Judge: Donald F. Gaffney, Case: "Gatewood v. The Irvine Company, LLC", Date: 2023-08-30 Tentative Ruling

TENTATIVE RULING:

Motion for Determination of Good Faith Settlement.

Defendant ADL Painting & Wallcovering, Inc. (“ADL”) moves for an order determining that the settlement between ADL and Plaintiff was entered in good faith pursuant to Code Civ. Proc. §§ 877 and 877.6, dismissing any and all pending cross-complaints against ADL, and barring claims against ADL for contribution or indemnity based on the incident that is the subject of this lawsuit.  For the following reasons, the unopposed motion is GRANTED.

1.    Code of Civil Procedure section 877.6 & Overview of “Tech-Bilt” Factors

Code of Civil Procedure section 877.6 provides in pertinent part:

(a)(1) Any party to an action in which it is alleged that two or more parties are joint tortfeasors or co-obligors on a contract debt shall be entitled to a hearing on the issue of the good faith of a settlement entered into by the plaintiff or other claimant and one or more alleged tortfeasors or co-obligors, upon giving notice in the manner provided in subdivision (b) of Section 1005. … [¶] … [¶]

(b) The issue of the good faith of a settlement may be determined by the court on the basis of affidavits served with the notice of hearing, and any counter affidavits filed in response, or the court may, in its discretion, receive other evidence at the hearing.

(c) A determination by the court that the settlement was made in good faith shall 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.

(d) The party asserting the lack of good faith shall have the burden of proof on that issue.

“[T]he 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 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. 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.” (Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499 (Tech-Bilt), internal citations omitted.)

Another key factor is the settling tortfeasor’s potential liability for indemnity to joint tortfeasors. (Far West Financial Corp. v. D & S Co. (1988) 46 Cal.3d 796, 816, fn. 16; TSI Seismic Tenant Space, Inc. v. Superior Court (2007) 149 Cal.App.4th 159, 166.) Because a good faith determination bars indemnity claims by nonsettling parties, the true value of the settlement may not be the amount paid to plaintiff but rather the value of the shield against such indemnity claims. (TSI Seismic, at 149 Cal.App.4th at 166.)

The settlor’s evidentiary burden depends on whether the good faith of the settlement is contested. Specifically, City of Grand Terrace v. Superior Court (1987) 192 Cal.App.3d 1251 explains that when a settlor files a motion or application for determination of good faith settlement, the settlor does not know whether the settlement will or will not be contested. (Id. at 1260-1261.) Thus, in the first instance, a “barebones” motion or application is sufficient. (Id. at 1261 [“That is to say, when no one objects, the barebones motion which sets forth the ground of good faith, accompanied by a declaration which sets forth a brief background of the case is sufficient.”].)  

When the good faith nature of a settlement is disputed, however, the court must consider and weigh the Tech-Bilt factors, irrespective of the fact that the opposing party has the burden of proof on the issue of lack of good faith. (See City of

Grand Terrace, 192 Cal.App.3d at 1261 [“when the good faith nature of a settlement is disputed, it is incumbent upon the trial court to consider and weigh the Tech-Bilt factors”]; id. at 1263-1264.) 

While the opposing party does bear the burden of proof on the issue of lack of good faith (Code Civ. Proc., § 877.6(d)), the statutory requirement of “good faith” presents an issue of fact, and a finding of good faith must therefore be supported by substantial evidence. (City of Grand Terrace, 192 Cal.App.3d at 1263-1265.) If, in a contested case, “ ‘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.’ [Citation.]” (Mattco Forge, Inc. v. Arthur Young & Co. (1995) 38 Cal.App.4th 1337, 1350-1351 & fn. 6; Toyota Motor Sales U.S.A., Inc. v. Superior Court (1990) 220 Cal.App.3d 864, 871; Toyota Motor Sales) [same]; City of Grand Terrace, 192 Cal.App.3d at 1263.)

In other words, just because the contesting party has the burden of proof on the issue of lack of good faith and might fail to meet that burden, does not mean that the trial court may properly grant the application if the record lacks sufficient evidence to support the conclusion that the settlement was entered into in good faith. (City of Grand Terrace, 192 Cal.App.3d at 1263-1264; Mattco Forge, 38 Cal.App.4th at 1350, fn. 6.)  

Mattco Forge, 38 Cal.App.4th at 1350, fn. 6, provides that once an objecting party challenges a settlement, the settlor must “file counteraffidavits ([Code Civ. Proc.,] § 877.6, subd. (b)) to make an evidentiary showing that the settlement was ‘in the ballpark.’ In the absence of such a showing by [the party] seeking approval of the good faith settlement, there is ‘no substantial evidence to support a critical assumption as to the nature and extent of [the] settling [party’s] liability[.]’” (Id.; see id. at 1351 [“in view of the absence of any substantial evidence to show the $250,000 value of the guarantee was within the reasonable range of [the settling party’s] proportionate liability, [the contesting party] met its burden in attacking the settlement as lacking in good faith”]; see also Grand Terrace, 192 Cal.App.3d at 1261, 1263 [“A necessary corollary to the definition of good faith in Tech-Bilt is that the trial court’s consideration of the settlement agreement and its relationship to the entire litigation in a contested setting must proceed upon a sufficient evidentiary basis to enable the court to consider and evaluate the various aspects of the settlement. [Citations.] 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 nonsettling 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.”].) 

Furthermore, where good faith is contested, conclusory allegations as to the settling parties’ liability are insufficient to uphold the court’s ruling granting a motion for good faith settlement as a matter of law. There must be substantial, competent evidence of the settling party’s proportionate liability and all other relevant Tech-Bilt factors before the court may grant a request for determination of good faith settlement in a contested case. (Mattco Forge, 38 Cal.App.4th at 1351.) Even an expert’s opinion must be substantiated by facts. (Greshko v. County of Los Angeles  (1987) 194 Cal.App.3d 822, 834 [“Affidavits or declarations setting forth only conclusions, opinions or ultimate facts are to be held insufficient; even an expert’s opinion cannot rise to the dignity of substantial evidence if it is unsubstantiated by facts.”]; Toyota Motor Sales, 220 Cal.App.3d at 871 [““Substantial evidence, of course, is not synonymous with ‘any’ evidence, but is evidence which is of ponderable legal significance. It must be ‘reasonable in nature, credible, and of solid value; it must actually be ‘substantial’ proof of the essentials which the law requires in a particular case.’ ”].)

Finally, the good faith evaluation must be made on the basis of information available at the time of settlement. (Tech-Bilt, 38 Cal.3d at 499.) “The evidence must be limited to the information available to the settling parties when they settled. ‘Good faith’ is not affected by the fact the parties did not have access to all the evidence ultimately offered at trial on the disputed issues.” (Toyota Motor Sales, 220 Cal.App.3d at 878.) 

2.    Merits

Tech-Bilt identifies specific, non-exhaustive factors that the court considers in determining whether a settlement was entered into in good faith. These factors are: (1) a rough approximation of the plaintiff's total recovery and the settlor's proportionate liability; (2) the amount paid in settlement; (3) the allocation of settlement proceeds among plaintiffs; (4) the recognition that a settlor should pay less in settlement than he would if he were found liable at 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 nonsettling defendants. (Tech-Bilt, 38 Cal.3d at 499.) A “good faith” settlement is one that is “within the reasonable range” of the settling tortfeasor’s share of liability. (Id.) Furthermore, an apparent disproportionately low settlement does not ipso facto reflect a lack of good faith where the damages are speculative, or liability is highly uncertain or remote. (Id. [the settling party’s payment of less than its “theoretical proportion or fair share” of the plaintiff's case does not necessarily make the settlement a bad faith settlement].)

a.    Rough approximation of Plaintiff’s total recovery and the settlor’s proportionate liability

Plaintiff’s Complaint asserts causes of action for 1) negligent maintenance of premises (Civil Code § 1714), 2) negligent hiring and supervision (Civil Code §1714), 3) negligence, and 4) premises liability.  Plaintiff has agreed to dismiss its claims against ADL for a sum of $12,500.00. (Becker Dec., ¶ 8.)

The evidence shows that the settlement of $12,500 to Plaintiff is not grossly disproportionate to what a reasonable person, at the time of the settlement, would estimate ADL’s liability to be. 

On April 11, 2019, Plaintiff acknowledges she did not smell any paint, paint thinner, or other paint-related fumes and odors in or about the location of ADL’s work, but only observed closed containers. This contrasts to Plaintiff’s deposition testimony that she smelled fumes and odors for several weeks in December 2018 through January 10, 2019, and experienced injuries from her exposure to the fumes and odors on January 10, 2019. As such, ADL’s proportionate liability is relatively small.

b.    Amount paid in settlement

Settling Defendant has agreed to pay $12,500 to Plaintiff upon court approval of the settlement and barring contribution and/or indemnity claims against ADL. 

c.    Allocation of settlement proceeds among plaintiffs

This factor is not an issue because there is only one Plaintiff.

d.    Settlor should pay less in settlement than if found liable a trial

The settlement fairly recognizes that Defendant should pay less in settlement than it would if it were found liable at trial.

e.    Financial conditions and insurance policy limits of settling defendants

ADL’s insurance carrier has agreed to pay the $12,500 to settle with Plaintiff.

f.     Existence of collusion, fraud, or tortious conduct meant to prejudice nonsettling defendants

There is no evidence of collusion between Plaintiff and settling Defendant.  (Becker Dec., ¶ 11.)

Based on the evidence before the Court, the Court grants the Motion, finds that the $12,500 settlement payment is a reasonable, good faith settlement pursuant to Code Civ. Proc. §§ 877 and 877.6, and dismisses all pending Cross-Complaints asserted against ADL and any other claims for contribution or indemnity from any other party served with this motion.

Moving Party to give notice.