Wrongful death in hotel room. $5 million settlement after bench verdict. Los Angeles County.

Summary

Man dies in hotel room from carbon monoxide poisoning; faulty pool heater blamed.

The Case

Case Name: Ruf v. Palm Canyon Hotels, Inc.
Court and Case Number: Los Angeles Superior / BC539849
Date of Verdict or Judgment: Monday, March 06, 2017
Date Action was Filed: Tuesday, March 18, 2014
Type of Case: Wrongful Death
Judge or Arbitrator(s): Hon. Donna Fields Goldstein
Plaintiffs:
Walter Ruf, father of decedent.
Patricia Ruf, mother of decedent.
Tina Haas, as Personal Representative of the Estate of Mark Walter Ruf
Defendants:
Palm Canyon Hotels, Inc.
Allen Yadgari
Jilla Moaddel
Type of Result: Settlement at Trial

The Result

Settlement Amount: $5,020,647.78 at trial plus prior $1M settlement (Kash Construction and Management, Inc., a contractor, was a co-defendant that settled pre-trial for $1,000,000.)
Non-Economic Damages:
$5,020,647.78
Trial or Arbitration Time: 1 week.

The Attorneys

Attorney for the Plaintiff:
Panish Shea & Boyle LLP by Brian Panish and Peter Kaufman, Los Angeles.
Attorney for the Defendant:
Cannon & Nelms, P.C. by Anthony Cannon and Shanna Burkholder, Anaheim.

Facts and Background

Facts and Background:
On November 13, 2013, plaintiffs' decedent, Mark Walter Ruf, was found dead in room 276 of the Curve Palm Springs Hotel & Resort. The Curve was operated by Defendant Palm Canyon Hotels, Inc.

The Riverside County Sheriff – Coroner Division attributed Mr. Ruf's death to carbon monoxide (CO) toxicity. An investigation by the Palm Springs Police and Fire Departments revealed that a pool heater, located in a mechanical room directly below room 276, was the source of the CO.

Palm Canyon Hotels, Inc., hired an unlicensed, uncertified handyman to remove the existing heater and to install the used heater. PCH failed to obtain permits for this project (permits are required for the removal and installation of water heaters), or to have the heater inspected (which is required for a used appliance).

Before Mr. Ruf checked into the Curve, defendants knew there was something wrong with the pool heater. In October 2013, the hotel’s maintenance supervisor observed that the heater was malfunctioning. During this same time period, the hotel's general manager observed a gas leak near the heater. The general manager ordered the heater turned off and contacted the handyman to determine if the heater required repairs. The handyman was unavailable to service the heater, and sent his son instead, who similarly lacks any license or certification relevant to gas water heaters. The defendants subsequently turned the heater back on, and it remained in operation until the time of Mr. Ruf’s death.

Between November 3 and November 11, the day Mr. Ruf checked in, no fewer than five guests became ill while in room 276. One guest was injured severely enough to require treatment at the hotel by emergency medical personnel, before being transported by an ambulance to a local hospital. All (or "some" per defense counsel) of the guests who became ill attributed their symptoms to CO, and reported these concerns to the management and staff of the hotel. Notwithstanding these complaints, defendants took no action to investigate the complaints, or to remove, or repair, the heater. Despite undeniable knowledge that the pool heater was causing an accumulation of poisonous CO gas in room 276, and that this dangerous condition was injuring guests, the defendants continued to rent the room to other guests.

Mr. Ruf checked in to room 276 on November 11, 2013, and was found dead in the room on November 13.
Plaintiff's Contentions:
Plaintiffs contended that defendants were negligent in the operation of the Curve Hotel and that this negligence caused the death of Mark Walter Ruf. Plaintiffs further contended that the shareholders of Palm Canyon Hotels, Inc., were the alter egos of the corporation and, as such, personally liable for the debts of the company, including any verdict.

As to alter ego claim: The sole purpose of Palm Canyon Hotels, Inc., was to operate the Curve Hotel. The entire time PCH operated the Curve, the shareholders failed to appropriately capitalize the corporation, commingled their funds with the corporation's, misappropriated the corporation's funds and used the corporation's assets as their own. The corporation suffered persistent capital shortfalls. As a consequence of these shortfalls, PCH routinely lacked sufficient funds to cover expenses.

Palm Canyon Hotels, Inc., purchased the pool heater at issue used, from an ad on Craigslist, in February 2013.

Before Mr. Ruf checked into the Curve, and was assigned to room 276, defendants knew the heater was causing a dangerous accumulation of CO in room 276.
Defendant's Contentions:
Defendants contended that the shareholders were not personally liable because the corporation was properly run and capitalized.

PCH did not purchase the pool heater at issue from an ad on Craigslist, the pool heater was located via an ad but was purchased at a pool supply shop that had placed the ad on Craigslist.

Two of the defendants, Allen Yadgari and Robert Kashefi, were expressly found not to have had knowledge of the CO leak.

Demands and Offers

Plaintiff Final Demand before Trial: $5,000,000, ($10,000,000 per defense counsel).
Defendant Final Offer before Trial: $1,000,000

Additional Notes

The case was trifurcated for trial. The first issue was whether the shareholders of the defendant corporation were the alter ego of the corporation. That issue was tried before Judge Goldstein for a week and the verdict was for the plaintiffs; all shareholders were found to be the alter egos, meaning they would be liable for any verdict.

Per defense counsel:

In Judge Goldstein's rulings on their motions for summary adjudication of the punitive damages claims, two of the defendants, Allen Yadgari and Robert Kashefi, were expressly found not to have had knowledge of the CO leak. Their motions were granted.

Further, there was conflicting evidence regarding whether two of the guests who purportedly became ill ever advised PCH that they thought it was because of CO.

Defendants included Kashe Investments, LLC and Vertigo Investments, LLC, both of which were dismissed with prejudice after demurrers were filed in response to the third amended complaint. Kash Construction and Management, Inc., a contractor, was a co-defendant that settled pre-trial for $1,000,000.

The settlement demand leading up to trial was $26,000,000, reduced to $10,000,000.