Judge: Gregory Keosian, Case: 18STCV05553, Date: 2023-02-06 Tentative Ruling

Case Number: 18STCV05553    Hearing Date: February 6, 2023    Dept: 61

Defendant Local Initiative Health Authority for Los Angeles County’s Application for Determination of Good Faith Settlement is GRANTED.

I.                   GOOD FAITH SETTLEMENT DETERMINATION

Code of Civil Procedure § 877.6(a)(1) provides:

 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. Upon a showing of good cause, the court may shorten the time for giving the required notice to permit the determination of the issue to be made before the commencement of the trial of the action, or before the verdict or judgment if settlement is made after the trial has commenced.

Code of Civil Procedure § 877(c) in turn provides:

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.

A good faith settlement determination also reduces the claims against the nonsettling defendants in the amount stipulated by the settlement. (See Code Civ. Proc. § 877(a).)

Where a motion for determination of good faith settlement is uncontested, a "barebone motion which sets forth the ground of good faith, accompanied by a declaration which sets forth a brief background of the case is sufficient to support a good faith determination. (See City of Grand Terrace v. Superior Court (1987) 192 Cal. App. 3d 1251, 1261.) But where a motion for determination of good faith settlement is contested, the moving party must provide the court with evidence of the settlement, at which point the burden shifts to the opposing party to prove it is not made in good faith under the factors announced in Tech-Bilt v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488. (City of Grand Terrace v. Superior Court (1987) 192 Cal. App. 3d 1251, 1261.) 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) a recognition that a settlor should pay less in settlement than he would if her were found liable after trial; (5) the financial condition and insurance policy limits of the settling defendants; and (6) the existence of collusion, fraud, or tortious conduct aimed to injure the interests of the non-settling defendants. (See Tech-Bilt, supra, 38 Cal.3d 488, 499.)

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, who has the burden of proof on that issue, should be permitted to 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 equitable objectives of the statute. Such a demonstration would establish that the proposed settlement was not a “settlement made in good faith” within the terms of section 877.6.

(Id. at pp. 499–500, internal citations, quotation marks, and alterations omitted.)

Defendant Local Initiative Health Authority for Los Angeles County dba L.A. Care Health Plan (LA Care) moves for approval of the settlement between itself and Plaintiff Ruthie Zepeda. The settlement consists of offers served by Plaintiff upon both LA Care and Defendant Equis, LLC under Code of Civil Procedure § 998, for settlement in the amount of $99,999.99. (Frater Decl. ¶ 11.) The offers were served on August 31, 2022, and LA Care accepted. Judgment was entered based on the offer on December 14, 2022. LA Care notes that Plaintiff’s sought damages consist of $247,520.00 in economic damages, with an unknown amount sought in noneconomic damages for emotional distress. (Frater Decl. ¶¶ 4–5.) LA Care’s counsel, Elisabeth Frater, estimates based on her experience that such noneconomic damages could amount to $300,000 or $500,000, if Plaintiff were to prevail on her claims. (Frater Decl. ¶¶ 5–9.)

The present settlement was reached by a succession of negotiations. Plaintiff in September 2021 demanded settlement in the amount of $500,000.00. (Frater Decl. ¶ 9.) In March 2022, at a mandatory settlement conference, LA Care and Equis each offered $15,000.00 to Plaintiff, who did not agree. (Frater Decl. ¶ 10.) The section 998 offer followed in August 2022. (Frater Decl. ¶ 11.)

Defendant Equis has filed an opposition to the settlement. It argues that approval or denial of the petition should await trial in this action, as trial will allow the court to determine whether the settlement is within the ballpark of LA Care’s proportionate liability. (Opposition at pp. 4–5.) Equis cites authority for the proposition that in some cases it may be “appropriate for the objecting non-settlor to move for a continuance of the hearing, if necessary, for the purpose of gathering facts, which could include further formal discovery, to support its statutory burden of proof as to all Tech-Bilt factors non-settlors placed in issue in order that the matter can be fully and fairly litigated.” (City of Grand Terrace v. Superior Court (1987) 192 Cal.App.3d 1251, 1265.)

LA Care has met its burden to make an initial showing of the existence of an arms-length settlement, with a figure not disproportionate to its liability. Equis, meanwhile, has not met its burden to show the absence of good faith, or to show that further facts are necessary to make such a determination. Equis’s sole argument concerning the disproportionate character of the settlement is the contention, grounded in Plaintiff’s pleadings, that LA Care possessed more control over the terms of Plaintiff’s employment than Equis did. (Opposition at pp. 3–4.) But as noted in denying Equis’s recent motion for judgment on the pleadings, the same complaint alleges that Equis controlled other terms of Plaintiff’s employment, and in fact terminated that employment with a retaliatory motive. This argument is therefore unsupported.

Moreover, Equis does not actually contend that a continuance of this hearing is necessary to a fair evaluation of the settlement. It does not explain what evidence it lacks that it could use to evaluate each defendant’s proportionate share of liability or the fairness of Plaintiff and LA Care’s negotiations. Equis simply argues that the relative accuracy of the settlement figure could be better assessed after trial and verdict. Yet this argument, to the extent it holds any truth, would be universally true of all good faith settlement applications. And as LA Care points out in reply, the good-faith settlement statute specifically contemplates that such determinations will take place “before the commencement of the trial in the action, or before the verdict or judgment if settlement is made after the trial has commenced.” (Code Civ. Proc. § 877.6, subd. (a)(1); Reply at p. 2.) Equis has thus shown neither the absence of good faith nor a satisfactory reason why a determination on that point should be delayed.

The motion is GRANTED.