Judge: Steven A. Ellis, Case: 21STCV35858, Date: 2024-02-06 Tentative Ruling

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ALSO NOTE:  If the moving party does not contact the court to submit on the tentative and does not appear (either remotely or in person), the motion will be taken off calendar.  THE TENTATIVE RULING WILL NOT BE THE ORDER OF THE COURT.

Case Number: 21STCV35858    Hearing Date: February 6, 2024    Dept: 29

Motion to Contest the Application for Good Faith Settlement filed by Defendants Specialty Healthcare Properties, LLC, and Cedars-Sinai Medical Center.

Tentative

The motion to contest is GRANTED.

Background

This case arises out of an alleged accident on February 28, 2020. Plaintiffs Sigrid Hazel Soto and Jorge Manrique (collectively “Plaintiffs”) allege that Plaintiff Soto was walking near the valet area in the parking lot of Defendants Specialty Healthcare Properties, L.L.C. (“Specialty”), Cedars-Sinai Medical Center (“CSMC”), and Does 11 through 50 when Defendant Nune Badalyan (“Badalyan”) drove her vehicle over Plaintiff Soto’s foot, causing her severe injuries.

On September 29, 2021, Plaintiffs filed the Complaint in this action, asserting five causes of action: (1) Plaintiff Soto asserts a motor vehicle negligence claim against Badalyan and Does 1 through 10; (2) both Plaintiff assert a general negligence claim against Badalyan and Does 1 through 10; (3) Plaintiff Soto asserts a premises liability claim against Specialty, CSMC, and Does 11 through 50; (4) Plaintiff Soto asserts a general negligence claim against Specialty, CSMC, and Does 11 through 50; and (5) Plaintiff Manrique asserts a loss of consortium claim against all Defendants.

CSMC filed its Answer on February 15, 2023. Specialty filed its Answer and a Cross-Complaint against Badalyan and Roes 1 through 100 on February 23, 2023. Badalyan filed her Answer and a Cross-Complaint against Specialty, CSMC, and Roes 1 through 10 on March 8, 2023.

On November 6, 2023, Plaintiffs amended their Complaint to name ABM Industries Incorporated (“ABM”) as Doe 1.

On December 29, 2023, Specialty and CSMC filed this motion to contest Badalyan’s application for determination of good faith settlement. (No application appears in the file.)  Badalyan filed her opposition to the motion on January 23, and Specialty and CSMC filed their reply on January 30.

Legal Standard

In a case involving two or more alleged joint tortfeasors, a party may seek a court order under Code of Civil Procedure section 877.6 determining that a settlement between the plaintiff and one or more of the alleged tortfeasors is in good faith. A judicial determination of good faith “bar[s] any other joint tortfeasor … from any further claims against the settling tortfeasor … for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault.” (Code Civ. Proc. § 877.6(c).)

In evaluating whether a settlement has been made in good faith, courts consider the following factors, as set forth by the California Supreme Court in the landmark case Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488:

             1) “a rough approximation of plaintiffs’ total recovery”;

             2) “the settlor’s proportionate liability”;

            3) “the amount paid in settlement”;

      4) “the allocation of the settlement proceeds among plaintiffs”;

5) “a recognition that a settlor should pay less in settlement than he would if he were found liable after a trial”;

             6) the settling party's “financial conditions and insurance policy limits”;

7) any evidence of “collusion, fraud, or tortious conduct aimed to injure the interests of nonsettling defendants.”

(Id. at 499.) “Practical considerations obviously require that the evaluation be made on the basis of information available at the time of settlement.” (Ibid.)

The “good faith” concept in Code of Civil Procedure 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, supra, 38 Cal.3d at 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. (Ibid.)

The Supreme Court explained that Code of Civil Procedure section 877.6 is designed to further two equitable policies:

1) encouragement of settlements; and

2) equitable allocation of costs among joint tortfeasors. 

(Ibid.) 

Those policies would not be served by an approach which emphasizes one to the virtual exclusion of the other. (Ibid.) 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.) Or, as the California Supreme Court has stated, 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.” (Tech-Bilt, supra, 38 Cal.3d at 499.)

When a motion seeking a determination under Code of Civil Procedure 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 of the case is sufficient”].)

When a good faith motion is contested, however, the moving parties have the initial burden of producing evidence in support of the requested good faith determination. (Id. at pp. 1261-1262.) “Section 877.6 and Tech-Bilt require an evidentiary showing, through expert declarations or other means, that the proposed settlement is within the reasonable range permitted by the criterion of good faith.” (Mattco Forge v. Arthur Young & Co. (1995) 38 Cal.App.4th 1337, 1351.) “Substantial evidence” is required. (Id. at p. 1352.) A declaration from a settling defendant’s attorney that states, in conclusory fashion, that the client has little, or no share of the liability may not be sufficient. (Greshko v. County of Los Angeles (1987) 194 Cal.App.3d 822, 834-35; see also 3 Weil & Brown, California Practice Guide: Civil Procedure Before Trial (The Rutter Group 2023) ¶¶ 12:774, 12:872-873.) 

The ultimate burden of persuasion is on the party opposing the good faith determination.  The “party asserting a lack of good faith shall have the burden of proof on that issue.”  (Code Civ. Proc. § 877.6(d); see also 3 Weil & Brown, supra, at ¶ 12:875.)

Discussion

Badalyan has settled with Plaintiffs for $50,000 and seeks a determination that the settlement is in good faith under Code of Civil Procedure section 877.6. Specialty and CSMC contest the good faith of the settlement.

The Court begins by considering each of the Tech-Bilt factors.

1. Rough approximation of Plaintiff’s total recovery.

Plaintiff Soto claims that the accident caused injuries to her foot, ankle, calf, back, neck, arms, and breast. (De Metruis Decl., Exh. 2.) When she was deposed on November 3, 2023, Plaintiff testified that she did not know what her medical bills to date were, but she estimated that she owed more than $250,000 in outstanding medical bills. (Ibid.)

In January 2023, Plaintiffs served a statement of damages in which each Plaintiff asserted a claim to $2 million ($1 million in special damages and $1 million in general damages for each Plaintiff). (Id., Exh. 3.)

Badalyan asserts that Plaintiff Soto may have “overtreated” but does not present any affirmative evidence of a rough approximation of Plaintiffs’ total recovery. (Opp. at pp. 2-5.)

On these facts, it appears to the Court that a rough approximation of Plaintiff Soto’s total recovery is in the mid six figures, if not more, after taking into account both special and general damages.

The Court has no evidence (other than the Statement of Damages) upon which it could approximate, even roughly, Plaintiff Manrique’s total recovery, except that it is likely less than Plaintiff Soto’s.

2. The settlor’s proportionate liability.

No party offers any evidence regarding what Badalyan’s proportionate share is of the total liability. Specialty and CSMC do point out, however, that it is uncontested that it was Badalyan who ran over Plaintiff Soto’s foot.

No party offers any evidence of what proportion of the liability is likely to be borne by the other defendants (Specialty, CSMC, and recently added Defendant ABM).

3. The amount paid in settlement.

It is undisputed that the settlement agreement requires Badalyan to pay Plaintiffs a total amount of $50,000.

4. The allocation of the settlement proceeds among plaintiffs.

No information has been provided to the Court regarding the allocation of the settlement proceeds between the two plaintiffs.

5. A recognition that a settlor should pay less in settlement than she would if she were found liable after a trial.

This factor favors a good faith determination, as the first settling party often receives a discount.

6. The settling party’s financial conditions and insurance policy limits.

Badalyan settled for the full amount of her insurance policy limits and has no other insurance available for this claim. (Badalyan Decl., ¶ 8.) Badalyan presents no other evidence of her financial condition.

7. Any evidence of collusion, fraud, or tortious conduct aimed to injure the interests of nonsettling defendants.

Other than the arguments of Specialty and CSMC regarding the small amount of the settlement, there is no evidence of collusion, fraud or tortious conduct.

The Court has carefully considered all of the evidence and argument presented by the parties. On this record, the Court GRANTS the motion to contest the good faith of the settlement, without prejudice to a subsequent application or motion for good faith by Badalyan. At this time, Badalyan has not met her initial burden of presenting evidence sufficient to show that the settlement is in good faith – there is little evidence of an approximation of either Plaintiffs’ total potential recovery or Badalyan’s proportionate share.

The evidence that does exist, moreover, suggests that the settlement is not “in the ballpark.” If, for example, the total recovery for both Plaintiffs is somewhere in the range of $500,000-$1,000,000, and Badalyan is at least 75 percent responsible, a $50,000 settlement is not in the ballpark. If either the total recovery or Badalyan’s proportionate share of the total liability is smaller than that, it is Badalyan’s obligation to come forward with evidence to make this showing – which she has not done.

Finally, the fact that Badalyan has settled for policy limits, without evidence regarding whether does or does not have other assets available to satisfy an excess judgment, does not, on this record, show good faith. It is true, of course, that in Tech-Bilt itself the California Supreme Court observed, “[e]ven where the claimant’s damages are obviously great, and the liability therefor certain, a disproportionately low settlement figure is often reasonable in the case of a relatively insolvent, and uninsured, or underinsured joint tortfeasor.” (Tech-Bilt, supra, 38 Cal.3d at p. 499.) In other words, even a settlement that appears to be disproportionate may nonetheless be determined to be in good faith because the settling party is in fact “relatively insolvent.” Here, however, Badalyan has presented no evidence that she is (apart from insurance coverage) “relatively insolvent.”

Badalyan’s reliance on Cahill v. San Diego Gas & Electric, Co. (2011) 194 Cal.App.4th 939 is misplaced. In that case, the Court of Appeal determined that the amount of the settlement was, based on the information known to the parties at the time, “in the ballpark.” Having made that determination, evidence of the financial circumstances of the settling party was not significant. (Id., at p. 968.) Here, in contrast, the evidence indicates that the settlement is not “in the ballpark.” Although even a disproportionate settlement may be made in good faith when a settling party has limited means, the burden in such a case, as here, is on the proponent of the good faith determination to provide evidence of the settling party’s limited financial resources. Badalyan has not done so here.

Conclusion

The Court GRANTS the motion of Specialty and CSMC to contest the good faith of the settlement. This ruling is without prejudice to Badalyan submitting a subsequent application or motion, supported by additional evidence, for a good faith determination under Code of Civil Procedure section 877.6

Moving parties Specialty and CSMC are ordered to give notice.