Judge Thomas D. Long, Case 21STCV16264 2022-08-09 Tentative Ruling

On April 29, 2021, Plaintiffs Moossa Naim and Laura Naim filed this action against Vista General Engineering Company Inc. (“Vista”), Scott Saunders, Elite Waterproofing and Coating Inc. (“Elite Inc.”), Jorge Casillas, Andrez Frias, and Elio Gould.

Casillas and Frias (“Settling Defendants”) have now settled with Plaintiffs for $30,000 and filed this application for determination of good faith settlement. Vista and Saunders have opposed the motion.

Vista’s and Saunders’s Objection to the Declaration of Jorge Casillas is overruled. The Objection to the Declaration of Nick M. Campbell is sustained as hearsay.

Any party to an action with two or more joint tortfeasors may petition the court for a determination of the issue of the good faith of a settlement. (Code Civ. Proc., § 877.6, subd. (a)(1).) The court’s approval of the settlement furthers two sometimes-competing policies: (1) the equitable sharing of costs among the parties at fault, and (2) the encouragement of settlements. (Erreca’s v. Superior Court (1993) 19 Cal.App.4th 1475, 1487.) To demonstrate a lack of good faith, a non-settling party must show that the settlement is so far “out of the ballpark” as to be inconsistent with the equitable objectives of Section 877.6. (Nutrition Now, Inc. v. Superior Court (2003) 105 Cal.App.4th 209, 213.) The Court will typically consider: (1) the plaintiff’s (roughly) approximated total recovery; (2) the settlor’s share of liability; (3) the size of the settlement at issue; (4) the distribution of settlement proceeds among plaintiffs; (5) the usual discount value when plaintiffs settle before trial; (6) the settlor’s financial condition and insurance policy limits; and (7) whether there is evidence of “collusion, fraud, or tortious conduct aimed to injure the interests of nonsettling defendants.” (Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499 (Tech-Bilt).) These factors will be evaluated accordingly to what information is available at the time of settlement. (Ibid.)

The motion, Casillas’s declaration, and defense counsel’s declaration set out the background of this case. Plaintiffs entered into contracts with Casillas, individually and doing business as Elite Waterproofing & Coatings (“Elite W&C”), to perform waterproofing work on exterior decks at Plaintiffs’ property for $30,600.00. (Casillas Decl. ¶ 4.) Vista directed the sequencing of the work, inspected the work, and oversaw the work. (Casillas Decl. ¶ 5.) After the work was performed, Elite W&C was owed $4,240.00. (Casillas Decl. ¶ 4.) Elite W&C primarily consists of Casillas with Frias as an employee. (Casillas Decl. ¶ 7.) Elite W&C was not covered by any applicable general liability insurance at the time of the work. (Casillas Decl. ¶ 8.)

The Settling Defendants will pay Plaintiffs $30,000.00 to settle this action after several communications with Plaintiffs’ counsel. (Campbell Decl. ¶ 4.) Elite W&C will also forego any claims for the $4,240.00 that Plaintiffs still owe. (See Motion at p. 8.) Casillas has tendered a check payable to defense counsel’s trust account in the amount of $30,000.00, and the funds are being held in trust until the Court determines this motion. (Campbell Decl. ¶ 6.) In exchange, Plaintiffs will dismiss all claims against Casillas, Frias, and Elite Inc. (Campbell Decl., Ex. C at pp. 2-3, ¶ 2.)

Vista and Saunders argue that the Settling Defendants have not provided sufficient evidence to establish that their settlement is in the ballpark. (Opposition at pp. 4-5.) But disproving that is the burden of Vista and Saunders; it is not the Settling Defendants’ burden to affirmatively prove it. (Tech-Bilt, supra, 38 Cal.3d at pp. 499-500 [“The party asserting the lack of good faith, who has the burden of proof on that issue (§ 877.6, subd. (d)), should be permitted to demonstrate, if he can, that the settlement is so far ‘out of the ballpark’ in relation to these factors as to be inconsistent with the equitable objectives of the statute.”].)

Vista and Saunders compare this motion to that in Mattco Forge, Inc. v. Arthur Young & Co. (1995) 38 Cal.App.4th 1337, 1350, where the defendants “did not proffer any evidence regarding their proportionate liability for [the plaintiff’s] alleged injury, either in their moving or reply papers,” and they “merely presented a series of questionable assumptions in their memorandum of points and authorities to show the settlement amount was reasonable.” In contrast, here, the Settling Defendants did provide evidence in the form of declarations and the contract proposals demonstrating their scope of work. (See Casillas Decl., Ex. A.)

Vista and Saunders also offer a comparison to Commercial Union Ins. Co. v. Ford Motor Co. (9th Cir. 1981) 640 F.2d 210, 211, where a plaintiff sued Ford Motor Company and a dealership, dismissed Ford Motor Company as a defendant “believing that he stood a better chance for recovery if Ford’s expert witnesses did not testify,” and won his case against the dealership. The dealership then sued Ford Motor Company for equitable indemnification, and Ford Motor Company argued it was not liable for indemnification because it was a dismissed party under Code of Civil Procedure section 877. (Id. at p. 212.) On appeal, the Ninth Circuit observed that “the decision to dismiss was substantially a tactical maneuver by plaintiff’s attorneys,” “[t]here was at least one expert prepared to testify that there was a design defect” which raised a probability of liability on behalf of Ford Motor Company, and the dismissal was not made in good faith “to the extent that it is dictated by the tactical advantage of removing a deep-pocket defendant because of the experts it could produce and the skilled trial attorneys it could retain.” (Id. at pp. 213-214.) Here, although the Complaint sought $5,200,000.00 in damages and Plaintiffs claim extensive property damage (see Stack Decl., Exs. 5-6), there is no evidence that Plaintiffs’ dismissal of the Settling Defendants is a tactical decision to avoid adverse testimony or a skilled defense. Moreover, the Settling Defendants are not strategically dismissed deep-pocket parties. Casillas declares that the settlement of $30,000.00 is the top of the range that can be paid without considering other means of resolving the claims, and neither he nor Frias have the financial ability to pay more than that amount. (Casillas Decl. ¶ 7.)

Next, Vista and Saunders argue that the Settling Defendants have failed to properly allocate the settlement among the parties and the types of damages. (Opposition at pp. 5-9.) “Where there are multiple defendants, each having potential liability for different areas of damage, an allocation of the settlement amount must be made. [Citations.] Failure to do so may preclude a ‘good faith’ determination because there is no way to determine the appropriate setoff pursuant to section 877 against the nonsettling defendant.” (L. C. Rudd & Son, Inc. v. Superior Court (1997) 52 Cal.App.4th 742, 750 (L. C. Rudd).) But Vista and Saunders have not shown that there is varying liability for different areas of damage. The Complaint alleges that “the home on the Subject Property started to have leaks in main living room of the residence generally under the balcony of the second floor.” (Complaint ¶ 20.) This occurred due to the alleged incompetent performance of Vista’s and Saunders’s supervision and general contracting services, the Settling Defendants’ “furnishing the services of installation of decking systems and waterproofing on the Subject Property, including on the second floor deck over the main living room of the Subject Property,” and Gould’s installation of travertine tile on decks. (Complaint ¶¶ 27, 36, 46.) As Vista and Saunders note, “Plaintiffs’ written discovery responses have made it clear that its claims relating to construction defects, water intrusion issues, and fire damages are all intertwined.” (Opposition at p. 6.) This is not a situation where there are distinct and easily divisible categories of harms where allocation is required. (See L. C. Rudd, supra, 52 Cal.App.4th 742, 750.)

Vista and Saunders argue there are no bank statements, other financial records, or further explanation to support Casillas’s statement that the Settling Defendants cannot pay more than $30,000.00. (Opposition at p. 7.) But Casillas’s declaration is evidence, and Vista and Saunders do not cite authority requiring anything more.

Finally, Vista and Saunders argue that a suspended corporation like Elite Inc. cannot participate in litigation. (Opposition at pp. 9-10.) Elite Inc. is not a party to the settlement agreement. (See Campbell Decl., Ex. C at p. 1.) Although named as a defendant, Elite Inc. does not currently do any business, did not contract with Plaintiffs, and was not formed until after Elite W&C began work on the project. (Casillas Decl. ¶ 2.) Under these circumstances, Plaintiffs’ agreement to dismiss Elite Inc. does not appear collusive or demonstrative of a lack of good faith.

Based on the record presented, the Court GRANTS the application, finds this settlement was made in good faith, and orders that any other joint tortfeasor or co-obligor is barred from asserting further claims against Jorge Casillas and Andrez Frias for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. Parties intending to appear are encouraged to appear remotely and should be prepared to comply with Dept. 48’s new requirement that those attending court in person wear a surgical or N95 or KN95 mask.

Hon. Thomas D. Long

Judge of the Superior Court