Judge: Michael P. Linfield, Case: 23STCV24520, Date: 2024-03-12 Tentative Ruling

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Case Number: 23STCV24520    Hearing Date: March 12, 2024    Dept: 34

SUBJECT:        Motion for Determination of Good Faith Settlement and Dismissal of Complaint

Moving Party: Defendants Compass California, Inc. and Angelo Fierro

Resp. Party:    Defendant Gelfand, Rennert, Feldman, LLP

The Motion is GRANTED.

BACKGROUND:

On October 9, 2023, Plaintiff 23 Courtington Trust filed its Complaint against Defendants Glenn Caron; Zina Caron; Compass, Inc.; Angelo Fierro; Gelfand, Rennert, Feldman, LLP; and Michael Stern. The causes of action are for breach of contract and negligence.

On November 30, 2023, Plaintiff filed its First Amended Complaint (FAC).

On December 21, 2023, by request of Plaintiff, the Clerk’s Office dismissed without prejudice Defendant Michael Stern from the FAC.

On January 8, 2024, Defendants Compass California, Inc. and Angelo Fierro (“Settling Defendants”) filed their Motion for Determination of Good Faith Settlement and Dismissal of Complaint (“Motion”). In support of their Motion, they concurrently filed: (1) Declaration of Sam Kraemer; (2) Proposed Order; and (3) Proof of Service.

On January 29, 2024, Settling Defendants filed their Notice of Non-Opposition.

On February 28, 2024, Defendant Gelfand, Rennert, Feldman, LLP (“Non-Settling Defendant”) filed its Opposition to the Motion. It concurrently filed: (1) Declaration of Jessica Ramirez-Shea; and (2) Declaration of John M. Gatti.

On March 5, 2024, Settling Defendants filed their Reply in support of their Motion. They concurrently filed: (1) Evidentiary Objections to Declaration of Jessica Ramirez-Shea; and (2) Evidentiary Objections to Declaration of John M. Gatti.

On March 6, 2024, Non-Settling Defendant filed: (1) Evidentiary Objections to Declaration of Sam Kraemer; (2) Response to Evidentiary Objections to Declaration of Jessica Ramirez-Shea; and (3) Response to Evidentiary Objections of John M. Gatti.

ANALYSIS:

I.          Evidentiary Objections

A.          Settling Defendant’s Evidentiary Objections

Settling Defendants filed evidentiary objections. The following are the Court’s rulings on these objections.

1.      Objections to Declaration of Jessica Ramirez-Shea

2.      Objections to Declaration of John M. Gatti

B.          Non-Settling Defendant’s Evidentiary Objections

Non-Settling Defendant filed evidentiary objections to the Declaration of Sam Kraemer. The following are the Court’s rulings on these objections.

II.       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).)

III.     Discussion

A.      The Parties’ Arguments

Settling Defendants move the Court to determine that a settlement made between them and Plaintiff 23 Courtington Trust was made in good faith pursuant to Code of Civil Procedure section 877.6. (Motion, pp. 5:9–10, 9:12–16.)

Non-Settling Defendant opposes the Motion, arguing: (1) that the settlement is not in good faith and prejudices all non-settling defendants, who have legitimate grievances with settling defendants that will remain unaccounted for it the settlement is confirmed; (2) that Settling Defendants have not adequately explained the settlement amount; (3) that Settling Defendants’ liability far outweighs their proposed settlement value; (4) that the settlement was not reached in an adversarial manner; (5) that Settling Defendant’s liability and exposure is undisputed; (6) that the financial conditions and insurance policy limits are unknown at this time as discovery has not begun and the Motion provides no evidence on this factor; (7) that there is evidence of collusion and/or tortious conduct aimed at all non-setting defendants; and (8) that the Motion may be moot if an express indemnity clause exists between Settling Defendants and Defendants Glenn Caron and Zina Caron. (Opposition, pp. 14:21–22, 15:1–2, 15:17–18, 18:1, 18:24–25, 22:8–9, 23:14–15, 24:9–10.)

In their Reply, Settling Defendants argue: (1) that Settling Defendants are entitled to a determination that their settlement is in good faith; (2) that Settling Defendants meet the test set forth in Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, with sub-arguments on each factor; (3) that the Motion is sufficient; and (4) that Non-Settling Defendant has the burden to demonstrate that the settlement was not made in good faith.

B.      Discussion

The Parties both discuss the California Supreme Court’s decision in Tech-Bilt, Inc., which states:

“[T]he intent and policies underlying section 877.6 require that a number of factors be taken into account including a rough approximation of plaintiffs' total recovery and the settlor's proportionate liability, the amount paid in settlement, the allocation of settlement proceeds among plaintiffs, and a recognition that a settlor should pay less in settlement than he would if he were found liable after a trial. Other relevant considerations include the financial conditions and insurance policy limits of settling defendants, as well as the existence of collusion, fraud, or tortious conduct aimed to injure the interests of nonsettling defendants. Finally, practical considerations obviously require that the evaluation be made on the basis of information available at the time of 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 settling defendant's liability to be.’ The party asserting the lack of good faith, who has the burden of proof on that issue (§ 877.6, subd. (d)), should be permitted to demonstrate, if he can, that the settlement is so far ‘out of the ballpark’ in relation to these factors as to be inconsistent with the equitable objectives of the statute. 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, Inc., supra, 38 Cal.3d at pp. 499–500, citations omitted.)

        Here, the FAC states liability against all defendants in the total amount of $112,153.81, plus late charges that have been accruing at the annual rate of 5% since August 7, 2023, as well as costs and attorney’s fees. (FAC, pp. 8:16–9:3.) The Settlement would include a payment of $35,000.00 as a full and complete settlement for Settling Defendants. (Motion, p. 5:3–8; Decl. Kraemer, Exh. 2, p. 1.) Even including the amount of late charges that have already accrued at the annual rate stated, this would cover approximately 30% of the damages claimed (not including fees and costs).

        Counsel for Settling Defendants declares, among other things: (1) that Settling Defendants negotiated a settlement directly with Plaintiff’s Counsel are being served with the Complaint; (2) that the settlement involved multiple back-and-forth communications, including offers and counteroffers; and (3) that none of the terms of the settlement are meant to be collusive. (Decl. Kraemer, ¶¶ 6–8.)

        The Motion addresses the other Tech-Bilt factors, arguing: (1)  that the settlement approximates Settling Defendants’ pre-litigation risk; (2) that their liability and damage exposure is disputed: (3) that all the settlement proceeds are being allocated to Plaintiff; (4) that while they do have insurance, their settlement meets the requirements of Code of Civil Procedure section 877.6; and (5) that there was no collusion, fraud, or tortious conduct aimed at injuring all the non-settling parties.

        After considering the evidence and filings submitted, the Court agrees with Settling Parties’ arguments. The Court has not been provided with any evidence that would indicate the settlement was not entered into in good faith. Nor has the Court been presented with any evidence that would indicate collusive or tortious conduct aimed at any of the non-settling parties. Rather, all of the evidence indicates that the settlement was entered into in good faith.

        In addition, Non-Settling Defendant argues that Defendant Compass California, Inc. is “100% liable for the situation in which [all non-settling defendants] find themselves today.” (Opposition, p. 8:7–8.) The Court has found that it is not uncommon for one defendant (whether or not they are settling) to disclaim all liability.  Of course, it will be up to the jury to determine that question. 

        Finally, Defendants Glenn Caron and Zina Caron have not opposed the Motion. Even if there was an indemnity clause between them and Settling Defendants, that clause would be waived by their non-opposition to the Motion. There is no evidence that would indicate such a clause exists; as Non-Settling Defendant does not know whether such a clause exists, it is doubtful that Non-Settling Defendant is a third-party beneficiary of such a clause and has standing to invoke it.

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

IV.      Conclusion

The Motion is GRANTED.