Rivas v. City of Kerman

• Decision Date: 30 October 1992
• Docket Number: No. F015685,F015685
• Citation: 10 Cal.App.4th 1110,13 Cal.Rptr.2d 147
• Court: California Court of Appeals Court of Appeals
• Parties: Mary RIVAS, as Special Administrator, etc., et al., Cross-complainants and Appellants, v. CITY OF KERMAN et al., Cross-defendants and Respondents.

Page 147

13 Cal.Rptr.2d 147

10 Cal.App.4th 1110

Mary RIVAS, as Special Administrator, etc., et al., Cross-complainants and Appellants, v. CITY OF KERMAN et al., Cross-defendants and Respondents.

No. F015685.

Court of Appeal, Fifth District, California.

Oct. 30, 1992.

As Modified Nov. 23, 1992.

[10 Cal.App.4th 1113] Baker, Manock & Jensen, John H. Baker, James C. Schaeffer, Bertram T. Kaufmann and Raymond L. Carlson, Fresno, for cross-complainants and appellants.

Mayer & Reeves and Irving Berger, Long Beach, for cross-defendants and respondents.

OPINION

BUCKLEY, Associate Justice.

In this opinion, we hold that GOVERNMENT CODE SECTION 825¹ does not compel a public entity to pay a judgment entered against its employee unless the public entity provided the employee's defense. Section 825.2 ensures protection of public employees by providing for indemnity by public entities for employees' actions committed in the course and scope of employment.

THE CASE

On April 20, 1987, Fernando Herrera, Ricardo Herrera (collectively Herrera) and Juanita Amavizca filed suit against Orlando Velasquez, the City of Kerman (City) and Kenneth Stafford, Chief of Police for the City of Kerman. The complaint alleged, inter alia, that Velasquez, within the scope of his employment as a police officer for the City and without justification, shot Fernando in the presence of his brother Ricardo and Juanita Amavizca. ²

Velasquez requested the City to defend him in the action. The City denied his request for defense because, in relevant part, the shooting "was not within the scope of [his] employment" and because he acted with "actual fraud[,] corruption or actual malice."

Velasquez filed a cross-complaint for declaratory relief against the City for a determination of respective liabilities and a declaration of the City's alleged responsibility to defend and indemnify Velasquez.

Thereafter, Herrera entered into a written agreement with Velasquez entitled "ASSIGNMENT OF RIGHTS" whereby Velasquez agreed to entry of judgment against himself and in favor of Herrera in the sum of $5,825,000 and assigned all claims he had against the City to them. In a separate written agreement entitled "COVENANT NOT TO EXECUTE AND INDEMNITY AGREEMENT," Herrera agreed not to execute the stipulated judgment against Velasquez and to dismiss the complaint to determine nondischargeability of debt Herrera had previously filed in connection with Velasquez's then-pending bankruptcy proceedings. Velasquez and plaintiffs below filed a stipulation for entry of judgment and order providing that judgment was to be entered in favor of Fernando in the sum of $5,800,000 and in favor of Ricardo in the sum of $25,000 against Velasquez. Judgment was entered by the court in conformity with the terms of the stipulation (stipulated judgment).

On April 17, 1989, Herrera and Velasquez joined together and filed a first amended cross-complaint against the City and Stafford for declaratory relief. The City's demurrer to this cross-complaint was sustained as was its demurrer to their second amended cross-complaint.

On December 29, 1989, the third amended cross-complaint at issue herein was filed by the same parties; the first cause of action alleges that section 825 requires the City to pay the stipulated judgment on Velasquez's behalf. Paragraph 9 of this cross-complaint alleged as follows:

"9. The judgment entered in the Underlying Action has the same effect as if the Underlying Action had been tried on the merits (see, e.g., Avery v. Avery (1970) 10 Cal.App.3d 525, 529 ), and accordingly the judgment is one which Cross-Defendant City of Kerman is required to pay under Government Code § 825, which mandates that 'the public entity shall pay any judgment based [on a claim for injury arising out of an act or omission occurring within the scope of the public employee's employment with the public entity].' The judgment is not a compromise or settlement to which the public entity must agree for purposes of Government Code § 825. Furthermore, if Defendant City of Kerman had a right under § 825 to have prior notification of the judgment entered against its' [sic ] employee, Orlando Velasquez, said Defendant waived any such right after having been notified of the underlying action and unqualifiably refusing to defend or otherwise provide coverage to Orlando Velasquez in the action despite his request therefore [sic ] as described above (See eg., Samson v. TransAmerica Ins. Co. (1981) 30 Cal.3d 220, 240-241 [178 Cal.Rptr. 343, 636 P.2d 32].)"

The City demurred on the basis that the first cause of action failed to state a claim, arguing that section 825 does not apply because the City did not conduct the defense of Velasquez and because the stipulated judgment is not a judgment within the meaning of the section. The trial court sustained the demurrer to the first cause of action on the ground that the "alleged 'Stipulation for Entry of Judgment and Order' is not a 'judgment' within the meaning of Government Code Section 825."

A fourth amended cross-complaint was not filed and the third amended cross-complaint was dismissed.

Mary Rivas, as special administrator for the estate of Fernando Herrera, and Ricardo Herrera appeal. ³

DISCUSSION

Appellants contend the trial court erred in sustaining the demurrer to the first cause of action of the third amended cross-complaint by determining that the term "judgment" contained in section 825 ⁴ does not include a stipulated judgment. ⁵ However, the issue which this court must determine is not whether the term "judgment" includes a stipulated judgment but whether section 825 is even applicable when the public entity has declined to provide a defense for the employee or former employee. As will be explained, review of the language of section 825, subdivision (a), the surrounding statutory framework, persuasive legal authority and public policy considerations all support the conclusion that section 825, subdivision (a) applies only in those situations in which the public entity provides a defense for the employee. Because the City declined to defend Velasquez pursuant to section 995.2, ⁶ section 825, subdivision (a) is not controlling and the trial court did not err in sustaining the demurrer to the first cause of action. ⁷

I. The language of section 825 itself demonstrates that it is applicable only when the public entity has provided a defense.

Statutes must be interpreted in accord with the plain meaning of the language used and their words are to be given their ordinary, commonsense meaning unless doing so would frustrate the "manifest purposes of the legislation as a whole or [lead] to absurd results." (People v. Belleci (1979) 24 Cal.3d 879, 884, 157 Cal.Rptr. 503, 598 P.2d 473.) A statute must be considered as a whole, with all parts read together and harmonized as much as possible. (Jones v. Tracy School Dist. (1980) 27 Cal.3d 99, 114, 165 Cal.Rptr. 100, 611 P.2d 441.)

The language of section 825 clearly indicates the section is applicable only if the public entity provides a defense for the employee. Paragraph one of subdivision (a) explicitly provides that the following conditions must be met in order for the employee or former employee to be entitled to indemnity: (1) the employee must request a defense and (2) this request must be made not less than 10 days before the date of trial and (3) the employee must cooperate in good faith in the defense. It is clear by the use of the word "cooperate" that the public entity must agree to provide the defense. If the statute intended to provide that indemnity is available regardless of whether the public entity acceded to the employee's request for defense, logically some indication of this intention would be present in the language of the statute. For example, the Legislature could have added the phrase "regardless of whether the defense is conducted by the public entity" after the requirement that the employee cooperate in good faith, in order to clarify that the defense does not refer exclusively to one provided by the public entity. Neither this phrase nor anything similar is contained in the statute. Thus, we find it implicit in paragraph one that "the defense" in which the employee must cooperate is one which the public entity provided after his or her timely request and not one which the employee provided on his own after refusal by the public entity.

That the phrase "the defense" in paragraph one refers to a defense provided by the public entity is further supported by the language used in section 825.2 in which, inter alia, it is specifically stated the employee must "conduct the defense of the claim or action in good faith or to reasonably cooperate in good faith in the defense conducted by the public entity [emphasis added]" in order to be entitled to recover any sums he or she has expended to satisfy a judgment arising out of his or her employment with a public entity. "Under well-established principles of statutory construction, these interrelated provisions must be construed together and harmonized if possible. [Citation.] ... [W]hen the same word or phrase is used, it should be given the same meaning in the related part of the law." (Gruschka v. Unemployment Ins. Appeals Bd. (1985) 169 Cal.App.3d 789, 792, 215 Cal.Rptr. 484.) Section 825 and section 825.2 are part of one comprehensive statutory framework and are inextricably interwoven; therefore, the phrase "the defense" should be construed in section 825 to have the same meaning as that explicitly given it by the Legislature in section 825.2. ⁸

Moreover, the introductory phrase of paragraph two of subdivision (a) of section 825 reads as a restatement of paragraph one and it explicitly provides that the public entity must provide the defense in order for the section to be applicable. The introductory clause reads: "If the public entity conducts the defense of an employee or former employee against any claim or...