Judge: Randy Rhodes, Case: 21CHCV00534, Date: 2023-01-18 Tentative Ruling
Case Number: 21CHCV00534 Hearing Date: January 18, 2023 Dept: F51
Dept. F-51¿
Date: 1/18/23
Case #21CHCV00534
¿
MOTION CONTESTING
GOOD FAITH SETTLEMENT
Motion Filed: 9/6/22
MOVING PARTY: Defendant, Brocca Custom Finish
Carpentry (“Moving Defendant”)
RESPONDING PARTY: Plaintiff/Cross-Defendant, Forza Construction,
Inc. (“Plaintiff”); and Defendant/Cross-Complainant, AVE Sheetmetal & Rain
Gutters Inc. ("AVE")
NOTICE: OK
RELIEF REQUESTED: An order denying AVE’s application
for good faith determination of its settlement with Plaintiff, or, alternatively,
60 days leave to complete further discovery as to Plaintiff’s alleged damages.¿
TENTATIVE RULING: The motion is denied. Moving
Defendant’s evidentiary objections are overruled.
BACKGROUND
This indemnity action arises out of
underlying claims for construction defects and delays. Nonparty Beach Home
Life, LLC filed a demand for arbitration against Plaintiff Forza Construction
Inc. seeking damages allegedly arising out of the construction of two single
family homes located in Venice, California (the Property). Plaintiff alleges
that it entered into subcontracting agreements with Defendants for work
performed on the Property. Plaintiff and Beach Life Homes, LLC settled the
claims made by Beach Life Homes, LLC in mediation for $340,000 plus attorney
fees. As a result, Plaintiff claims that it has been damaged and such damages
were caused by the acts and/or omissions of Defendants.
On 7/16/21, Plaintiff filed this
action against the four subcontractor Defendants for: (1) Implied Contractual
Indemnity; (2) Total Indemnity; (3) Equitable Indemnity; (4) Express Indemnity;
(5) Breach of Written Contract; (6) Negligence; (7) Declaratory Relief Re Duty
to Defend and (8) Declaratory Relief Re Duty to Indemnify.
On 8/11/22, defendant AVE filed and
served a notice of settlement and application for determination of good faith
settlement. On 9/6/22, Moving Defendant filed the instant motion challenging
the application. On 1/3/23, AVE filed its opposition. On 1/10/23, Moving
Defendant filed its reply.
ANALYSIS
Legal Standard
“Where there are multiple
defendants, each having potential liability for different areas of damage, an
allocation of the settlement amount must be made. … Failure to do so may
preclude a ‘good faith’ determination because there is no way to determine the
appropriate set off pursuant to section 877 against the nonsettling defendant.”
(L. C. Rudd & Son, Inc. v. Superior Court (1997) 52 Cal.App.4th 742,
750.)
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. (Fisher v. Superior Court (1980) 103 Cal.App.3d 47; Code Civ.
Proc. § 877.6, subd. (d).) The ultimate determinant of good faith is whether
the settlement is grossly disproportionate to what a reasonable person at the
time of settlement would estimate the settlor’s liability to be. (City of
Grand Terrace v. Superior Court (1987) 192 Cal. App. 3d 1251, 1262.)
In making such a determination, the
Court considers several factors: (1) A rough approximation of the plaintiff’s
total recovery and the settlor’s proportionate liability; (2) The amount paid
in settlement; (3) A recognition that a settlor should pay less in settlement
than if found liable at trial; (4) The allocation of the settlement proceeds
among the plaintiffs; (5) The settlor’s financial condition and insurance
policy limits, if any; and (6) Evidence of any collusion, fraud, tortious
conduct between the settlor and the plaintiff aimed at making the non-settling
parties pay more than their fair share. (Tech-Bilt, Inc. v. Woodward-Clyde
& Associates (1985) 38 Cal.3d 488, 499.)
Here, the relevant terms of ACE’s
8/11/22 application for determination of the good faith nature of its settlement
agreement with Plaintiff are as follows:
“A. A.V.E.,
through its defending insurer, will pay to PLAINTIFF the total sum of
$90,000.00 in full and final settlement of all claims by PLAINTIFF against
A.V.E. relating in any way to A.V.E. 'S involvement with the two attached
single-family homes which are the subject of this litigation. […]
D. The total
payment of $90,000.00 toward this settlement is the compromise of disputed
claims after extensive negotiations and was agreed to by the settling parties
to avoid further litigation. This settlement is “within the ballpark” pursuant
to Code of Civil Procedure §877 and Tech-Bilt v. Woodward-Clvde and Associates
(1985) 38 Cal.3d 488.
E. PLAINTIFF and
A.V.E. agree to execute a Settlement Agreement and Release of All Claims in
which PLAINTIFF shall release A.V.E. from all claims, of whatever nature,
arising out of A.V.E.’S involvement with the Property which is the subject of
this litigation, including a waiver of the rights protected pursuant to
California Civil Code § 1542.
F. Each of the
settling parties will bear their own costs of litigation, including attorneys’
fees, if any.” (8/11/22 Application for Determination of Good Faith Settlement
of A.V.E. Sheetmetal & Rain Gutters, Inc.)
Initial Burden to Show
Allocation of Settlement Amount
Moving Defendant contests the good
faith nature of the settlement between AVE and Plaintiff on the bases that “it
is premature to determine the reasonable allocation of Plaintiff’s damages
between the defendants in the case at this time, the settlement terms are
unclear, as there is no allocation of Plaintiff’s damages, and the settlement
is not in the ballpark of AVE Sheetmetal’s potential liability, taking into
consideration the potential for indemnity and/or contribution.” (Mot., 2:5–9.)
Moving Defendant argues that AVE is
not sufficiently detailed as to how the settlement amount is allocated between
the issues and parties. Moving Defendant asserts that based on Plaintiff’s
discovery responses, the duration of the alleged construction delays caused by
AVE and Moving Defendant appear to overlap, thus requiring a more detailed showing
of the allocation calculations. (Mot., 8:25–27.)
In opposition, AVE proffers the
settlement agreement between itself and Plaintiff, as well as its attorney’s
declaration, stating that Plaintiff allocated to it a total of $183,803.65 in
damages and attorney fees. (Decl. of Mona Jeffery, ¶ 4.) AVE further observes that “good faith will not be
determined by the proportion [the] settlement bears to the damages of the
claimant. For the damages are often speculative, and the probability of legal
liability therefor is often uncertain or remote.” (Stambaugh v. Superior
Court (1976) 62 Cal.App.3d 231, 239.)
Based on this showing, the Court finds that AVE has met its
initial burden as the settling defendant to show the allocation of the
settlement amount.
Responsive Burden to Show Lack
of Good Faith
The burden therefore shifts to
Moving Defendant to prove a lack of good faith. (Code Civ. Proc. § 877.6, subd. (d).)
Here, Moving Defendant argues that the settlement does not meet the Tech-Bilt
factors because the application fails to detail the allocation of the
settlement amount between the issues, thereby preventing the Court from
determining the amount to offset against the non-settling parties. (Mot.
10:1–7.)
As set forth above, the Court finds
that AVE has sufficiently met its initial burden to show the allocation of the
settlement amount. Accordingly, without any additional evidence proffered or
arguments made to contest the good faith nature of the settlement agreement,
Moving Defendant has not demonstrated that the settlement is so far “out of the
ballpark” as to be inconsistent with the statutory intent of Code of Civil
Procedure section 877.6. (Tech-Bilt, 38 Cal.3d at 499–500.)
Moreover, AVE has shown that the
settlement amount of $90,000, which is approximately 49% of the total amount of
damages Plaintiff allocated to AVE, is within the “ballpark” of a reasonable
settlement. (Opp. 8:14–19.) To the extent that Moving Defendant disputes the
allocation amount determined by Plaintiff, Moving Defendant has not
sufficiently met its evidentiary burden to challenge the good faith nature of
the settlement. Moreover, Moving Defendant appears to concede that it lacks
sufficient evidence regarding Plaintiff’s damages allegations against Moving
Defendant, by requesting a continuance on this hearing to conduct additional
discovery thereto.
Additional Discovery
Moving Defendant requests that the
court allow 60 days for it to conduct additional discovery before ruling on the
good faith nature of the settlement between Plaintiff and AVE. (Mot. 3:13–15.)
However, the Court notes that AVE’s application for good faith determination
was filed on 8/11/22, and Moving Defendant has since had ample opportunity to
conduct its discovery or bring any necessary motions to compel, yet has not
done so. As AVE observes, “BROCCA bases its inability to meet its burden of
proof on its failure to complete discovery with PLAINTIFF, however BROCCA has
not taken any steps to obtain any additional evidence BROCCA deems necessary to
evaluate PLAINTIFF’S damages and the respective defendants’ responsibility for
such damages.” (Opp. 6:20–23.)
Based on the foregoing, the Court
denies Moving Defendant’s request for an additional 60 days to complete its
discovery into Plaintiff’s damages, and denies the instant motion in its
entirety.
CONCLUSION
The motion is denied.