Judge: Melvin D. Sandvig, Case: BC668642, Date: 2022-10-19 Tentative Ruling

Case Number: BC668642    Hearing Date: October 19, 2022    Dept: F47

Dept. F-47

Date: 10/19/22                                                          TRIAL DATE: 1/3/23

Case #BC668642

 

MOTION TO CONTEST GOOD FAITH OF SETTLEMENT

(CCP § 877.6)

 

Motion filed on 6/24/22.

 

MOVING PARTY: Defendant Newhall Unified School District

RESPONDING PARTY # 1: Defendant Impact Construction Services, Inc.

RESPONDING PARTY # 2: Plaintiffs Jose De Jesus Diaz Mata and Maria Del Rosario Arroyo

 

RELIEF REQUESTED: For the Court to deny Defendant Impact Construction’s application for an order determining the settlement between Impact Construction and Plaintiffs is in good faith pursuant to Code of Civil Procedure §§ 877 and 877.6(a)(2).

 

RULING: The motion is denied.    

                          

This action arises from an incident that occurred on July 13, 2016, at the Old Orchard Elementary School in Valencia, California within the Defendant Newhall Unified School District (“the District”). Plaintiffs Jose De Jesus Diaz Mata and Maria Del Rosario Arroyo, collectively, (“Plaintiffs”) allege that Jose De Jesus Diaz Mata was in the process of dismantling, removing, and/or transporting a modular classroom at Old Orchard Elementary School when the walls and/or roof collapsed onto him. Plaintiffs allege that the defendants negligently and carelessly controlled, inspected, and operated the project and/or created a dangerous condition—specifically, the modular classroom and surrounding areas; failed to protect/guard against or warn of the dangerous condition; failed to ensure the safety of Jose De Jesus Diaz Mata; and/or failed to act with reasonable care—all of which Plaintiffs allege caused the modular classroom to collapse onto Jose De Jesus Diaz Mata.

 

Plaintiffs allege that Defendant Impact Construction Services, Inc. (“Impact Construction” or “Impact”) agreed to purchase four modular classroom units and one modular restroom unit from the District. Impact Construction then subcontracted with Defendant Hector Lopez dba HN Construction Services (“HN Construction”), a licensed contractor, to remove the modular classrooms. HN Construction employed Jose De Jesus Diaz Mata when he was allegedly injured by the modular classroom, and Maria Del Rosario Arroyo claims loss of consortium as Jose De Jesus Diaz Mata’s spouse.

 

On July 11, 2022, the Court granted HN Construction’s motion for summary judgment based on the “Exclusive Remedy Doctrine.” Impact Construction settled with Plaintiffs, and on May 31, 2022 applied for a determination of good faith regarding the settlement agreement. On June 24, 2022, the District filed the instant motion contesting the good faith of the settlement agreement between Plaintiffs and Impact Construction.

    

CCP § 877.6(a)(2) states:

 

[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...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.

 

Requiring the settling party to disclose the terms of the settlement and apply for a determination of good faith is, in part, because CCP § 877.6(c) states:

 

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 further states:

 

Where 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.

(b) It shall discharge the party to whom it is given from all liability for any contribution to any other parties.

 

A number of factors must be taken into account in assessing a settlement's good faith under section 877.6, including (1) a rough approximation of plaintiffs' total recovery and the settlor's proportionate liability, (2) the amount paid in settlement, (3) the allocation of settlement proceeds among plaintiffs, (4) a recognition that a settlor should pay less in settlement than he would if he were found liable after a trial, (5) the financial conditions and insurance policy limits of settling defendants, and (6) the existence of collusion, fraud, or tortious conduct aimed to injure the interests of non-settling defendants. Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499. Another key factor is the settling tortfeasor’s potential liability for indemnity to the remaining alleged joint tortfeasors. Far West Fin’l Corp. v. D & S Co. (1988) 46 Cal.3d 796, 816. These factors are non-exhaustive and may not apply in all cases. “Practical considerations require that [their] evaluation be made on the basis of information available at the time of settlement.”  Dole Food Co., Inc. v. Superior Court (2015) 242 Cal.App.4th 894, 909.

 

 

Before the September 6, 2022 hearing on the instant motion, the Court issued a tentative ruling to grant the motion due Impact Construction’s failure to allocate how its settlement of $210,000.00 would be allocated between the two Plaintiffs.  (See Evenstad Supplemental Decl. ¶4, Ex.A).

 

At the September 6, 2022 hearing, Plaintiffs’ counsel represented/clarified that Plaintiff Jose De Jesus Diaz Mata is seeking non-economic damages.  (See  9/6/22 Minute Order).  Plaintiffs’ counsel also represented that the settlement funds were to be distributed/allocated 50/50 between the Plaintiffs.  Id.  The Court continued the hearing on the instant motion to September 9, 2022.  Id.  On September 9, 2022, the Court continued the hearing on the instant motion to 10/19/22 and allowed the parties to file supplemental briefing regarding allocation of settlement proceeds.  (See 9/9/22 Minute Order, p.4).  Further, the Court ordered the parties to meet and confer regarding a mutually acceptable allocation of settlement proceeds prior to the continued hearing date.  Id.

 

Based on the foregoing, the only issue precluding the Court from finding the settlement to be in good faith was the allocation of the settlement proceeds among the Plaintiffs.  The District seems to concede as much as its Supplemental Brief focuses on a 50/50 allocation being unreasonable and requests that in the alternative to granting the motion, the Court consider allocating $10,000.00 of the settlement proceeds to Plaintiff Arroyo and $200,000 to Plaintiff Mata.  (See District’s Supplemental Brief generally and p.6:4-6; Evenstad Supplemental Decl. ¶5).

 

In Impact Construction’s Supplemental Opposition, it indicates that Plaintiffs and Impact have agreed to allocate 10% ($21,000) of the settlement funds to Plaintiff Arroyo for her non-economic “loss of consortium” claim and 90% ($189,000) of the settlement funds to Plaintiff Mata for his economic damage claims.  (See Impact’s Supplemental Opposition, p.2; Daley Supplemental Decl. ¶4, Ex.A pp.1-2).  Plaintiffs have also filed an opposition to the District’s Supplement Brief wherein they indicate that they would prefer a different allocation, but they will defer to the Court deciding the allocation issue.  (See Balam Decl. ¶3).

 

In the District’s reply to the supplemental oppositions, the District argues that the proposed $189,000 allocation in not within the ballpark of Impact’s liability for Plaintiff Mata’s claimed economic damages of $2,512,100.  The supplemental reply does not indicate whether the District would withdraw its challenge to the settlement if Impact and Plaintiffs had agreed to the District’s proposed allocation of $10,000 to Plaintiff Arroyo and $200,000 to Plaintiff Mata.  The Court notes that the District refers to learning “the full extent of the medical specials that plaintiff intends to present at trial” after filing the motion.  (See Supplemental Brief, p.4:6-17; Evenstad Supplemental Decl. ¶6).  As such, it not clear if the District is now attempting to claim that the $210,000, regardless of allocation, is not “within the ballpark.”  However, Plaintiffs’ expert gave notice of the future economic damages Plaintiff Mata is expected to incur on September 1, 2022.  (See Evenstad Supplemental Decl. ¶6, Ex.C).  Therefore, the District was seemingly aware of same and was willing to accept/not contest the $210,000 settlement if there was an allocation of $10,000 to Plaintiff Arroyo and $200,000 to Plaintiff Mata on September 23, 2022.  (See Evenstad Supplemental Decl. ¶5, Ex.B).       

 

Realizing that a good faith settlement does not require a perfect or almost perfect apportionment of liability, the Court finds that the $210,000 settlement with an allocation of 10% or $21,000 to Plaintiff Arroyo and 90% or $189,000 to Plaintiff Mata is reasonable and in good faith under the circumstances of this case.  See PacificCare of California v. Bright Medical Associates, Inc. (2011) 198 Cal.App.4th 1451, 1465; Tech-Bilt, supra at 499; (Daley Supplemental Decl. ¶¶2-4).

 

Therefore, the Court will deny Defendant Newhall Unified School District’s motion and grant Defendant Impact Construction’s application for an order determining the settlement between Impact Construction and Plaintiffs is in good faith pursuant to Code of Civil Procedure §§ 877 and 877.6(a)(2).

 

Impact is ordered to submit a revised proposed order granting its application for good faith settlement determination which reflects the above (10/90) allocation of the settlement proceeds.