Mongoose Capital v. Radin CA1/2

Filed 12/13/13 Mongoose Capital v. Radin CA1/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION TWO

MONGOOSE CAPITAL, INC.,

Plaintiff and Appellant,

A135644

v.

PETER J. RADIN, JR., (Alameda County

Super. Ct. No. RG06289441)

Defendant and Appellant.

Following a bench trial, the court entered judgment for plaintiff Mongoose

Capital, Inc. (Mongoose) against defendant Peter J. Radin, Jr. (Radin) for $72,629.52,

including $54,100 in punitive damages. This judgment has prompted appeals by both

parties along very familiar lines: Radin contends the trial court awarded too much;

Mongoose claims it awarded too little. We reject Radin’s claim that there was no basis

for the trial court to conclude that he had interfered with Mongoose’s contractual

relationship. We conclude that Mongoose was not entitled to a greater recovery because

of the remedy it elected to pursue. We also conclude, however, that Radin is entitled to

credit for a $60,000 settlement by a joint tortfeasor, but that he cannot use that credit to

erase the entire judgment. We will modify the judgment to reflect the credit, and affirm

the judgment as so modified.

BACKGROUND

This dispute originated with a construction loan that was to be used for remodeling

an Oakland property. The transaction became vastly complicated. Fortunately, we have

the trial court’s exhaustively thorough 39-page first statement of decision (there were

1

two), and briefs from the parties that are models of accurate and dispassionate narrative.

Aided by these sources, we can distill the salient details of the dispute to the following1:

Menlo Park I, LLC (MP-1) borrowed $575,000, secured by a promissory note and

deed of trust, from United States Dairy Products (USDP) to develop a property in

Oakland. As memorialized in their “Participation Agreement Construction Loan,”

Mongoose provided $100,000 of the $575,000, and agreed to service the note as USDP’s

agent. Shortly thereafter, USDP sold the entire loan obligation to Regency Acquisitions,

LLC (Regency). MP-1 then defaulted.

Radin’s presence permeated the transaction. The trial court described him as

follows: “[A]n attorney who has been licensed for more than 20 years. Radin served as

an agent for Robert Trafton, Inc., USDP’s managing general partner. Radin, either

directly or indirectly, through various family trusts and other vehicles, owned interests in

other defendants or key players. Radin acted individually and as agent for those trusts.”

Specifically, and among other things, Radin: (1) participated in the negotiation of the

$575,000 loan and executed the appropriate documents on USDP’s behalf; (2) personally

provided $50,000 of the loan; (3) provided $112,500 from a limited partnership of which

he was the general partner; (4) apparently provided an additional $115,000 from “an

entity of which Radin is an ‘indirect equity partner’ ”; (5) “delivered the original Menlo

Park Note and Deed of Trust to Mongoose”; (6) as USDP’s agent, modified the interest

rate on the note without bothering to advise Mongoose or get its consent; (7) executed on

USDP’s behalf the sale to Regency (which was owned by a “longtime friend”) without

disclosing that Mongoose had a participation interest, and again without notifying

Mongoose or securing its consent; (8) “made the decision to sell the interests of

Mongoose in the Menlo Park Note”; and (9) initiated default and foreclosure proceedings

against the property owner (which seems to have been how Mongoose learned of the

resale of the obligation to Regency).

1

All ensuing quotes in this part of our opinion are, unless otherwise indicated,

taken from this statement of decision.

2

In December 2005, the property owner sued USDP, its managing general partner

Robert Trafton, Inc. (Trafton), Regency, and others. The matter settled in May of 2006,

when “USDP and Radin-related entities paid $192,000 of the settlement amount, and . . .

an entity controlled by Radin’s wife[] paid $300,000 of the settlement funds. Other

entities also contributed to the . . .total settlement,” which was $1 million. That same

month, Regency and USDP “modified the terms” of the their agreement. Regency

executed a new promissory note for $660,000 that “was unsecured and not guaranteed.”

Approximately $200,000 for purchase of payments were made on the note, all of which

went to the “entity of which Radin is an ‘indirect equity owner.’ ”

In October 2006, MP-1 refinanced the terms of the original promissory note.

Regency received $345,000 from the refinance, and “reconveyed” a deed of trust to

MP-1. “A portion of the proceeds went to pay off one of the loan participants,” i.e., the

“entity of which Radin is an ‘indirect equity partner.’ ”

In September 2006, Mongoose sued USDP, Regency, and Radin for breach of

contract, fraud, and injunctive relief to halt a pending trustee’s sale. In January 2007,

shortly after filing its second amended complaint which added MP-1 as a defendant,

Mongoose recorded a lis pendens. The lis pendens was expunged—so that the Oakland

property could be sold—when MP-1 posted a surety bond of $185,000.

At the request of USDP and Radin, the matter was stayed for a private arbitration

of Mongoose’s claims against USDP only. In March 2008, the arbitrator’s award in favor

of Mongoose was confirmed and entered as a judgment for $141,958.90 against USDP.2

2

In his award, the arbitrator calculated this sum as “One Hundred Thousand

Dollars . . . being the amount paid by [Mongoose] . . . for its interest in the promissory

note, together with simple interest thereon . . . being $41,958.90.” The arbitrator

excoriated USDP for an “egregious breach” of its agreement with Mongoose, and also

because USDP “stole [Mongoose’s] interest in the note and sold it, deceived [Mongoose]

not only regarding the sale but for several months after the sale occurred.” These words

were quoted by the trial court in its statement of decision, but they are almost an

encomium when compared to the blistering language used by the trial court to

characterize Radin and his conduct.

3

The stay lifted, the matter proceeded to trial, and was tried in two phases. The

first, which generated the extraordinary statement of decision mentioned earlier, was held

in July 2010, and concerned Mongoose’s claims against Radin and MP-1.3 The trial

court determined that Radin was liable for $138,900 of principal and accrued interest,

plus $18,529.52 of attorney fees. MP-1 was held liable for $213,715.73 in principal and

accrued interest. The court deferred to the second phase the determination of the amount

of punitive damages for which Radin would be liable. Also deferred was the allocation

of a $60,000 settlement by a former defendant.

The second phase entailed no presentation of evidence, but was decided on trial

briefs and argument. The court determined that Radin would be assessed punitive

damages of $54,100.

Mongoose submitted a proposed judgment that would award it its principal

investment of $100,000, interest of more than $128,000, and attorney fees from MP-1,

together with $100,000 principal, $38,900 interest, $18,529.52 for attorney fees, and

$54,100 punitive damages from Radin. USDP and Radin had several problems with the

scope of recovery Mongoose was claiming: “The time has finally come for Mongoose to

elect its remedy: either a judgment for judicial foreclosure against MP-1 or a judgment

for damages against Radin . . . . [¶] Should Mongoose choose to pursue a remedy for

damages against Radin, the Court should not award damages in the amount proposed by

Mongoose. Because contract damages against Radin are not available, and because

Radin is not jointly and severally responsible for MP-1’s obligation, the Proposed

Judgment proffered by Mongoose should be rejected by the Court. Instead, the Proposed

Judgment should be modified to reflect the actual damages sustained by Mongoose as a

result of the interference specified by the Court. [¶] The Proposed Judgment should also

be rejected or modified because it fails to properly account for any set offs and credits”

for “settlement proceeds.”

3

A default had already been entered against Regency. The statement of decision

recites that “the trial is serving as a prove-up hearing against that entity.” Ultimately, no

damages were assessed against Regency.

4

The trial court apparently found these objections persuasive because the judgment

subsequently entered provided as follows:

“The Court has determined that plaintiff Mongoose . . . has a viable security

interest in the MP-1 Note. The Court finds that plaintiff must elect a remedy, and further

finds that plaintiff has stated its election to pursue the security interest it has in the MP-1

note by seeking to collect on the Surety Bond to Expunge Lis Pendens . . . in

post-judgment proceedings . . . . Based upon plaintiff’s election, the Court finds as

follows:.

“IT IS HEREBY ORDERED, ADJUDICATED AND DECREED that plaintiff

may recover $18,529.52 in compensatory damages, and $54,100 in punitive damages

from defendant Peter M. Radin, Jr. . . . Radin’s obligations in this regard are deemed

several.4

“IT IS FURTHER ORDERED, ADJUDICATED AND DECREED that plaintiff

shall recover from defendant Menlo Park 1 . . . the following amounts: $100,000

representing principal; $131,084.16 from March 28, 2012, representing accrued interest;

the daily amount of $54.79 per day through March 28, 2012 until the date of entry of this

judgment; late charges in the amount of $525.00; and, attorneys fees and statutory costs

in an amount to be determined . . . .5

“IT IS FURTHER ORDERED, ADJUDICATED AND DECREED that the

amounts to be recovered by plaintiff against MP-1, as specified above, be set off and

4

The $18,529.52 designated as compensatory damages is the identical figure used

by Mongoose in its proposed judgment and allotted “for attorneys’ fees.” Although not

common, “ ‘Under California law, it is a well-established principle that attorney fees

incurred through instituting or defending an action as a direct result of the tort of another

are recoverable damages.’ ” (Third Eye Blind, Inc. v. Near North Entertainment Ins.

Services, LLC (2005) 127 Cal.App.4th 1311, 1324-1325.)

5

In December 2012, the court made an “Order . . . Enforcing Liability On

Undertaking,” concluding that, because Mongoose’s total damages—including a

postjudgment award of attorney fees of more than $161,000 assessed against MP-1—

totaled $336,846.78 “plus any accrued interest” and thus exceeded the amount of the

bond, Mongoose was entitled to recover the entire $185,000 value of the bond, MP-1 and

Regency being jointly and severally liable.

5

reduced by $60,000, representing the amount in settlement funds paid by defendant

George Cresson, the credit to be applied in the following order: (1) attorney fees

(2) costs (3) interest and (4) principal.”

Timely notices of appeal were filed by Radin, and then by Mongoose.

REVIEW

The Parties’ Contentions

Radin first argues that he should not be liable at all because he was erroneously

found to have interfered with the Mongoose-MP-1 contract. If that fails, Radin argues

that the trial court erred in not allowing an offset to the damage award against him for the

$60,000 paid by another defendant to settle Mongoose’s claims. He believes that sum is

more than enough to obliterate the $18,529.52 of compensatory damages, which would

then erase the $54,100 of punitive damages. Mongoose asserts that the trial court failed

to award it all the damages to which it was entitled by Civil Code section 33336 for

Radin’s interference with its contract.

We will address the parties’ contentions in the most logical order. Because it is

the common element of both sides’ arguments, we initially examine the trial court’s

decision that Radin was liable for intentionally interfering with Mongoose’s contract with

MP-1.

What The Trial Court Found

Radin states on the first page of his brief that he “does not challenge the factual

findings made by the trial court.” This will be treated as a binding admission.

(Mangini v. Aerojet-General Corp. (1996) 12 Cal.4th 1087, 1097-1098; Franklin v. Appel

(1992) 8 Cal.App.4th 875, 893, fn. 11.) Mongoose is not quite so plain-spoken, but its

6

Which provides: “For the breach of an obligation not arising from contract, the

measure of damages, except where otherwise expressly provided by this code, is the

amount which will compensate for all the detriment proximately caused thereby, whether

it could have been anticipated or not.” (Civ. Code § 3333.)

6

brief appears to adopt the same stance. In light of this mutual acceptance, the trial court’s

analysis will be quoted, and treated, as factually dispositive.

Under the heading “Mongoose has proved its fifth and ninth causes of action

against Radin for intentional interference with contract,” the trial court concluded:

“ ‘The tort of intentional interference with contractual relations is committed only

by “strangers—interlopers who have no legitimate interest in the scope or course of the

contract’s performance.” [Citation omitted.] Consequently, a contracting party is

incapable of interfering with the performance of his or her own contract and cannot be

held liable in tort for conspiracy to interfere with his or her own contract. [Citation

omitted.]’ (PM Group, Inc. v. Stewart (1997) 154 Cal.App.4th 55, 65.) As explained

below, Radin’s liability for this claim is not derivative . . . .

“While it is true that Radin acted on behalf of USDP in selling the Menlo Park

Note to Regency Acquisitions, Radin donned at least two other of his many hats

following the execution of the Participation Agreement and following the sale of USDP’s

interest in the note. One hat Radin wore was that of directing the managing agents of

Regency Acquisitions to take certain actions to foreclose on the Menlo Park Note and to

engage in other questionable, if not outright illegal, activities. Radin was in actual, even

if not nominal, control of Regency Acquisitions. A second and similar hat was that of

being a person in actual, if not nominal control, of Regency Builders. Neither Regency

Acquisitions nor Regency Builders were parties to Mongoose’s Participation Agreement.

By wearing those two separate and distinct hats, Radin became a stranger to the . . .

Participation Agreement between USDP and Mongoose, and [to] the Menlo Park

Note. . . .

“On November 7, 2005, USDP, acting through Radin, sold to Regency all of its

interest in the Menlo Park Note, and purported to sell all of the interests of the other

participants in the Menlo Park Note. USDP thus no longer had any further interest in the

Menlo Park Note, although it did retain an interest in the Participation Agreement.

Consequently, Radin’s actions and conduct in December 2005, in initiating foreclosure

proceedings by directing that a notice of default be recorded, and by employing Standard

7

Trust Deed to foreclose, after USDP no longer had an interest in the Menlo Park Note,

could not possibly be said to have been undertaken as an agent of USDP. On the

contrary, in December 2005, Radin was a mere interloper, with no legitimate interest in

the performance of the Menlo Park Note. And to the extent Radin acted through Regency

Acquisitions and/or Regency Builders, Radin was a stranger to the Participation

Agreement.

“The elements necessary to state a cause of action for intentional interference with

contractual relations are ‘(1) a valid contract between plaintiff and a third party;

(2) defendant’s knowledge of this contract; (3) defendant’s intentional acts designed to

induce a breach or disruption of the contractual relationship; and (5) resulting damage.’

(Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126.) . . . As

applied to this case, Radin’s independent and non-derivative liability is clearly

established.

“The Court finds that both the Participation Agreement between Mongoose and

USDP, and the Menlo Park note, are the operative contracts . . . . The Court further finds

that Radin knew of the Participation Agreement and Mongoose’s interest in the Menlo

Park note and of Mongoose’s right to service the loan. The Court further finds that Radin

intended to and did disrupt the performance of the Participation Agreement by instituting

foreclosure proceedings, and finally, by reconveying the Menlo Park Note and deed of

trust through Regency Builders, after falsely representing that the note had been fully

repaid. The reconveyance alone intentionally and unquestionably prevented performance

of the contracts. Radin himself testified that the reconveyance destroyed Mongoose’s

security interest.

“Mongoose clearly was financially harmed, and Radin’s actions were a substantial

factor in causing that harm. Radin’s directed activities, particularly in permitting

nonjudicial foreclosure proceedings to be commenced, resulted in the outright theft of

Mongoose’s investment, and caused Mongoose financial harm because Mongoose had to

hire attorneys to stop the foreclosure action. The conduct also laid the groundwork for

the ultimate fraudulent reconveyance of the Menlo Park Note, which was designed to and

8

would have destroyed Mongoose’s security in the note, but for this lawsuit. Thus, the

Court rejects Radin’s claim that only an attempted interference has been shown.

“Such independently wrongful conduct, which cannot be condoned, provides a

basis for a finding of liability on these causes of action. As a result of this conduct,

Mongoose lost its $100,000 investment, and any interest it could have earned on this

money. Mongoose is therefore entitled to judgment against Radin on the fifth cause of

action for intentional interference with contract.” And the court further found that that

“Radin was not acting on behalf of USDP when he committed this tort.” Moreover,

“[t]he Court finds that Radin engaged in this conduct with malice, oppression and/or

fraud, thus entitling Mongoose to . . . punitive damages.”

Mention has already been made that the trial court entertained a very low opinion

of Radin’s probity and credibility. (See fn. 2, ante.) The expression of that opinion is

also pertinent to Radin’s liability. The trial court colorfully—and accurately—called

Radin “a master puppeteer, making George Cresson, Noel Knight [successively the

managing partners of MP-1], Mark Hill [the owner of Regency] and others dance to his

merry music, obey his whims, and defraud others. Cresson and Knight testified that they

did nothing unless directed to do so by Radin. Radin wore many hats throughout all

relevant times, hiding behind one or the other when it suited his fancy. It was those many

hats that has done him in, because he has lost the ability to claim that he was at all times

acting as the agent of USDP.”

Against that background, we turn to the parties’ contentions, in the reorganized

order we believe most conducive to comprehension.

Radin Was Not Immune From Liability

Radin argues that “the trial court fail[ed] to acknowledge Radin’s immunity from

liability for interference with his principal’s contract.” He begins with the principle that

“The tort of intentional interference with contractual relations is committed only by

‘strangers—interlopers who have no legitimate interest in the scope or course of the

contract’s performance.’ (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994)

7 Cal.4th 503, 514.) Consequently, a contracting party is incapable of interfering with

9

the performance of his or her own contract.” (PM Group, Inc. v. Stewart (2007)

154 Cal.App.4th 55, 65.) He then adds the tenet that “It is also well established that

corporate agents and employees acting for and on behalf of a corporation cannot be held

liable for a breach of his corporation’s contract.” (Shoemaker v. Myers (1990) 52 Cal.3d

1, 24.) Thus, Radin reasons, because he acted on behalf of Trafton, USDP’s managing

general partner, damages against him were logically and legally impossible.

Trafton obviously qualifies as a corporation, but it was not a party to the

Participation Agreement between USDP and Mongoose. It merely acted on behalf of

USDP, which was a partnership, not a corporation. The trial court did not describe Radin

as an officer or director of Trafton, merely its “agent.” Thus, as to the contract between

Mongoose and USDP, Radin was a non-party, situated at least two levels from the actual

contracting parties. Radin was, therefore, indeed only a “stranger” and “interloper” to

that contract.7

There is also this finding by the trial court: “Radin’s actions and conduct in

December 2005, in initiating foreclosure proceedings by directing that a notice of default

be recorded, and by employing Standard Trust Deed to foreclose, after USDP no longer

had an interest in the Menlo Park Note, could not possibly have been undertaken as an

agent of USDP.” This finding clearly views Radin as an interloping stranger.

Moreover, even the general rule of immunity is subject to an important proviso:

“For many years, our courts also held that an interference claim based on the contractual

obligation of a business entity could be maintained against the officers, directors, or

owners of that entity. Such defendants could escape liability by resorting to certain

privileges, however, which turned on whether they had acted to benefit the business

entity in question. (Collins v. Vickter Manor (1957) 47 Cal.2d 875, 883 [valid cause of

7

Even so, it might be an overstatement to say that Radin had “ ‘no . . . interest in

the scope or course of the contract’s performance,’ ” because, as the dominant actor in

both USDP and Trafton, he may well have had “some general economic interest or other

stake in the contract.” (Woods v. Fox Broadcasting Sub., Inc. (2005) 129 Cal.App.4th

344, 352 (Woods).)

10

action for interference stated against officers who were officers, directors, and beneficial

owners of the contracting company . . . .] . . .)” (Woods, supra, 129 Cal.App.4th 344,

350-351.)

What the Woods court concluded seems strikingly germane to our situation:

“[N]either Applied Equipment nor any of the authorities it relied upon when discussing

the liability of third parties arose from factual settings like the one here—where a

powerful shareholder . . . interferes in a contract between the corporation whose shares it

owns and some other person or entity. As a consequence, the Applied Equipment court

had no occasion to discuss the line of cases such as Collins, supra, 47 Cal.2d 875, which

held that the owners or officers of a business entity could be held liable for interfering

with that entity’s contracts . . . . Given this, we find it highly unlikely that Applied

Equipment intended to hold, or should be construed as holding, that persons or entities

with an ownership interest in a corporation are automatically immune from liability for

interfering with their corporation’s contractual obligations.” (Woods, supra,

129 Cal.App.4th 344, 353, fn. omitted.) Here, Radin obviously played the role of the

“powerful shareholder” in his cavalier disregard for existing relationships, other parties’

rights, and minimal norms of business propriety.

The trial court clearly believed that Radin’s actions were not privileged, excused,

or ratified, nor did they benefit USDP or Trafton. Its determination that Radin had acted

toward Mongoose with the mental state justifying punitive damages is, by itself, virtually

conclusive to separate Radin from USDP or Trafton. The court treated Radin’s actions

and conduct as motivated by personal concerns, hence the findings that Radin “has lost

the ability to claim that he was at all times acting as the agent of USDP,” and the express

finding that “Radin was not acting on behalf of USDP when he committed this tort.”

And this is in addition to the finding just quoted concerning Radin’s initiation of

foreclosure proceedings.

The record is replete with numerous proofs of Radin’s disloyalty. His self-dealing

and duplicity has already cost USDP the $141,000 for the arbitration award, close to

$200,000 to settle with the property owner, and up to $185,000 on the bond. By no

11

stretch of the imagination can Radin’s manipulations and machinations be deemed

undertaken with the best interests of USDP or Trafton in mind. (Collins v. Vickter

Manor, supra, 47 Cal.2d 875, 883; Woods, supra,129 Cal.App.4th 344, 351.)

The trial court’s determination that Radin interfered with the Mongoose-MP-1

contract is legally sound, has the support of abundant evidence, and will not be

overturned.

Mongoose Cannot Increase Radin’s Liability

Mongoose contends: “Originally, the trial court in its Statement of Decision found

that Radin would be liable for the loss of the principal amount of the Menlo promissory

note, interest thereon and attorney fees under the third party tort doctrine for the fees

incurred by Mongoose to contest the foreclosure proceedings. However, in conjunction

with formal issuance of the final judgment against Radin, the trial court changed its

position and refused to award Mongoose damages for the losses related to the Menlo

promissory note. Coupled with the fact that its original determination of damages was

too low, its further limitation of damages compounded its error.” Although Mongoose is

not altogether explicit in its brief, it seems to peg its proper recovery to $100,000 for the

loan principal, plus at least $113,000 interest on the principal, and attorney fees and costs

of $105,147.62. These sums are obviously far in excess of the $18,529.52 in

compensatory damages actually awarded. But, however unsympathetic a party Radin

may be, Mongoose cannot prevail with this argument on this appeal.

The clear import of Mongoose’s contention is that it was not awarded adequate

damages. Yet, as recited in the judgment, the amounts of damages awarded against

Radin were the result of Mongoose’s election of remedies. In a different order, the trial

court explained: “Now that the Court has determined that Plaintiff has a viable security

interest in the MP-1 Note, Plaintiff must elect which course it wishes to pursue. Plaintiff

cannot secure the same $100,000 principal amount, plus interest, late fees and costs, from

USDP, MP-1, and Radin. [¶] Plaintiff stated its election to pursue the security interest it

has in the MP-1 Note by seeking to collect on the bond that was given as substitute for

the security.” One of the purposes of requiring a party to elect remedies is to prevent

12

windfall multiple recoveries for the same injury. (E.g., Howell v. Hamilton Meats &

Provisions, Inc. (2011) 52 Cal.4th 541, 573-574; City of Moorpark v. Superior Court

(1998) 18 Cal.4th 1143, 1161; Busick v. Workmen’s Comp. Appeals Bd. (1972) 7 Cal.3d

967, 974.) Once made, the election is ordinarily binding. (Akin v. Certain Underwriters

at Lloyd’s London (2006) 140 Cal.App.4th 291, 296.) Mongoose will not on this appeal

be allowed to repudiate its election in an obvious attempt to secure a multiple recovery.

The Trial Court Erred In Not Allowing An

Offset For the Amount Of A Prior Settlement

One of the defendants added by Mongoose in its second amended complaint was

George V. Cresson, III, who was the managing partner of MP-1 until he withdrew from

that position sometime prior to the October 2006 refinancing and the “reconveyance” to

MP-1. Cresson settled with Mongoose for $60,000. Cresson and Mongoose agreed in

their written settlement agreement that this sum “shall be applied against attorney’s fees

previously incurred by Mongoose.” The court granted Mongoose’s unopposed motion to

have this settlement determined to be in good faith. As reflected in the judgment quoted

above, the trial court allowed this amount to be set off to reduce MP-1’s contractual

liability to Mongoose. On the premise that he and Cresson were joint tortfeasors, Radin

contends that Code of Civil Procedure sections 877 and 877.68 require that this amount

should have been credited to him to reduce his tort liability to Mongoose.

Mongoose advances two opposing arguments. First, it sees the issue as waived

because Radin did not raise it when the good faith of the Cresson settlement was

8

“Where a release, dismissal with or without prejudice, or a covenant not to sue or

not to enforce judgment is given in good faith before verdict or judgment to one or more

of a number of tortfeasors claimed to be liable for the same tort, . . . it shall . . . [¶] . . .

reduce the claims against the others . . . in the amount of the consideration . . . .” (Code

Civ. Proc., § 877, subd. (a).)

“Any party to an action in which it is alleged that two or more parties are joint

tortfeasors . . . shall be entitled to a hearing on the issue of the good faith of the

settlement entered into by the plaintiff . . . and one or more alleged tortfeasors . . . .”

(Code Civ. Proc., § 877.6, subd. (a)(1).)

13

submitted for the trial court’s determination. Second, Mongoose asserts that the premise

of Radin’s contention is faulty because Radin and Cresson were not joint tortfeasors.

The trial court refused to allow the offset on what appears to have a forfeiture

theory: “[T]he Court agrees with Mongoose that the funds should be allocated as

provided for in the Cresson settlement agreement. The Court rejects Radin’s allegation

that he should be credited with some or all of the settlement funds because he and

Cresson were alleged to be joint tortfeasors as to the interference with contract claims.

Radin was aware of the proposed allocation of the settlement . . . when the application for

determination of good faith settlement was made, and did not object to that allocation.

The Court believes that the allocation was fair when proposed and approved, and Radin

will not be heard to object at this juncture.” This reasoning was faulty.

Once a settlement between plaintiff and tortfeasor is judicially determined to be in

good faith, “nonsettling tortfeasors are entitled to a credit in the amount paid by the

settling tortfeasor.” (Leung v. Verdugo Hills Hospital (2012) 55 Cal.4th 291, 303; italics

added; accord, e.g., Wade v. Schrader (2008) 168 Cal.App.4th 1039, 1046-1047

[nonsettling defendants are “entitled, as a matter of right,” “as a matter of law,” and “by

operation of law” to reduce their liability by the amount of pretrial good faith

settlements].) “[O]ne of the purposes of the setoff requirement . . . is to avoid an unjust

double recovery,” and another is “to ensure an equitable apportionment of liability among

tortfeasors.” (Bostick v. Flex Equipment Co., Inc. (2007) 147 Cal.App.4th 80, 111.)

Concepts of waiver, estoppel, and invited error do not apply. (See Hartford Accident &

Indemnity Co. v. Superior Court (1995) 37 Cal.App.4th 1174, 1182-1184.) We have

treated the offset as mandatory. (Newby v. Vroman (1992) 11 Cal.App.4th 283, 288.)

Mongoose’s waiver argument is not persuasive. The one decision it cites, El

Escorial Owners’ Assn. v. DLC Plastering, Inc. (2007) 154 Cal.App.4th 1337, does

invoke the principle that “ ‘ “An appellate court will ordinarily not consider procedural

defects or erroneous rulings . . . where an objection could have been, but was not . . .

presented . . . .,” ’ ” but it does so within the context of the appellant trying to challenge

the determination that a settlement was made in good faith. (Id. at pp. 1362-1364.) That

14

is not Radin’s objective here, and his contention presumes that the Cresson-Mongoose

settlement was a good faith one. Moreover, the cited decision notes the credit entitlement

just mentioned (id. at p. 1353), as does Knox v. County of Los Angeles (1980)

109 Cal.App.3d 825, 836, another decision cited by Mongoose. But Mongoose is unable

to produce precedent directly holding that a nonsettling defendant forfeits entitlement to

reduction by failing to challenge whether the settlement that would create the credit was

the product of good faith.

Finally, it does not appear that Radin failed to bring the matter to the court’s

attention in a timely matter. The record produced by the parties in their respective

appendices does not include their trial briefs, if such were submitted. But the record does

establish that Radin repeatedly argued for the $60,000 credit while the first statement of

decision was being composed. By contrast, there is nothing in the record establishing

that Mongoose questioned Radin’s status as Cresson’s joint tortfeasor prior to entry of the

judgment. Mongoose is thus defeated by the very same principle it tries to use against

Radin. (El Escorial Owners’ Assn. v. DLC Plastering, Inc., supra, 154 Cal.App.4th

1337, 1363.)

Mongoose states in its brief: “Radin contends that he is entitled to a credit for the

Cresson settlement, because he and Cresson were, allegedly, joint tortfeasors. However,

the evidence at trial does not support this contention. The evidence (and the trial court’s

findings to which Radin does not object) demonstrates that Radin was directing all

activities which acted to interfere with Mongoose’s rights.” This may be conceded, but it

does not exclude participation by Cresson. On this point it is useful to consider this

finding by the trial court: “In March 2005, George V. Cresson, III, MP-1’s manager

[managing partner], and Radin, on behalf of USDP, through its managing general partner,

Robert Trafton, Inc., modified the Menlo Park Note to change the interest rate from daily

compounding to simple interest.” This finding clearly treats Cresson and Radin as both

involved in the modification. Insofar as this act was wrongful, it would be sufficient to

establish Cresson and Radin as joint tortfeasors. The fact that Cresson had subsequently

resigned as MP-1’s managing partner by the time Radin directed initiation of the

15

foreclosure proceedings, which is the foundation of Mongoose’s argument, would

therefore not be dispositive.

It only remains to determine whether the credit is to made in a manner that will

absolve Radin from any and all liability.

Radin Is Not Entitled To Complete

Financial Exoneration

Not content with getting the $60,000 offset, Radin advances a creative approach

for using it to obliterate the $72,629.52 judgment against him. He argues that the offset

is far greater than the compensatory damages of $18,529.52 and, with no compensatory

damages, there can be no punitive damages as a matter of law. (See Mother Cobb’s

Chicken T., Inc v. Fox (1937) 10 Cal.2d 203, 206 [“[P]unitive damages . . . are allowed

only in addition to recovered actual damages.”]; Cheung v. Daley (1995) 35 Cal.App.4th

1673, 1676-1677 [same].) Thus, Radin proposes to use a $60,000 credit to erase a

$72,629.52 judgment. But he cites no authority for such a piecemeal approach, and the

condemnations he has received—well deserved as they are—are not inducements to such

leniency. We will therefore modify the judgment by reducing the compensatory and

punitive damages to approximately equal sums.

DISPOSITION

The judgment is modified to provide that Mongoose shall recover from Radin

$6,329.52 in compensatory damages and $6,300 in punitive damages. As so modified,

the judgment is affirmed. The parties shall bear their respective costs on appeal.

16

_________________________

Richman, J.

We concur:

_________________________

Haerle, Acting P.J.

_________________________

Brick, J.*

*

Judge of the Alameda County Superior Court, assigned by the Chief Justice

pursuant to article VI, section 6 of the California Constitution.

17