Motion for Determination of Good Faith Settlement (Judge William D. Stewart)


Case Number: EC068626    Hearing Date: July 08, 2020    Dept: A

Glendale French Bakery v Salvatore

Motion for Determination of Good Faith Settlement;

Motion for Leave to File a Cross-Complaint

     
Calendar: 55    
Case No.: EC068626    
Hearing Date: July 8, 2020    
Action Filed: July 09, 2018    
Trial Date: May 18, 2020    

     
       
       
       
       
       

Good Faith Settlement

MP: Defendants Rick Salvatore Marino; and Marino Property Management, LLC
RP: Defendants Margarit Yahiayan; and Teaside Properties, LLC

 

Leave to File XC

MP: Defendants Margarit Yahiayan; and Teaside Properties, LLC
RP: Defendants Rick Salvatore Marino; and Marino Property Management, LLC

 

ALLEGATIONS:

The instant action arises from Plaintiff Glendale French Bakery, Inc. d/b/a Papillon International Bakery (“Plaintiff”)’s rental of real property located at 1817 W. Glenoaks Blvd., Glendale, California 91201 (the “Property”).  The Property was originally owned and let by Defendants Rick Salvatore Marino (“Marino”); and Marino Property Management, LLC (“MPM” and together “Marino Defendants”) on or about September 19, 2017, who sold the Property to Defendants Margarit Yahiayan (“Yahiayan”); and Teaside Properties, LLC (“Teaside” and together the “Teaside Defendants”) on or about July 10, 2018.  Plaintiff alleges that Teaside Defendants substantially interfered with Plaintiff’s purchase of the Property after Plaintiff and Marino Defendants entered into escrow on or about April 17, 2018, by informing Plaintiff and Marino Defendants of Teaside Defendants’ intent to build a wall – substantially devaluing the Property due to the loss of parking and access.

Plaintiff filed its Complaint on July 09, 2018, and filed the operative First Amended Complaint (“FAC”) on July 31, 2018.  In the operative complaint, Plaintiff alleged twelve causes of action sounding in (1) Breach of Lease, (2) Breach of covenant of Quiet Use and Enjoyment, (3) Breach of Covenant of Good Faith and Fair Dealing, (4) Fraud, (5) Negligent Misrepresentation, (6) Rescission and Restitution based on Fraud or Mistake, (7) Promissory Estoppel, (8) Interference with Contractual Relations, (9) Interference with Prospective Economic Advantage, (10) Private Nuisance, (11) Public Nuisance, and (12) Violation of Bus. & Prof. Code §17200 et seq.

PRESENTATION:

Marino Defendants filed the motion for determination of good faith settlement on December 20, 2019.  Teaside Defendants opposed the motion on January 14, 2020, and a reply brief was received on January 23, 2020.  Oral arguments were heard on February 07, 2020, whereupon the motion was continued to April 17, 2020, to coincide with Teaside Defendants’ motion for leave to file a cross-complaint. Teaside Defendants’ motion was filed on February 04, 2020, and Marino Defendants filed an opposition on April 1, 2020; no reply was filed to the Teaside Defendants’ motion.

On March 25, 2020, in response to the COVID-19 pandemic and pursuant to the March 17, 2020, Administrative Order of the Presiding Judge, the Court continued the instant motion to May 29, 2020. Counsel for Moving Party was informed, and directed to give notice. A copy of this minute order was mailed to counsel.

On April 29, 2020, and in response to the continuing pandemic conditions, the Court continued the matter again, setting the motion for hearing on June 30, 2020. A copy of the minute order was mailed to counsel.

On May 6, 2020, in response to stipulated request by Defendant Margarit Yahiayan and counsel, the Court continued the matter for hearing on July 8, 2020. Counsel for Defendant Yahiayan was directed to give notice.

RELIEF REQUESTED:

Marino Defendants move for a determination of good faith settlement.

Teaside Defendants move for leave to file a cross-complaint.

DISCUSSION:

Standard of Review – Good Faith Settlement – 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 nonsettling 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 – As to the first factor, Marino Defendants represent that they have assigned “all of its rights against Teaside to Glendale French, other than the payments by Teaside on its promissory note to Marino.”  Motion, 9:5-9.  The motion does not indicate that any other amount were paid, nor does it provide a monetary value or description of what ‘rights’ have been assigned between Plaintiff and Marino Defendants.  As such, the Court does not consider the instant factor to weigh in favor or against the motion.

Settlement Amount Versus Trial Amount – As to the second factor, Marino Defendants provide no analysis whatsoever on motion.  Motion 9:10-16.  As such, the Court does not consider the instant factor to weigh in favor or against the motion.

Total Recovery Versus Proportional Liability – As to the third factor, Marino Defendants argue that the recovery exceeds the proportional liability of the Marino Defendants, and asserts that there are “many valid defenses, including exculpatory clauses in the Lease which specifically limited its liability”.  Motion, 8:19-9:5.  Earlier in the motion, Marino Defendants claim that paragraph 17 of the lease agreement between Plaintiff and Marino Defendants.  While Marino Defendants do not provide the Lease agreement as part of the instant motion, the Court’s review of Exhibit A of the FAC shows that paragraph 17 of the alleged lease agreement provides:

  1. Definition of Lessor.  The term “Lessor” as used herein shall meant the owner or owners at the time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee’s interest in the prior lease.  In the event of a transfer of the Lessor’s title or interest in the Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) and unused Security Deposit held by Lessor.  Upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor.  Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabover defined.

FAC, Ex. 1, ¶17.  The Court notes, however, that the FAC alleges conduct giving rise to liability against Marino Defendants that arose prior to the sale of the Property.  See FAC ¶¶17-21.  As such, it is not clear to the Court that Marino Defendants are completely without any liability in the action, and without further information about the value of the settlement, and the value of the potential liability at trial, the Court cannot adequately analyze the instant factor other than to note that (1) there is no apparent value in the settlement other than avoidance of further litigation, and (2) there is some apparent value in the claims in the FAC.  Under these circumstances, the Court finds that the instant factor weighs against settlement.

Financial Condition – As to the fourth factor, Marino Defendants represent that the Property was MPM’s only asset, and that Marino is unemployed and a full-time caregiver to his wife, who has been diagnosed with cancer.  Motion, 9:17-10:1.  The Court, however, cannot consider the information asserted on motion, as no declaration or other evidence has been presented to the Court.  In any moving paper purporting to provide evidence, such evidence must be submitted by way of declaration, submitted under penalty of perjury, and documents must be authenticated.  See, e.g., Code of Civ. Proc. §2015.5; Evid. Code §1400 et seq.  Absent competent evidence, the Court cannot consider the putative evidence or documents presented, as the putative evidence lacks adequate foundation to serve as competent evidence in support of, or in opposition to, a motion.

Insurance Policy Limits – As to the fifth factor, Marino Defendants represent that their liability and title insurers have both denied coverage and there is no expectation of coverage in the future.  Motion, 9:17-23; Decl. of Lovett, ¶6.  The opposition does not address this factor, and the Court finds that the complete unavailability of insurance proceeds for the recovery of damages and for accrued attorneys fees weights strongly in favor of granting the instant motion.

Collusion Between Settling Parties – As to the sixth factor, Marino Defendants represent that the settlement was reached through an arms-length transaction.  Motion, 10:2-7; Decl. of Lovett, ¶7.  Teaside Defendants provide no evidence or information to contradict this representation.  Accordingly, the Court finds that this factor weighs in favor of granting the motion.

Allocation of Proceeds – As there are no proceeds, allocation is not discussed.  Accordingly, the factor does not weigh in favor or against the motion.

Determination – On balance, the Court finds that the above factors weigh in favor of granting the instant motion.  While Teaside Defendants argue that the motion should be denied because it will foreclose their ability to file a Cross-Complaint, the Court notes that the analytical factors discussed under Tech-Bilt is the appropriate framework for determining whether cross-actions should be foreclosed.  Teaside Defendants have not substantially engaged in any analysis under Tech-Bilt, nor provided any information establishing that a determination of good faith settlement is not appropriate under the relevant standards.  The mere fact that a determination of good faith settlement prevents a cross-complaint is not a basis for denying a determination for good faith settlement.  Accordingly, the motion will be granted.

Standard of Review – Leave to file Cross-Complaint – Pursuant to Code of Civ. Proc. §428.50(c), “[a] party shall obtain leave of court to file any cross-complaint except one filed within the time specified in subdivision (a) [at time of filing answer] or (b) [before trial date is set by court]. Leave may be granted in the interest of justice at any time during the course of the action.”  Under Code of Civ. Proc. §428.10(b), a party to an action may file a cross-complaint setting forth any cause of action he has against a person to be liable thereon if the cause of action asserted in the cross-complaint: (1) arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause brought against him, or (2) asserts a claim, right, or interest in the property or controversy which is the subject of the cause brought against him.  The decision to grant or deny a permissive cross-complaint under  Code of Civ. Proc. §§428.50 & 428.10 is solely within the discretion of the Court, and “[t]he reason for allowing cross-complaints is to have a complete determination of a controversy among the parties in one action, thus avoiding circuity of action and duplication of time and effort.”  City of Hanford v. Superior Court (1989) 208 Cal. App. 3d 580, 587.  The Court does not abuse its discretion, however, in denying motions due to delay in seeking relief or the closeness of the underlying action to trial.  See, e.g., Crocker Nat. Bank v. Emerald (1990) 221 Cal. App. 3d 852, 864; People ex rel. Department of Public Works v. Los Angeles (1960) 179 Cal. App. 2d 558, 567-68 (under former law).

Here, the proposed Cross-Complaint filed by Teaside Defendants names Defendant Rick Salvatore Marino as the sole Cross-Defendant, and would allege five causes of action sounding in (1) Implied Indemnity, (2) Total Equitable Indemnity, (3) Partial Equitable Indemnity, (4) Equitable Contribution, and (5) Declaratory Relief.  As laid out above, the Court has already determined that the Good Faith Settlement by and between Plaintiff and the Marino Defendants – inclusive of the proposed Cross-Defendnat Rick Salvatore Marino – should be granted.  On these grounds, Teaside Defendants are foreclosed from filing the instant Cross-Action against the settling Defendants for indemnity and contribution under Code of Civ. Proc. §877.6(c).  Code of Civ. Proc. §877.6(c) (“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.”).

Accordingly, the motion will be denied as barred by the good faith settlement.

RULING: below,

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 Rick Salvatore Marino and Marino Property Management, LLC’s Motion for Determination of Good Faith Settlement came on regularly for hearing on July 8, 2020, together with Defendants Margarit Yahiayan; and Teaside Properties, LLC’s Motion for Leave to File a Cross-Complaint, 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 MOTION FOR DETERMINATION OF GOOD FAITH SETTLEMENT IS GRANTED; AND

THE MOTION FOR LEAVE TO FILE A CROSS-COMPLAINT IS DENIED AS BARRED BY THE GOOD FAITH SETTLEMENT.

DATE:  _______________                            _______________________________

                                                                        JUDGE