Judge Timothy Patrick Dillon, Case 20STCV41358 2023-01-18 Tentative Ruling

Judge: Timothy Patrick Dillon, Case: 20STCV41358, Date: 2023-01-18 Tentative Ruling

Counsel for Defendants/Cross-Complainants (Movants): William M. Slaughter, Jonathan D. Marshall (SLAUGHTER, REAGAN & COLE, LLP)

Counsel for Defendants/Cross-Defendants (Opposition): Michael R. Halvorsen, Sandra L. Block, Christopher Barnes (PHILLIPS, SPALLAS & ANGSTADT LLP)

Royal Viking Motel and Etown, LLC’s Motion to Contest the Application for Determination of Good Faith Settlement

This is a residential landlord-tenant habitability case. On October 28, 2020, Plaintiffs Young Lee, Guillaume Le Blanc, Samuel Lamontagne, Linus Ainalem, Renee Ramirez, Lucio Perez, Emanuel Johnson, Seyeid Ali, Neftali Trigueros, and Lisa Holmes (collectively “Plaintiffs”) filed this action against Defendants Royal Viking Motel, Altman Apartments, LLC (“Altman Apartments”), and West 3^rd Street, LLC¿(“West 3^rd Street”) alleging numerous slum housing conditions at 2025 W. 3^rd St., Los Angeles, CA 90057 (the “Property”), caused Plaintiffs injuries and damages. Defendants Altman Apartments and West 3^rd Street purchased the Property from Defendant Royal Viking Motel in October 2019 and are the current owners of the Property. On or about October 23, 2019, Etown Inn, LLC (“Etown”) signed an agreement on behalf of Royal Viking Motel whereby Royal Viking Motel and Etown (hereinafter “Cross-defendants”) agreed to defend and indemnify Altman Apartments and West 3^rd Street from Plaintiffs lawsuits.

On February 2, 2022, Plaintiffs filed the operated Third Amended Complaint against the aforementioned Defendants alleging the following causes of action: (1) Breach of Warranty of Habitability (Violation of Civil Code § 1941.1); (2) Breach of Warranty of Habitability (Health & Safety Code § 17920.3); (3) Breach of Warranty of Habitability (Violation of Civil Code § 1942.4); (4) Negligence – Premises Liability; (5) Nuisance; (6) Intentional Infliction of Emotional Distress; (7) Breach of Contract; (8) Breach of Covenant of Quiet Enjoyment; (9) Fraud/Deceit/Intentional Misrepresentations of Fact.

Plaintiffs Emanuel Johnson, Seyeid Ali and Neftali Trigueros previously filed suit against Gerald Wang and Royal Viking Motel, LP in the related lawsuit Emanuel Johnson, et al. v. Royal Viking Motel, et al., Los Angeles Superior Court Case No. 19STCV37729 (“Johnson”).

Plaintiffs Young Lee, Guillaume Le Blanc, Samuel Lamontagne, Linus Ainalem, Renee Ramirez, and Lucio Perez filed suit against Gerald Wang and Royal Viking Motel, LP in the related lawsuit Young Lee, et al. v. Royal Viking Motel, et al., Los Angeles Superior Court Case No. 19STCV37734 (“Lee”).

Johnson and Lee were filed on October 17, 2019. By June 2022, those cases were settled and dismissed with prejudice. Plaintiff Lisa Holmes, who is a plaintiff in this action but not in Lee or Johnson, settled her claims against Royal Viking Motel in June 2022 for the sum of $46,000. In sum, there are three purported settlement agreements.

On June 22, 2022, Altman Apartments and West 3^rdStreet filed a cross-complaint against Royal Viking Motel and Etown (hereinafter “Cross-Defendants”) alleging (1) breach of contract, (2) equitable indemnity, (3) contribution, and (4) declaratory relief.

On August 3, 2022, Cross-Defendants filed an Application for Determination of Good Faith Settlement, arguing:

· Cross-Defendants have entered into settlements with Plaintiffs, which include a payment of money in exchange for a general release of any claims by Plaintiffs against Cross-Defendants.

· The settlement amounts are confidential but are “in the ballpark” of a reasonable settlement for Plaintiff’s claims. As indicia of the reasonableness of the settlements, Cross-Defendants note that the alleged tenancies of most of the Plaintiffs with Cross-Defendants were very brief.

· The terms of the settlements were reached after extended arms-length negotiations and were not the product of collusion or fraud.

III. The Motion to Contest the Application for Determination of Good Faith Settlement

On August 29, 2022, Defendants Altman Apartments and West 3^rd Street (hereinafter “Altman Defendants”) filed a Motion to Contest the Application for Determination of a Good Faith Settlement arguing:

· Cross-Defendants have not submitted any evidence regarding the terms of the purported settlements.

· Cross-Defendants expressly and contractually agreed to defend and indemnify Altman Defendants from Plaintiffs’ lawsuits.

On January 6, 2023, Cross-Defendants filed an Opposition to Altman Defendants’ Motion to Contest, arguing and/or representing:

· Cross-Defendants were not required to submit a detailed declaration of the settlement terms until and unless another party properly challenged the settlement.

· Because this Application only concerns the settlement with Plaintiff Lisa Holmes, and there is not settlement in this action with the Lee and Johnson Plaintiffs, Cross-Defendants withdraw any request for determination of good faith settlement with the Lee and Johnson Plaintiffs. Accordingly, Altman Defendants may pursue their claim for contractual indemnity.

· Cross-Defendants attach the Plaintiff Lisa Holmes’ Form Interrogatory responses and the settlement agreement with Holmes. Her interrogatory responses indicate she was “bitten by bed bugs all over [her] body,” suffered “sleeplessness, inconvenience, humiliation, grief, anxiety, and other symptom [sic],” and had anxiety, depression, persisting cough, shortness of breath, and tightness of chest because of the inhabitable conditions at the Property. Holmes’ responses further indicate having suffered property damage to bedding, clothes and towels, and dishes, but did not indicate having lost earnings, the capacity to earn an income, or any other damages. In the settlement agreement, Holmes agrees to release her claims against Cross-Defendants for the sum of $46,000. Based on this evidence, as well as a lack of evidence of collusion, fraud, or tortious conduct, Cross-Defendants argue the settlement with Plaintiff Lisa Holmes is “in the ballpark”, was entered in good faith, and accords proportional liability.

· Cross-Defendants’ Application for Good Faith Determination is untimely[1] because the settlement agreement with Plaintiff Lisa Holmes was never attached to the Application.

· Cross-Defendants’ Opposition fails to satisfy the Tech-Bilt factors because proportionate liability with respect to Plaintiff Lisa Holmes cannot be established. Thus, it cannot be determined based on the evidence submitted whether the settlement figure is reasonable.

Code of Civil Procedure section 877.6 permits the court to evaluate a settlement made between a plaintiff and a defendant when the defendant is a joint tortfeasor with other non-settling defendants. A determination that their settlement is a good faith settlement under section 877.6 will bar any claims for equitable contribution or comparative indemnity.

Under Code of Civil Procedure, section 877.6, subdivision (a)(2), “a settling party may give notice of settlement to all parties and to the court, together with an application for determination of good faith settlement and a proposed order. The application shall indicate the settling parties, and the basis, terms, and amount of the settlement. The notice, application, and proposed order shall be given by certified mail, return receipt requested, or by personal service. Proof of service shall be filed with the court. Within 25 days of the mailing of the notice, application, and proposed order, or within 20 days of personal service, a nonsettling party may file a notice of motion to contest the good faith of the settlement. If none of the nonsettling parties files a motion within 25 days of mailing of the notice, application, and proposed order, or within 20 days of personal service, the court may approve the settlement. The notice by a nonsettling party shall be given in the manner provided in subdivision (b) of Section 1005. However, this paragraph shall not apply to settlements in which a confidentiality agreement has been entered into regarding the case or the terms of the settlement.”

Factors to consider in determining if a settlement was made in good faith include “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.” (Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499 (Tech-Bilt).) “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.” (Id.)

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, supra, 38 Cal.3d at p. 499.) “[A] court not only looks at the alleged tortfeasor’s potential liability to the plaintiff, but it must also consider the culpability of the tortfeasor vis-à-vis other parties alleged to be responsible for the same injury.” (TSI Seismic Tenant Space, Inc. v. Superior Court (2007) 149 Cal.App.4th 159, 166.) “Potential liability for indemnity to a nonsettling defendant is an important consideration for the trial court in determining whether to approve a settlement by an alleged tortfeasor.” (Id.)

In City of Grand View Terrace v. Superior Court (1987) 192 Cal.App.3d 1251, 1261 (City of Grand Terrace), the court provided the following guidance regarding a motion for a good faith settlement determination:

“This court notes that of the hundreds of motions for good faith determination presented for trial court approval each year, the overwhelming majority are unopposed and granted summarily by the trial court. At the time of filing in many cases, the moving party does not know if a contest will develop. If each motion required a full recital by declaration or affidavit setting forth a complete factual response to all of the Tech-Bilt factors, literally thousands of attorney hours would be consumed and inch-thick motions would have to be read and considered by trial courts in an exercise which would waste valuable judicial and legal time and clients’ resources. . . . That is to say, when no one objects, the barebones motion which sets forth the ground of good faith, accompanied by a declaration which sets forth a brief background of the case is sufficient.

If the good faith settlement is contested, section 877.6, subdivision (d), sets forth a workable ground rule for the hearing by placing the burden of proving the lack of good faith on the contesting party. Once there is a showing made by the settlor of the settlement, the burden of proof on the issue of good faith shifts to the nonsettlor who asserts that the settlement was not made in good faith. If contested, declarations by the nonsettlor should be filed which in many cases could require the moving party to file responsive counterdeclarations to negate the lack of good faith asserted by the nonsettling contesting party.

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. (See City of Grand Terrace, supra, at p. 1261 (holding that a barebones motion including a declaration setting forth a brief background is sufficient). However, when the motion is contested, then the moving parties must make a sufficient showing in the moving papers or in the reply papers. (Id. at 1262 (holding that evidence showing a lack of good faith requires the moving party to provide evidence to negate the lack of good faith asserted by the contesting party).).

“The party asserting the lack of good faith shall have the burden of proof on that issue.” (Code Civ. Proc., § 877.6, subd. (d).) The party asserting the lack of good faith can establish that the proposed settlement was not a settlement made in good faith by showing the settlement is so far “out of the ballpark” in relation to the Tech-Bilt factors as to be inconsistent with the equitable objectives of the statute. (Tech-Bilt, supra, 38 Cal.3d at pp. 499-500.)

Cross-Defendants fail to meet their burden to show the settlement with Plaintiff Lisa Holmes is entitled to a determination of good faith. Cross-Defendants correctly argue that their Application need not be supported by a detailed declaration showing its compliance with the Tech-Bilt factors until and unless the Application is opposed. (See City of Grant Terrace, supra, at pp. 1261-1262 (holding that a bare bones declaration that generally details the background in support of an application for determination of good faith settlement is sufficient unless and until it is contested.) However, an Application filed pursuant to Code of Civil Procedure section 877.6, subdivision (a)(2) requires, at minimum, indication of the settling parties, and the basis, terms, and amount of the settlement. Cross-Defendants do not provide any terms or the settlement amount in the Application. Rather, Cross-Defendants provide the amount of the settlement with Holmes, along with the settlement agreement, and Holmes’ Form Interrogatory Responses, as part of their Opposition to Altman Defendants’ Motion to Contest, and in support of their Application. Contrary to Altman Defendants’ contention, evidence supporting the application may be submitted in an opposition to a motion to contest the application. (City of Grand Terrace, supra, at p. 1262.)

Following application of the six Tech-Bilt factors, the court finds that the settlement entered between Cross-Defendants and Plaintiff Lisa Holmes was entered in good faith.

1. Factors 1 and 2: A Rough Approximation of Plaintiff Lisa Holmes’ Total Recovery and Cross-Defendants’ Proportionate Share of Liability, and Cross- Defendants’ Payment in Settlement

First, following a review of the evidence submitted by the parties, the court finds that the court is unable to determine whether Cross-Defendants’ payment in settlement is proportionate to the Cross-Defendants’ share of liability in this action.

Cross-Defendants and Plaintiff Lisa Holmes have agreed to settle her claims for the sum of $46,000. (Marshall Decl., Ex. A.) Cross-Defendants submit Holmes’ Form Interrogatory Responses to show that her injuries, which include bed bug bites all over her body, suffering anxiety, depression, coughing, shortness of breath/tightness of chest, and property damage for bedding, clothes and towels, and dishes are de minimis. (Marshall Decl., Ex. B, pp. 12, 17, 19-20.) To be sure, the property damage indicated here seems relatively slight. However, as Altman Defendants point out, Cross-Defendants fail to provide any evidence showing a rough approximation of Holmes’s damages in this case, which prevents a determination as to the significance of the $46,000 settlement amount. Additionally, the lack of evidence submitted by Cross-Defendants regarding the severity of Holmes’ physical and emotional injuries underscores the deficiencies of Cross-Defendants’ Application.

Furthermore, Altman Defendants submit or point to evidence suggesting (1) Holmes’ injuries were more serious than Cross-Defendants characterize; and (2) such injuries predated Altman Defendants’ purchase of the property. Altman Defendants direct the court’s attention to Form Interrogatory Response No. 6.4 which indicates that Holmes “received treatment in a hospital in downtown Los Angeles some time in 2019 for shortness of breath.” (Marshall Decl., Ex. B, p. 12.) Altman Defendants also submit excerpts of Holmes’ deposition testimony which indicates that Holmes received hospital treatment for shortness of breath between the end of 2018 and early 2019. (Block Decl., Ex. K.) Altman Defendants acquired the Property in October 2019. Holmes’ hospitalization for injuries as a consequence of the uninhabitable conditions on the Property do not coincide with Altman Defendants’ ownership of the Property. Thus, the period Holmes identifies in her deposition testimony cuts against the proportion of liability attributable to Altman Defendants. Accordingly, the court is not persuaded this factor weighs in favor of a finding of good faith.

This factor is inapplicable to the present analysis because all Plaintiffs, with the exception of Plaintiff Lisa Holmes, have already settled their claims with Cross-Defendants.

3. Factor 4: A Recognition that Cross-Defendants Should Pay Less in Settlement Than Cross-Defendants Would if Cross-Defendants were Found Liable Following Trial

Because the court has found that Cross-Defendants have not submitted evidence to allow the court to determine Cross-Defendants’ share of liability in this action, the court is unable to recognize whether Cross-Defendants should pay less than the Cross-Defendants would if these Defendants were found liable at trial. Therefore, the court is not persuaded this factor weighs in favor of a finding of good faith.

4. Factor 5: Financial Condition and Insurance Policy Limits of Cross-Defendants

Cross-Defendants have not submitted any documentation regarding their financial condition or insurance policy limits. Accordingly, the court finds this factor weighs against a finding of good faith.

5. Factor 6: Existence of Collusion, Fraud, Tortious Conduct Aimed to Injure the Interests of the Non-Settling Altman Defendants

The Altman Defendants do not contend that the settlement between Cross-Defendants and Plaintiff Lisa Holmes was the result of collusion, which tends to weigh in favor of a finding of good faith.

Based on the foregoing, the court finds the Tech-Bilt factors weigh in favor of denying the present Application for Determination of Good Faith Settlement. Accordingly, Altman Defendants’ Motion to Contest the Application for Determination of Good Faith Settlement is granted.

[1] Altman Defendants also point out that Cross-Defendants filed an untimely opposition, but do not otherwise argue that the court should disregard the filing for lack of timeliness. In any event, “[n]o paper may be rejected for filing on the ground that it was untimely submitted for filing. If the court, in its discretion, refuses to consider a late filed paper, the minutes or order must so indicate.” (Cal. Rules of Court, rule 3.1300, subd. (d).) The court exercises its discretion to consider Cross-Defendants’ opposition.