Judge: Michael P. Linfield, Case: 21STCV08285, Date: 2023-11-30 Tentative Ruling

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Case Number: 21STCV08285    Hearing Date: January 29, 2024    Dept: 34

SUBJECT:        Application for Determination of Good Faith Settlement

Moving Party: Defendants Sam Ghanouni, Avi Galili, and Charles Hefner

Resp. Party:    None  

SUBJECT:        Motion to be Relieved as Counsel

Moving Party: Defense Counsel Jonathan L. Endman and RELAW, APC

Resp. Party:    None  

The Application for Determination of Good Faith Settlement is GRANTED.

The Motion to be Relieved as Counsel is GRANTED.

BACKGROUND:

        On March 3, 2021, Plaintiff ADH Swall Limited filed its Complaint against Defendant Swall Heights, LLC on a cause of action for violation of Civil Code section 895, et seq.   

        On June 17, 2021, Plaintiff filed its First Amended Complaint, which added additional causes of action.

        On May 23, 2022, Plaintiff amended its pleading by substituting Doe 1 with Sam Ghanouni, Doe 2 with Avi Galili, Doe 3 with Jeremias Luza, and Doe 4 with Charles Hefner.

        On June 27, 2022, by request of Plaintiff, the Clerk’s Office entered default on Defendant Jeremias Luza.

        On September 26, 2022, Defendants Sam Ghanouni, Avi Galili, and Charles Hefner filed their respective Answers to the FAC.

        On October 25, 2022, Plaintiff amended its pleading by substituting Doe 5 with Eduardo Castro.

        On January 20, 2023, by request of Plaintiff, the Clerk’s Office entered defaulted on Eduardo Castro.

        On March 29, 2023, Plaintiff amended its pleading by substituting Doe 6 with Hanna Construction Engineering, Inc.

        On May 4, 2023, by request of Plaintiff, the Clerk’s Office dismissed without prejudice the second and third causes of action from the FAC as to Defendant Hanna Construction Engineering, Inc.

        On June 15, 2023, Defendant Hanna Construction Engineering, Inc. filed its Answer to the FAC.

        On October 16, 2023, Defendant Swall Heights, LLC filed its Answer to the FAC.

        On December 13, 2023, Defendants Sam Ghanouni, Avi Galili, and Charles Hefner filed their Notice of Settlement and Application for Determination of Good Faith Settlement (“Application”). In support of their Application, they concurrently filed: (1) Proposed Order; and (2) Proof of Service.

        On December 19, 2023, Jonathan L. Endman and RELAW, APC, who are counsel for Defendant Swall Heights, LLC, filed: (1) MC-051, Motion to be Relieved as Counsel (“Motion”); (2) MC-052, Declaration; and (3) MC-053, Proposed Order. Proof of service was filed on January 17, 2024.

        On January 25, 2024, Defendant Hanna Construction Engineering Inc. filed its Opposition to the Application (“Non-Moving Defendant’s Opposition”).

        On January 25, 2024, Plaintiff filed its Reply in support of the Application (“Plaintiff’s Reply”).

        On January 25, 2024, Defendants Sam Ghanouni, Avi Galili, and Charles Hefner filed their Reply in support of the Application (“Moving Defendants’ Reply”). Insupport of Moving Defendants’ Reply, they concurrently filed: (1) Declaration of Robert F. Rubin; and (2) Proof of Service.

ANALYSIS:

I.          Application for Determination of Good Faith Settlement

A.      Legal Standard

“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 subdivision (b) of Section 1005.” (Code Civ. Proc., § 877.6, subd. (a)(1).)

“In the alternative, 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.” (Code Civ. Proc., § 877.6, subd. (a)(2).)

“The issue of the good faith of a settlement may be determined by the court on the basis of affidavits served with the notice of hearing, and any counteraffidavits filed in response, or the court may, in its discretion, receive other evidence at the hearing.” (Code Civ. Proc., § 877.6, subd. (b).)

B.      Discussion

Defendants Sam Ghanouni, Avi Galili, and Charles Hefner move the Court to find that the settlement they entered into with Plaintiff was made in good faith pursuant to Code of Civil Procedure section 877.6, subdivision (a)(2). (Application, p. 7:25–27.)

Among other things, their counsel declares: (1) that after discovery was conducted, Plaintiff agreed to settle with Defendants Sam Ghanouni, Avi Galili, and Charles Hefner for $10,000.00 in total for all three of these defendants; (2) that Defendants Sam Ghanouni, Avi Galili, and Charles Hefner prepared construction plans in accordance with the Building Code but have determined that this settlement is reasonable and in good faith considering their lack of insurance coverage for this claim; and (3) that this settlement is not the byproduct of collusion, fraud, or tortious conduct. (Application, Decl. Rubin, pp. 9:21–27, 10:1–3.)

        Defendant Hanna Construction Engineering Inc. opposes the Application, arguing that the settlement is “not within the reasonable range of the Settling Party Defendants’ proportional share of comparative liability for the damages being claimed . . . and is therefore not entered in good faith.” (Non-Moving Defendant’s Opposition, p. 2:7–11.)

        Plaintiff argues that the Non-Moving Defendant’s Opposition does not offer any evidence that the settlement was not in good faith. (Plaintiff’s Reply, p. 2:22–23.)

        The Moving Defendants argue that Defendant Hanna Construction Engineering Inc. has not followed the proper procedure for opposing the settlement and that it has not carried its burden to show that the settlement is not in good faith. (Moving Defendants’ Reply, p. 1:23–28, 2:1–14.)

        The Court agrees with the arguments made by Moving Defendants and Plaintiff.

Defendant Hanna Construction Engineering Inc. filed its Opposition to the Application fewer than five days before the hearing on the Application. Their response is late.

Further, Moving Defendants correctly note that Defendant Hanna Construction Engineering Inc. has not complied with the procedures set forth in Code of Civil Procedure section 877.6, subdivision (a) for opposing the settlement.

Finally, even if the Court were to consider the Opposition on the merits, the Court has not been presented with sufficient evidence to determine that the settlement with Moving Defendants disproportionately harms Defendant Hanna Construction Engineering Inc. Rather, the evidence supports a finding that (a) the settlement was undertaken in good faith and (b) the settlement is substantively appropriate and thus not itself proof of bad faith.

The Court finds that the settlement was entered into good faith. (Code Civ. Proc, § 877.6, subd. (b).)

C.      Conclusion

The Application for Determination of Good Faith Settlement is GRANTED.

II.       Motion to be Relieved as Counsel

A.      Legal Standard

An attorney moving to be relieved as counsel under California Code of Civil Procedure section 284(2) must meet the requirements set out in California Rules of Court, rule 3.1362.

To comply with rule 3.1362, the moving party must submit the following forms: (1) Notice of Motion and Motion to be Relieved as Counsel; (2) Declaration in Support of Attorney's Motion to be Relieved as Counsel; and (3) Order Granting Attorney's Motion to be Relieved as Counsel. (Cal. Rules of Court, rule 3.1362(a), (c), (e).)

The moving party must serve the aforementioned forms on the client and all other parties who have appeared in the case. (Cal. Rules of Court, rule 3.1362(d).) Further, when the client is served by mail, the attorney's declaration must show that the client's address was confirmed within the last 30 days and how it was confirmed. (Id.) 

Absent a showing of resulting prejudice, an attorney’s request for withdrawal should be granted. (People v. Prince (1968) 268 Cal.App.2d 398, 406.)

B.      Discussion

Counsel’s Motion to be Relieved as Counsel complies with all of the requirements of California Rules of Court, rule 3.1362, in that Counsel provided notice of motion and motion to be relieved as counsel; proposed order granting attorney’s motion to be relieved as counsel; and declaration in support of the motion to be relieved as counsel.

The declaration states, among other things, that Defendant Swall Heights, LLC has not paid attorney fees as required by written retainer.

Trial is scheduled for May 20, 2024, which is nearly four months from now. The Court has previously stated that there would be no further continuances of the trial.  There is a moderate risk of prejudice to Defendant Swall Heights, LLC by this withdrawal, both because of the approaching trial date and because corporations cannot represent themselves in propria persona. (Merco Constr. Eng’rs, Inc. v. Mun. Ct. (1978) 21 Cal.3d.724, 730.)

However, the trial court may allow a corporation’s attorney to withdraw from representation, even if that would leave the corporation without representation. (Ferruzzo v. Super. Ct. (1980) 104 Cal.App.3d 501, 504.) “For the uncooperative corporate client who has not been willing to bring in new counsel, granting of the withdrawal motion will put extreme pressure on it to obtain new counsel of record for should it fail to do so it risks forfeiture of its rights through nonrepresentation.” (Ibid.)¿

There is time for Defendant Swall Heights to obtain new counsel prior to trial. Furthermore, it is not counsel’s responsibility to litigate a matter without reasonable payment when that counsel and its client have not agreed to a contingency agreement.

C.      Conclusion

The Motion to be Relieved as Counsel is GRANTED.