Corvin Business Center Owners’ Assn v. Corvin Commercial Condominiums

Cross-Defendant Scurtz Electric brings this Motion for Good Faith Settlement Determination Cross-Defendant Scurtz installed external lighting, an external panel and a house meter and after acknowledging that none of Scurtz’s work involves any of the claims in the lawsuit, Plaintiffs have settled with Scurtz for a waiver of costs. The Motion is unopposed and GRANTED.

Cross-Defendant Dunn Rite (“Dunn Rite”) brings this Motion for Good Faith Settlement following its settlement with Plaintiff in the sum of $20,000. In its moving papers, Dunn Rite asserts that it was hired by Defendant TF McGuckin to perform certain plastering work on the subject property. Dunn Rite argues in its moving papers that the settlement sum of $20,000 meets the requisite Tech-Bilt factors as well as the requirements of CCP 877.6 as it represents “nearly” 40% of the claimed costs of repair set forth by Plaintiff and is therefore “within the ballpark” of its proportionate liability. Dunn Rite also includes an allocation of its settlement figure which was reached with the assistance of mediator Craig Meredith on January 26, 2015.

In opposition, TF McGuckin argues that Dunn Rite’s settlement with plaintiff is not in good faith as it (1) Is aimed to injure McGuckin”s interests as it seeks to prevent them from pursuing indemnification; (2) the terms of the settlement are not certain; (3) the settlement agreement does not include any offsets; and (4) several of the Tech-Bilt factors are not addressed in the moving papers.

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.)

After a full review of the papers and supporting exhibits and Declarations, the Court finds that the settlement agreement does meet the standards set forth in CCP 877.6 and Tech-Built and that the opposing parties have not met their burden in showing that the Settlement Agreement was entered into in bad faith. Accordingly, Dunn Rite’s Motion for Good Faith Settlement is GRANTED.

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