Case Number: KC069043 Hearing Date: March 28, 2018 Dept: J

Re: Porfirio De La Peza, et al. v. Herbert Schmidt, et al. (KC069043)

MOTION FOR DETERMINATION OF GOOD FAITH SETTLEMENT

Moving Parties: Defendants Anthony De La Vara, Sophia De La Vara and Rockpointe Realty Group, Inc. dba Coldwell Banker Alliance Realty

Respondents: Defendants Herbert Schmidt and Waltraud B. Schmidt

POS: Moving OK; Opposing OK; Reply OK

This dispute arises out of plaintiffs’ purchase of the real property located at 2687 Turnbull Canyon in La Puente (“subject property”). Plaintiffs allege that defendants failed to accurately disclose the subject property’s boundary line. The complaint was filed 1/30/17. The operative First Amended Complaint, filed 7/28/17, asserts causes of action against Defendants Herbert Schmidt, Waltraudt B. Schmidt, Anthony De La Vara, Sophia De La Vara, Rockpointe Realty Group, Inc. dba Coldwell Banker Alliance Realty and Does 1-20 for:

1. Breach of Contract

2. General Negligence

3. Fraud

4. Rescission

5. Violation of Civil Code §§ 1102 et seq.

A court trial is set for 7/16/18.

Defendants Anthony De La Vara (“A. De La Vara”), Sophia De La Vara (S. De La Vara”) and Rockpointe Realty Group, Inc. dba Coldwell Banker Alliance Realty (“moving defendants”) move the court for an order, per CCP § 877.6, determining that the settlement entered into this action between them and Plaintiffs Porfirio De La Peza and Sally A. De La Peza (“plaintiffs”) was made in good faith and barring any non-settling defendant, cross-defendant or interested party from seeking contribution or indemnification from moving defendants in this action or in any other action. Moving defendants have agreed to pay plaintiffs $18,350.00 in exchange for plaintiffs’ dismissal of their First Amended Complaint (“FAC”) against the moving defendants.

CALIFORNIA RULES OF COURT RULE (“CRC”) 3.1382:

Moving defendants are admonished for failing to comply with CRC Rule 3.1382 (i.e., “[a] motion or application for determination of good faith settlement may include a request to dismiss a pleading or a portion of a pleading. The notice of motion or application for determination of good faith settlement must list each party and pleading or portion of pleading affected by the settlement and the date on which the affected pleading was filed”).

When a party is seeking a good-faith settlement determination, “any party to an action in which 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 or other claimant and one or more alleged tortfeasors or co-obligors, upon giving notice in the manner provided in subdivision (b) of Section 1005.” CCP § 877.6(a)(1). “The issue of the good faith of a settlement may be determined by the court on the basis of affidavits served with the notice of hearing, and any counteraffidavits filed in response, or the court may, in its discretion, receive other evidence at the hearing.” CCP § 877.6(b). “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 party asserting the lack of good faith shall have the burden of proof on that issue.” CCP § 877.6(d).

“[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. (See In re MGM Grand Hotel Fire Litigation (D. Nev. 1983) 570 F.Supp. 913, 927.) Finally, practical considerations obviously require that the evaluation be made on the basis of information available at the time of settlement. ‘[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.’ (Torres v. Union Pacific R.R. Co. (1984) 157 Cal.App.3d 499, 509). 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.” Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499-500.

This case arises out of plaintiffs’ purchase of the real property located at 2687 Turnbull Canyon in La Puente (“subject property”) from sellers Herbert Schmidt and Waltraud B. Schmidt. (“Defendant Sellers”). The listing agent for the subject property was S. De La Vara and the plaintiffs’ agent was A. De La Vara and their respective brokerages. Plaintiffs allege that defendants misrepresented or concealed the true boundary lines of the subject property and negligently stated that the boundary lines were at the chain link fence between the property and the neighbor’s property and that the driveway was a part of their property when in fact a good portion of it was not. (FAC, ¶ GN-1). Plaintiffs claim that, after their purchase, they had to construct another driveway to the subject property going around it in a different direction. (Id.). Plaintiffs allege that their damages are “no less than $100,000.” (Id.).

The moving defendants urge that the $18,350.00 settlement is not grossly disproportionate to their liability exposure at trial. They point out that Civil Code § 2079 sets forth a real estate agent’s general duty to only visually inspect the subject premises, and attach the “Agent Visual Inspection Disclosure” to their reply. A. De La Vara, moreover, attests that “[i]t was Mr. Schmidt, not me, who told the plaintiffs that the boundary was located at the chain link fence. I was present when the plaintiffs asked the seller, Mr. Schmidt, the location of the boundary and he replied ‘where the fence is.’ Whether this was true was and remains out of the scope of my personal knowledge, hence why I never made any representations concerning the same. Ultimately, I did not conceal anything about the property lines or square footage of the subject property because I did not know where the boundaries are. I, like the plaintiffs, relied on the seller’s statements and representations.” (A. De La Vara Decl., ¶ 2). Defendants Sellers not disavow making representations to plaintiffs or moving defendants regarding the subject property’s boundaries. They also do not provide the court with declarations as to what knowledge they had regarding the subject property’s boundaries (i.e., such as when they became owners of the subject property, when the fence was erected, if the fence was erected during the time they owned the property, whether they had disputed boundaries with their neighbor at any time, etc.).

Moving defendants assert that plaintiffs’ damages as against them are no more $50,000.00, after taking into account the comparative fault of the neighbors, plaintiffs, and Defendants Sellers. The settlement, then, is approximately 37% of this reduced amount. Although Defendants Sellers claim that the total damages as alleged actually exceed $240,000.00 because plaintiffs are seeking more than $136,000.00 for a new driveway and $5,689.00 for the relocation of gate posts and related costs, no documentation has been provided to substantiate $236,000.00 of plaintiffs’ purported damages. Again, even if plaintiffs were able to substantiate this higher amount of damages, Defendants Sellers do not disavow making representations about the boundary lines. Moving defendants also point out that, if the plaintiffs were to succeed at trial, they would bear at least some of the liability for their damages due to their choice not to survey the property before the close of escrow.

Defendant Sellers’ issues with regard to the mediation, moreover, do not affect the court’s ruling. The mediation was conducted by an experienced private mediator, Max Factor III. (Defendant Sellers’ opposition appears to violate the mediation privilege of Evidence Code § 1119.) Moving defendants have not provided the court with any evidence suggesting fraud or collusion.

The motion, then, is granted. The court finds the settlement to have been entered into in good faith. The Cross-Complaint filed on 3/15/18 by Defendant Sellers is ordered stricken for having been filed without leave of court. Counsel for the moving defendants is to submit a proposed order and give notice.