Herrera v. City of San Jose

• Decision Date: 28 June 2019
• Docket Number: H042211
• Court: California Court of Appeals Court of Appeals
• Parties: MARTHA HERRERA, Plaintiff and Appellant, v. CITY OF SAN JOSE, Defendant and Appellant.

MARTHA HERRERA, Plaintiff and Appellant, v. CITY OF SAN JOSE, Defendant and Appellant.

H042211

COURT OF APPEAL OF THE STATE OF CALIFORNIA SIXTH APPELLATE DISTRICT

June 28, 2019

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Santa Clara County Super. Ct. No. 1-10-CV-165689)

In this action for dangerous condition and inverse condemnation against the City of San Jose (City), a jury awarded damages to plaintiffs Martha Herrera and her daughters. Both the City and Herrera appeal from the judgment: The City contends that res judicata barred Herrera from recovering for property damage because her insurer had already settled with the City; Herrera contends that the court improperly offset her recovery by the amount of that settlement. Herrera also appeals from the subsequent order limiting her attorney fees, costs, and prejudgment interest. We will affirm the judgment and postjudgment order.

Background

1. Events Culminating in the Verdict

On April 6, 2008, Herrera lived with her daughters, plaintiffs Michelle and Jessica Rodriguez, in her home on Mossall Way in San Jose. In the early morning that day, raw sewage from the City's main sewer line flooded most of the first floor. Mark Hunter, a plumbing consultant testifying at trial as an expert in the field of sewer mains and backflows, explained that a sag in the sewer line had allowed the accumulation of debris until a blockage occurred, resulting in a diversion of flow. Upon inspection and cleaning that day, grease was found to have caused a stoppage.¹ In addition, the backflow valve at Herrera's home was not working properly; those valves tended to function correctly about 50 percent of the time.

Herrera was insured by California State Automobile Association (CSAA), which accepted her claim. The policy carried limits of $329,000 for the dwelling, $230,300 for personal property, and $65,800 for loss of use. Deanna Thompson, a file handler for CSAA, testified that she told Herrera that she was not sure if there would be coverage; if this turned out to be an "off-premises sewage loss," then Herrera might have to file a claim with the City.² After mitigation of the damage, the company sent Herrera a check for $12,480.13, the amount it calculated to cover structural repairs, less the homeowner's $1,000 deductible. The following month additional payments of $3,898.82 and $2,877 were made to Herrera for crawl space mitigation and the fair rental value of her home, respectively. It was only after September 18, 2008 that the file was finally closed on the claim.

A month after the incident Robert Wall, a CSAA attorney, talked to Herrera. From that conversation Herrera inferred that CSAA was going to represent her in "a separate complementary lawsuit against the City." For the first two years after the loss, she thought CSAA attorneys were representing her. It was only later that she learned that the insurer and the City had settled the property damage claims without her involvement. Myles Corcoran, Herrera's expert in construction consultation and waterdamage, testified on cross-examination that it would not have taken longer than about two months to repair the damage to the home. However, the house was still vacant by the time of trial.

In August 2008 CSAA submitted a claim against the City with the City Clerk, seeking reimbursement for the amounts it had paid to Herrera for the damage to her home, which it asserted was attributable to the City's "[f]ailure to inspect, maintain and repair [the] city sewer main." On October 7, 2008 Herrera submitted a government claim with the City Clerk "to complement what [her CSAA] policy does not cover." Herrera requested $36,088.15, plus an unknown amount for future costs.

In November 2008 CSAA filed a complaint in subrogation against the City, alleging inverse condemnation and dangerous condition of public property. In September 2009 those parties settled the action: CSAA released the City from all current and future claims in exchange for the City's payment of $60,000. That lawsuit was dismissed with prejudice on October 30, 2009.

On March 8, 2010, Herrera and her daughters filed their action against the City, claiming property damage and personal injury. In their second amended complaint, filed August 28, 2013 by conditional stipulation,³ plaintiffs alleged negligence in the maintenance and control of the main sewage line, dangerous condition of public property, and inverse condemnation.

Before trial began on November 10, 2014, the court heard motions in limine. Plaintiffs' counsel asked the court to exclude as a collateral source the payments she had received from CSAA and disability payments she had received through her employment. Counsel noted that the payment from CSAA could later be credited against the recovery; but to allow it to come into evidence at trial would be "so prejudicial" against plaintiffs.In the City's motion it requested a ruling barring all of plaintiffs' claims of property damage based on res judicata and excluding all evidence of property damage. According to the City, the second amended complaint violated the rule against splitting a cause of action because CSAA had resolved "the very same property damage claims" presented by plaintiffs. Consequently, the City argued, the jury should hear only personal injury damages and not be prejudiced by evidence of property damage.

The court allowed the jury to hear evidence of the $60,000 settlement, and defense counsel urged the jury to find that Herrera had already been compensated for the property damage. As to the City's motion, the court denied it without prejudice, saying it could not "dispose of an entire cause of action through the vehicle entitled motion in limine."

The jury found in plaintiffs' favor by separate verdicts. On Herrera's claim of dangerous condition of public property, it awarded her $360,016.08, of which $150,493.33 was for property damage. Jessica Rodriguez's damages of $40,958.33 for dangerous condition included $958.33 for property damage, while $125 of Michelle Rodriguez's $25,541.67 recovery was for property damage. Finally, as to the inverse condemnation claim, the jury found that $110,166.67 of the damage to Herrera's real property was caused by the blockage in the City's sewer main. Upon inquiry by the court, the jurors affirmed that this $110,166.67 was included in the $150,493.33 of property damage in the cause of action for dangerous condition.

2. Posttrial Motions

The court entered judgment on the verdict on January 28, 2015. Two days later the City filed multiple posttrial motions: a motion to offset the judgment by $60,000, the amount of its settlement with CSAA; a motion for judgment notwithstanding the verdict (JNOV) on the inverse condemnation claim; a motion for JNOV on the dangerous condition claim; a motion for reduction of damages, or alternatively, a new trial; and a motion to stay enforcement of the judgment pending the outcome of the other threemotions. The trial court granted the stay motion and the motion to offset the judgment but denied the motions for JNOV and a new trial.

On March 27, 2015 Herrera individually moved for costs and attorney fees. She initially requested $42,056.45 in expert "engineering and appraisal costs"⁴ pursuant to Code of Civil Procedure section 1036,⁵ "ordinary" costs of $16,736.31 under section 1033.5, prejudgment interest of $52,608.36, and attorney fees of $450,915. In her reply to the City's opposition, Herrera reduced her claim of attorney fees to $395,940 to correct errors in counsel's initial calculations.⁶

The court continued the hearing to allow Herrera to submit additional evidence to support her claim of inverse condemnation costs; but the supplemental evidence included $13,888.11 that had not been claimed in the initial motion. Those were disallowed. The court also denied section 1036 costs of $14,999.45 because they were not shown to be reasonably related to the inverse condemnation claim, along with expert deposition costs that had already been paid by the City. Subtracting those amounts left $25,482.09 in expert costs that were granted under section 1036. As to prejudgment interest, the court calculated the amount based on the $50,166.67 inverse condemnation award (after the offset), yielding $23,956.30. Attorney fees were awarded in the amount of $20,066.67, representing 40 percent of Herrera's $50,166.67 recovery pursuant to the contingent fee agreement she had with her attorney.

The City filed a timely notice of appeal from the judgment. Herrera timely appealed from the judgment and from the postjudgment order.

Discussion

1. The City's Appeal

Renewing the contention it advanced in its motion in limine, the City asserts that Herrera was not entitled to any damages for property damage because CSAA had already recovered for that harm in the settlement and dismissal of its subrogation action. By including this claim in her lawsuit, the City argues, Herrera was improperly splitting a cause of action that was barred by res judicata.

Herrera responds, as she did below, that the City has waived the defense of res judicata; and in any event, the doctrine is inapplicable in the circumstances presented. The City's defense, however, was not waived or forfeited. Even if it failed to assert res judicata sufficiently in its initial answer, the trial court properly granted the City leave to file an amended answer that specifically included this doctrine as an affirmative defense. The court noted that this had already been an issue between the parties, so plaintiffs would incur no prejudice from the amendment. This ruling was well within the scope of the court's discretion.

The aspect of res judicata...