Superior Court of California

County of Los Angeles

Department 50

SAVOY COMMUNITY ASSOCIATION, Plaintiff, vs. PERENNIAL ENGINEERING & CONSTRUCTION, INC., et al., Defendants.	Case No.:	19STCV26077
	Hearing Date:	January 11, 2023
	Hearing Time:	10:00 a.m.
	[TENTATIVE] ORDER RE: MOTION FOR ORDER DETERMINING GOOD FAITH SETTLEMENT BY INTERVENOR COLONY INSURANCE COMPANY
AND RELATED CROSS-ACTIONS

Background

Plaintiff Savoy Community Association (“Plaintiff”) filed this action on July 26, 2019 against Defendants Perennial Engineering & Construction, Inc., dba DM Construction Services (“Perennial”); SBBC Associates Inc. dba Stonemark Construction Management; and Angelus Waterproofing & Restoration, Inc. (“Angelus”).

The Complaint asserts causes of action for (1) breach of contract, (2) breach of express warranty, (3) breach of implied warranty, (4) negligence, and (5) strict liability. Plaintiff is a nonprofit mutual benefit corporation composed of owners of condominium living units located at 100 South Alameda Street, Los Angeles California (the “Property”). (Compl., ¶ 1.) Plaintiff alleges that there are a number of deficiencies at the Property due to renovations and repairs. (Compl., ¶ 22.) Among other allegations, Plaintiff alleges that defendants negligently, carelessly, and in an unworkmanlike manner performed work, labor, and/or services on the Property such that the Property was reconstructed and repaired improperly, negligently, carelessly, and in an unworkmanlike manner. (Compl., ¶ 51.)

On December 4, 2019, Angelus filed a Cross-Complaint against Moes 1-50. On February 5, 2021, Angelus filed an amendment to the Cross-Complaint naming Mark Beamish Waterproofing, Inc. (“Beamish”) as Moe 3. On July 7, 2021, Beamish filed a Cross-Complaint against Roes 1-50.

On April 1, 2020, Colony Insurance Company (“Colony”) filed a Complaint in Intervention on behalf of Perennial. On May 9, 2022, Colony filed a First Amended Complaint in Intervention on behalf of Perennial.

Plaintiff; Colony, Perennial, P’Raes General Contractors, Inc. dba DM Construction Services, DM Construction Services, Inc., and David Solomos entered into a Settlement Agreement and Release of Claims, under which Colony shall pay Plaintiff the sum of $1,000,000.00. (Rodman Decl., ¶¶ 15, 16, Ex. A.)

Colony now moves for an Order finding that the settlement entered into between Colony on behalf of Perennial, P’Raes General Contractors, Inc. dba DM Construction Services, DM Construction Services, Inc., and David Solomos (collectively the “Settling Parties”) and Plaintiff was made in good faith. Colony also moves for an order dismissing the Complaint with prejudice against Perennial and discharging the Settling Parties “from all liability for any further contribution to Plaintiff or contribution to other parties,” and ordering that the good faith settlement bars future claims against the Setting Parties for equitable indemnity, comparative contribution, or partial or comparative indemnity based on comparative negligence or fault based on the allegations in this action. Beamish opposes.

Discussion

“[Code of Civil Procedure] Section 877.6 was enacted by the Legislature in 1980 to establish a statutory procedure for determining if a settlement by an alleged joint tortfeasor has been entered into in good faith and to provide a bar to claims of other alleged joint tortfeasors for equitable contribution or partial or comparative indemnity when good faith is shown.” (Irm Corp. v. Carlson (1986) 179 Cal.App.3d 94, 104.)

Section 877.6(a)(1) provides, in relevant part, that, on noticed motion, “[a]ny party to an action in which it is alleged that two or more parties are joint tortfeasors or co-obligors on a contract debt shall be entitled to a hearing on the issue of the good faith of a settlement entered into by the plaintiff or other claimant and one or more alleged tortfeasors or co-obligors.” (Code Civ. Proc., § 877.6(a)(1).) “The party asserting the lack of good faith shall have the burden of proof on that issue.” (Code Civ. Proc., § 877.6(d).)

“A determination by the court that the settlement was made in good faith shall bar any other joint tortfeasor or co-obligor from any further claims against the settling tortfeasor or co-obligor for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault.” (Code Civ. Proc., § 877.6(c).)

In Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499, the California Supreme Court identified the following nonexclusive factors courts are to consider in determining if a settlement is in good faith under section 877.6: “a rough approximation of plaintiffs’ total recovery and the settlor’s proportionate liability, the amount paid in settlement, the allocation of settlement proceeds among plaintiffs, and a recognition that a settlor should pay less in settlement than he would if he were found liable after a trial. Other relevant considerations include the financial conditions and insurance policy limits of settling defendants, as well as the existence of collusion, fraud, or tortious conduct aimed to injure the interests of nonsettling defendants.” The evaluation of whether a settlement was made in good faith is required to “be made on the basis of information available at the time of settlement.” (Tech-Bilt, Inc. v. Woodward-Clyde & Associates, supra, at p. 499)

Colony asserts that the settlement meets the criteria set forth in Tech-Bilt. Colony indicates that following multiple arms-length negotiations with the assistance of a mediator, Colony and Plaintiff entered into the subject settlement by which Colony shall pay Plaintiff the sum of $1,000,000, representing the total limits of the policy issued to DM Construction by Colony. (Rodman Decl., ¶ 15.) More specifically, Colony indicates that on April 22, 2013, Plaintiff contracted with P’Raes General Contractor’s Inc. dba Perennial Engineering & Construction, Inc. dba DM Construction Services. (Rodman Decl., ¶ 6.) P’Raes General Contractor’s Inc. later became insolvent and was replaced by Perennial Engineering & Construction dba DM Construction Services. (Rodman Decl., ¶ 6.) Colony issued a commercial general liability policy on behalf of DM Construction Services with limits of $1,000,000 per occurrence, $2,000,000 in the aggregate. (Rodman Decl., ¶ 8.) Colony asserts that this lawsuit and all damages arising out of Plaintiff’s project are deemed a single occurrence, rendering the total available insurance on behalf of DM Construction to be $1,000,000. (Rodman Decl., ¶ 8.)

Colony also asserts that it questions Plaintiff’s ability to prove negligence and covered damages against Perennial. In addition, Colony and Plaintiff performed an allocation of Colony’s settlement payment to the various categories of defects alleged by Plaintiff. (Rodman Decl., ¶ 19.) A pro rata formula was used to determine the percentages for each of the Plaintiff’s defect categories to address the credit issue for the nonsettling parties. (Rodman Decl., ¶ 19.)

In the opposition, Beamish contends that the settlement is not within the ballpark under Tech-Bilt when viewed in the context of Plaintiff’s intent to claim in excess of $8,000,000

in damages at trial. As discussed above, Colony performed an allocation of its settlement payment to the various categories of defects alleged by Plaintiff, using a pro rata formula based on Plaintiff’s February 18, 2022 Cost of Repair, and DM Construction’s scope of repair. (Rodman Decl., ¶ 19.) The subtotal amount of Plaintiff’s costs listed in Colony’s table is $4,667,160.00, and the “Total Burdened with Contingencies” is $8,120,858.40. (Rodman Decl., ¶ 19.) Beamish asserts that “Intervenor’s $1,000,000 settlement constitutes approximately 12% contribution, which is paltry compared to 100% liability for Plaintiff’s entire claimed damages in excess of $8 million.” (Opp’n at p. 6:23-24.)

Beamish submits the Declaration of its expert Ronald Mallory who asserts that “there is no evidence to indicate that [Beamish’s] shotblasting prep work, which was overseen and approved by Plaintiff’s waterproofing consultant, James West, and ultimately accepted by DM Construction as adequate and sufficient before proceeding with the waterproofing work, fell below the standard of care.” (Mallory Decl., ¶ 4.) Mr. Mallory concludes that “there is no evidence that any damages associated with DM’s faulty waterproofing work is attributable to [Beamish’s] work,” and that “most if not 100% of Plaintiff’s cost of repair was caused by DM Construction and/or pre-existing conditions at the site that was the subject of the prior construction defect lawsuit.” (Mallory Decl., ¶¶ 7-8.)

Colony counters that if Plaintiff were successful at trial, the most it could recover from Colony or DM Construction is the $1 million policy limit Colony has tendered for settlement. Colony also notes that Beamish does not provide evidence that DM Construction itself could fund a portion of any settlement.

Lastly, Beamish asserts that “the circumstances surrounding the settlement suggests collusion aimed to prejudice [Beamish].” (Opp’n at p. 8:3-4.) However, as noted by Colony, Beamish offers no evidence of any collusive conduct here.

Based on a consideration of the applicable Tech-Bilt factors and the argument and evidence presented by the parties, the Court finds that Beamish has not shown that the settlement is so far out of the “ballpark” as to lack good faith.

Conclusion

Based on the foregoing, Colony’s motion for determination of good faith settlement is granted. Pursuant to Code of Civil Procedure section 877.6, subdivision (c), the Court’s determination that the settlement was made in good faith “shall bar any other joint tortfeasor or co-obligor from any further claims against the settling tortfeasor or co-obligor for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault.”

Colony is ordered to provide notice of this ruling.

DATED: January 11, 2023 ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court