Judge: Teresa A. Beaudet, Case: 21STCV27807, Date: 2022-09-06 Tentative Ruling

Case Number: 21STCV27807    Hearing Date: September 6, 2022    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

            Background

On July 28, 2021, Plaintiffs Xian Chen Ge, Dong Ge, Yu Qi Ge, and Su Me Zheng (collectively, “Plaintiffs”) initiated the instant action against Defendants Joe Chikin, Angela Szeto, Parkland Townhomes Homeowners Association, Inc.[1], and Inveserve Corporation (“Inveserve”). Chikin Joe (“Joe”) indicates in the instant motion that he was erroneously sued as Joe Chikin, and Nicole Szeto (“Szeto”) indicates that she was erroneously sued as Angela Szeto. 

On July 19, 2022, Plaintiffs filed a Second Amended Complaint (“SAC”), asserting causes of action for (1) violation of Civil Code § 1941, et seq. and Civil Code § 1942, et seq., (2) breach of warranty of habitability, (3) breach of covenant of quiet enjoyment, (4) nuisance, (5) negligent failure to provide and/or maintain habitable premises, (6) intentional infliction of emotional distress, (7) negligent infliction of emotional distress, (8) violation of Business & Professions Code § 17200 et seq., and (9) injunctive relief.   

On July 14, 2022, Plaintiffs reached a settlement with Joe and Szeto. (Lezon Decl., ¶ 9.) The settlement includes, inter alia, a release of claims in exchange for payment by Joe

and Szeto in the total amount of $145,000.00. (Lezon Decl., ¶¶ 10-11, Ex. 1.)

Joe and Szeto (the “Settling Defendants”) now move for an order determining that the settlement was entered into in good faith pursuant to Code of Civil Procedure section 877.6. Parkland and Inveserve (the “Nonsettling Defendants”) oppose.

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, subdivision (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, subd. (a)(1).) “The party asserting the lack of good faith shall have the burden of proof on that issue.” (Code Civ. Proc., § 877.6, subd. (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, subd. (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) 

The Settling Defendants assert that given the facts and evidence available to them at the time of settlement, the settlement is reasonable and well within the “ballpark” range of their share of liability for Plaintiffs’ damages claims. The Settling Defendants contend that they have maintained since the outset of this litigation that their liability for Plaintiffs’ claims is highly questionable, and that the evidence marshalled through discovery prior to settlement strengthened this assessment. The Settling Defendants’ counsel asserts that Plaintiffs allege that there was “toxic” mold at the Property, but that no such findings were ever reflected in the expert witness report. (Lezon Decl., ¶ 7.) The Settling Defendants’ counsel also asserts that the evidence shows that the condition of the subject property was caused by Plaintiffs’ maintenance of the property and that there is no evidence to support the damages sought against the Settling Defendants. (Lezon Decl., ¶ 8.)

            In their opposition, the Nonsettling Defendants first assert that the Settling Defendants failed to put forth substantial evidence from an expert showing the nature and extent of their liability in this action. But as set forth above, “[t]he party asserting the lack of good faith shall have the burden of proof on that issue.” (Code Civ. Proc., § 877.6, subd. (d).) Here, the Nonsettling Defendants do not offer evidence in connection with the opposition concerning the nature and extent of the Settling Defendants’ liability.   

            Second, the Nonsettling Defendants note that the Settling Defendants have not allocated

the settlement proceeds among the four Plaintiffs. In the motion, the Settling Defendants indicate that the Plaintiffs will split the settlement proceeds however they see fit.

Third, the Nonsettling Defendants note that the Settling Defendants have not set a specific amount for the assignment of rights to Plaintiffs in the settlement. The Settling Defendants agree under the settlement to “assign and transfer to PLAINTIFFS any and all sums of money now due or owing to [the Settling Defendants], and all claims, demands, and cause or causes of action of whatever kind and nature that [the Settling Defendants] now have or may later have against INVESERVE CORPORATON and PARKLAND TOWNHOMES HOME OWNERS ASSOCIATION, INC., or any other person or persons, whether jointly or severally, arising out of, or for, any loss, injury, or damage sustained by [the Settling Defendants] in connection with PLAINTIFFS’ claims in the ACTION.” (Lezon Decl., ¶ 10, Ex. 1, ¶ C(3).) The Nonsettling Defendants assert that the value of the assigned rights must be established by declarations or other evidence to fix the amount of credit to which the Nonsettling Defendants are entitled. In support of this assertion, they cite to Erreca’s v. Superior Court (1993) 19 Cal.App.4th 1475, 1496-1497, where the Court of Appeal noted the following:

“It is clear that assignment of indemnity rights may constitute a valuable noncash consideration for settlement. In Southern Cal. Gas Co. v. Superior Court (1986) 187 Cal.App.3d 1030, 1034-1037 [232 Cal.Rptr. 320], the court granted a writ of mandate to require the trial court to vacate a good faith settlement approval because the parties had not placed a value upon certain defendants’ assignment to plaintiffs of their rights under the defendants’ insurance policy, under which the insurer had denied coverage and refused to defend. The Court of Appeal noted that the assignment of tort and contract rights with respect to the insurance policy was a part of the consideration paid by the settling defendants, that such rights were valuable, and that under section 877, subdivision (a) the nonsettling defendants were entitled to credit against any eventual judgment for the value of the assigned rights. The court explained that the value of the assigned rights could have been determined by declaration or by expert testimony, and the value then allocated between the several plaintiffs by agreement among the settling parties. Alternatively, the trial court could have provided for credit in favor of the nonsettling defendants for any amounts recovered by the plaintiffs through the assigned rights, as long as the assigned rights were pursued with due diligence. (Southern Cal. Gas Co., supra, 187 Cal.App.3d at p. 1036.) 

In Alcal, supra, 8 Cal.App.4th 1121, the court noted that the settlement included an assignment of the developers’ indemnity rights against the roofer to the plaintiff homeowners’ association, but that the settling parties had failed to place a value upon that assignment of rights. The court stated: ‘Without more information about the assignment, we cannot determine whether valuable consideration was transferred here or whether the assigned rights merely duplicated Association's existing rights against roofer. If the assigned rights were valuable, the settlement agreement should have set their value and the court should have considered the added value when determining whether the settlement was in good faith. [Citation.] The added value would then be included in any offset to any judgment against roofer.’ (Alcal, supra, 8 Cal.App.4th at p. 1128.)”

            The Settling Defendants assert in the motion that at the time of settlement, they did not know the value of the assignment in the settlement agreement, since the Settling Defendants had not considered bringing a cross-action against the Nonsettling Defendants. (Lezon Decl., ¶ 13.)

“The trial court’s evaluation of the good faith of a settlement must be made on the basis of¿information available at the time of settlement.” (Cahill v. San Diego Gas & Elec. Co. (2011) 194 Cal.App. 4th 939, 960 [internal quotations omitted, emphasis in original].) The Settling Defendants submit that, to the extent the assignment has any value, it only strengthens their position that the total settlement amount is fair and reasonable under the Tech-Bilt factors.

            Fourth, the Nonsettling Defendants assert that the Settling Defendants have “colluded” to have the Nonsettling Defendants pay more than their fair share by including the assignment provision in the settlement agreement. As the Settling Defendants note, there is no evidence of collusion aimed at injuring the Nonsettling Defendants.

            Lastly, the Nonsettling Defendants assert that the Settling Defendants owe Parkland contractual indemnity under Parkland’s CC&Rs and “likely” owe indemnity to Inveserve. “Another key factor is the settling tortfeasor’s potential liability for indemnity to joint tortfeasors.” (Long Beach Memorial Medical Center v. Superior Court (2009) 172 Cal.App.4th 865, 873.) The Nonsettling Defendants assert that the Settling Defendants “are likely to owe non-settling defendants’ equitable indemnity because Settling Defendants had an obligation to maintain the subject property. Settling Defendants Nicole Szeto and Chikin Joe are the owners, occupiers, and/or landlords, who were responsible for the construction, maintenance, and repair of the Premises pursuant to the applicable Conditions, Covenants & Restrictions (“CC&Rs”), in which Settling Defendants agreed to construct, repair, and maintain the Premises in a tenantable condition.” (Opp’n at p. 5:20-25.) The good faith determination will have no bearing on any contractual indemnity.

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

            Conclusion

            Based on the foregoing, the Settling Defendants’ motion for determination of good faith settlement is granted.

The Settling Defendants are ordered to provide notice of this ruling.

DATED:  September 6, 2022                         ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court