Judge Bruce G. Iwasaki, Case Number: 22STCV23623, Date: 2024-07-18 Tentative Ruling

Case Name: Sanaz Afsar, et al. v. Bunker Hill Tower Condominium Association, et al.

Tentative Ruling: Defendant Pacific Water Tank Services, Inc.’s Motion for Determination of Good Faith Settlement is GRANTED. Defendant’s Motion to Seal is also GRANTED.

Plaintiff owns Unit 2301 in the Bunker Hill Tower high-rise in downtown Los Angeles. Plaintiff alleges that on April 13, 2022, Defendants Bunker Hill Tower Condominium Association (“BHTCA”) and Pacific Water Tank Services Inc. (“PWTS”) discharged 2000 or more gallons of dirty water directly into Plaintiff’s unit, causing extensive property damage.

On July 21, 2022, Plaintiff filed a complaint against BHTCA and PWTS for (1) negligence and (2) trespass.

On October 14, 2022, Defendant BHTCA filed a cross-complaint against Plaintiff, Saied Kashani, PWTS, VNH Enterprises, Inc. alleging (1) breach of contract; (2) negligence; (3) equitable indemnity; (4) apportionment and/or contribution; (5) declaratory relief and (6) declaratory relief. BHTCA dismissed Plaintiff and Saied Kashani from its cross-complaint on Jun 29, 2023.

On November 30, 2022, Defendant PWTS filed a cross-complaint against BHTC and VNH Enterprises, Inc. alleging (1) equitable indemnity; (2) contribution; (3) apportionment; and (4) declaratory relief.

This is the motion by PWTS for determination of good faith settlement, and also a motion to seal the settlement documents by the settlement amount. The motions are unopposed.

Code of Civil Procedure section 877.6 states, in pertinent part: “(a) Any party to an action wherein it is alleged that two or more parties are joint tortfeasors shall be entitled to a hearing on the issue of good faith or a settlement entered into by the plaintiff or other claimant and one or more alleged tortfeasors . . . [para.] (c) A determination by the court that the settlement was made in good faith shall bar any other joint tortfeasors from any further claims against the settling tortfeasors for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault. [para.] (d) The party asserting the lack of good faith shall have the burden of proof on that issue.”

In determining whether a settlement is in good faith, our Supreme Court stated that the trial court should inquire into, 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.” (Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499.)

The intent and policies underlying section 877.6 require that a number of facts be taken into account (i.e. the Tech-Bilt 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 defendants; (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 interest of the nonsettling defendants. 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.

The party asserting the lack of good faith has the burden of proof. (Code Civ. Proc., §877.6, subd. (d).) The party asserting lack of good faith should 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 objective of section 877.6. (Tech-Bilt at pp. 500-501.) A determination that the settlement was in good faith would “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).) Any existing cross-complaints for such claims would be subject to dismissal.

While an unopposed application for good faith settlement may be granted on bare bones facts, an opposed application requires the Court to consider the settlement based on the Tech-Bilt factors. (City of Grand Terrace (1987) 192 Cal.App.3d 1251, 1261.) This requires the settlor to provide the Court with “sufficient evidentiary basis to enable the court to consider and evaluate the various aspects of the settlement.” (Id. at p. 1263.) “Because Tech-Bilt mandates a rough approximation of the settling defendant's proportionate liability and consideration of all other defendants' proportionate liability and consideration of all other factors that might affect the fairness of the settlement as respects non-settling defendants, the affidavits, declarations or other evidence should provide the court with the facts necessary to evaluate the settlement in terms of the factors contemplated by Tech-Bilt. Without the facts, in a contested hearing, it is impossible for a court to exercise its discretion in an appropriate fashion.” (Ibid.)

In consideration for a release of the settling parties by each of the settlement parties, and a dismissal of the action against PWTS, PWTS will pay Plaintiff a sum in settlement.[1] The settlement will result in dismissal of Plaintiff’s complaint and BHTCA and Seabreeze Management Company, Inc’s cross-complaint against PWTS.

3. Rough Approximation of Plaintiff’s Total Recovery and Settlors’ Proportionate Liability:

Substantial evidence (e.g., factual declarations) showing the nature and extent of the settling defendant's liability is required for a good-faith determination. Without such evidence, a “good faith” determination is an abuse of discretion. (Mattco Forge, Inc. v. Arthur Young & Co. (1995) 38 Cal.App.4th 1337, 1348 (“questionable assumptions” in moving party's memorandum of points and authorities insufficient to show settlement was reasonable); Greshko v. County of Los Angeles (1987) 194 Cal.App.3d 822, 834 (attorney's declaration re settling defendant's liability insufficient where he failed to provide specific supporting facts or expert opinion). The ultimate determinant of good faith is whether the settlement is grossly disproportionate to what a reasonable person at the time of settlement would estimate the settlor's liability to be. (City of Grand Terrace vs. Superior Court (1987) 192 Cal App.3d 1251, 1262.)

“When a trial court considers the good faith of a settlement, it must determine each tortfeasor's proportionate share of liability. The trial court's good faith determination must also take into account the settling tortfeasor's potential liability for indemnity to a cotortfeasor, as well as the settling tortfeasor's potential liability to the plaintiff. In so doing, a trial court must consider each of the plaintiff's claims and possible recoveries and the potential liability of the joint tortfeasors.” (Cal-Jones Properties v. Evans Pacific Corp. (1989) 216 Cal.App.3d 324, 328.)

PWTS maintains its liability for the incident is minimal at best. PWTS’s only involvement in this action is as the entity hired by BHTCA to service a water tank on the premises. (Motion, Carpenter Dec., ¶3.) PWTS argues the water intrusion was not the result of its conduct. (Id. at ¶3.) PWTS maintains the tank was already drained when it arrived, and it was at all times BHTCA’s responsibility to drain the tank. (Id. at ¶4.) PWTS establishes its proportionate liability is likely zero. No oppositions have been filed to this motion. For this reason, PWTS’s failure to provide any information regarding Plaintiff’s approximate recovery is immaterial.

“In the typical one-plaintiff, multiple-defendants, personal injury action each tortfeasor is potentially liable for the same injury to the plaintiff. Therefore the full settlement by one defendant will offset a judgment against other tortfeasors; no allocation of the settlement is required. But many lawsuits and many settlements do not fit this pattern. In some, the amount of the offset is uncertain because one settlement covers multiple plaintiffs or causes of action with different damages, or because a sliding scale settlement is used and payments by the settling defendant are contingent upon the degree of plaintiff's success against the remaining defendants. In others, the amount of the offset is clouded by injection of noncash consideration into the settlement or, as here, by settling claims for separate injuries not all of which would be attributable to conduct of the remaining defendants.” (Alcal Roofing & Insulation v. Superior Court (1992) 8 Cal.App.4th 1121, 1124-1125.)

“In a situation where the cash amount of the settlement does not dictate the amount of the offset, the settling parties must include an allocation or a valuation in their agreement. A natural tension will exist between plaintiff, who benefits by undervaluing the settlement in order to permit greater recovery against the remaining defendants, and the settling defendant, who would want the settlement value high enough to be approved in order to relieve settling defendant from liability for comparative indemnity or contribution. Requiring a joint valuation by the plaintiff and the settling defendant should generally produce a reasonable valuation.” (Id.)

No allocation of the settlement proceeds is required. There is a single Plaintiff and the causes of action allege the same damages. There is also no noncash consideration in the settlement.

Based on the record, there is no evidence of fraud, collusion or tortious conduct indicating that the settlement was entered into to injure Defendant BHTC or other remaining defendants or cross-defendants.

6. Recognition that settlor should pay less in settlement than he would if he were found liable after a trial:

PWTS’s settlement is less than if it were found liable at trial. PWTS maintains, however, that its liability is zero.

The settlement is not disproportionately low. As such, PWTS’s financial conditions and insurance policy limits are immaterial. (L.C. Rudd & Son, Inc. v. Supr. Ct. (1997) 52 Cal.App.4th 742, 749-750 (request for discovery into defendant’s financial condition for purposes of determining good faith settlement denied; financial condition of settling defendant only relevant where settlement is disproportionately low).)

Unless confidentiality is required by law, court records are presumed to be open to the public. (California Rules of Court, rule 2.550, subd. (c).) Therefore, pleadings, motions, discovery documents, and other papers may not be filed under seal merely by stipulation of the parties. The parties' agreement that certain documents be filed under seal is improper and insufficient. (Savaglio v. Wal–Mart Stores, Inc. (2007) 149 Cal.App.4th 588, 600.) A prior court order must be obtained. (California Rules of Court, rule 2.550, subd. (a); H.B. Fuller Co. v. Doe (2007) 151 Cal.App.4th 879, 888.) At a minimum, a party seeking to seal documents must come forward with a specific list of facts sought to be withheld and specific reasons for withholding them. (Id. at 894.)

“Before substantive courtroom proceedings are closed or transcripts are ordered sealed, a trial court must hold a hearing and expressly find that (i) there exists an overriding interest supporting closure and/or sealing; (ii) there is a substantial probability that the interest will be prejudiced absent closure and/or sealing; (iii) the proposed closure and/or sealing is narrowly tailored to serve the overriding interest; and (iv) there is no less restrictive means of achieving the overriding interest.” (NBC Subsidiary (KNBC-TV), Inc. v. Supr. Ct. (1999) 20 Cal.4th 1178, 1217-1218.)

PWTS moves to seal the Motion for Determination of Good Faith Settlement and the declaration of Elizabeth J. Carpenter. PWTS submitted a public redacted version of the documents it the settlement amount redacted and it lodged an unredacted version with the Court, as required under California Rules of Court, rule 2.550, subdivision (b)(5).

PWTS moves to seal these documents to maintain the confidentiality of the settlement amount. The settlement agreement contains a confidentiality provision. (Motion to Seal, Carpenter Dec., ¶2.) There is no overriding public interest in the settlement amount agreed to between Plaintiff and PWTS. No oppositions have been filed to the Motion to Seal.

The motion to seal is granted. PWTS demonstrates an overriding interest in sealing the settlement amount, namely preservation of the confidentiality of the settlement as agreed to by the parties. The parties’ willingness to settle and their interest in maintaining the settlement’s confidentiality can only be served by the very limited redactions of the papers. PWTS establishes that there are no less restrictive means to achieve this overriding interest.

[1] The Court has reviewed this sum, but, in light of the ruling on the motion to seal, does not disclose it here.

Department 58