stats.1939, ch. 828, § 10, p. 2408, enacting former Agr. Code,
§ 1300.9f, predecessor to Food & Agr. Code, § 55648, concerning agricultural producer’s
lien]; Stats.1927, ch. 505, § 2, pp. 849-850 [enacting Civ. Code, § 3065a, concerning
logger’s lien ].)
In short, the Legislature had a variety of verbal formulas at its ready disposal to
declare, if it wished, that once attached to a judgment, a county’s statutory lien became its
only remedy against a tortfeasor. It employed none of them. Of course, as we have
acknowledged, things the Legislature did not say will often provide a slender reed on
which to rest the interpretation of a statute. But when a variety of familiar constructions
were readily available to express the meaning asserted by a party, the Legislature’s
failure to adopt any of them is some indication that it did not intend the statute to convey
that meaning.
E. Statutory Purpose and Reasonable Consequences
A more potent tool for ascertaining the intended effect of a statute is to consult its
purpose and the reasonableness of the consequences flowing from competing
constructions. “To the extent th[e] examination of the statutory language leaves
uncertainty, it is appropriate to consider ‘the consequences that will flow from a
particular interpretation. [Citation.]’ [Citation.] Where more than one statutory
construction is arguably possible, our ‘policy has long been to favor the construction that
22
leads to the more reasonable result. [Citation.]’ [Citation.] This policy derives largely
from the presumption that the Legislature intends reasonable results consistent with its
apparent purpose. [Citation.] Thus, our task is to select the construction that comports
most closely with the Legislature’s apparent intent, with a view to promoting rather than
defeating the statutes’ general purpose, and to avoid a construction that would lead to
unreasonable, impractical, or arbitrary results. [Citations.]” (Copley Press, Inc. v.
Superior Court (2006) 39 Cal. 4th 1272, 1291, quoted in Yassin v. Solis, supra, 184
Cal. App. 4th 524, 532.)
The manifest purpose of section 23004.1 is to provide counties with a source of
recompense for the expenses incurred by them—and their taxpayers—in providing
medical services necessitated by tortious conduct. This qualifies the statute as remedial
in character, and calls for its liberal construction in aid of the remedies thus granted. (See
Leader v. Cords (2010) 182 Cal. App. 4th 1588, 1597, quoting Rich v. Maples (1867) 33
Cal. 102, 106 [“ ‘A remedial statute is one which provides a means for the enforcement
of a right or the redress of a wrong.’ ”]; id. at p. 1598, quoting Tintocalis v. Tintocalis
(1993) 20 Cal. App. 4th 1590, 1592 [“A remedial statute ‘ “must be liberally construed ‘to
effectuate its object and purpose, and to suppress the mischief at which it is
directed.’ ” ’ ”].)11 At least when the person treated lacks the means to pay for the
11
The Legislature adopted several measures with the manifest purpose of
avoiding draconian applications of the statute. One of these is to limit the county’s
recovery to the “reasonable value of the care and treatment so furnished.”
(Section 23004.1, subds. (a), (b).) Another is to declare the county “subrogated to any
right or claim” brought by the injured person—implying that, in some situations at least,
the county’s rights are subject to limitations on the doctrines surrounding equitable
subrogation. (Id., subd. (a); see State Bar of California v. Statile, supra, 168 Cal. App. 4th
650; pt. I, ante.) Of course, as we have noted exhaustively, the county’s entitlement to
sue in its own right “abate[s] during the pendency of [the injured person’s] action.”
(Section 23004.1, subd. (b).) And the county is expressly authorized to forego recovery
under the statute, in whole or part, if its governing body “determines that collection
23
services thus rendered, it might be said that the county and its taxpayers themselves
become victims of the tort. It is thus fitting that if the tortfeasor is able to respond in
damages, he or she is called upon to compensate the county for these expenses, whether
or not the injured person elects to bring suit.12 Obviously this purpose is ill served by
permitting the tortfeasor to excuse itself from this obligation by turning control of the
claimed funds over to the injured patient. The intent of the statute is best effectuated by
providing counties with a straightforward remedy against the recalcitrant tortfeasor cum
judgment creditor.
Fresh Express contends, however, that such a reading would place it, and other
similarly situated tortfeasors, in an untenable position. According to Fresh Express, it
“faced multiple obligations concerning the need to satisfy the Escobar judgment and
resolve claimed liens from the County and multiple medical providers. Fresh Express’
first obligation pursuant to the verdict and judgment was, of course, to satisfy the
judgment itself.[13] If Fresh Express had written a check directly to the County for the full
amount of the medical lien (as the County argues it should have), the Company would not
have obtained a Satisfaction of Judgment and would have been exposed to additional
costs related to judicial enforcement of the judgment, including accruing interest charges.
would result in undue hardship upon the person who suffered the injury or disease . . . .”
(Gov. Code, § 23004.2, subd. (a).)
12
If the injured person does bring suit, of course, the medical expenses he or she
has incurred will become an element of special damages which—if he or she prevails—
will be awarded in the judgment. (See Reichle v. Hazie (1937) 22 Cal. App. 2d 543, 547-
548.) The effect of the statutory lien is simply to carve out that portion of the award and
require its payment to the county, rather than force the county to pursue a collection
action against the injured person.
13
As further discussed in Escobar II, supra, H038185, Fresh Express has not in
fact satisfied the judgment, since it paid a portion of it in a check that could not be, and
presumably has not been, negotiated. (See Code Civ. Proc., § 724.010, subd. (c).)
24
Conversely, if Fresh Express merely paid Escobar the full amount of the total judgment,
the Company would have ignored its obligations to the lien claimant, the County. [¶] In
an effort to fashion an efficient satisfaction of the judgment, Fresh Express issued a check
to Mr. Escobar for the amount of the judgment exclusive of the amount of the County’s
medical lien. Fresh Express then issued a check to both the County and Mr. Escobar’s
counsel for the amount relating to the medical charges by the County. [Record citation.]
Fresh Express acted with the reasonable understanding that Mr. Escobar’s counsel and
the lien claimant would then divide up the amount of that check . . . .” (Italics added.) In
its brief in one of the related appeals, Fresh Express concludes a similar discussion by
asserting that section 23004.1 “could not have been intended to result in the illogical and
perverse conclusion of having a third party tortfeasor ‘double-pay’ a judgment related to
the medical services provided by the County.”
We agree that the Legislature could not have intended to require a tortfeasor in
Fresh Express’s position to pay the plaintiff’s medical expenses twice—once to the
plaintiff, and again to a county lienholder. Nor does a proper construction of
section 23004.1 require a judgment debtor such as Fresh Express to entangle itself in
disputes between a county lien claimant and the injured plaintiff over the county’s
recovery. But it does not follow that the Legislature meant to permit judgment debtors
like Fresh Express to wash their hands of the matter by simply turning the funds over to
the injured plaintiff. Rather it could quite reasonably intend that a party in Fresh
Express’s position would remain liable on the underlying statutory obligation unless and
until the county lienholder’s claims were resolved. Without the threat of such continuing
liability, there would be no incentive for a judgment debtor to comply with a county’s
lien, and it might safely be anticipated that no plaintiff would ever cooperate in such
compliance when it could instead, as Escobar has done here, cast the county into
procedural limbo in hopes of driving down the size of its claim.
25
Thus, while we agree that Fresh Express should have been able to disentangle
itself from any dispute between Escobar and County, and to obtain a satisfaction of
judgment by paying the full amount of the judgment, we cannot agree that it could
accomplish these objectives by simply writing a check payable to both of the competing
claimants. There were and are far more suitable remedies for one in Fresh Express’s
situation. It has simply failed to avail itself of them.
First, with respect to Fresh Express’s supposed plight as the target of conflicting
claims by Escobar and County, our codes provide a procedure tailored to precisely such
situations: “[W]henever conflicting claims are or may be made upon a person for or
relating to personal property, or the performance of an obligation . . . such person may
bring an action against the conflicting claimants to compel them to interplead and litigate
their several claims.” (Code Civ. Proc., § 386, subd. (a).) Similarly, “Any person . . .
against whom double or multiple claims are made . . . such that they may give rise to
double or multiple liability, may bring an action against the claimants to compel them to
interplead and litigate their several claims.” (Id., subd. (b).) The plaintiff-in-interpleader
may then deposit the disputed funds into court (id., subd. (c)), and upon establishing that
it is a “mere stakeholder,” may “apply to the court for an order discharging [it] from
liability and dismissing [it] from the action” (Code Civ. Proc., § 386.5).
Interpleader was the remedy employed in State Farm Mutual Automobile
Insurance Co. v. Huff (2013) 216 Cal. App. 4th 1463 (Huff), by a liability insurer in a
position analogous to that of Fresh Express here. The insurer found itself the target of
conflicting claims by an injured claimant and a hospital district seeking to enforce its lien
under the Hospital Lien Act (HLA) (Civ. Code, §§ 3045.1-3045.5). Although the opinion
does not explicitly disclose the fate of the insurer, it states that after the interpleader
action was filed, “[t]he conflicting claims of [the claimant] and the [d]istrict . . .
26
proceeded to a bench trial.” (State Farm, supra, at p. 1467.) Presumably the insurer
was—as it should have been—relieved of any further obligations in the matter.
Second, with respect to obtaining a satisfaction of judgment, we see no reason to
doubt that a stakeholder in Fresh Express’s position, having duly invoked the foregoing
remedy, would also be entitled to a satisfaction of judgment. If there were no dispute as
to the amount of the lien, Fresh Express would satisfy the judgment by paying the full
amount of the lien to County and paying the rest of the judgment to Escobar. This would
constitute “payment of the full amount required” by the judgment, and thus would effect
its satisfaction. (Code Civ. Proc., § 724.010, subd. (a).) Fresh Express seems to assume
that in order to establish its discharge of all obligations under the judgment, it had to
satisfy Escobar (or more realistically, his attorney), which it could not do without
surrendering control of the disputed funds to him. But Escobar was under a duty to
acknowledge satisfaction “immediately” upon its occurrence. (Code Civ. Proc.,
§ 724.030.) If he failed to perform that duty, Fresh Express would become entitled to
demand compliance and, failing that, to move the court to compel compliance. (Code
Civ. Proc., § 724.050, subds. (a), (d).) If the court found that the judgment had been
satisfied, it could either order Escobar to acknowledge satisfaction, or direct the clerk to
enter satisfaction of judgment. (Code Civ. Proc., § 724.050, subd. (d).) In either case, if
Escobar’s failure to comply was found to be “without just cause,” he would be “liable to
[Fresh Express] . . . for all damages sustained by reason of such failure,” and would be
required to “forfeit one hundred dollars” to Fresh Express (Code Civ. Proc., § 724.050,
subd. (e)), and, potentially, to absorb Fresh Express’s attorney fees (Code Civ. Proc.,
§ 724.080).
We have no doubt that these same remedies would be available to a judgment
debtor who duly invoked the remedy of interpleader with respect to portions of the
judgment that were subject to conflicting claims. The deposit of the disputed funds,
27
coupled with the payment of undisputed funds as directed by the judgment, would also
constitute “payment of the full amount required” by the judgment, and thus would entitle
the judgment creditor to an acknowledgment or certification of satisfaction (Code Civ.
Proc., § 724.010, subd. (a)) in addition to excusing it from further involvement in the
dispute over the deposited funds. To the extent that Fresh Express now finds itself in an
uncomfortable strait, it is because it failed to avail itself of the escape routes provided by
the code. It cannot invoke the resulting hardship as a basis for limiting County’s
statutory rights. The relief from its supposed dilemma does not lie in an untenable
construction of section 23004.1.
F. Legislative History
We have found no pertinent direct evidence of legislative intent, e.g., committee or
other reports accompanying the enactment of section 23004.1.14 However, we can draw
some inferences from four bodies of evidence: the history of amendments to the bill
prior to its adoption; a comparison of this statute with the HLA, adopted six years earlier;
and enrolled bill reports concerning a nearly identical provision adopted within a few
days of section 23004.1.
As originally proposed, the bill giving rise to section 23004.1 did not grant
counties either a lien or an entirely independent cause of action. Instead it granted a right
to “intervene or join” in any action brought by the injured person, and to bring an action
against the tortfeasor only if the injured person did not institute suit within six months of
the treatment furnished. (Sen. Bill No. 893 (1967 Reg. Sess.), as introduced Apr. 6,
1967, § 1.) The bill was then amended to grant the county, in addition to its own right of
action, a lien on the injured person’s judgment. (Sen. Bill No. 893 (1967 Reg. Sess.), as
14
The only legislative history we have found is the governor’s chaptered bill file,
in which we find nothing bearing on the intended relationship between the abatement
clause and the lien clause.
28
amended May 23, 1967, § 1.) The amendment further provided that the county could
“enforce such lien in a separate action.” (Ibid.) The next amendment conditioned the
lien upon the injured person’s bringing suit, and added the provisos that (1) the county’s
right of action “shall abate during the pendency of such action,” and (2) would “continue
as a first lien against any judgment recovered by the injured or disabled person . . . .”
(Sen. Bill No. 893 (1967 Reg. Sess.), as amended Jun. 20, 1967, § 1.) It also eliminated
the provision expressly authorizing a “separate action” to enforce the lien.15 (Ibid.) The
remaining amendments have no apparent relevance here.16
The deletion of the provision for lien enforcement “in a separate action” suggests
two competing hypotheses: either the Legislature meant to deny counties a right to
enforce the lien in a separate action; or it considered the grant of such a right superfluous
once the statute was amended to declare that the county’s own right of action “abate[d]
during the pendency” of the injured person’s action. We think the latter inference is by
far the more reasonable of the two. None of the materials before us, admissible or
otherwise, suggests any reason for the Legislature to limit a county’s power to enforce
the lien granted by the statute. In contrast, the circumstances readily suggest grounds for
the Legislature to deem an explicit grant of such power unnecessary and potentially
15
Somewhat curiously, the Legislative Counsel’s digest of the bill as ultimately
enacted continues to state that it “provides that county may enforce such lien in a separate
action.” (Leg. Counsel’s Dig., Sen. Bill No. 893 (1987-1988 Reg. Sess.), 4 Stats. 1987,
Summary Digest, p. 5216.) While this may be attributable to oversight, it certainly
militates against the idea that the statute was understood to preclude further litigation
against the tortfeasor after entry of the underlying judgment.
16
One amendment made the statute effective only in counties which had elected
to be governed by its provisions. (Sen. Bill No. 893 (1967 Reg. Sess.), as amended
Jun. 26, 1967, § 3; see Gov. Code, § 23004.3.) The final two amendments required the
county to give notice of the lien to the tortfeasor’s insurance company, if known. (Sen.
Bill No. 897 (1967 Reg. Sess.), as amended Jul. 14, 1967, § 1; Sen. Bill No. 893 (1967
Reg. Sess.), as amended Aug. 2, 1967, § 1.)
29
mischievous. Having limited the duration of the abatement of the county’s right of action
to coincide with the pendency of the injured person’s action, the Legislature could quite
reasonably expect that the right would be revived if the county did not obtain satisfaction
through its lien. Given such an expectation, the Legislature could quite reasonably fear
that the specification of a particular enforcement mechanism—i.e., an “separate action”
on the lien—would imply the withholding of other remedies, such as a suit on the original
right of action. This could be especially pernicious given the absence of any prescribed
or previously settled means of enforcing the lien. The uncertainty, confusion, and waste
of resources attendant upon such a regime are illustrated by this very case, in which two
parties who clearly owe County money have both avoided paying anything for a number
of years, essentially by playing competing remedies off against each other in two
different courts.
The simplest and most direct solution to such difficulties would be, and we believe
was, to put the burden on the tortfeasor/judgment debtor to either satisfy the county’s
demands or face a new or revived suit on the county’s statutory cause of action.
Anticipating that its enactment would be so construed and applied, the Legislature quite
prudently omitted any reference to a suit to enforce the lien.
This inference is bolstered, in our view, by the contrast between section 23004.1
and the HLA. Both statutory schemes provide remedies, including lien rights, to an
entity that provides medical treatment to a person who is unable to pay, where a third
person is liable for the injury giving rise to the treatment. But each employs different
mechanisms to strike a balance among the interests affected.17 The lien granted by the
17
It appears that a county could invoke both remedies in a proper case. (See Civ.
Code, § 3045.1 [making HLA available to “[e]very . . . public entity, or other institution
or body maintaining a hospital”]; e.g., County of San Bernardino v. Calderon (2007) 148
Cal. App. 4th 1103; Newton v. Clemons (2003) 110 Cal. App. 4th 1.)
30
HLA attaches to a “judgment, settlement, or compromise” (Civ. Code, § 3045.2),
whereas the lien under section 23004.1 attaches only to “a[] judgment” and not to funds
received in settlement (§ 23004.1, subd. (b); Mares v. Baughman, supra, 92 Cal. App. 4th
672, 679; Newton v. Clemons, supra, 110 Cal. App. 4th 1, 8-9). However the HLA has
been construed by the Supreme Court to limit recovery on the lien to 50 percent of the
injured person’s recovery. (Parnell v. Adventist Health System/West (2005) 35 Cal. 4th
595, 601 (Parnell), citing Newton v. Clemons, supra, 110 Cal. App. 4th 1, 6, & Civ. Code,
§ 3045.4; accord, Huff, supra, 216 Cal. App. 4th 1463, 1470.) No such limitation appears
in section 23004.1 or related statutes. Further, the HLA “does not give a hospital an
independent cause of action against the third party tortfeasor,” but generally allows
recovery only from “ ‘damages recovered’ by the patient from a third party tortfeasor.”
(Parnell, supra, 35 Cal.4th at p. 603.) However, the HLA expressly entitles the hospital
to proceed directly against a tortfeasor who pays the injured person without honoring the
lien. (Civ. Code, § 3045.4; see Parnell, supra, at p. 608 [noting contrast between the two
acts in this regard].)18
The interpretation of section 23004.1 advocated by Fresh Express and adopted by
the trial court would make another distinction between the remedies afforded by the two
acts: whereas the HLA imposes direct liability on a tortfeasor for failing to honor a lien
under that act (Civ. Code, § 3045.4), the tortfeasor who ignores a lien under
section 23004.1 would be subject only to some undefined proceeding to enforce the lien.
The trial court apparently supposed, for unexplained reasons, that such a proceeding
could take place only in the court that rendered the underlying judgment. But that is the
18
As relevant here, Civil Code section 3054.4 provides, “Any person . . . making
any payment to the injured person . . . for the injuries he or she sustained, after the receipt
of the notice as provided by Section 3045.3, without paying . . . [the lienor] the amount of
its lien . . . shall be liable to the [lienor] . . . for the amount of its lien . . . .”
31
least of its inadequacies. Because of the peculiar nature of the statutory lien, there is
simply no clear guidance in statute or precedent concerning methods for its
“enforcement.” Under the trial court’s reading, the county would have no assurance that
its statutory rights could be vindicated at all—let alone that they would be vindicated in
an expedient or efficient manner.
This stark discrepancy between the HLA and Section 23004.1—as construed by
the trial court—is readily eliminated by taking the abatement clause at face value and
holding that a county’s right of action is revived if, after the injured person’s suit
concludes, the county’s demands have not been satisfied or otherwise resolved. Again,
such a rule would have the salutary effect of bringing the tortfeasor, the injured person,
and the county to the table to negotiate an outcome agreeable to all; failing that, it would
provide a strong incentive for the tortfeasor qua judgment debtor to deposit the disputed
funds in court, require the injured person and the county to litigate their competing
claims, and demand that its own liability on the judgment be declared satisfied. The trial
court’s interpretation, in contrast, is destined to generate precisely the kind of delay,
confusion, and waste reflected in this and the two related appeals.
Finally we note that the Legislature used the same construction at issue here in
former Welfare and Institutions Code section 14417, which was enacted three days
before section 23004.1. (Stats. 1967, ch. 1424, § 1, p. 3350, adopted Aug. 25, 1967; cf.
Stats. 1967, ch. 1495, § 1, pp. 3492-3492, adopted Aug. 28, 1967.) In its original form,
that statute granted the state a right of action against any person civilly responsible for
inflicting injuries for which Medi-Cal benefits had been paid. (See City and County of
San Francisco v. Sweet (1995) 12 Cal. 4th 105, 123 (Sweet).) Like section 23004.1, it
provided that if a beneficiary filed suit, the state’s “right of action shall abate during the
pendency of such action, and . . . continue as a first lien against any judgment recovered
by the injured person . . . .” (See Stats. 1967, ch. 1424, § 1, p. 3350.)
32
Unfortunately, before that statute could be judicially construed the quoted
provision was replaced by one substituting other remedies for the original ones. (Former
Welf. & Inst. Code, § 14417, as enacted by Stats. 1969, ch. 1420, § 2, p. 2910, discussed
in Sweet, supra, 12 Cal.4th at p. 123; see now Welf. & Inst. Code, §§ 14124.70 et seq.)
In connection with the 1967 enactment, however, two executive branch offices submitted
enrolled bill memoranda to the Governor stating that the bill authorized a direct action
and “also gives . . . [a] . . . lien.” (Office of Health Care Services, Enrolled Bill Analysis
of Sen. Bill 1277 (1967-1968 Reg. Sess.) Aug. 23, 1967, p. 1, italics added; Legis.
Liaisons to Senat and Assembly, Bill Memorandum re Sen. Bill 1277 (1967-1968 Reg.
Sess.) Aug. 23, 1967, p. 1 [same]; cf. Revenue and Management Agency, Memorandum
on Sen. Bill 1277 (1967-1968 Reg. Sess.) Aug. 21, 1967, p. 1 [“The recovery can be
made directly against the liable third party or through a lien against any settlement
between the injured party and the responsible third party.”].) Although such materials
“do not take precedence over more direct windows into legislative intent,” and “cannot be
used to alter the substance of legislation,” they may be “ ‘instructive’ in filling out the
picture of the Legislature’s purpose.” (In re Conservatorship of Whitley (2010) 50
Cal. 4th 1206, 1218, fn. 3.) Here they suggest that the lien remedy was viewed as
cumulative of, or at worst an alternative to, the cause of action. Nothing we have found
suggests that the Legislature intended the lien to supersede the cause of action.
We conclude that County’s right of action under section 23004.1 survived the
attachment of its lien and that County was entitled to revive it, as it sought to do here,
when Fresh Express surrendered control of the liened funds to Escobar’s attorney. It
follows that the trial court erred by sustaining Fresh Express’s demurrer and that the
judgment predicated on that ruling must be reversed.
33
III. WCAB Jurisdiction
Fresh Express also contends that County’s right to relief is constrained by the
exclusive remedy provisions of the Workers’ Compensation Act. Fresh Express asserts
that “the WCAB has exclusive jurisdiction over medical liens” and that the amounts
recoverable by medical lienholders are limited to those allowed in the WCAB’s medical
fee schedules. The identical contention is asserted by Escobar in Escobar III, supra,
H039600. As the person claiming to have suffered an industrial injury, he has a stronger
argument than anything Fresh Express—a third-party tortfeasor and judgment debtor—
can make. For reasons explained at length in our opinion in that matter, we have
concluded that the workers’ compensation laws pose no impediment to County’s claims
against Escobar. A fortiori, they pose no impediment to its claims against Fresh Express.
DISPOSITION
The judgment is reversed with directions to overrule the demurrer. On remand,
Fresh Express may wish to commence a proceeding in interpleader to extricate itself from
this dispute. County will recover its costs on appeal.
34
______________________________________
RUSHING, P.J.
WE CONCUR:
____________________________________
PREMO, J.
____________________________________
ELIA, J.
County of Santa Clara v. Escobar et al.
H038121
35
Trial Court: Santa Clara County Superior Court
Superior Court No.: 1-11-CV201680
Trial Judge: The Honorable Patricia M. Lucas
Attorneys for Plaintiff and Orry P. Korb,
Appellant County of Santa Clara: County Counsel
Lori E. Pegg,
Acting county Counsel
Shephen H. Schmid,
Deputy County Counsel
Marcy L. Berkman,
Deputy County Counsel
Attorneys for Defendant and Law Offices of Carcione, Cattermole,
Respondent Javier Escobar: Dolinski, Stucky, Markowitz & Carcione
Joseph W. Carcione, Jr.
Joshua S. Markowitz
Attorneys for Defendant and Burnham Brown
Respondent Fresh Express, Inc.
Robert M. Bodzin
Raymond A. Greene, III
County of Santa Clara v. Escobar et al.
H038121
36