Judge: Cherol J. Nellon, Case: 21STCV25274, Date: 2023-05-19 Tentative Ruling
Case Number: 21STCV25274 Hearing Date: May 19, 2023 Dept: 28
Defendants Carlos Zavala and Nicolas Zavala’s Application for Good Faith Settlement
Having considered the moving and opposing papers, the Court rules as follows.
BACKGROUND
On July 9, 2021, Plaintiff Ramiro David Macias (“Plaintiff”) filed this action against Defendants Carlos Zavala (“Carlos”), Nicolas Zavala (“Nicolas”), Ricardo Reyes (“Reyes”) and Assa Abloy Entrance Systems, US Inc., (“Assa”) for motor vehicle negligence and general negligence.
On October 8, 2021, Reyes filed an answer and a Cross-Complaint against Cross-Defendants Carlos and Nicolas for implied indemnity, contribution and declaratory relief. On September 30, 2022, Carlos and Nicolas filed an answer.
On March 18, 2022, the Court dismissed Nicholas and Carlos, without prejudice, pursuant to Plaintiff’s request.
On March 25, 2022, Assa filed an answer.
On March 7, 2023, Carlos and Nicolas (“Moving Defendants”) filed an application for determination of good faith settlement.
On March 30, 2023, Assa and Reyes (“Opposing Defendants”) filed a Motion to Contest Pena’s Application for Good Faith Settlement to be heard on April 27, 2023. The Court continued the hearing on the motion to May 19, 2023. On May 1, 2023, Moving Defendants filed a reply.
Trial is currently scheduled for November 9, 2023.
PARTY’S REQUESTS
Moving Defendants request the Court find their settlement made in good faith.
Opposing Defendants request the Court deny the settlement for not being in good faith.
LEGAL STANDARD
CCP § 887.6(a)(2) states that “[i]n 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. The application shall indicate the settling parties, and the basis, terms, and amount of the settlement. The notice, application, and proposed order shall be given by certified mail, return receipt requested, or by personal service. Proof of service shall be filed with the court. 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. 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. The notice by a nonsettling party shall be given in the manner provided in subdivision (b) of Section 1005. However, this paragraph shall not apply to settlements in which a confidentiality agreement has been entered into regarding the case or the terms of the settlement.” The statute further clarifies that the party asserting the lack of good faith shall have the burden of proof on that issue.
CCP § 877 states “[w]here a release, dismissal with or without prejudice, or a covenant not to sue or not to enforce judgment is given in good faith before verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the same tort, or to one or more other co-obligors mutually subject to contribution rights, it shall have the following effect: (a) It shall not discharge any other such party from liability unless its terms so provide, but it shall reduce the claims against the others in the amount stipulated by the release, the dismissal or the covenant, or in the amount of the consideration paid for it, whichever is the greater. (b) It shall discharge the party to whom it is given from all liability for any contribution to any other parties.”
In Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499, the California Supreme Court identified the following nonexclusive factors courts are to consider in determining if a settlement is in good faith under section 877.6: “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.”
DISCUSSION
Recovery and Proportionate Liability
Plaintiff’s claim arises from a three-vehicle accident on northbound Atlantic Blvd. Plaintiff was stopped in the left turning lane at a red light when he was rear-ended by Carlos, driving Nicolas’s vehicle. Carlos claims that he was forced to swerve into Plaintiff’s vehicle after another driver, Reyes, exited the freeway and tried to cut in front of him to get into the left turning lane. Reyes states he was exiting the freeway, with his blinker on, and attempting to merge into the left turn lane; he claims he suddenly saw the truck at a high speed of at least 50 mph. It appears that proportionate liability is in dispute.
Plaintiff’s medical damages total approximately $15,000.00. Moving Defendants and Plaintiff have agreed to settle for $15,000.00, slightly above the total medical damages. Therefore, Moving Defendants have agreed to effectively settle for 100% of the medical damages. The Court only accounts for currently identified special damages when evaluating good faith settlement. Even if Moving Defendants were 100% liable, the proposed settlement covers 100% of the economic damages.
Opposing Defendants argue that Plaintiff served a $150,000.00 settlement demand on Opposing Defendants; they claim the proposed $15,000.00 settlement is unfair, given that it is likely Moving Defendants are more liable for the subject incident. When evaluating whether a settlement is made in good faith, the Court does not evaluate settlements in proportion to other proposed settlement agreements—it only looks to the fairness given the proposed economic damages and liability of the settling party.
Opposing Defendants argue that Moving Defendants do not account for any future medical expenses, loss of earnings, or non-economic damages. As discussed above, the Court does not account for non-economic damages when accounting for settlement. However, Moving Defendants did not state whether there have been claims for future medical expenses or loss of earnings. Settlement is evaluated based on the information available at the time the settlement is reached. (Tech-Bilt, Inc., supra, 38 Cal.3d at pg. 499.) Without some evidence indicating that the
discussed medical specials are the only currently identified economic damages, the Court cannot find the application to be made in good faith.
Allocation of Settlement
Plaintiff will receive the entirety of the settlement.
Financial considerations
Moving Defendants settled for the full extent of their insurance policy limit. Carlos submitted a declaration stating that he does not have assets over $2,000.00. Moving Defendants agreed to settle for Moving Defendants’ maximum potential liability, as the settlement covers Plaintiff’s current economic damages in full.
Collusion or Fraud
There is no indication of fraud or collusion. This factor weighs in favor of granting the motion.
Conclusion
The Court is unable to ascertain whether this settlement was made in good faith without evidence that the only economic damages are the existing medical damages. The Court continues the hearing on the motion and orders Moving Defendants to submit additional documents in support of this fact.
CONCLUSION
Defendants Carlos Zavala and Nicolas Zavala’s Application for Good Faith Settlement is CONTINUED to June 14, 2023, at 1:30 p.m. in Department 28 of the Spring Street Courthouse.
Moving party is ordered to give notice of this ruling.
Moving Party is ordered to file the proof of service of this ruling with the Court within five days.
The parties are directed to the header of this tentative ruling for further instructions.