Judge: Michael E. Whitaker, Case: 19STCV30440, Date: 2023-03-07 Tentative Ruling

Case Number: 19STCV30440    Hearing Date: March 7, 2023    Dept: 32

PLEASE NOTE:   Parties are encouraged to meet and confer concerning this tentative ruling to determine if a resolution may be reached.  If the parties are unable to reach a resolution and a party intends to submit on this tentative ruling, the party must send an email to the Court at sscdept32@lacourt.org indicating that party’s intention to submit.  The email shall include the case number, date and time of the hearing, counsel’s contact information (if applicable), and the identity of the party submitting on this tentative ruling.  If the Court does not receive an email indicating the parties are submitting on this tentative ruling and there are no appearances at the hearing, the Court may place the motion off calendar or adopt the tentative ruling as the order of the Court.  If all parties do not submit on this tentative ruling, they should arrange to appear in-person or remotely (which is highly encouraged).  Further, after the Court has posted/issued a tentative ruling, the Court has the inherent authority to prohibit the withdrawal of the subject motion and adopt the tentative ruling as the order of the Court. 

TENTATIVE RULING

MOTION

Plaintiffs Mary Ann Espejo and Ariel Espejo (collectively, Plaintiffs) settled their claims against Cross-Defendant Jeffery Rodriguez (Cross-Defendant).   Cross-Defendant filed an application for determination that the settlement with Plaintiffs was entered into in good faith.  Defendant/Cross-Complainant Strategic Sports, Ltd (Defendant) filed a motion opposing the application. 

Although neither Cross-Defendant nor Plaintiffs have filed an opposition to the motion, the Court will exercise its discretion and consider Cross-Defendant’s application.

ANALYSIS

Under section 877.6 of the Code of Civil Procedure, “[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.”  (Code Civ. Proc., § 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.  (Code Civ. Proc., § 877.6, subd. (a).)  “The party asserting the lack of good faith has the burden of proof on that issue.”  (Code Civ. Proc., § 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.) 

Because a good faith determination bars indemnity claims by nonsettling parties, the true value of the settlement to the settlor may not be the amount paid to plaintiff but rather the value against such indemnity claims.  (TSI Seismic Tenant Space, Inc. v. Superior Court (2011) Cal.App.4th 159, 166.)  Substantial evidence showing the nature and extent of the settling defendant’s liability is required.  Without such evidence, a “good faith” determination is an abuse of discretion.  (Mattco Forge, Inc. v. Arthur Young & Co. (1995) 38 Cal.App.4th 1337, 1348; see Greshko v. County of Los Angeles (1987) 194 Cal.App.3d 822, 834 [attorney’s declaration re settling defendant’s liability insufficient where he failed to provide specific supporting facts or expert opinion].) 

In this case, Plaintiffs filed suit based on injuries they sustained as a result of a motorcycle accident which resulted in their daughter, Decedent Kristine Espejo (Decedent)’s death.  Cross-Defendant was driving the motorcycle and Defendant is the manufacturer of the helmet worn by Decedent.  As the party contesting the good faith of the settlement, Defendant bears the burden to demonstrate “that the settlement is so far ‘out of the ballpark’ . . .” that it was not in good faith. 

Defendant argues that Plaintiffs’ settlement with Cross-Defendant is not in good faith because it is not within the reasonable range of Cross-Defendant’s proportional liability.  The Court notes that Plaintiffs should expect to receive less in settlement from Cross-Defendant than Plaintiffs would receive at the time of trial; however, Defendant asserts that the settlement amount of $15,000 represents a mere 0.31% of the total amount of claimed damages.  This calculation is based on the July 22, 2022 Plaintiffs’ demand of Defendant in the amount of $4,888,888.88.  (Declaration of Michael D. Schoeck, ¶ 3.)

In support of his application, as noted by Defendant, Cross-Defendant contends he has “limited liability in this matter.”  (See Application, p. 5.)  Yet Cross-Defendant advances in support of the application the traffic collision report which attributes fault solely to Cross-Defendant for the accident.  (See Declaration of Michael F. Caoile, ¶ 1, Exhibit A [“Party #1 caused this traffic collision by driving Vehicle #1 in violation of California Vehicle Code section 22350 . . . .”]; see also Declaration of Michael D. Schoeck, ¶ 1, Exhibit A.)  Consequently, the Court finds that the traffic collision report does not demonstrate that Cross-Defendant has “limited liability in this matter.”  To the contrary, the Court finds that the traffic collision report shows that Cross-Defendant has “significant” liability in this matter. 

Moreover, Defendant argues, in light of Cross-Defendant’s $15,000 policy limit, as well as the fact that the $15,000 settlement amount may be outside the ballpark of Cross-Defendant’s proportionate liability, Cross-Defendant’s financial condition is particularly relevant.  But, as pointed out by Defendant, Cross-Defendant does not squarely address his financial condition, or present evidence of his financial condition, as part of the application.   

Accordingly, because Cross-Defendant has not advanced, as part of the application or in opposition to the motion, evidence establishing his “limited” proportionate liability nor addressed his financial condition vis-à-vis the settlement amount, the Court finds Defendant has met its burden to show that the proposed settlement is so far out of the ballpark that it is not in good faith after taking into consideration the Tech-Bilt factors.  And as noted by Defendant, the record is devoid of such evidence. 

Therefore, the Court grants Defendant’s motion opposing Cross-Defendant’s application for determination of good faith settlement, and denies without prejudice Cross-Defendant’s application for determination of good faith settlement. 

Defendant shall provide notice of the Court’s ruling and file proof of service of such.