Tuesday, April 12, 2016

Karpinski v. Smitty's Bar, Inc. (Cal. Ct. App. - April 12, 2016)

I wanted to write about this opinion from the Court of Appeal, if only because it involved Smitty's Bar.  Which sounds like a fake, made-for-television name, but apparently it's a real place.  Awesome.

The opinion also teaches an important lesson.  The Court of Appeal holds that you can't refuse to pay an agreed-upon settlement amount just because -- or even if -- you're worried that the plaintiff may decide not to pay his lienholders.  And you also can't permissibly "solve" this "problem" by making the settlement check payable jointly to the plaintiff and the lienholders.

Or at least you can't do so without a much more specific settlement agreement than the typical one at issue here.  You've instead going to have to work a lot harder to make payment of the liens an express condition precedent to your payment of the settlement funds.

This holding may well result in lienholders not getting their money.  But that's their problem, not yours.  (Or at least not primarily yours, since there's typically an indemnification provision in these types of agreements.  Or, as here, four of 'em.  If that's not good enough for you, you're going to have to work harder on drafting the terms of the settlement before you can make the check out to everyone.)