This is a construction defect action by plaintiff The Irvine Company LLC (“Irvine”), owner of an apartment project commonly referred to as “The Laurels” located in San Jose, California (the “Project”). Irvine alleges certain conditions at the Project resulting in water intrusion causing tangible property damage in and around, but not limited to, the Property’s breezeways, private balconies, decks, and stairwells. The operative First Amended Complaint (“FAC”), filed July 20, 2012, asserts six causes of action for: (1) breach of prime contract; (2) breach of express warranty; (3) breach of subcontracts; (4) breach of express indemnity; (5) negligence; and (6) strict liability. The named defendants include Douglas Ross Construction, Inc. (“DRC”), Sealtech Caulking & Waterproofing, Inc. (“Sealtech”), Etter & Sons Construction, Inc. (“Etter & Sons”), Selco Air Conditioning, Inc. (“Selco”), Northstate Plastering, Inc. (“Northstate”), CJS Plumbing, Inc. (“CJS”), Poured Floors, Inc. (“Poured Floors”), Expansion Specialties, Inc. (“ESI”), Emseal Joint Systems, Ltd. (“Emseal”), Action Drywall, Inc. (“Action Drywall”), Argenal Welding (“Argenal”), Joseph J. Albanese, Inc. (“J. Albanese”), Collier Warehouse, Inc. (“Collier”), Decorative Paving, Inc. (“Decorative Paving”), Eagle Pools, El Camino Roofing Co. (“ECR”), F. Rodgers Insulation, Inc. (“F. Rodgers”), Hanson’s Masonry, Inc. (“Hanson’s Masonry”), Knight Roofing Company (“Knight”), Milgard Manufacturing, Inc. (“Milgard”), Park West Landscape, Inc. (“Park West”), Pinnacle Installations, Inc. (“Pinnacle”), Precision Trades, Inc. (“Precision Trades”), RJS Associates (“RJS”), Rex Moore Electrical Contractors & Engineers (“Rex Moore”), Tara Coatings, Inc. (“Tara Coatings”), Architectural Facades Unlimited, Inc. (“AFU”), Zebra Awning Co. (“Zebra”), House Construction, and Harder Masonry, Inc. (“Harder Masonry”).

On July 28, 2010, DRC filed its Cross-Complaint for breach of contract, indemnity, negligence, and declaratory relief against various subcontractor cross-defendants, including Sealtech, Etter & Sons, Selco, Northwest, CJS, Poured Floors, ESI, Emseal, J. Albanese, RJS, Argenal, and Eagle Pools. On October 13, 2010, DRC substituted Collier as Roe 2. On August 1, 2011, DRC substituted Pinnacle as Roe 8. On November 16, 2011, DRC substituted I.R.C. Technologies, Inc. dba Independent Roofing Consultants (“IRC”) as Roe 17. However, on February 1, 2012, DRC filed a request for dismissal without prejudice as to IRC.

J. Albanese, CJS Plumbing, and House Construction move for determination of good faith settlement with Irvine. All three motions are unopposed.

Joseph J. Albanese’s Motion for Determination of a Good Faith Settlement with Plaintiff Irvine Company, LLC and Douglas Ross

J. Albanese was hired by Irvine to complete work on the podium level of the apartment project. Irvine alleges J. Albanese improperly sloped concrete leading to water intrusion on the podium level, improperly installed podium level drains, failed to properly waterproof, and improperly installed podium pavers. However, Irvine also alleges other subcontractors are responsible for damage at the podium level – narrowing J. Albanese’s liability as to the podium.

The settlement agreement among J. Albanese, Irvine and DRC provides that J. Albanese will pay in total $1.1 million, exhausting J. Albanese’s general liability policy as well as contributing other non-insurance funds. The $1.1 million paid by J. Albanese will be allocated as follows: $600,000 for podium deck repair, $25,000 for investigation and testing, $25,000 for repair design permits, $50,000 for administration and monitoring of repair work, $50,000 in legal fees, $75,000 in expert costs, $50,000 wrap insurance, and $225,000 for loss of use. In return, Irvine and DRC will dismiss J. Albanese’s with prejudice upon the granting of this motion.

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.)

Under Code of Civil Procedure section 877 subdivision (a), a good faith settlement reduces the claims against non-settling joint tortfeasors claimed to be liable for the same tort or co-obligors mutually subject to contribution rights in the amount stipulated by the release, the dismissal or the covenant, or in the amount of the consideration paid for it, whichever is the greater. “Where there are multiple defendants, each having potential liability for different areas of damage, an allocation of the settlement amount must be made. [Citations.] Failure to do so may preclude a ‘good faith’ determination because there is no way to determine the appropriate setoff pursuant to section 877 against the nonsettling defendant. [Citations.] It 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. [Citation.]” (L.C. Rudd & Son v. Superior Court (1997) 52 Cal.App.4th 742, 750.) “[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.)

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.

As stated previously, J. Albanese’s motion for determination of good faith settlement is not opposed. As the moving papers show, the settlement was reached after extensive negotiations and discovery. Further, the Declaration of Michael L. Marx sets forth a clear and detailed background of the case fulfilling the requirements of City of Grand Terrace.

For all of these reasons, J. Albanese’s motion for determination of good faith settlement is GRANTED.

House Construction’s Motion for Determination of Good Faith Settlement

House Construction was contracted by DRC to install exterior entry and balcony doors. House Construction agrees to pay $850,000 to Plaintiff, Irvine, with the following breakdown: $300,00 for elevated catwalk repair, $94,370 for podium deck repair, $94,370 for stucco and windows, $17,000 for investigation and testing, $17,000 for repair design and permits, $34,000 for administration and monitoring of repair work, $34,000 for legal fees, $55,250 for expert costs, $34,000 for wrap insurance, and $170,000 for loss of use. The $850,000 will be paid out of House Construction’s diminishing insurance policy in return for (1) DRC assigning its rights to Irvine to pursue claims against House Construction and (2) Irvine will release and dismiss House Construction with prejudice from the complaint and DRC’s cross-complaint.

Analysis: House Construction’s motion for determination of good faith settlement is unopposed. As such, the Court need not review the Tech-Bilt factors. The settlement was reached after years of back and forth negotiations in the form of mediations, settlement conferences and discovery. The Declaration of Ilene Isert-Kott sets forth a clear and descriptive background of the case, fulfilling the City of Grand Terrace standard.

For all of these reasons, House Construction’s motion for determination of good faith settlement is GRANTED.

CJS Plumbing, Inc.’s Motion for Determination of Good Faith Settlement

Irvine’s allegations against CJS are limited to plumbing completed in the units at the podium and private deck levels. Irvine alleges defects led to water intrusion. However, Irvine also alleges other contractors contributed to the damage sustained at the podium and private deck levels – narrowing CJS’s liability.

CJS agrees to pay $425,000 to Irvine, with the following breakdown: $100,000 for podium deck repair, $50,000 for plumbing repairs, $15,000 for private balcony deck repairs, $5,000 for investigation and testing, $5,000 for repair design and permits, $5,000 for administration and monitoring of repair work, $25,000 in legal fees, $30,000 in expert costs, $10,000 wrap insurance and $75,000 for loss of use. In return, Irvine and DRC will dismiss CJS with prejudice from the complaint and cross-complaint.

Analysis: CJS’s motion for determination of good faith settlement is unopposed. As such, the Court need not review the Tech-Bilt factors. The settlement was reached after extensive discovery, negotiations, and several mediations before Craig Meredith, Esq. The Declaration of Matthew Giampaoli sets forth a clear and descriptive background of the case, fulfilling the City of Grand Terrace standard.

For all of these reasons, CJS’s motion for determination of good faith settlement is GRANTED.