ANDREW J. ELIOPULOS, ET AL. VS MILGARD MANUFACTURING, ET AL.

Tentative Rulings

Case Number: PC056467    Hearing Date: August 04, 2020    Dept: F47

Dept. F-47

Date: 8/4/20

Case #PC056467 (c/w PC057529)

MOTION FOR DETERMINATION OF GOOD FAITH SETTLEMENT

Motion filed on 6/23/20.

MOVING PARTY: Defendant/Cross-Complainant Milgard Manufacturing, Inc.

RESPONDING PARTY: Intervenor Benchmark Insurance Company on behalf of Perez Plastering Design, Inc. and Perez Plastering, Inc.

NOTICE: ok

RELIEF REQUESTED: An order determining that the settlement reached between Plaintiffs Andrew J. Eliopulos and Rula Eliopulos and Milgard and Avalon Door and Window, Inc. has been made in good faith within the meaning of CCP 877 and CCP 877.6 and barring all claims against Milgard and Avalon for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault, including implied contractual indemnity pursuant to CCP 877(c).

RULING: The motion is granted.

The parties are reminded to review the 5/3/19 First Amended General Order Re Mandatory Electronic Filing for Civil. When efiling documents, parties must comply with the “TECHNICAL REQUIREMENTS” which are set forth at page 4, line 4 through page 5, line 12 of the Court’s 5/3/19 First Amended General Order Re Mandatory Electronic Filing for Civil. Failure to comply with these requirements in the future may result in matters being continued so documents can be resubmitted in compliance with these requirements, documents not being considered and/or the imposition of sanctions.

These consolidated actions arise from construction defect claims at a single family residence located in Valencia, California. (Hammons Decl. ¶3). Plaintiffs Andrew and Rula Eliopulos acted as their own general contractor for the project. (Id.; SAC ¶14). Based on purchase orders, Milgard Manufacturing, Inc. (Milgard) shipped windows and sliding glass doors for the project through a third-party distributor, Avalon Door and Window, Inc. (Avalon) in October 2012. (Hammons Decl. ¶3). Plaintiffs paid $34,403.38 for the Milgard product. Id. Plaintiffs hired Cross-Defendant Weslar, Inc. (Weslar) to install the windows and Cross-Defendant, St. Amand Building Products, Inc. (St. Amand) to install the doors. Id.

On 6/29/15, Plaintiffs filed a complaint against Milgard, Avalon and Does 1-20. (Id. at ¶4). On 2/27/17, Avalon filed a cross-complaint against Zoes 1-100 which alleged causes of action for: (1) equitable indemnity, (2) express indemnity, (3) breach of contract, (4) negligence, (5) contribution, (6) declaratory relief, and (7) breach of contract – additional insurance. On 2/27/18, Avalon filed a Zoe Amendment naming Weslar and St. Amand as cross-defendants. On 5/2/18, Weslar filed an answer to the cross-complaint. St. Amand has not appeared in this matter. (Id. at ¶¶5-6).

From November 2012 through March 2019, Milgard performed significant product warranty repairs at the subject property. (Hammons Decl. ¶7; Aldrete Decl.). On 1/2/19, Plaintiffs filed their Second Amended Complaint against Milgard and Avalon (the window defendants) and Perez Plastering, Inc., Perez Plastering Design, Inc. Samuel Perez (the plaster defendants) and Does 1-20 alleging the following causes of action: (1) products liability, (2) negligent manufacture, (3) negligent repair, (4) breach of express warranty, (5) breach of implied warranty, (6) breach of contract, (7) breach of implied warranty, and (8) negligence. (Hammons Decl. ¶8). Plaintiffs’ claims are for potential future damages related to the removal and replacement of all the windows and all plaster at the property. (Id.; SAC ¶¶33, 80). The window defendants and the plaster defendants answered the Second Amended Complaint and on 1/30/19, Milgard filed a cross-complaint for indemnity and contribution. (Id. at ¶¶8-9). There are no pending cross-complaints against Milgard or Avalon. (Id. at ¶10).

In November 2019, Plaintiffs produced a cost of repair for the window and plaster defects. (Hammons Decl. ¶11). Of the total burdened cost of repair of $157,327.76 only $2,862.95 is allocated to the purchase of replacement windows. (Id. at ¶¶21, 22). Plaintiffs’ total alleged damages are for $202,847.37, which includes the cost of repair and Plaintiffs’ Stearman investigation costs. (Id.).

Although Milgard and Avalon dispute their liability in this action, after mediation and further negotiations, Milgard and Avalon reached a settlement with Plaintiffs which Milgard now seeks to have determined to be in good faith by this court pursuant to CCP 877 and CCP 877.6. By way of the settlement, Milgard agrees to pay Plaintiffs $45,000.00 and provide Plaintiffs with 3 replacement casement windows which have a value of $6,042.24. (Hammons Decl. ¶13). Additionally, Milgard and Avalon agree to assign to Plaintiffs their cross-complaints against Weslar and St. Amand for indemnity and contribution. (Id.) In exchange, Plaintiffs agree to release all window product claims as to Milgard and Avalon. (Id.).

In ruling on a motion for determination of good faith settlement, the court must consider several factors: (1) a rough approximation of plaintiff’s total recovery and the settlor’s proportionate liability; (2) the amount paid in settlement; (3) the allocation of settlement proceeds among the plaintiffs; (4) the recognition that a settlor should pay less in settlement than he would if he were found liable after trial; (5) defendant’s financial condition and insurance policy limits; and (6) any indication of fraud, collusion or tortuous conduct aimed to injure the interest of the non-settling defendants. See Tech-Bilt, Inc. (1985) 38 C3d 488, 499. The ultimate determinant of good faith is whether the settlement is grossly disproportionate to what a reasonable person at the time of settlement would estimate the settlor’s liability to be. City of Grand Terrace (1987) 192 CA3d 1251, 1262.

The total value of the settlement amounts to $53,259.49. (Hammons Decl. ¶16). Based on the damages claimed by Plaintiffs and those which can be attributed to Milgard and Avalon, the total settlement value is within the ballpark of Milgard and Avalon’s potential liability. (Hammons Decl. ¶¶14, 18, 19; Cruz Decl. ¶6).

The entire settlement amount will be allocated equally between Perez and Weslar, the only remaining defendants. (Hammons Decl. ¶23).

While Milgard had an insurance policy during the time of the claim, the policy has a $2,000,000.00 self-insured retention. (Hammons Decl. ¶24). Therefore, Milgard is paying its defense and this settlement out of pocket. (Id.). There is no evidence of collusion, fraud or tortious conduct as the settlement was reached after mediation and arms-length negotiations. (See Hammons Decl. ¶¶25-27).

A party opposing the good faith of the settlement has the burden of proof on that issue. CCP 877.6(d). Intervenor Benchmark Insurance Company on behalf of Perez Plastering Design, Inc. and Perez Plastering, Inc. has failed to meet this burden. The gravamen of the opposition is based on Benchmark’s criticism of Plaintiffs’ expert testing and Plaintiffs’, who acted as their own general contractor, failure to select an appropriate window and stucco product for the home. Such issues are not relevant to Milgard and Avalon’s settlement with Plaintiffs.

The determination that the settlement is in good faith bars any claims for indemnity, contribution, or apportionment of fault by a joint tortfeasor against Milgard and/or Avalon. CCP 877.6(c).