Judge: Michael E. Whitaker, Case: 23SMCV01590, Date: 2024-01-24 Tentative Ruling

Case Number: 23SMCV01590    Hearing Date: January 24, 2024    Dept: 207

TENTATIVE RULING

BACKGROUND

This case arises from alleged violations of the Song-Beverly Act.  Plaintiff Ben L. Gary Jr. (“Plaintiff”) brought suit against Defendants Piaggio Group Americas, Inc. (“Piaggio”) and Aprilia USA, Inc. (“Aprilia”) (collectively, “Defendants”), alleging engine oil leak defects in the Aprilia motorcycle Plaintiff allegedly purchased from Defendants. 

Plaintiff’s complaint seeks $22,100.16 in damages, representing “the total purchase obligation involved in the transaction alleged herein, plus finance charges and other incidental and consequential damages and costs.”  (Compl. ¶ 20.)  In the alternative, Plaintiff claims to have “been damaged in an amount calculated as the difference between the value of the Motorcycle as was originally accepted and the value it would have been as warranted.”  (Ibid.)

On December 6, 2023, Plaintiff filed a Notice of Settlement of Entire Case, indicating Plaintiff had settled the entire case with Piaggio for $2,194.00 and that “the putative defendant named in the Lawsuit as ‘Aprilia USA, Inc.’ has never existed; rather, ‘Aprilia’ is the brand name for a line of motorcycles that Piaggio Group distributes in the Americas.”  (See Notice of Settlement, Ex. A.)  The Court notes that Aprilia has not responded to the complaint.

Piaggio now moves for a determination of good faith settlement.  The 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.) 

The moving party on an unopposed motion for determination of good faith settlement, however, is not required to set forth a full discussion of the Tech-Bilt factors by declaration or affidavit. The moving party on an unopposed motion for determination of good faith settlement need only advance a motion setting forth the basic grounds for the determination of good faith and a declaration setting forth a brief background of the case. (City of Grand Terrace v. Superior Court (1987) 192 Cal.App.3d 1251, 1261.)

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

1.      A ROUGH APPROXIMATION OF PLAINTIFF’S TOTAL RECOVERY AND THE SETTLOR’S PROPORTIONATE LIABILITY.

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.)

Piaggio contends its potential liability is zero because the subject motorcycle was not defective when sold.  While the Court agrees that Piaggio may ultimately be determined not to be liable at trial, Piaggio could also be determined to be liable for the defects.

The Complaint alleges Plaintiff paid $22,100.16 to purchase the subject motorcycle.  Thus, the maximum damages Piaggio could be liable for is $22,100.16.  But Plaintiff seeks, in the alternative, the difference between the value of the motorcycle as purchased and the value of the motorcycle as originally warranted.  (Compl. ¶ 20.)  Given that the only defect Plaintiff alleges is engine oil defects, Piaggio’s true liability is likely substantially less than the requested $22,100.16.  Because Plaintiff purchased the motorcycle from Piaggio, and the parties have represented that Defendant Aprilia does not exist, the Court does not draw a further apportionment of damages as between Piaggio and Aprilia, and assumes Piaggio is liable for the full amount of damages.

2.      THE AMOUNT PAID IN SETTLEMENT.

‘“[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.)

Here, Plaintiff and Piaggio have settled the matter for $2,194.00.  This is “within the ballpark” of potential liability, which, as discussed above, is the diminution in value of the motorcycle due to engine oil leak defects, which is likely substantially less than the claimed $22,100.16 Plaintiff allegedly spent to purchase the subject motorcycle.

3.      THE ALLOCATION OF SETTLEMENT PROCEEDS AMONG PLAINTIFFS.

The allocation of settlement proceeds among plaintiffs is only relevant if there is more than one plaintiff.  (See Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 968 (hereafter Cahill).)  Here, there is only one Plaintiff, therefore this factor is irrelevant. 

4.      A RECOGNITION THAT A SETTLOR SHOULD PAY LESS IN SETTLEMENT THAN HE WOULD IF HE WERE FOUND LIABLE AFTER TRIAL.

The Court expressly recognizes that a settlor should pay less in settlement than he would if he were found liable after trial.  This factor supports the present motion for good faith determination.  (See Cahill, supra, 194 Cal.App.4th at p. 968.)

5.      THE FINANCIAL CONDITIONS AND INSURANCE POLICY LIMITS OF SETTLING DEFENDANTS.

An exception to the proportionality requirement described above is that “a disproportionately low settlement figure is often reasonable” when the settling defendant is “relatively insolvent” and uninsured or underinsured.  (Tech-Bilt, supra, 38 Cal.3d at p. 499; see Schmid v. Superior Court (1988) 205 Cal.App.3d 1244, 1245–6 [holding that “a settlement of a personal injury lawsuit is in ‘good faith[]’ . . . where a defendant pays the plaintiff the limit of the defendant’s insurance policy and has no assets, even though the amount paid in settlement is far less than the likely amount of a judgement against the defendant were the case to go to trial”]; see also County of Los Angeles v. Guerrero (1989) 209 Cal.App.3d 1149, 1157–8 [finding that the settling defendant’s “modest” financial condition and insurance limits “are necessarily controlling and effectively override the other Tech-Bilt factors”].)

Because the Court has not determined that the settlement amount is disproportionately low, the exception does not apply.

6.      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 defendant Aprilia, who the parties have acknowledged does not exist.  Further, Plaintiff has indicated that the settlement with Piaggio resolves the entire case.  (See Notice of Settlement.)

CONCLUSION AND ORDER

For the reasons stated, the Court grants Piaggio’s unopposed Motion for a Determination of Good Faith Settlement. 

Piaggio is ordered to provide notice of the Court’s ruling and file proof of service of such. 

DATED:  January 24, 2024                                                    ___________________________

                                                                                          Michael E. Whitaker

                                                                                          Judge of the Superior Court