Scruton v. Korean Air Lines Co.

• Decision Date: 08 November 1995
• Docket Number: No. B080103,B080103
• Citation: 39 Cal.App.4th 1596,46 Cal.Rptr.2d 638
• Court: California Court of Appeals Court of Appeals
• Parties: , 95 Cal. Daily Op. Serv. 8645, 95 Daily Journal D.A.R. 14,913 Todd B. SCRUTON, a minor, etc., et al., Plaintiffs and Appellants, v. KOREAN AIR LINES CO., LTD., Defendant and Respondent. Robert L. Beal, et al., Intervenors and Appellants.

Page 638

46 Cal.Rptr.2d 638

39 Cal.App.4th 1596, 95 Cal. Daily Op. Serv. 8645,

95 Daily Journal D.A.R. 14,913

Todd B. SCRUTON, a minor, etc., et al., Plaintiffs and Appellants, v. KOREAN AIR LINES CO., LTD., Defendant and Respondent Robert L. Beal, et al., Intervenors and Appellants.

No. B080103.

Court of Appeal, Second District, Division 3, California.

Nov. 8, 1995.

Certified for Partial Publication ^*.

Paul A. Franklin and Patrick Talbot Hall, Santa Rosa, for Plaintiff and Appellant.

Terry Van Ryn as Guardian ad Litem for Todd and Alicia Scruton.

Juanita M. Madole and Speiser, Krause, Madole & Cook, Irvine, for Intervenors and Appellants.

Stephen R. Ginger, Condon & Forsyth, Los Angeles, George N. Tompkins, Jr., Andrew J. Harakas and George N. Tompkins, III, Tompkins, Harakas, Elsasser & Tompkins, White Plains, NY, for Defendant and Respondent Korean Air Lines Co., Ltd.

ALDRICH, Associate Justice.

INTRODUCTION

Plaintiff Terry Van Ryn, as guardian ad litem of two minor children, has appealed from the trial court rulings granting the motion of defendant Korean Air Lines (KAL) to enforce a compromise of the minors' claims against KAL and approving the settlement. In 1983, Rebecca Scruton, the sole parent of the minors, was a passenger on KAL flight 007 and died when the plane was shot down by Soviet fighter jets. As the minors' guardian ad litem and administratrix of the decedent's estate, Van Ryn brought this action for wrongful death and personal injury against KAL and others. The parties agreed to settle the minors' claims for a total of $500,000. Pursuant to Code of Civil Procedure section 372, ¹ Van Ryn filed petitions for approval of the compromise. However, before the hearing on her petitions, new information was revealed which Van Ryn felt affected the settlement. Van Ryn withdrew the petitions, causing KAL to file a motion to enforce the settlement agreement. The trial court granted KAL's motion and approved the compromise.

In her appeal, Van Ryn contends under the California statutory scheme for settlements of minors' claims, the guardian ad litem may repudiate compromises at any time before trial court approval. Van Ryn also contends, once she repudiated the tentative settlement, neither the trial court nor KAL had the power to enforce it. We hold, pursuant to section 372, a guardian ad litem may repudiate a tentative compromise of a minor's claim before trial court endorsement. Once repudiated, the trial court may only unilaterally enforce the compromise after finding the guardian acted contrary to the minor's best interests. ² Because the trial court failed to make such a finding, the judgment with respect to settlement of the minors' claims is reversed.

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FACTUAL AND PROCEDURAL BACKGROUND

On September 1, 1983, KAL Flight 007 was shot down over the Sea of Japan by a Soviet SU-15 interceptor aircraft. ³ All 269 people on board were killed, including Rebecca Scruton. The flight was bound for Seoul, South Korea from New York with a stopover in Anchorage, Alaska. At the time of the crash, the flight was more than 300 nautical miles off course and illegally in Soviet airspace.

On July 23, 1984, Van Ryn filed the instant personal injury and wrongful death action against KAL and Litton Systems, Inc., ⁴ doing so in her capacity as administratrix of the estate of Rebecca Scruton and guardian ad litem of the minor children of the deceased, Todd B. and Alicia Mae Scruton (at the time, ages 6 and 2, respectively). Meanwhile, the many actions filed against KAL around the country were consolidated and tried in the federal District Court for the District of Columbia. (In re Korean Air Lines Disaster of September 1, 1983 (S.D.N.Y.1992) 807 F.Supp. 1073, 1079.) On May 3, 1985, at the behest of KAL, this action was stayed pending termination of the consolidated federal actions.

At trial in the federal consolidated action, the plaintiffs proceeded on the theory the crew of flight 007 was aware, either before leaving Anchorage or shortly thereafter, a programming error existed in the plane's inertial navigation system. Rather than to turn back and face discipline, the crew decided to cover up the problem by fabricating the plane's location reports to the air traffic controllers. The jury found KAL guilty of willful misconduct and awarded damages to the 137 plaintiffs. (In re Korean Air Lines Disaster of September 1983, supra, 932 F.2d at pp. 1476-1477, 1481, (hereinafter In re KAL ).)

In May, 1991, the District of Columbia Circuit Court of Appeals upheld the jury's liability verdict, but vacated the award of punitive damages. (In re KAL, supra, at p. 1490.) On August 4, 1992, after all the appeals became final, the court herein lifted its stay.

On March 18, 1993, Van Ryn filed petitions for compromise of the minors' disputed claims pursuant to Code of Civil Procedure section 372, indicating KAL had offered to pay the minors $250,000 each for the loss of support and of care, comfort, society and guidance of their mother. Two weeks later, Van Ryn informed KAL she was withdrawing her consent to settle. Van Ryn's attorney explained, as the result of a jury verdict in favor of the plaintiffs ($400,000 for pre-death pain and suffering and $320,000 for loss of society) rendered in a flight 007 action in the United States District Court for the Eastern District of Michigan, and the many jury verdicts throughout the country which exceed the proposed $250,000 settlement here, coupled with the potentially huge prejudgment interest accumulated here, she could no longer represent to the court that the settlement was fair and reasonable.

KAL proceeded to file a motion in the trial court to enforce the settlement agreement. Acknowledging "... the policies and principles that apply when litigation involves adult parties differ somewhat from those instituted when a minor is involved," and "[e]ven though the approval of the court in which the case is pending is essential to a valid compromise made on behalf of a minor, ..." KAL claimed the agreement was binding and enforceable.

At the hearing on KAL's motion for enforcement, the court concluded it had a responsibility to determine whether the settlement was fair to protect the minors, but that the guardian ad litem cannot reject the agreement at any time before the court rules on the petition, if the compromise is "in the best interest of the minor." On September 16, 1993, the trial court entered an order [[/]] ^***

reflecting this ruling. As to the petitions for approval, the court found Van Ryn's attorney had justified the validity of the settlement and that it was reasonable and in the minors' best interests.

Van Ryn [[/]] *** timely appeals. ⁵

CONTENTIONS

Van Ryn contends (1) under section 372, KAL lacked standing and the trial court lacked power to enforce the compromise, and (2) the trial court erred in finding the settlement was fair and adequate.

[[/]] ***

DISCUSSION

As previously noted, liability is not at issue in this action, KAL's guilt having been established in the consolidated federal cases. (In re KAL, supra, 932 F.2d at pp. 1476-1477.) The issues in Van Ryn's appeal are discrete, namely whether under California law a guardian ad litem may repudiate a tentative settlement before trial court approval and whether a trial court may unilaterally enforce a repudiated settlement. Van Ryn contends, under section 372, the settlement is not final until the court approves it. KAL contends the "issue is whether a valid and enforceable agreement reached by two parties can be set aside for no justified reason." We hold, under section 372 of the Code of Civil Procedure, a settlement of the claims of a minor by a guardian ad litem is not final or binding until the agreement is approved by the trial court in which the claims were brought. Faced with a compromise which the guardian has repudiated in advance of such endorsement, a trial court has limited authority to enforce the settlement unilaterally, and may do so only after finding the guardian ad litem acted counter to the minor's best interests by rejecting the proposed compromise.

1. Choice of Law

Preliminarily, the parties dispute whether this action was brought under the Warsaw Convention for the Unification of Certain Rules Relating to International Transportation by Air (49 Stats. 3000, T.S. 876) and the supplemental Montreal Agreement, Agreement Relating to Liability Limitations of the Warsaw Convention and the Hague Protocol. ⁶ (Together reprinted at 49 U.S.C.A., note following § 1502).

As a general rule, where an action founded on a federal statute is brought in a state court, the law of the state controls in matters of practice and procedure unless the federal statute provides otherwise. (Bach v. County of Butte (1983) 147 Cal.App.3d 554, 561-562, 195 Cal.Rptr. 268 [an action in state court under federal Civil Rights Act, 42 U.S.C. § 1983 et seq.].) Subdivision (2) of Article 28 of Chapter III of the Warsaw Convention specifies, "Questions of procedure shall be governed by the law of the court to which the case is submitted." (49 U.S.C.A., note following § 1502). Also, construction and enforcement of settlement agreements are generally governed by local law. (Jeff D. v. Andrus (9th Cir.1989) 899 F.2d 753, 759.) Hence, even if this action had been brought under the treaties, there is no question but that California procedural law applies to settlement of the lawsuit. Indeed, KAL even concedes, citing section 372, "a settlement compromising a minor's claim must be judicially approved."

2. Under section 372 of the Code of Civil Procedure, the compromise of a minor's claim is not final or binding until it has been approved by the trial court.

Section 372 of the Code of Civil Procedure describes the powers of the guardian ad litem.

It provides in relevant part, the "... guardian ad litem so appearing for any minor, ... shall have power, with the approval of the court in which the...