This is a Motion for Good Faith Settlement Determination brought by Defendant/Cross-Defendant Architectural Facades Unlimited, Inc. (“AFU”) regarding the settlement agreement entered into by AFU and Plaintiff The Irvine Company LLC (“Plaintiff”) and the agreement between AFU and Defendant/Cross-Defendant Douglas Ross Construction, INC. (“DRC”).

In its moving papers, AFU argues that it entered into a settlement agreement with both Plaintiff and DRC on March 11, 2015 after engaging in protracted and arms-length settlement negotiations with the assistance of mediator Ross Hart. AFU contends that its scope of work of the very large (439 units) apartment complex was limited to providing precast concrete and GFRC materials and that there has been no evidence produced through discovery that these materials were defective in any way. AFU contends that its settlement with Plaintiffs in the sum of $70,000 is to “buy peace” and extricate itself from a large, expensive lawsuit even though it claims to have no liability. Furthermore, AFU argues that its settlement meets the Tech-Bilt standards and the requirements of CCP 877.6. With respect to its settlement with DRC, AFU agreed to assign its express indemnity rights and breach of contract claim against Harder Masonry Inc. (“Harder”) which they contend is valued at $55,000. In arguing that the respective settlements meet the requisite Tech-Bilt standards, AFU points out that Plaintiff has not alleged any defect with the materials supplied by AFU and that $70,000 represents an overpayment as discovery has failed to indicate any defects with the products supplied. With respect to the assignment given to DRC, AFU further argues that in light of its express indemnity agreement with Harder, DRC can recover additional costs such as attorney’s fees and any other damages that AFU could recover for breach of contract against Harder.

In its opposition papers, Harder contends that AFU has failed to meet the requirements set forth under Tech-Bilt , specifically that its settlement is reasonably proportionate to the overall claim for damages, Harder also argues that: (1) AFU has not provided a copy of the settlement agreement and accordingly, neither Harder nor the Court can properly evaluate the material terms of the agreement; (2) AFU has failed to provide any allocation of the various defect issues asserted by Plaintiff and therefore a set-off cannot be determined; (3) AFU has failed to provide any information regarding the settlement with DRC and whether the settlement includes any allocation for attorney’s fees/costs including those for monies owed due to the additional insured obligations; and (4) AFU has failed to provide any evidentiary basis regarding the value of the assignment of AFU’s insurer’s subrogation rights against Harder and accordingly, Harder cannot determine the terms of the settlement.

In reply, AFU argues that the party opposing the good faith settlement has the burden of proving that the settlement lacks good faith and Harder has not met its burden. AFU further contends that Harder erroneously relies on Plaintiff’s statement of damages totaling over $66 Million in asserting that AFU’s payment of $70,000 was unreasonable and the appropriate standard is to look at the reasonable range of AFU’s liability rather than the overall claimed damages. AFU further contends that a copy of the settlement agreement is not required and that the evidentiary basis supporting the reasonableness of the settlement is set forth in the accompanying Declaration and Supplemental Declaration of Jamie Cheng, counsel for AFU. Finally, AFU argues that even though a detailed allocation of the settlement funds is not required, AFU refers to an allocation matrix produced by Plaintiff’s experts and provides additional information explaining the valuation of the assignment to DRC.

California Code of Civil Procedure section 877.6 provides that a party to an action in which it is alleged that two or more parties are joint tortfeasors may seek a determination that a settlement was made in good faith. “A determination by the court that the settlement was made in good faith shall bar any other joint tortfeasor…from any further claims against the settling tortfeasor…for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault.” (Code Civ. Proc., § 877.6, subd. (c).) “The purpose of this statute is to bar claims against a settling tortfeasor and thereby promote settlement.” (Cal-Jones Properties v. Evans Pacific Corp. (1989) 216 Cal.App.3d 324, 327.)

In Tech-Bilt, Inc. v. Woodward-Cycle & Associates (1985) 38 Cal.3d 488, the Supreme Court set forth the following factors for consideration of a proposed settlement:

a rough approximation of plaintiffs’ total recovery and the settler’s proportionate liability;
the amount paid in settlement;
the allocation of settlement proceeds among plaintiffs;
discount for settlement before trial;
the financial conditions and insurance policy limits of settling defendants; and
the existence of collusion, fraud, or tortious conduct aimed to injure the interests of non-settling defendants.

(Tech-Bilt, supra, 38 Cal.3d at p. 499.)

In determining whether a proposed settlement is made in good faith, the court may consider affidavits and counteraffidavits. In its discretion, the Court may receive other evidence at the hearing on the motion. (Cal. Code Civ. Proc., § 877.6, subd. (b).) “The party asserting the lack of good faith shall have the burden of proof on that issue.” (Cal. Code Civ. Proc., § 877.6, subd. (d).) Bad faith may be established by “demonstrat[ing] that the settlement is so far ‘out of the ballpark’ in relation to these [Tech-Bilt] factors as to be inconsistent with the equitable objectives of the statute.” (Tech-Bilt, supra, 38 Cal.3d at pp. 499-500.)

“Where there are multiple defendants, each having potential liability for different areas of damage, an allocation of the settlement amount must be made.” (L.C. Rudd & Son, Inc. v. Superior Court (1997) 52 Cal.App.4th 742, 750.) The failure to allocate the settlement “may preclude a ‘good faith’ determination because there is no way to determine the appropriate setoff pursuant to section 877 against the nonsettling defendant. (Id.) As a result, “[i]t 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.” (Id.) “[W]here the settling parties have failed to allocate, the trial court must allocate in the manner which is most advantageous to the nonsettling party.” (Dillingham Construction N.A., Inc. v. Nadel Partnership (1998) 64 Cal.App.4th 264, 287.)

However, “the inquiry at the good faith settlement stage is not the same as the inquiry at trial, where complete precision of allocation could presumably be achieved. Since we are dealing with a pretrial settlement, in which the factual findings or determinations made on contested issues of liability or damages are tentative, and made solely for purposes of evaluating the good faith of a settlement as of the date of the valuation [citation], we must necessarily apply a broader and more permissive standard for evaluating good faith of a settlement as to such allocation. . . . [W]hat should be required of the settling parties is that they furnish to the court and to all parties an evidentiary showing of a rational basis for the allocations made and the credits proposed. They must also show that they reached these allocations and credit proposals in an atmosphere of appropriate adverseness so that the presumption may be applied that a reasonable valuation was reached. [Citation.]” (Regan Roofing v. Superior Court (1994) 21 Cal.App.4th 1685, 1704.)

In the immediate case, the settlement appears to fall within the ballpark of AFU’s potential liability in this case. AFU has provided evidence (Declarations of Glenn Taylor and Francis Bracken) indicating that while AFU supplied precast concrete and glass fiber for the subject project, it did not perform any installation of the materials it supplied and that there is no evidence that the products supplied were defective in any way. As noted above, Harder has the burden of proving that the settlement is not in good faith and provides no evidence to refute or contradict these Declarations. With virtually no evidence establishing that the products were defective and no evidence of installation, AFU’s potential liability in the case would appear to be remote or non-existent. Harder’s arguments regarding the absence of any meaningful allocation of the settlement proceeds has some merit, but the Court finds that the allocation issues are properly addressed in the reply papers as well as the supporting declarations. With respect to the valuation of the assignment of claims against Harder, the Court finds that the Supplemental Declaration of Jamie Cheng provides sufficient information in terms of the maximum amount of recovery for the assigned claims ($117,000) for the Court to conclude that the settlement is reasonable and represents the proportionate liability of the assigned claims.

For the reasons set forth above, the Motion for Good Faith Settlement Determination is GRANTED.