2016-00191170-CU-PO

Angela Andrews vs. Ding Zhang

Nature of Proceeding: Determination of Good Faith Settlement

Filed By: Montanari, R. Ernest

The motion of Defendant Dennis Max Werking dba American Property Management (APM) for determination of good faith settlement pursuant to CCP § 877.6 is DENIED without prejudice.

This case arises from a landlord/tenant relationship. The plaintiffs are Angela Andrews (Andrews) and Alexandrea Andrews Haggerty (Minor), through Andrews as guardian ad litem (collectively “Plaintiffs”). APM was the landlord’s property manager. Co-Defendant Ding Zhang (Zhang) was the landlord.

In the operative fourth amended complaint (4AC), Plaintiffs allege that they occupied the premises with a Section 8 HUD voucher. They allege a toxic mold infestation as well as other violations of housing laws, and they further allege that there were no timely attempts to repair despite their initial complaints. When repairs were attempted, the premises were left in shambles, and Plaintiffs were exposed to the mold as well as rodent droppings. Plaintiffs allegedly suffered physical and emotional injuries as a result. Plaintiffs also allege that they were the victims of retaliatory eviction under two different statutory schemes.

The 4AC contains causes of action for premises liability, “Claim for Uncured Building Inspection [CC § 1942.4], tortious breach of the warranty of habitability, breach of the covenant of quiet enjoyment, negligence, breach of the covenant of good faith and fair dealing, retaliatory eviction [CC § 1942.5], retaliatory eviction [Unified Residential Landlord and Tenant Act, § 5.101(b)], breach of contract, fraud by concealment, intentional misrepresentation and violation of B&P Code § 17200. All of these causes of action appear to be directed at both APM and Zhang.

In June 2018, Plaintiffs settled with APM for the total amount of $25,000. (See Montanari Decl., Exh. D.) The settlement is conditioned on the court’s good faith determination. (See id., Exh. D, § 2(a), (c).) The settlement left it to Plaintiffs to decide how to apportion the settlement proceeds between themslves “in a manner which benefits [the Minor].” (Id., Exh. D, § 2(b).) No other allocation is mentioned.

On 10/03/18, the court entered an order approving Plaintiffs’ petition for a Minor’s Compromise. Based on the petition, it appears Andrews will receive $20,000 of the settlement, and the Minor will receive the remaining $5,000. This allocation was not made until after APM filed this motion and Zhang filed her opposition.

The motion is denied for two reasons. First, the setting parties failed to allocate the settlement proceeds among the different injuries alleged in the 4AC:

In the typical one-plaintiff, multiple-defendants, personal injury action each tortfeasor is potentially liable for the same injury to the plaintiff. Therefore the full settlement by one defendant will offset a judgment against other tortfeasors; no allocation of the settlement is required. But many lawsuits and many settlements do not fit this pattern. In some, the amount of the offset is uncertain because one settlement covers multiple plaintiffs or causes of action with different damages [citations]… . In others, the amount of the offset is clouded by injection of noncash consideration into the settlement [citations] or, as here, by settling claims for separate injuries not all of which would be attributable to conduct of the remaining defendants.

In a situation where the cash amount of the settlement does not dictate the amount of the offset, the settling parties must include an allocation or a valuation in their agreement. A natural tension will exist between plaintiff, who benefits by undervaluing the settlement in order to permit greater recovery against the remaining defendants, and the settling defendant, who would want the settlement value high enough to be approved in order to relieve settling defendant from liability for comparative indemnity or contribution. “[R]equiring a joint valuation by the plaintiff and the settling defendant should generally produce a reasonable valuation.” [Citation.]

(Alcal Roofing & Insulation v. Superior Court (1992) 8 Cal.App.4th 1121, 1124-1125.)

APM characterizes each cause of action as encompassing the same claims of physical and emotional injuries, but the court is not persuaded this is necessarily true. For example, Plaintiffs’ retaliatory eviction causes of action do not appear to encompass the physical injuries associated with the cause of action for premises liability. Nor is it clear that APM and Zhang will be found liable, if at all, in equal proportion on each and every cause of action in the 4AC. Under these circumstances, APM and Plaintiffs were required to take stock of the various claims for damages alleged in the 4AC and allocate the settlement funds.

The court also denies the motion, albeit without prejudice, because Zhang was not aware of Plaintiffs’ allocation of settlement proceeds between themselves before she filed her opposition. Although the court expresses no opinion about this allocation, Zhang should be afforded an opportunity to address it before the court makes a good faith determination under CCP § 877.6

The court does not address the parties’ other arguments in support of or in opposition to the motion.

Disposition

The motion is denied without prejudice.

The minute order is effective immediately. No formal order pursuant to CRC 3.1312 or further notice is required.