Judge: Lisa R. Jaskol, Case: 22STCV05186, Date: 2024-06-06 Tentative Ruling
Case Number: 22STCV05186 Hearing Date: June 6, 2024 Dept: 28
Having considered the moving, opposition, and reply papers, the Court rules as follows.
BACKGROUND
A. Prior proceedings
On February 10, 2022, Plaintiff Martin Castro Vela (“Vela”) filed this action against Defendants State of California (“State”), County of Los Angeles (“County”), City of Los Angeles (“City”), Vesta Housing Solutions, LLC (“Vesta”), and Does 1-20 for (“Vesta”) for general negligence and premises liability.
On June 27, 2022, Vesta filed an answer. On June 30, 2022, Vesta filed a cross-complaint against Cross-Defendants Roes 1-100 for implied indemnity, comparative contribution, total equitable indemnity, and declaratory relief.
On August 1, 2022, the Court dismissed the City without prejudice at Vela’s request. On August 18, 2022, the Court dismissed the County and the State without prejudice at Vela’s request.
On September 6, 2022, Vela amended the complaint to include Defendant Bernards Bros. Inc. dba Bernards as Doe 1 (“Bernards”). On October 12, 2022, Bernards filed an answer.
On September 11, 2023, Vela amended the complaint to include Defendant TMP Services, Inc. as Doe 2 (“TMP”).
On November 7, 2023, TMP filed an answer and a cross-complaint against Cross-Defendants Bernard Bros. Inc., Vesta, and Moes 1-20 for indemnity, contribution, comparative partial indemnity, and declaratory relief—apportionment of fault. On November 28, 2023, Bernards and Vesta filed an answer to TMP’s cross-complaint.
On December 18, 2023, TMP amended its cross-complaint to include Cross-Defendant Preferred Modular Structures, Inc. as Moe 1 (“Preferred”).
On January 25, 2024, the Court dismissed Bernard Bros. Inc. and Vesta from TMP’s cross-complaint without prejudice at TMP’s request.
On February 16, 2024, Vela amended the complaint to include Defendant Preferred as Doe 3.
On April 22, 2024, Preferred filed an answer to Vela’s complaint.
On April 22, 2024, Preferred filed an answer to TMP’s cross-complaint and filed a cross-complaint against Cross-Defendants Vela, State, County, City, Vesta, Bernards, TMP, and Zoes 1-50 for indemnification, contribution, declaratory relief—apportionment of fault, and comparative partial indemnity.
On May 17, 2024, Bernards and Vesta filed an answer to Preferred’s cross-complaint.
B. This motion
On March 5, 2024, Bernards and Vesta (“Moving Defendants”) filed a motion for good faith settlement determination to be heard on March 27, 2024. The Court continued the hearing on the motion to June 6, 2024. On May 20, 2024, Preferred filed an opposition. On May 23, 2024, TMP filed an opposition. On May 29, 2024, Moving Defendants filed a reply to TMP’s opposition. On May 30, 2024, Moving Defendants filed a reply to Preferred’s opposition.
Trial is currently set for August 1, 2023.
PARTIES’ REQUESTS
Moving Defendants ask the Court to find that their settlement with Vela is in good faith.
Preferred and TMP ask the Court to deny the motion.
LEGAL STANDARD
Code of Civil Procedure section 877.6 provides in part:
“(a) (1) 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, upon giving notice in the manner provided in subdivision (b) of Section 1005. Upon a showing of good cause, the court may shorten the time for giving the required notice to permit the determination of the issue to be made before the commencement of the trial of the action, or before the verdict or judgment if settlement is made after the trial has commenced.
“(2) In the alternative, a settling party may give notice of settlement to all parties and to the court, together with an application for determination of good faith settlement and a proposed order. The application shall indicate the settling parties, and the basis, terms, and amount of the settlement. The notice, application, and proposed order shall be given by certified mail, return receipt requested, or by personal service. Proof of service shall be filed with the court. Within 25 days of the mailing of the notice, application, and proposed order, or within 20 days of personal service, a nonsettling party may file a notice of motion to contest the good faith of the settlement. If none of the nonsettling parties files a motion within 25 days of mailing of the notice, application, and proposed order, or within 20 days of personal service, the court may approve the settlement. The notice by a nonsettling party shall be given in the manner provided in subdivision (b) of Section 1005. However, this paragraph shall not apply to settlements in which a confidentiality agreement has been entered into regarding the case or the terms of the settlement.
“(b) The issue of the good faith of a settlement may be determined by the court on the basis of affidavits served with the notice of hearing, and any counteraffidavits filed in response, or the court may, in its discretion, receive other evidence at the hearing.
“(c) 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.
“(d) The party asserting the lack of good faith shall have the burden of proof on that issue. . . .”
(Code Civ. Proc., § 877.6, subds. (a), (b), (c), (d).)
In Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499 (Tech-Bilt), our Supreme Court identified the following nonexclusive factors courts must consider in determining if a settlement is in good faith under section 877.6: “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. 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.”
The evaluation of a settlement is “made on the basis of information available at the time of settlement.” (Tech-Bilt, supra, 38 Cal.3d at p. 499.)
DISCUSSION
A. The complaint and cross-complaints
1. Vela’s complaint
Vela’s complaint alleges that on or about February 10, 2021, at 1060 N. Vignes Street in Los Angeles (“premises”), Defendants State, County, City, Vesta, and Does 1-20 and their agents/employees negligently owned, controlled, supervised, managed, designed, constructed, maintained and/or operated the premises, causing and/or allowing a dangerous condition to exist on the property which proximately caused Plaintiff to fall from a platform while performing services on Defendants' property, injuring Plaintiff.
2. Vesta’s cross-complaint
Vesta’s cross-complaint alleges that if Vela sustained injuries as alleged in his complaint, the injuries were the result of the negligent, intentional, and/or reckless acts of Cross-Defendants Roes 1-100.
3. TMP’s cross-complaint
TMP’s cross-complaint alleges that if it is found liable to Vela or any other party for negligence, indemnity or any other reason arising out of or relating to the damages allegedly sustained by Vela, then Bernard Bros. Inc., Vesta, and Moes 1-20 “were also negligent and otherwise at fault in causing [Vela’s] injuries, if any” and their actions caused Vela’s injuries and damages.
4. Preferred’s cross-complaint
Preferred’s cross-complaint alleges that it is not liable for the events described in Vela’s complaint and that Vela, State, County, City, Vesta, Bernards, TMP, and Zoes 1-50 were legally responsible for any damages Vela suffered.
B. Moving Defendants’ motion
1. Background
Moving Defendants were general contractors for a construction project at the Vignes Street location. (Motion p. 2.) Alternatively, Bernards was the general contractor, Vesta was the contractor, and A&D Fire Sprinklers (“A&D”) was the subcontractor. (Motion pp. 3-4.)
Plaintiff was working at the site as an alarm technician for A&D when he fell off a platform, suffering injuries. (Motion p. 3.)
2. Settlement terms
Moving Defendants have settled with Vela for $943,159. Zurich Insurance will pay the entire policy limits of $943,159 (which represents the policy limits of $1,000,000 less diminishing defense costs). In exchange, Plaintiff will file a request for dismissal with prejudice of his claims against Moving Defendants. Plaintiff agrees to set aside $120,000 of the settlement amount to negotiate the outstanding workers’ compensation lien, which is currently $81,934.32. American Zurich reserves its rights to assert its future credit rights against Plaintiff under Labor Code sections 3858 and 3861. The Release does not reduce American Zurich’s rights to future credit in the workers compensation claim. The settling parties will bear their own costs, expenses, and attorneys’ fees.
3. Tech-Bilt factors
a. Moving Defendants’ proportionate liability
Citing Privette v. Superior Court (1993) 5 Cal.4th 689 (Privette), Moving Defendants argue that Bernards is not liable as the general contractor because Bernards had no control over the A&D’s work and exercised no supervisory control over the site work. In Privette, our Supreme Court considered whether a landowner could be liable for injuries sustained when an independent contractor's employee fell off a ladder while carrying hot tar up to a roof during a roof installation. (See Gonzalez v. Mathis (2021) 12 Cal.5th 29, 41 (Gonzalez), citing Privette, supra, 5 Cal.4th at pp. 691-692.) The Court held that “the doctrine of peculiar risk — which provides that landowners are vicariously liable for injuries to third parties resulting from the negligence of independent contractors in performing inherently dangerous work on the landowners’ property — does not apply to injuries sustained by the contractor's own employees.” (Ibid., citing Privette, supra, 5 Cal.4th at pp. 691-692.)
Moving Defendants also contend that Vesta complied with all workplace safety guidelines to ensure a safe working environment. (Motion p. 5.) Moving Defendants point to the conclusion of their safety expert John Martinet (“Martinet”), who found that the distance between the platforms and the ground was 30-36 inches or almost 3 feet. Martinet concluded that guardrails were not required because Cal OSHA requires guardrails at a height of 7½ feet and the federal standard requires guardrails at a height of 6 feet. Martinet opined that Moving Defendants had complied with the Cal OSHA standards and Plaintiff was not watching where he was going. (Motion p. 4.)
Last, Moving Defendants argue the allegedly unsafe condition was open and obvious. According to Moving Defendants, Plaintiff was well aware of the construction site and the open nature of the platforms and was not watching where he was going. (Motion p. 5.)
b. Plaintiff’s damages
Plaintiff has incurred $267,998.22 in past medical expenses. Plaintiff claims $130,000 in past lost earnings and over $350,000.00 in future lost earnings. Although Plaintiff apparently claims future medical expenses, Moving Defendants have not specified a cost.
c. Allocation of settlement
Plaintiff will receive the entire settlement subject to applicable liens.
d. Financial considerations
Moving Defendants state that, under the contract between A&D and Vesta and the prime contract between Vesta and Bernards, A&D is contractually obligated to provide a defense and indemnity as a subcontractor and to hold the two general contractor harmless. Therefore, when Bernards and Vesta tendered their defense and requested indemnity from A&D, A&D’s insurer Zurich accepted the tender.
Moving Defendants clarify that the subcontract between Vesta and A&D requires A&D to indemnify and hold harmless Bernards and Vesta from bodily injury claims/damages/losses arising out of A&D’s work under the subcontract only to extent caused by negligent acts of A&D or their employees. (Motion pp. 4-5.)
Moving Defendants have not provided a copy of the subcontract or a copy of Zurich’s letter accepting Moving Defendant’s tender. The Court does not know if Zurich’s acceptance of the tender included any conditions or limitations.
Zurich will pay its entire policy limits of $943,159 (which represents the policy limits of $1,000,000 less diminishing defense costs). (Motion pp. 3, 7.)
e. Collusion or fraud
Moving Defendants assert that the settlement is a result of arms-length negotiations and there is no evidence of fraud or collusion. (Motion p. 11.)
C. Preferred’s opposition
In its opposition to Moving Defendants’ motion, Preferred asserts that it did not appear in the case until April 22, 2024. Preferred asks the Court to take the motion off calendar or continue the hearing at least 120 days to give Preferred time to conduct its investigation.
In addition, based on its counsel’s preliminary investigation, Preferred believes that Moving Defendants have far more insurance than the Zurich policy. Preferred has attached a “Certificate of Liability Insurance” for Bernards dated September 7, 2022. The first page of the certificate lists three “insurer(s) affording coverage.” The first two commercial general liability policies listed have per occurrence limits of $2 million. The third policy, which provides excess liability coverage, has per occurrence and aggregate limits of $8 million.
The second page of the certificate lists three additional policies: (1) excess and umbrella #2, per occurrence and aggregate limits of $10 million, (2) excess #3, per occurrence and aggregate limits of $10 million, and (3) excess #4, per occurrence and aggregate limits of $20 million.
Preferred also asserts that Plaintiff has hundreds of thousands of dollars in medical specials and is projected to have even more in the future.
D. TMP’s opposition
Like Preferred, TMP argues that Moving Defendants have insurance coverage beyond the Zurich policy limits of $943,159. TMP has provided Moving Defendants’ form interrogatory responses and a certificate of insurance to support its argument. TMP contends that while it is possible that the Zurich policy must be exhausted before the other policies can be reached, this does not mean that the other policies are not available.
E. Moving Defendants’ replies
In their replies, Moving Defendants argue that only the Zurich policy is at issue because A&D and TMP are required to indemnify Moving Defendants under their subcontracts.
F. Analysis
The Court takes the motion for good faith settlement determination off calendar. On December 5, 2023, Moving Defendants settled the case for $943,159. On December 29, 2023, Moving Defendants reserved their motion for good faith settlement for March 27, 2024. On February 18, 2024, Moving Defendants served the summons and complaint on Preferred. Sixteen days later, on March 5, 2024, Moving Defendants filed their motion for a good faith settlement determination. Based on this chronology, Preferred has not had time to conduct a reasonable investigation of the settlement’s good faith.
Moving Defendants contend that they are justified in limiting the settlement amount to the limits of Zurich’s policy because Zurich’s insured, A&D, is contractually required to indemnify Moving Defendants. But Moving Defendants have not shown that, aside from Moving Defendants’ potential liability based on the negligent acts of A&D or its employees (which Zurich’s policy evidently would cover), they are not exposed to liability to Plaintiff based on their own negligence. Moving Defendants’ brief reference to the Privette line of cases does not resolve this issue. For example, Moving Defendants appear to argue that, under Privette, Bernards is shielded from liability. Vesta, on the other hand, faces no liability (according to Moving Defendants) because Vesta complied with all workplace safety guidelines to ensure a safe working environment. If Preferred had received sufficient time to conduct a reasonable investigation, Preferred might have addressed these arguments.
The motion is off calendar.
CONCLUSION
The Court takes off calendar the motion for good faith settlement determination filed by Defendants Vesta Housing Solutions, LLC, and Bernards Bros. Inc.
Moving parties are ordered to give notice of this ruling.
Moving parties are ordered to file the proof of service of this ruling with the Court within five days.