Samanukorn v JPCL Development

Motion to Challenge Good Faith Settlement (x2);

Motion to Compel Further Response to Special Interrogatories (x2)

Calendar: 18
Case No.: EC068262
Hearing Date: July 26, 2019
Action Filed: March 14, 2018
Trial Date: March 02, 2020

Motion to Challenge Determination of Good Faith Settlement

MP: Defendants JPCL Development LLC; Ping Xiao Lin; and Shiann Chen
RP: Defendants Essex Financial, Inc. d/b/a Century 21 Dynasty; Hoang M. Chu; and Jade Ngoc Chu

 

Motion to Challenge Determination of Good Faith Settlement

MP: Defendants CDH Investments, Inc. d/b/a IRN Realty; and Ted Ru-Hao Chen
RP: Defendants Essex Financial, Inc. d/b/a Century 21 Dynasty; Hoang M. Chu; and Jade Ngoc Chu

 

Motion to Compel Further Response to Special Interrogatories (Yuwanda Samnukorn)

MP: Defendants JPCL Development LLC; Ping Xiao Lin; and Shiann Chen
RP: Plaintiff Yuwanda Samanukorn

 

Motion to Compel Further Response to Special Interrogatories (Kan Xie)

MP: Defendants JPCL Development LLC; Ping Xiao Lin; and Shiann Chen
RP: Plaintiff Kan Xie

 

 

ALLEGATIONS:

This action involves a dispute regarding real property located at 8946 Emerson Place, Rosemead, CA 91770.  Plaintiffs Yuwanda Samanukorn and Kan Xie (“Plaintiffs”) allege they are first time buyers of real estate.  They allege that on July 18, 2017, Plaintiffs with the representation of their real estate agents (Defendants Essex Financial, Inc. dba Century 21 Dynasty (“C21”), Hoang M. Chu, and Jade Ngoc Chu), entered into the Residential Purchase Agreement for the property in the amount of $608,000.00 and the sale closed on July 18, 2017.  The owner of record and seller of the property was Defendant JPCL Development LLC (“JPCL”), through its agents Defendants CHD Investments Inc. dba IRN Realty (“IRN”) and Ted Ru-Hao Chen (“Ted”).  Plaintiffs allege that Defendants Ping Xiao Lin (operating manager of JPCL) and Shiann Chen (alleged spouse of Ping Xiao Lin) worked in concert to use JPCL to deceive and conceal material matters concerning the property from Plaintiffs.  Plaintiffs allege that Defendants failed to disclose that the property had easements for ingress and egress for use by 3 adjacent property owners and is used as a driveway or access road to the other properties.

Plaintiffs filed their Complaint on March 14, 2018, and their First Amended Complaint (“FAC”) on September 10, 2018.  The FAC alleges causes of action for: (1) Fraud and Deceit; (2) Negligent Misrepresentation; (3) Constructive Fraud; (4) Breach of Statutory Duty; (5) Breach of Fiduciary Duty; (6) Breach of Contract; (7) Professional Negligence; (8) Negligent Misrepresentation; (9) Professional Negligence; and (10) Breach of Implied Covenant Against Encumbrances.

Defendants JPCL, Ping Xiao Lin, and Shiann Chen filed a Cross-Complaint on January 17, 2019, against IRN, Ted, C21, and Jade Ngoc Chu; and thereafter filed a First Amended Cross-Complaint (“FXC”) on May 09, 2019, alleging causes of action sounding in (1) Indemnity, (2) Contribution, (3) Negligence, and (4) Declaratory Relief.

PRESENTATION:

Defendants JPCL Development LLC; Ping Xiao Lin; and Shiann Chen motion to challenge the determination of a good faith settlement between Plaintiffs and Defendants Essex Financial, Inc. d/b/a Century 21 Dynasty; Hoang M. Chu; and Jade Ngoc Chu (“Settling Parties”) was filed on June 03, 2019.  While Defendants CDH Investments, Inc. d/b/a IRN Realty; and Ted Ru-Hao Chen similarly moved to contest the application for good faith settlement by Settling Parties on June 03, 2019.  Settling Parties opposed both motions on July 15, 2019, through a single opposition brief.  Defendants JPCL Development LLC; Ping Xiao Lin; and Shiann Chen and Defendants CDH Investments, Inc. d/b/a IRN Realty; and Ted Ru-Hao Chen submitted reply briefs on July 19, 2019.

Defendants JPCL Development LLC; Ping Xiao Lin; and Shiann Chen filed two motions to compel further response to Special Interrogatories, Set One, on May 28, 2019, seeking to compel further reposes from Plaintiff Yuwanda Samanukorn and Plaintiff Kan Xie.  Plaintiffs filed separate opposition papers on July 15, 2019, and a reply brief was received on each motion on July 18, 2019.  Plaintiff additionally filed an unauthorized and consolidated sur-reply on July 22, 2019.

RELIEF REQUESTED:

Defendants JPCL Development LLC; Ping Xiao Lin; and Shiann Chen move for an order denying Settling Parties’ application for good faith settlement.

Defendants CDH Investments, Inc. d/b/a IRN Realty; and Ted Ru-Hao Chen move for an order denying Settling Parties’ application for good faith settlement.

Defendants JPCL Development LLC; Ping Xiao Lin; and Shiann Chen move to compel further responses by Plaintiff Yuwanda Samanukorn to Special Interrogatories, Set One.

Defendants JPCL Development LLC; Ping Xiao Lin; and Shiann Chen move to compel further responses by Plaintiff Kan Xie to Special Interrogatories, Set One.

DISCUSSION:

Standard of Review – Under Code of Civil Procedure §877.6, “[a]ny 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 tortfeasor or co-obligors.”  Code of Civ. Proc. §877.6(a).  The statute aims at two competing policies: “(1) The equitable sharing of costs among the parties at fault and (2) the encouragement of settlements.”  Erreca’s v. Superior Court (1993) 19 Cal. App. 4th 1475, 1487.  A determination under §877.6(a) by the court “shall bar any other joint tortfeasor or co-obligor from any further claims against the settling tortfeasor . . .  for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault.”  Id. subd. (c).  “The party asserting the lack of good faith shall have the burden of proof on that issue.”  Id. subd. (d).  To demonstrate lack of good faith, the opposing party must “demonstrate, if he can, that the settlement is so far ‘out of the ballpark’ in relation to [certain enumerated factors] as to be inconsistent with the equitable objectives of the statute.”  Nutrition Now, Inc. v. Superior Court (2003) 105 Cal. App. 4th 209, 213.  To make this determination, the Court must rely “on the basis of experience rather than speculation, [and] a court may enlist the guidance of the judge’s personal experience and of experts in the field.”  Cahill v. San Diego gas & Elec. Co. (2011) 194 Cal. App. 4th 939, 959.

In determining whether a settlement is so far out of the ballpark that it is inconsistent with the statute, the factors to consider include 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 condition and insurance policy limits of settling defendants, as well as the existence of collusion, fraud, or tortious conduct aimed to injure the interests of non-settling defendants.  Finally, practical considerations obviously require that the evaluation be made on the basis of information available at the time of settlement.”  Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal. 3d 488, 499. As a starting point, “when no one objects, the barebones motion which sets forth the ground of good faith, accompanied by a declaration which sets forth a brief background of the case is sufficient.”  City of Grand Terrace v. Superior Court (1987) 192 Cal. App. 3d 1251, 1261.  It is only when “the good faith nature of a settlement is disputed [that] it is incumbent upon the trial court to consider and weigh the Tech-Bilt factors.”  Id.

Under Tech-Bilt the Court must analyze a motion for the determination of a good faith settlement on the basis of:  (1) the amount paid in settlement, (2) the settlement amount versus trial amount, (3) the total recovery versus proportional liability, (4) financial conditions of the parties, (5) insurance policy limits of the settling party, (6) collusion/fraud/tortious conduct between the settling parties, and (7) the allocation of the proceeds.

Amount Paid – The amount to be paid in the settlement between Plaintiffs and the Settling Parties is $25,000.00.  May 09, 2019, Application for Good Faith Settlement (“Application”), 2:15-18.  This would cause the settlement of both the FAC, which requests relief in the amount of $608,000.00 and in the Cross-Complaint by JPCL requesting relief in the form of indemnification on the underlying FAC.

This factor does not weigh for or against the determination of good faith settlement.

Settlement Amount Versus Trial Amount – In their Application and in their consolidated Opposition, Settling Parties do not provide an analysis of the expected trial amount of Plaintiffs or Cross-Complainants.  As the only substantive analysis is performed by Defendants CDH Investments, Inc. d/b/a IRN Realty; and Ted Ru-Hao Chen on motion, the Court concludes that the instant factor weighs against Settling Parties.  CDH Motion, 8:2-13 (stating that the settling amount of $25,000 from the proposed trial amount of $608,000 is 4% of the trial amount).

This factor weighs against the determination of good faith settlement.

Total Recovery Versus Proportional Liability – Settling Parties represent that their proportional liability for the alleged injury to Plaintiffs is 0%, and that the offer of $25,000 represents a significant over-payment based on their proportionate liability.  Application, 5:21-6:20.  As an initial matter, the Court considers that Settling Parties were the agents of Plaintiffs during the purchase of the Property subject to the instant dispute.  FAC ¶7-9, & 27-37; FXC ¶10.  Further, the FAC and FXC include allegations that Settling Parties had all of the information needed to inform Plaintiffs of the easement within their possession prior to the sale, but that the Settling Parties failed in the performance of their duty to Plaintiffs by failing to review and advise Plaintiffs of the existence of the easement.  See, e.g.,FAC ¶23, 43; FXC ¶13.

Based on the allegations in both the FAC and FXC it is not clear to the Court that Settling Parties’ proportionate liability is 0%, as argued by Settling Parties – nor is it clear that figure of $25,000 (purportedly representing 4% of the potential recovery of Plaintiffs at trial) is an adequate share of Settling Parties’ proportionate liability, even applying a discount.  If the Court accepts the representations made by the parties opposing settlement in their moving papers, that the roadway easement was represented in the July 18, 2015 preliminary title report, and if it can be established at trial that Settling Parties breached their duty of care to Plaintiffs based on their receipt and review of said report, there is a strong probability that Settling Parties may be determined to be liable for a grater share of responsibility than the 4% figure $25,000 represents, or the 0% figure argued-for by Settling Parties.

Pursuant to these considerations, the Court concludes that this factor weighs against the determination of good faith settlement.

Financial Condition – No information is provided to the Court to review the financial condition of the Settling Parties.

As such, this factor does not weigh for or against the determination of good faith settlement.

Insurance Policy Limits – While the Application does not provide information relevant to this factor, in Opposition, Settling Parties represent to the Court that their insurance coverage exceeds their potential exposure in the instant matter.  Opposition, 4:4-16.  Settling Parties argue that the availability of insurance should not factor into keeping them in the case in light of an otherwise proper good faith settlement.  Id.  The Court considers that this factor more heavily weighs when insurance is limited, policy limits are provided, and further litigation may drain the availability of funds due to the payment of attorney’s fees.

As such considerations are not a factor in the instant case, the Court concludes that this factor does not weigh for or against the determination of good faith settlement.

Collusion Between Settling Parties – None of the moving parties present any information that would serve to support an inference of collusion between Settling Parties and Plaintiffs.  However, no information is provided to support an inference that the proposed settlement was reached through an arms-length, negotiated, process.

Accordingly, this factor does not weigh for or against the determination of good faith settlement.

Allocation of Proceeds – There is no information provided by Settling Parties regarding how or whether the proceeds are being allocated in any particular manner, however, the general rule is that any unallocated amounts go to economic damages.  Civ. Code §1431.2.

Accordingly, this factor does not weigh for or against the determination of good faith settlement.

In sum – Upon weighing the factors pursuant to Tech-Bilt, the Court concludes that the analysis militates against a determination of good faith settlement, and in favor of granting the pending motions contesting the application.

Accordingly, the Court will grant the motions contesting the determination of good faith settlement, and issue an order denying Settling Parties’ application for good faith settlement.

Standard of Review – Compel Further Response to Special Interrogatories – Code of Civil Procedure §2030.300 provides for a party to bring a motion to compel further responses to interrogatories where the responding party provides inadequate, incomplete, or evasive responses, or the objections are too general or without merit.  The propounding party must submit a declaration under Code of Civ. Proc. §2016.040 stating facts demonstrating a good faith and reasonable effort to informally resolve all issues raised by the motion.  Code of Civ. Proc. §2030.300(b).  The motions must be brought within 45 days of service of the responses or supplemental responses.  Code of Civ. Proc. §2030.300(c).  Sanctions are mandatory against the party or attorney who unsuccessfully makes or opposes a motion to compel further unless the party acted with substantial justification or the circumstances make imposition of sanctions unjust.  Code of Civ. Proc. §2030.300(d).

Meet and Confer – The Court has reviewed the Declaration of Grant Peto, and the email exhibits attached thereto, as well as the Declaration of Robert Bonito and the arguments related to Plaintiffs’ contestation of the adequacy of the meet and confer efforts engaged by moving parties.  Under the instant circumstances of the instant meet and confer efforts, Obregon v. Superior Court case is instructive.  In Obregon the court found that it is appropriate for a trial court to require additional good faith efforts to resolve the dispute informally when the plaintiff’s motion showed that the only efforts made to avoid the motion were that (1) there was an extension by the plaintiff of the time to respond to discovery, and (2) the only response received one day prior to the motion was a letter informing plaintiff of defendant’s objections, but offering to negotiate further.  Obregon v. Superior Court (1998) 67 Cal. App. 4th 424, 428–29.

Here, while it appears that the moving parties made efforts to meet and confer on the matters presented in the instant motions, as shown through email communication, the efforts nonetheless fall short of the requirements provided in Code of Civ. Proc. §2016.040, which requires an attempt to resolve “each issue presented by the motion,” as the moving parties address the Special Interrogatories as a whole, and not as to each issue.  The Court considers that further meet and confer efforts should be fruitful in light of the many invalid objections made by Plaintiffs to the discovery propounded, and moving party’s right to receive code-compliant responses to each and every Special Interrogatory.

Accordingly, the Court will continue the instant motions to compel further responses to form interrogatories in order to permit additional meet and confer efforts. Another option is to appoint a discovery referee.

RULING:

Grant the motions to challenge the application for good faith settlement and continue the motions to compel further discovery responses.

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records.

ORDER

Defendants JPCL Development LLC; Ping Xiao Lin; and Shiann Chen’s and Defendants CDH Investments, Inc. d/b/a IRN Realty; and Ted Ru-Hao Chen’s two separate Motions to Challenge the Determination of Good Faith Settlement came on regularly for hearing on July 26, 2019, together with Defendants JPCL Development LLC; Ping Xiao Lin; and Shiann Chen’s two motions to compel further responses to special interrogatories, propounded as to each individual Plaintiff, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows:

The Motions Challenging the Determination of Good Faith Settlement by Plaintiffs and Defendants Essex Financial, Inc. d/b/a Century 21 Dynasty; Hoang M. Chu; and Jade Ngoc Chu are:

                        GRANTED IN THEIR ENTIRETY; AND

The Motions to Compel Further Reponses to Special Interrogatories propounded by Defendants JPCL Development LLC; Ping Xiao Lin; and Shiann Chen on individual Plaintiffs Yuwanda Samanukorn and Kan Xie are:

CONTINUED TO PERMIT ADDITIONAL MEET AND CONFER EFFORTS.