Judge: Michael Shultz, Case: 22CMCV00007, Date: 2023-08-17 Tentative Ruling
Case Number: 22CMCV00007 Hearing Date: August 17, 2023 Dept: A
22CMCV00007 Assurant Global
P&C Claims v. Hilliard Contracting Services, et al.
[TENTATIVE] ORDER GRANTING MOTION FOR
DETERMINATION OF GOOD FAITH SETTLEMENT BY
I.
BACKGROUND
This is a subrogation action. Plaintiff provided
homeowner’s insurance to its insured (“Insured”), who sustained water damage to
his home on March 10, 2021, allegedly caused by Defendant, Hilliard Contracting
Services (“Hilliard”) (now dismissed) and H20 Dynamics (“H20”), who were
contracted to install rain barrels at the insured’s home. Plaintiff paid
insurance benefits to its insured.
On March 30, 2022, H20 filed a cross-complaint against Cross-Defendant
Hilliard for implied indemnity, contribution, and declaratory relief.
II.
ARGUMENTS
Defendant Hilliard requests a
determination that its settlement with Plaintiff for $21,500.00 was made in
good faith pursuant to Code
of Civil Procedure, section 877.6. In
its supplemental briefing, Hilliard argues that it contracted with H2O to
perform the work. Hilliard did not instruct H20 or dictate how the work was to
be performed. Hilliard did not bear any liability but settled with Plaintiff to
avoid litigation costs. The settlement was the result of arms-length
negotiation.
The Court continued the initial hearing at
H20’s request to permit H20 to discover facts material to its opposition. In
its supplemental opposition, H20 argues Hilliard hired H20 as a subcontractor
to perform landscaping, not to install rain barrels, which ultimately caused
damage to the insured’s property. However, at Hilliard’s request, H20 agreed to
connect the rain harvesting tanks into the landscape draining system although
it was not within H20’s scope of work. Hilliard was the general contractor on
the work completed at the property. Hillard was paid $29,662.12 to perform some
of the repair work and by settling for $21,500, it is making $8,162.12 to
resolve Plaintiff’s claim. The parties have colluded. The settlement is not
within the “ballpark” of Hillard’s potential liability. The homeowner agreed to
waive subrogation against H20, who should not be left “holding the bag.”
Hilliard did not file a reply brief by August
10, 2023.
III.
LEGAL STANDARDS
Civil Procedure section 877.6 states that “[a]ny
party to an action in which it is alleged that two or more parties are joint
tortfeasors … shall be entitled to a hearing on the issue of good faith of a settlement”
entered into by the plaintiff and one or more alleged tortfeasors. (Code
Civ. Proc., § 877.6.) Once there is a showing made by the
settlor of the settlement, the burden of proof on the issue of good faith
shifts to the nonsettlor who asserts that the settlement was not made in good
faith. (City
of Grand Terrace v. Superior Court (1987) 192 Cal.App.3d 1251,
1261–1262.)
The court considers a number of non-exhaustive
factors to make its determination which include: an approximation of
plaintiff’s total recovery and settlor’s proportionate liability; the amount
paid in settlement; the recognition that the settlor should pay less in
settlement; the allocation of the settlement proceeds; the settlor’s financial
condition and insurance policy limits; evidence of collusion, fraud or tortious
conduct between the settlor and plaintiff; and whether the settlement is within
the reasonable range of the settlor’s share of liability. (Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499.) The court must
avoid “rigid” application of the factors since “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.) Practical
considerations “obviously require that the evaluation be made on the basis of
information available at the time of settlement.”) (Dole
Food Co., Inc. v. Superior Court (2015) 242 Cal.App.4th 894,
909.)
IV. DISCUSSION
H20’s
evidence demonstrates that it is jointly liable for the water damage since it
admits agreeing to install the rain barrels at Hilliard’s request. (Decl of Noe
Grandos ¶ 12, Ex. 1). H20 contends that the installation was not within the
scope of H20’s work to install a new draining system. However, H20’s invoice includes
“hook up and overflow to rain harvesting system” which H20 performed at no
charge. (Id.)
The
evidence supports some liability against Hilliard who purportedly pointed out the
“stub-outs” to H20 to which the rain barrels should be connected. (Grandos
Decl. ¶¶ 14-17.) Hilliard served as a general contractor on the project handling
scheduling and the administrative aspects of the project. (Decl. of John
Hilliard ¶ 3, 7.) Hilliard’s expert opines that H20 violated the standard of
care by not verifying which pipe was the proper pipe by running water through
it. (Decl. of Mark Chapman, ¶ 5.)
Plaintiff
alleged it paid its insured $79,112.95 for the water damage. Plaintiff settled
with Hilliard for $21,500, approximately 27 percent of Plaintiff’s approximate
recovery. Even if 50 percent of liability is allocated between Hilliard and
H20, Tech-Bilt acknowledges “the recognition that the settlor
should pay less in settlement.” (Tech-Bilt at 499.)
H20
contends that the homeowner’s (insured’s) contract with Hilliard included the
homeowner’s waiver of the right to subrogation against any subcontractors like
H20. (Grandos Decl., Ex. 5, .pdf p. 58). The provision excludes the waiver of “such
rights as [Owner and Contractor] had to proceeds of such insurance held by the
Owner as fiduciary.” (Id.) There
is no evidence of the Owner’s insurance policy which was required to provide
for such waivers of subrogation “by endorsement or otherwise.” (Id.) Regardless, it is not clear how this provision reflects
that the settlement was made in bad faith.
Finally, H20 contends that Hilliard
performed the repairs to the damage and was paid $29,662.112. Hilliard’s
obligation to repair the work that it warranted is irrelevant to the Plaintiff
insurance company’s right to recover reimbursement for the damage caused by
Hilliard, or that Hilliard chose to settle to avoid further litigation costs.
V.
CONCLUSION
H20 has not met its burden of proving that
Hilliard’s settlement with Plaintiff was made in bad faith. The settlement was the result of an arm’s-length
transaction between the parties. (Decl. of Marci Bormann, filed 11/23/22, ¶5.)
Accordingly, Hilliard’s motion is GRANTED. The
good
faith determination “shall bar any other joint tortfeasor or co-obligor from
any further claims against the settling tortfeasor or co-obligor....” (§ 877.6,
subd. (c).) Therefore, H20’s Cross-Complainant against Hilliard is dismissed.