Judge Randolph M. Hammock, Case Number: 20STCP02196, Date: 2024-01-04 Tentative Ruling

This is an interpleader action filed pursuant to Code of Civil Procedure § 386, by American Modern Home Insurance Group, Inc (“American”). Respondents are Vicki Laken (“Laken”) and the Kent Sherwood 2011 Trust (“the Trust”) through its Trustee, Mihana Mitchell (“Mitchell”).

Laken and the Trust both claim the right to the remaining insurance proceeds for dwelling repairs to a mobile home located at 30473 Mulholland Highway, No. 104, Agoura, CA 91301, which was destroyed by the Woolsey Fire in November 2018.

Respondents have filed cross-complaints against each other. Respondent Laken also filed a cross-complaint against Robert Meepos, the previous Trustee of the Trust, and Mihana Mitchell, the present Trustee of the Trust.

On May 10 and 11, 2022, this court held the Phase One Non-Jury trial to determine which party is entitled to recovery of the interpleaded funds. This court found that Laken is solely entitled to the interpleaded funds at issue, but that the funds are not to be released until there has been a final resolution or determination of the remaining claims.

American Modern Home Insurance Group now moves to contest the good faith settlement entered into by Robert Meepos, as former Trustee of the Trust, and Vicki Laken. Laken and Meepos opposed.

In an action in which it is alleged that two or more parties are joint tortfeasors or co-obligors on a contract debt, a party to that action may file a motion seeking a determination from the court that the settlement between the plaintiff or other claimant and one or more alleged tortfeasors or co-obligors was made in good faith. (CCP § 877.6(a).) The notice of motion or application for good faith determination must list each party and pleading or portion of pleading affected by the settlement and the date on which the affected pleading was filed. (CRC Rule 3.1382.)

The California Supreme Court in Tech-Bilt, Inc. v. Woodward-Clyde & Assoc. (1985) 38 Cal.3d 488, established the standard for determining whether a settlement was made in good faith. Under Tech-Bilt, the following factors are considered: (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 498-501.) Additionally, the evaluation must be made based on the information available at the time of settlement. (Id. at 599.)

Where good faith is contested, the burden begins with the settlor to demonstrate the settlement. (City of Grand Terrace, 192 Cal. App. 3d 1251, 1261.) “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 non-settlor who asserts that the settlement was not made in good faith.” (Id. at 1262; CCP § 877.6(d).) The nonsettlor should demonstrate “that the settlement is so far ‘out of the ballpark’ in relation to the [Tech-Bilt] factors as to be inconsistent” with a settlement made in good faith. (Id. at 500.) Where good faith is not contested, a “barebones motion which sets forth the ground of good faith, accompanied by a declaration which sets forth a brief background of the case is sufficient.” (City of Grand Terrace, 192 Cal. App. 3d 1251, 1261.) A court must weigh the Tech-Bilt factors only when good faith is contested. (Id.)

If the court makes a good faith determination, the court may dismiss the settling party from comparative indemnity claims if the settling party has made such a request at the time of making the good faith motion. (CCP §§ 877, 877.6(c); CRC 3.1382.)

[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. The application shall indicate the settling parties, and the basis, terms, and amount of the settlement. The notice, application, and proposed order shall be given by certified mail, return receipt requested, or by personal service. Proof of service shall be filed with the court. Within 25 days of the mailing of the notice, application, and proposed order, or within 20 days of personal service, a nonsettling party may file a notice of motion to contest the good faith of the settlement. If none of the nonsettling parties files a motion within 25 days of mailing of the notice, application, and proposed order, or within 20 days of personal service, the court may approve the settlement. (Emphasis added.)

Here, Cross-Defendant Robert Meepos filed and served an application for determination of good faith settlement on November 3, 2023. Applying the 25-day deadline for mail service, any motion to contest the settlement was due on or about November 28, 2023. Thus, American Modern’s instant motion to contest was untimely since it was filed on December 6, 2023. Based on this fact, this court granted Meepos’ application for determination of good faith settlement on December 8, 2023.

On December 21, 2023, American Modern’s counsel, Alexandra P. Saddik, submitted a declaration in support of a [Proposed] Order that the court stay or vacate its order finding a good faith settlement. Counsel represents in her declaration that American Modern originally filed its motion to contest good faith settlement on November 27, 2023. (Saddik Decl. ¶ 3.) However, that filing was “rejected by the court.” (Id.) American Modern did not learn the filing was rejected until November 30, 2023. (Id. ¶ 4.) On December 6, 2023, American modern refiled and re-served the motion.

In the interests of justice, this court is willing to consider the motion to contest on its merits in the alternative, so long as American Modern can adequately prove that it did attempt to timely file the motion. Assuming it can, the court has read and considered the motion to contest, and addresses the merits as follows:

In the motion, American Modern states it “does not object to the proposed settlement but objects to what the Settling Parties propose would be impact on AMHIG if the Court grants the Application.” (Mtn. 1: 8-9.) American Modern asserts that that the settlement paid by Meepos should serve as an off set to any judgment against it in the lawsuit filed by Laken.

As raised by the settling parties in opposition, the motion to contest is really a premature request for post-judgment setoff. (Laken Opp. 2: 9-10.) American Modern does not contest the good faith of the settlement or even discuss the Tech-Bilt factors. Instead, it focuses on its potential impact on future claims for equitable indemnity, contribution, and post-judgment setoffs. This is simply an issue for a later date. For now, the settlement is valid and American Modern has not shown otherwise.

Judge of the Superior Court

FN 1 - It is also noted that American Modern has not filed any motion for relief under CCP section 473, to the extent any such relief may be available. Be that as it may, there appears to be no need for such relief, as this Court has issued an alternative ruling which is denying the motion on its merits.