Judge: Mark C. Kim, Case: 21LBCV00543, Date: 2022-09-13 Tentative Ruling

Case Number: 21LBCV00543    Hearing Date: September 13, 2022    Dept: S27

1.     Background Facts

Plaintiff, Tokio Marine America Insurance Company filed this action against Defendants, Orange Courier, Inc. and Global Alternative Services, Inc. for subrogation arising out of a payment to its insured based on a claim involving damage to cargo.  Plaintiff alleges Defendants accepted a shipment of goods to be carried from the port to a warehouse, but failed to properly deliver the cargo in the condition in which it was received; Plaintiff paid its insured just over $400K as a result of Defendants’ alleged negligence.    

2.     Application for Determination of Good Faith Settlement

a.     Terms of Settlement

Orange Courier agreed to settle all claims with Plaintiff for the total amount of $250,000, which is the limit on its insurance policy. 

b.     Opposition to Application

On 8/03/22, Global Alternative Services filed an opposition to the application.  It contends it arranged for the pick-up of the subject goods, but Orange Courier was the actual transporter of the goods, and Orange Courier caused all of the damages to the cargo.  It contends Orange Courier has admitted full liability for the subject loss.  It contends the Court cannot find the settlement in good faith absent evidence of Orange Courier’s financial condition. 

c.     Reply

Orange Courier, in reply, contends the opposition is procedurally defective.  It also contends the opposition fails to meet the high burden to show the settlement is not in good faith. 

d.     Analysis

i.              Procedural Issues

As Orange Courier correctly notes in its reply papers, the Code does not permit an “opposition” to an application for determination of good faith settlement.  CCP §877.6(a)(2) requires a party seeking to contest an application for determination of good faith settlement to do so by way of a noticed motion to contest the settlement. 

The parties complicated this issue by entering into a stipulation to extend the time for filing of an opposition to the application.  The parties filed the stipulation on 7/25/22.  The stipulation specifies that the parties agreed to extend the date of filing of opposition to 8/04/22.  It appears, at the time of the stipulation, that both parties contemplated an “opposition,” as opposed to “motion to contest,” would be filed.

Further compounding the issue, while GAS timely filed its “opposition” on 8/03/22, Orange Courier contends GAS did not serve it with the papers until 8/16/22, after its attorney requested a copy of the papers from GAS’s attorney. 

ii.             Merits

Regardless of the above issues, and even if the Court were to consider the opposition, the Court finds the application must be granted.  Orange Courier has agreed to pay its policy limits of $250,000 to settle a claimed $400,000 in debt.  Orange Courier contends it was not negligent in connection with the incident, such that the settlement is fair and reasonable.

GAS’s primary argument in opposition to the application is that Orange Courier is solely liable for the accident, and GAS bears no liability.  GAS is free, at trial, to assert its position that it did nothing negligent.  It is also free to submit the evidence submitted with its opposition to show it was not negligent.  If the jury finds it was not negligent, then it will not be held liable, and will not be harmed by the settlement.  If, however, the jury finds it was negligent, then GAS has failed to provide any detailed analysis of the parties’ proportional shares of the settlement.  Notably, a settlement in excess of 50% of claimed damages in a disputed liability case is presumedly in good faith. 

GAS’s other argument is that Orange Courier did not provide evidence of its financial condition.  Orange Courier is not, however, seeking a determination that the settlement is in good faith based on its financial condition.  It is seeking a determination that the settlement is in good faith based on the fact that negligence is contested, the settlement is in excess of 50% of claimed damages, and the settlement represents its policy limits. 

iii.            Conclusion

The application for determination of good faith settlement is granted.  All future hearing dates remain as scheduled. 

Orange Courier is ordered to give notice. 

Parties who intend to submit on this tentative must send an email to the court at gdcdepts27@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative. If any party does not submit on the tentative, the party should make arrangements to appear remotely at the hearing on this matter.