Judge: Michael E. Whitaker, Case: 19SMCV01966, Date: 2024-12-19 Tentative Ruling

Case Number: 19SMCV01966    Hearing Date: December 19, 2024    Dept: 207

TENTATIVE RULING

BACKGROUND

This case arises from alleged construction defects to the home of Plaintiffs Michael Levine and Zorbey Ozdilek (“Plaintiffs”).  Plaintiffs brought suit against the architects, general contractor, and subcontractors who worked on the project.

Moving Defendants David Trumball dba Sure Light Electric and Sure Light Electric, Inc. (“Defendants”), were hired as subcontractors on the project by general contractor Denver Thomas Dale IV, dba Residential Construction Co. (“Dale”).  In addition to being named as Defendants in Plaintiffs’ operative Fourth Amended Complaint (“4AC”), Defendants are also named as cross-defendants in Dale’s cross-complaint. 

On October 17, 2023, the Court approved the good faith settlement between Plaintiffs and Defendant subcontractor E & J Lopez Plumbing, Inc. in the amount of $120,000 and between Defendant/Cross-Complainant Denver Thomas Dale IV dba Residential Construction Company and Cross-Defendant E & J Lopez Plumbing in the amount of $30,000.

On January 24, 2024, the Court approved the good faith settlement between Plaintiff and Defendant Rapid Duct Testing, the HVAC subcontractor who worked on the project, in the amount of $50,000.

Defendants now move for determination of a good faith settlement among themselves on the one hand, and Plaintiffs and Dale on the other hand (together, “Settling Parties”) in the amount of $110,000, payable to Plaintiffs.  In exchange for Defendants’ payment to Plaintiffs, both Plaintiffs and Dale will dismiss the respective 4AC and operative Cross-Complaint against Defendants.  The Settling Parties agree to waive their respective attorneys’ fees and costs.  Defendants’ motion is unopposed.

ANALYSIS

A.    THE LAW GOVERNING GOOD FAITH SETTLEMENTS

Under section 877.6 of the Code of Civil Procedure,[1]  “[a] determination by the court that [a] settlement was made in good faith shall bar any other joint tortfeasor . . . from any further claims against the settling tortfeasor . . . for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault.”  (§ 877.6, subd. (c).)  Additionally, a determination that a settlement was made in good faith will reduce the claims against the non-settling defendants by the amount specified in the settlement agreement.  (§ 877.6, subd. (a).)  “The party asserting the lack of good faith has the burden of proof on that issue.”  (§ 877.6, subd. (d).) 

Section 877.6 requires “that the courts review [settlement] agreements made under its aegis to insure that the settlements appropriately balance the . . . statute’s dual objectives” (i.e., providing an “equitable sharing of costs among the parties at fault” and encouraging parties to resolve their disputes by way of settlement).  (Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 494 (hereafter Tech-Bilt).)  In Tech-Bilt, the California Supreme Court set forth the factors to consider when determining whether a settlement was made in good faith.  The Tech-Bilt factors are: (1) a rough approximation of plaintiff’s 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 the non-settling defendants.  (Id. at pp. 498-501.)  “Practical considerations obviously require that the [trial court’s] evaluation [of the settlement] be made on the basis of information available at the time of settlement.”  (Id. at p. 499.) 

“The party asserting the lack of good faith . . . [is] permitted to demonstrate, if he can, that the settlement is so far ‘out of the ballpark’ in relation to [the above] factors as to be inconsistent with the equitable objectives of [Section 877.6].  Such a demonstration would establish that the proposed settlement was not a ‘settlement made in good faith’ within the terms of section 877.6.”  (Tech-Bilt, supra, 38 Cal.3d at pp. 499–500.) 

B.    APPLICATION OF THE TECH-BILT FACTORS TO THE FACTS OF THE CASE

1.     FIRST FOUR FACTORS: (1) A ROUGH APPROXIMATION OF PLAINTIFF’S TOTAL RECOVERY; (2) THE SETTLOR’S PROPORTIONATE LIABILITY AND THE AMOUNT PAID IN SETTLEMENT; (3) ALLCATION AMONG PLAINTIFFS; and (4) RECOGNITION THAT SETTLOR PAYS LESS IN SETTLEMENT

The first Tech-Bilt factor consists of two parts – a rough approximation of Plaintiff’s total recovery and the settlor’s proportionate liability.  When approximating a plaintiff’s total recovery or the settling defendant’s proportionate liability, “judges should . . . not yearn for the unreal goal of mathematical certainty.  Because the application of section 877.6 requires an educated guess as to what may occur should the case go to trial, all that can be expected is an estimate, not a definitive conclusion.”  (North County Contractor’s Assn. v. Touchstone Ins. Services (1994) 27 Cal.App.4th 1085, 1090 (hereafter North County).) 

Additionally, “a court not only looks at the alleged tortfeasor’s liability to the plaintiff, but it must also consider the culpability of the tortfeasor vis-à-vis other parties alleged to be responsible for the same injury.  Potential liability for indemnity to a nonsettling defendant is an important consideration for the trial court in determining whether to approve a settlement by an alleged tortfeasor.  [Citation.]”  (TSI Seismic Tenant Space, Inc. v. Superior Court (2007) 149 Cal.App.4th 159, 166.)

As for the second factor,  “ ‘[A] defendant’s settlement figure must not be grossly disproportionate to what a reasonable person, at the time of the settlement, would estimate the defendant’s liability to be.’  [Citation.]”  (Tech-Bilt, supra, 38 Cal.3d at p. 499.)  However, even though “an offer of settlement must bear some relationship to one’s proportionate liability, bad faith is not ‘established by a showing that a settling defendant paid less than his theoretical proportionate or fair share.’  [Citation.]”  (North County, supra, 27 Cal.App.4th at p.1090.)  “Such a rule would unduly discourage settlements” and “convert the pretrial settlement approval procedure into a full-scale mini-trial.”  (Tech-Bilt, supra, 38 Cal.3d at p. 499.)  Rather, in order to meet the proportionality requirement, “all that is necessary is that there be a ‘rough approximation’ between a settling tortfeasor’s offer of settlement and his proportionate liability.  [Citation.]”  (North County, supra, 27 Cal.App.4th at pp. 1090–1091.)  In determining whether the settling defendant’s settlement figure is “within the ballpark” of his fair share of liability, the Court may rely on “the judge’s personal experience” and the experience of “experts in the field.”  (Tech-Bilt, supra, 38 Cal.3d at p. 500.)

The 4AC alleges Plaintiffs purchased the subject property for over two million dollars $2,000,000.00 and that the project was estimated to cost two million five hundred eighty thousand dollars ($2,580,000.00).  (4AC ¶¶ 33-34.)  Plaintiffs further allege that they paid in excess of four million dollars ($4,000,000) on the project, and then had to spend three million more dollars ($3,000,000) to remediate construction mistakes and defects.  (4AC ¶ 44.)  In total, the 4AC seeks nine million dollars ($9,000,000) in actual damages. (4AC Prayer at ¶¶ a-b.)

Defendants were hired by the general contractor Dale to perform electrical work on the project.  (Motion at p. 3.) 

The 4AC alleges over 50 separate violations, including that Defendants installed breakers with amperages that were below those specified in the plans, used wiring that was also under capacity, installed mis-matched circuit breakers of varying different brands, eleven hidden junction boxes that were dangerously covered in plaster, junction boxes containing live wires that were stuffed with paper and hidden behind the drywall, plus additional locations where wires terminated inside the walls with no junction boxes at all.  (4AC ¶¶ 139-159.)

Notwithstanding, the electrical work is a part of the overall project, which also included tile and marble, roofing, woodworking, doors/gates, weatherproofing, HVAC, drywall/plaster, plumbing, and hardwood flooring.  Thus, the electrical work is one of ten areas of work upon which Plaintiffs allegedly incurred $3,000,000 to remediate. 

Thus, the $110,000 settlement amount, which is in line with the amounts the plumbing subcontractor has already settled for, and more than twice what one of the HVAC contractors already settled for, appears to represent a reasonable approximation of Defendant’s, proportionate liability, taking into account that settlors should pay less in settlement than they would if the case went to trial. 

Because Plaintiffs are both parties to the settlement agreement, the allocation between them is irrelevant. 

2.     THE EXISTENCE OF COLLUSION, FRAUD, OR TORTIOUS CONDUCT AIMED TO INJURE THE INTERESTS OF THE NON-SETTLING DEFENDANTS.

“Any negotiated settlement involves cooperation, but not necessarily collusion.  It becomes collusive when it is aimed to injure the interests of an absent tortfeasor.  Although many kinds of collusive injury are possible, the most obvious and frequent is that created by an unreasonably cheap settlement.”  (River Garden Farms, Inc. v. Superior Court (1972) 26 Cal.App.3d 986, 996.)  “Prevention of collusion is but a means to the end of preventing unreasonably low settlements which prejudice a nonparticipating tortfeasor.  The price of a settlement is the prime badge of its good or bad faith.  Construed in the light of [section 877.6’s] objectives, the good faith release clause extends the obligation of good faith beyond the parties to the negotiations, embracing an absent tortfeasor.”  (Ibid.) 

Here, there is no argument or evidence that the settlement was made in bad faith to harm the remaining defendants.  Rather, the Settling Parties reached settlement after mediation, a Mandatory Settlement Conference, and informal settlement negotiations at arm’s length.

CONCLUSION AND ORDER

For the reasons stated, the Court grants Defendants’ unopposed Motion for a Determination of Good Faith Settlement.  The Court will enter the proposed Order received on November 15, 2024. 

Defendants shall provide notice of the Order and file the notice with a proof of service forthwith. 

DATED:  December 19, 2024                                                ___________________________

                                                                                          Michael E. Whitaker

                                                                                          Judge of the Superior Court