Judge Lisa K. Sepe-Wiesenfeld, Case Number: 21SMCV00579, Date: 2024-04-02 Tentative Ruling

Judge: Lisa K. Sepe-Wiesenfeld, Case: 21SMCV00579, Date: 2024-04-02 Tentative Ruling

Any other joint tortfeasors or co-obligors are barred from asserting any further claims against Cross-Complainants/Cross-Defendants XL Hog, Inc. dba Advance Building Maintenance, 9033 Wilshire Boulevard Investors LLC, and Madison Marquette Real Estate Services Inc. based on comparative negligence or comparative fault.

Code of Civil Procedure section 877.6 enables a settling defendant to free itself not only from any further claims of the plaintiff but also from any subsequent liability to any non-settling defendant for equitable comparative contribution, or partial or comparative indemnity. A settling defendant obtains this immunity by settling in “good faith.” Code of Civil Procedure section 877.6, subdivision (b), provides that the court may determine the good faith of a settlement on the basis of affidavits and counter affidavits or may, in its discretion, receive other evidence at the hearing. Section 877.6 grants the trial court broad discretion in determining whether a settlement is in good faith for purposes of that statute, and “its decision may be reversed only upon a showing of abuse of discretion.” (TSI Seismic Tenant Space, Inc. v. Superior Court (2007) 149 Cal.App.4th 159, 165.)

To determine whether a settlement was in “good faith” the court 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.) Ultimately, the “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.” (Tech-Bilt v. Woodward-Clyde & Assocs. (1985) 38 Cal.3d 488, 499 (Tech-Bilt).)

In determining the good faith of a settlement, the court should consider a number of factors, including (1) a rough approximation of the total recovery and the settlor’s proportionate liability, (2) the actual settlement amount, (3) the allocation of settlement proceeds among plaintiffs, (4) the recognition that a settlor should pay less in settlement than he or she would if liability is established after trial, (5) the financial conditions and insurance policy limits of the settlor, and (6) the existence of facts showing collusion, fraud, or tortious conduct aimed to injure the interests of nonsettling defendants. (Tech-Bilt, supra, 38 Cal.3d at p. 499.) Furthermore, the evaluation must “be made on the basis of information available at the time of settlement.” (Ibid.)

The party contesting the settlement bears the burden of proving that the settlement is in bad faith. (Code Civ. Proc., § 877.6, subd. (d).) If the party contesting the settlement can show with admissible evidence “that the settlement is so far ‘out of the ballpark’ in relation to [the above-referenced] factors as to be inconsistent with the equitable objectives of the statute,” then the court should find the settlement to be lacking in good faith. (Tech-Bilt, supra, 38 Cal.3d at pp. 499-500.) If no such showing is made, the settlement should be deemed to be in good faith, and the settlor is entitled to an order barring any further claims by any other joint tortfeasor or co-obligor for “equitable comparative contribution, or partial or comparative indemnity.” (Code Civ. Proc., § 877.6, subd. (c).)

Cross-Complainants/Cross-Defendants XL Hog, Inc. dba Advance Building Maintenance, 9033 Wilshire Boulevard Investors LLC, and Madison Marquette Real Estate Services Inc. (“Cross-Defendants”) move the Court for a determination that their settlement reached with Plaintiff Sentinel Insurance Company, Ltd. (“Plaintiff”) was made in good faith. Defendant/Cross-Complainant/Cross-Defendant University of Southern California (“USC”) opposes the motion on the ground that there is insufficient evidence to support a finding of good faith settlement, the settling Cross-Defendants’ settlement fails the Tech-Bilt analysis, and USC is entitled to conduct discovery. The Court proceeds to an analysis of the Tech-Bilt factors to determine whether the proposed settlement was made in good faith.

Cross-Defendants have agreed to settle this action with Plaintiff, who has sued only USC, for $1,000,000.00. (Mot., Felder Decl. ¶ 4.) As to the rough approximation of the total recovery, Plaintiff’s FAC seeks reimbursement for damages of $3,793,848.20 (FAC ¶ 30), plus costs and prejudgment interest against USC. Cross-Defendants argue this amount does not account for the potential for an adverse verdict, a lower verdict, or findings as to fault or mitigation by Plaintiff. Cross-Defendants deny any liability for the incident, and they contend that the proposed settlement represents 26% of Plaintiff’s claimed damages in the FAC. USC argues that Plaintiff’s alleged damages are actually $5,422,417.83. (Opp’n, Dixon Decl. ¶¶ 11-13.) Assuming this is true, the proposed settlement amount still represents 19% of Plaintiff’s estimated damages, which appears fair given that Cross-Defendants are not Defendants to Plaintiff’s FAC; only USC is a defendant.

As to the proportionate liability, Cross-Defendants contend there is no evidence as to what duty Cross-Defendants owed Plaintiff, particularly given the terms of the lease, and equitable indemnity is proper only where there is a joint legal obligation of Cross-Defendants and USC to Plaintiff (C.W. Howe Partners Inc. v. Mooradian (2019) 43 Cal.App.5th 688, 700, quotation marks omitted [“Equitable indemnity, which requires no contractual relationship, is premised on a joint legal obligation to another for damages; it is subject to allocation of fault principles and comparative equitable apportionment of loss”]), and there is no other basis for liability. USC argues there is no evidence that Cross-Defendants did not cause the subject loss, and USC presents evidence to the contrary, but the only evidence provided is from USC’s counsel, who lacks personal knowledge to testify about the cause of the loss. (Opp’n, Dixon Decl. ¶ 9.) Given Cross-Defendants’ possible defenses to USC’s claims against them, the Court finds that this factor weighs in favor of approving the settlement as made in good faith.

Cross-Defendants dispute that they are liable for the harm alleged by Plaintiff, particularly given Cross-Defendants’ defenses. This favor weighs in favor of approving the settlement as made in good faith, as Cross-Defendants dispute liability to any extent.

Cross-Defendants provide evidence that Cross-Complainants/Cross-Defendants 9033 Wilshire Boulevard Investors LLC and Madison Marquette Real Estate Services Inc. tendered their defense to Cross-Complainant/Cross-Defendant XL Hog, Inc. dba Advance Building Maintenance, whose insurer accepted the tender under a reservation of rights, and the available insurance policy has a $1,000,000 policy limit. There is no basis to conclude that additional insurance policies would require a settling party to pay more than their proportionate liability, i.e., there is no requirement that a party go up to the limit of its insurance policy when settling. Given that Cross-Defendants settled for the limit allowed by the applicable insurance policy, this factor weighs in favor of approving the settlement as made in good faith.

Cross-Defendants represent that the settlement is the result of mediation, and the settlement was not aimed at making other parties pay more than their fair share. (Mot., Ryan Decl. ¶ 4.) USC argues that Cross-Defendants are trying to rely on a $1,000,000 insurance policy and some to cut off USC’s ability to pursue indemnification claims against them, but this is a conclusory statement, devoid of any specific evidence demonstrating collusion, that would preclude a finding of good faith settlement in almost any case. Thus, the Court finds that this factor weighs in favor of approving the settlement as made in good faith. USC also argues that it is entitled to conduct further discovery into Cross-Defendants’ financial condition, but Cross-Defendants show that USC possesses all applicable insurance policies, and again, there is no basis to conclude that additional insurance policies would require a settling party to pay more than their proportionate liability.

After considering the factors set forth in Tech-Bilt, supra, 38 Cal.3d at page 499, the Court finds that the proposed settlement was made in good faith. Accordingly, Cross-Complainants/Cross-Defendants XL Hog, Inc. dba Advance Building Maintenance, 9033 Wilshire Boulevard Investors LLC, and Madison Marquette Real Estate Services Inc.’s Motion for Good Faith Settlement Determination is GRANTED. Any other joint tortfeasors or co-obligors are barred from asserting any further claims against Cross-Complainants/Cross-Defendants XL Hog, Inc. dba Advance Building Maintenance, 9033 Wilshire Boulevard Investors LLC, and Madison Marquette Real Estate Services Inc. based on comparative negligence or comparative fault.