Judge William D. Claster, Case 20-01153656 2023-01-06 Tentative Ruling

Judge: William D. Claster, Case: 20-01153656, Date: 2023-01-06 Tentative Ruling

1. Cross-Defendant C.W. Construction, Inc.'s Notice of Motion for Determination of Good Faith Settlement of Cross-Defendant CW Construction, Inc. with Plaintiffs Peter Castanon and Paul Leeper and Cross-Complainant Karvin Knut Ulrickson dba MKU Construction ROA 706

2. Defendants Jay and Rita Sehgal's Motion to Contest Cross-Defendant Krizia Corp.'s Application for Determination of Good Faith Settlement Under CCP Section 877.6 (a)(2) ROA 787

3. Defendant/Cross-Complainant Geotechnical Solutions, Inc.'s Notice of Motion for Good Faith Settlement Determination 877

4. Defendant/Cross-Complainant Aquarius Investments, Inc.'s Joinder to Geotechnical Solutions, Inc.'s Motion to Contest Good Faith Settlement of Kriza Corporation ROA 792

5. Defendants Jay and Rita Sehgal's Joinder in Geotechnical Solutions, Inc.'s Motion to Contest Cross-Defendant Krizia Corp.'s Application for Determination of Good Faith Settlement CCP Section 877.6(a)(2) ROA 786

Before the Court are two motions to determine the good faith of two settlements under CCP § 877.6.

GSI’s Motion

Geotechnical Solutions, Inc.’s (GSI) motion is unopposed. When a good faith determination is unopposed, a “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.” (City of Grand Terrace v. Superior Court (1987) 192 Cal.App.3d 1251, 1261.) GSI’s motion easily exceeds this standard. The motion is GRANTED.

C.W.’s Motion

C.W. Construction, Inc.’s motion is opposed by Jay and Rita Seghal and Aquarius Investments, Inc.

I. Summary of Settlement

An unsigned copy of the settlement agreement is attached to ROA 953. The “Settling Parties” are Plaintiffs (Peter Castanon and Paul Leeper), Marvin Knut Ulrikson dba MKU Construction, and C.W.

Pursuant to the terms of the settlement, C.W. agrees to pay Plaintiffs $23,000. In exchange, Plaintiffs release all claims they may have against C.W. arising from C.W.’s work on their house. Plaintiffs additionally provide an “Issue Release and Scope of Work Release” against MKU and the Seghals (even though the Seghals aren’t party to the settlement) that covers “all defects and damages claimed related to the scope of work of C.W.,” specifically items 3.05 (stucco cracks/pops), 4.02 (drywall cracks, visible tape joints, and nail pops), 7.02 (door frame separation), and 7.04 (framing notched improperly) on Plaintiffs’ estimated cost of repair. Finally, MKU and C.W. release any claims they may have against each other.

II. Standard of Review

The factors to be considered in determining whether a settlement was reached in good faith are set forth in Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal. 3d 488, 499. They include:

A rough approximation of the plaintiff’s total recovery and the settlor’s proportionate liability.
The amount paid in settlement.
The allocation of settlement proceeds among plaintiffs.
Recognition that the settlor should pay less in settlement than he would if he were found liable at trial.
The financial conditions and insurance policy limits of settling defendants.
The existence of collusion, fraud or tortious conduct aimed to injure the interests of non-settling defendants. (Id., at p. 499.)

Where, as here, the good faith of a settlement is contested, the opposing party bears the initial burden of putting on evidence the settlement was not reached in good faith, at which point the moving party must come forward with evidence of good faith. (City of Grand Terrace v. Superior Court (1987) 192 Cal.App.3d 1251, 1261-1262.) These showings must be supported by evidence. Mere allegation or argument is not enough. (See Mattco Forge, supra, 38 Cal.App.4th at p. 1351 [abuse of discretion to approve settlement based on “argument, unsupported by affidavits”] [emphasis original].) The question of whether a settlement was reached in good faith must be decided on the basis of information available at the time of settlement. (Tech-Bilt, supra, 38 Cal.3d at p. 499.)

III. Proportionate Liability

Aquarius and the Seghals both argue the settlement is disproportionately low. On the current record, the Court cannot resolve this question.

Again, the settlement amount is $23,000. The only potential liability figure attested to in C.W.’s papers is Plaintiffs’ total repair estimate of about $2.27 million, even though it appears from the agreement that C.W.’s scope of work was limited to four line items in the estimate. Without an understanding of the liability tied to C.W.’s scope of work, the Court cannot determine whether the settlement amount is too low.

Accordingly, the motion will be CONTINUED to permit C.W. to substantiate the proportionality of the settlement. The Court recognizes that the necessary evidence may be in the voluminous record of this case, but it is not the Court’s job to search the record for evidence in support of a moving party’s contentions. The parties should be prepared to discuss further briefing and timing at the hearing.