Case Number: BC624021 Hearing Date: March 05, 2018 Dept: 53

COLLIS P. AND HOWARD HUNTINGTON MEMORIAL HOSPITAL TRUST vs. STATE OF CALIFORNIA , et al.; BC624021, March 5, 2018

[Tentative] Order RE: MOTION CONTESTING CONSTRUCTION MANAGEMENT PARTNERS GROUP, INC.’S APPLICATION FOR DETERMINATION OF GOOD FAITH SETTLEMENT WITH PLAINTIFF

Defendant WARE MALCOMB’s Motion Contesting Construction Management Partners Group, Inc.’s Application for Determination of Good Faith Settlement with Plaintiff is DENIED.

BACKGROUND

On June 16, 2016, Plaintiff Co-Trustees of the Collis P. and Howard Huntington Memorial Hospital Trust (“Plaintiff”) initiated this action against Defendants State of California, Department of General Services, Real Estate Services Division; State of California, California Environmental Protection Agency, Department of Toxic Substances Control (the State of California entities to be referred to as the “State”); Construction Management Partners Group, Inc. (“CMPG”); and Ware Malcomb (“Ware Malcomb”). The Complaint asserts causes of action for breach of contract, negligence, premises liability, and breach of express warranty arising from a project to design and construct a chemical laboratory owned by Plaintiff and leased by the State. Basically, the wrong fume hoods were installed in the lab, which nobody realized until the wrong type of acid was put into the fume hood and damaged it. CMPG was the project manager on the project, and Ware Malcomb was the architect.

Plaintiff and CMPG have reached a settlement, and on December 8, 2017, CMPG filed a Notice of Settlement. Ware Malcomb now contests that the settlement was reached in good faith. The State does not oppose Ware Malcomb’s motion. CMPG does oppose.

DISCUSSION

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 shall be entitled to a hearing on the issue of the good faith of a settlement entered into by the plaintiff or other claimant and one or more alleged tortfeasors or co-obligors upon giving notice in the manner provided in Code of Civil Procedure section 1005(b). (Code Civ. Proc., § 877.6(a)(1).) 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. (Code Civ. Proc., § 877.6(c).) In determining the propriety of settlements in multiple tortfeasor/co-obligor actions under section 877.6, the court must attempt to accommodate two competing interests, i.e., the equitable sharing of costs among the parties at fault and the encouragement of settlements. (Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 494.)

The court should consider a number of factors in determining the good faith of a settlement, not all of which will always be applicable to each case. Those factors are:

1. A rough approximation of the total recovery and the settlor’s proportionate liability;

2. The actual settlement amount;

3. The allocation of settlement proceeds among settling parties;

4. The recognition that a settlor should pay less in settlement than he/she would if liability were established after trial;

5. The financial conditions and insurance policy limits of the settlor; and

6. The existence of facts showing collusion, fraud, or tortious conduct aimed to injure the interests of non-settling defendants. (Id. at p. 499.)

The party contesting the settlement bears the burden of proving that the settlement is in bad faith. (Code Civ. Proc., § 877.6 (d).) If the party contesting the settlement can show, with admissible evidence, that the settlement is “so far ‘out of the ballpark’ in relation to [the above-referenced factors] as to be inconsistent with the equitable objectives of the statute,” then the court should find the settlement to be lacking in good faith. (Id. at pp. 499-500.)

The ultimate determinant of good faith 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. (City of Grand Terrace v. Superior Court (1987) 192 Cal.App.3d 1251, 1262.) In order to make a determination of good faith, substantial evidence showing the nature and extent of the settling defendant’s liability is required. (Mattco Forge, Inc. v. Arthur Young & Co. (1995) 38 Cal.App.4th 1337, 1348.)

The issue here is primarily a dispute between CMPG and Ware Malcomb over what proportion of liability for Plaintiff’s damages CMPG should shoulder. Plaintiff has claimed $320,000 in damages and seeks to recover an additional $200,000 in attorneys’ fees. (Murtaugh Decl., ¶ 4.) Plaintiff and CMPG have agreed to settle their claims for $30,000.00. Ware Malcomb contends that this represents about 6% of the total recovery sought by Plaintiff, but CMPG is actually liable for closer to 33% of the total recovery. Ware Malcomb presents evidence that CMPG was contractually obligated to Plaintiff to manage the design process, be fully knowledgeable about the State’s requirements for the lab, and use its best efforts to ensure that those requirements were met. (Murtaugh Decl., Ex. A, §§ 1.1, 1.3.) In addition, Ware Malcomb presents evidence that CMPG failed to discharge those obligations. (See generally Murtaugh Decl., Ex. B.) Particularly, CMPG did not know what type of fume hood needed to be installed. (See Murtaugh Decl., Ex. B, p. 28: 4-23.) CMPG did not determine what the requirements would be for the lab and did not attempt to ensure that the architect was aware of any such requirements. (See Murtaugh Decl., Ex. B, p. 38: 11-21, p. 43: 9-20.) Ware Malcomb also presents evidence that CMPG has an applicable $1 million insurance policy. (Murtaugh Decl., ¶ 10.)

Based on the above, and in consideration of the ­Tech-Bilt factors, the Court finds that CMPG’s settlement of $30,000 is not grossly disproportionate to what a reasonable person, at the time of the settlement, would estimate its liability to be. The burden is on Ware Malcomb to demonstrate with substantial evidence that the settlement is in bad faith, but the evidence and argument submitted does not compel a finding that CMPG’s settlement is so far out of the ballpark of its potential liability. As the project manager, CMPG’s duty was to coordinate and oversee the project, but it is not so clear that any purported breach of that duty was what caused the incorrect fume hood to be installed. One would think that the State defendants and the architect would have primary responsibility for calling out the specific kind of hoods required for the intended uses. The Court does not find that Ware Malcomb has carried its burden of proving that the settlement agreement between Plaintiff and CMPG is in bad faith.

With regard to CMPG’s request for a judicial determination that the settlement between CMPG and Plaintiff would also bar the State’s third party beneficiary breach of contract claim, that issue is not properly before the Court, and so the Court declines to issue a ruling thereon.

CONCLUSION

Based on the foregoing, Defendant WARE MALCOMB’s Motion Contesting Construction Management Partners Group, Inc.’s Application for Determination of Good Faith Settlement with Plaintiff is DENIED. The Court determines that the settlement between CMPG and Plaintiff was made in good faith.

CMPG is ordered to provide notice of this ruling.

DATED: March 5, 2018

_____________________________

Howard L. Halm

Judge of the Superior Court