Judge: Joseph Lipner, Case: 22STCV12737, Date: 2025-04-24 Tentative Ruling
Case Number: 22STCV12737 Hearing Date: April 24, 2025 Dept: 72
SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES
DEPARTMENT 72
TENTATIVE
RULING
|
PEPPERDINE UNIVERSITY, Plaintiff, v. HARLEY ELLIS DEVEREAUX CORPORATION, Defendants. |
Case No:
22STCV12737 Hearing Date: April 24, 2025 Calendar Number: 2 |
Defendant Sundt Construction, Inc. (“Sundt”) and
Cross-Defendants Giroux Glass Inc. (“Giroux”); Iron Mechanical, Inc. (“Iron”);
Inland Pacific Tile, Inc. (“Inland”); Global Specialties Direct Inc.
(“Global”); and Continental Marble and Tile Co. (“Continental”) (collectively,
“Moving Parties”) move for an order determining that the settlement between
Moving Defendants and Plaintiff Pepperdine University (“Plaintiff”) is in good
faith under Code of Civil Procedure, section 877.6 and is a bar to all
cross-complaints for equitable and implied indemnity and contribution with
respect to the damages claimed by Moving Parties. Defendant Harley Ellis
Devereaux Corporation (“HED”) opposes.
Sundt further moves to dismiss and enter judgment on its
Cross-Complaint against Giroux, Iron, Inland, Global, and Continental
(collectively, “Moving Cross-Defendants”) with prejudice.
The Court GRANTS the motion.
This is a construction dispute.
This claim arises out of the construction of new student
housing at Pepperdine University. The housing project is located at 2455
Pacific Coast Highway, Malibu, California, commonly referred to as Outer
Precinct Seaver Residence or Seaside Hall (the “Project”).
On December 15, 2014, Plaintiff hired Defendant HED to
perform architectural and engineering design and construction administration,
among other services, for the Project. (Oh Decl. ¶ 2.)
On November 6, 2015, Plaintiff contracted with Defendant
Sundt as general contractor for the construction of the Project. (Griffin Decl.
¶ 2.)
The Project consists of a four-story dormitory with 67
residential suites. Each suite has two to four bedrooms, a living room, and
common restroom facilities. The Project also includes a common area including a
kitchen, dining area, and restrooms.
Sundt hired multiple subcontractors, including Giroux, Iron,
Inland, Global, and Continental. As part of a Contractor Controlled Insurance
Program (“CCIP”) for the project, each of the Moving Cross-Defendants, with the
exception of Continental, completed an enrollment form and was enrolled in the
CCIP.
The general scope of work for each subcontractor involved in
this case is as follows: Giroux was responsible for installation of casement
windows and windows; Iron was responsible for plumbing installation, including
drains; Inland was responsible for bathroom tile and waterproofing
installations; Global was responsible for shower accessories, including ADA
seats; and Continental was responsible for bathroom tile and waterproofing
installations.
The Project was first occupied by students in September
2018.
Plaintiff alleges negligence and/or design deficiencies
relating to bathrooms and casement windows against HED. Plaintiff alleges that
windows were falling or being damaged during wind events and that runoff and
splash from the showers were failing to drain properly in the bathrooms. (Oh
Decl. ¶ 4.)
Plaintiff filed this action on April 15, 2022. The operative
complaint is now the First Amended Complaint (“FAC”), which raises claims for
(1) breach of architect’s contract (against HED); (2) architect’s negligence
(against HED); (3) breach of contractor’s contract (against Sundt); and (4)
contractor’s negligence (against Sundt). Sundt was named via Doe amendment in
the FAC.
After filing the FAC, Plaintiff provided the parties with a
list of damages incurred, which most recently amounts to $17,896,526.70. (Oh
Decl. ¶ 6.) This amount consists of $12,976,017.26 for estimated costs of
repairing the windows; $4,564,795.00 for estimated costs of repairing the
bathrooms; $195,692.98 in Stearman costs associated with investigating the
defects; and $160,021.48 for temporary repairs and mitigation. (Oh Decl. ¶ 6.)
On December 5, 2022, Sundt filed its Cross-Complaint against
Giroux; Iron; Perlite Plastering Co., Inc. (“Perlite”); Inland, and Global.
Sundt’s Cross-Complaint raises claims for (1) express contractual indemnity;
(2) implied indemnity; (3) equitable indemnity, apportionment, and
contribution; and (4) declaratory relief.
On March 3, 2025, Moving Parties (including Sundt and the
cross-defendants) filed this motion for determination of good-faith settlement.
On March 18, 2025, HED filed an opposition. On the same day,
the Court continued the hearing, originally set for April 1, 2025, to April 8,
2025.
On April 1, 2025, Pepperdine, Sundt, and Continental each
filed a reply. On the same day, Inland, Iron, and Global each filed a notice of
joinder to Sundt’s reply. Global also joined Pepperdine’s reply.
On April 2, 2025, Giroux filed a notice of joinder to Sundt
and Pepperdine’s replies.
On April 4, 2025, the Court continued the hearing from April
8, 2025 to April 24, 2025.
On April 18, 2025, HED filed an objection to Pepperdine and
Continental’s replies, as well as to the joinders to those replies. HED did not
object to Sundt’s reply.
The Court sustains Sundt’s objection 6 (argument), 7
(argument), 8 (argument), 9 (argument), 10 (argument and legal conclusion), and
13 (argument and legal conclusion) to
the Sebra declaration.
The Court overrules the remaining evidentiary objections.
“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[.]” (Code Civ. Proc., § 877.6, subd. (a)(1).) “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, subd. (c).)
When analyzing a motion for determination of good faith
settlement, the trial court should consider several factors, including “whether
the amount of the settlement is within the reasonable range of the settling
tortfeasor's proportional share of comparative liability for the plaintiff's
injuries.” (Tech-Bilt,
Inc. v. Woodward-Clyde & Associates
(1985) 38 Cal.3d 488, 499 (Tech-Bilt).) Such factors
(the “Tech-Bilt Factors”) are summarized as follows:
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 it would if it
were found liable after a trial;
5. The
financial conditions 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.
(Tech-Bilt, supra, 38 Cal.3d at p. 499.)
“[T]he trial court's good faith determination must take into
account the settling tortfeasor's potential liability for indemnity to a
cotortfeasor, as well as the settling tortfeasor's potential liability to the
plaintiff.” (Far West Financial Corp. v. D & S Co. (1988) 46 Cal.3d
796, 816 fn. 16.)
“Ordinarily, a determination as to whether a settlement is
in good faith must be left to the discretion of the trial court” unless the
exercise of discretion on the basis of the Tech-Bilt criteria could only
lead to one conclusion. (Tech-Bilt, supra, 38 Cal.3d at p. 502.)
“[O]nly when the good faith nature of a settlement is
disputed, it is incumbent upon the trial court to consider and weigh the
Tech-Bilt factors. That is to say, when no one objects, the barebones motion
which sets forth the ground of good faith, accompanied by a declaration which
sets forth a brief background of the case is sufficient.” (City of Grand
Terrace v. Superior Court (1987) 192 Cal.App.3d 1251, 1261.)
“The party asserting the lack of good faith shall have the
burden of proof on that issue.” (Code Civ. Proc., § 877.6, subd. (d).)
The total settlement amount is $4,000,000.00. Plaintiff
claims a total of $17,896,526.70 in damages in this case. The Moving Parties
that are covered by the CCIP are contributing a total of $3,900,000.00 and
Continental is contributing $100,000.00.
This amount resulted from a two-day formalized mediation and
weeks of subsequent negotiations between the parties. Plaintiff provided the
Moving Parties with a defect list and cost of repair, which the Moving Parties’
consultants analyzed.
HED argues that this amount exposes HED to too much
potential leftover liability with the settling parties out of the case. But HED
admitted in its own discovery responses, months after Sundt’s Cross-Complaint
was filed, that HED did not contend that anyone other than itself contributed
to the construction defect claim. Furthermore, although HED contends that some
or all of the defects were Plaintiff’s responsibility, this is again not a
basis for claiming that the settling parties should pay Plaintiff a greater
amount.
HED has not shown that this amount is not reasonably
proportional to Plaintiff’s total demand, especially given the lower amount
expected to be paid by settling defendants as a compromise before trial.
The
Moving Parties agreed to pay a total settlement of $4,000,000.00.
There is only one Plaintiff in this action – Pepperdine. HED
argues that an allocation must be made between the defendants because there are
different distinct areas of damage, and failing to do so would prevent a proper
offset as to HED. While it is true that the subcontractors worked on distinct
portions of the Project (for the most part), HED was the general architecture
and engineering firm, and oversaw the project as a whole. Thus, it is not
necessary to delineate exactly which construction problems the settlement is
meant to pay for in which amounts. HED will benefit from the offset regardless.
Here, the $4,000,000.00 settlement is substantially less
than the total claim of over $17 million raised by Plaintiff. However, the fact
that Plaintiff will not have to take the settling parties to trial supports a
finding that this is reasonable. This is a construction case with a large
number of parties. The costs of litigating the case to trial with all of the
current parties would be great, and it is possible that Plaintiff may not
prevail against any given party, especially if HED is correct that the defects
resulted from Plaintiff’s own choices. The settlement amount is therefore
within the ballpark of the Moving Parties’ potential liability.
The Moving Parties that are covered by the CCIP are
contributing a total of $3,900,000.00 and Continental is contributing
$100,000.00.
The primary CCIP policy was Exhausted at $2,000,000.00.
(Griffin Decl. ¶ 10.) The first layer of excess is $25,000,000.00. (Supp. Griffin
Decl. ¶ 4.)
The
settlement resulted from a protracted period of negotiations between Plaintiff
and the settling defendants. Further, HED has not introduced evidence showing
bad faith by the settling parties – which is HED’s burden to show as an
objecting party. (Code Civ. Proc., § 877.6, subd. (d).)