Judge Jill Feeney, Case 21STCV31701 2023-03-01 Tentative Ruling

Given A1’s substantial potential liability as the installer of the board on which Plaintiff alleges to have tripped, the Court does not find that the settlement is in good faith given the substantial amount of damages being sought by Plaintiff.

This is an action for negligence and retaliatory eviction arising from a trip and fall incident which took place in May 2020. Plaintiff Maria Geisner filed her Complaint against Defendants Nicholas Gallyon and Carl Scott Thomas on August 26, 2021.

Gallyon moves to challenge good faith settlement on the grounds that it is not a good faith settlement under the Tech-Bilt factors. Gallyon argues that (1) the settlement is not roughly proportionate to the settling party’s liability, (2) the amount paid in settlement is not in good faith, and (3) A1 is in a better position to pay any judgment awarded to Plaintiff because it has an insurance policy limit of $1,000,000.

Defendant A1 argues that A1 is only jointly liable with Gallyon for Plaintiff’s negligence cause of action, not for the retaliatory eviction allegations, and Plaintiff agreed to have A1’s settlement funds allocated to economic damages, (2) Plaintiff’s damages against A1 are limited to her medical expenses, (3) A1’s liability is speculative because there is no evidence Plaintiff fell in the hole allegedly created by A1 and A1 was not responsible for replacing the concrete on the subject property, (4) A1 would not be liable for Plaintiff’s injuries if she was not injured on the subject property, and (5) A1’s insurance policy is not relevant to the Tech-Bilt factors.

California Code of Civil Procedure section 877.6(a)(1), provides, in relevant part, that, on noticed motion, “[a]ny party to an action wherein 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 . . . and one or more alleged tortfeasors or co-obligors . . . .” “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. section 877.6(c).) Although a determination that a settlement was in good faith does not discharge any other party from liability, “it shall reduce the claims against the others in the amount stipulated” by the settlement. (Code Civ. Proc. section 877(a).)

If the good faith settlement is contested, section 877.6, subdivision (d), sets forth a workable ground rule for the hearing by placing the burden of proving the lack of good faith on the contesting party. Once there is a showing made by the settlor of the settlement, the burden of proof on the issue of good faith shifts to the nonsettlor who asserts that the settlement was not made in good faith. If contested, declarations by the nonsettlor should be filed which in many cases could require the moving party to file responsive counterdeclarations to negate the lack of good faith asserted by the nonsettling contesting party.

In Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499 (Tech-Bilt, Inc.), 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.”

The evaluation of whether a settlement was made in good faith is required to “be made on the basis of information available at the time of settlement.” (Tech-Bilt, Inc., supra, 38 Cal.3d at p. 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.’ [Citation.]” (Ibid.)

“The party asserting the lack of good faith, who has the burden of proof on that issue (§ 877.6, subd. (d)), 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.)

“[A] court not only looks at the alleged tortfeasor's potential 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.)

Plaintiff and A1 filed a notice of settlement on December 23, 2022. A1 agreed to pay $25,000 in exchange for Plaintiff’s full and complete release of all bodily injuries, claims, damages, liabilities, and injuries arising from the subject incident. Plaintiff agreed to dismiss A1 from this action with prejudice.

Gallyon argues that Plaintiff’s medical expenses total $173,927. (Gole Decl., ¶2.) Additionally, Plaintiff’s statement of damages claims $500,000 in medical expenses to date, $500,000 in future medical expenses, $250,000 in lost earnings, and $3,000,000 for loss of future earning capacity. (Id., ¶3.)

Although the parties agree on Plaintiff’s past medical expenses, there is no evidence other than Plaintiff’s statement of damages of her total recovery. Based on the available evidence, Plaintiff’s recovery is at least $173,927. A1’s settlement, $25,000 is significantly lower than Plaintiff’s total recovery. This factor weighs against a finding that the settlement was made in good faith.

Gallyon argues that A1 fails to provide any evidence that the settlement is not disproportionate to its liability. However, Gallyon is the party asserting a lack of good faith and thus has the burden of proof on the issue. Gallyon provides a declaration from an expert witness, Lazaros Papademetropoulos, who states that A1 was responsible for creating and patching the holes at the subject property and acted below the standard of care by leaving uncovered holes on the premises for over two months. (Papademetropoulos Decl., ¶¶4-5.) Gallyon also provides his own declaration showing that he hired A1 to fix a broken pipe and repair holes. (Gallyon Decl., ¶4.) On March 10, 2020, A1 informed Gallyon that they would patch the holes when the rain stopped. (Id., ¶6.) Although the City of Long Beach did repair another line in the alleyway, the city did not require that A1’s work remain uncovered. (Id., ¶8.) Gallyon requested that A1 cover the holes multiple times between February and May 2020 until A1 patched the walkway in May 2020. (Id., ¶9.)

A1 provides their responses to Form Interrogatories. The responses state that A1 replaced 50 feet of pipe using two holes, one in an area with dirt near a fence, and the other in a walkway. (Exh. 4, pdf p. 91.) The hole in the walkway was filled with dirt and covered with plywood. (Id., pdf p. 92.) A1 alleges placing the concrete was not in its scope of work and Gallyon requested that A1 leave the area without concrete because he was going to have the city work on some pipe from that point to the city line in the alley. (Id.) Gallyon paid A1 in full on February 25, 2020. (Id.) A1 also produced communications from Gallyon showing the City of Long Beach repaired piping in the alley between March and May 2020. (Id.) After the repairs were completed and Gallyon requested that A1 fill in the holes, A1 filled in the holes with new concrete. (Id.) Plaintiff also produced a letter from Gallyon’s counsel dated May 26, 2020 stating the delay in replacing the concrete was due to COVID. (Id., pdf p. 93.)

There is also a dispute over whether Plaintiff ever fell in the subject walkway. A1 provides Gallyon’s written discovery responses, which state that Plaintiff injured herself while riding her bike. (Madariaga Decl., pdf p.28-31, 86.) A1 also argues in its opposition that Plaintiff’s husband testified during deposition that she injured herself while on her bike. However, A1 provides no evidence of this testimony. Because this issue is still in dispute, the Court cannot determine A1’s liability based on this issue. The issue also implies that neither Defendant is liable in this matter.

The Court finds that parties’ evidence concerning A1’s liability is conflicting and sufficient to show that A1's liability is potentially substantially greater than the amount covered by the settlement. Although A1 argues that Gallyon’s liability is greater because Plaintiff’s cause of action for retaliatory eviction is only against Gallyon, Plaintiff’s medical expenses from her alleged fall total at least $173,927. Plaintiff’s other damages include future medical expenses, lost wages, and loss of earning capacity, which would arise from her injuries. Because A1’s liability is disputed and is potentially much greater than the amount covered by the $25,000 settlement, this factor weighs against a finding of good faith.

A1 has insurance policy limits of $1,000,000. A1 did not hide its financial condition and has the ability to pay a reasonable settlement. This factor does contribute to a finding of good faith as A1 has settled for an amount substantially below its insurance coverage.

There is no evidence of collusion or fraud. Because there is only one Plaintiff in this action, there is no issue of allocation among plaintiffs. It is also recognized that a settlor should pay less in settlement than he would if he were found liable after a trial. These factors do not weigh one way or the other.