2015-00186315-CU-PO

Qixing Yuan vs. The Legends at Willow Creek, LP

Nature of Proceeding: Determination of Good Faith Settlement by FF Development (7

Filed By: Weiner, Matthew H.

California, Defendants and Cross-Complainants FF Development, L.P.; FF Properties, LP dba Fairfield Properties; Fairmark Development, L.P.; Fairfield Residential, LLC; Fairfield Residential, Inc.; and Willow Crossing Apartments, L.P. (collectively, “Fairfield”) Motion for Determination of Good Faith Settlement by and between plaintiffs and Fairfield; Architects Orange; Van Dorpe Chou Associates; David Sewell/Sierra Shower Pans/Hot Tar; Eagle Ridge Construction, Inc.; Ladell Inc., dba Johnson Air; Villara Corporation fka Beutler Corporation and Lee Ornamental Iron is GRANTED. Code Civ. Proc. §877.6.

The Joinder of David Sewell and Sierra Shower Pans, Inc. (erroneously sued as Hot Tar) (“Sewell”) is GRANTED.

The Joinder of Defendant/Cross-Defendant Ladell, Inc. dba Johnson Air (“Ladell”) is GRANTED.

The Joinder of Villara Corporation erroneously sued as Beutler Heating &, Air Conditioning (“Villara”) is GRANTED.

The Joinder of Defendant Architects Orange (hereafter “AO”) is not opposed and is GRANTED.

The Joinders of Lee Ornamental Iron, Inc., Hoss Lee Stairways, Inc. and Devrae S. Lee, as well as incorrectly designated Defendants Steel Stairs, Inc., California Stairs and California Stairways (collectively “Lee”) is not opposed and is GRANTED.

The Joinder of Defendant and Cross-complainant Van Dorpe Chou Associates, Inc.

(“VCA”) is not opposed and is GRANTED.

The Joinder of Defendant, Cross-Defendant and Cross-Complainant, Eagle Ridge Construction & Roofing, Inc., (“Eagle Ridge”) is not opposed and is GRANTED.

Plaintiffs Qixing Yuan and Yulin Ye, Runfen Yuan, aka Frances Yuan; Ka Chung

Cheung, aka Charles Cheung; Jia Hua Miao, aka Jeff Miao; Qian Xin Deng, aka Winnie Deng and Ying Yip, aka Jayde Yip have filed a Notice of Non-Opposition to the Motions for Good Faith Settlement.

Defendants The Legends at Willow Creek, L.P., Filbert Management, Inc., and Jalson Co., Inc. dba Gerson Bakar & Associates (hereinafter collectively “GBA”) oppose the motion for finding of good faith settlement as to the Fairfield entities and as to the Joinders of Sewell, Ladell, and Villara only.

GBA does not oppose the Joinders in the motion for good faith settlement by AO, Lee, VCA or Eagle Ridge.

Defendant GBH’s Request Judicial Notice of the contents of the Memoranda of Points and Authorities filed by GBH in opposition to the four pending Motions for Summary Judgment, or in the Alternative for Summary Adjudication of Issues calendared for Jan. 25, 2018 and March 1, 2018.

While the Court grants GBH’s Request for Judicial Notice of the existence of each document in this court file, it can only take judicial notice of the truth of facts asserted in documents such as orders, findings of fact and conclusions of law, and judgments. Bach v. McNelis (1989) 207 Cal. App. 3d 852, 865.

GBH’s attempted incorporation by reference of their Opposition Memoranda of Points and Authorities in to the three Motions for Summary Judgment filed by Fairfield, AO, and VCA (Oppo. 4:4-7) is denied, as it violates C.R.C., Rules 3.1113(d). To permit such a procedure would allow opposing parties to exceed the 15 page limit for a memorandum of points and authorities. The Court declines to consider the three Memoranda in Opposition to the Summary Judgment motions, which have not yet been read or determined by the Court, as to do so would increase the pages of memoranda filed by the opposing parties to 66 pages, in violation of the Rule.

Statement of the Facts

FF Development, L.P.; FF Properties, LP dba Fairfield Properties; Fairmark Development, L.P.; Fairfield Residential, LLC; Fairfield Residential, Inc.; and Willow Crossing Apartments, L.P. (collectively, “Fairfield”) was a developer of real property in the 1990’s. It purchased property in Folsom in order to develop an apartment complex (the “Project”).

Fairfield hired Architects Orange (“AO”) to serve as project architect. Van Dorpe Chou Associates (“VCA”) served as structural engineer. Fairfield hired numerous subcontractors to perform the construction work. David Sewell/Sierra Shower Pans/Hot Tar (collectively “Sewell”) installed waterproofing on the breezeways and stair landings. Eagle Ridge Construction, Inc. (“Eagle Ridge”) installed gutters and downspouts, and later performed emergency repairs. Ladell Inc., dba Johnson Air (“Ladell”) and Villara Corporation fka Beutler Corporation (“Villara”) installed HVAC and limited sheet work on the project. Lee Ornamental Iron (“Lee”) built the staircases. Each subcontractor’s scope of work is further described in their respective Joinders.

The apartments were completed in 1999, which ended the design professionals’ and subcontractors’ involvement in the Project. (Weiner Dec., Exh. B.) Fairfield sold the project to a third party in 2002, at which time its involvement in the development

concluded. (Weiner Dec., Exh. C.)

Gerson Bakar & Associates (“GBA”) purchased the Project from the third party in 2006. In the course of performing its due diligence prior to the purchase, GBA discovered serious and pervasive problems with the staircases. A report was prepared by the investigator retained by GBA which described “chronic moisture intrusion at corridors and stair towers/mid-landings resulting in potentially significant repair/replacement requirements”. (Weiner Dec., Exh. D.) The investigator reported to GBA that he observed evidence of moisture intrusion at all stairs and moisture stained soffits and framing members. He provided a Needs Assessment Study with a projected cost to repair the stairs of $240,000.00 and recommended that the repairs be conducted in the first year of ownership. Various GBA personnel were provided with the report and testified that they understood its contents. (Weiner Dec., Exh. E.)

GBA purchased the property in 2006 under a sales agreement which included an “As Is” provision. (Weiner Dec., Exh. F.)

Following the purchase, GBA hired contractors and design professionals to further investigate the stair condition and design and implement repairs, (Weiner Dec., Exh. G.) Consequently, the original construction condition was altered. The repair plan was only partially implemented. In 2014, a staircase at Building No. 7 collapsed. (Weiner Dec., Exh. H.) GBA once again retained an engineer to investigate conditions and design repairs. That engineer informed GBA that various staircases needed to be repaired, including the replacement of the support beams that held certain stairs in place. In both August 2014, and again in Feb. 2015, that engineer told GBA to remove and replace various beams at Building 8. Once again, there was no urgency to complete the repairs and no steps were taken to support the stairs pending repairs. (Weiner Dec., Exh. I.) In July 2015, a second staircase collapsed at Building No. 8, one of the stairs identified by the engineer as needing repairs, causing the death of plaintiffs’ decedent Chris Yuan.

Allegations of the Complaint

Plaintiffs’ First Amended Complaint alleges causes of action for negligence and premises liability, and wrongful death and survival benefits in connection with the July 2015 accident at an apartment complex, which resulted in the death of Chris Yuan, a 26 year old student. The plaintiffs are the decedent’s’ parents Qixing Yan and Yulin Ye, and Frances Yuan, Charles Cheung, Jeff Miao, Winnie Deng, and Jayde Yip who were present and witnessed the death of decedent at the scene of the accident.

Pleadings

Plaintiffs’ First Amended Complaint sets forth causes of action for wrongful death, negligence and premises liability Plaintiffs are his parents, his cousin and some acquaintances who were at the scene, but not physically injured.

Plaintiffs sued the owner of the apartment complex and contractors and engineers responsible for repairs. They also named as defendants the original builder, design professionals and contractors (the “Original Construction Group”)

Procedural Posture

This case was designated complex in August 2016. The parties have conducted extensive written discovery. A case management order provided for mutual exchange of all relevant documents via a centralized deposit, as well as information concerning each party’s scope of work and insurance coverage. More than 30 depositions have been noticed. None of the deposition scheduled by the non-settling parties remain on calendar.

Five separate Motions for Summary Judgment, or in the Alternative for Summary Adjudication of Issues have been filed and served by Fairfield, AO, VCA, Sewell and Eagle Ridge. Although originally calendared for hearing on Nov. 21, 2017, the motions have been twice continued by the moving parties (except VCA) to be heard on March 1, 2018, after the determination of this motion.

Settlement

All parties participated in a three day mediation with Judge Richard Gilbert (Ret.).

Following negotiations, the Original Construction Group with the assistance of the
mediator settled with plaintiffs for a total amount of $1,400,000. The contributions will
be made as follows: Fairfield $500,000, Sewell $300,000, AO $200,000, Ladell
$150,000, Villara $100,000, Eagle Ridge $100,000, VCA $49,000 and Lee $5,000.

The Settlement sum will be divided among Plaintiffs as follows: Qixing Yuan (decedent’s father) $413,696, Yulin Ye (decedent’s mother) $413,696, Frances Yuan $130,000, Charles Cheung $110,000, Jeff Miao $115,774, Winnie Deng $108,361 and Jayde Yip $112,000. (Plaintiffs’ Non-Oppo.)

Good Faith Factors

In considering whether a settlement is entered in good faith, the court considers the following factors: (1) a rough approximation of the plaintiffs’ total recovery and the settling party’s proportionate liability; (2) the amount to be paid in the settlement; (3) the proposed allocation of the settlement proceeds; (4) a recognition that the settling parties should pay less in settlement than if they were found to be liable after trial; (5) the financial condition of the settling parties, and the insurance policy limits, if any; and

(6) the existence of collusion, fraud or tortuous conduct aimed to injure the interests of the non-settling defendants. (Tech-Bilt v. Woodward-Clyde & Assoc. (1985) 38 Cal.3d 488, 499.) The ultimate test is whether the settlement is grossly disproportionate to what a reasonable person at the time of settlement would estimate the settlor’s liability to be. (Id.) Settling defendants may properly pay less than their proportional share of the anticipated damages. In order to encourage settlement, what is required is simply that the settlement not be grossly disproportionate to the settlor’s fair share of liability. This determination is made based on the information available at the time of the settlement. (Tech-Bilt, supra, 38 Cal.3d at p. 499.)

The party asserting the lack of good faith shall have the burden of proof on that issue. (Code Civ. Proc., § 877.6.)

(1) A Rough Approximation of the Plaintiffs’ Total Recovery and the Settling Party’s Proportionate Liability; (2) The Amount to Be Paid in the Settlement

The Original Construction Group asserts that its settlement with plaintiffs is proportionate to the settling parties’ liability.

In determining defendants’ prospective liability, plaintiffs’ allegations of claim value is not determinative. (Norton v. Superior Court (1989) 194 Cal.App.3d 727, 735.) A rough approximation of actual value is determinative. (Tech-Bilt, Inc., supra, 38 Cal.3d at 501.)

Here, the Parent Plaintiffs claim economic damages in the amount of $407,362.00 and have documented actual damages of $227,362.00.

Opposing party does not dispute the moving parties’ assessment of the Parent Plaintiffs’ economic damages.

Moving parties assert that the Witness/Friends Plaintiffs’ (Frances Yuan, Charles Cheung, Jeff Miao, Winnie Deng, and Jayde Yip) damages are almost entirely non-economic. Each of them saw a counselor once or twice and missed little or no work. One friend, who alleges a job loss resulting from the accident, was terminated based on performance prior to the date of the accident. Collectively, the Witness/Friends Plaintiffs suffered actual damages of $13,500 and claimed damages of $4,812,061.

Opposing parties dispute the amount of damages of the Witness/Friends Plaintiffs, asserting that the issue of future medical costs remains “open” at this time, therefore the damages cannot be capped at $13,500. Each of the Witness/Friends Plaintiffs has alleged $15 million in general damages in answers to interrogatories.

However, plaintiff’s claims for damages are not determinative; a rough approximation of what plaintiff would actually recover is all that is required.

Opposing parties have failed to provide admissible evidence that future medical treatment by the Witness/Friends plaintiffs will be incurred. None of the Witness/Friends has made any plans for future doctors’ or therapist appointments.

All Plaintiffs’ economic damages for which the defendants are responsible total between $250,000 and $420,000.

The non-economic damages claimed by all plaintiffs are in the millions of dollars. The Witness/Friends recovery would be limited by the limited nature of their friendship. Moving parties assert that general damage jury verdicts for the parents of an unmarried adult in Sacramento County fail to reveal any multi million dollar judgments.

The Original Construction group would assert the defense of the completed and accepted doctrine as a bar to plaintiffs’ claims. It is the general rule that when a contractor’s work has been completed and accepted by the owner, the contractor is not thereafter liable to third persons for injury suffered by reason of the condition of the work, even though he was negligent in carrying out the contract. An exception is made, however, for latent defects in the construction of the article or structure in question, the existence of which is known or reasonably should be known by the contractor. (Sanchez v. Swinerton & Walberg Co. (1996) 47 Cal.App.4th 1461, 1468.)

Here, however, the settling parties will assert this defense against the non-settling defendants, on the grounds that the non-settling defendants had actual knowledge of any latent defects when GBH retained an investigator in 2006, who prepared a Needs Assessment Study reflecting the moisture intrusion and setting forth recommended

repairs. At that point, the latent defects had become patent defects, and GBH purchased the property with knowledge of the defects. Any subsequent failure to make the required repairs in the ensuing years is no longer the responsibility of the Original Construction defendants.

The knowledge on the part of the current owner concerning both the claimed defect and its cause triggers the application of the four year statute in C.C.P., sec. 337.1.

Because there are defenses which could negate the Original Construction defendants’ culpability entirely, the Court may find a low settlement amount to be sufficient. ( Wysong & Miles Co. v. Western Industrial Movers (1983) 143 Cal.App.3d 278, 290.)

(3) The Proposed Allocation Of The Settlement Proceeds (5) The Financial Condition Of The Settling Parties, And The Insurance Policy Limits, If Any;

Each of the settling parties is contributing to the settlement in proportion to its respective responsibility.

Fairfield is a bankrupt, thus its exposure is limited to available insurance. Fairfield and its insurer have express indemnity rights against the remainder of the Original Construction Group.

The subcontractors’ payments are proportionate to their relative scopes of work, and Sewell, Villara and Eagle Ridge each have insurance coverage issues.

VCA contracted with AO to provide structural engineering services for the structural design on the walls and floors, but did not design the prefabricated stairs or their connections. Nor did VCA design the roof system, post-tension foundation system, railings, or other prefabricated components.

Eagle Ridge’s only work on Building 8 was the sealing of wall cracks in Units 828 and 822, which were not near the staircase that collapsed.

Lee’s payment is justified by his absence of insurance coverage or assets and Lee Ornamental Iron was dissolved in August 2011, without a successor entity.

Ladell voluntarily left the project, it never finished its work on the project, and performed very minimal work on the subject Building 8. Ladell did not install any of the sheet metal flashing on the Building 8 breezeways before it left the project.

The Plaintiffs have agreed among themselves on the division of the settlement proceeds: Qixing Yuan (decedent’s father) $413,696, Yulin Ye (decedent’s mother) $413,696, Witness/Friends Plaintiffs Frances Yuan $130,000, Charles Cheung $110,000, Jeff Miao $115,774, Winnie Deng $108,361 and Jayde Yip $112,000. (Plaintiffs’ Non-Oppo.)

(4) A Recognition That the Settling Parties Should Pay Less In Settlement than If They Were Found To Be Liable After Trial and (6) the Existence of Collusion, Fraud or Tortuous Conduct Aimed To Injure the Interests of the Non-Settling Defendants

The Court recognizes that settlement negotiations were extensive and conducted over more than three days with an experienced neutral, Judge Gilbert (Ret.). The Court

recognizes that the settling parties should pay less in settlement than if they were found to be liable after trial.

There is no evidence of collusion, fraud or tortuous conduct aimed to injure the interests of the non-settling defendants.

Based on the court’s review of the evidence presented, the settlement appears to be reasonable and in good faith considering the factors set forth in Tech-Bilt Inc. v Woodward Clyde & Associates , supra, 38 Cal.3d at p. 499; CCP 877.6.

Counsel shall submit a formal Order for the Court’s signature.