Filed 11/6/14 Cordova v. BNSF Railway CA4/2



                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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

                                   FOURTH APPELLATE DISTRICT

                                                 DIVISION TWO



RANDALL P. CORDOVA,

         Plaintiff and Respondent,                                       E056223

v.                                                                       (Super.Ct.No. BCVBS08535)

BNSF RAILWAY COMPANY,                                                    OPINION

         Defendant and Appellant.



         APPEAL from the Superior Court of San Bernardino County. Victor R. Stull,

Judge. Affirmed.

         Sims Law Firm, Selim Mounedji and John E. Stobart for Defendant and

Appellant.

         Paul Andrew Burnett for Plaintiff and Respondent.




                                                             1
                                     INTRODUCTION

       Defendant and appellant BNSF Railway Company (hereafter referred to as BNSF)

appeals from an order denying its motion for entry of acknowledgement of full

satisfaction of judgment, pursuant to Code of Civil Procedure, section 724.050.1 BNSF

also contends that the court improperly allowed interest to accrue after it had tendered

payment of the judgment. We will affirm the judgment.

                                      BACKGROUND

       Plaintiff and respondent Randall P. Cordova, employed by defendant BNSF as a

carman, was injured on the job when an angle cock2 he was repairing flew off the

assembly and struck him in the face. He filed suit under the Federal Employers’ Liability

Act (45 U.S.C. § 51 et seq.), alleging several theories under which BNSF could be held

liable for negligence. The trial court granted BNSF’s motion for summary judgment.

Cordova appealed. We found that the trial court properly granted summary adjudication

as to one of the theories of negligence Cordova alleged, but we reversed and remanded

for further proceedings as to his other theories. (Cordova v. BNSF Railway Company




       1 All further statutory citations refer to the Code of Civil Procedure unless another
code is specified.
       We discuss the provisions of section 724.050 below.

       2   An angle cock is part of an air brake system.


                                              2
(Mar. 16, 2009, E043344) [nonpub. opn.].) The matter went to trial, and a jury awarded

Cordova $583,616, plus costs.3 Judgment was entered on December 6, 2011.

       After entry of judgment, Cordova obtained a writ of execution seeking

$619,566.85, consisting of the amount of the judgment plus costs, interest, and the $25

fee for issuance of the writ. BNSF filed an ex parte motion to quash the writ. BNSF

contended that it had fully satisfied the judgment or, in the alternative, that it had partially

satisfied the judgment and that the writ failed to reflect the correct amount remaining to

be paid. BNSF had tendered to Cordova checks totaling $479,735.92, representing the

judgment minus prejudgment advances made to Cordova for which it asserted a lien,

liens on the judgment by the Railroad Retirement Board, and federal tax withholdings,

which all together totaled $142,865.93.4

       In that motion, BNSF informed the court that it had sent Cordova a request that he

execute an acknowledgement of satisfaction of judgment but that pursuant to section

724.050, it was required to wait 15 days before filing a motion for entry of satisfaction of

judgment. It asked the court to quash the writ or stay execution of it until its motion for

entry of satisfaction of judgment could be heard.

       In his opposition to the motion to quash the writ, Cordova stated that he had

refused to accept BNSF’s first check because it was tendered solely as full satisfaction of

       3 The jury found that Cordova suffered $1,061,120 in damages but determined
that he was 45 percent at fault.

       4 There are discrepancies in the amounts of the liens BNSF refers to in various
pleadings. We will assume the amounts listed in BNSF’s letter to Cordova’s attorney
explaining its calculation of the amount required to satisfy the judgment are correct.

                                               3
the judgment but did not actually constitute full payment. He had offered to return the

check to BNSF or to destroy it, but its attorney had told him to keep the check “‘pending

resolution of the remaining issues.’”

       At the hearing on the ex parte motion, the court stayed execution of the writ

pending a hearing on BNSF’s motion for acknowledgment of satisfaction of judgment.

The court stated that at that hearing it would address the issue of the offsets and whether

BNSF’s tender of payment stopped the accrual of interest. The court ordered Cordova to

return the checks to BNSF.

       BNSF filed its motion for acknowledgment of full satisfaction of judgment under

section 724.050. It asserted in the motion that because of the offsets to which it was

entitled, the judgment had been satisfied in full. In his opposition to the motion, Cordova

repeated that he had refused to accept BNSF’s checks because they were tendered solely

as full satisfaction of the judgment but did not constitute full payment. He disputed the

offsets BNSF unilaterally applied. He also contended that BNSF was seeking to amend

the judgment and that the trial court had no jurisdiction to do so. He asserted that BNSF

should have sought any offsets it believed were due before entry of the judgment. In his

declaration in support of the opposition, Cordova’s attorney stated that he had returned

BNSF’s check as ordered by the trial court.

       After hearing the arguments of the parties, the court took the question of

satisfaction of judgment and the accrual of interest under submission. It continued to stay

execution of the writ pending its decision.



                                              4
       On April 13, 2012, the court issued its ruling. The ruling ordered BNSF to pay

Cordova “judgment in the amount of $583,616.00, costs in the amount of $34,039.58 and

accrued interest . . . from the date of entry of judgment, December 6, 2011, until the date

the award is paid.” The ruling offered no explanation of the court’s reasoning.

       BNSF filed a timely notice of appeal.

                                   LEGAL ANALYSIS

                                             1.

   THE TRIAL COURT PROPERLY DENIED BNSF’S MOTION FOR ENTRY OF

                           SATISFACTION OF JUDGMENT

       Preliminary Matters

       We will begin our discussion by addressing and rejecting three of Cordova’s

contentions.

       Section 724.050 provides that if a money judgment has been fully satisfied and the

judgment debtor has not filed an acknowledgment of satisfaction of judgment with the

court and has not complied with the judgment creditor’s demand that he do so, “the

person making the demand may apply to the court on noticed motion for an order

requiring the judgment creditor to comply with the demand. . . . If the court determines

that the judgment has been satisfied and that the judgment creditor has not complied with

the demand, the court shall either (1) order the judgment creditor to comply with the

demand or (2) order the court clerk to enter satisfaction of the judgment.” (§ 724.050,

subd. (d), italics added.) Thus, an essential element of a section 724.050 motion is a



                                               5
showing that the judgment has in fact been satisfied. (Pierson v. Honda (1987) 194

Cal.App.3d 1411, 1414 & fn. 4.)

       Cordova contends that the court properly denied the section 724.050 motion

because BNSF had not even partially satisfied the judgment as of the date of the hearing

on the motion. Cordova had returned BNSF’s checks before BNSF filed its section

724.050 motion. Accordingly, Cordova contends, the motion necessarily failed because

no payment, not even of a disputed amount, had been made.

       This argument is disingenuous, bordering on frivolous. At the hearing on BNSF’s

motion to quash the writ, the parties agreed to a further hearing to resolve the dispute as

to the sufficiency of BNSF’s tendered payment. The parties agreed that BNSF would file

and serve its section 724.050 motion and, after hearing the motion, the court would

resolve the question of the offsets BNSF asserted and determine whether the payment

BNSF had tendered did in fact satisfy the judgment. At that point, Cordova had BNSF’s

checks in his possession. BNSF offered to allow Cordova to negotiate those checks and

stated that it would not attempt to argue that by doing so, Cordova had accepted its tender

as full payment of the judgment. Cordova initially agreed to this, but then balked when

the court said that in that case, it would quash the writ. Cordova preferred to return the

checks and have the court stay execution of the writ. The court agreed to this and ordered

Cordova to return the checks to BNSF. However, the parties’ agreement to resolve the

question of the sufficiency of BNSF’s tender of performance to satisfy the judgment

remained unchanged: The parties agreed that the tender constituted at least partial

payment of the judgment, and that the only issue to be resolved was the application of the

                                             6
offsets.5 Having agreed to this procedure, Cordova cannot defeat it simply by returning

the checks.

       We also reject Cordova’s contention that BNSF’s motion was in effect an

untimely motion to amend the judgment. BNSF is not seeking to amend the judgment

but merely to offset its obligation by amounts which it contends Cordova had agreed to

pay in the event of a judgment and by amounts which it asserts it was required by law to

pay on Cordova’s behalf. “[T]he right to seek equitable setoff after the entry of judgment

has long been recognized by the California courts. . . . ‘[I]t is well settled that a court of

equity will compel a set-off when mutual demands are held under such circumstances

that one of them should be applied against the other and only the balance recovered.’”

(O'Callaghan v. Southern Pac. Co. (1962) 202 Cal.App.2d 364, 370-371, quoting

Harrison v. Adams (1942) 20 Cal.2d 646, 648-649.) A motion to compel

acknowledgment of satisfaction of judgment is “an entirely acceptable procedure for

balancing” offsets. (Wade v. Schrader (2008) 168 Cal.App.4th 1039, 1048.)

       Finally, we reject Cordova’s contention that BNSF was required to assert its claim

for offsets as an affirmative defense. Section 431.70, on which Cordova relies, provides

in pertinent part: “Where cross-demands for money have existed between persons at any

point in time when neither demand was barred by the statute of limitations, and an action

       5 Contrary to BNSF’s contention, its unilateral decision to apply offsets which
Cordova contested did not constitute a tender of performance sufficient to discharge its
obligation. (Civ. Code, § 1486 [offer of partial performance is of no effect].) In the
absence of a judicial ruling or Cordova’s agreement on the offsets BNSF claims, BNSF’s
tender of less than the full amount of the judgment did not satisfy Code of Civil
Procedure section 724.050.

                                               7
is thereafter commenced by one such person, the other person may assert in the answer

the defense of payment in that the two demands are compensated so far as they equal

each other, notwithstanding that an independent action asserting the person’s claim would

at the time of filing the answer be barred by the statute of limitations.” (Italics added.)

       “May” is generally permissive while “shall” is generally compulsory, unless a

contrary intent appears from the context of a statute. (Marshall v. Foote (1927) 81

Cal.App. 98, 100-103.) Cordova does not provide any persuasive argument or authority

that in using the word “may” in section 431.70, the Legislature actually meant “shall” or

“must.” The cases he cites do not so hold. Rather, both merely state that section 431.70

describes “the procedure to be followed in raising setoff as a defense.” (Fassberg

Construction Co. v. Housing Authority of City of Los Angeles (2007) 152 Cal.App.4th

720, 762; see Granberry v. Islay Investments (1995) 9 Cal.4th 738, 744.) We understand

this to mean that section 431.70 describes the procedure to be followed if a party wishes

to raise setoff as a defense. Any other interpretation would conflict with the authorities

discussed above, which hold that a defendant may seek an equitable setoff after entry of

judgment. (See O'Callaghan v. Southern Pac. Co., supra, 202 Cal.App.2d at pp. 370-

371; Harrison v. Adams, supra, 20 Cal.2d at pp. 648-649; Wade v. Schrader, supra, 168

Cal.App.4th at p. 1048.) Moreover, after discussing section 431.70 and noting that the

defendant in that case did raise setoff as a defense, the court in Fassberg Construction

Co. v. Housing Authority of City of Los Angeles, supra, stated, “In our view, there is no

particular procedure required to invoke the equitable power of the court to effect a setoff,

when appropriate.” (Id. at p. 763.)

                                              8
       BNSF’s Contentions Fail

       We now turn to BNSF’s contentions concerning the offsets.

       In its motion, BNSF claimed the following offsets against the judgment:

       1. $112,300 paid to Cordova under BNSF’s program of advancing living expenses

pending resolution of a claim for injury on the job;

       2. $10,586.53, paid to Cordova under BNSF’s supplemental sickness payment

benefits program;

       3. $3,892.57 paid by BNSF to satisfy a lien in favor of the Railroad Retirement

Board; and

       4. $40,704.06 in Railroad Retirement Tax Act payroll taxes withheld by BNSF

from the judgment.6

       We first address the standard of review. BNSF contends that we review de novo

the question “whether BNSF satisfied the judgment by tendering what it owed plaintiff

under the judgment less advances and withholdings” because the facts pertaining to the

claimed offsets are undisputed. The facts may be undisputed, but the underlying issue is

whether BNSF is entitled to the offsets it claims. That determination is a matter of

discretion for the trial court: “The right to offset is not absolute and may be restricted

when the failure to do so would be inequitable. . . . It follows that the trial court’s

decision [denying an offset] was one subject to an exercise of its equitable powers, and


       6Some of these amounts differ from the amounts stated in BNSF’s letter to
Cordova’s attorney. (See footnote 4, ante.) Because we are affirming the denial of
BNSF’s motion, the discrepancy is not significant.

                                               9
that the only issue before us on this appeal is whether that discretion was so abused that it

resulted in a manifest miscarriage of justice.” (Wm. R. Clarke Corp. v. Safeco Ins. Co. of

America (2000) 78 Cal.App.4th 355, 358-359.) Accordingly, we will review the

judgment to determine whether denial of any of the offsets was an abuse of discretion.

However, because a motion pursuant to section 724.050 is an all or nothing proposition—

either the judgment was fully satisfied or it was not—in order to reverse the trial court’s

ruling, we would have to conclude that the court abused its discretion with respect to all

of the offsets BNSF claims.7 Or, stated conversely, if we find that it was not an abuse of

discretion to reject even one of the offsets BNSF claimed, we must conclude that the trial

court properly denied the motion for entry of acknowledgment of full satisfaction of

judgment.

       Living Expense Advances and Supplemental Sickness Benefits

       It is beyond any reasonable dispute that BNSF is entitled to an offset for the

$112,350 (or $112,300) in advances it paid to Cordova for living expenses. Cordova

signed a receipt for each such advance, and the receipts expressly acknowledged that

BNSF would recoup the advances in the event of a judgment in Cordova’s favor.

Accordingly, it would be an abuse of discretion to deny BNSF an offset for those

advances.




       7  Section 724.110 provides an identical remedy for a judgment debtor who has
partially satisfied a judgment. BNSF’s motion did not seek an acknowledgment of partial
satisfaction as an alternative to acknowledgment of full satisfaction of the judgment.

                                             10
       We cannot say the same concerning the offset for the $10,586.53 in provisional

supplemental sickness benefits. The declaration of BNSF’s claims manager indicates that

those benefits were paid by “Aetna,” presumably the insurance company by that name,

under a supplemental sickness plan. The excerpt from the plan documents attached as an

exhibit to the declaration provides that benefits paid under the plan will be offset against

any judgment or settlement for personal injury obtained by the injured worker and

provides that Aetna is entitled to deduct those benefit payments “from any payment made

in any case involving a claim for loss of wages and in which the employer or a third party

may be liable for the injury.” Although this provision clearly states that Aetna has a right

to reimbursement of the benefits, it does not authorize BNSF to claim an offset on its

behalf. There is no evidence that Aetna assigned its claim to BNSF, that BNSF had

reimbursed Aetna for the benefits paid to Cordova, or that BNSF was for any other

reason entitled to claim the offset. In the absence of such evidence, BNSF’s claim

necessarily fails. Moreover, the excerpt states that “[t]he benefits and procedures set

forth in this booklet apply to disabilities which began on or after January 1, 2010.”

Cordova was injured in 2002. Accordingly, the evidence is insufficient as a matter of law

to support BNSF’s claim, and the trial court did not abuse its discretion in finding that

BNSF did not meet its burden of proof with respect to the claimed offset for those

benefits.




                                             11
       The Railroad Retirement Board (RRB) Lien

       BNSF contends that it is entitled to an offset for $3,892.57, the amount required to

pay a lien in favor of the RRB for sickness benefits paid by the RRB to Cordova.

Although BNSF alludes to having paid this lien, it cites no evidence in the record that it

did so, and we are not aware of any such evidence. Cordova does not dispute that the

RRB has a lien on the judgment which must be satisfied. He argues that BNSF must

either demonstrate that it has satisfied the lien or allow him to do so. Otherwise, he

contends, he will be subjected to uncertainty as to whether the lien has been or will be

satisfied.

       Title 45 United States Code section 362(o) provides as follows:

       “Benefits payable to an employee with respect to days of sickness shall be payable

regardless of the liability of any person to pay damages for such infirmity. The [RRB]

shall be entitled to reimbursement from any sum or damages paid or payable to such

employee or other person through suit, compromise, settlement, judgment, or otherwise

on account of any liability (other than a liability under a health, sickness, accident, or

similar insurance policy) based upon such infirmity, to the extent that it will have paid or

will pay benefits for days of sickness resulting from such infirmity. Upon notice to the

person against whom such right or claim exists or is asserted, the [RRB] shall have a lien

upon such right or claim, any judgment obtained thereunder, and any sum or damages

paid under such right or claim, to the extent of the amount to which the [RRB] is entitled

by way of reimbursement.”



                                              12
       An injured railroad employee and the employer railroad are jointly and severally

liable for payment of the lien created by this statute. (Keith v. Burlington Northern

Railroad Co. (Mo.Ct.App. 1994) 889 S.W.2d 911, 924-925, discussing U.S. v. Atlantic

Coast Line R.R. (4th Cir. 1956) 237 F.2d 137, 139.) It would be improper to allow BNSF

an offset against the judgment without proof that it had satisfied the lien, because without

such proof, Cordova could still be liable for the amount of the lien. Accordingly, the trial

court did not abuse its discretion in finding that BNSF was not entitled to credit for the

amount owed to the RRB.

       Payroll Taxes

       The Railroad Retirement Tax Act (26 U.S.C. §§ 3201-3233) imposes a dual tax on

railroad employers and employees that is used to fund annuities for retired railroad

employees. Railroad employers are responsible for withholding the employee’s share

and are also required to pay both the employer’s and employee’s portions to the Internal

Revenue Service. (Hance v. Norfolk Southern Railway Co. (6th Cir. 2009) 571 F.3d 511,

522.) BNSF contends that it was entitled to an offset for $40,704.06, representing the

amount of railroad retirement taxes due from it and from Cordova, based on the full

amount of the judgment. It contends that because the jury returned a general verdict and

did not apportion the judgment between damages for time lost from work and other types

of damages, the entire judgment must be deemed compensation for time lost.

       Title 45 United States Code section 231, a part of the Railroad Retirement Tax

Act, provides in part: “An employee shall be deemed to be paid ‘for time lost’ the

amount he is paid by an employer with respect to an identifiable period of absence from

                                             13
the active service of the employer, including absence on account of personal injury, and

the amount he is paid by the employer for loss of earnings resulting from his

displacement to a less remunerative position or occupation. If a payment is made by an

employer with respect to a personal injury and includes pay for time lost, the total

payment shall be deemed to be paid for time lost unless, at the time of payment, a part of

such payment is specifically apportioned to factors other than time lost, in which event

only such part of the payment as is not so apportioned shall be deemed to be paid for

time lost.” (45 U.S.C. § 231(h)(2), italics added.)

         Here, the jury returned an unapportioned general verdict. According to the

declaration of Cordova’s attorney, which was attached to his opposition to BNSF’s

section 724.050 motion, the reason that the verdict was not apportioned between

compensation for time lost and other damages was that the trial court acceded to BNSF’s

request that the jury not be given a special verdict form asking it to apportion the

damages. BNSF does not deny that it requested the unapportioned verdict; it merely

asserts that Cordova is precluded from mentioning it now because the trial court denied

his motion for new trial, which was in part based on his complaints about the verdict

form, and Cordova did not appeal. We reject this contention. Cordova is not seeking

affirmative relief; he is merely presenting an argument to demonstrate why it was not an

abuse of discretion to deny BNSF’s motion for an offset based on its withholding of

taxes.




                                             14
       We also reject the contention that because the entire judgment is subject to payroll

taxes as a matter of law, BNSF is necessarily entitled to an offset for the amount of

payroll taxes it was required to withhold. As we have discussed, BNSF’s entitlement to

the offset is a matter of equity subject to the trial court’s exercise of discretion. (Wm. R.

Clarke Corp. v. Safeco Ins. Co. of America, supra, 78 Cal.App.4th at pp. 358-359.) It

was not an abuse of discretion to refuse to allow BNSF an offset for payroll taxes when

the only reason the judgment was not apportioned between general damages and various

types of special damages, including lost past and future earnings, is that BNSF

successfully persuaded the court not to require the jury to make that apportionment, over

Cordova’s objection. BNSF created the problem, and it is not equitable to require

Cordova to accept any negative consequences.

       Because the trial court did not abuse its discretion in denying BNSF three out of

the four offsets it claimed, it follows that BNSF’s motion for acknowledgment of full

satisfaction of judgment was properly denied.

                                              2.

   BNSF’S TENDER OF LESS THAN THE FULL AMOUNT OF THE JUDGMENT

                    DID NOT STOP THE ACCRUAL OF INTEREST

       BNSF contends that the trial court erred when it ordered BNSF to pay interest

from the date of entry of the judgment. It contends that the accrual of interest stopped

when it tendered what it terms a “valid tender” of payment.

       An offer of payment “duly made” stops the running of interest on a judgment or

other obligation. (Civ. Code, § 1504.) To be effective, however, the tender must

                                              15
constitute full performance and may not impose a condition which the creditor is not

bound to accept. (Civ. Code, §§ 1486, 1494; In re Marriage of Green (2006) 143

Cal.App.4th 1312, 1323; Mission Ins. Group, Inc. v. Merco Construction Engineers, Inc.

(1983) 147 Cal.App.3d 1059, 1067-1068.) BNSF’s tender of less than the full amount of

the judgment did not suffice to stop the accrual of interest because it required Cordova to

accept the amount offered in full satisfaction of the judgment and to waive his right to

recover the rest of the judgment. Having found that BNSF was not entitled to full

satisfaction of the judgment by virtue of the payment it tendered, the trial court correctly

ordered BNSF to pay interest on the full amount of the judgment from the date of entry of

judgment.

                                      CONCLUSION

       The judgment is affirmed. Plaintiff and respondent Randall Cordova is awarded

costs on appeal.

       NOT TO BE PUBLISHED IN OFFICIAL REPORTS



                                                                McKINSTER
                                                                                 Acting P. J.
We concur:



RICHLI
                           J.



MILLER
                           J.

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