Case Number: 19STCV29010    Hearing Date: March 9, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Plainitff/Cross-Defendant Abraham Lopez brought this action to sue various former employer Defendants, including Legion Builders, Inc. and Oscar Davila, pursuant to claims of qui tam retaliation, FEHA and Labor Code violations, wrongful termination, unfair business practices, and various torts of or against Mr. Lopez.

Mr. Lopez and Defendants Legion Builders, Inc. and Oscar Davila now come before the Court, seeking approval of a Joint Motion for Determination of Good Faith Settlement between these parties. No other party to this action—by way of complaint or cross-complaint—has opposed the motion.

Motion for Determination of Good Faith Settlement

Legal Standard

Any party to an action in which it is alleged that two or more parties are joint tortfeasors or co-obligors on a contract debt is 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. (Code Civ. Proc., § 877.6, subd. (a)(1).)

In the alternative, a settling party may give notice of settlement to all parties and to the court, together with an application for determination of good faith settlement and a proposed order. (Code Civ. Proc., § 877.6, subd. (a)(2).) The application shall indicate the settling parties, and the basis, terms, and amount of the settlement. (Code Civ. Proc., § 877.6, subd. (a)(2).) The notice, application, and proposed order shall be given by certified mail, return receipt requested, or by personal service, with proof of service to be filed with the court. (Code Civ. Proc., § 877.6, subd. (a)(2).) Within 25 days of the mailing of the notice, application, and proposed order, or within 20 days of personal service, a nonsettling party may file a notice of motion to contest the good faith of the settlement. (Code Civ. Proc., § 877.6, subd. (a)(2).) If none of the nonsettling parties files a motion within 25 days of mailing of the notice, application, and proposed order, or within 20 days of personal service, the court may approve the settlement. (Code Civ. Proc., § 877.6, subd. (a)(2).) This subsection does not apply to settlements in which a confidentiality agreement has been entered into regarding the case or the terms of the settlement. (Code Civ. Proc., § 877.6, subd. (a)(2).)

The issue of the good faith of a settlement may be determined by the court on the basis of affidavits served with the notice of hearing, and any counter affidavits filed in response, or the court may, in its discretion, receive other evidence at the hearing. (Code Civ. Proc., § 877.6, subd. (b).)

A party asserting lack of good faith in settlement has the burden of proving lack of good faith. (Code Civ. Proc., § 877.6, subd. (d).) The objecting party may carry its burden by demonstrating that the settlement is so far “out of the ballpark” in relation to various factors, including:

(1) A rough approximation of plaintiff’s total recovery and the settlor’s proportionate liability;

(2) The amount paid in settlement;

(3) The allocation of settlement proceeds among plaintiffs;

(4) A recognition that a settlor should pay less in settlement than it would if it were found liable after a trial;

(5) The financial conditions and insurance policy limits of settling defendants; and

(6) The existence of collusion, fraud, or tortious conduct aimed to injure the interests of the non-settling defendants.

(Tech-Bilt, Inc. v. Woodward-Clyde & Assocs. (1985) 38 Cal.3d 488, 499-500.)

A determination by the court that the settlement was made in good faith shall bar any other joint tortfeasor or co-obligor from any further claims against the settling tortfeasor or co-obligor for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault. (Code Civ. Proc., § 877.6, subd. (c).)

Analysis

Abraham Lopez on the one hand and Legion Builders, Inc. and Oscar Davila on the other (the settling parties), bring this application for determination of good faith settlement as served on all interest parties. (Mot., 1:3-6, Proof of Service.)

The Court notes the following irregularities relating to the proof of service.

The proof of service for the motion shows service on all defendants in the complaint minus Defendants (1) Aardvark, (2) RS Gardena, (3) Montoya’s Truck Rental, and (4) Alexander Construction & Clean-Up.

The proof of service also does not show Avitus, Inc., Real Ventures Ltd., and Barrett Business Services, Inc., but these parties were respectively dismissed from this case on 1/27/22, 5/21/21, and 3/6/21.

Aardvark and RS Gardena were served with the original Complaint in this action on 9/24/19 by substituted service and do not appear to have participated in the action at all.

Montoya Truck Rental and Alexander Construction & Clean-Up, however, have been participating in this action, most recently at the 3/3/23 hearing on the motions for initial discovery. On the other hand, eCourt lists Montoya Truck Rental and Alexander Construction & Clean-Up’s counsel as Luis Valencia, who was served with a copy of this motion in his role as counsel for Alexander Demolition & Hauling, Alexander Construction & Engineering, and Felipe Davila.  This motion was mentioned on the record at that hearing and Mr. Valencia was advised it was on calendar.

Given that Aardvark and RS Gardena do not appear to have participated in this action since being served and given that Montoya Truck Rental and Alexander Construction & Clean-Up’s counsel was one of the attorneys listed on the Proof of Service for this motion, it appears that service of this motion on all interested parties was accomplished as required by Code of Civil Procedure section 877.6, subdivision (a)(2), if not properly reflected on the proof of service itself.

The application identifies the settling parties and terms of settlement, providing in relevant part that the settlement is between Plaintiff and Legion Builders and Oscar Davila, for a payment of $36,000 from Legion and Davila to Abraham Lopez over a period of 24 months, with settlement contingent the granting of this motion, payment of the settlement funds, and dismissal thereafter. (Mot., 5:4-28.)

As noted by the settling parties’ motion, this request is unopposed by the nonsettling parties in this action. (Mot., 7:3-17; see docket generally.)

The settling parties also argue that their agreement satisfies the Tech-Bilt factors, explaining that:

The portion of Defendants Legion and Oscar Davila’s liability “is minimal simply because Plaintiff was only employed by Legion Builders for a short period, [in contrast to his employment with] all other Defendants,” with employment for Legion lasting “a few weeks” compared to “over 6 years” of relevant employment alleged in the FAC (Mot., 9:14-17);

The settling parties have disclosed the settlement amount of $36,000 to be paid out over 24 months (Mot., 9:20-22);

As there is only one plaintiff in the FAC for this action, “the allocation of the entire amount in settlement to Plaintiff is reasonable” (Mot., 10:2-4);

Legion and Oscar Davila pay less in settlement that if they were found liable at trial because “[e]ven assuming liability, the verdict range at trials is never an exact science, and the total verdict al located to the Legion Defendants might be in the range of the settlement amount, less than the settlement amount, or more than the settlement amount,” for which reason “it cannot be said that the settlement does not represent a fair amount in relation to any potential proportionate liability” (Mot., 10:9-16);

Legion and Oscar Davila have “serious financial limits” “such that they would not be able to pay a large verdict” and have “no insurance to cover the[] [plaintiff’s] claims” (Mot., 10:24-27); and

“There is absolutely no evidence of collusion or lack of good faith” where “the “settlement [was an] agreement negotiated by adverse parties, who were all separately represented, and is entirely in good faith” and where “there is absolutely no evidence that the settlement by the Legion Defendants [i.e., Legion Builders and Oscar Davila] will unduly harm the interests of the non-settling defendants or that the Legion Defendants sought to harm the non-settling defendants” (Mot., 11:10-18).

The Court is satisfied with this briefing—which is unopposed by the nonsettling parties—and therefore GRANTS this motion.

Conclusion

Plainitff/Cross-Defendant Abraham Lopez and Defendants Legion Builders, Inc. and Oscar Davila’s Joint Motion for Determination of Good Faith Settlement is GRANTED because the application for settlement satisfies the requirements of Code of Civil Procedure section 877.6, as well as the factors established in Tech-Bilt, Inc. v. Woodward-Clyde & Assocs. (1985) 38 Cal.3d 488.