Judge: Kerry Bensinger, Case: 21STCV37131, Date: 2023-08-15 Tentative Ruling

Case Number: 21STCV37131    Hearing Date: August 15, 2023    Dept: 27

Tentative Ruling

Judge Kerry Bensinger, Department 27

HEARING DATE:     August 15, 2023                                 TRIAL DATE:  October 24, 2023

CASE:                                Karla Alvarenga v. Kusum R. Shah, et al.

CASE NO.:                 21STCV37131

MOTION FOR DETERMINATION OF GOOD FAITH SETTLEMENT

MOVING PARTY:               Defendant Rosecrans Gardens Homeowners Association, Inc.

RESPONDING PARTY:      Defendant Rashmi K. Shah and Kusum Shah

I.          BACKGROUND

            On February 15, 2023, Plaintiff Karla Alvarenga, filed this action against Defendants, Kusum R. Shah and Rashmi K. Shah (the “Shahs”), and Rosecrans Gardens Homeowners Association, Inc. (“Settling Defendant”), asserting causes of action for general negligence and premises liability.  On the morning of October 30, 2019, Plaintiff was stabbed multiple times by her then boyfriend who entered her bedroom through an unsecured window.  Plaintiff was a tenant of a condominium unit owned by the Shahs at the time of the incident.  Settling Defendant owns and manages the commons areas of the condominium complex where Plaintiff’s unit is located.   Plaintiff alleges that Defendants failed to take reasonable steps to secure the property and allowed a dangerous condition to exist at the premises.  The Shahs and Settling Defendant later filed cross-complaints against each other for indemnity and contribution.

On May 17, 2023, Settling Defendant filed this Motion for Good Faith Settlement Determination.  Settling Defendant filed proof of service showing that Plaintiff and the Shahs were served with this motion.

On July 11, 2023, counsel for the Shahs filed a declaration stating that the Shahs did not file an opposition to this motion because Plaintiff’s counsel agreed to prepare and execute dismissals of the Complaint against the Shahs.  However, given that Plaintiff have yet to dismiss the Shahs from this action, the Shahs request that the hearing be continued to allow them to file an opposition to the motion.

            The motion was heard on July 18, 2023.  Based on the Shah’s declaration, the motion was continued to allow the Shahs to file an Opposition.  Settling Defendants could file a Reply.

            The Shahs have since filed an Opposition.  Settling Defendants have filed a Reply.

II.        LEGAL STANDARD

“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).)¿¿¿ 

A contested application for determination of good faith settlement must analyze the ‘Tech-Built factors,’ but an unopposed motion does not require a finding on every factor.¿ In City of Grand Terrace v. Superior Court (1987) 192 Cal.App.3d 1251, 1261, the Court of Appeal stated, “We are unaware of any reported decision which has reversed an uncontested good faith determination and we, therefore, conclude that only 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.)¿¿ 

III.      DISCUSSION

After weighing the Tech-Bilt factors, the Court finds that the settlement between Plaintiff and Settling Defendant was made in good faith.

Application of the Tech-Bilt Factors  
 

1.      A Rough Approximation Of Plaintiff’s Total Recovery And The Settlor’s Proportionate Liability.  

The first Tech-Bilt factor consists of two parts – a rough approximation of Plaintiff’s total recovery and the settlor’s proportionate liability.  When approximating a plaintiff’s total recovery or the settling defendant’s proportionate liability, “judges should . . . not yearn for the unreal goal of mathematical certainty.  Because the application of section 877.6 requires an educated guess as to what may occur should the case go to trial, all that can be expected is an estimate, not a definitive conclusion.”  (North County Contractor’s Assn. v. Touchstone Ins. Services (1994) 27 Cal.App.4th 1085, 1090 (hereafter, North County).)  “The ultimate determinant of good faith is whether the settlement is grossly disproportionate to what a reasonable person at the time of the settlement would estimate the settlor’s liability to be.”¿ (City of Grand Terrace, supra, 192 Cal.App.3d at p. 1262.)¿¿ 

‘“[A] defendant’s settlement figure must not be grossly disproportionate to what a reasonable person, at the time of the settlement, would estimate the defendant’s liability to be.’  [Citation.]”  (Tech-Bilt, supra, 38 Cal.3d at p. 499.)  However, even though “an offer of settlement must bear some relationship to one’s proportionate liability, bad faith is not ‘established by a showing that a settling defendant paid less than his theoretical proportionate or fair share.’  [Citation.]”  (North County, supra, 27 Cal.App.4th at p.1090.)  “Such a rule would unduly discourage settlements” and “convert the pretrial settlement approval procedure into a full-scale mini-trial.”  (Tech-Bilt, supra, 38 Cal.3d at p. 499.)  Rather, in order to meet the proportionality requirement, “all that is necessary is that there be a ‘rough approximation’ between a settling tortfeasor’s offer of settlement and his proportionate liability.  [Citation.]”  (North County, supra, 27 Cal.App.4th at pp. 1090-91.)  In determining whether the settling defendant’s settlement figure is “within the ballpark” of his fair share of liability, the Court may rely on “the judge’s personal experience” and the experience of “experts in the field.”  (Tech-Bilt, supra, 38 Cal.3d at p. 500.) 
 
            Additionally, “a court not only looks at the alleged tortfeasor’s 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.) 
 
            Under the terms of the settlement, Settling Defendant agrees to pay the sum of $1,000,000 in exchange for Plaintiff’s execution of a written release of all current and potential claims which are in any way related to the attack.  The sum represents the extent of the Settling Defendants’ available liability insurance.  (Declaration of Scott Davis, ¶ 7.)¿ Settling Defendant argues that the settlement amount is well within its share of liability given that it did not own the subject unit and was under no obligation to make improvements to the property owned by Plaintiff’s landlords.  Settling Defendant further submits that the settlement figure is “within the ballpark” given that Plaintiff’s known medical expenses total approximately $116,291.

The Shahs argue that Plaintiff’s rental unit had metal bars installed on the windows for many years until Settling Defendant removed them and failed to re-install.  This argument fails for two reasons.  First, the Shahs, as the party contesting the good faith of the settlement has the burden of furnishing evidence to show that the settlement was not made in good faith.  The Shahs do not offer any evidence for this, or any, assertion.  Second, even accepting the representation as true, the Shahs wholly ignore how a settlement payment of $1,000,000 fails to represent Settling Defendant’s share of liability.  In sum, this factor weighs in favor of good faith.

2.      The Amount Paid In Settlement. 
 

Settling Defendant has agreed to pay $1,000,000. 

The Shahs argue that payment of the entirety of Settling Defendant’s policy limits leaves noting from the policy to be paid to the Shahs for their claim for indemnity.  However, this presupposes that the Shahs have a meritorious claim for indemnity.  More importantly, the Shahs fail to counter that the settlement amount does not adequately represent Settling Defendant’s share of liability.

 3.  The Allocation Of Settlement Proceeds Among Plaintiffs.  
 
            The allocation of settlement proceeds among plaintiffs is only relevant if there is more than one plaintiff.  (See Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 968 (hereafter, Cahill).)  Here, there is only one Plaintiff.  Thus, this factor is irrelevant. 
 

4.  A Recognition That A Settlor Should Pay Less In Settlement Than He Would If
                 He Were Found Liable After Trial.  
 

The Shahs do not provide evidence of Settling Defendant’s share of liability, thereby failing to establish that Settling Defendants would pay less in settlement than he would if found liable at trial.  This factor supports a determination of good faith.   
 
             5.  The Financial Conditions And Insurance Policy Limits Of Settling Defendants.  
 
            An exception to the proportionality requirement described above is that “a disproportionately low settlement figure is often reasonable” when the settling defendant is “relatively insolvent” and uninsured or underinsured.  (Tech-Bilt, supra, 38 Cal.3d at p. 499; see Schmid v. Superior Court (1988) 205 Cal.App.3d 1244, 1245–6 [holding that “a settlement of a personal injury lawsuit is in ‘good faith[]’ . . . where a defendant pays the plaintiff the limit of the defendant’s insurance policy and has no assets, even though the amount paid in settlement is far less than the likely amount of a judgement against the defendant were the case to go to trial”]; see also County of Los Angeles v. Guerrero (1989) 209 Cal.App.3d 1149, 1157–8 [finding that the settling defendant’s “modest” financial condition and insurance limits “are necessarily controlling and effectively override the other Tech-Bilt factors”].) 

Here, the Shahs argue that Settling Defendant has not provided any evidence to show that the $1,000,000 settlement payment represents their insurance policy limits and that Settling Defendants lack other assets.  The Shahs are correct that Settling Defendant does not provide evidence showing a lack of assets to contribute to the settlement.  Thus, even if Settling Defendant is offering the extent of its policy limits, this factor tends to weigh against a finding of good faith.  However, given the Court’s finding that there is a lack of evidence of the Settling Defendant’s liability, this factor does little to undermine a good faith determination.

6. The Existence Of Collusion, Fraud, Or Tortious Conduct Aimed To Injure    
    The Interests Of The Non-Settling Defendants. 
 

            “The party asserting the lack of good faith . . . [is] permitted to demonstrate, if he can, that the settlement is so far ‘out of the ballpark’ in relation to [the above] factors as to be inconsistent with the equitable objectives of [Section 877.6].  Such a demonstration would establish that the proposed settlement was not a ‘settlement made in good faith’ within the terms of section 877.6.”  (Tech-Bilt, supra, 38 Cal.3d at pp. 499–500.) 

“Any negotiated settlement involves cooperation, but not necessarily collusion.  It becomes collusive when it is aimed to injure the interests of an absent tortfeasor.  Although many kinds of collusive injury are possible, the most obvious and frequent is that created by an unreasonably cheap settlement.”  (River Garden Farms, Inc. v. Superior Court (1972) 26 Cal.App.3d 986, 996 (River Garden Farms).)  “Prevention of collusion is but a means to the end of preventing unreasonably low settlements which prejudice a nonparticipating tortfeasor.  The price of a settlement is the prime badge of its good or bad faith.  Construed in the light of [section 877.6’s] objectives, the good faith release clause extends the obligation of good faith beyond the parties to the negotiations, embracing an absent tortfeasor.”  (Ibid.)  

  
            Here, the Shahs argue that the circumstantial evidence surrounding settlement indicates collusion.  Specifically, the Shahs point to (1) Plaintiff’s unwillingness to formalize a global settlement agreed by all parties and to release her claims against the Shahs and (2) Settling Defendant’s unwillingness to stipulate to continue the hearing for this motion.  Again, these assertions are not supported by evidence.  Nor do the Shahs make sufficiently clear how Plaintiff’s delay in formalizing a global settlement and release her claims against the Shahs, or Settling Defendant’s refusal to continue this motion, is indicative of collusion.  Moreover, prevention of collusion is simply a means to the end of preventing unreasonably low settlements.  (River Garden Farms supra, 26 Cal.App.3d at p. 996.)  A payment of $1,000,000 is not an unreasonably low figure given a lack of evidence concerning Settling Defendant’s share of liability.

IV.         CONCLUSION 

In sum, the Court finds the settlement between Defendant Rosecrans Gardens Homeowners Association, Inc. and Plaintiff Karla Alvarenga for $1,000,000 was made in good faith. 

Accordingly, the Motion for Determination of Good Faith Settlement is GRANTED.

Moving party to give notice. 

Dated:   August 15, 2023                                          ___________________________________

                                                                                    Kerry Bensinger

                                                                                    Judge of the Superior Court

            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.  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.