Case Name: Cilker Apartments, LLC v. Western National Construction, et al.
Case No.: 2013-1-CV-258281

This case arises out of alleged construction defects at One Pearl Place Apartments, a 182-unit residential apartment building in San Jose. Currently before the Court are the following motions: (1) a motion by plaintiff Cilker Apartments, LLC for a new trial; (2) a motion by general contractor Western National Construction (“WNC” or “Western National”) for judgment on the pleadings as to Cilker’s complaint; and (3) a motion by defendant and cross-defendant California Classic Paver Designs (“CA Classic Pavers” or “CCPD”) for determination of good faith settlement.

I. Cilker’s Motion for New Trial

Cilker moves for a new trial with respect to the Court’s order granting summary judgment in favor of defendants and cross-defendants Madera Framing, Inc. and Rounds & Buroker, Inc. dba Madera Construction on the basis of a release executed by Cilker, Madera Framing, and Western National during prior litigation. Madera Framing and Madera Construction (collectively, the “Madera Defendants”) separately oppose Cilker’s motion.

A. Factual and Procedural Background

On May 24, 2016, the Court granted separate motions for summary judgment by the Madera Defendants against both Cilker and Western National, over both parties’ oppositions. The order provided the following relevant background on the release at issue:

In late 2003, Madera Framing performed framing work at the One Pearl Place project. After its work was completed, Madera Framing was not paid. On December 1, 2003, Madera Framing filed a complaint in Santa Clara County Superior Court naming Cilker and Western National [(the “Prior Action”)]. The lawsuit ended in a mutual release and settlement agreement that was fully funded and executed.

(Ex. 1 to Mot., Order After Hearing on May 6, 2016, Ex. A., p. 2, citations omitted.)

The settlement agreement identifies Cilker as a “Settling Party” and provides for a $215,000 payment by Cilker to Madera Framing in consideration for the dismissal of the Prior Action with prejudice, with the Madera entities to deliver to Cilker “a fully executed and notarized release of Madera’s mechanic’s lien” within three business days of receiving payment and the fully executed settlement agreement. (Ex. 3 to Mot., Mutual Release and Settlement Agreement, ¶ 1.) The release encompasses “any and all claims, demands, arbitrations, actions, or causes of action, that arise out of or relate to the claims alleged in the [first amended complaint and related pleadings in the Prior Action], or which could have been alleged [therein], whether known or unknown.” (Id. at ¶ 2.) Excepted from the release are “any claims Cilker and WNC have against each other regarding which party is ultimately responsible for this settlement payment” (ibid.) and “any and all claims, rights and defenses concerning, [sic.] responsibility for future claims by third parties for personal injury, construction defects and/or resultant property damage occurring at the Project or arising out of the work related to the Project, but only to the extent such claims arise out of conditions that were unknown to WNC or Cilker and not apparent by reasonable inspection as of the date this Agreement became fully executed” (id. at ¶ 3).

The Court found that the release applied to the claims against the Madera Defendants at issue in this action and granted summary judgment in their favor. On June 9, 2016, Western National filed a motion for judgment on the pleadings as to Cilker’s complaint based on the same release, which is also at issue. Cilker now moves for a new trial with respect to the summary judgment rulings.

B. Untimely and Oversized Brief

As an initial matter, the Madera Defendants correctly note that Cilker’s 19-page brief filed in support of its motion exceeds the page limitations established by the California Rules of Court. (See Cal. Rules of Court, rule 3.1113(d) [“Except in a summary judgment or summary adjudication motion, no opening or responding memorandum may exceed 15 pages.”].) The brief, which was filed on June 27, 2016, is also untimely, since Cilker filed its notice of intent to move for a new trial on June 14, 13 days earlier. (See Cal. Rules of Court, rule 3.1600(a) [memorandum must be filed and served within 10 days of filing of notice of intention to move for a new trial].)

These defects constitute an independently sufficient ground for the Court to deny Cilker’s motion. (See Cal. Rules of Court, rule 3.1600(b) [“If the moving party fails to serve and file a memorandum within the time prescribed in (a), the court may deny the motion for a new trial without a hearing on the merits.”], rule 3.1113(g) [oversided memorandum “must be filed and considered in the same manner as a late-filed paper”]; Quantum Cooking Concepts, Inc. v. LV Associates, Inc. (2011) 197 Cal.App.4th 927, 932-934 [trial court properly denied motion for a new trial for failure to comply with rule 3.1113].) As discussed below, the motion also fails on its merits

C. Evidentiary Issues

Cilker’s request for judicial notice of the docket in the Prior Action is GRANTED. (Evid. Code 452, subd. (d).)

The Court declines to issue individual rulings on Madera Construction’s objections to evidence, and Madera Framing’s motion to strike portions of the evidence submitted in support of Cilker’s motion is DENIED. The Court will not rely upon any inadmissible evidence submitted by Cilker and will discuss relevant evidence in context below, but there is no authority for the proposition that it must issue individual evidentiary rulings in connection with a motion for a new trial.

D. Legal Standard

A motion for a new trial seeks “a reexamination of an issue of fact in the same court after a trial and decision by a jury, court, or referee.” (See Code Civ. Proc., § 656 [defining “new trial”].) “A motion for a new trial is appropriate following an order granting summary judgment.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 858.)

A motion for new trial may only be made on the seven grounds set forth in Code of Civil Procedure section 657, insofar as they materially affect the substantial rights of the aggrieved party. (See Code Civ. Proc., § 657.) Generally, the matter must be determined by the same judge who presided over the challenged decision. (Id. at § 661.) The trial court has the “duty to weigh and consider the evidence of both parties and exercise its discretion in passing upon a motion for new trial.” (Anderson v. Dahl (1932) 121 Cal.App. 198, 200.)

Cilker refers to four of the seven grounds set forth in section 657 in support of its motion: (1) irregularity in the proceedings of the court, jury or adverse party, or any order of the court or abuse of discretion by which either party was prevented from having a fair trial (Code Civ. Proc., § 657(1)); (2) accident or surprise which ordinary prudence could not have guarded against (id. at § 657(3)); (3) newly discovered material evidence which could not, with reasonable diligence, have been discovered and presented at the hearing (id. at § 657(4)); and (4) error in law, occurring at the trial and excepted to by the party making the application (id. at § 657(7)).

E. Irregularity, Accident or Surprise, or Newly Discovered Evidence

“Sections 657 and 658 establish seven grounds for a new trial, which fall into two groups.” (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1192.) “Motions seeking a new trial on the first four grounds ‘must be made upon affidavits’ (§ 658).” (Ibid.; Code Civ. Proc., § 658.) These procedures are strictly construed, and the trial court lacks the authority to grant a new trial on a ground that requires a supporting affidavit when no such affidavit has been submitted. (See Cembrook v. Sterling Drug Inc. (1964) 231 Cal.App.2d 52, 66; Gaskill v. Pacific Hospital of Long Beach (1969) 272 Cal.App.2d 128, 130; Gardner v. Marshall (1944) 24 Cal.2d 686, 690.)

A motion for new trial on the ground of irregularity at the proceeding (Code Civ. Proc., § 657(1)) requires affidavits showing that neither the party “nor his attorney was aware of the” irregularity before the decision was rendered. (Weathers v. Kaiser Foundation Hospitals (1971) 5 Cal.3d 98, 103.) A motion on the ground of accident or surprise (Code Civ. Proc., § 657(3)) requires a showing of a condition or situation in which a party is unexpectedly placed to his detriment, which ordinary prudence on his or her part could not have guarded against. (Hata v. Los Angeles County Harbor/UCLA Medical Center (1995) 31 Cal.App.4th 1791, 1806.) A motion on the ground of newly discovered evidence (Code Civ. Proc., § 657(4)) must be supported by a showing that “(1) the evidence is newly discovered; (2) [the party] exercised reasonable diligence in discovering and producing it; and (3) it is material to” that party’s case. (Doe v. United Airlines, Inc. (2008) 160 Cal.App.4th 1500, 1506.) If the party’s showing is clearly lacking in essential particulars, the grant of a new trial is an abuse of discretion. (Ibid.)

Here, the only changed circumstance that Cilker identifies is Western National’s motion for judgment on the pleadings, which is based on the same release that the Madera Defendants successfully relied upon in moving for summary judgment. Cilker submits no affidavit showing that Western National’s position could not have been anticipated—it merely argues that Western National took a contrary position in unspecified “judicial pleadings” (Mot., p. 4) and in a settlement agreement executed in 2006, years before the present action was filed (Mot., p. 5). It does not explain how it was prejudiced by Western National’s change in position, given that it opposed the Madera Defendants’ motions at the time they were initially at issue. Nor does Cilker identify any newly-discovered evidence pertinent to the Madera Defendants’ motions for summary judgment. Consequently, Cilker’s motion is not justified based on subparts (1), (3), or (4) of section 657.

F. Error in Law

Cilker’s real contention, and the first and primary ground it cites in support of its motion, is that the Court’s ruling on the Madera Defendants’ summary judgment motions was erroneous. (See Code Civ. Proc., § 657(7).) For the Court to grant a new trial on this ground, the error must have materially affected Cilker’s substantial rights. (Code Civ. Proc., § 657; see also Sherman v. Kinetic Concepts, Inc. (1998) 67 Cal.App.4th 1152, 1161 [“Prejudice is required: … there is no discretion to grant a new trial for harmless error.”].)

Cilker contends that the Court made the following erroneous determinations in granting the Madera Defendants’ summary judgment motions: (1) the settlement agreement is unambiguous; (2) the Court would not consider extrinsic evidence; (3) there were no triable issues of fact regarding the intent of the agreement; and (4) the agreement released Cilker’s claims in this action.

Taking these arguments in their logical order, Cilker is correct that

[t]he interpretation of a contract involves a two-step process: First the court provisionally receives (without actually admitting) all credible evidence concerning the parties’ intentions to determine ambiguity, i.e., whether the language is reasonably susceptible to the interpretation urged by a party. If in light of the extrinsic evidence the court decides the language is reasonably susceptible to the interpretation urged, the extrinsic evidence is then admitted to aid in the second step—interpreting the contract.
(Wolf v. Superior Court (Walt Disney Pictures and Television) (2004) 114 Cal.App.4th 1343, 1351, citing Winet v. Price (1992) 4 Cal.App.4th 1159, internal quotations omitted.) To the extent that the Court’s statement that there was “no reason for [it] to look at evidence regarding the intent of the parties” suggests otherwise, that statement was in error. (Order at Ex. A, p. 3.)

However, Cilker must show that any misstatement of the law or refusal by the Court to consider extrinsic evidence materially affected its substantial rights. (Code Civ. Proc., § 657.) Cilker cites the following evidence that it did not intend to release claims relating to construction deficiencies against Western National or the Madera Defendants:

First, it points to statements by its counsel in the Prior Action that this was not Cilker’s intent. However, “evidence of the undisclosed subjective intent of the parties is irrelevant to determining the meaning of contractual language.” (Winet v. Price (1992) 4 Cal.App.4th 1159, 1166, fn.3.) Next, Cilker points to its counsel’s asserted statement to counsel for Western National that “any and all future disputes that [Cilker] may have against [Western National] would need to be expressly identified as not being covered by the Agreement.” (Ex. 6 to Mot., Decl. of David Mitchell ISO Cilker’s Opp. to Madera Constructions Mot. for Summary Adjudication, ¶ 7.) However, such an express exemption of all future disputes between Cilker and Western National was simply not included in the settlement agreement, and has no bearing on Cilker’s expressed intention regarding future disputes with the Madera Defendants.

Next, Cilker invites the Court to review drafts of the settlement agreements showing that the exception for claims by “third parties” was included in the proposed agreement before it was contemplated that Cilker would become a party to the settlement. Cilker contends that this shows it was intended to remain a “third party” even after it became a party to the settlement agreement, but this is not a reasonable inference or a reasonable interpretation of the agreement. Cilker also implies that testimony by Madera Framing lawyers that they could not recall the Prior Action or settlement negotiations; testimony by Madera officer Jerry Merry that he “assumed” the Madera Defendants had been released from any liability regarding the project at issue; and the fact that documents relating to the negotiations were withheld from production under claim of privilege shows that the defendants are hiding relevant evidence about the parties’ intent, but this argument is wholly speculative.

Cilker also cites settlement communications between Madera Framing’s counsel and Western National’s counsel that it argues confirm “that it was the intent of the parties to exclude from the release any claims relating to construction deficiencies that were not known, or discoverable, upon reasonable inspection.” (Mot. at p. 15.) However, the communications discuss language similar to that included in the final agreement, which excludes third party claims “only to the extent such claims arise out of conditions that were unknown to [Western National] or Cilker,” not all unknown claims. (Settlement Agreement, ¶ 3.) In fact, as the Court noted during the hearing on the Madera Defendants’ motions, the settlement includes a broad, express release of unknown claims among the parties pursuant to California Civil Code section 1542. (Id. at ¶ 4.)

Finally, Cilker points to the parties’ conduct after the settlement agreement was executed—specifically, Western National’s position in opposition to the Madera Defendants’ summary judgment motions that the agreement did not release the claims at issue; the Madera Defendants’ belated assertion of the agreement as a defense to this action; and Western National’s execution of a subsequent 2006 settlement agreement acknowledging Cilker’s right to sue it for construction defects. However, the parties’ litigation conduct is not relevant “course of performance” evidence as discussed in the authorities cited by Cilker. (See Epic Communications, Inc. v. Richwave Technology, Inc. (2015) 237 Cal.App.4th 1342, 1355; Sterling v. Taylor (2007) 40 Cal.4th 757, 772–773 [“the practical construction placed upon [a contract] by the parties before any controversy arises as to its meaning affords one of the most reliable means of determining the intent of the parties”], italics added.) Furthermore, the 2006 settlement agreement is not newly-discovered and was not before the Court in connection with the Madera Defendants’ summary judgment motions, and the Court disagrees that it acknowledged Cilker’s right to sue Western National for construction defects.

Cilker consequently does not show that the Court failed to consider any material evidence relating to the intended meaning of the settlement agreement. Specifically, the evidence cited by Cilker does not show that the settlement agreement is ambiguous in any of the three respects urged by Cilker in its motion. First, it does not show any ambiguity regarding whether the claims against the Madera Defendants are within the scope of the agreement’s release, which encompasses not only claims that were asserted in the Prior Action, but claims that “relate to” such claims “or which could have been alleged in the Action, whether known or unknown.” (Settlement Agreement, ¶ 2.) The evidence also does not show any ambiguity regarding whether Cilker is a “third party” under the exception to the release. That exception clearly contrasts the “Settling Parties,” defined to include Cilker, with “third parties” who are not Settling Parties. (Id. at ¶ 3.) Finally, the third ambiguity asserted by Cilker is a variation on its first argument that the scope of the release is ambiguous. The fact that the exception to the release refers to “work related to the Project” does not render the distinct language used in the release itself ambiguous.

Cilker’s various remaining arguments as to why the Court erred in finding that there were no triable issues regarding whether the release applies to the claims against the Madera Defendants also fail. First, the Court did not construe the exception to the release in isolation from the rest of the settlement agreement. Second, there is no triable issue of fact regarding whether Cilker received consideration for executing the settlement agreement. The agreement itself indicates that the dismissal of the Prior Action and Madera’s associated delivery of a fully executed and notarized release of its mechanic’s lien to Cilker constituted consideration for Cilker’s payment. (Settlement Agreement, ¶ 1.)

G. Request for Reformation

Finally, Cilker argues that it is entitled to reformation of the settlement agreement should the Court decline to grant it a new trial. As urged by the Madera Defendants, any such request is beyond the scope of the pleadings, the issues raised in the prior summary judgment motions, and consequently, the present motion for a new trial. (See Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1258 [“The complaint limits the issues to be addressed at the motion for summary judgment. … If plaintiff wishes to expand the issues presented, it is incumbent on plaintiff to seek leave to amend the complaint either prior to the hearing on the motion for summary judgment, or at the hearing itself.”].) The Court notes that any claim for reformation must be supported by specific factual allegations, which Cilker does not offer here. (See George v. Automobile Club of Southern California (2011) 201 Cal.App.4th 1112, 1132-1133 [bare, conclusory allegations are insufficient to state a cause of action for reformation].)

H. Conclusion and Order

In light of the above, Cilker’s motion for a new trial is DENIED.

II. Western National’s Motion for Judgment on the Pleadings

Western National’s request for judicial notice of the Court’s May 24th order granting the Madera Defendants’ motions for summary judgment is GRANTED as to the existence, content, and legal effect of the order. (Evid. Code, § 452, subd. (d); Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564-1568 [a court may take judicial notice of the existence and content of each document in a court file, but cannot take judicial notice of the truth of hearsay statements or factual findings therein].) Cilker’s request for judicial notice of various filings in this action is GRANTED to the same extent. (Ibid.)

Western National moves for judgment on the pleadings as to Cilker’s complaint, arguing that in awarding summary judgment in favor of the Madera Defendants based on the release associated with the Prior Action, the Court “necessarily found that the clear and unambiguous terms of the settlement agreement between Cilker, WNC and the Madera parties released all claims between those settling parties.” (Mot., p. 5.)

But the Court found no such thing. Clearly, the parties did not release “all claims” between them without limitation. As discussed above, they released claims “aris[ing] out of or relate[d] to the claims alleged in the [Prior Action], or which could have been alleged [therein].” The Prior Action related to work performed by the Madera Defendants. In ruling on the Madera Defendants’ summary judgment motions, the Court had no occasion to consider whether or how the Release might apply to Cilker’s claims against Western National, which involve more than the Madera Defendants’ work. Contrary to Western National’s argument, this issue was not actually or necessarily decided by the Court’s prior order. (See Bridgeford v. Pacific Health Corp. (2012) 202 Cal.App.4th 1034, 1042 [setting forth these and other requirements for collateral estoppel to apply].)

Western National’s motion is accordingly DENIED.

III. CA Classic Pavers’s Motion for Determination of Good Faith Settlement

CA Classic Pavers seeks an order approving its $500,000 settlement with Cilker. Western National opposes CA Classic Pavers’s motion to the extent it seeks an order precluding the contractual claims alleged in Western National’s cross-complaint.

A. Legal Standard

California Code of Civil Procedure section 877.6 provides that a party to an action involving two or more alleged joint tortfeasors may seek a determination that a settlement was made in good faith. To promote settlement (Cal-Jones Properties v. Evans Pacific Corp. (1989) 216 Cal.App.3d 324, 327), such determination “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 amount paid by the settling defendant reduces the claim against the other defendants. (Code Civ. Proc., § 877, subd. (a).)

In Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, the Supreme Court set forth factors to be considered in approving a good faith settlement, 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.
(At p. 499.) “[O]nly when the good faith nature of a settlement is disputed,” however, is it “incumbent upon the trial court to consider and weigh the Tech-Bilt factors.” (City of Grand Terrace v. Superior Court (Boyter) (1987) 192 Cal.App.3d 1251, 1261.)

“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 (Krystal) (1997) 52 Cal.App.4th 742, 750.) It is the settling parties’ burden to explain “the evidentiary basis for any allocations and valuations made sufficient to demonstrate that a reasonable allocation was made.” (Ibid.) Nevertheless,

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, … 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.

(Regan Roofing v. Superior Court (Finkelstein) (1994) 21 Cal.App.4th 1685, 1704, internal citations omitted.) “[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.)

The court may consider affidavits and counteraffidavits, and may receive other evidence at the hearing on the motion in its discretion. (Code Civ. Proc., § 877.6, subd. (b).) “The party asserting the lack of good faith shall have the burden of proof on that issue.” (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 [the Tech-Bilt] factors as to be inconsistent with the equitable objectives of the statute.” (Tech-Bilt v. Woodward-Clyde & Associates, supra, 38 Cal.3d at pp. 499-500.) “[W]hen 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.” (City of Grand Terrace v. Superior Court, supra, 192 Cal.App.3d at p. 1261.)

B. Analysis

As an initial matter, Western National opposes CA Classic Pavers’s motion on the sole ground that it “believes that CCPD and its counsel may be under the misguided notion that CCPD’s settlement with Cilker serves to resolve CCPD’s liability to WNC” for contractual claims asserted in Western National’s cross-complaint. As urged by Western National, “a good faith settlement order does not bar a non-settling tortfeasor from asserting an indemnification claim against the settling defendants based on an express contract.” (Interstate Fire and Cas. Ins. Co. v. Cleveland Wrecking Co. (2010) 182 Cal.App.4th 23, 32.) Since Western National does not raise any other issue with the settlement in its opposition, CA Classic Pavers’s motion is essentially unopposed.

CA Classic Pavers is both a defendant and a cross-defendant to Western National’s cross-complaint. It indicates that it subcontracted with Western National to furnish and install approximately 37,000 square feet of interlocking paving stones at vehicular and pedestrian areas at One Pearl Place, including a bed of sand under the pavers. At the pedestrian areas, its work was installed on top of a podium slab and other components built by other subcontractors. Cilker alleges that water accumulates and leaks through the podium deck to the concrete garage structure below, and leaks at the perimeter of the podium deck damaging the stucco and substrate of the residential units. At the vehicular areas, CA Classic Pavers installed pavers on-grade and around support columns. Cilker alleges that sealant joints in that area were improperly constructed, resulting in water intrusion and damage to framing and finishes installed by other subcontractors.

Western National used Cilker’s final defect list and repair cost proposal to allocate the defects and related repair costs to the subcontractors, and allocated 2.4% of Cilker’s total claim ($799,923) to CA Classic Pavers. CA Classic Pavers subsequently issued a Code of Civil Procedure section 998 offer to compromise to Cilker in the amount of $500,000, which Cilker accepted on June 10, 2016.

CA Classic Pavers’s motion exceeds the “barebones” showing required for an unopposed motion, and the settlement appears to be in the ballpark of its liability given Western National’s allocation. (City of Grand Terrace v. Superior Court, supra, 192 Cal.App.3d at p. 1261.) However, CA Classic Pavers does not propose an allocation of the settlement among the defendants as required under the circumstances. The Court will consequently use the allocation proposed by Western National in the absence of any objections by the parties.

In light of the above, CA Classic Pavers’s motion is GRANTED.