Judge: Daniel M. Crowley, Case: 20STCV26242, Date: 2023-02-24 Tentative Ruling

Case Number: 20STCV26242    Hearing Date: February 24, 2023    Dept: 28

Case Number: 20STCV26242   Hearing Date: February 14, 2023     Dept: 28

Defendant Greenfields Outdoor Fitness, Inc.’s Motion for Determination of Good Faith Settlement

Having considered the moving, opposition and reply papers, the Court rules as follows. 

BACKGROUND

On July 13, 2020, Plaintiff Cathy Contreras (“Contreras”) and Aniya Correra (“Correra” or “Plaintiff”) filed this action against Defendants Corvallis Middle School (“Corvallis”), Norwalk-La Miranda Unified School District (“NMUSD”) and Greenfields Outdoor Fitness, Inc. (“GOF”) for general negligence, products liability and premises liability.

On October 27, 2020, GOF filed an answer. On December 4, 2020, the Court dismissed Corvallis, with prejudice, pursuant to Plaintiff’s request.

On December 18, 2020, Plaintiffs filed the FAC. Plaintiff later amended the FAC to include Defendant Environmental Constructions, Inc. (“EC”).

On January 12, 2021, NMUSD filed an answer and a Cross-Complaint against Cross-Defendant GOF and EC for express indemnity and declaratory relief. On February 17, 2021, GOF filed an answer. On June 23, 2021, EC filed an answer.

On March 25, 2021, Plaintiffs filed the SAC.

On May 28, 2021, Plaintiffs filed the TAC. Plaintiff later amended the complaint to include Defendant T.J. Janca Construction, Inc. (“T.J.”).

On June 29, 2021, GOF filed an answer and a Cross-Complaint against Cross-Defendants NMUSD and EC for equitable indemnity, contribution and declaratory relief. GOF later amended the CC to include Cross-Defendant T.J. On August 2, 2021, EC filed an answer. On September 22, 2021, NMUSD filed an answer. T.J. was dismissed on December 9, 2022.

On July 2, 2021, NMUSD filed an answer.

On July 13, 2021, EC filed an answer and a Cross-Complaint against Cross-Defendants GOF, NMUSD and T.J. for indemnification, equitable contribution, apportionment of fault and declaratory relief. On August 6, 2021, GOF filed an answer. T.J. filed an answer on December 23, 2021. T.J. was dismissed on December 9, 2022.

On December 23, 2021, T.J. filed a Cross-Complaint against Cross-Defendants EC, GOF and NMUSD for equitable indemnity, contribution, apportionment of fault and declaratory relief. On January 11, 2022, GOF filed an answer. On January 24, 2022, EC filed an answer. On January 26, 202, NMUSD filed an answer.

On January 26, 2022, NMUSD filed a Cross-Complaint against Cross-Defendant T.J. for equitable indemnity, contribution and declaratory relief.  NMUSD later amended the Cross-Complaint to include Cross-Defendants EC and GOF. On February 28, 2022, T.J. filed an answer. T.J. was dismissed on December 9, 2022.

On December 2, 2022, GOF filed a Motion for Good Faith Settlement to be heard on February 14, 2023. On January 31, 2023, NMUSD filed an opposition. On February 6, 2023, GOF filed a reply.

Trial is currently set for March 13, 2023.

PARTY’S REQUESTS

GOF requests the Court find its settlement with Plaintiff is 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

Plaintiffs allege that Plaintiff placed her right hand on a two-person ski machine, while it was in use by classmates. As her classmates got off the machine, Plaintiff’s right finger was crushed by the machine. GOF sold the subject machine. GOF alleges that no parties to the action have been able to prove the subject machine was defective or that GOF had any actual or constructive notice of any alleged defect.

Recovery and Proportionate Liability 

Plaintiffs’ discovery states that her past medical expenses amount to approximately $162,000.000. Plaintiffs have agreed to accept a settlement from GOF of $200,000.00.

GOF states that no party has been able to produce admissible evidence demonstrating the subject machine was defective, or that GOF had any actual or constructive notice of any alleged defect. Discovery has shown that NMUSD did not conduct routine maintenance or safety inspections on the machine to make sure it was functioning properly after being installed. GOF also claims that NMUSD failed to properly supervise their students when the machine was in use and failed to report a prior incident that resulted in injury, preventing GOF from resolving any potential defect that could have caused or contributed to the incident.

Under these circumstances, the Court finds this settlement to be “within the ballpark” of an equitable settlement.

Allocation of Settlement 

All of the settlement will be delivered to the Plaintiff minor, who was injured in this action. This is the proper allocation, as the other Plaintiff is serving as Plaintiff's Guardian ad Litem.

Financial considerations  

GOF has an aggregate insurance limit of $2,000,000.00. GOF did not provide any information as to asset discovery. The amount provided is within GOF s financial means.

Collusion or Fraud 

There is no indication of fraud or collusion. This was an arms-length settlement conducted after extensively engaging in discovery with all parties. This factor leaves in favor of granting the motion.

NMUSD’s opposition

NMUSD claims that the settlement is unfair as it potentially saddles NMUSD with the majority of the settlement expenses. First, NMUSD claims that Plaintiffs have offered to settle with NMUSD for $315,000.00. Should NMUSD agree and all settlements be approved, the total settlement payments to Plaintiff would total $565,000.00. NMUSD claims that this results in an unfair settlement regarding proportionate liability, as GOF has not provided adequate reasoning as to why NMUSD should have to pay more in settlement than GOF.

NMUSD misunderstands how the Court weighs proportionate liability in regard to Plaintiffs’ recovery. NMUSD cites to various cases that state that good faith may only be found if the settlement appears to be in a reasonable range for the settling party’s proportionate share of comparative liability, all of which are accurate. Long Beach Memorial Med. Cntr. v. Sup. Court, 172 Ca1.App.4th 865, 872 (2009). However, Plaintiffs’ recovery is not based in the total amount received by Plaintiffs in settlement, but rather the amount of damages potentially recoverable by Plaintiffs. Generally, this is based upon the amount of special damages, as under Civil Code § 1431.2, a defendant is only responsible for its share of noneconomic damages as that share has been determined by the jury. None of the cases cited in support of NMUSD’s settlement based proportionality argument rely upon the collective settlements, but rather the plaintiff’s alleged damages.  

Here, Plaintiff claims $162,000 in special damages.  As it is only joint and severally liable for those damages, NMUSD’s only concern here should be that it have to pay a disproportionate share of Plaintiff’s special damages.  In opposing a motion for good faith settlement, it is on the opposing party to prove why the settling party should be more liable for the damages in question.   NMUSD has provided no evidence of either its or GOF’s proportionate liability such that the Court can determine that NMUSD faces unfair exposure to Plaintiff’s special damages.

NMUSD also argues that there is evidence of collusion as NMUSD was left out of the settlement agreements. All parties originally met at mediation but failed to reach a settlement agreement. All settlement agreements were decided separately post-mediation. As NMUSD was not present at these discussions, NMUSD speculates there was collusion. This is not sufficient to establish collusion, especially given GOF’s reply. GOF notes that NMUSD failed to meaningfully participate in the settlement process, resulting in delayed and shortened mediation. This is evidenced by NMUSD’s refusal to make a settlement offer over $10,000.00, despite evidence in support of some amount of liability. All other Defendants agreed to engage in the settlement process with Plaintiff, resulting in settlement within a week.

Conclusion 

The Court finds that GOF has satisfied the Tech-Bilt factors. GOF provided sufficient information as to all factors and generally factors support finding the settlement to be made in good faith. The Court grants the motion.

CONCLUSION

Defendant Greenfields Outdoor Fitness, Inc.’s Motion for Determination of Good Faith Settlement is GRANTED. The Court dismisses all pending and future claims against GOF, including Cross-Complaints based in equitable indemnity.

            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.