Judge: Yolanda Orozco, Case: 19STCV30835, Date: 2022-10-31 Tentative Ruling
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Case Number: 19STCV30835 Hearing Date: October 31, 2022 Dept: 31
HEARING DATE: October 31, 2022
CASE NUMBER: 19STCV30835
CASE NAME: Emily Beers. v. Robert Giambalvo, et al.
MOVING PARTIES: Defendants, Redfin Corporation and Robert Giambalvo
OPPOSING PARTIES: Defendants, Prima Property, LLC-Application filed on April 19, 2022
TRIAL DATE: None
PROOF OF SERVICE: OK
MOTION: Motion to Contest Good Faith
Settlement Determination
OPPOSITION: October 18, 2022
REPLY: October 24,
2022
TENTATIVE: The Redfin
Defendants’ motion is granted. The Application for Determination of Good Faith
Settlement is denied. The Redfin Defendants are to give notice.
This action arises in connection with a residence located
at 2320 Berkeley Avenue in Los Angeles County, California (the “Residence”). Emily Beers (“Plaintiff”) alleges that
Defendant and Seller, Prima Property, LLC (“Seller”) acquired the Residence
with the intent of remodeling and reselling it (“Flipping” or “Flipping Homes”).
Plaintiff alleges that Seller, in
flipping the Residence, remodeled the Residence in a generally unworkmanlike
manner. Thereafter, Plaintiff purchased the Residence and certain systems in
the Residence began breaking down, which led Plaintiff to discover other
undisclosed material defects to many areas, such as the Residence’ electrical
system, plumbing system, framing, and load bearing components.
After Seller remodeled the Residence, it allegedly listed
the residence as “exceptional” on the Multiple Listing Service despite its
alleged knowledge that the Residence contained many defects. Further, Plaintiff
alleges that Defendants Redfin Corporation (“Redfin”) and Robert Giambalvo
(“Giambalvo”) are also liable to her for damages because they repeatedly made
allegedly false representations that the Residence was of superior quality and
free from defects in assisting her with purchase of the Residence.
Plaintiff’s operative Complaint alleges causes of action as
follows: (1) fraudulent inducement against Seller, (2) intentional
misrepresentation, (3) constructive fraud, (4) fraud-concealment against all
Defendants, (5) breach of fiduciary duty against Redfin, (6) negligent misrepresentation,
(7) negligence, (8) negligence per se against Seller, (9) breach of contract
against Seller, (10) violation of Penal Code § 496(a) against Seller, (11)
violation of Business and Professions Code § 7000 against Seller, (12)
violation of implied warranties against Seller, (13) violation of Business and
Professions Code § 17200 against Seller.
On July 20, 2020, Plaintiff filed a First Amended
Complaint. (“FAC”)
On July 27, 2020, Seller’s Motion to Compel Arbitration was
granted. The court further ordered as follows:
“Plaintiff
is ordered to arbitrate her claims against Seller pursuant to the RPA and to
file a petition to arbitrate within 60 days. The court sets an order to show
cause re commencement of arbitration for September 30, 2020
at 8:30 a.m. If plaintiff files proof of commencement before that date, no
appearance is necessary. Plaintiff’s remaining causes of action against the
Defendants who are not parties to the arbitration are stayed pending the
completion of arbitration.”
(July 27, 2020
Minute Order.)
On August 21, 2020, Plaintiff filed a Notice of Partial
Settlement with Seller and a Request for Dismissal as to Seller.
On September 30, 2020, the court held an Order to Show
Cause Regarding Commencement of Arbitration. At this hearing, the court lifted
the stay previously set on July 27, 2020.
On December 23, 2020, Plaintiff gave notice that the FAC
was being withdrawn.
On
February 3, 2021, the court granted Redfin Defendant’s motion to compel
arbitration and stayed the action pending binding arbitration as to the entire
action.
On August 5, 2020, Plaintiff reached a settlement with the Seller
conditioned upon a determination of good faith settlement. On April 19, 2022, Seller
filed their application for Determination of Good Faith Settlement. On May 9,
2022, Redfin Defendants filed their motion contesting the motion for good faith
settlement.
Seller opposes the motion contesting good faith settlement.
The Redfin Defendants’ motion now comes on for hearing.
Redfin Defendants’ Objections
Objections to Declaration of Kevin Spainhour
Objection 1: Sustained.
Objections 2-3. Overruled.
Discussion
I.
Legal
Standard
Any party to an action involving
joint tortfeasors may seek a hearing on the issue of the good faith
of a settlement entered into by the plaintiff and one or more of the alleged tortfeasors.
(CCP § 877.6(a)(1).) “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.” (CCP § 877.6(c).)
“The statutory requirement of good faith extends not only
to the amount of the overall settlement but as well to any allocation which
operates to exclude any portion of the settlement from the setoff.” (L.C.
Rudd & Son, Inc. v. Superior Court (1997) 52 Cal.App.4th 742,
748.) “Where there are multiple defendants, each having potential
liability for different areas of damage, an allocation of the settlement amount
must be made.” (Id. at p. 750.) 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.
(Ibid.) It is the burden of the settling parties to explain to the
court and to all other parties the evidentiary basis for any allocations and
valuations made sufficient to demonstrate that a reasonable allocation was
made. (Ibid.)
In Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985)
38 Cal.3d 488 (Tech-Bilt), the California Supreme Court set forth the
factors to be considered in determining whether a settlement is in good
faith:
[T]he
intent and policies underlying section 877.6 require that a number of factors
be taken into account including 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. [Citation.] Finally,
practical considerations obviously require that the evaluation be made on the
basis of information available at the time of settlement.
(Id. at p. 499.)
A trial court need not consider and weigh the Tech-Bilt factors when
a motion for good faith determination is uncontested. (Grand Terrace, supra,
192 Cal.App.3d at p. 1261.) “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.” (Ibid.)
II.
Analysis
The Seller seeks a determination
that their settlement with Plaintiff for $75,000 was made in good faith and an
order that the settlement “represents a fair and equitable approximation of
Defendant’s liability in this action.” (Notice of Motion, 1-2.)
Seller argues that their motion
should be granted because their settlement with Plaintiff satisfies several Tech-Bilt
factors. Specifically, Seller argues that their settlement satisfied this first
three factors for the following reasons: (1) the settlement is “her own
valuation of the costs of repairs” (2) the Seller’s settlement payment is substantially
more than their share of liability, (3) the settlement did not result from
collusion, fraud or tortious conduct, (4) Defendant’s only liability remains
for cosmetic changes Defendant made to the property, and (5) as discovery has
yet to be completed, and an investigation into the facts has yet to take place,
the settlement arose from the information available at the time, the inspection
reports and Plaintiff’s valuation. (Application, 11-15.)
The Seller submits a declaration
from Kevin Spainhour (“Spainhour”) in support of their motion. According to Spainhour,
Seller and Plaintiff reached a settlement that includes the following terms:
3. SETTLEMENT
3.1 Intent This Agreement is a full release and settlement of
any and all claims and demands of any type asserted or which could have been
asserted by the Settling Parties against each other to date, arising out of or
related to PLAINTIFF's purchase of the Property and arising out of or related
to the Action. In consideration of the mutual promises, covenants, and
commitments contained in this Agreement, the Settling Parties agree as set
forth in this Section 3 and all of the subsections thereof.
3.2 Terms of Payment and Settlement DEFENDANT agrees to pay
the total lump sum of Seventy Five Thousand Dollars and Zero Cents ($75,000.00)
in good funds to PLAINTIFF pursuant to the terms of this subsection 3.2 (the
"Settlement Payment") on or before August 10, 2020.
The Settlement Payment shall be made by a Cashier's Check in
United States Dollars and in good funds payable to The KERMAN[ LAW FIRM,
located at 12400 Wilshire Boulevard, Suite 400, Los Angeles, CA 90025,
telephone number: (310) 475~3400. The Settlement Payment to PLAINTIFF shall be
delivered in full to The Kermani Law Firm, Plaintiff's counsel as stated
herein, on or before MONDAY, AUGUST 10, 2020. Failure to deliver the Settlement
Payment cashier's check on or before said date, to the Kermani Law Firm is a
material breach or this Agreement and renders this Agreement completely null
and void.
3.3 Dismissal
Upon DEFENDANT's fulfillment of: (a) the payment by AUGUST I
0, 2020 as provided in this Agreement; (b) unconditional clearing in good funds
of the Settlement Payment that are available for withdrawal by PLAINTIFF's
counsel; and (c) DEFENDANT's obligation to execute this Agreement, then and
only then shall PLAINTIFF execute and file with the court, including service on
DEFENDANT's attorney Kevin Spainhour, Esq., a Notice of Settlement within ten (
I 0) court days and a Request for Dismissal with prejudice of DEFENDANT within
ten ( I 0) court days after the Settlement Payment has been made pursuant to
this Agreement in good funds and has unconditionally cleared into the financial
institution of Plaintiff's counsel and is available for immediate withdrawal
and DEFENDANT's obligations have been met pursuant to this Agreement.
Thereafter, Plaintiff shall provide DEFENDANT's attorney with
a signed copy of the Request for Dismissal within ten (I 0) court days after a
conformed copy of the entered Request for Dismissal is received by Plaintiff's
attorneys.
...
4. MUTUAL
GENERAL RELEASES
In consideration of the terms and conditions made by the
Settling Parties to each other under this Agreement, DEFENDANT for itself, and
on behalf of its past, present and future members, shareholders, investors,
affiliates, attorneys, heirs, executors, administrators, successors and
assigns, ("privies") release, unconditionally and immediately upon
execution of this Agreement acquits and forever discharges PLAINTIFF and
PLAINTIFF's heirs, executors, administrators, successors, assigns, and
attorneys, from any and all claims, liabilities, demands, obligations, costs,
any costs or expenses whatsoever, attorneys' fees and actions which DEFENDANT
and its privies have held or could have held against PLAINTIFF and her privies,
or now hold with respect to the matters asserted or that could have been
asserted in the Action, including, but not limited to, claims for attorneys
fees and costs related to or arising out of any and all motions, petitions or
proceedings; claims of malicious prosecution, sanctions, claims for attorneys
fees and costs for any reason whatsoever or any other claims whatsoever related
to or arising out of the Action and/or the Property.
In consideration of the terms and conditions made by the
Settling Parties to each other under this Agreement, subject to the
unconditional receipt by AUGUST 10, 2020, by PLAINTIFF's attorney, in trust, of
unconditional cleared funds available for immediate withdrawal, representing
the Settlement Payment, PLAINTIFF for herself and on behalf of her heirs,
executors, administrators, attorneys, successors and assigns, releases,
("privies") acquits and forever discharges DEFENDANT and DEFENDANT's
past, present and future members, shareholders, investors, affiliates. heirs.
executors, administrators, successors, assigns, ("privies") from any
and all claims, liabilities, demands, obligations, costs, any costs or expenses
whatsoever, attorneys' fees and actions which PLAINTIFF and her privies have
held or could have held against DEFENDANT and its privies, or now hold with
respect to the matters asserted: or that could have been asserted in the
Action, including, but not limited to, claims for attorneys fees and costs
related to or arising out of any and all motions, petitions or proceedings,
claims of malicious prosecution, sanctions, claims for attorneys fees and costs
for any reason whatsoever or any other claims whatsoever related to or arising
out of the Action and/or the Property.
By entering into this Settlement Agreement, PLAINTIFF does
not waive or assign any of her rights to pursue an action or remedy against any
person or entity who is not a signatory to this Agreement, including but not
limited to defendant Robert Giambalvo, defendant Redfin Corporation and
DEFENDANT's general contractors or subcontractors involved in work at the
Property all of whom are specifically excluded from this Agreement.
5. WAIVER OF CIVIL CODE§ 1542
Subject to and without waiving PLAINTIFF's rights under
Section 3, it is the intention of the Settling Parties in executing this
Agreement that it shall be effective as a bar to each and every claim, demand
and cause of action against the other Settling Party, and in furtherance of
this intention the Settling Parties and their privies, and each of them, waive
and relinquish all rights and benefits they may have under California Civil
Code section 1542, which provides in pertinent part:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR
OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE
TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
The Settling Parties and their privies, and each of them,
acknowledge that they may hereafter discover facts different from or in
addition to those now known or believed to be true with respect to the Action
and such claims, demands or causes of action, and agree that this Agreement
shall be and remain effective in all respects notwithstanding any such
different or additional facts.
(Spainhour Decl., Exh. A.)
Redfin Defendants, in their motion
to contest this application, correctly point out that Seller failed to provide
notice as required by CCP § 877.6. (Motion, 4-5.) Seller subsequently filed a
Proof of Service establishing Defendant’s counsel were served by certified mail
on September 21, 2022. The court also notes
that Seller served the Application upon defendants’ counsel by email on
September 21, 2022.
Redfin Defendants also contend the
Application fails because it “does not present a rough approximation of a
Plaintiff’s total recovery and thus there is no way to analyze what Prima's
proportionate liability is, because it fails to take into account the potential
indemnity to Redfin and Giambalvo; and because it offers no evidence or
argument as to Prima's insurance or financial condition.” (Motion 6.) Redfin
Defendants thus point out that Plaintiff’s estimation of the reasonable cost of
repairs, as inferred from discovery responses, is in excess of $1,500,000.00,
not $75,000. (Id.) Redfin Defendants further contend here that as the
Complaint not only seeks $1.5 million in repair costs, “but also seeks
non-economic damages, punitive damages, and attorneys’ fees,” the proposed
settlement amount is not within a reasonable settlement range. (Motion, 7;
citing Long Beach Mem. Med. Ctr. (2009) 172 Cal. App.4th 865, 874.)
Redfin Defendants also correctly point out Seller has provided little
information regarding its own financial conditions or insurance policy limits.
(Motion, 7-8.) Lastly, Redfin Defendants also contend Seller produces little
evidence to show why the non-settling Defendants should pay “significantly
greater” than their share of liability. (Motion, 8.)
In opposition, Seller contends
Plaintiff “has extensive knowledge relating to the cost of repairs and the
conduct of the parties while transacting the sale that forms the basis for this
action” and believes that $75,000 is a fair settlement for the Seller, even
though the Complaint alleges $1,500,000.00 in cost of repairs. (Opp., 2-3.)
Seller again reiterates the contention that it “approximates” Plaintiff’s
“total recovery to be $75,000 and its proportionate liability to be less than
10%.” (Opp., 5-6.) However, Seller again fails to point to substantiating
evidence for its valuation. Seller further contends Redfin Defendants have not
offered any evidence that $75,000 “does not represent [Seller’s] proportionate
liability in this action.” (Opp., 7.) As such, Seller contends Redfin
Defendants have not met their burden to contest the determination. (Id.)
Seller also points to Plaintiff’s incurred expenses, as described in the
discovery responses, to assert “based on information available to the Court at
this time, that $75,000 represents an approximation of Plaintiff’s total
recovery in this action.” (Opp., 8.) Seller also fails to discuss its own
financial conditions and policy limits, but rather contends “the relevance of this
factor is not apparent” as “[Seller] has already paid the settlement.” (Opp.,
8-9.) Lastly, Seller contends Plaintiff only asserted punitive and exemplary
damages against the Redfin Defendants, and there “are no other damages being
alleged against [Seller].” (Opp., 9-10.)
Redfin Defendants filed a reply to
Seller’s opposition to the instant motion. The reply again argues that the application’s
analysis about Seller’s liability, misrepresentations of allegations against it
and the potential damages, Seller’s potential liability for punitive damages,
and failure to provide more information regarding Seller’s financial conditions
are insufficient to satisfy the Tech-Bilt factors. (Reply, 3-6.)
The court agrees with the contesting
defendants that the Seller’s application fails to demonstrate why the
settlement with Plaintiff was in good faith. According to the application, the
settlement was in good faith because it was for an amount larger than Plaintiff’s
claims against all defendants. However, Seller does not explain the basis for
its approximation of its liability, and fails to discuss and/or include an
analysis of all the claims made against it. Further, Seller fails to explain
the entirety of the information made available to it during the settlement
discussions, and further fails to divulge information regarding its own
financial conditions. The substantial difference between Plaintiff’s alleged
damages, and the small share of damages as represented by this settlement
amount, give the court serious pause as explained by Long Beach Mem. Med.
Ctr. (2009) 172 Cal. App.4th 865. As such, Seller’s application is
insufficient in its analysis to show this court that the settlement has been
made in good faith.
For these reasons, the Seller’s
application is denied and the Redfin Defendants’ motion to contest is granted.
Conclusion
The Redfin Defendants’ motion is granted.
The Application for Determination of Good Faith Settlement is denied. The Redfin
Defendants are to give notice.