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Marion v. 396 Investment Co.5/17/2005
ded damages in the amount of the full market value of the residence, he would receive a windfall of $110,000 over the amount of the damage he sustained." (Ibid.)
In response to the homeowner's argument that the collateral source rule should be applied for a contrary result, the court in Smith, supra, 214 Cal.App.3d 266 responded that the homeowner "cite no authority for the proposition that the collateral source rule applies in an action for inverse condemnation." (Id. at p. 292.) The same holds true here. In their respective respondent's briefs, the affected homeowners have not explained why the collateral source rule should apply. Rather, they argue that the rule of Smith, supra, 214 Cal.App.3d at page 292 should not apply because in that case, the lender did not give a discount, but simply cancelled the entire debt without receipt of any payment at all. We do not see that as a distinction with merit. Whether the lender cancelled the debt with no payment at all (a 100 percent discount, so to speak) or on receipt of only partial payment, the issue is the same: Should the plaintiff be able to recover real property losses exceeding the amount of his or her equity in the property? The court in Smith, supra, 214 Cal.App.3d at page 292 answered that question in the negative and the reasoning of that case is sound.
The only other argument that the affected homeowners make is that the offset to which Anaheim is entitled is defined by Code of Civil Procedure section 877 and thereby limited to the amount that 396 actually paid for the cancellation of the mortgage debt. Code of Civil Procedure section 877 provides in pertinent part: "Where a release, dismissal with or without prejudice, or a covenant not to sue or not to enforce judgment is given in good faith before verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the same tort, or to one or more other co-obligors mutually subject to contribution rights, it shall have the following effect: [ ] (a) It shall not discharge any other such party from liability unless its terms so provide, but it shall reduce the claims against the others in the amount stipulated by the release, the dismissal or the covenant, or in the amount of the consideration paid for it whichever is the greater."
The affected homeowners have not explained why this provision should be interpreted in the manner they suggest. It is one thing to say that the amounts 396 paid on the mortgages should reduce the claims against Anaheim and another thing to say that the claims against Anaheim should properly include amounts exceeding the amounts of equity in the respective properties. The affected homeowners cite no case interpreting Code of Civil Procedure section 877 the way they do.
We apply the rule enunciated in Smith, supra, 214 Cal.App.3d 266. The trial court erred in applying offsets in the amounts of the payments 396 paid for the cancellation of the respective mortgages, as opposed to the full amounts owing under those mortgages at the time of the cancellation. We shall address the particular offsets pertaining to the respective judgments in turn.
(b) Beyer Judgment
Anaheim claims that the judgment in favor of the Beyers contains an erroneous offset. The October 2, 2002 judgment provides a verdict, states that the court made findings pertaining to offsets on July 3, 2002, and then provides a final damages award. The judgment itself does not articulate the amount of the offset, and our review of the record indicates that the court itself did not, on July 3, 2002, articulate an offset amount with respect to the Beyers. Furthermore, the reporter's transcript of the July 3, 2002 hearing indicates tha
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