Superior Court of California 

County of Los Angeles – West District 

Beverly Hills Courthouse / Department 205 

 

 

BACKGROUND 

 

This is a construction defect case.  Non-party Stanford Culver owns the property located at 3831 S. Hughes Avenue, Los Angeles, California known as the Culver Medical Plaza (the “Property”).  Stanford Culver hired Plaintiffs Q3 Engineers Inc. and Q3 Builders Inc. as general contractors to perform construction and waterproofing work at the Property.  In turn, Plaintiffs entered into subcontract agreements with among others, Cell-Crete Corporation (“Cell-Crete”).  Cell-Crete installed light weight concrete over roof decks on the top floor of the parking structure.   

On November 6, 2020, Stanford Culver filed a demand for arbitration against Plaintiffs alleging that Plaintiffs failed to perform their work on the Project in a professional and workmanlike manner, thereby causing damage in an amount no less than $2,500,000.  Plaintiffs deny wrongdoing, but allege that if there was damage, the parties responsible for the damage are the subcontractors including Cell-Crete.  Plaintiffs sued the sub-contractor defendants for express indemnity, equitable indemnity, apportionment and contribution and declaratory relief.      

Plaintiffs, Cell-Crete, and Stanford Culver have now entered into a settlement that is contingent upon this Court’s finding of good faith, whereby Cell-Crete agrees to pay $5,000 in exchange for a dismissal with prejudice of Plaintiffs’ complaint against Cell-Crete and a full and complete release of any claims that arise out of or are related to Cell Crete’s work on the Property.     

This hearing is on Cell-Crete’s motion for a determination of good faith settlement.  Cell-Crete argues that it has met the criteria for determination of a good faith settlement outlined by the California Supreme Court in Tech Bilt Inc. V. Woodward-Clyde & Assocs. (1985) 38 Cal.3d 488.   

LEGAL STANDARD 

Under Code of Civil Procedure § 877.6, “[a]ny 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.”  (Code Civ. Proc.§ 877.6(a)(1).)  “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.” (Code Civ. Proc.§ 877.6(b).)   

Section 877.6 requires “that the courts review [settlement] agreements made under its aegis to insure that the settlements appropriately balance the . . . statute’s dual objectives” of (1) providing an “equitable sharing of costs among the parties at fault” and (2) encouraging parties to resolve their disputes by way of settlement.¿ (Tech-Bilt, 38 Cal.3d at 494.) 

“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.”  (Code Civ. Proc.§ 877.6(c).)  The party asserting the lack of good faith shall have the burden of proof on that issue.  (Code Civ. Proc.§ 877.6(d).)   

In Tech-Bilt, the California Supreme Court set forth the following factors for evaluating whether a proposed settlement was made in good faith: (1) a rough approximation of plaintiffs’ total recovery and the settler’s proportionate liability; (2) the amount paid in settlement; (3) the allocation of settlement proceeds among plaintiffs; (4) discount for settlement before 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 non-settling defendants.  (38 Cal.3d at 499.)  The Court considers each of these factors below. 

DISCUSSION 

Rough Approximation/Settlement Amount 

The first Tech-Bilt factor consists of two parts – a rough approximation of Plaintiff’s total recovery and the settlor’s proportionate liability.¿ When approximating a plaintiff’s total recovery or the settling defendant’s proportionate liability, “judges should . . . not yearn for the unreal goal of mathematical certainty.¿ Because the application of section 877.6 requires an educated guess as to what may occur should the case go to trial, all that can be expected is an estimate, not a definitive conclusion.”¿ (North County Contractor’s Assn. v. Touchstone Ins. Services (1994) 27 Cal.App.4th 1085, 1090 (hereafter, North County).)¿¿¿ 

¿ Additionally, “a court not only looks at the alleged tortfeasor’s liability to the plaintiff, but it must also consider the culpability of the tortfeasor vis-à-vis other parties alleged to be responsible for the same injury.¿ Potential liability for indemnity to a nonsettling defendant is an important consideration for the trial court in determining whether to approve a settlement by an alleged tortfeasor.¿ [Citation.]”¿ (TSI Seismic Tenant Space, Inc. v. Superior Court (2007) 149 Cal.App.4th 159, 166.)¿ 

‘[A] defendant’s settlement figure must not be grossly disproportionate to what a reasonable person, at the time of the settlement, would estimate the defendant’s liability to be.”¿ (Tech-Bilt, 38 Cal.3d at p. 499.)¿  However, even though “an offer of settlement must bear some relationship to one’s proportionate liability, bad faith is not ‘established by a showing that a settling defendant paid less than his theoretical proportionate or fair share.”¿ (North County, supra, 27 Cal.App.4th at p.1090.)¿ “Such a rule would unduly discourage settlements” and “convert the pretrial settlement approval procedure into a full-scale mini-trial.”¿ (Tech-Bilt, supra, 38 Cal.3d at p. 499.)¿  Rather, in order to meet the proportionality requirement, “all that is necessary is that there be a ‘rough approximation’ between a settling tortfeasor’s offer of settlement and his proportionate liability.” (North County, supra, 27 Cal.App.4th at pp. 1090–1091.)¿  

The second Tech-Bilt factor – amount of settlement – is closely related to the first factor and addresses whether the settlement amount is within the ballpark of settling defendant’s share of liability.  In determining whether the settling defendant’s settlement figure is “within the ballpark”, the Court may rely on “the judge’s personal experience” and the experience of “experts in the field.”¿ (Tech-Bilt, 38 Cal.3d at 500.)¿      
¿ Here, Cell-Crete’s settlement is within the ballpark of its share of liability, because it claims it has no liability at all, and therefore the $5,000 it is paying is in excess of its proportionate liability.  Cell-Crete contends that Stanford Culver did not have to make any repairs to Cell-Crete’s work.  (Brault Decl. ¶6.)  Considering there is a serious dispute as to whether Cell-Crete was liable at all, the Court concludes the settlement amount is well within the range of Cell-Crete’s potential proportionate liability.  Accordingly, the first two Tech-Bilt factors weigh in favor of finding a good faith settlement.   

Allocation of Settlement Proceeds 

Because Plaintiffs are the only plaintiffs in this action, this factor does not apply. 

 

Discount for Settlement Before Trial 

Moving Defendant argues that this factor favors a finding of good faith, given their disputed liability.  The Court expressly recognizes that a settlor should pay less in settlement that it would if it were found liable after trial.¿ This factor supports a good faith determination.¿ (See Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 968.)¿ 

Financial Condition and Insurance Policy Limits 

Moving Defendants have not shown their financial condition and insurance policy limits merit a good faith determination.  Accordingly, this factor does not weigh in favor of or against a good faith determination. 

Collusion, Fraud or Other Tortious Conduct 

There is no evidence of collusion, fraud or other tortious conduct aimed at injuring the interests of non-settling defendants.  Rather, the settlement was reached after extensive and contentious negotiations.  (Brault Decl. ¶11.)  Moving Defendant has also shared the settlement terms with the remaining defendants.       

CONCLUSION 

Based on the foregoing, the Court GRANTS Moving Defendant’s motion for determination of a good faith settlement.   

IT IS SO ORDERED. 

 

DATED: September 24, 2024 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court