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Can Your Defendant Pay?

One of the more troubling issues facing Irvine business attorney today is the inability of the defendants to pay judgments and settlements. This puts a completely different spin on the case when the ability to pay is the primary factor in getting a case.

It used to be ‘that you looked for a design problem in the catastrophic injury auto case when there was insufficient insurance from the parties involved in the actual collision. But, the “deep pocket” defendants no longer have deep pockets. Automobile manufacturers can’t pay for the damage their defective cars cause, as witnessed in the Chrysler bankruptcy plan that may wipe out the rights of catastrophically injured victims.

A recent report from the Center for Justice & Democracy says that according to the bankruptcy plan, an occupant of a Chrysler vehicle who is severely injured in a collision or otherwise because the car was not made safely, will have no legal recourse against the company. There are more than 10 million Chrysler vehicles now on the road.

Warranties will be honored and money is set aside to cover replacement of defective car parts, but if the defective part causes an accident that leads to a catastrophic injury or death, the company is off the hook. Luckily other car companies can still be held accountable for making unsafe cars, even if Chrysler cannot.

Government entities

Los Angeles civil litigation lawyers found it is no longer the best case when you have a governmental entity involved as a defendant in a civil case.

We have several cases that have gone to verdict against both the City and County of Los Angeles. Both resulted in large judgments. But how do you collect from an entity with a valid argument that there is no money to pay your clients’ claims? Everyone, including jurors, is acutely aware of the budget crises facing cities, counties and the state of California, We have found clients who have taken pennies on the dollar with payments extended over several fiscal years, and even then there is nothing to stop the government entity from saying, “Sorry, we can’t make the agreed upon payment.”

Termination: Can the employer pay?

Then there are the employment cases where the client is terminated, and the termination is blamed on the economy, said a Los Angeles sexual harassment lawyer.

Whether it is true or not, this is an additional hurdle we have to leap. And what about a case we’ve already filed in which the defendant business is now in jeopardy due to changes in the economy? We have a case where the client was terminated by a high-end tile and granite supplier. It’s a valid case, but the defendant claims he cannot pay: His main client was Home Depot’s subsidiary; EXPO, which recently closed its doors. So now the client is faced with a trial against a defendant who says, “If you do get a judgment, I will just declare bankruptcy, and you can get in line with all the other folks we owe money to.” In the alternative, you can take less money and take it over time.

Insurers: Tougher yet

In these hard times, we can’t just look at the case for negligence, causation and damages. We must now pay more attention to whether a defendant or its insurance company has the ability to pay. With insurers also failing or suffering economic setbacks, there are no guarantees. It’s no coincidence that our members who do auto cases tell us that, in the past few months, insurance companies such as Mercury have become impossibly difficult to deal with.

The upside is that the calls are coming in. More people are being wronged. Doctors and hospitals are still making mistakes that cause permanent harm. Police are still stepping outside the boundaries of their professional standards. Folks on mobile phones are still running into other folks because they are too distracted.

We all are grateful that we have work to do. The injured still need our help. The abused still need our protection. The wronged still seek justice and we are still the soldiers for justice. It is just a little harder to get paid.

And a personal note

As some of you may know, on April 25 I got married to Yana Henriks, an attorney and CAALA member. The ceremony was conducted by LA. Superior Court Assistant Presiding Judge Lee Edmon at the Four Seasons Hotel in Beverly Hills. Yana and I met last year at a member mixer. I’ve told you that being a CAALA member has its benefits.