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1 MATTHEW A, HAULK (SBN; 272457)
RAGGHIANTI FREITAS LLP
1101 Fifth Avenue, Suite 100
San Rafael, California 94901 10/13/2021
Telephone: (415) 453-9433
Facsimile: (415) 453-8269
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Attorney for Defendants
PUNIT K. SARNA and
PUJA SARNA
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN MATEO
16 LOUIS PAYCHECK, CASE NO.: 19CIV02595
Plaintiff, PUNIT AND PUJA
12 TO LOUIS
SARNAS'PPOSITION
PAYCHECK'S
vs. MOTION FOR CREDIT OF SETTLING
13 SURETY
PUNIT K. SARNA, et al.,
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Defendants. DATE: October 26, 2021
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TIME: 2:00 p.m.
16 DEPT.:4
COURTROOM: N
17 JUDGE: Hon. Nancy L. Fineman
18 Complaint Filed: 2019
May 10,
AND RELATED CROSS-ACTION. Trial: May 12, 2021
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21 INTRODUCTION
22 Plaintiff and Cross-Defendant Louis Paycheck (" Paycheck" ) requests a reduction
23 of $40,000 Defendant and Cross-Complainant Punit Sama's ("Sama") disgorgement
24 award against him under the Sixth Cause of Action of Punit Sama's First Amended
Cross-Complaint. Paycheck argues that Punit Sama and his sister, Defendant Puja
Sama, entered into a settlement agreement with Suretec Indemnity Co., Inc. ("Suretec")
for $ 40,000 on a separate cause of action. Because Surtec has threatened to sue
Paycheck for contract indemnity, Paycheck argues that he should be given "credit" for the
OPPOSITION TO LOUIS PAYCHECK'S MOTION FOR CREDIT FOR SETTLING SURETY
$ 40,000 settlement itentered into with the Sarnas.
2 Paycheck has failed to provide any legal authority to support a "credit". The
3 judgment against Paycheck was based on a separate cause of action from the settlement
4 with Suretec, Code of Civil Procedure section 877.6 does not apply to this case or
5 provide for a "credit", and there is no logical reason to reduce Punit Sama's award based
8 on his sister's settlement with Suretec. Paycheck does not even concede that he is
7 responsible to indemnify Surtec and he has failed to produce evidence that he as paid
8 Suretec the $ 40,000 which he seeks to "offset" from Sama's judgment. There is no basis
8 to reduce Punit Sama's award against Paycheck and this Motion should be denied.
10 SUMMARY OF FACTS
Punit Sama alleged a Sixth Cause of Action against Louis Paycheck for failing to
12 be duly licensed throughout the project and sought disgorgement of all compensation
13 paid to Paycheck. Bus. & Prof. Code 5 7031. Sama alleged other causes of action
&4 against Paycheck to recover damages caused by Paycheck's breach of warranty,
15 negligence, breach of contract, and separate statutory violations. Punit Sama's sister,
18 Puja Sama, was a Defendant in Paycheck's Complaint but did not file a Cross-Complaint
17 against Paycheck.
18 Sama alleged a Ninth Cause of Action against Suretec indemnity Co., Inc. under
&8 Business and Professions Code section 7017.5(c). Suretec issued a $ 15,000 license
2o bond to Paycheck and Sama alleged the right to $ 7,500 of the bond amount under
21 Business and Professions code sections 7071.5(c) and 7071.6. Sama's Ninth Cause of
22 Action against Suretec required him to establish that Sama was, "[a] person damaged as
23 a result of a willful and deliberate violation of this chapter by the licensee [Paycheck], or
24 by the fraud of the licensee [Paycheck] in the execution or performance of a construction
25 contract." Sama also sought an award of attorney's fees against Suretec based on his
26 statutory claims under Business and Professions Code section 7160, Code of Civil
27 Procedure section 1029.8, and Karton v. Ari Design & Construction, inc. (2021) 61
28 Cal.App.5th 734, 751.
OPPOSITION TO LOUIS PAYCHECK'S MOTION FOR CREDIT FOR SETTLING SURETY
1 The parties bifurcated trial into a licensing claims trial and a construction claims
2 trial. The Phase 1 licensing claims trial proceeded in May 2021. The court determined
3 that Paycheck was not duly licensed throughout the project and therefore required to
4 disgorge all compensation that he received for work on the project. The remaining claims,
including Sama's claims against Suretec, were reserved for the Phase 2 construction
s claims trial.
7 Punit Sama, Puja Sama, and Suretec entered into a settlement agreement for
8 $ 40,000. The parties agreed that the settlement would not operate as any sort of release
0 for their respective claims against Paycheck:
10 This Agreement not intended to release, and the
is parties agree that it
does not release, any claims that the Parties may have against LOUIS
PAYCHECK d/b/a/ EUROPEAN ENTERPRISE. (Settlement Agreement, tj
12 3.4; 7 4.1).
13 Following this settlement, Sama voluntarily dismissed his remaining causes of
„4 action against Paycheck. Sama is a cardiologist, not a professional litigant. His objective
in this case was to get Paycheck out of his life and his sister's life,and to get Paycheck's
lien off his property. This objective is reflected in his CCP g 998 offer to Paycheck for $ 2
and his offer for a "walk-away" at the Mandatory Settlement Conference. After the Phase
1 Trial, Sama achieved an award against Paycheck in the principal amount of
$ 228,330.63 and achieved a total defense to Paycheck's claims. There was no reason to
go any further.
LEGAL ARGUMENT
1. Pavcheck's Reauest for a $ 40.000 Credit Lacks LerIal Merit.
23 Paycheck asks the court to reduce the principal amount of Punit Sama's judgment
against him by $ 40,000 based on Suretec Indemnity's settlement with Puja Sama and
Punit Sama. The basis of this request is that Suretec has demanded reimbursement from
Paycheck under a written indemnity agreement and that, ifPaycheck were to comply with
this demand, Sama would receive "free money" and itwould be unfair. Paycheck also
23 argues that Sama and Suretec should have filed a Motion for Good Faith Settlement
OPPOSITION TO LOUIS PAYCHECK'S MOTION FOR CREDIT FOR SETTLING SURETY
under Code of Civil Procedure section 877.6. These arguments are without legal or
2 factual merit.
3 a. Sama's Settlement with Suretec Is Not Based on the Same Claim
4 Givina Rise to the Disaoraement Award Aqainst Pavcheck.
5 Sama prevailed against Paycheck under his Fourth Cause of Action for
5 Disgorgement based on a determination that Paycheck was not duly licensed as a
7 contractor throughout the project. Thereafter, Sama settled his Ninth Cause of Action
s against Suretec (which required a showing of Paycheck's willful and deliberate
a misconduct and fraud) in addition to his claims for attorney's fees and costs against
10 Suretec under Karfon v. Ari Design 8 Construction, inc. (2021) 61 Cal.App.5th 734, 751."
Sama's claims against Suretec were separate from his disgorgement claim
12 against Paycheck. The causes of action were based on separate legal injuries and
13 primary rights, and had different elements, burdens of proof, and measures of damages.
Further, where Sama had a right to attorney's fees against Suretec under its Ninth Cause
of Action, he had no equivalent right to attorney's fees against Paycheck based on his
15 Fourth Cause of Action. There is no legal or logical reason why the court would reduce
17 Sama's disgorgement award against Paycheck by $ 40,000 merely because Suretec
ts settled a $ 7,500 bond claim and corollary attorney's fee claim with Punit Sama and
10 resolved prospective liability with regard to Puja Sama.
20 Notably, Paycheck does not concede that he owes Suretec a contractual
21 indemnity and he has not satisfied Suretec's demand. Paycheck seeks a reduction in a
22 judgment against him based on the theory that he might satisfy a contested indemnity
23 claim. Thel'e Is no equitable l3asls fol the IedUctlon Undel'hese oil cUmstances Bnd,
further, Business and Professions Code section 7031 prohibits off-sets or credits based
25 on "equitable" considerations. Judicial Council of California v Jacobs Facilities, Inc.
26 (2015) 239 Cal.App.4th 882.
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't the time of settlement, Sama and Paycheck were litigating
bond funds to secure a dismissal from the case.
Suretec's Motion to Interplead $ 7,500 in
OPPOSITION TO LOUIS PAYCFIECK'S MOTION FOR CREDIT FOR SETTLING SURETY
1 b. Code of Civil Procedure Section 877.6 Has No Bearina on this Case.
2 Paycheck argues that the Sarnas and Suretec should have filed a Motion for Good
3 Faith Settlement under Code of Civil Procedure section 877.6. Code of Civil Procedure
4 section 877.6 provides as follows:
Any party to an action in which itis alleged that two or more parties are joint
tortfeasors or co-obligors on a contract debt shall be entitled to a hearing on
the issue of the good faith of a settlement entered into by the plaintiff or
other claimant and one or more alleged tortfeasors or co-obligors, upon
giving notice in the manner provided in subdivision (b) of Section 1005
9 Section 877.6 allows a settling joint tort-feasor or co-obligor to extricate itself from
1o a lawsuit and bar future actions against him or her for eauitable indemnitv by the
remaining joint tort-feasors or co-obligors. Fullerton Redevelopment Agency v. Southern
12 California Gas Co. (2010) 183 Cal.App.4" 428. A settling indemnitee retains the right to
13 pursue either equitable or contractual indemnity claims against the indemnitor in a
14 separate action. Peter Culley 8 Associates v. Superior Court (1992) 10 Caf.App.4'" 1484.
15 Section 877.6. does not apply to this case because Suretec and
16 Paycheck were not sued as joint-obligors or joint tortfeasors. Suretec was liable to Sama
17 for $ 7,500 under Business and Professions Code section 7071.5 and 7071.6 and for
18 attorney's fees and costs. Suretec was not jointly liable to Paycheck for his failure to be
19 duly licensed as a contractor throughout the project under Business and Professions
2o Code section 7031.
21 To the extent that section 877.6 applies to this case, itallowed (but did not require)
22 Sama and Suretec to seek a determination of good faith settlement to prevent Paycheck
23 (the remaining defendant) from bringing a future claim for equitable indemnity against
24 Suretec (the settling party). Given that Paycheck owes Suretec a contractual indemnity,
26 and not an equitable indemnity, there was no reason such a motion would have been
26 filed. However, if Paycheck believes he has a cause of action for equitable indemnity
against Suretec, he may proceed with a lawsuit because there was no determination of
28 "good faith settlement" under Code of Civil Procedure section 877.6.
OPPOSITION TO LOUIS PAYCHECK'S MOTION FOR CREDIT FOR SETTLING SURETY
1 CONCLUSION
2 The court should deny this motion for credit for settling surety.
3 Dated: October 12, 2021
MATTHEW A. HAULK
Attorneys for Defendants
PUNIT K. SARNA and PU JA SARNA
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OPPOSITION TO LOUIS PAYCHECK'S MOTION FOR CREDIT FOR SETTLING SURETY
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1 MATTHEW A, HAULK (SBN; 272457) RAGGHIANTI FREITAS LLP 1101 Fifth Avenue, Suite 100 San Rafael, California 94901 10/13/2021 Telephone: (415) 453-9433 Facsimile: (415) 453-8269 4 Attorney for Defendants PUNIT K. SARNA and PUJA SARNA 6 SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN MATEO 16 LOUIS PAYCHECK, CASE NO.: 19CIV02595 Plaintiff, PUNIT AND PUJA 12 TO LOUIS SARNAS'PPOSITION PAYCHECK'S vs. MOTION FOR CREDIT OF SETTLING 13 SURETY PUNIT K. SARNA, et al., 14 Defendants. DATE: October 26, 2021 15 TIME: 2:00 p.m. 16 DEPT.:4 COURTROOM: N 17 JUDGE: Hon. Nancy L. Fineman 18 Complaint Filed: 2019 May 10, AND RELATED CROSS-ACTION. Trial: May 12, 2021 20 21 INTRODUCTION 22 Plaintiff and Cross-Defendant Louis Paycheck (" Paycheck" ) requests a reduction 23 of $40,000 Defendant and Cross-Complainant Punit Sama's ("Sama") disgorgement 24 award against him under the Sixth Cause of Action of Punit Sama's First Amended Cross-Complaint. Paycheck argues that Punit Sama and his sister, Defendant Puja Sama, entered into a settlement agreement with Suretec Indemnity Co., Inc. ("Suretec") for $ 40,000 on a separate cause of action. Because Surtec has threatened to sue Paycheck for contract indemnity, Paycheck argues that he should be given "credit" for the OPPOSITION TO LOUIS PAYCHECK'S MOTION FOR CREDIT FOR SETTLING SURETY $ 40,000 settlement itentered into with the Sarnas. 2 Paycheck has failed to provide any legal authority to support a "credit". The 3 judgment against Paycheck was based on a separate cause of action from the settlement 4 with Suretec, Code of Civil Procedure section 877.6 does not apply to this case or 5 provide for a "credit", and there is no logical reason to reduce Punit Sama's award based 8 on his sister's settlement with Suretec. Paycheck does not even concede that he is 7 responsible to indemnify Surtec and he has failed to produce evidence that he as paid 8 Suretec the $ 40,000 which he seeks to "offset" from Sama's judgment. There is no basis 8 to reduce Punit Sama's award against Paycheck and this Motion should be denied. 10 SUMMARY OF FACTS Punit Sama alleged a Sixth Cause of Action against Louis Paycheck for failing to 12 be duly licensed throughout the project and sought disgorgement of all compensation 13 paid to Paycheck. Bus. & Prof. Code 5 7031. Sama alleged other causes of action &4 against Paycheck to recover damages caused by Paycheck's breach of warranty, 15 negligence, breach of contract, and separate statutory violations. Punit Sama's sister, 18 Puja Sama, was a Defendant in Paycheck's Complaint but did not file a Cross-Complaint 17 against Paycheck. 18 Sama alleged a Ninth Cause of Action against Suretec indemnity Co., Inc. under &8 Business and Professions Code section 7017.5(c). Suretec issued a $ 15,000 license 2o bond to Paycheck and Sama alleged the right to $ 7,500 of the bond amount under 21 Business and Professions code sections 7071.5(c) and 7071.6. Sama's Ninth Cause of 22 Action against Suretec required him to establish that Sama was, "[a] person damaged as 23 a result of a willful and deliberate violation of this chapter by the licensee [Paycheck], or 24 by the fraud of the licensee [Paycheck] in the execution or performance of a construction 25 contract." Sama also sought an award of attorney's fees against Suretec based on his 26 statutory claims under Business and Professions Code section 7160, Code of Civil 27 Procedure section 1029.8, and Karton v. Ari Design & Construction, inc. (2021) 61 28 Cal.App.5th 734, 751. OPPOSITION TO LOUIS PAYCHECK'S MOTION FOR CREDIT FOR SETTLING SURETY 1 The parties bifurcated trial into a licensing claims trial and a construction claims 2 trial. The Phase 1 licensing claims trial proceeded in May 2021. The court determined 3 that Paycheck was not duly licensed throughout the project and therefore required to 4 disgorge all compensation that he received for work on the project. The remaining claims, including Sama's claims against Suretec, were reserved for the Phase 2 construction s claims trial. 7 Punit Sama, Puja Sama, and Suretec entered into a settlement agreement for 8 $ 40,000. The parties agreed that the settlement would not operate as any sort of release 0 for their respective claims against Paycheck: 10 This Agreement not intended to release, and the is parties agree that it does not release, any claims that the Parties may have against LOUIS PAYCHECK d/b/a/ EUROPEAN ENTERPRISE. (Settlement Agreement, tj 12 3.4; 7 4.1). 13 Following this settlement, Sama voluntarily dismissed his remaining causes of „4 action against Paycheck. Sama is a cardiologist, not a professional litigant. His objective in this case was to get Paycheck out of his life and his sister's life,and to get Paycheck's lien off his property. This objective is reflected in his CCP g 998 offer to Paycheck for $ 2 and his offer for a "walk-away" at the Mandatory Settlement Conference. After the Phase 1 Trial, Sama achieved an award against Paycheck in the principal amount of $ 228,330.63 and achieved a total defense to Paycheck's claims. There was no reason to go any further. LEGAL ARGUMENT 1. Pavcheck's Reauest for a $ 40.000 Credit Lacks LerIal Merit. 23 Paycheck asks the court to reduce the principal amount of Punit Sama's judgment against him by $ 40,000 based on Suretec Indemnity's settlement with Puja Sama and Punit Sama. The basis of this request is that Suretec has demanded reimbursement from Paycheck under a written indemnity agreement and that, ifPaycheck were to comply with this demand, Sama would receive "free money" and itwould be unfair. Paycheck also 23 argues that Sama and Suretec should have filed a Motion for Good Faith Settlement OPPOSITION TO LOUIS PAYCHECK'S MOTION FOR CREDIT FOR SETTLING SURETY under Code of Civil Procedure section 877.6. These arguments are without legal or 2 factual merit. 3 a. Sama's Settlement with Suretec Is Not Based on the Same Claim 4 Givina Rise to the Disaoraement Award Aqainst Pavcheck. 5 Sama prevailed against Paycheck under his Fourth Cause of Action for 5 Disgorgement based on a determination that Paycheck was not duly licensed as a 7 contractor throughout the project. Thereafter, Sama settled his Ninth Cause of Action s against Suretec (which required a showing of Paycheck's willful and deliberate a misconduct and fraud) in addition to his claims for attorney's fees and costs against 10 Suretec under Karfon v. Ari Design 8 Construction, inc. (2021) 61 Cal.App.5th 734, 751." Sama's claims against Suretec were separate from his disgorgement claim 12 against Paycheck. The causes of action were based on separate legal injuries and 13 primary rights, and had different elements, burdens of proof, and measures of damages. Further, where Sama had a right to attorney's fees against Suretec under its Ninth Cause of Action, he had no equivalent right to attorney's fees against Paycheck based on his 15 Fourth Cause of Action. There is no legal or logical reason why the court would reduce 17 Sama's disgorgement award against Paycheck by $ 40,000 merely because Suretec ts settled a $ 7,500 bond claim and corollary attorney's fee claim with Punit Sama and 10 resolved prospective liability with regard to Puja Sama. 20 Notably, Paycheck does not concede that he owes Suretec a contractual 21 indemnity and he has not satisfied Suretec's demand. Paycheck seeks a reduction in a 22 judgment against him based on the theory that he might satisfy a contested indemnity 23 claim. Thel'e Is no equitable l3asls fol the IedUctlon Undel'hese oil cUmstances Bnd, further, Business and Professions Code section 7031 prohibits off-sets or credits based 25 on "equitable" considerations. Judicial Council of California v Jacobs Facilities, Inc. 26 (2015) 239 Cal.App.4th 882. 27 25 't the time of settlement, Sama and Paycheck were litigating bond funds to secure a dismissal from the case. Suretec's Motion to Interplead $ 7,500 in OPPOSITION TO LOUIS PAYCFIECK'S MOTION FOR CREDIT FOR SETTLING SURETY 1 b. Code of Civil Procedure Section 877.6 Has No Bearina on this Case. 2 Paycheck argues that the Sarnas and Suretec should have filed a Motion for Good 3 Faith Settlement under Code of Civil Procedure section 877.6. Code of Civil Procedure 4 section 877.6 provides as follows: Any party to an action in which itis alleged that two or more parties are joint tortfeasors or co-obligors on a contract debt shall be entitled to a hearing on the issue of the good faith of a settlement entered into by the plaintiff or other claimant and one or more alleged tortfeasors or co-obligors, upon giving notice in the manner provided in subdivision (b) of Section 1005 9 Section 877.6 allows a settling joint tort-feasor or co-obligor to extricate itself from 1o a lawsuit and bar future actions against him or her for eauitable indemnitv by the remaining joint tort-feasors or co-obligors. Fullerton Redevelopment Agency v. Southern 12 California Gas Co. (2010) 183 Cal.App.4" 428. A settling indemnitee retains the right to 13 pursue either equitable or contractual indemnity claims against the indemnitor in a 14 separate action. Peter Culley 8 Associates v. Superior Court (1992) 10 Caf.App.4'" 1484. 15 Section 877.6. does not apply to this case because Suretec and 16 Paycheck were not sued as joint-obligors or joint tortfeasors. Suretec was liable to Sama 17 for $ 7,500 under Business and Professions Code section 7071.5 and 7071.6 and for 18 attorney's fees and costs. Suretec was not jointly liable to Paycheck for his failure to be 19 duly licensed as a contractor throughout the project under Business and Professions 2o Code section 7031. 21 To the extent that section 877.6 applies to this case, itallowed (but did not require) 22 Sama and Suretec to seek a determination of good faith settlement to prevent Paycheck 23 (the remaining defendant) from bringing a future claim for equitable indemnity against 24 Suretec (the settling party). Given that Paycheck owes Suretec a contractual indemnity, 26 and not an equitable indemnity, there was no reason such a motion would have been 26 filed. However, if Paycheck believes he has a cause of action for equitable indemnity against Suretec, he may proceed with a lawsuit because there was no determination of 28 "good faith settlement" under Code of Civil Procedure section 877.6. OPPOSITION TO LOUIS PAYCHECK'S MOTION FOR CREDIT FOR SETTLING SURETY 1 CONCLUSION 2 The court should deny this motion for credit for settling surety. 3 Dated: October 12, 2021 MATTHEW A. HAULK Attorneys for Defendants PUNIT K. SARNA and PU JA SARNA 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 OPPOSITION TO LOUIS PAYCHECK'S MOTION FOR CREDIT FOR SETTLING SURETY