Case Number: KC066320 Hearing Date: January 26, 2015 Dept: O
Sagarose Star Partners, L.P. v. Severson (KC066320)

Cross-Defendants Coldwell Banker Commercial George Realty and Tina Wu’s MOTION FOR ORDER DETERMINING “GOOD FAITH” OF SETTLEMENT

Respondent: Cross-Complainant Severson

TENTATIVE RULING

Cross-Defendants Coldwell Banker Commercial George Realty and Tina Wu’s motion for order determining “good faith” of settlement is DENIED.

Any party to an action in which it is alleged that two or more parties are joint tortfeasors or co-obligors on a contract debt may seek a judicial determination that a settlement was made in good faith; such a determination bars any other joint tortfeasor or co-obligor from any further claims against the settling tortfeasor for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault. The party asserting the lack of good faith shall have the burden of proof on that issue.” (CCP 877.6 (a), (c)-(d).)

The Tech-Bilt court developed a number of different factors to consider when determining whether a settlement is made in “good faith.” The settlement amount, while clearly a relevant factor, is not the sole consideration. For example, bad faith is not established simply by showing that a settling defendant paid less than his or her theoretical proportionate or fair share. Such a rule would unduly discourage settlements – damages are often speculative, and the probability of legal liability is often uncertain or remote. Further, even where damages are great and liability certain, a disproportionately low settlement figure is often reasonable in the case of a relatively insolvent, and uninsured, or underinsured, joint tortfeasor. Moreover, such a rule would tend to convert the pretrial settlement approval procedure into a full scale mini trial.

The intent and policies underlying 877.6 require that a number of factors be taken into account including a rough approximation of plaintiff’s 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.

Finally, practical considerations obviously require that the evaluation be made on the basis of information available at the time of settlement. A defendant’s settlement figure must not be “grossly disproportionate” to what a reasonable person, at the time of the settlement, would estimate the settling defendant’s liability to be. The party asserting the lack of good faith has the burden of proof on that issue (CCP 877.6(d)) and should be permitted to demonstrate, if he can, 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. Such a demonstration would establish that the proposed settlement was not a settlement made in good faith within the terms of 877.6. (Tech-Bilt, Inc. v. Woodward-Clyde & Assoc. (1985) 38 Cal.3d 488, 498-501.)

The Tech-Bilt factors can be summarized as follows:

(1) A rough approximation of plaintiff’s total recovery and the settlor’s proportionate liability;
(2) The amount paid in settlement;
(3) The allocation of settlement proceeds among defendants;
(4) A recognition that a settlor should pay less in settlement than he would if he were found liable after a 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 the nonsettling defendants.

Where the nonsettling defendants contest “good faith,” the moving party must make a sufficient showing of all the Tech-Bilt factors. (City of Grand Terrace v. Sup.Ct (1987) 192 Cal.App.3d 1251, 1262.)

Here the plaintiff, through a grant of summary judgment on 1/15/2015, has obtained judgment in full against the defendant/cross-complainant. To now allow the cross-defendants (who were not named parties in plaintiff’s original action) to settle with the plaintiff for an amount which is in addition to the judgment he sought and has been awarded and thereby prevent further action by the defendant/cross-complainant for their alleged responsibility for the damage to her arising from that same judgment is collusive and clearly aimed to injure the interests of the defendant/cross-complainant. Further, as plaintiff has judgment in full, the amount paid bears no relationship to the settlor’s proportional liability to the plaintiff – there is no liability. As such, the court does not find the settlement was done in Good Faith under the Tech-Built factors.