Judge: Serena R. Murillo, Case: 19STCV12156, Date: 2022-09-29 Tentative Ruling
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Case Number: 19STCV12156 Hearing Date: September 29, 2022 Dept: 29
Tyra Wiltz v. Rio Vista Development Company, et al.
Thursday, September
29, 2022
Motion for
Good Faith Settlement Determination filed by Cross-Defendant AXCSS, Inc., dba
Patio Heaven Outdoor Furniture Warehouse
TENTATIVE
Cross-Defendant AXCSS, Inc., dba Patio Heaven Outdoor Furniture Warehouse’s motion for a good faith settlement determination under CCP section 877.6 is DENIED.
Legal Standard
When a motion seeking a determination under CCP section 877.6 is not opposed, the burden on the moving parties to show that the settlement was made in good faith is slight. (City of Grand Terrace v. Superior Court (1987) 192 Cal.App.3d 1251, 1261 (holding that a barebones motion including a declaration setting forth a brief background is sufficient). However, when the motion is contested, then the moving parties must make a sufficient showing in the moving papers or in the reply papers. (Id. at 1262 (holding that evidence showing a lack of good faith requires the moving party to provide evidence to negate the lack of good faith asserted by the contesting party).) CCP section 877.6(d) imposes the burden of showing that the settlement was not made in good faith on the parties opposing the application.
In order to determine whether the settlement was made in good faith under CCP section 877.6, the Court applies the following factors identified by the California Supreme Court in Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488 to determine whether the settlement amount is “in the ballpark” of the settling party’s share of liability for the injuries:
1) a rough approximation of the plaintiff's total recovery;
2) an approximation of the settling party's share of the liability;
3) recognition that a settling party should pay less in settlement than if found liable after a trial;
4) the allocation of the settlement proceeds among plaintiffs;
5) the settling party's financial condition and insurance policy limits;
6) evidence that the plaintiff and the settling party acted with an intent to make the non-settling parties pay more than their fair share (considered fraud and collusion under Tech-Bilt).
The "good faith" concept in CCP section 877.6 is a flexible principle imposing on reviewing courts the obligation to guard against the numerous ways in which the interests of nonsettling defendants may be unfairly prejudiced. (Rankin v. Curtis (1986) 183 Cal. App. 3d 939, 945.) Accordingly, under Tech-Bilt, the party asserting the lack of “good faith” may meet this burden by demonstrating that the settlement is so far "out of the ballpark" as to be inconsistent with the equitable objectives of the statute. (Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal. 3d 488, 499-500.) Such a demonstration would establish that the proposed settlement was not a "settlement made in good faith" within the terms of section 877.6. (Id.)
The Supreme Court explained that CCP section 877.6 is designed to further two equitable policies:
1) encouragement of settlements; and
2) equitable allocation of costs among joint tortfeasors.
(Id.)
Those policies would not be served by an approach which emphasizes one to the virtual exclusion of the other. (Id.) Accordingly, a settlement will not be found in good faith unless the amount is reasonable in light of the settling tortfeasor's proportionate share of liability. (Std. Pac. of San Diego v. A. A. Baxter Corp. (1986) 176 Cal. App. 3d 577, 589.)
Discussion
Cross-Defendant Patio Heaven seeks an order finding that its settlement with Plaintiff is a good faith settlement for the purposes of CCP section 877.6. Under the settlement agreement, Cross-Defendant agreed to pay $7,500 to Plaintiff to extricate itself from this lawsuit. The settlement is conditioned on the Court confirming that the settlement is in good faith and the concomitant relief of Defendants’ Cross-Complaint against Cross-Defendant being dismissed.
1) A rough approximation of the plaintiff's total recovery
Plaintiff’s medical bills for her treatment to date total $15,657.69, of which she has paid $1,660.10. (Case Decl., ¶ 15, Exh. 9-10.) Plaintiff is also making a claim for loss of income and future earning capacity related to her work as an independent consultant for an online retail company. She claims she missed two weeks of work following the accident to the tune of approximately $2,350. Thereafter, she returned to work, but claims she could not perform as she did prior to the accident. (Case Decl., ¶ 17; Exh. 8.)
Defendants argue that Cross-Defendant characterizes Plaintiff’s injuries as “a bump and abrasion to her head.” (Motion, p. 11, ln. 10-11.) Defendants argue that Plaintiff alleges she suffered a “head contusion, headaches, problems with memory, difficulty with comprehension, difficulty maintaining train of thought, difficulties with recall, confusion, frustration, anxiety, sensitivity to light, anxiety, mood swings and outbursts of anger, sadness, and withdrawing from relationships.” (Motion, p. 5, ln. 25-28 [citing Ex. 8].) Defendants argue that Plaintiff underwent a neurologic examination on April 10, 2019 by Dr. Aminian who diagnosed Plaintiff with a traumatic brain injury and post traumatic headaches. (Motion, p. 5, ln. 8-10; Exh. 6.) Dr. Aminian recommended a “formal cognitive neuropsychological evaluation/memory assessment.” (Exh. 6.) Following a neuropsychological evaluation, Dr. Aminian anticipated further recommending “cognitive rehabilitation and/or cognitive behavior psychotherapy.” (Ex. 6.) Formal cognitive rehabilitation and/or cognitive behavior psychotherapy is no doubt not inexpensive. It is currently unknown whether Plaintiff intends to designate a life care planner or the extent of Plaintiff’s claimed future damages.
Defendants also argue that Plaintiff was recently deposed wherein she testified that her complaints are ongoing and have stayed the same over the past five years. (Smith Decl. ¶ 5.) In light of Plaintiff’s complaints and neurologic examination, Defendants argue that it appears that Plaintiff is attempting to contend she sustained a traumatic brain injury in this incident leading to ongoing permanent injuries.
As such, Defendants contend that a settlement of $7,500 is not even close to the “ballpark” of potential liability if Plaintiff is able to convince a jury that she actually sustained a traumatic brain injury in this incident.
The Court finds that Defendants have not rebutted Cross-Defendant’s approximation of Plaintiff’s total recovery as they have not presented any argument as to her medical bills of $15,657.69 and her loss of earnings claim of $2,350. But the Court also notes that Cross-Defendant has not accounted for Plaintiff’s potential award of general damages. Thus, the $18,000 in special damages would only be a fraction of Plaintiff’s recovery in this case, and Cross-Defendant’s settlement of $7,500 would not even account for half of Plaintiff’s special damages.
2) An approximation of the settling party's share of the liability and the Amount Paid in Settlement
Plaintiff filed suit against Defendants, but not Cross-Defendant Patio Heaven. Plaintiff alleges that while a guest of Defendants and sitting under a cabana at the Hotel owned and/or operated by Defendants, she sustained injuries when Defendants’ property fell on her as a result of Defendants’ negligence and other actions and omissions to act in that area on the part of the Defendants, thereby legally causing the injuries and damages to Plaintiff. (Case Decl., ¶ 19, Exh. 1.) Moreover, Plaintiff has indicated in written discovery that she does not contend that Cross-Defendant is responsible for the subject accident. (Case Decl., ¶ 19, Exh. 2.)
In response to written discovery to Cross-Defendant, Defendants assert that Cross-Defendant is liable because Cross-Defendant’s alleged custom manufacturing, installation, maintenance of the subject cabana and other services, “likely caused or contributed” to the subject incident. (Case Decl., ¶ 21, Exhs. 14-15.) Cross-Defendant argues that the alleged documentation that supports Defendants’ claims are an invoice and emails between Cross-Defendant and Marcus. Cross Defendant argues that these documents do not establish that Cross-Defendant’s alleged “custom manufacturing, installation, maintenance of the subject cabana and other services” likely caused or continued to the subject incident. At best, it contends, the invoices show that Cross-Defendant sold gazebos to Defendant Rio and then installed them at various times pre- and post-accident. Likewise, it argues, the emails between Cross-Defendant and Defendant Marcus address Cross-Defendant’s work pre- and post-accident, but do not establish that Cross-Defendant caused or contributed to the subject accident. (Case Decl., ¶ 22, Exhs. 16-17.)
Defendants also acknowledged in written discovery that they did not perform any inspections on the subject cabana for the five years preceding the subject accident nor any inspection of the cabana after the accident. (Case Decl., ¶ 23; Exhs. 14-15.) Rather, they claim the subject cabana was last inspected by Cross-Defendant when it was installed on June 10, 2015. (Case Decl., ¶ 24; Exhs. 14-15.)
Cross-Defendant argues that Defendants do not have a contract with Cross-Defendant to provide maintenance for the subject cabana. Defendants do not have a contract with
Cross-Defendant to inspect and maintain the subject cabana. Rather, the only thing Defendants have is that Cross-Defendant sold and installed the subject cabana to Rio approximately 2 years before the accident. It argues that this evidence does not establish that Cross-Defendant caused or even “likely caused and/or contributed” to the subject incident. On the other hand, Cross-Defendant argues that Defendants, who were obligated to maintain the Hotel, including the cabana, admit they never inspected the subject cabana after it was installed in June 2015. Taken all together, Cross-Defendant contends, the evidence to date suggests Defendants are not likely to establish that it owes them indemnity, either total or partial.
Defendants argue that Cross-Defendant designed, manufactured, installed, and/or maintained the subject cabana. The frame of the subject cabana had aluminum rods that were inserted and held the cloth covering of the cabana. (Motion, Exh. 16.) Defendants argue that the rods inserted to the frame were defective in that they were able to be bent and dislodged from the frame by a mere gust of wind. This defect was latent and unknown to Defendants to the extent that a simple inspection would not reveal that wind could bend the rods. However, the problem with the rods and panel was known to Cross-Defendant as they designed and modified the cabana. (Id.)
Cross-Defendant advertises that the subject cabana “can be manufactured to your exact specifications.” (Id.) Marcus ordered longer privacy panels. (Declaration of Mitch Johnson (“Johnson Decl.”), ¶ 3; Motion, Exh. 16.) When the cabanas were installed, the rods holding the panels were slipped into the frame and not held in place by any hardware. (Johnson Decl., ¶ 4.) Cross-Defendant did not inform Defendants that there were any potential problems with wind being able to bend the poles and dislodge the pole. (Johnson Decl., ¶ 7.) After the subject incident occurred, Marcus contacted Cross-Defendant to fix the problem with the subject cabana. (Johnson Decl., ¶ 5.) In or around June of 2017, Cross-Defendant came to fix the subject cabana. (Johnson Decl., ¶ 6; Exh. 16.) However, Marcus later learned that Cross-Defendant merely replaced the rod which was still slipped into the frame and not held in place by any hardware. (Johnson Decl., ¶ 6.)
In or around February of 2018, Hotel contacted Moving Party to inform them the panel had again been detached from the frame by wind and that their “fix” didn’t work. (Johnson Decl., ¶ 8; Exh. 16.) In addition, Marcus communicated to Cross-Defendant that they didn’t know if Cross-Defendant had secured the panel the way its supposed to be. (Exh. 16.) Cross-Defendant responded expressing its knowledge of their modification of their design, the problem they created, and potential remedies which would affix the rods with hardware to prevent the rods from being dislodged. (Id.) On or about March 13, 2018, Cross-Defendant modified the subject cabana by making additional holes and adding screws to remediate their design defect. (Exh. 14, Nos 48 & 49.)
Defendants contend that Cross-Defendant performed maintenance on the subject cabana on June 17, 2015, when the cabana was initially installed, and March 22, 2017 when replacing another cabana that had been destroyed by a tree in a rainstorm. (Id., Nos. 15, 16, & 17.) Indeed, Cross-Defendant repaired the subject cabana after this incident without making any modifications in their design allowing the cabana pole to collapse again. (Exh. 16.)
Defendants thus argue that given that Cross-Defendant defectively designed the subject cabana and appear to have known of the danger from wind (Exh. 16), it is far more than “speculation” that Cross-Defendant caused or contributed to the subject incident. While Plaintiff characterizes this action as negligence and a premises liability action, Defendants believe that it should be more accurately be characterized as a products liability action with fault lying primarily on Cross-Defendant who designed, manufactured, installed, and/or maintained the subject cabana.
In addition, Cross-Defendant fails to appreciate the multiple emails and invoices produced in discovery that indicate that Cross-Defendant knew that wind could bend and dislodge the pole without changing their design creating a dangerous condition. (Exh. 16.)
3) Recognition that a settling party should pay less in settlement than if found liable after a trial
Cross-Defendant is offering to pay an amount before trial and it should pay less than a potential verdict, if the matter proceeded to trial and the jury found in favor of the Plaintiff.
4) The allocation of the settlement proceeds among plaintiffs
This factor is not applicable.
5) The settling party's financial condition and insurance policy limits
Cross-Defendant has not offered any evidence or argument as to this factor.
As a result, it is not clear what Cross-Defendant’s financial condition is.
6) Evidence that the plaintiff and the settling party acted with an intent to make the non-settling parties pay more than their fair share (considered fraud and collusion under Tech-Bilt).
Cross-Defendant avers that this settlement was reached at arms-length negotiations between Plaintiff and Cross-Defendant. There has been no collusion, fraud or tortious conduct aimed to injure the interests of Defendants. (Case Decl., ¶ 26.)
Overall, Cross-Defendant has not shown a rough approximation of Plaintiff’s total recovery and that its settlement of $7,500 is an approximate share of its liability for Plaintiff’s injuries as Defendants have submitted sufficient evidence to show that a jury could very well find that Cross-Defendant’s design of the rod was the cause of Plaintiff’s injuries, or at the least, find that Cross-Defendant is a joint tort-feasor. The proposed settlement of $7,500 would not even account for half of Plaintiff’s special damages of $18,000. This figure does not even include general damages. Moreover, as Defendants point out there is no evidence of Cross-Defendant’s financial condition, or any mention of its insurance policy limits.
As a result, Cross-Defendant has not shown that its settlement is a good faith settlement for the purposes of CCP section 877.6.
Conclusion
Cross-Defendant has not met its burden of demonstrating that it is entitled to a finding that its settlement is a good faith settlement under CCP section 877.6. Therefore, the motion for a good faith settlement determination is DENIED.
Moving party is ordered to give notice.