Judge: Theresa M. Traber, Case: BC515574, Date: 2024-02-05 Tentative Ruling
Case Number: BC515574 Hearing Date: February 27, 2024 Dept: 47
Tentative Ruling
Judge Theresa M. Traber, Department 47
HEARING DATE: February 27, 2024 TRIAL DATE:
NOT SET
CASE: Green Mutual Property & Investment
Co., et al. v. Wilshire Bank, et al.
CASE NO.: BC515574 
MOTION
FOR DETERIMINATION OF GOOD FAITH SETTLEMENT
MOVING PARTY: Defendants James Hyojin Ahn and Robert Ahn
RESPONDING PARTY(S): Defendant Bank of
Hope, successor-in-interest to Defendant Wilshire Bank
CASE
HISTORY:
STATEMENT
OF MATERIAL FACTS AND/OR PROCEEDINGS:
Plaintiffs allege that Defendants
fraudulently enticed them into buying a bad note.
Defendants
James and Robert Ahn move for a determination of good faith settlement.
TENTATIVE RULING:
Defendants’ Motion for Good Faith
Settlement Determination is DENIED. This ruling is without prejudice to filing a
properly supported Motion for Good Faith Settlement Determination.
DISCUSSION:
Defendants James and Robert Ahn
move for a determination of good faith settlement. The basic terms of the
settlement according to the moving papers are that the Ahn Defendants, will pay
Plaintiffs $45,000 in settlement of Plaintiff’s claims against them.
(Declaration of Lawrence C. Ecoff ISO Mot. ¶ 4.)
Any party to an action “in which it is alleged that two or more parties
are joint tortfeasors or co-obligors on a contract debt” is 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,
upon giving notice in the manner provided in subdivision (b) of Section 1005.”
(Code Civ. Proc. § 877.6(a)(1).)
There is no precise yardstick for
measuring the “good faith” of a settlement with one of several tortfeasors, but
it must harmonize the public policy favoring settlements with the competing
public policy favoring equitable sharing of costs among tortfeasors. (See Tech-Bilt, Inc. v. Woodward-Clyde &
Associates (1985) 38 Cal.3d 488, 499.)
The nonexclusive factors considered
include:
(1)
A rough approximation of plaintiffs’ 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 after a trial;
(4)
The allocation of the settlement proceeds among
plaintiffs;
(5)
The settlor's financial condition and insurance policy
limits, if any; and
(6) Evidence of any collusion, fraud, or
tortious conduct between the settlor and the plaintiffs aimed at making the
nonsettling parties pay more than their fair share.
(Tech-Bilt, supra, 38 Cal.3d at 499; TSI Seismic Tenant Space, Inc. v. Superior
Court (2007) 149 Cal.App.4th 159, 165-166.)
The party contesting the settlement
bears the burden of proving that it is in bad faith. (Code Civ. Proc.
§877.6(d).) If the party contesting the settlement can show, with admissible
evidence, that the settlement is “so far ‘out of the ballpark’ in relation to
[the above-referenced factors] as to be inconsistent with the equitable
objectives of the statute,” then the court should find the settlement to be
lacking in good faith. (Id. at
499-500.) If no such showing is made, the settlement should be deemed to be in
good faith and the settlor is entitled to an order barring any further claims
by any other joint tortfeasor or co-obligor for “equitable comparative
contribution, or partial or comparative indemnity” and/or an order dismissing
any such claims. (Code Civ. Proc. § 877.6(c).)
Defendant Bank of Hope contests the
settlement as being in bad faith and opposes the motion as insufficiently
supported.
1.
Rough Approximation of Liability
The Ahn Defendants contend that their
total liability is disputed. The gravamen of the action is that, in February
2007, Saehan Bank loaned the owners of Trimax, a carwash business, $3.6 million
on an appraised property value of $5.5 million. (TAC ¶ 2.) The bank
progressively downgraded the loan between 2007 and 2010 and reappraised the
property for $2.2 million in 2009. (Id.) Saehan set out to sell the loan
in January 2010. (Id.) Plaintiff alleges that the bank and its agent,
James Ahn, misrepresented the quality of the note to induce Plaintiff’s
predecessor in interest, Green Mutual Equity, to purchase the loan for $2.4
million, by promising a $3.6 million return at maturity. (Id.) Plaintiff
asserts causes of action against James Ahn for, inter alia, fraud,
negligence, and breach of fiduciary duty. Plaintiff also alleges causes of
action against Robert Ahn for breach of fiduciary duty, negligence, and breach
of the covenant of good faith and fair dealing for failing to properly manage
the Trimax note for Plaintiff.
In their moving papers, the Ahn
Defendants contend that, with respect to James Ahn, his total liability would
be limited because he merely served as a messenger from Saehan Bank to
Plaintiff. The papers also state that no damages can be attributed to Robert
Ahn because the property taxes that he allegedly failed to disclose were paid
by Saehan Bank and James Ahn. These statements are not supported by the sworn
affidavits provided in support of the motion. Moreover, Defendants do not
provide any estimation of the potential liability that James Ahn would face as
an individual or as an agent for the Bank.
In opposition, Bank of Hope
contends that the total exposure was $23,000,000, based on the damages
requested in the pleadings. (See TAC prayer for relief.) But pleadings are not
evidence of exposure. Bank of Hope also argues that James Ahn is subject to
greater potential liability because there is evidence that James Ahn positioned
himself as an agent for both sides and took a central role in the proceedings.
(See generally Declaration of Cameron Partovi ISO Opp. Exhs. 1-2.) In reply,
the Ahn Defendants state that James Ahn’s agency relationship with Bank of Hope
is undisputed, based on the Bank’s filings and James Ahn’s deposition testimony,
so his actions are attributable to the Bank. (See Supplemental Declaration of
Lawrence Ecoff ISO Reply Exh. 1.) Attempting to counter
the Bank’s accusation that James Ahn was a double agent who could be personally
liable to Plaintiff despite his status as the Bank’s agent, the Ahn Defendants rely
on James Ahn’s testimony characterizing him as stating that all the information
he conveyed to Plaintiff was information he received from Saehan Bank with the
instruction to convey it to Plaintiff. (Ecoff Supp. Decl. Exh. 1. p.29:6-12.)
In addition, the Ahn Defendants argue, without any supporting evidence, that
the false information the Bank fed to James Ahn for transmittal to Plaintiff
persuaded James Ahn himself to back the deal ultimately struck by acting as a
guarantor for Plaintiff’s loan obligations owed to the Bank. (Reply, p. 2.)
The Court is concerned about the
weak factual foundation laid by the Ahn Defendants to establish their minimal
financial liability in the face of Plaintiff’s contentions of double-dealing,
fiduciary breach, and fraud. For example, the deposition testimony offered from
James Ahn does not say, as it is described in the reply, that the only false
information he gave to Plaintiff about the Trimax note was conveyed to him by
the Bank for transmittal to Plaintiffs.
(Reply, p. 2.) Instead, his
testimony is more general, asserting that, in acting as a real estate broker,
he gives whatever information he receives from the seller to the buyer and
similarly conveys the buyer’s questions and information to the seller. (Exh. 1, p. 29.) Interestingly, he also testified that he did
not remember ever acting as a real estate broker for the Bank. (Id., p. 30.) While evidence that James Ahn acted as a mere
conduit of false data pushed by the Bank could support a finding of minimal
exposure for James Ahn, the factual record before the Court does not include
probative evidence of this allegation.
The same must be said of James Ahn’s argument that he himself was duped
by the Bank’s misinformation into acting as a guarantor for its loan to
Plaintiff. There is no testimony or
other evidence to support this argument, so it cannot be used to justify the
relatively small settlement reached by James Ahn. As the Bank offers no affirmative challenge
to the contention that Robert Ahn faces negligible liability, the Court would
find that a minimal settlement with him would pass muster. Because the settlement here sweeps in
Plaintiff’s claims against both Ahns, however, there is inadequate factual
support for the Ahn Defendants’ assertion that the settlement is consistent
with a rough approximation of their exposure.
As the Bank’s opposition demonstrates, as a key figure in the primary
transaction that caused harm to Plaintiff, James Ahn could confront substantial
exposure for monetary damages, depending on the underlying facts, and he has
not explained why those facts are unlikely to be proven at trial.
2.
Amount Paid in Settlement
The Ahn Defendants have reached a
settlement with Plaintiff in the amount of $45,000. (Ecoff Decl. ¶ 4.) Bank of
Hope does not dispute the amount to be paid in settlement.
3.
Recognition that Settlor Should Pay Less in
Settlement Than if Found Liable After Trial
As the Defendants have provided no
estimation of their total potential liability, there is no comparison between
the settlement amount and the potential liability at trial.
//
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4.
Allocation of Settlement
As there is only one Plaintiff,
Defendants need not discuss allocation of the settlement amount.
5.
Settlor’s Financial Condition and Insurance Policy
Limits
Defendants provide no evidence of
their financial condition but contend that they have no insurance with respect
to this matter and will be paying out of pocket.
6.
Evidence of Collusion, Fraud, or Tortious Conduct
Bank of Hope argues that the motion
is not made in good faith but offers no evidence beyond the low settlement
value and the assertion based on the pleadings that this is a “cost of defense”
settlement.
Conclusion
Although the parties extensively
dispute who is more culpable, neither side has provided any evidence tending to
show meaningful estimates of potential exposure, actual proportions of
liability, or financial condition of the settling defendants. With three of the
Tech-Bilt factors essentially unaddressed, the Court cannot issue a
finding of good faith on this record.
CONCLUSION:
Accordingly,
Defendants’ Motion for Good Faith Settlement Determination is DENIED. This
ruling is without prejudice to a properly supported Motion for Good Faith
Settlement Determination.
Moving
Parties to give notice.
IT IS SO ORDERED.
Dated: February 27,
2024 ___________________________________
Theresa
M. Traber
Judge
of the Superior Court
Any party may submit on the
tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day
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should be aware that the court may not adopt the tentative, and may issue an
order which modifies the tentative ruling in whole or in part.