2017-00210375-CU-PO

Albert McKinley vs. Epona Inv Group, LLC

Nature of Proceeding: Determination of Good Faith Settlement

Filed By: Meyer, Jr., Raymond

Defendant NBS Cancun Opco, LLC’s (“NBS”) motion for determination of good faith settlement is granted.

This action arises out of alleged substandard housing conditions at a 62 unit apartment building located at 695 Plaza Avenue, in Sacramento. The property was owned by NBS until it was sold to Defendant Epona Inv. Group, LLC (“Epona”) in December 2015. The Plaintiffs are 11 adults who reside or resided at the property and allege causes of action for failure to provide habitable dwelling, breach of covenant and right to quiet enjoyment, nuisance and negligence.

NBS moves for a good faith determination of a settlement it reached with Plaintiffs Albert McKinley and April Hullaby for $24,000. Mr. McKinley is to receive $15,000 and Ms. Hullaby is to receive $9,000. In consideration for that payment, the settling plaintiffs agreed to dismiss their complaint against NBS with prejudice.

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 tortious 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. (Id.)

Epona opposes the motion. As the party opposing the motion, Epona bears the burden of demonstrating that the settlement is so far out of the ballpark in relation to the Tech-Bilt factors as to be inconsistent with the objectives of the good faith settlement statute. (CCP § 877.6(d); Tech-Bilt, supra, at 499-500.) “Once there is a showing made by the settler of a settlement…the burden of proof on the issue of ‘good faith’ shifts to the non-settling tortfeasor who asserts the claim that the settlement was not made in good faith.” (Fisher v. Superior Court (1980) 103 Cal.App.3d 434, 447.)

Epona first argues that NBS failed to provide sufficient evidence of a settlement because the settlement agreement attached to NBS’s counsel’s declaration is not signed. However, there is no requirement for a party seeking a good faith determination to produce a copy of the settlement agreement, executed or not, and Epona has cited no authority for such a proposition. Regardless, Code of Civil Procedure § 877 et seq., merely requires the identification of the settling parties along with “the basis, terms, and amount of the settlement.” (See, e.g., CCP § 877.6(a)(2).) It would be unreasonable to construe that language to require production of a complete executed agreement, especially where, as here, the settlement is expressly contingent on the finding of a good faith settlement. (Kam Decl. ¶ 6, Exh. A, ¶ 4.) In short, the fact that the settlement agreement attached to NBS’ counsel’s was not executed does not render the proposed settlement to not be in good faith. The Court accepts counsel’s sworn representation that this is the agreement that has been

reached with the plaintiffs. (Kam Decl. ¶¶ 5-7, Exh. A.) In any event, a fully executed agreement was provided with the reply.

Epona next argues that NBS failed to produce sufficient evidence to allow the Court to make a determination that a reasonable allocation was made. NBS’s counsel declares that “[i]n litigating this case, NBS Cancun and Settling Plaintiffs have developed information which bears on the rough approximation of the total recovery and NBS Cancun’s proportionate share thereof.” (Kam Decl. ¶ 9.) NBS’s counsel indicates that the “settlement was achieved after investigation and discovery….was achieved via

arms-length bargaining, and to avoid the ongoing cost of litigation.” (Id. ¶¶ 12, 13.) NBS also stated in its opening memorandum that the settlement is not “grossly disproportionate to the cost of repair proposed by Settling Plaintiffs’ experts or the potential exposure calculated by NBS Cancun and its expert witness.” This is sufficient. The party seeking a determination of good faith may file a “bare bones” motion stating the grounds on which the determination is sought and supporting the motion with a brief background of the case and the settlement terms. (City of Grand Terrace v. Superior Court (1987) 192 Cal.App.3d 1251, 1261.) Here, as set forth above, NBS provided a background of the case and the terms of the settlement. It then became Epona’s burden to demonstrate that the $24,000 settlement between Plaintiffs Albert McKinley ($15,000) and April Hullaby ($9,000) in this action regarding substandard conditions at the subject apartment complex was not in good faith. Epona presented no evidence whatsoever in connection with its opposition or even any suggestion that the settlement was not in good faith. Although settling defendants may properly pay less than their proportional share of the anticipated damages, there is no evidence present by Epona that this is the case.

Finally, Epona argues that NBS seeks relief beyond the scope of the settlement because the settlement is only with two of the eleven Plaintiffs yet the proposed order seeks an order that all claims for contribution and equitable indemnity against NBS be barred. In this, Epona is correct that the order must be limited to contribution and equitable indemnity claims related only to Plaintiffs Albert McKinley and April Hullaby. NBS argues in reply that Epona is incorrect on this point because CCP § 877.6 provides that a determination that a settlement was in good faith acts to “bar any other joint tortfeasor or co-obligor from any further claims against the settling tortfeasor or co -obligor for equitable comparative, or partial or comparative indemnity, based on comparative negligence or comparative fault.” (CCP § 877.6(c).) But, NBS did not settle with the 9 other plaintiffs and this instant motion involves only the settlement between NBS and the 2 settling plaintiffs. The statute cannot be construed as to bar claims relating to plaintiffs with whom NBS has not settled and no authority is presented to the contrary.

Having considered the evidence and the payment amount, the settlement appears to be reasonable and in good faith considering the factors set forth in Tech-Bilt Inc, supra, 38 Cal.3d 488. (CCP § 877.6.) Epona failed to demonstrate that the settlement is so far out of the ballpark in relation to the Tech-Bilt factors as to be inconsistent with the objectives of the good faith settlement statute. (Code Civ. Proc. § 877.6(d); Tech-Bilt, supra, at 499-500.)

The motion is granted, as addressed herein.

NBS shall provide a new proposed order to the Court consistent with the above ruling, pursuant to CRC 3.1312. The proposed order [which the Court is not signing] is not

limited to contribution and equitable indemnity claims related to Plaintiffs Albert McKinley and April Hullaby.