Judge Upinder S. Kalra, Case Number: 23STCV10387, Date: 2025-04-30 Tentative Ruling

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1. An Order denying good faith of the settlement between Plaintiff and Defendant Nora Penaflor.

On May 9, 2023, Plaintiff National Asian American Coalition (Plaintiff) filed a Complaint against Defendants Faith Bautista, Josefina Bautista, Nora Penaflor, Bing Crosby Bautista, Marissa Samaco, and Floradema LLC (Defendants) with causes of action for: (1) Breach of Fiduciary Duty and Aiding and Abetting Breach of Fiduciary Duty; (2) Fraud; (3) Deceit; (4) Constructive Fraud; (5) Receipt of Stolen Property, Treble Damages, and Attorney’s Fees under Penal Code § 496(c); (6) Conversion; and (7) Negligent Misrepresentation.

According to the Complaint, Defendants each breached their fiduciary duties to Plaintiff and schemed together to do so. Plaintiff further alleges that Defendants’ wrongful conduct caused Plaintiff to owe $12 million to the State of California.

On November 6, 2023, Defendant/Cross-Complainant Marissa Samaco filed a Cross-Complaint.

On November 6, 2023, Defendant/Cross-Complainant Faith Bautista filed a request for dismissal as to her entire Cross-Complaint.

On November 13, 2023, Cross-Defendants Floradema LLC and Faith Bautista filed an Answer to Marissa Samaco’s Cross-Complaint.

On April 16, 2024, Defendant Josefina Bautista and Defendant Bing Crosby Bautista each filed Demurrers which the court OVERRULED.

On June 3, 2024, Defendants Josefina Bautista and Bing Crosby Bautista each filed Answers.

On August 6, 2024, Defendant/Cross-Defendant Josefina Bautista and Defendant/Cross-Defendant Bing Crosby Bautista each filed an Answer to Marissa Samaco’s Cross-Complaint.

On October 28, 2024, Plaintiff and Defendant Nora Penaflor filed a Stipulation and Order for Settlement and Dismissal pursuant to CCP § 664.6.

On January 6, 2025, Defendant Nora Penaflor filed an Application for Determination of Good Faith Settlement.

On January 28, 2025, Defendants Faith Bautista and Floradema LLC (collectively Floradema) filed the instant Motion to Challenge Good Faith Settlement. On April 14, 2025, Defendant Nora Penaflor filed an opposition. On April 21, 2025, Floradema filed a reply.

California Code of Civil Procedure section¿877.6, subdivision¿(a)(1),¿provides, in relevant part, that, on noticed motion, “[a]ny¿party to an action wherein 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¿. . . and one or more alleged¿tortfeasors¿or co-obligors¿. . . .”¿¿“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).)¿¿Although a determination that a settlement was in good faith does not discharge any other party from liability, “it shall reduce the claims against the others in the amount stipulated” by the settlement.¿¿(Code Civ. Proc.,¿§ 877, subd.¿(a).)¿¿

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

In¿City of Grand View Terrace v. Superior Court¿(1987)¿192 Cal.App.3d 1251, 1261, 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.¿¿

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.,¿supra,¿38¿Cal.3d at¿p.¿499.)¿¿“‘[A] defendant’s settlement figure must not be grossly disproportionate to what a reasonable person, at the time of the settlement, would estimate the settling defendant’s liability to be.’ [Citation.]”¿¿(Ibid; see also City of Grand Terrace v. Sup. Ct. (Boyter) (1987) 192 Cal.App.3d 1251, 1262; Cahill v. San Diego Gas & Elec. Co (2011) 194 Cal.App.4th 939, 967.)¿¿

“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.¿¿Such a demonstration would establish that the proposed settlement was not a¿‘settlement made in good faith’¿within the terms of section 877.6.”¿¿(Id.¿at pp. 499-500.)¿¿

“[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.¿ 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.¿ [Citation.]”¿ (TSI Seismic Tenant Space, Inc. v. Superior Court¿(2007) 149 Cal.App.4th 159, 166.)¿¿

Moving Defendants Floradema LLC and Faith Bautista (collectively for this motion Floradema) move to contest the good faith settlement between Plaintiff and Defendant Penaflor. Floradema contends that the settlement is so far out of the ballpark in relation to the remaining liability that it cannot be considered made in good faith.[1] Defendant Penaflor argues that she was not one of the main actors, that she lacks assets, and that the settlement was at arms length with Plaintiff. Floradema replies that Defendant Penaflor did not address its points and still lacks evidence of her financial condition and mischaracterizes the extent of her involvement in the underlying fraud.

Factor 1: Rough Approximation of Plaintiff’s Recovery & Settlor’s Proportionate Liability

Substantial evidence (e.g., factual declarations) showing the nature and extent of the settling defendant's liability is required. (Tech-Bilt, supra, at p. 500; Mattco Forge, Inc. v. Arthur Young & Co. (1995) 38 Cal.App.4th 1337, 1350; Greshko v. County of Los Angeles (1987) 194 Cal.App.3d 822, 834.) Without such evidence, a “good faith” determination is an abuse of discretion. (Mattco, supra, at p. 1350.) “The ultimate determinant of good faith is whether the settlement is grossly disproportionate to what a reasonable person at the time of settlement would estimate the settlor's liability to be.” (City of Grand Terrace v. Superior Ct. (1987) 192 Cal.App.3d 1251, 1262.)

Here, there is insufficient evidence before the court showing the nature and extent of Defendant Penaflor’s liability. Notably, each party references the Complaint. The Complaint is not evidence. (See, e.g., Cassady v. Morgan, Lewis & Bockius LLP (2023) 145 Cal.App.4th 220, 241 (internal citations omitted).) Accordingly, the court is in no position to coherently evaluate Defendant Penaflor’s proportionate liability with the $50,000.00 settlement. The court declines to evaluate the remaining factors.

Accordingly, the court GRANTS Floradema’s motion contesting good faith settlement.

[1] Floradema also contends that Defendant Penaflor did not correctly serve her Application for Good Faith Settlement and so the court should reject the Application on that ground. Floradema also expressed concern for its ability to conduct discovery on Defendant Penaflor should she be dismissed now.