Judge Kerry Bensinger, Case 20STCV27521 2023-04-20 Tentative Ruling

On July 21, 2020, plaintiffs Leeza Tierney (“Tierney”) and Stuart Crichton (“Crichton”) (collectively, “Plaintiffs”) filed this action against defendants Anush Smbatyan (“Anush”) and Sevak Smbatyan (collectively, “Settling Defendants”) arising from a motor vehicle accident. Plaintiffs allege that on April 1, 2019, Tierney was operating her vehicle when Anush drove, without warning and at an excessive speed, out of a private driveway and struck Tierney’s vehicle. Tierney asserts a claim for negligence and Crichton asserts a claim for loss of consortium.

On September 15, 2020, Plaintiffs amended the Complaint to add John Yavrouian and Vicky Yavrouian (the “Landlord Defendants”). On October 5, 2020, Plaintiffs dismissed Settling Defendants with prejudice from the action. On November 4, 2020, Plaintiffs filed a First Amended Complaint (“FAC”) naming only the Landlord Defendants. Plaintiffs assert claims for premises liability, negligence, and loss of consortium, alleging that the Landlord Defendants negligently managed their apartment complex and caused a large trash bin to be placed by their driveway which blocked Plaintiff and Anush’s line of sight, causing Anush’s vehicle to collide with Plaintiff’s.

On September 13, 2021, the Landlord Defendants filed a cross-complaint against Settling Defendants and the City of Glendale for indemnity and contribution.

On April 25, 2022, Settling Defendants filed an application for determination of good faith settlement. Under the terms of the agreement, Settling Defendants would pay $22,500 to Plaintiff Tierney and $2,500 to Plaintiff Crichton in exchange for a full and final release of any and all claims. The Court denied the application without prejudice. Because Settling Defendants did not submit evidence or discuss Plaintiff’s expected recovery, the Court could not assess whether the settlement amount was grossly disproportionate to Settling Defendants’ share of liability. Further, while Settling Defendants offered their full policy limits, there was no evidence to show that Settling Defendant had no other assets.

On December 5, 2022, Settling Defendants filed this motion for determination of good faith settlement. On April 7, 2023, Cross-Defendant City of Glendale (“City”) filed an opposition. Settling Defendants reply.

“Any party to an action in which it is alleged that two or more parties are joint tortfeasors or coobligors on a contract shall be entitled to a hearing on the issue of the good faith settlement entered into by the plaintiff or other claimant and one or more alleged tortfeasors or coobligors….” (Code of Civ. Proc., § 877.6.) Good faith settlements further 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.)

The Court must consider several factors 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 than he would if he were found liable after a trial.” (Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499 (Tech-Bilt).) “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.” (Id.)

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, supra, 38 Cal.3d at p. 499.) “[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.” (TSI Seismic Tenant Space, Inc. v. Superior Court (2007) 149 Cal.App.4th 159, 166.) “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.” (Id.)

In City of Grand View Terrace v. Superior Court (1987) 192 Cal.App.3d 1251, 1261, the court provided the following guidance regarding a motion for a good faith settlement determination:

“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.”

Following application of the six Tech-Bilt factors, the Court finds that the settlement between Settling Defendants and Plaintiffs was entered in good faith.

A. Factors 1 and 2: A Rough Approximation of Plaintiffs’ Total Recovery and Settling Defendants’ Proportionate Share of Liability, and Settling Defendants’ Payment in Settlement

Under the settlement agreement, signed September 1 and September 11, 2020, Settling Defendants will pay $22,500 to Tierney and $2,500 to Crichton in exchange for a full and final release of any and all claims against Settling Defendants, known or unknown, as alleged in this action. The total settlement amount equals Settling Defendants’ policy limits of $25,0000. (See Illya Decl., Exs. H, I.) Settling Defendants also point to the placement of a trash dumpster, which was under the control of Cross-Defendants, as the cause of the collision. (See Tierney Deposition, Illya Decl., Ex. G, p. 81:7-10.) Further, at the time of the settlement, Plaintiff Tierney’s claims were valued at $94,338 and Plaintiff Crichton’s claims were valued at $35,000, (see Ilya Decl., Ex. 3, p. 10), totaling $129,388. This amount is more than the $49,388 figure cited by Settling Defendants (Motion, p. 7:21) and less than the figure of $290,508 cited by City (Opposition, p. 4:7).

City argues that the settlement was not made in good faith because the $25,000 settlement amount is grossly disproportionate to Settling Defendants’ liability, representing only 8.6% of Plaintiffs’ claimed damages. However, that percentage is based on a damages figure of $290,508 taken from Plaintiffs’ Statement of Damages, served March 23, 2023. (See Kang Decl., Exs. A, B.) 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, supra, 38 Cal.3d at p. 499.) Here, Settling Defendants and Plaintiffs reached a settlement agreement in September 2020, which is less than two months after Plaintiffs filed the Complaint. Accordingly, the $129,388 figure best represents the “information available at the time of settlement.”

By the Court’s calculations, $25,000 is roughly 19.3% of Plaintiffs’ claimed damages at the time they filed the Complaint. Though based on the 8.6% calculation, City contends that the settlement is grossly disproportionate because Settling Defendants are most liable for Plaintiffs’ damages. For this assertion, City relies on a partially edited transcript of Anush’s deposition testimony. (Kang Decl., Ex. C.) As Settling Defendants point out, and as stated clearly on the transcript, City may not cite the transcript in any way. (Code Civ. Proc. §2025.540, subd. (b).) Effectively, City has not provided any evidence to support its assertion that the settlement is grossly disproportionate.

City further argues that the motion does not account for the potential elimination of the cross-complaints in this action; that is the true value of the settlement to Settling Defendants. After all, a finding of good faith of the settlement would foreclose City’s ability to assert indemnity and contribution claims against Settling Defendants should Plaintiffs prevail in their action against the Landlord Defendants, and Landlord Defendants in their indemnity action against City. However, it is City’s burden to submit evidence that the settlement was not made in good faith. City does not provide any evidence to show that its share of liability, or Landlord Defendants’ share of liability, is smaller than Settling Defendants’.

Further, even if the settlement does not accurately represent Settling Defendants’ share of liability, and thus weighs against a finding of good faith, the Court’s determination of Factor 5, below, would override an adverse finding on Factors 1 and 2. A settling defendant’s modest financial condition and insurance policy limits are necessarily controlling and effectively override the other Tech-Built factors. (County of Los Angeles v. Guerrero (1989) 209 Cal.App.3d 1149, 1158.)

Based on the foregoing, the Court finds that Factors 1 and 2 weigh slightly in favor of a finding of good faith.

Under the settlement, Tierney will receive $22,500 for her damages based on bodily injury and property damage and Crichton will receive $2,500 for his loss of consortium claim.

City argues that Settling Defendants fail to explain the allocation of settlement proceeds and further assert that the allocation is designed to limit the amount of any setoff available to the non-settling parties.

In reply, Settling Defendants contend that the allocation of settlement proceeds is self-evident because at the time of settlement, Tierney asserted a single cause of action for negligence and Crichton’s single claim for loss of consortium derived from Tierney’s claim. The Court agrees. 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, supra, 38 Cal.3d at p. 499.) Further, City does not submit any evidence to support its assertion that the allocation is designed to limit the amount of any setoff available to the non-settling parties.

Accordingly, the Court finds that this factor weighs in favor of a finding of good faith.

C. Factor 4: A Recognition that Settling Defendants Should Pay Less in Settlement Than They Would If Found Liable Following Trial

Settling Defendants argue that even if they were found liable following trial, damages would be offset for the proportionate fault of (1) Tierney who was reportedly driving without a California Driver’s license and (2) City’s and Landlord Defendants’ alleged negligent maintenance and control of the garbage dumpster. (Illya Decl., Ex. C, F.)

Accordingly, the Court finds that this factor weighs in favor of a finding of good faith.

D. Factor 5: Financial Condition and Insurance Policy Limits of Settling Defendants

Anush has an automobile policy that covers up to $25,000 per person and $50,000 per accident for bodily injury. The settlement proceeds represent Settlement Defendants’ single policy limit of $25,000. (Illya Decl., Exs. H, I.) Further, Settling Defendants do not possess any assets or other insurance that could provide coverage for Plaintiff’s claim. (Anush Smbatyan Decl., ¶¶ 6-8; Sevak Smbatyan Decl., ¶¶ 4, 5, 8.) Evidence of Settling Defendants’ lack of assets or additional insurance coverage weighs heavily in favor of a finding of good faith. “‘[E]ven where the claimant’s damages are obviously great, and the liability therefor certain, a disproportionately low settlement figure is often reasonable in the case of a relatively insolvent, and uninsured, or underinsured, joint tortfeasor.’ [Citation.]” (County of Los Angeles v. Guerrero (1989) 209 Cal.App.3d 1149, 1157, citing Tech-Built, supra, at p. 499.)

Accordingly, the Court finds that this factor weighs in favor of a finding of good faith.

E. Factor 6: Existence of Collusion, Fraud, Tortious Conduct Aimed to Injure the Interests of the Non-Settling Defendants

Settling Defendants declare that the settlement agreement was reached through open-arms-length negotiations and is not the result of collusion, fraud or tortious conduct. (Illya Decl., ¶¶ 10-11, 14.)

Accordingly, the Court finds that this factor weighs in favor of a finding of good faith.

Settling Defendants Anush Smbatyan’s and Sevak Smbatyan’s Motion for Determination of Good Faith Settlement is GRANTED.

Parties who intend to submit on this tentative must send an email to the Court at SSCDEPT27@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org. Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.

Hon. Kerry Bensinger

Judge of the Superior Court