Judge Audra Mori, Case 21STCV09299 2022-10-19 Tentative Ruling

Plaintiff TR (“Plaintiff”), a minor by and through her guardian ad litem, Niloofar Rabbani, filed this action against defendants, Encino Place, LP and Encino Place, LLC, Elevators Etc., Inc., and Elevators Etc. Gs Inc. for injuries Plaintiff sustained when her left hand became entrapped inside an escalator. The complaint alleges that Encino Place, LP and Encino Place, LLC owned the property where the incident occurred, and that Elevators Etc., Inc., and Elevators Etc. Gs Inc. were contracted to perform the necessary maintenance and service for the escalators at the property. Elevators Etc. (“Elevators”), erroneously sued as Elevators Etc., Inc., has filed a cross-complaint against Encino Place, LP, Encino Place, LLC, Niloofar Rabbani, and Kamran Rabbani. Elevators’s operative First Amended Cross-Complaint alleges causes of action for (1) express indemnity, (2) equitable indemnity, (3) negligence, (4) apportionment of fault/contribution, and (5) declaratory relief.

At this time, Encino Place, LP and Encino Place, LLC (collectively, the “Encino Defendants”) move for a determination of good faith settlement regarding a settlement entered into between Plaintiff, by and through her guardian ad litem, and the Encino Defendants. Elevators opposes the motion, and the Encino Defendants filed a reply.

In an action involving two or more joint tortfeasors or co-obligors, when one tortfeasor or obligor enters into a settlement with the plaintiff, the other tortfeasors or obligors are entitled to a hearing on the issue of whether the settlement was entered into in good faith. (Code Civ. Proc., § 877.6(a).) Where a plaintiff settles with one of several joint tortfeasors or co-obligors without releasing the others, a determination of “good faith” discharges the settling defendant from liability to the other defendants for equitable contribution or comparative indemnity. (CCP § 877(a)-(b).) The amount paid by the settling defendant reduces the claim against the others (CCP § 877(a)), but a risk of prejudice remains because an unreasonably low settlement (i.e., with the “most culpable” tortfeasor) exposes the remaining defendants to a judgment exceeding their fair share of the liability. (See Bay Development, Ltd. v. Superior Court (1990) 50 Cal. 3d 1012, 1019-1020.)

There is no precise yardstick for measuring the “good faith” of a settlement with one of several tortfeasors, but it must harmonize the public policy favoring settlements with the competing public policy favoring equitable sharing of costs among tortfeasors. (See Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499.)

“A more appropriate definition of ‘good faith,’ in keeping with the policies of American Motorcycle and the statute, would enable the trial court to inquire, among other things, whether the amount of the settlement is within the reasonable range of the settling tortfeasor's proportional share of comparative liability for the plaintiff's injuries. This is not to say that bad faith is ‘established by a showing that a settling defendant paid less than his theoretical proportionate or fair share.’ [Citation.] Such a rule would unduly discourage settlements. ‘For the damages are often speculative, and the probability of legal liability therefor is often uncertain or remote. And even where the claimant's damages are obviously great, and the liability therefor certain, a disproportionately low settlement figure is often reasonable in the case of a relatively insolvent, and uninsured, or underinsured, joint tortfeasor.’ [Citation.] Moreover, such a rule would tend to convert the pretrial settlement approval procedure into a full scale mini trial [citation].

“But these considerations do not lead to the conclusion that the amount of the settlement is irrelevant in determining good faith. Rather, the intent and policies underlying section 877.6 require that a number of factors be taken into account including a rough approximation of plaintiffs' total recovery and the settlor's proportionate liability, the amount paid in settlement, the allocation of settlement proceeds among plaintiffs, and a recognition that a settlor should pay less in settlement than he would if he were found liable after a trial. Other relevant considerations include the financial conditions and insurance policy limits of settling defendants, as well as the existence of collusion, fraud, or tortious conduct aimed to injure the interests of nonsettling defendants. [Citation.] Finally, practical considerations obviously require that the evaluation be made on the basis of information available at the time of settlement. ‘[A] defendant's settlement figure must not be grossly disproportionate to what a reasonable person, at the time of the settlement, would estimate the settling defendant's liability to be.’ [Citation.] The party asserting the lack of good faith, who has the burden of proof on that issue (§877.6(d)), should be permitted to demonstrate, if he can, that the settlement is so far ‘out of the ballpark’ in relation to these factors as to be inconsistent with the equitable objectives of the statute. Such a demonstration would establish that the proposed settlement was not a ‘settlement made in good faith’ within the terms of section 877.6.

Section 877.6 contemplates that the determination of good faith may be made by the court on the basis of affidavits (subd. (b)), and as the court observed in River Garden Farms, ‘The price levels are not as unpredictable as one might suppose. Despite the uncertainties, generalized valuation criteria are recognized by the personal injury bar, insurance claims departments and pretrial settlement courts. When testing the good faith of a settlement figure, a court may enlist the guidance of the judge's personal experience and of experts in the field. Represented by knowledgeable counsel, settlement negotiators can predict with some assurance whether a settlement is within the reasonable range permitted by the criterion of good faith. The danger that a low settlement violates the good faith clause will not impart uncertainty so long as the parties behave fairly and the courts maintain a realistic awareness of settlement imponderables.’ [Citation.]

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

(4) A recognition that a settlor should pay less in settlement than he would if he 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 nonsettling defendants.

Accordingly, if the party contesting the settlement can show, with admissible evidence, that the settlement is “so far ‘out of the ballpark’ in relation to [the above-referenced factors] as to be inconsistent with the equitable objectives of the statute,” then the court should find the settlement to be lacking in good faith. (Id. at 499-500.) If no such showing is made, the settlement should be deemed to be in good faith and the settlor is entitled to an order barring any further claims by any other joint tortfeasor or co-obligor for “equitable comparative contribution, or partial or comparative indemnity” and/or an order dismissing any such claims. (CCP §877.6(c).)

The Encino Defendants’ burden in moving for good faith determination is to prove the value of the settlement, the evidentiary basis for the value, and that it was reached in a sufficiently adversarial manner to show a reasonable valuation was reached. (Franklin Mint Co. v. Superior Court (2005) 130 Cal.App.4th 1550, 1558; see also CCP §877.6(a)(2).)

The Encino Defendants provide that they have reached a settlement with Plaintiff in the amount of $1,000,000, which represents the Encino Defendants’ full insurance policy limits. In exchange for the settlement amount, Plaintiff agreed to dismiss her complaint with prejudice against the Encino Defendants.

As to the basis for the valuation, the Encino Defendants assert they are contesting liability and that they were negligent in any manner, but they entered into the agreement to fully resolve Plaintiff’s claims. The Encino Defendants state that the incident occurred on their property when Plaintiff, who was then sixteen months old, fell while descending an escalator and her hand became trapped for several minutes. The Encino Defendants provide that they had a contract for maintenance of the escalators at their property that required Elevators examine, clean, and repair them. (Mot. Phillips Decl. Exh. 1.) The Encino Defendants aver that Elevators failed to properly maintain the escalator and had not serviced it in the four weeks before the incident, so a jury could place a portion of liability on Elevators. Further, the Encino Defendants assert that prior to filing this lawsuit, Plaintiff and the Encino Defendants attended a mediation on October 30, 2019, where although the matter did not settle, the mediator issued a Mediator’s Recommendation recommending that the Encino Defendants pay $1,000,000 to Plaintiff. Thereafter, the Encino Defendants and Plaintiff accepted the mediator’s recommendation and executed the settlement agreement on May 10, 2020. (Mot. Phillips Decl. ¶ 6 Exh. 2.) Thus, the Encino Defendants show the evidentiary basis for the value of the settlement and that it was reached in a sufficiently adversarial manner to be reasonable.

Because the Encino Defendants meet their moving burden, the burden shifts to Elevators to show the settlement was not in good faith. (CCP 877.6(d). [“The party asserting lack of good faith shall have the burden of proof on that issue.”]; see Mattco Forge, Inc. v. Arthur Young & Company (1995) 38 Cal.App.4th 1337, 1350 n. 6.)

In opposition, Elevators asserts that on September 22, 2022, Plaintiff’s counsel issued a $10,000,000 demand to Elevators, and this suggests that the Encino Defendants colluded with Plaintiff’s counsel to settle the case for the Encino Defendants’ $1,000,000 policy limits.[1] Elevators contends that the agreement sets forth a scheme whereby all parties will pursue Elevators with the common goal of reimbursing the Encino Defendants 105% of the settlement proceeds paid, not the goal of benefiting Plaintiff. Elevators argues the settlement is thus aimed at harming Elevators, who was not a party to the mediation or settlement.

In considering the first and second Tech-Bilt factors, the Encino Defendants have agreed to pay $1,000,000 to Plaintiff to settle the claims against them. The Encino Defendants contend the settlement is within the ballpark of Plaintiff’s recovery, as liability for Plaintiff’s injuries and damages are disputed and a jury may find issues with the escalator or service of it. Elevators, in opposition, asserts that based on Plaintiff’s $10,000,000 demand to Elevators, and $1,000,000 settlement with the Encino Defendants, Elevators is being allocated 91% liability for the incident, which Plaintiff valuates at $11,000,000. Elevators contends the agreement is in bad faith because the Encino Defendants have a non-delegable duty to maintain their property and ensure the escalator was safe. Elevators contends this duty is also mirrored in the maintenance contract between Encino Defendants and Elevators regarding the escalators at the Encino Defendants’ property. Elevators contends that the Encino Defendants bear most or all of the liability and that the settlement has no rational relationship to the Encino Defendants’ proportionate share of liability.

While Elevators asserts that Plaintiff made a $10,000,000 settlement demand to it recently, the settlement demand alone is not evidence of Plaintiff’s actual damages, nor does it establish that Plaintiff is entitled to damages in that amount. (See Dole Food Co., Inc. v. Superior Court (2015) 242 Cal.App.4th 894, 904 [“A plaintiff's claims for damages are not determinative in finding good faith.” (quoting West v. Superior Court (1994) 27 Cal.App.4th 1625, 1636)].) Indeed, Elevators submits no evidence of the actual value of Plaintiff’s damages. Further, in reply to Elevators’ contentions regarding the $10,000,000 demand, the Encino Defendants submit Plaintiff’s counsel’s declaration providing that on September 23, 2021, Plaintiff made a $1,000,000 policy limits demand to Elevators, but Elevators denied any liability and rejected the demand. (Reply Gravich Decl. ¶¶ 8-10.) Any argument that Plaintiff would recover $10,000,000 or more if this matter went to trial is merely speculative. (Tech-Bilt, Inc., 38 Cal.3d at 499 [“For the damages are often speculative, and the probability of legal liability therefor is often uncertain or remote.”].) Elevators provides no evidence showing that Plaintiff is entitled to, or that Plaintiff is likely to recover, substantially more in damages than the settlement amount at this time.

Concerning the Encino Defendants proportionate liability, Elevators is correct that “[a] landowner or possessor owes a duty of care to persons who come on his property as well as to persons off the property for injuries due to the landowner's lack of due care in the management of his property,” and that “[g]enerally, the duty owed by a landowner is nondelegable.” (Davert v. Larson (1985) 163 Cal.App.3d 407, 410.) However, the Encino Defendants deny liability and assert that there has been no evidence of any breach of a duty by the Encino Defendants. Additionally, as the Encino Defendants contend, if it is determined that Elevators’s lack of maintenance contributed to the incident, under the maintenance contract between the Encino Defendants and Elevators, Elevators could be found liable for the incident. (Mot. Phillips Exh. 1.) In addition, to the extent that Elevators contends that Plaintiff’s father bears liability for the incident, this would further support the Encino Defendants’ contention that they are not solely liable for the incident.

Accordingly, causation and liability are disputed in this matter, and Elevators does not establish that the Encino Defendants’ potential liability is grossly disproportionate to the settlement amount reached between Plaintiff and the Encino Defendants. Accordingly, the first and second factors balance in favor of finding a good faith settlement.[2]

As to the fourth factor, in recognizing that a settlor should pay less in settlement than if found liable after trial, settlements have been upheld as being in good faith in cases with a $25,000 settlement in a $5 million case, a $30,000 settlement in a $1 million case, a $65,000 settlement in a $7 million case, and a $50,000 settlement in a $1.425 million case. (See Cahill v. San Diego Gas & Elec. Co. (2011) 194 Cal.App.4th 939, 968 [citing Bay Development, Ltd. v. Superior Court (1990) 50 Cal.3d 1012; Wysong & Miles Co. v. Western Industrial Movers (1983) 143 Cal.App.3d 278; Wilshire Ins. Co. v. Tuff Boy Holding, Inc. (2001) 86 Cal.App.4th 627].) Other damages are speculative or uncertain at this time. And there is no evidence submitted to suggest that Plaintiff would be entitled to a substantially higher amount than the settlement if Plaintiff was completely successful on the claims. Therefore, the fourth factor balances in favor of finding a good faith settlement.

As to the fifth factor concerning the Encino Defendants’ financial condition and insurance policy limits, the Encino Defendants attest that the $1,000,000 settlement amount represents its insurance policy limits. (Mot. Phillips Decl. ¶ 5.) Moreover, as analyzed above, there is no evidence showing the settlement amount is disproportionately low. Because the settlement amount is not disproportionately low, the Encino Defendants’ financial condition is not relevant at this time. (See, L.C. Rudd & Son, Inc. v. Superior Court (1997) 52 Cal.App.4th 742, 749-50 [settling defendant’s financial condition was irrelevant where the settlement amount was not disproportionately low; disproportionately low settlement is a “threshold requirement” to finding financial condition relevant.].) The party asserting the lack of good faith of a settlement agreement, for purposes of determining the good faith of a settlement with alleged joint tortfeasors or co-obligors, has the burden of proof to demonstrate that the settlement is so far “out of the ballpark” in relation to the reasonable range of the settling tortfeasor’s proportionate share of comparative liability for the plaintiff’s injuries as to be inconsistent with the equitable objectives of the statute absolving from further liability for equitable indemnity a tort defendant who has entered into a good-faith settlement. (Nutrition Now, Inc. v. Superior Court (2003) 105 Cal.App.4th 209, 213-214.) In this case, Elevators has not shown the Encino Defendants’ settlement agreement for $1,000,000 is so far out of the ballpark in relation to its proportionate share of Plaintiff’s claimed damages. Given the evidence presented, there is no showing that the settlement amount is disproportionately low. The fifth factor, thus, balances in favor of finding a good faith settlement.

As to the sixth factor relating to the existence of collusion, fraud or tortious conduct aimed to injure the interests of the non-settling defendants, Elevators asserts that the Encino Defendants attended the mediation with Plaintiff without elevators. In reply to Elevators’ contention, the Encino Defendants submit evidence showing that they and Plaintiff invited Elevators to participate in the mediation, but Elevators declined to do so. (Reply Phillips Decl. ¶ 2, Gravich Decl. ¶ 7.) The fact that the Encino Defendants and Plaintiff entered into the settlement agreement based on the mediator’s recommendation following mediation suggests the settlement was reached in an adversarial manner. There is otherwise no evidence suggesting that the mediation or the mediator’s recommendation involved any collusion, fraud, or conduct aimed at injuring Elevator’s interests.

Elevators further contends that the settlement agreement contains terms that reimburse the Encino Defendants’ insurance carrier for 105% of its settlement payment to the detriment of Elevators. Elevators points to the following terms in the settlement agreement:

In the event Encino Place or Insurer pursues remedies against others, Tiffany, Kamron and Niloofar Rabbani agree to cooperate with Encino Place, LP and Insurer, and to provide Encino Place and Insurer documents, testimony and/or declarations as reasonably requested.

In consideration of the payments herein, Insurer and Encino Place and Rabbani agree that Truck and Encino Place will assign their rights to Rabbani to assert claims against Elevators Etc. or any related entity, with the following distribution of any recovery:

Net of attorney's fees and costs which shall be based off of the global recovery other than the settlement between and Rabbani on one hand and Encino Place and Truck on the other hand, Rabbani agrees to pay Truck from any recovery:

• Thereafter, and less the first $50,000.00 which shall be construed as a credit:

> Insurer will receive 20% of any amounts in excess of $750,000 until it has received a

The Encino Defendants, in reply, contend this provision was inserted because Elevators insists it has no liability for the incident and that it has no indemnity obligation to the Encino Defendants. The Encino Defendants assert this provision is merely an attempt to recover in part on Elevators’s indemnity obligation per the maintenance contract should Elevators be found liable. The Encino Defendants argue they are not getting a windfall as Elevators refused the Encino Defendants’ tender and the Encino Defendants’ carrier has funded the entire litigation.

The maintenance contract between the Encino Defendants and Elevators contains an indemnity provision that states: “[Elevators] will indemnify and hold you harmless for losses due to personal injury or property damage to the extent caused by our negligent acts or omissions during the performance of the work, but not to the extent caused by others. [The Encino Defendants] agree to indemnify as under the same terms and conditions.” (Mot. Phillips Decl. Exh. 1 at p. 4.) The above terms therefore assign the Encino Defendants’ indemnification rights against Elevators to Plaintiff. If Elevators is found liable for such claims, Plaintiff agrees to pay a portion to the Encino Defendants’ carrier. Consequently, the terms concern the Encino Defendants’ indemnification rights; there is no showing they are intended to make Elevators pay more than its fair share. Nor is the settlement amount so low as to establish it is aimed at injuring Elevators. Elevators does not show collusion, fraud or tortious conduct between Plaintiff and the Encino Defendants. Accordingly, the sixth factor balances in favor of finding a good faith settlement.

The Encino Defendants’ motion for determination of good faith settlement between Plaintiff and the Encino Defendants is granted. Pursuant to CCP § 877.6(c), any further claims for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault are barred against the Encino Defendants.

Hon. Audra Mori

Judge of the Superior Court

[1] The Court notes that no party has objected to any of the alleged settlement communications referenced in the briefs or evidence submitted with the papers.

[2] Because there are not multiple plaintiffs in this action, and the settlement proceeds are being distributed to Plaintiff only, the third factor regarding allocation of settlement proceeds is not relevant to this analysis.