John C Ellsworth et al vs Sierra Pacific Windows et al

Case Number

19CV02346

Case Type

Hearing Date / Time

Fri, 03/29/2024 - 10:00

Nature of Proceedings

Motion: Challenge Motion for GFS

Tentative Ruling

For the reasons set forth herein, the motion of Ken Taub dba KT Construction challenging determination of good faith settlement is denied. The application of Quality Plastering, Inc. for determination of good faith settlement is granted.

Quality Plastering Inc. shall revise the proposed order to reflect that the application for determination of good faith settlement was challenged.

Background:

This action commenced on May 2, 2019, by the filing of the complaint by plaintiffs John C. Ellsworth and Janice L. Ellsworth as Trustees of the Casa Gran Vista Revocable Trust against defendants Sierra Pacific Windows (“Sierra”) and Ken Taub dba KT Construction Company (“KT”) setting forth causes of action for: (1) Negligence; (2) Negligence per se; (3) Breach of contract; (4) Breach of implied and express warranties; and (5) Breach of implied warranties. Quality Plastering, Inc. (“Quality”) is not named in the complaint.

As set forth in the complaint:

Plaintiffs are the owners of real property located at 1410 Northridge Road, Santa Barbara. (Complaint, ¶ 1.)

Sierra was a product manufacturer who provided materials in the nature of doors and windows which were installed at plaintiffs’ property. (Complaint, ¶ 7.) All of the doors and windows were defectively manufactured and installed which caused water intrusion and property damage to plaintiffs’ property. (Ibid.) Defects consist of improper installation of the Masonry brick and stone, improper installation of the grading system, improper installation of the roofing system, improperly installed windows and doors, defectively manufactured windows and doors, improper installation of tile and grout, improper finishing and painting, improper installation of cabinets, improper installation of swimming pool tiles, failure of the stucco system around the doors and windows, stained exterior and interior finishes, and damage as the result of water intrusion and mold. (Complaint, ¶ 12.)

On October 18, 2019, KT filed a cross-complaint against Sierra, and Moes 1 through 100, setting forth causes of action for: (1) Express indemnity; (2) Implied indemnity; (3) Equitable indemnity; (4) Breach of express warranty; (5) Breach of implied warranty; (6) Negligence; (7) Breach of written and/or oral contract; and (8) Declaratory relief. On June 17, 2020, KT filed an amendment to the cross-complaint substituting in true names for Moes 1 through 7. Quality is “Moe 2.” Quality filed its answer to the cross-complaint on August 19, 2020, asserting a general denial and 59 affirmative defenses.

On December 20, 2023, Quality filed a notice of settlement, indicating that it had settled directly with plaintiffs, and an application for determination of good faith settlement in the amount of $15,000.00.

On January 12, 2024, KT filed the present motion to challenge the good faith of the settlement entered into by plaintiffs and Quality. Quality opposes the motion arguing that the settlement is in good-faith and the settlement amount reasonably represents Quality’s potential proportionate share of liability.

Analysis:

As an initial note, KT objects to the introduction of a settlement offer it made to Quality because it is inadmissible, as communications made in the course of or pursuant to mediation, under Evidence Code section 1119. The court sustains the objection. However, it makes no difference in the courts’ ruling.

“Any party to an action in which it is alleged that two or more parties are joint tortfeasors or co-obligors . . . 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 . . .” (Code Civ. Proc., § 877.6, subd. (a)(1),)

Code of Civil Procedure section 877 provides:

“Where a release, dismissal with or without prejudice, or a covenant not to sue or not to enforce judgment is given in good faith before verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the same tort, or to one or more other co-obligors mutually subject to contribution rights, it shall have the following effect:

“(a) It shall not discharge any other such party from liability unless its terms so provide, but it shall reduce the claims against the others 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.

“(b) It shall discharge the party to whom it is given from all liability for any contribution to any other parties.

“(c) This section shall not apply to co-obligors who have expressly agreed in writing to an apportionment of liability for losses or claims among themselves.

“(d) This section shall not apply to a release, dismissal with or without prejudice, or a covenant not to sue or not to enforce judgment given to a co-obligor on an alleged contract debt where the contract was made prior to January 1, 1988.”

“When confronted with motions for good faith settlements, judges should . . . not yearn for the unreal goal of mathematical certainty. Because the application of section 877.6 requires an educated guess as to what may occur should the case go to trial, all that can be expected is an estimate, not a definitive conclusion.” (North County Contractor’s Assn. v. Touchstone Ins. Services (1994) 27 Cal.App.4th 1085, 1090.) “ ‘[A] “good faith” settlement does not call for perfect or even nearly perfect apportionment of liability.’ [Citation.]” (Ibid.)

“[T]he intent and policies underlying section 877.6 require that a number of factors be taken into account including a rough approximation of plaintiffs’ total recovery and the settlor’s proportionate liability, the amount paid in settlement, the allocation of settlement proceeds among plaintiffs, and a recognition that a settlor should pay less in settlement than he would if he were found liable after a trial. Other relevant considerations include the financial conditions and insurance policy limits of settling defendants, as well as the existence of collusion, fraud, or tortious conduct aimed to injure the interests of nonsettling defendants. [Citation.] Finally, practical considerations obviously require that the evaluation be made on the basis of information available at the time of settlement. ‘[A] defendant’s settlement figure must not be grossly disproportionate to what a reasonable person, at the time of the settlement, would estimate the settling defendant’s liability to be.’ [Citation.] The party asserting the lack of good faith, who has the burden of proof on that issue (§ 877.6, subd. (d)), should be permitted to demonstrate, if he can, 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.” (Tech-Bilt v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499-500 (Tech-Bilt).)

KT includes the declaration of Kory Kruckenberg in support of their challenge to the good-faith settlement. Kruckenberg is a general contractor who was retained by KT to render opinions regarding the reasonableness of the $15,000.00 settlement between plaintiffs and Quality. Kruckenberg “reviewed the project documents, claims, allegations of damage and [has] reviewed [Quality’s] application for good faith settlement determination.” (Kruckenberg Dec., ¶ 3.) He has also inspected the subject real property. (Ibid.) While Kruckenberg disagrees with plaintiffs’ claims contained in their defect list and cost of repair estimate, Kruckenberg opines that Qualities potential exposure totals $100,177.94 of plaintiffs’ alleged cost of repair. (Kruckenberg Dec., ¶ 10.)

Quality includes the declaration of Kevin Franklin in support of their opposition to KT’s challenge to the good-faith settlement. Franklin is President of Orange Coast Building Services, Inc. and is a licensed general contractor. (Franklin Dec., ¶ 3.) Franklin has reviewed plaintiffs’ complaint and KT’s cross-complaint, project documents, plaintiffs’ defect and damage claims reports, and plaintiffs’ repair cost documents including plaintiffs’ May 2021 updated cost estimate. Franklin also reviewed Quality’s job file documents, Quality’s Application for good-faith settlement determination, KT’s motion to challenge Quality’s application for good-faith settlement determination and has investigated the claims at the subject property including attending meetings with the other experts in this case. (Franklin Dec., ¶ 5.)
 

Franklin declares that “most, if not all, of the stucco repairs are not related in any way to the original work performed by Quality, but may only be required due to problems with the other trades’ defective work, specifically doors, windows, and earthwork/compaction, that have nothing to do with Quality’s stucco or plastering. (Franklin Dec., ¶ 7.) Franklin explains why he disagrees with Kruckenberg’s opinions, including drawing attention to the fact that some of the claimed costs are not apparently related to any stucco work, and estimates Quality’s potential exposure is $17,055.63. (Franklin Dec., ¶ 16.) The court finds Franklin’s declaration more detailed and persuasive than Kruckenberg’s. It does appear that the majority of the stucco work will be required because of needed repairs to aspects of the project that were not under the control of Quality. There is little to no evidence, of any defects with the original stucco work performed by Quality, that has been presented to the court.

The declarations of attorney Catherine Lagman-Legaspi, contractor Kevin Franklin, and the attached exhibits demonstrate evidence as to all the factors outlined by Tech-Bilt, essentially demonstrating plaintiffs’ potential total recovery; cross-defendant’s proportionate liability; the amount to be paid and its allocation to the non-settling defendants; the source of the settlement funds; and the absence of collusion, fraud, or tortious conduct.

Given the facts of this case, the $15,000.00 settlement is within the reasonable range and the settlement is in good faith.

The purpose of a motion for determination of good faith settlement is to discharge the party to whom it is given from all liability for any contribution to any other parties.

“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, subd. (c).)

The proposed order submitted by Quality needs to be revised to reflect that KT contested the application for determination of good-faith settlement. (Proposed Order, p. 3, ll. 2-4.)