Judge Audra Mori, Case BC689021 2022-09-06 Tentative Ruling

Plaintiff Oliver Szakall (“Szakall”) filed this action against Defendants Frankie Munoz (“Munoz”), KAM’s Automotive, Inc. (“KAM’s Automotive”), Brent McNamee (“McNamee”), and United Recovery, Inc. (“United Recovery”) for damages arising from a motor vehicle accident. On April 30, 2019, this matter was consolidated with Case No. 17STLC00906, which concerned an action filed by the passenger in Plaintiff’s vehicle, Abel Vasquez (“Vasquez”), at the time of the subject accident.

At this time, KAM’s Automotive moves for determination of good faith settlement providing that KAM’s Automotive has entered into a settlement with Szakall. KAM’s Automotive provides that Szakall has agreed to dismiss his claims against KAM’s Automotive, with prejudice, in exchange for a waiver of costs. Defendants McNamee and United Recovery oppose the motion, and KAM’s Automotive filed a reply.

This matter was initially set for hearing on June 2, 2022, where it was continued to August 4, 2022, for McNamee and United Recovery to conduct additional discovery to evaluate KAM’s Automotive’s potential liability. However, after no notice was filed concerning the continued hearing date as had been ordered, the matter was again continued to September 6, 2022, and McNamee and United Recovery were ordered to file any supplemental opposition at least nine court days before the continued hearing date. KAM’s Automotive has now filed notice of the continuance and proof of service on all parties.

Any supplemental opposition was due by August 23, 2022. As of September 1, 2022, none has been filed.

KAM’s Automotive asserts there is no potential for a finding of liability against KAM’s Automotive because Szakall’s allegations are premised on the theory that KAM’s Automotive either owned the vehicle Munoz was driving at the time of the accident, or that KAM’s Automotive was Munoz’s employer. KAM’s Automotive contends, however, that it sold the subject vehicle six months before the accident, and that it did not have any relationship with Munoz at the time of the accident. KAM’s Automotive contends the evidence shows it is not a proper defendant in this matter, which Szakall has acknowledged.

In opposition, McNamee and United Recovery argue that KAM’s Automotive does not establish that Munoz was not acting as KAM’s Automotive’s agent or contractor at the time of the accident. McNamee and United Recovery contend that this evidence is critical to the claims in the matter, as McNamee claims that Munoz negligently struck his vehicle and caused McNamee to collide with Plaintiff’s vehicle.

In reply, KAM’s Automotive contends that McNamee and United Recovery fail to meet their burden to show that the settlement was not entered into in good faith. KAM’s Automotive argues that McNamee’s and United Recovery’s arguments concerning other purported theories of liability against KAM’s Automotive are purely speculative.

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).) Additionally, “[w]hen 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.” (Tech-Bilt, 38 Cal.3d at 500.)

KAM’s Automotive’s burden in moving for good faith determination is to prove there has been a settlement. (See Franklin Mint Co. v. Superior Court (2005) 130 Cal.App.4th 1550, 1558; see also Mattco Forge, Inc. v. Arthur Young & Company (1995) 38 Cal.App.4th 1337, 1350 n. 6.) KAM’s Automotive provides it has reached a settlement with Szakall, wherein Szakall has agreed to dismiss his claims against KAM’s Automotive, with prejudice, in exchange for a waiver of costs. Because KAM’s Automotive meets its moving burden, the burden shifts to McNamee and United Recovery to show the settlement was not in good faith. (Mattco, 38 Cal.App.4th at 1350 n.6; CCP 877.6. [“The party asserting lack of good faith shall have the burden of proof on that issue.”].)

McNamee and United Recovery, in opposition, primarily argue they did not have an opportunity to obtain discovery to assess KAM’s Automotive’s potential liability for Plaintiff’s damages. McNamee and United Recovery requested a continuance to allow them to obtain the necessary information. Based on their request, the motion was continued to allow McNamee and United Recovery to conduct further discovery. Despite this matter being continued twice since the original hearing date of June 2, 2022, McNamee and United Recovery filed no further supplemental opposition to the motion.

In considering the factors discussed in Tech-Bilt, the Court notes Szakall has agreed to dismiss his claims against KAM’s Automotive in exchange for a waiver of costs. KAM’s Automotive asserts that Szakall’s claims against it are premised on the theory that KAM’s Automotive either owned Munoz’s vehicle or employed Munoz at the time of the accident. KAM’s Automotive avers that it did not have any relationship with Munoz or own the subject vehicle, and that it produced documents supporting the fact that it is not a proper defendant in this matter, which Szakall believed was sufficient to establish that KAM’s Automotive had no liability for the accident. There is no evidence submitted by any party suggesting that KAM’s Automotive is liable for the accident in light of these representations, and thus, there is no basis for finding KAM’s Automotive’s potential liability for the accident is grossly disproportionate to any other defendants’ liability. (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.”].). Accordingly, the first and second factors balance in favor of finding a good faith settlement.

As to the fourth factor,[1] in recognizing that a settlor should pay less in settlement than if found liable after trial, the only evidence submitted at this time shows that KAM’s Automotive does not bear any responsibility for the subject accident. (Mot. Exh. A Lopez Decl. ¶¶ 3-4.) Furthermore, regarding the fifth factor, as analyzed above, there is no evidence showing the settlement amount is disproportionately low. Because the settlement amount is not disproportionately low, KAM’s Automotive’s 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.) 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, McNamee and United Recovery do not show KAM’s Automotive settlement agreement for a waiver of costs in exchange for a dismissal with prejudice is so far out of the ballpark in relation to its proportionate share of Szakall’s claimed damages. Therefore, the fourth and fifth factors balance in favor of finding a good faith settlement.

As to the sixth factor, the Court does not find, based on the evidence presented, the settlement is so low such as to establish that it is aimed at making the non-settling defendants pay more than their fair share. Additionally, there is no evidence or argument made to show collusion, fraud or tortious conduct between KAM’s Automotive and Szakall. Consequently, the sixth factor balances in favor of finding a good faith settlement.

Based on the foregoing, KAM’s Automotive’s settlement with Szakall appears reasonable. There is not sufficient evidence showing otherwise

Defendant KAM’s Automotive’s application for good faith determination pursuant to CCP § 877.6 is granted.

Hon. Audra Mori

Judge of the Superior Court

[1] The third factor, allocation of settlement proceeds among defendants, is not in play in this instance.