Judge Audra Mori, Case 21STCV46427 2023-02-27 Tentative Ruling

Plaintiffs Zhen Zhou (“Zhou”) and Wei Zhang (“Zhang”) (collectively, “Plaintiffs”) filed this action against Defendants Tingting You (“You”), the Cheng Living Trust Dated April 16, 1991 (“Cheng”), and EAN Holdings, LLC, dba Enterprise Rent-A-Car Company (“EAN Holdings”) for damages relating to the alleged wrongful death of Plaintiffs’ minor child, Sarah Zhou (“Decedent”). Plaintiffs allege that they were tenants at the same condominium property, and that on August 18, 2021, after Zhang and You returned from a shopping trip together, You parked her vehicle in the driveway of a condominium unit at the project. You took Decedent and Decedent’s sister out of the vehicle. You then got into her car, drove out of the driveway fast, and did not see that Decedent walked behind You’s vehicle. You ran over Decedent, and Decedent died instantly. Plaintiffs allege that EAN Holdings negligently entrusted the vehicle You was operating to You. Further, Plaintiffs allege that Cheng, as the owner of the property, failed to maintain the property in a safe and risk-free condition. The complaint alleges cause of action for (1) negligence in operating the vehicle against You, (2) negligence against Cheng, (3) negligent entrustment against EAN Holdings, and (4) wrongful death against all defendants.

At this time, Plaintiffs move under CCP § 877.6 for a determination that a settlement entered into between Zhou, Zhang,[1] and Laura Zhou (“Laura”), who was Decedent’s sister, and You, Li Xi, Allstate Northbrook Indemnity Company, Rental Claims Services, Inc., Enterprise Rent-A-Car Company of Los Angeles LLC, EAN Holdings LLC, and Straus Meyers LLP (collectively, the “settling parties”) was made in good faith.[2] Defendant Cheng opposes the motion, and Plaintiffs filed a reply.

Cheng, with its opposition, submits two objections to Plaintiffs’ counsel’s declaration filed with the motion. Objections 1-2 are overruled.

Any settling party in an action where it is alleged that two or more parties are joint tortfeasors can apply for a determination of good faith settlement. (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).)

Plaintiffs provide that on or about August 26, 2022, Plaintiffs Zhou and Zhang, along with non-party Decedent’s sister, Laura, entered into a settlement with You, Li Xi, EAN Holdings, Enterprise Rent-A-Car of Los Angeles, Allstate Northbrook Indemnity Company, Rental Claims Services Inc., and Straus Meyers LLP. The settlement provides that in consideration for the payment of $550,000 to Plaintiffs, and a portion thereof to be paid to Laura, Plaintiffs discharge and release “Defendants” from all claims relating to Decedent’s death. (Mot. Luan Decl. ¶ 4.) Of the $550,000, $300,000 is to be paid by Enterprise Rent-A-Car and $250,000 is to be paid by Allstate Northbrook Indemnity Company. (Id.)

Plaintiffs’ 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 only evidence submitted with the motion is Plaintiffs’ counsel’s declaration. Plaintiffs’ counsel states the terms of the settlement and provides that Plaintiffs’ counsel “have done a due diligent investigation of the assets of the driver, Tingting You, and found no real estate and business assets.” (Mot. Luan Decl. ¶¶ 4, 5.) Plaintiffs’ counsel states that it is believed that You’s only income is her salary as a licensed esthetician, so the insurance coverage is the only source of financial compensation to Plaintiffs. (Id. at 5.)

As Cheng argues in opposition, Plaintiffs do not submit competent evidence on several of the Tech-Bilt factors. Plaintiffs provide no evidence of the total insurance coverage available to You. Plaintiffs provide no evidence regarding the financial condition or insurance coverage of any of the settling parties other than You. Moreover, the motion does not address Plaintiffs’ total recovery and the settling parties’ proportionate liability. While Plaintiffs contend in their reply that there is no need to proportion liability, this is a critical error. “A determination as to the good faith of a settlement, within the meaning of section 877.6, necessarily requires the trial court to examine and weigh a number of relevant factors, one of the most important of which is the settling party's proportionate liability. In making such examination, the court must look at the state of the evidence as it exists at the time the motion for a good faith determination is heard. If, …, there is no substantial evidence to support a critical assumption as to the nature and extent of a settling defendant's liability, then a determination of good faith based upon such assumption is an abuse of discretion.” (Toyota Motor Sales U.S.A., Inc. v Superior Court (1990) 220 Cal.App.3d 864, 871.) “Section 877.6 and Tech–Bilt require an evidentiary showing … that the proposed settlement is within the reasonable range permitted by the criterion of good faith.” (Mattco Forge, Inc. v Arthur Young & Co. (1995) 38 Cal.App.4th 1337, 1351.) Plaintiffs offer nothing upon which the court can determine that the settlement is within the ballpark of the settling parties' proportionate liability.[3]

Furthermore, Plaintiffs’ counsel states that a portion of the $550,000 settlement is to be paid to Decedent’s sister, Laura, but no information is provided with the motion or reply specifying what the allocation of the settlement proceeds is to be between Plaintiffs and Laura. Plaintiffs also argue that there is no evidence of fraud or collusion showing the settlement was entered into to injure Cheng. However, Plaintiffs provide no information regarding how the settlement was negotiated or reached.

Plaintiffs have not provided sufficient evidence for the Court to determine whether this settlement has been reached in good faith or whether it exposes the remaining defendants to a judgment exceeding their fair share of the liability. Based on the foregoing, Plaintiffs’ motion for determination of good faith settlement is denied without prejudice.

Hon. Audra Mori

Judge of the Superior Court

[1] The Notice of Motion identifies one of the settling Plaintiffs as “Wei Fang.” However, there is no plaintiff by the name of Wei Fang in this action. Rather, it appears this may be a mistake and Plaintiffs meant to refer to plaintiff Wei Zhang.

[2] Li Xi, who Plaintiffs state is You’s husband, Allstate Northbrook Indemnity Company, Rental Claims Services, Inc., Enterprise Rent-A-Car Company of Los Angeles LLC, and Straus Meyers LLP are not parties in this action.

[3] Plaintiffs imply that among the settling parties, which consist of ”insurers, attorney, car rental company, or the relatives of the parties,” “the proportion of liability on the side of Defendants was 100% on Defendant Tingting You.” (Reply at p. 6:11-12.) This neither addresses the first Tech Bilt factor, “A rough approximation of plaintiff’s total recovery and the settlor’s proportionate liability,” nor explains the reasons for the other settling parties’ payments.