Judge: Maurice A. Leiter, Case: 20STCV16589, Date: 2022-09-28 Tentative Ruling

Case Number: 20STCV16589    Hearing Date: September 28, 2022    Dept: 54

Hearing Date: September 28, 2022

Department 54, Judge Maurice A. Leiter

Motion Contesting Good Faith Settlement

Moving Party: Defendants T&L Air Conditioning, Inc. and DWC Enterprise Group, Inc.

Responding Party: Plaintiff Cal Garden, LLC and Defendants EGL Associates Inc., Environmental Geotechnology Laboratory Inc., and Hank Hsing-Lian Jong

T/R:    THE MOTION TO CONTEST GOOD FAITH SETTLEMENT IS CONTINUED TO OCTOBER 10, 2022 AT 9:00AM.

THE PARTIES ARE ORDERED TO PROVIDE SUPPLEMENTAL BRIEFING ON THE ISSUE OF OFFSET, NOT TO EXCEED 7 PAGES, NO LATER THAN OCTOBER 4, 2022.

            DEFENDANTS TO NOTICE.

If the parties wish to submit on the tentative, please email the courtroom at¿SMCdept54@lacourt.org¿with notice to opposing counsel (or self-represented party) before 8:00 am on the day of the hearing.

            The Court considers the moving papers, opposition, and reply.

BACKGROUND

            This is a construction defect case arising out of the construction of condominium complex and its subterranean garage. The owners of property adjoining the complex claim the construction caused substantial subsidence and settlement issues on its property. The action involves several contractors/sub-contractors, complaints, and cross-complaints.

ANALYSIS

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 Code of Civil Procedure, section 1005(b).  (CCP § 877.6(a)(1).)  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.  (CCP § 877.6 (c).)  The party contesting the settlement bears the burden of proving that the settlement is in bad faith.  (CCP § 877.6 (d).) 

Defendants T&L Air Conditioning, Inc. and DWC Enterprise Group, Inc. challenge the application for good faith settlement between Plaintiff and Defendants BLE, Inc., Environmental Geotechnology Laboratory, Inc., EGL Associates, Inc., Hank Hsing-Lian Jong, Queens Land Builder, Inc., Tie Gao and Ning Wang.

The settlement disposed of related cases, including those brought by the Homeowner’s Association. Plaintiff and settling Defendants agreed that Plaintiff would pay the Homeowner’s Association $500,000.00; Queens Land Builder would pay the association $675,000.00; BLE would pay $250,000.00; EGL Associates would pay $35,000.00; and Cal Garden’s insurance company would pay $25,000.00. Plaintiff agreed to release any claims against the settling Defendants.

The non-settling Defendants contest that the settling Defendants paid the Plaintiff nothing. They argue this shows bad faith, and unfairly would preclude claims against the settling Defendants without providing an offset to a settlement or verdict against the non-settling Defendants.

The Court shares this concern regarding offsets. CCP § 877(a) provides, “[W]here a release, dismissal with or without prejudice, or a covenant not to sue or not to enforce judgment is given in good faith before verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the same tort, or to one or more other co-obligors mutually subject to contribution rights, it shall have the following effect: (a) It shall not discharge any other such party from liability unless its terms so provide, but it shall reduce the claims against the others in the amount stipulated by the release, the dismissal or the covenant, or in the amount of the consideration paid for it, whichever is the greater.”

It is unclear whether the settlement in the related case would or should provide an offset to any money judgment against non-settling Defendants in the instant case. The Court needs further briefing on this issue before deciding good faith. Given the parties’ interest in resolving this issue promptly, the Court will allow only a brief continuance.