Mediation Message No. 120



Diamond v. Reshko (2015) 239 Cal.App.4th 828 advises how a trial shall be conducted where a defendant settles with the plaintiff before trial and then agrees to participate in the trial involving a co-defendant. In Diamond, Christine Diamond was injured while riding as a passenger in a taxi that was involved in a collision with a second car. She and her husband sued Yellow Cab and the driver and owner of the second car (the Reshkos). Yellow Cab settled with the Diamonds and agreed, pursuant to a settlement provision, to participate as a party defendant at the Diamonds’ trial against the Reshkos. An order finding a good faith settlement was entered before that trial.

Before the trial began, the court excluded evidence of the Diamond-Yellow Cab settlement, including the clause in the agreement that required Yellow Cab to attend and participate in the trial. After the close of the evidence, the court denied the Reshkos’s request that Yellow Cab be precluded from addressing the Diamonds’ damages in closing arguments.

Yellow Cab’s trial counsel argued that his driver was the “less culpable” party and that Reshko was the “bad guy here.” Counsel contended that his client’s driving was not a substantial factor in causing the accident and, under the circumstances, used reasonable care. Accordingly, the attorney urged the jury to apportion only between 0 and 25 percent of the liability for the accident to his client. This attorney also recognized that the Diamonds incurred significant medical bills and other losses, and that the evidence supported a total damages award of approximately $800,000. The Reshkos’ counsel argued that the negligence of both drivers were substantial factors in causing the accident, the Diamonds were entitled to compensation for their injuries and that their damages totaled approximately $302,900.71. After a total damages award of $745,778, the jury apportioned responsibility of 40 percent to Yellow Cab and 60 percent to the Reshkos. The trial court entered a judgment holding the Reshkos liable to the Diamonds for $406,698, plus fees and costs.

Relying on Pellett v. Sonotone Corp. (1945) 26 Cal.2d 705, 713 and Everman v. Superior Court (1992) 8 Cal.App.4th 466, 473, Diamond found it was not improper for the plaintiffs to require Yellow Cab, the settling party, to participate in the trial to prevent the Reshkos, the nonsettling defendants, from making an “empty chair” argument by ascribing “fault to an actor who is not present to defend himself.” (At p. 844.) However, where a settlement requires such participation, Diamond also holds that “the settling defendant’s position should be revealed to the court and jury to avoid committing a fraud on the court, and to permit the trier of fact to properly weigh the settling defendant’s testimony,” (id.) unless the court were to find that such disclosure would create a substantial danger of undue prejudice. (At p. 843.) “Without this evidence, the jury is prevented from fully assessing the motivations of both the plaintiff and the settling defendant, and from properly weighing the credibility of their witnesses.” (At p. 845.)

The appellate court found that exclusion by the trial court of the Diamond-Yellow Cab settlement, including the clause in the agreement that required Yellow Cab to attend and participate in the trial, was an abuse of discretion and reversed the judgment on behalf of the Diamonds.

Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
(310) 201-0010

Copyright Michael D. Marcus, March 2016

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