Nov 20, 2017

TENTATIVE RULINGS

LAW & MOTION CALENDAR

FRIDAY,  NOVEMBER 17, 2017, 8:30 A.M.

Courtroom 12 to be heard in Dept. #18

3055 Cleveland Ave, Santa Rosa, CA

 

CourtCall is available for all Law and Motion appearances, EXCEPT parties in small claims cases and motions for claims of exemption which are mandatory appearances.  CourtCall can be reached directly at (888) 882-6878.

 

The following tentative rulings will become the ruling of the Court unless a party desires to be heard.  If you desire to appear and present oral argument as to any motion, you must contact the Judicial Assistant by telephone at 521-6547 by 4:00 p.m. today, Thursday,  November 16, 2017.  Any party requesting an appearance must notify all other opposing parties of their intent to appear.  Parties in small claims cases and motions for claims of exemption are exempt from this requirement. IF SOMEONE OPPOSES A TENTATIVE RULING, THE MATTERS WILL BE CALLED IN DEPT. #18 LOCATED AT THE CFC BUILDING, 3055 CLEVELAND AVE., SANTA ROSA.

 

PLEASE NOTE:  The Court no longer provides Court Reporters for motion hearings.  If they wish, the parties may confer and arrange for one of the parties to bring a privately retained Certified Shorthand Reporter to serve in the matter.

 

1.   MCV-240713,  Loannow v. Koskinaris
            Plaintiff filed opposition on November 6, 2017.  This does not claim lack of service or notice so it eliminates the Proof of Service problem for the motion and the court may reach the merits.

            Plaintiff argues that it properly substitute-served Defendant.  This is correct as far as the court can tell and Defendant never actually challenged the sufficiency of service or notice.  Plaintiff also argues that Defendant fails to show mistake or excusable neglect but Defendant’s arguments do arguably support mistake and excusable neglect, and certainly support a finding of extrinsic fraud or mistake, as Defendant explained that she did not file an answer because she was in the middle of negotiating a settlement with Plaintiff, which Plaintiff was actively conducting with Defendant, when Plaintiff without warning entered the default.  Plaintiff’s opposition does nothing to challenge that.

            However, Plaintiff does correctly point out that Defendant has failed to provide any explanation of a defense or a proposed answer.  The moving papers mention an answer as Exhibit A but there is none.  Defendant would need to cure this defect and if she does, the court would tentatively grant the motion.

            The court REQUIRES APPEARANCES to address the issues, particularly given the potential confusion from the fires and delays.  The motion is denied without prejudice, unless Defendant provides an answer.  Should she do that, then the court, as noted above, would grant the motion.

2. MCV-241303,  TD Bank USA v. Camacho
            Motion is granted with leave to amend.  The complaint states a valid cause of action for the common counts alleged.  The answer admits all allegations of the complaint, denies none, and mentions no affirmative defenses.  Defendant must file an amended pleading within 30 days of the service of the notice of entry of this order.

 3. MCV-215816,  Midland Funding v. Clendenning
            Continued to December 1, 2017 at 9:30 a.m. in Dept. #12.

4. SCV-259002,  Medeiros v. Macias
            The demurrer is continued to November 22, 2017 at 3:00 p.m. in Dept. #18.

5. SCV-260303,  Sonoma County Medical Association v. Auld
            Plaintiff’s motion for discharge is granted. 

            This order includes a restraining order, as Plaintiff requests, but this restraining order is limited to the rights and duties regarding only the specific funds deposited in this action.  Plaintiff and the opposition papers demonstrate a clear threat of multiple lawsuits over the funds given the number of claimants already identified as well as the disputes already arising regarding the funds and Plaintiff’s handling of them.  However, the restraining order must be limited only to the funds deposited and will not apply to actions seeking accounting or further funds, or on rights and obligations of any possible additional funds or disputes which may exist between the parties.   

The court awards to Plaintiff the full amount of fees and costs requested.   

ANALYSIS:

Interpleader

            A stakeholder, a party holding property the ownership of which other parties dispute, may interplead and seek discharge either by filing an interpleader complaint or, if already sued by a claimant, a cross-complaint.  CCP section 386.  Such a party “against whom double or multiple claims are made, or may be made, by two or more persons which are such that they may give rise to double or multiple liability, may bring an action against the claimants to compel them to interplead and litigate their several claims.”  CCP section 386(b).  The stakeholder need not attempt to resolve the dispute.  Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 876.

            When bringing an interpleader action, the stakeholder may deposit the property with the court.  CCP section 386(c).  There is no right to a jury trial.  Shopoff & Cavallo LLP v. Hyon (2008) 167 Cal.App.4th 1489, 1512. 

            Claimants may not prevent the stakeholder from being discharged by claiming that they should have received the funds and they must instead bring their own action.  Pacific Loan Management Corp. v. Sup.Ct. (1987) 196 Cal.App.3d 1485, 1489.

Motion to Discharge and Dismiss

When a person or entity faces conflicting claims for property, CCP §386(b) allows that party to deposit the amount in dispute with the court and file a complaint in interpleader, either separately, or as part of an ongoing action.  The party may thereby admit it has no interest in the funds and ask the court to deliver the proceeds to a claimant or require the claimants to litigate their claims.  Subdivision (b) specifically states that “[a]ny person, firm, corporation, association or other entity” faced with this issue “may bring an action against the claimants to compel them to interplead and litigate their several claims.”  That party may deposit the amount with the court clerk in accord with subdivision (c), which states, in pertinent part, “[a]ny amount which a plaintiff or cross-complainant admits to be payable may be deposited…with the clerk of the court at the time of the filing of the complaint or cross-complaint in interpleader without first obtaining an order of the court therefor.”

CCP § 386.5 allows a defendant to apply to the court for an order discharging the party from liability and dismissing him from the action. 

No party opposes the basic core of this motion to deposit the money and discharge Plaintiff.

Restraining Order

CCP section 386(f) states that the court “may enter its order restraining all parties to the action from instituting or further prosecuting any other proceeding in any court in this state affecting the rights and obligations as between the parties to the interpleader, until further order of the court.”

Defendants Auld and Marcus oppose the request for an order restraining further action against Plaintiff.  They claim that such a restraining order would be improper because in the future one or more Defendants may need to bring an action for an accounting against Plaintiff regarding other funds which are not subject to the interpleader and deposit here.  That is a valid concern but it does not necessarily warrant denying the restraining order because by statute such a restraining order should only apply to the rights and obligations at issue here. 

More importantly, they contend, in relation to the issue of an accounting action, that Plaintiff has not provided an accounting and held on to the stock for 17 years before selling it, raising concerns over the actual amount at issue and whether Plaintiff has more funds that it should disburse.  Again, that concern is valid, but the court may still issue a restraining order as to any action regarding these specific funds

The Defendants also contend that Plaintiff needs to demonstrate that it needs the order in order to prevent a multiplicity of lawsuits.  Given that it has a large amount of funds with several possible identified claimants already, who are already jumping into the dispute over who is entitled to what and already raising the possibility of further actions on as-yet unidentified speculative funds, Plaintiff does seem in real danger of facing multiple actions, warranting the restraining order.

That said, Plaintiff is not persuasive that the possible claims for accounting on possible “other” unidentified funds should be restrained. The restraining order is proper but only applies to the funds deposited in this action.  If there are other funds to which parties may make claim, nothing in this action should affect those funds or claims thereto.

Fees and Costs

Richard Ferrington (hereinafter “Ferrington”) opposes Plaintiff’s recover of a portion of the costs, $10,065 referred to as the “administrative costs,” on the basis that they are not listed amongst recoverable costs under CCP section 1033.5.

Under CCP section 386.6, the court “may, in its discretion, award such party his costs and reasonable attorney fees from the amount in dispute which has been deposited with the court.”   It states, in full,

(a) A party to an action who follows the procedure set forth in Section 386 or 386.5 may insert in his motion, petition, complaint, or cross complaint a request for allowance of his costs and reasonable attorney fees incurred in such action. In ordering the discharge of such party, the court may, in its discretion, award such party his costs and reasonable attorney fees from the amount in dispute which has been deposited with the court. At the time of final judgment in the action the court may make such further provision for assumption of such costs and attorney fees by one or more of the adverse claimants as may appear proper.

(b) A party shall not be denied the attorney fees authorized by subdivision (a) for the reason that he is himself an attorney, appeared in pro se, and performed his own legal services.

As noted in Messerall v. Fulwider (1988) 199 Cal.App.3d 1324, at 1333, “[i]n such an action, costs and attorney's fees may be awarded in the discretion of the court (Code Civ.Proc., § 386.6), and ordinarily should be awarded to a diligent bailee.”  The court in Southern California Gas Company v. Flannery (2014) 232 Cal.App.4th 477, at 492, explained that section 386.6, subdivision (a) authorizes the court to discharge the interpleading party and award attorney fees before a final judgment in the action: “In ordering the discharge of such party, the court may, in its discretion, award such party his costs and reasonable attorney fees from the amount in dispute which has been deposited with the court.  At the time of final judgment in the action the court may make such further provision for assumption of such costs and attorney fees by one or more of the adverse claimants as may appear proper.”  [Citation.]

In Southern California Gas Company, the appellate court affirmed the trial court’s order awarding the stakeholder over $81,000 in attorney’s fees and costs, explaining the court did not abuse its discretion when it accepted SCGC's assertion that it had incurred $81,053.44 in fees and costs in connection with preparing the complaint in interpleader, attending various hearings and the mandatory settlement conference, opposing defendant's Anti-SLAPP Motion, and preparing the Discharge Motion.

Ferrington’s argument that costs are only recoverable by statute or court rule and that the “administrative” costs and some others are not authorized under CC section 1033.5, setting forth recoverable costs is inapplicable here.

First, he bases it directly on CCP section 1033.5, which sets forth recoverable costs, when that provision does not appear to apply or control in this situation.  Second, even assuming that section 1033.5 does apply, Ferrington incorrectly asserts the rule as inflexible when in fact it includes exceptions and allows room for court discretion.

CCP section 1033.5 does set forth authorized recoverable costs, as Ferrington asserts.  However, it expressly states that it sets forth only those items “allowable as costs under Section 1032.”  Section 1032 governs “prevailing party” in civil actions and the general right of a “prevailing party” to recover costs.  It states, in full,

(a) As used in this section, unless the context clearly requires otherwise:

(1) “Complaint” includes a cross-complaint.

(2) “Defendant” includes a cross-defendant or a person against whom a complaint is filed.

(3) “Plaintiff” includes a cross-complainant or a party who files a complaint in intervention.

(4) “Prevailing party” includes the party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant. When any party recovers other than monetary relief and in situations other than as specified, the “prevailing party” shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed may apportion costs between the parties on the same or adverse sides pursuant to rules adopted under Section 1034.

(b) Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.

(c) Nothing in this section shall prohibit parties from stipulating to alternative procedures for awarding costs in the litigation pursuant to rules adopted under Section 1034.

In contrast, Plaintiff here seeks costs pursuant to CCP sections 386 and 386.6, the provisions governing interpleader actions and the right of a stakeholder depositing funds to recover costs in such proceedings. Whereas section 1033.5 specifies the right to costs under section 1032, and section 1032 covers the general right of a prevailing party to recover costs, section 386.6 specifically governs a stakeholder’s right to costs in an interpleader action under section 386.  Section 386.6 and 386, moreover, do not contain an arguably restrictive list of items recoverable as costs as is found in section 1033.5.

Even under sections 1032 and 1033.5, moreover, there are exceptions and discretion and it is clear that the court has some discretion, contrary to Ferrington’s claim, to authorize recovery of costs not specifically listed.  As the court explained in Perko’s Enterprises, Inc. v. RRNS Enterprises (1992) 4 Cal.App.4th 238, at 242, “costs are one of two types: those recoverable as a matter of right and those recoverable at the discretion of the court.”  CCP § 1033.5(c)(4) itself expressly allows some additional discretion for other costs not listed, stating that “[i]tems not mentioned in this section and items assessed upon application may be allowed or denied in the court's discretion.” The court clearly has some authority to grant costs that the statute does not expressly list and the difference seems to be that a party has a right to recover costs listed, and may recover costs not expressly provided. 

Therefore, Plaintiff at least may, in the court’s discretion, recover the costs at issue. 

The costs at issue, moreover, clearly seem appropriate and necessary for this type of action.  Plaintiff seeks a total recovery of $49,734.12. Of this Ferrington challenges only the $10,065 of “administrative costs” which include correspondence with Plaintiff’s attorneys, reviewing Plaintiff’s records  on the subject matter, responding to contacts from members asking about the funds, and drafting and sending letters to “hundreds” of members regarding the funds.  All of this seems reasonable and appropriate, even necessary for Plaintiff to try to do its job regarding the funds. 

Plaintiff is discharged from this action. Plaintiff is awarded $49,734.12 fees and costs. Defendants are restrained from pursuing legal action against Plaintiff based on these specific funds only.

Plaintiff to prepare an order/dismissal and deliver to Dept. 17 within 10 days.

6. SCV-261109,  Pappas v. Canine Companions for Independence
            Motion to Compel Arbitration is dropped from calendar per stipulation and order.

7. SCV-251605, Umpqua Bank v. Schaefer
            The unopposed motion of Plaintiff Umpqua Bank for entry of judgment pursuant to C.C.P. § 664.6 is granted.  As set forth in the parties’ Stipulation, the parties agreed that although the total obligation owing to the Bank was $1,248,905.06, (¶1 Stipulation, page 2, lines 6-11), as an incentive to settle, the parties agreed and the Stipulation for Judgment recites, that the Bank would accept the discounted sum of $1,075,000.00, with interest, in full satisfaction of the $1,248,905.06 obligation.  (Declaration of Gloria Oates, ¶3).  The $1,075,000.00 was to be paid with $275,000.00 paid by December 31, 2012, and $800,000.00 paid in monthly installments and a balloon payment due on December 1, 2015. (Stipulation, ¶11).

            The Stipulation included a payment schedule (See Stipulation, ¶¶10 & 11), and provided that judgment would not be entered unless Defendants defaulted on the payments.  (Id. ¶14 & 16).  As set forth in Paragraph 10 of the Stipulation for Judgment, Defendants were required to pay the sum of $275,000.00 to the Bank on or before December 31, 2012.  Defendants remitted that payment to the Bank.  (Bank Declaration [Lisa Jones] in Support of Motion to Enter Judgment Pursuant to C.C.P. §664.6 (“Bank Decl., ¶3”).  After that payment was received, the Bank’s attorney caused the Deed of Trust to be reconveyed, and caused the Bank to release its security interest in the “other Collateral”, as required by the Stipulation. (Oates Decl., ¶4).

            The Defendants were required to pay the additional principal sum of $800,000.00 to the Bank in monthly payments, with a balloon payment due on December 1, 2015.  (Stipulation ¶11).  The Defendants made five interest payments during the months of April through July 2013 but defaulted on the remainder of the agreed payments.  (See, Bank Dec., Exhibit 2.)

The Court shall enter judgment in Plaintiff’s favor and jointly and severally against defendants DAN M. SCHAEFER, JR., MOUNAIN TERRACES VINEYRD, LLC; SONOMA UNLIMITED, LLC; SONOMA UNLIMITED II, LLC; AKOMA ZOUME, LLC, in the principal sum of $800,000, plus accrued interest from January 1, 2013 through August 14, 2017, at the rate of $219.176 per day, less the interest payments itemized in Exhibit 2 to the Bank Declaration filed herewith.  The total judgment prayed for, as of August 17, 2017, is $1,148,273.66.

Plaintiff shall submit a written order consistent with this tentative ruling and in compliance with Rule of Court 3.1312.  When the formal order is signed, the court will sign the proposed form of Judgment submitted by Plaintiff and cause it to be filed.

8. SCV-258432, States v. Wilday
            Moving party has demonstrated with competent evidence that the proposed settlement was made in good faith and meets the requirements set forth in CCP sec. 877.6, as well as the factors set forth in Tech-Bilt. Moving Party’s’ request that all cross-claims filed against it be dismissed with prejudice is granted.

FACTS AND PROCEDURAL HISTORY:

Introduction

            The allegations in this case stem from alleged leaks occurring in the Plaintiffs Sven Staes and Miki Kimura’s primary residence located at 19450 7th Street East, Sonoma, CA.  (the “Subject Property”).  The Plaintiffs completed a substantial renovation and re-building of the premises starting in the spring of 2009.  After moving in about 2012, the Plaintiffs allege they detected water leaks in the premises’ fire sprinkler system.  Although subject to dispute, certain evidence indicates that the property’s foam roofing insulation had been improperly installed and/or that the foam product was defectively manufactured, resulting in damage to the previously installed fire sprinkler pipes and causing the leaks.

            Ps’ Complaint alleged causes of action against Foam Tech, who sprayed insulation foam in the Ps’ residence, and Lapolla, who supplied the insulation foam for damaging Ps’ home. Ps’ complaint alleges causes of action for strict liability, negligence, breach of implied warranty against both Foam Tech and Lapolla.  Foam Tech was also included in the breach of contract cause of action, and Lapolla was included in the products liability cause of action.

            The Complaint alleges, after the construction of the home, the Ps’ sprinkler system malfunctioned causing water damage to the home.  Foam Tech installed the insulation foam that is alleged to have caused the damage to Ps’ home, and Lapolla sold the foam to Foam Tech. Foam Tech alleges that Lapolla sold it defective foam.

            On those allegations, Plaintiff brought claims against various contractors and materials suppliers, including the foam manufacturer, the foam installer and Defendants and Moving Parties Bay Fire Sprinklers, Inc. and SureTec Insurance Company, the contractor’s bond holder for Bay Fire.  Plaintiff’s homeowner’s insurance carrier, Allied Property and Casualty (“Allied”) filed an action in intervention to recover costs allegedly spent repairing the conditions at issue. The Cross-Complaint stems from Plaintiff’s SVEN STAES’ and MIKI KIMURA’s (“Ps”) property damage to their home, which is the subject of Ps’ complaint against Lapolla.  Plaintiffs’ complaint asserts causes of action for strict liability, negligence, breach of implied warranty, and products liability.  The gravamen of Lapolla’s cross-complaint against Foam Tech stems from Ps’ damages alleged in the complaint. Therefore, for Lapolla to prevail on its negligence cause of action against Foam Tech, Lapolla must establish that Foam Tech owes Lapolla a duty and Foam Tech failed to fulfill that duty, causing Lapolla damages.                         

            Plaintiffs Damages

            Plaintiff alleges that the property requires extensive additional repairs to cure the defects at issue, including demolition of existing ceiling materials, old foam and any damaged components, replacement of the fire sprinkler system, and replacement of affected electrical components, new insulation and re-finishing of the ceiling.  According to Plaintiffs the cost of the work is projected to be $248,283.22.

            This cost and the intended scope of the work is in great dispute as between Plaintiffs and all Defendants.

            After substantial litigation, written discovery, and deposition, the parties mediated their claim in front of the Hon. Lynn Duryee.  The claims did not resolve in mediation, but Judge Duryee and John Hyland continued their efforts to assist in ongoing settlement negotiations. Ultimately, Performance Foam and its bond holder, SURE TEC INDEMNITY COMPANY (“SureTec”), came to resolution of the claims by Ps for a total sum of $115,000 by and through its insurer to Ps.

The Settlement

            The Settling Parties including Performance Foam and Plaintiffs have participated in ongoing settlement discussions for months, including a mandatory settlement conference with Mr. John Hyland. As a result of negotiations, Ps and Performance Foam agreed to $115,000 to settle all claims.

         MOTION:

            Defendant/Cross-Defendant/Cross-Complainant MICHAEL PATRICK MORGAN dba PERFORMANCE FOAM TECH and Defendant SURETEC INDEMNITY COMPANY will move this Court for a determination of good faith settlement pursuant to CCP secs. 877, 877.6.

            There is NO OPPOSITION.  

ANALYSIS: 

Good-Faith Settlement: Authority

            According to CCP §877.6, a “plaintiff or other claimant” can settle with one or more joint tortfeasors or co-obligors without releasing others, provided the settlement is in “good faith.”  A good-faith settlement discharges the settling defendant from liability to other parties for equitable contribution or comparative indemnity.  A party can make the application either through a simplified ex parte application consisting of the notice of settlement, the application, and a proposed order, or as a noticed motion with Ps&As and declarations.  CCP § 877.6 (a)(1), (2).  If the party seeking the good-faith determination raises it as an ex parte application, no evidence seems necessary but judges can and do require evidence to show the elements needed.  Id.; Weil&Brown, ¶12:851.     

            City of Grand Terrace v. Sup.Ct. (Boyter) (1987) 192 Cal.App.3d 1251, at 1262, explained that the amount of the settlement and whether it is grossly disproportionate to potential liability is the “ultimate determinant of good faith....”  See also River Garden Farms, Inc. v. Sup.Ct. (1972) 26 Cal.App.3d, 986, at 996.  The determination of good-faith settlement is in the discretion of the trial court.  Tech-Bilt Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 502.

            Wysong & Miles Co. v. Western Industrial Movers (1983) 143 Cal.App.3d 278, at 290, provides additional insight.  The court there ruled that whether the settlement is proportionate to the claims made does not alone determine good faith.  It added, in line with the cases above, that the potential for liability is also a critical factor and held that where a settlement is extremely low compared to the amount demanded, but evidence exculpates the settling defendant, the settlement may still be in good faith.

            There is no precise standard to determine “good faith” but the court must harmonize public policy favoring settlements with public policy favoring equitable sharing of costs among tortfeasors.  To this end,  Tech-Bilt Inc., supra, 38 Cal.3d 488, requires that the settlement be within the “reasonable range” of settling tortfeasor's share of liability, taking into consideration the facts and circumstances of the particular case and evaluating the settlement on the basis of information available at the time of settlement.  The factors include:

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

2)  The amount paid in settlement;

3)  A recognition that a settlor should pay less in settlement than if found liable after trial;

4) the allocation of the settlement proceeds among plaintiffs;

5)  Settlor's financial condition and insurance policy limits, if any; and

6)  Evidence of any collusion, fraud or tortious conduct between the settlor and the plaintiffs aimed at making nonsettling parties pay more than their fair share.

A determination of good faith requires “substantial evidence” to support a “critical assumption” as to the nature and extent of a settling defendant's liability, or it is an abuse of discretion.  Toyota Motor Sales U.S.A., Inc. v. Superior Court (1990) 220 Cal.App.3d 864, 871; Mattco Forge, Inc. v. Arthur Young (1995) 38 Cal.App.4th 1337, 1348.

            If one contests “good faith,” the party seeking a good-faith determination must sufficiently demonstrate all the Tech-Bilt factors.  City of Grand Terrace, supra, 1262.  However, the party contesting good faith has 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 equitable objectives of the statute.  Tech-Bilt, supra, at 499-500; Widson v. International Harvester Co., Inc. (1984) 153 Cal.App.3d 45.

            The settling parties also have the burden of meeting standards delineated in Abbott Ford Inc. v. Sup. Ct. (1987) 43 Cal.3d 858, specifically the valuation of the component parts of the settlement agreement.  Erreca’s v. Sup. Ct. (1993) 19 Cal.App.4th 1475, 1491.  However, in evaluating the accuracy of the settling parties’ valuation, the court “may not be able to do more than simply make its best estimate, ...” Abbott Ford, supra, 43 Cal.3d 879, fn. 23.  This means that the court is simply required to make a reasonable examination and the nonsettling defendant is not entitled to a “mini‑trial” on the valuation issue.

            Aero-Crete Inc. v Sup. Ct. (1993) 21 Cal.App.4th 203, a complex construction defect case, further explain valuation.  The court indicated at page 209 that in appropriate circumstances it can determine good faith and postpone determining its allocation to damages.  Until a nonsettling defendant’s liability is established, the potential setoff amount is “technically irrelevant.”  Simply because “a known setoff figure might facilitate a settlement under certain circumstances (because it reduces uncertainty) does not mean that valuation of assigned rights” is always mandatory.  When valuation is unnecessary to determine good faith, there is no reason why the value of the assigned rights “cannot be adequately determined once a finding of liability makes such a determination necessary.”  In that case, valuation was unnecessary because the settling defendant was insolvent and no party was likely to get anything from it. 

            In Alcal Roofing & Insulation v. Sup.Ct. (1992) 8 Cal.App.4th 1121, another construction-defect case, the only nonsettling party, a roofer, challenged a good-faith determination and the court ruled that the trial court erred in approving the settlement.  The court held that approval was improper since it could not determine what settlements had been approved, how the subcontractors settled and were involved in the allocation, or the value of the assigned rights.  Alcal, 1128-1129.  In part, these defects seem related to a failure to specify a clear allocation of liability and payment. 

            The court must examine the relative share of liability of each party.  Bay Development, Ltd. v. Sup.Ct. (1990) 50 Cal.3d 1012, 1034.  If it finds that the settling defendant has a greater share of liability, it should find the settlement in good faith only if the settlement requires the settling party to bear an appropriate share and leaves the nonsettling parties with a liability that is not grossly disproportionate to their own responsibility.  Id.  If the nonsettling defendant’s liability is wholly attributable to the settling defendant’s breach, the court may decline to grant good-faith status.  Id. 

            Where no evidence is yet available to determine the validity of the claims and the parties’ culpability, a nonsettling party objecting to good-faith status may seek to continue the determination.  City of Grand Terrace, supra, 1265.  This applies to any case, and regardless of what Tech-Bilt factors are at issue.  Id.

However, there is an exception to the “ballpark” rule where the settler is insolvent and uninsured or has settled for the full insurance policy.  Tech-Bilt, supra 38 Cal.3d 499; Schmid v. Sup.Ct. (1988) 205 Cal.App.3d 1244, 1248.  The court in Schmid ruled that it was an abuse of discretion for the trial court to deny a good-faith-settlement motion where the evidence showed that the settling party had settled for far less than the party’s apparent liability and the settling party’s argument that the other defendant was more liable was not persuasive, but where the settling party had settled for the maximum insurance limits and was insolvent, and where the other defendant did not oppose the motion.

In this case, there is substantial evidence to indicate no liability at all on the part of Performance Foam.  The insulation foam was installed by Performance Foam and there is evidence that Mr. Morgan sprayed the insulation properly.  Performance Foam’s expert performed visual inspections at the Property and determined that the foam was sprayed within the manufacturer’s requirements.

            Under these circumstances, the settlement clearly demonstrates good faith.              

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

Plaintiff alleges a repair cost of roughly $245,000, but this is contested by all Defendants in this case.  Other experts have surmised that the reasonable cost of repair is closer to $50,000. Therefore, the proposed settlement is nearly half of all the Plaintiffs’ stated cost of repair and a substantial portion of the Plaintiffs’ claimed costs.  This amount also does not take into account the $45,000.00 that Bay Fire has paid the plaintiffs for the damages that their negligent installation of the sprinklers caused.  In light of the dispute regarding the alleged damages and minimal evidence of liability on the part of Performance Foam, the settlement is clearly “within the ballpark” of Performance Foam’s potential liability at trial.

Recognition that Settling Party Should Pay Less than if Found Liable After Trial

Performance Foam may disagree on the scope of its liability and the total potential damages in this matter.  However, Performance Foam also recognizes the inherent risk of going to trial and being found liable.  The purpose of entering into a settlement agreement is to avoid the uncertainty of a ruling at trial, as well as the ongoing costs of litigation.  The “reasonable range” test that was adopted in Tech-Bilt “leaves substantial latitude to the parties and to the discretion of the trial court, [so that] defendants will still have an incentive to get out of the litigation for a reduced amount. ” Tech-bilt, supra, 38 Cal.3d at 500.  Accordingly, the $45,000 settlement of all Plaintiffs’ and Allied’s claims against Performance Foam is clearly within Performance Foams’ “ballpark” of potential liability.

The Settling Party's Financial Condition and Applicable Insurance Limits

The parties’ financial conditions and insurance coverage are not at issue here because the settlement is not “disproportionately low.”  See, L.C. Rudd & Son v. Superior Court (1997) 52 Cal.App.4th 742, 749.  The Court of Appeal in Rudd held that where a settlement was not “disproportionately low” that any inquiry or discovery into the financial condition of a settling defendant is not necessary.  Id., at 749-750.

Collusion, Fraud or Tortious Conduct

There does not seem to have been any issue of collusion or fraud.

Conclusion

            Moving party has demonstrated with competent evidence that the proposed settlement was made in good faith and meets the requirements set forth in CCP sec. 877.6, as well as the factors set forth in Tech-Bilt. Performance Foam’s request that all cross-claims filed against it be dismissed with prejudice is granted.  They shall prepare a proposed order/dismissal and deliver it directly to Dept. 17 within 10 days. 

9. SPR-089788, Matter of Arnold & Ruby Anderson Trust
            Motion for Summary continued to December 1, 2017 at 9:30 a.m. in Dept. #12.

 

© 2017 Superior Court of Sonoma County