Judge John J. Kralik, Case 20STCV17746 2023-04-14 Tentative Ruling

Counsel who wish to submit on the tentative ruling may do so by emailing BURDeptB@lacourt.org

PLEASE WRITE THE CASE NUMBER AND PARTY YOU REPRESENT. YOU MAY ONLY SUBMIT ON BEHALF OF THE PARTY YOU REPRESENT. YOU MAY NOT SUBMIT ON BEHALF OF ANOTHER PARTY.Counsel are directed to cc all other counsel if you are submitting on the tentative ruling.

IF YOU HAVE QUESTIONS OR NEED CLARIFICATION ON THE TENTATIVE, YOU MUST APPEAR AND ADDRESS YOUR QUESTIONS TO THE COURT.

IF BOTH SIDES SUBMIT ON THE TENTATIVE RULING, THE TENTATIVE RULING THEN BECOMES THE ORDER OF THE COURT ON THE MOTION DATE AND NO APPEARANCES ARE NECESSARY.

Superior Court of California

County of Los Angeles

Department B

Plaintiff Michael Leasher (“Plaintiff”) alleges that he was injured on July 5, 2019 at his house when the top of the pool filter exploded and struck him in the head. Defendant Everclean Pool & Spa, Inc. (“Everclean”) is alleged to have inspected and maintained the pool filter and equipment at the subject location that injured Plaintiff. Defendant Crystal Clear Pool and Spa, Inc. (“Crystal Clear”) is alleged to be the company that sold, installed, designed, configured, maintained, and inspected the pump, plumbing, and pool filter location and on/off switch at the subject location. Defendant Leslie’s Poolmart, Inc. dba Leslie’s Pool Supplies (“Leslie’s”) is alleged to be the company that sold, installed, designed, configured, maintained, inspected, and placed into the stream of commerce the pool filter and other equipment. Defendant Pentair Water Pool & Spa, Inc. (“Pentair”) is alleged to have designed, manufactured, assembled, inspected, repaired, maintained, installed, endorsed, drafted, tested, franchised, supplied, sold, leased, distributed, marketed, instructed, warned, and placed into the stream of commerce the pool filter.

Relevant to the motion before the Court is the 1^st cause of action, which is the only cause of action alleged against Everclean. In the 1^st cause of action, Plaintiff alleges that Everclean, Crystal Clear, and Leslie’s performed pool equipment installation services, inspection, maintenance, supervision, repairs, modifications and/or risk assessment, and that sold, installed, designed, configured, maintained, and inspected the pool filter system that injured Plaintiff. (FAC, ¶10.) Plaintiff alleges that Defendants owed Plaintiff a reasonable duty of care to inspect, maintain, supervise, repair, modify, assess, install, design, configure, maintain, and inspect the pool filter system. (Id., ¶11.) Plaintiff alleges Defendants breached their duty and thereby caused Plaintiff’s injuries. (Id., ¶¶12-15.)

The first amended complaint (“FAC”), filed July 27, 2021, alleges causes of action for: (1) negligence against Everclean, Crystal Clear, and Leslie’s; (2) strict products liability against Pentair and Leslie’s; and (3) negligent products liability against Pentair and Leslie’s.

On December 17, 2020, Everclean filed a cross-complaint against Pentair and Crystal Clear. The cross-complaint alleges causes of action for: (1) equitable indemnity; (2) equitable apportionment; (3) contribution; (4) declaratory relief; and (5) indemnity. Each cause of action is alleged against Crystal Clear and Pentair.

On January 26, 2023, Crystal Clear filed a cross-complaint against Everclean, Pentair, and Leslie’s for: (1) implied indemnity; (2) comparative equitable indemnity; (3) equitable indemnity; (4) declaratory relief; and (5) products liability. The 1^st to 4^th causes of action are alleged against all Cross-Defendants. The 5^th cause of action is brought against Pentair and Leslie’s.

On February 21, 2023, Pentair and Leslie’s filed a motion for good faith settlement determination.

Everclean requests judicial notice of Exhibits: (H) Plaintiff’s FAC filed in this action on July 27, 2021; (C) the declaration of Alison Osinski, Ph.D. dated November 2, 2022 filed in support of Plaintiff’s opposition to Everclean’s motion for summary judgment; and (D) the Court’s ruling on Everclean’s motion for summary judgment entered on December 30, 2022. The request is granted. (Evid. Code, § 452(d).)

Crystal Clear requests judicial notice of: (1) Plaintiff’s operative FAC filed on July 27, 2021; (2) Crystal Clear’s cross-complaint filed on January 23, 2023; (3) Plaintiff’s 998 Offer to Crystal Clear dated March 17, 2022; (4) the declaration of Alison Osinski, Ph.D. dated November 2, 2022 filed in support of Plaintiff’s opposition to Everclean’s motion for summary judgment; and (5) the declaration of David Rondinone dated November 2, 2022 in support of Plaintiff’s opposition to Everclean’s motion for summary judgment. The request is granted. (Evid. Code, § 452(d).)

In Tech-Bilt, Inc. v. Woodward-Clyde & Assoc. (1985) 38 Cal.3d 488, 499, the California Supreme Court articulated several factors to be considered in determining whether a settlement is in good faith within the meaning of section 877.6:

[T]he intent and the 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 a recognition that a settlor should pay less in settlement that he would if he were found liable after trial. Other relevant considerations include the financial conditions and insurance policy limits of the settling defendants, as well as the existence of collusion, fraud, or tortious conduct aimed to injure the interests of nonsettling defendants. [Citation.] Finally, practical considerations obviously require that the evaluation be made on the basis of information available at the time of settlement.

To determine whether a settlement was in “good faith” the judge should inquire as to whether the amount of the settlement is “within the reasonable range” of the settling defendant’s proportional share of comparative liability for the plaintiff’s injuries. (Abbott Ford, Inc. v. Superior Court (1987) 43 Cal.3d 858, 872; City of Grand Terrace v. Superior Court (1987) 192 Cal.App.3d 1251, 1262.) Generally, a settlement will be found to be in good faith unless the objecting defendant shows it to be “grossly disproportionate to what a reasonable person at the time of settlement would estimate the settlor’s liability to be.” (Abbott Ford, supra, 43 Cal.3d at 872.) That is, a party opposing a good faith settlement must demonstrate that “the settlement is so far ‘out of the ballpark’ in relation to” the factors discussed above that it is “inconsistent with the equitable objectives of the statute.” (Tech-Bilt, supra, 38 Cal.3d at 499-500.)

Pentair and Leslie’s (“Settling Parties”) move for determination of good faith settlement, stating that they have settled their claims with Plaintiff. The defendants who are not a part of the settlement are Crystal Clear and Everclean.

In making its determination on the good faith nature of the settlement, the Court evaluates the Tech-Bilt factors.

1. Amount Paid in Settlement and Allocation of Settlement Proceeds Among Plaintiffs

The Settling Parties state that in order to resolve all claims and mitigate undue expenses of continued litigation, they have reached a settlement with Plaintiff for $225,000. (Gulbrandsen Decl., Ex. Q [Confidential Settlement Agreement and Release].) The Settlement Agreement states in relevant part that the parties intend the settlement to include the full and complete release of claims existing between Settling Parties and Plaintiff in the lawsuit, Settling Parties will pay Plaintiff $225,000 for the full release of claims, including a Civil Code, § 1542 waiver, and Plaintiff will dismiss his claims against the Settling Parties with prejudice 30 days after receiving the settlement check. (Settlement Agreement, ¶¶1, 3, 6, 9.) The settlement also contemplates that the Settling Parties will pay a portion of the settlement amount directly to Medicare to settle the Medicare lien once Medicare provides a Recovery Demand Letter. (Id., ¶10.) It is the parties’ intention to satisfy all obligations and requirements under Medicare, Medicaid, and SCHIP Extension Act of 2007. (Id., ¶12.)

There is only one Plaintiff in this action, such that there would be no allocation of settlement proceeds among various plaintiffs.

In opposition, Everclean and Crystal Clear argue that Settling Parties have not stated how the settlement amount will be allocated between general and special damages, such that the non-settling parties would not know whether there would be an offset during trial. (Everclean Mot. at p.12; Crystal Clear Opp. at p.15.) However, this is not a requirement under CCP § 877.6 or the Tech-Bilt factors. Further, Everclean and Crystal Clear have not provided any case law showing that this is a requirement for a determination of the good faith nature of the proposed settlement.

2. Rough Approximation of Plaintiff’s Total Recovery and Settlor’s Proportionate Liability

Settling Parties argue that they have contested their liability and the settlement amount is within the reasonable range of their proportionate liability as among Everclean and Crystal Clear. Settling Parties argue that Everclean and Crystal Clear have greater potential liability. With respect to Everclean, Settling Parties argue that Everclean responded to the request to reassemble the subject filter a month before the accident, but could not locate the nut to secure the clamp band; the subject filter could only forcefully separate and injure Plaintiff if the filter was not properly secured at the base; Everclean serviced Plaintiff’s pool equipment on July 1, 2019 (4 days before the accident) and had been informed by Plaintiff’s wife that the lid had blown off; and the accident would not have occurred if Everclean ensured that the pool filter was properly assembled on July 1, 2019. With respect to Crystal Clear, Settling Parties argue that the accident would likely not have occurred if Crystal Clear installed the pool filter more than 5 feet away from the on/off switch for the pump and at least 6 inches away from the wall pursuant to Pentair’s installation manual; Crystal Clear redesigned the pool equipment pad at Plaintiff’s residence; and Crystal Clear installed the filter 1 foot away from the on/off switch, which placed Plaintiff in the danger zone when turning on the pump.

Settling Parties argue that they believe Plaintiff cannot prevail at trial, but they are willing to settle the claims to mitigate costs. They argue that the $225,000 settlement amount is four times the amount Plaintiff personally paid for his medical expenses in the amount of $51,102.41. They acknowledge that this amount is less than the $1.5 million global settlement demand Plaintiff originally claimed against all Defendants and likely less than what would be awarded at trial, but they argue that Tech-Bilt promotes settlement and recognizes that a settlor should pay less in settlement that it would if it were found liable after trial.

Everclean argues that on October 22, 2022, Plaintiff’s counsel sent an email to all Defendants stating that he was making a global demand of $1.5 million. (Feldman Decl., Ex. A.) Everclean argues that Settling Parties filed a motion for summary judgment/adjudication, which was scheduled to be heard on November 21, 2022, but Settling Parties withdrew the motion and instead reached the settlement with Plaintiff for $225,000 (15% of the global demand). Thereafter, on February 3, 2023, Plaintiff’s counsel sent a settlement demand to Everclean for $625,000. (Id., Ex. B.) Everclean argues that the $225,000 settlement amount from the manufacturer of the equipment (Pentair) and the retailer (Leslie’s) is not within the “ballpark” compared to the $625,000 demand made on Everclean (the pool maintenance company), which would potentially leave a remainder for Crystal Clear (installer) for $650,000.[1]

Crystal Clear argues that Plaintiff claims he suffered a broken neck and traumatic brain injury and that his life care plan will easily reach over $1 million. (Crystal Clear Opp. at p.14.) It argues that Settling Parties have not provided a rough approximation of Plaintiff’s recovery and how this settlement amount is proportionate to their share of liability.

Both Everclean and Crystal Clear rely on the declarations of Plaintiff’s experts, which were filed by Plaintiff in support of his opposition to Everclean’s motion for summary judgment. In those declaration, the experts opined that the filter and its component parts were defective and should have been taken off the market. Thus, Everclean and Crystal Clear argue that Plaintiff’s own experts placed the “lion’s share” of the potential liability on Settling Parties, such that a $225,000 settlement amount is inconceivable. (Everclean Opp. at p.9; Crystal Clear Opp. at p. 18.)

However, in making its determination, the Court declines to consider Plaintiff’s global settlement demand as the fixed and accurate amount of Plaintiff’s damages. (Wysong & Miles Co. v. Western Industrial Movers (1983) 143 Cal.App.3d 278, 290 [“The fact that the settlement was disproportionate to the claims made by plaintiffs' complaint is not in itself evidence of the lack of good faith….”]; Horton v. Superior Court (1987) 194 Cal.App.3d 727, 735 [“In determining a settling defendant's equitable proportionate share of liability, the judge does not look to the plaintiff's claim for damages; rather the judge tries to determine a ‘rough approximation’ of what the plaintiff would actually recover if the case should go to trial.”].) As stated in Horton, “[t]he assertion that $50,000 represents only about 15 percent of plaintiffs' total potential damages is also based on a false assumption, i.e., that plaintiffs were actually damaged in the sum of at least $325,000. This amount merely reflects what plaintiffs claimed they were damaged.” (Horton, supra, 194 Cal.App.3d 727, 735.) Thus, Plaintiff’s settlement with Settling Parties for only 15% of the initial global demand amount is not entirely unreasonable.

At the time Plaintiff made the global settlement demand for $1.5 million on October 22, 2022, he may have believed that his claims were $1.5 million against all 3 Defendants. However, Plaintiff’s assessment of his case may have changed after seeing Settling Parties’ motion for summary judgment/adjudication (not heard), the hearing on Everclean’s motion for summary judgment (December 30, 2022), further negotiations with Settling Parties, and/or any other number of events before entering into the Settlement Agreement with Settling Parties in January 2023. Whatever reason for this settlement amount with Settling Parties, the Court recognizes that the evaluation of the settlement was made on the basis of the information available to the parties at the time of settlement and that the amount paid in settlement is less than what Settling Parties would have paid if they were found liable after trial.

There is no doubt that liability is hotly contested by all of the parties in this action. Nevertheless, it appears that the $225,000 settlement amount is reasonable in light of Settling Parties’ approximate proportionate liability based on Plaintiff’s current damages.

Based on the arguments and evidence available to the Court in connection with the motion, the Court finds that the proposed settlement constitutes a rough approximation of Plaintiff’s recovery and is reasonably proportionate to Settling Parties’ liability. In making its determination on this issue, the Court recognizes that it is acceptable for settlors to pay less in settlement than if they were found liable after trial and also takes into account the information available to the parties at the time of negotiations. The opposing parties have not shown that the settlement was grossly disproportionate or “so far out of the ballpark” that the Court should deny this motion for good faith settlement determination.

3. Other Factors: Financial Condition and Insurance Policy Limits of Settlor, and Existence of Collusion, Fraud, or Tortious Conduct

Settling Parties argue that the settlement was the result of arms-length negotiations, including weeks of back-and-forth negotiations between counsel as to the terms and amount of settlement. (Gulbrandsen Decl., ¶21.) Mr. Gulbrandsen states that the settlement involves no fraud, collusion, or tortious misconduct by any of the parties. (Id.) Settling Parties also argue that there is no issue concerning their financial conditions or their insurance policy limits. (Mot. at p.17.) (The Court notes that Settling Parties cite to paragraph 25 of Mr. Gulbrandsen’s declaration, but the declaration only includes paragraphs 1-22 and does not include paragraph 25 or the signature page.)

The opposing parties do not argue that there is evidence of collusion, fraud, or tortious conduct. This factor weighs in favor of granting the motion.

Crystal Clear argues that Pentair and Leslie’s have abundant and excess insurance, which shows that the settlement was not made in good faith. (Crystal Clear’s Opp. at p.22.) Crystal Clear argues that Settling Parties have more sufficient insurance and multi-layers of excess coverage to satisfy the potential judgment in this matter and that they have more capital to fund a larger settlement that more accurately reflects their share of liability. Crystal Clear cites to the form interrogatory responses attached as Exhibits I and J to its opposition papers. Pentair responded to FROG No. 4.1 (re insurance information) by referencing the declarations page of the first layer of insurance for Pentair and stating that it maintained additional layers of excess insurance that are beyond and amount sufficient to satisfy any judgment or settlement that may reasonably arise from this matter. Leslie’s responded to FROG No. 4.1 by referring to a document reflecting the declarations page of the first layer of insurance covering Leslie’s for the claim. The Court notes that the insurance documents are not attached to the discovery responses.

However, merely because Pentair and Leslie’s may be larger corporations with more capital, or they paid for more comprehensive insurance coverage does not mean that they should pay additional amounts above their proportionate liability. As discussed above, the proposed settlement amount is reasonable and is not so out of the ballpark.

Everclean and Crystal Clear have not shown the existence of collusion, fraud, or tortious conduct between Plaintiff and Settling Parties. Further, the Court has considered the Settling Parties’ financial condition and insurance policy limit. The Court finds that these additional factors weigh in favor of approving the application for good faith determination.

CCP § 877.6 states in relevant part: “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.”

Settling Parties argue that Plaintiff’s FAC must be dismissed with prejudice, as well as Everclean’s cross-complaint and Crystal Clear’s cross-complaint alleged against them.

With respect to Everclean’s cross-complaint, Everclean’s causes of action for (1) equitable indemnity, (2) equitable apportionment, (3) contribution, and (5) indemnity are barred pursuant to CCP § 877.6(c). Everclean and Settling Parties do not appear to dispute that the 1^st, 2^nd, 3^rd, and 5^th causes of action would be dismissed by way of this order, but dispute whether the 4^th cause of action for declaratory relief would be barred. The 4^th cause of action alleges that an actual controversy has arisen and now exists between Everclean (on the one hand) and Crystal Clear and Pentair (on the other hand), regarding their respective liabilities and responsibilities in relation to Plaintiff. (Everclean Cross-Complaint, ¶20.) Everclean alleges that cross-defendants are legally responsible for Plaintiff’s injuries and damages. (Id., ¶21.) Everclean argues that this cause of action would determine the parties’ respective liabilities and responsibilities to one another and should not be barred. Settling Parties argue that the declaratory relief claim is based on comparative fault principles and is a disguised claim for indemnity/contribution.

With respect to Crystal Clear’s cross-complaint, Settling Parties argue that Crystal Clear’s cross-complaint causes of action are barred as they all sound in indemnity. The 1^st, 2^nd, and 3^rd causes of action for implied indemnity, comparative equitable indemnity, and equitable indemnity would be barred pursuant to CCP § 877.6. The 4^th cause of action for declaratory relief alleges that there is an actual and justifiable controversy between Crystal Clear, Everclean, Pentair, and Leslie’s about their legal responsibility to Plaintiff on the FAC and that Crystal Clear is entitled to comparative indemnity from cross-defendants. (Id., ¶¶23-24.) In the 5^th cause of action for products liability, Crystal Clear alleges that Pentair pool filter and component parts were defective in design, manufacture, and warning, causing the pool filter top/lid to blow off and strike Plaintiff such that Crystal Clear was compelled to incur attorney’s fees, expert fees, and court costs by reason of this action. (Id., ¶¶29-30.)

“That court has the ‘discretion to ferret out those claims that are in fact claims for indemnity’ that would be barred by the good faith settlement.” (Gackstetter v. Frawley (2006) 135 Cal.App.4th 1257, 1276.) In Gacktetter, the plaintiff filed claims for indemnity, breach of fiduciary duty, professional negligence, misrepresentation, and breach of the attorney-client retainer agreement. The Court of Appeal found that two of the plaintiff’s claims were expressly for indemnification and that the “other causes of action, although having different labels, are in effect for indemnification,” including claims for attorney’s fees as they were considered a form of implied equitable indemnity that would be barred by a good faith settlement. (Gacktetter, supra, 135 Cal.App.4th at 1275.)

Here, the claims for declaratory relief brought each by Everclean and Crystal Clear seek a determination on the respective rights of Everclean/Crystal Clear and Pentair and Leslie’s. However, the declaratory relief causes of action would essentially be null since any result would ultimately point back to the ruling on this motion—i.e., that any claim by Everclean or Crystal Clear against Pentair and Leslie’s for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault would be barred by CCP § 877.6. (There do not appear to be any claims by Everclean and Crystal Clear against Pentair and Leslie’s for express indemnity.)

Further, Crystal Clear’s claim for products liability is essentially another claim for indemnity. The 5^th cause of action alleges that Crystal Clear is seeking attorney’s fees, expert fees, and court costs as a result of this action—in other words, Crystal Clear is seeking indemnity and a reimbursement of fees and costs for defending against Plaintiff’s action. As this claim is essentially a disguised claim for indemnity, it too is barred by section 877.6.

Thus, the Court finds that Everclean’s cross-complaint is barred as alleged against Pentair. (The Court notes that Everclean’s cross-complaint was not alleged against Leslie’s. Everclean’s cross-complaint shall remain against Crystal Clear.) Similarly, Crystal Clear’s cross-complaint is barred as alleged against Pentair and Leslie’s.

The Court finds the Tech-Bilt factors have been met and determines that the settlement entered between Plaintiff and Settling Parties was entered in good faith and is fair.

Defendants Pentair Water Pool and Spa, Inc. and Leslie’s Poolmart, Inc.’s motion for good faith settlement determination is granted.

“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.” (CCP § 877.6(c).) As discussed in the Court’s written order, Defendant Everclean Pool & Spa, Inc.’s cross-complaint as alleged against Pentair Water Pool and Spa, Inc. is barred. Similarly, Defendant Crystal Clear Pool & Spa, Inc.’s cross-complaint as alleged against Pentair Water Pool and Spa, Inc. and Leslie’s Poolmart, Inc. is barred.

[1] In Crystal Clear’s papers, Crystal Clear provides the declaration of Julissa M. Galvin. Counsel states that in March 2022, Plaintiff served a 998 Offer of $1 million each to Everclean and Crystal Clear, and then served the global settlement demand for $1.5 million on October 22, 2022. (Galvin Decl., ¶¶10, 12.) Thereafter, Counsel states that Plaintiff and Settling Parties reached a settlement for $225,000 in November 2022 and that Plaintiff made a settlement offer to Everclean in the amount of $625,000. (Id., ¶¶14-15.) Counsel does not state whether Plaintiff made another offer to Crystal Clear or for what amount.