Bridgett Higginbotham vs. Pacific Specialty Insurance, et al.

“If a complaint does not state a cause of action, but there is a reasonable possibility that the defect can be cured by amendment, leave to amend must be granted.” Milligan v. Golden Gate Bridge Highway & Transportation Dist. (2004) 120 Cal.App.4th 1, 6.

First Cause of Action: Equitable Indemnity

GAII argues its demurrer to PSIC’s cause of action for equitable indemnity must be sustained because it requires joint liability in tort which is not alleged and does not exist. The Court disagrees.

“[T]he right to indemnity flows from payment of a joint legal obligation on another’s behalf.” AmeriGas Propane, LP v. Landstar Ranger, Inc. (2014) 230 Cal.App.4th 1153, 1167. “The elements of a cause of action for indemnity are (1) a showing of fault on the part of the indemnitor and (2) resulting damages to the indemnitee for which the indemnitor is . . . equitably responsible.” Bailey v. Safeway, Inc. (2011) 199 Cal.App.4th 206, 217. California common law recognizes a right of partial indemnity under which liability among multiple tortfeasors may be apportioned according to the comparative negligence of each.’ The test for indemnity is thus whether the indemnitor and indemnitee jointly caused the plaintiff’s injury.” AmeriGas Propane, L.P. v. Landstar Ranger, Inc. (2010) 184 Cal.App.4th 981, 989. For purposes of equitable indemnity, “it matters not whether the tortfeasors acted in concert to create a single injury, or successively, in creating distinct and divisible injury.” Blecker v. Wolbart (1985) 167 Cal.App.3d 1195, 1203.

In the context of equitable indemnity, joint and several liability is expansive, not limited to the traditional meaning of “joint tortfeasor,” and can apply to acts that are concurrent, successive, joint, or several, where they create a detriment caused by several actors. Greystone Homes, Inc. v. Midtec, Inc. (2008) 168 Cal. App. 4th 1194, 1208. See, e.g. Considine Co. v. Shadle (1986) 187 Cal. App. 3d 760, 769 (“A defendant sued for breach of contract may have a right of implied indemnity against a third person whose wrong caused the defendant’s breach.”). “ ‘Where the transaction rests upon related facts, whether concurrent or successive, joint or several, which legally create a detriment compensable against multiple actors, the right of indemnity should follow....” GEM Developers v. Hallcraft Homes of San Diego, Inc. (1989) 213 Cal.App.3d. 419, 431 (citation omitted).

Here, PSIC has alleged in its Cross-Complaint that any injuries suffered by Plaintiff were proximately caused not by their acts, but rather by the negligence or breach of fiduciary duty by GAII:

PSIC has denied, and continues to deny, each and every allegation of Plaintiff’s First Amended Complaint, including all allegations of wrongdoing or breach of the policy on the part of PSIC. ... [T]o the extent Plaintiff sustained any injuries or damages as alleged in her First Amended Complaint, the acts and/or omissions of Greenspan and Cross Defendants are the sole and direct proximate cause thereof due to their failure to accurately, honestly, timely, and reasonably advise Plaintiff regarding the amount of money and extent of coverage, including code upgrade coverage, that would be contractually afforded to Plaintiff under her homeowners’ insurance policy, the laws and regulations in effect that would control which code upgrades were actually necessary to repair her residence, the selection of Defendant SELECT ENVIRONMENTAL to undergo demolition at the Property, and the legal, contractual, and financial ramifications of Plaintiff optionally choosing to raze her home and expand its foundational footprint.

Cross-Complaint ¶ 9. The Cross-Complaint of PSIC, thus, sufficiently alleges Cross-Defendant GAII’s acts and/or omissions caused Plaintiff’s injuries, for which PSIC likewise was sued. The Cross-Complaint also sufficiently alleges that Cross-Defendant GAII is liable to indemnify PSIC in a sum equal to the relative and comparative share of fault for any liability imposed upon Cross-Complainant PSIC in the underlying action. Id. ¶ 16. PSIC’s allegations suffice to plead potential joint and several tort liability exposure for injury to Plaintiff and therefore is sufficient to state a claim for equitable indemnity.

Second Cause of Action: Contribution

GAII argues Cross-Complainant’s cause of action for contribution fails for the same reason. The Court again disagrees.

Pursuant to Code of Civil Procedure section 875, “Where a money judgment has been rendered jointly against two or more defendants in a tort action there shall be a right of contribution among them....” Code Civ. Proc. § 875(a).

In this claim, PSIC incorporates the allegations of Paragraph 9 above and further alleges that Cross-Defendant GAII “contributed to the alleged damages purportedly sustained by Plaintiff as alleged in the operative First Amended Complaint” and that “PSIC is entitled to contribution from the Cross-Defendant[] for such sums which Cross-Complainant[PSIC] may be found liable ....” Cross-Complaint ¶¶ 20-21.

PSIC’s allegations suffice to plead potential joint and several tort liability exposure for injury to Plaintiff and are sufficient to state a claim for contribution.

Third Cause of Action: Declaratory Relief

GAII lastly argues that no claim for declaratory relief has been stated because the underlying indemnity and contribution theories fail. The Court is not persuaded.

A declaratory relief action may be brought under Code of Civil Procedure section 1060 to establish rights and duties of the parties. A complaint for declaratory relief must set forth facts establishing such an actual controversy and must request the court adjudicate the rights and duties of the parties under dispute. Columbia Pictures Corp. v. DeToth (1945) 26 Cal.2d 753, 760.

Here, Cross-Complainant PSIC has adequately pled a claim for declaratory relief to delineate the rights and duties of the parties with respect to equitable indemnification and contribution for the reasons noted previously.

Defendant Select Environmental’s Motion for Determination of Good Faith Settlement

Defendant Select Environmental’s (“Select”) motion for determination of good faith settlement shall be continued for further hearing to allow the parties to conduct discovery related to the same. The parties shall appear to discuss a new hearing date and briefing schedule related thereto.

In an action alleging claims against multiple joint tortfeasors, a party may seek a good faith settlement determination under Code of Civil Procedure section 877.6(a) which, if granted, generally bars claims for contribution and indemnity by any other joint tortfeasor against the settling party. Code Civ. Proc. §§ 877.6(a)(1), (c).

“Any party to an action in which it is alleged that two or more parties are joint tortfeasors or coobligators in a contract debt shall be entitled to a hearing of good faith of a settlement entered into by the plaintiff or other claimant and one or more alleged tortfeasors or co-obligators....” Code Civ. Proc. § 877.6(a)(1). Rulings on a motion for good faith settlement must be made “in view of the equitable goals of the statute, in conformity with the spirit of the law and in a manner that serves the interests of justice,” and must serve the goals of “encouraging settlement among all interested parties” and “equitably allocating costs among multiple tortfeasors,” as opposed to allowing a party to obtain “protection from its indemnification obligation at bargain-basement prices.” Long Beach Memorial Medical Center v. Sup. Ct. (2009) 172 Cal. App. 4th 865, 873, 876. The requirement of good faith is to protect the interests of the non-settling defendants. City of Grand Terrace v. Superior Court (1987) 192 Cal.App.3d 1251, 1263.

A good faith determination is only denied if the settlement is “grossly disproportionate to what a reasonable person, at the time of settlement, would estimate the settling defendant’s liability to be.” Torres v. Union Pacific Railroad Company (1984) 157 Cal.App.3d 499, 509. The following factors are considered in determining whether a settlement is within the ballpark of a reasonable settlement range: 1) a rough approximation of the plaintiffs’ total recovery and the settling defendant’s proportionate liability; 2) the amount paid in settlement; 3) recognition that the settling defendant should pay less in settlement than if it were found liable after trial; 4) the settlor’s financial condition and insurance policy limits, if any; and 5) evidence of any collusion, fraud, or tortious conduct between the settlor and plaintiff aimed at making the nonsettling parties pay more than their fair share. Tech-Bilt Inc. v. Woodward Clyde & Associates (1985) 38 Cal.3d 488, 499. No one factor is outcome determinative. And not every factor will necessarily apply in every case. Dole Food Co., Inc. v. Superior Court (2015) 242 Cal.App.4th 894, 909.

That a settlement calls for the settling party to pay less than the party’s theoretical proportionate share does not mean the settlement is made in bad faith; a good faith settlement does not require “ ‘perfect or even nearly perfect apportionment of liability.’ All that is necessary is that there be a ‘rough approximation’ between a settling tortfeasor’s offer of settlement and his proportionate liability.” North County Contractor’s Assn., supra, 27 Cal.App.4th at 1090-1091 (citations omitted). In assessing the value of the settlement to the settling party and whether the settlement was reached in good faith, “a trial court must examine not only the settling tortfeasor’s potential liability to the plaintiff, but also the settling tortfeasor’s potential liability to all nonsettling tortfeasors.” PacifiCare of California v. Bright Medical Associates, Inc. (2011) 198 Cal.App.4th 1451, 1465-1466 (citations omitted); TSI Seismic Tenant Space, Inc. v. Superior Court (2007) 149 Cal.App.4th 159, 166. 11

The court is entitled to rely on its judicial experience in evaluating the good faith of the settlement amount. Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 968. The determination of whether the settlement is a good faith settlement is left to the discretion of the trial court. Id.

Of note, “the trial court's consideration of the settlement agreement and its relationship to the entire litigation in a contested setting must proceed upon a sufficient evidentiary basis to enable the court to consider and evaluate the various aspects of the settlement.” City of Grand Terrace, 192 Cal.App.3d at 1263 (italics added).

Because Tech-Bilt mandates a rough approximation of the settling defendant's proportionate liability and consideration of all other defendants' proportionate liability and consideration of all other factors that might affect the fairness of the settlement as respects non-settling defendants, the affidavits, declarations or other evidence should provide the court with the facts necessary to evaluate the settlement in terms of the factors contemplated by Tech-Bilt. Without the facts, in a contested hearing, it is impossible for a court to exercise its discretion in an appropriate fashion.

Ibid.

“At the time of the hearing, the objecting non-settlor in many instances does not possess sufficient factual information to carry its burden of proof as to lack of good faith.” Id. at 1265. As such, an “objecting non-settlor [may] move for a continuance of the hearing, if necessary, for the purpose of gathering facts, which could include further formal discovery, to support its statutory burden of proof as to all Tech-Bilt factors non-settlors placed in issue in order that the matter can be fully and fairly litigated.” Ibid. “[T]his could necessarily lead to motions for further discovery, additional declarations, and counterdeclarations by the parties and a delay in the proceedings, but this procedure will ensure that the expanded scope of the hearing dictated by Tech-Bilt will be followed, the evidence will be intelligently assessed, and the objectives of Tech-Bilt will be attained.” Ibid.

At bar, Pacific Specialty Insurance Company (PSIC) opposes the settlement or alternatively seeks a continuance for targeted discovery regarding the same. The latter request has merit. While Select counsel has submitted a declaration in support of its motion, Select has presently provided minimal evidentiary support to establish that the settlement is in good faith and reasonable. As it stands, there is no developed record as to a rough approximation of the Plaintiff’s total recovery, Select’s proportionate liability, and why the proposed settlement by Select is reasonable under the totality of Tech-Bilt factors. Discovery for a limited period of time is appropriate to ensure that all parties can fully and fairly litigate the matter presented.

The parties shall be prepared to provide the Court with an estimate as to how much time is necessary to complete discovery regarding the proposed settlement. A hearing date and briefing schedule will then issue.

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