Case Name:   Countrywide Home Loans Lien Priority Cases.

Case No.:       1-08-CV-124661 (lead)

This coordinated proceeding originally consisted of thirteen actions[1] all arising from allegations of mortgage loan fraud by various individual sellers and buyers acting in concert through the use of fraudulent “double escrows,” wherein the buyer and seller enter into separate transactions to convey the same real property, opening two separate loan escrows with separate escrow agents who are unaware of each other or the other transaction.  As noted below, several of the cases have now been resolved through settlement and the settling parties now seek a good faith settlement determination pursuant to California Code of Civil Procedure 887.6.

Plaintiffs Bank of America, N.A., as Servicer and Attorney in Fact for the Bank of New York Mellon fka The Bank of New York, as Trustee for the Certificate Holders of the CWALT, Inc. Alternative Loan Trust 2006-OA10 Mortgage-Pass Through Certificates, Series 2006-OA10 in Included Action #1, Countrywide Home Loans, Inc. in Included Action #3, Option One Mortgage Corporation in Included Action #4, Residential Credit Solutions, Inc. as Assignee of Societe General as Assignee of Option One Mortgage, Inc. in Included Action #5, The Bank of New York Mellon fka The Bank of New York, as Trustee for the Certificate Holders CWALT, Inc., Alternative Loan Trust 2006-OA10 Mortgage Pass-Through Certificates, Series 2006-OA10 in Included Action #6, The Bank of New York, as Trustee for Certificate Holders CWALT, Inc. Alternative Loan Trust 2006-OA10, Mortgage Pass-through Certificates in Included Action #8, The Bank of New York fka The Bank of New York as Successor to JP Morgan Chase Bank, N.A. as Trustee for Holders of SAMI II Trust 2006-AR7 in Included Action 3 9  and U.S. Bank, N.A. as Trustee for Pass-Through Certificates WMALT 2007-OA2 in Included Action #12 (collectively referred to as “Plaintiffs”) move this Court for an Order Confirming Good Faith Settlement Determination Pursuant to California Code of Civil Procedure Section 877.6.

Plaintiffs’ Collective Motion is unopposed.

Analysis:  “Any party to an action in which it is alleged that two or more parties are joint tortfeasors … shall be entitled to a hearing on the issue of good faith of a settlement entered into by the plaintiff … and one or more alleged tortfeasors[.]”  (Code Civ. Proc., § 877.6, subd. (a)(1).)  In determining whether a proposed settlement is made in good faith, the Court may consider affidavits and, in its discretion, it may receive other evidence at the hearing on the motion.  (Id., § 877.6, subd. (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.”  (Id., § 877.6, subd. (c).)  “The party asserting the lack of good faith shall have the burden of proof on that issue.”  (Id., § 877.6, subd. (d).)

In Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, the California Supreme Court set forth the following factors for consideration of a proposed settlement: (1) a rough approximation of plaintiffs’ total recovery and the settler’s proportionate liability; (2) the amount paid in settlement; (3) the allocation of settlement proceeds among plaintiffs; (4) discount for settlement before trial; (5) the financial conditions and insurance policy limits of settling defendants; and, (6) 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.)  The party asserting the lack of good faith, who has the burden of proof on that issue, should be permitted to demonstrate 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.  (Id. at p. 500.)  Such a demonstration would establish that the proposed settlement was not a “settlement made in good faith” within the terms of Code of Civil Procedure Section 877.6.  (Id. at pp. 499-500.)  However, bad faith is not “established by a showing that a settling defendant paid less than his theoretical proportionate or fair share.”  (Id. at p. 499.)

However, if no party contests the good faith of a settlement, a trial court need not consider the Tech-Bilt factors. City of Grand Terrace v. Superior Court (1987) 192 Cal.App.3d 1251, 1261 (“[O]nly when the good faith nature of a settlement is disputed, it is incumbent upon the trial court of consider and weigh the Tech-Bilt factors.”). Where there is no objection to good faith settlement “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.” Id.

In the instant case, Plaintiffs’ moving papers include individualized charts documenting each settlement including the settling parties, the amount of each settlement, the identity of the non-settling defendants and a breakdown of the amounts paid.  In summary, the total amount of the collective payments totals $2,325,000 with the settling defendants paying approximately 70% through their title insurer.  The moving papers further demonstrate that the settlement was the product of extended negotiations that were facilitated by two experienced mediators over several days of mediation.  Clearly, the settlement was the result of arms-length negotiations and there is no evidence of collusion or any conduct which might injure the interests of the non-settling defendants.  There are no outstanding cross-complaints by the non-settling defendants and given the nature of the allegations, it is unlikely that there would ever be any successful claim for equitable contribution and/or indemnity in favor of the non-settling defendants.  Accordingly, the Motion for Good Faith Settlement Determination Pursuant to CCP 877.6 is GRANTED.

[1] The coordinated actions are: (1) Countrywide Home Loans v. Wachovia Mortgage, et al., Santa Clara County case no. 1-08-CV-117883; (2) Chevy Chase Bank, F.S.B. v. Forrest, Santa Clara Superior Court, Case No. 1-08-CV-124661; (3) Countrywide v. Wachovia, et al., San Mateo County, case no. 475796; (4) Option One v. Wachovia, et al., Sonoma County case no. SCV243805; (4) Option One Mortgage v. Deutsche Bank, Sacramento case no. 2008-00026019; (5) Option One v. Wachovia Mortgage, FSB, Sonoma Superior Court Case No. SCV 243 805; (6) Bank of New York Mellon v. Wachovia Mortgage, et al., Sacramento Case No. 34 2009-00060250; (7) JP Morgan Chase Bank, et al v. Shafazand, et al., Santa Clara Case No. 1-09-CV-152637; (8) The Bank of New York Mellon, et al. v. Chu, et al., Stanislaus Case no. 648688; (9) The Bank of New York, et al. v. Chu, et al., Stanislaus Case no. 649028; (10) Wells Fargo, N.A., et al. v. Chu, Alameda Case no. RG10492172; (11) Bank of America v. Truong, et al., Santa Clara Case No. 1-10-CV-165126; (12) US Bank Trustee v. Wachovia, et al., Sacramento County Superior Court, Case No. 34-2010-00069855; and (13) First Community Bank v. Stewart Title of California, Inc., Los Angeles Superior Court Case No. BC442162.