Judge: Helen Zukin, Case: 20STCV17331, Date: 2023-01-17 Tentative Ruling

Case Number: 20STCV17331    Hearing Date: January 17, 2023    Dept: 207

Background

This is a personal injury action in which Plaintiff Isac Hernandez Hernandez (“Plaintiff”) was injured while working at a construction site in Santa Monica, California. Defendants and Cross-Complainants Shane W. Josephs, Jennifer L. Josephs, and Josephs Properties (collectively the “Josephs”) owned the property were Plaintiff was injured. Plaintiff brought suit against the Josephs who in turn cross-complained against Cross-Defendant David Morris dba David Morris Insurance Agency (“Morris”) and Cross-Defendants Zalman N., Inc., and Zalman T. Nemtzov (collectively “Nemtzov”) for indemnity and contribution. The Josephs’ operative Second Amended Cross-Complaint also alleges claims against Morris for fraud and negligent misrepresentation.

The Josephs previously settled Plaintiff’s claims against them for $4 million. On December 2, 2021, the Court granted the Josephs’ motion for determination of good faith settlement in connection with their settlement with Plaintiff. The Josephs and Morris have now settled the Josephs’ cross-claims against Morris in return for a payment of $700,000 by Morris. Morris now moves for a determination that its settlement with the Josephs was entered into in good faith pursuant to Code Civ. Proc. § 877.6. Nemtzov opposes the motion.

Legal Standard

The Court must approve any settlement entered into by less than all joint tortfeasors or co-obligors. (C.C.P. § 877.6.) This requirement furthers two sometimes-competing policies: (1) the equitable sharing of costs among the parties at fault, and (2) the encouragement of settlements. (Erreca’s v. Superior Court (1993) 19 Cal.App.4th 1475, 1487.)

If the settlement is made in good faith, the Court “shall bar any other joint tortfeasor or co-obligor from any further claims against the settling tortfeasor . . . for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault.” (C.C.P. § 877.6(c).) The non-settling tortfeasors or obligors bear the burden of demonstrating the absence of good faith in the settlement. (C.C.P. § 877.6(d).)

In order to demonstrate a lack of good faith, the non-settling party must show the settlement is so far “out of the ballpark” as to be inconsistent with the equitable objectives of section 877.6. (Nutrition Now, Inc. v. Superior Court (2003) 105 Cal.App.4th 209, 213.) The Court will typically consider: (1) the plaintiff’s (roughly) approximated total recovery; (2) the settlor’s share of liability; (3) the size of the settlement at issue; (4) the distribution of settlement proceeds among plaintiffs; (5) the usual discount value when plaintiffs settle before trial; (6) the settlor’s financial condition and insurance policy limits; and (7) whether there is evidence of “collusion, fraud, or tortious conduct aimed to injure the interests of nonsettling defendants.” (Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499 (Tech-Bilt).) “Another key factor is the settling tortfeasor's potential liability for indemnity to joint tortfeasors.” (Long Beach Memorial Medical Center v. Superior Court (2009) 172 Cal.App.4th 865, 873 [as modified (Apr. 1, 2009].)

These factors will be evaluated accordingly to what information is available at the time of settlement. (Ibid.)

Analysis

Morris and the Josephs have agreed to settle the Josephs’ claims against Morris in exchange for a payment of $700,000. Morris claims this amount is well within the “ballpark” of his exposure on the Josephs’ cross-claims. The Josephs hired Nemtzov to build a new home on their property. Nemtzov applied to Morris to obtain a commercial general liability insurance policy, which Morris procured for him. The policy did not include workers’ compensation coverage or coverage for new construction of residential projects. The Josephs’ claims against Morris allege they inquired from Morris about the extent of Nemtzov’s coverage under the policy procured by Morris and Morris misrepresented the scope of that coverage. Morris disputes these allegations. The Josephs’ Second Amended Cross-Complaint also asserts claims against Nemtzov for indemnity, contribution, and breach of contract on the basis that Plaintiff was employed by Nemtzov or one of his subcontractors at the time he was injured.

The Court is satisfied the $700,000 settlement between Morris and the Josephs is within the “ballpark” of Morris’ proportionate share of liability on the Josephs’ Second Amended Cross-Complaint. Morris argues his potential liability to the Josephs is limited as Plaintiff’s claims against the Josephs is barred by the workers’ compensation exclusive remedy doctrine and he never misrepresented the extent of Nemtzov’s insurance coverage for the subject construction project. On such facts, the $700,000 settlement is reasonable, particularly when considering the discount afforded to settlement figures where, as here, a claim is resolved before trial.

The Court finds the remaining Tech-Bilt factors are satisfied as well. There is only one Plaintiff in this action, so there are no concerns regarding the allocation of settlement funds between multiple plaintiffs. The Court also finds no evidence of collusion, fraud, or other tortious conduct on behalf of Morris or the Josephs. Nemtzov argues in his opposition that Morris and the Josephs “colluded together to find money” to fund the instant settlement, but Nemtzov’s conclusory characterization of the settlement as collusion is unsupported by any evidence showing the settlement was in any way improper or tortious.

Nemtzov’s opposition also claims the settlement is improper as it would diminish the insurance proceeds available to satisfy the Josephs’ claims against him. Nemtzov asserts he is the “Policy Holder” for the insurance policy used to find Morris’ settlement. However, this claim is unsupported by any evidence. Indeed, Nemtzov’s opposition only puts forth evidence showing he was the policy holder of an insurance policy issued by Security National Insurance Company. (Opp. at 4-5; Bojic Decl. at ¶¶4-6.) But Morris and the Josephs both represent to the Court that their settlement will be funded by Morris’ errors and omissions policy of which Morris is the sole insured. Nemtzov has provided no evidence disputing these representations and has failed to provide the Court with any basis from which it can conclude Nemtzov has any claim for coverage under Morris’ policy. The Court notes Nemtzov has not asserted any cross-claims against Morris. To the extent Nemtzov appears to believe he is entitled to coverage under the policy issued by Security National, any claims Nemtzov has against Security National are not impacted by the instant motion for good faith settlement.

Accordingly, the Court finds the settlement between Morris and the Josephs was entered into in good faith under Code Civ. Proc. § 877.6 and accordingly Morris’ motion is GRANTED.

Conclusion

Cross-Defendant David Morris dba David Morris Insurance Agency’s motion for determination of good faith settlement is GRANTED.