345 SOUTH HARVARD BLVD HOMEOWNERS ASSOC VS HARVARD 345 LLC

Tentative Rulings

Case Number: BC683612    Hearing Date: November 19, 2019    Dept: 20

TENTATIVE RULING/ORDER

Judge Dalila C. Lyons

Department 20

Hearing Date: Tuesday, November 19, 2019

Case Name: 345 South Harvard Boulevard Homeowner’s Association v. Harvard 345, LLC, et al.

Case No.: BC683612

Motion: Determination of Good Faith Settlement

Moving Party: Defendants Harvard 345, LLC; Hersel Neman; Robert Neman; Hong S. Jeon; B. Raeen Construction Inc.; and Indigo Construction, Inc.

Responding Party: *UNOPPOSED*

Notice: OK

Ruling: Defendants Harvard 345, LLC; Hersel Neman; Robert Neman; Hong S. Jeon; B. Raeen Construction Inc.; and Indigo Construction, Inc.’s motion for good faith determination of settlement is GRANTED.

Any and all cross-complaints or claims arising out of this action against Defendants Harvard 345, LLC; Hersel Neman; Robert Neman; Hong S. Jeon; B. Raeen Construction Inc.; and Indigo Construction, Inc. for equitable comparative contribution or full or partial or comparative indemnity based on comparative negligence or comparative fault are barred.

Per the Notice of Settlement of the Entire Case filed on October 9, 2019, a dismissal of the entire case was going to be filed by December 15, 2019. Accordingly, the entire case, including all cross-complaints, must be dismissed by December 15, 2019. Plaintiff and ALL Cross-complainants must file the dismissals clearly specifying the particular complaint or cross-complaint being dismissed.

Moving Party to give notice.

BACKGROUND

On November 14, 2017, Plaintiff 345 South Harvard Boulevard Homeowner’s Association (“Plaintiff” or the “Association”) against Defendants Harvard 345, LLC (“Harvard LLC”), B. Raeen Construction, Inc. (“Raeen Construction”), Hersel Neman (“H. Neman”), Robert Neman (“R. Neman”), Hong S. Jeon (“Jeon”), and Does 1 through 1,000 for (1) violations of building standards for original construction pursuant to Civil Code § 896 et seq.; and (2) breach of fiduciary duty.

Plaintiff was and now is the Owners’ Association for the condominium common interest development located at 345 South Harvard Boulevard, Los Angeles, CA 90020 (the “Property”). Plaintiff alleges at the time of purchasing the Property that they believed to have purchased a building in good and workmanlike manner and in conformance with the building plans and specifications according to generally accepted building practices in the community and in conformance with the standards for residential construction. But Plaintiff alleges the Property was defective in design, materials, workmanship, and construction it that it was improperly designed and constructed and failed to comply with Building and Housing Code standards which materially affect the construction of residential structures.

On February 15, 2018, Raeen Construction filed its Cross-Complaint against Cross-Defendants Harvard LLC, California Express Plumbing, Inc. (“Express Plumbing”), Indigo Construction Corporation (“Indigo”), H & R Construction & Resurfacing, Inc. (“H & R Construction”)^[1], JK Electric, Inc. (“JK Electric”)^[2], B & A Fire Protection, Inc. (“B & A Fire”), Ultimate Construction (“Ultimate”), Sunset Drywall, Inc. (“Sunset Drywall”), Pfinish Koncepts, Inc. (“Pfinish Koncepts”) d/b/a Stonecraft Enterprises (“Stonecraft”) ^[3], Best Metal Design Iron Works, Inc. (“Best Metal”)^[4], Heriberto Alcantar Gomez (“Gomez” d/b/a Bandera Glass (“Bandera”), Nu Design, Inc. (“Nu Design”)^[5], Fame Floor Covering (“Fame Floor”), Eskimo Air Control & Construction, Inc. (“Eskimo Air Control”), KG Construction Solutions USA, Inc. (“KG Construction”)^[6], Doo-Rite Painting (“Doo-Rite”), Capital Cabinets (“Capital Cabinets”)^[7], and Roes 1 through 350 for (1) contractual indemnity; (2) breach of settlement agreement; (3) implied contractual indemnity; (4) negligence; and (5) breach of implied warranty.

On May 14, 2018, Indigo filed its Cross-Complaint against Cross-Defendants H. Neman, R. Neman, Farhad Farahmand (“Farahmand”), Naim and Associates “(Naim”), H & R Construction, and Roes 1 to10 for (1) equitable indemnity; (2) equitable contribution; and (3) declaratory relief. On June 15, 2018, Indigo filed its Amended Cross-Complaint for (1) equitable indemnity; (2) equitable contribution; (3) declaratory relief; (4) breach of contract; and (5) express indemnity.

On June 22, 2018, Harvard LLC, H. Neman, R. Neman, and Jeon filed their Cross-Complaint against Cross-Defendants Naim, Indigo, and Roes 11 through 20 for (1) equitable indemnity; (2) equitable contribution; and (3) declaratory relief.

On August 10, 2018, Naim & Associates Consulting Structural Engineers, Inc. (“Naim”) filed its Cross-Complaint against H. Neman, R. Neman, Farahmand, H & R Construction, Indigo, and Moes 1 through 150 for (1) contractual indemnity; (2) breach of settlement agreement; (3) equitable indemnity; (4) equitable contribution; and (5) declaratory relief.

On October 9, 2019, Plaintiff filed a Notice of Settlement of Entire Case.

No opposition was filed to this motion.

ANALYSIS

I. Good Faith Settlement

“[A] settling party may give notice of settlement to all parties and to the court, together with an application for determination of good faith settlement and a proposed order. The application shall indicate the settling parties, and the basis, terms, and amount of the settlement. The notice, application, and proposed order shall be given by certified mail, return receipt requested, or by personal service. Proof of service shall be filed with the court. Within 25 days of the mailing of the notice, application, and proposed order, or within 20 days of personal service, a nonsettling party may file a notice of motion to contest the good faith of the settlement. If none of the nonsettling parties files a motion within 25 days of mailing of the notice, application, and proposed order, or within 20 days of personal service, the court may approve the settlement.” CCP § 877.6(a)(2).

“[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.” Torres v. Union Pacific R.R. Co. (1984) 157 Cal.App.3d 499, 509. 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. Such a demonstration would establish that the proposed settlement was not a “settlement made in good faith” within the terms of section 877.6. Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499-500.

The factors a court should look to in evaluating “good faith” within the meaning of CCP § 877.6 are (1) a rough approximation of plaintiff’s total recovery and the settler’s proportionate liability, (2) the amount paid in settlement, (3) the allocation of settlement proceeds among the various plaintiffs, (4) the financial condition of the settling defendants and their ability to respond to a judgment against them, (5) the existence of collusive, fraudulent, or other tortious conduct by the settling parties in connection with the negotiation and construction of the settlement which is injurious to the interests of the non-settling parties. Abbot Ford, Inc. v. Superior Court (1987) 43 Cal.3d 858, 874 citing Tech-Bilt 38 Cal.3d 488. While the settling party is not initially compelled to make a showing of the Tech-Bilt factors in bringing the motion or application for good faith settlement, once the settlement is attacked as lacking good faith the settling party is required to file counter-affidavits showing the settlement is “in the ballpark.” See Mattco Forge, Inc. v. Arthur Young & Co. (1995) 38 Cal. App. 4th 1337, 1350 n. 6.

A. Underlying Settlement and Background Facts

Defendants Harvard 345, LLC; Hersel Neman; Robert Neman; Hong S. Jeon; B. Raeen Construction Inc.; and Indigo Construction, Inc. (“Moving Defendants’) move for a determination of good faith settlement because the amount paid in settlement is sufficient given that all claims against Moving Defendants are barred by the statute of limitations.

Moving Defendants were sued by the homeowners association of a condominium project the Moving Defendants built. Moving Defendants filed cross-complaints for indemnity against each other and various subcontractors.

“Potential liability for indemnity to a nonsettling defendant is an important consideration for the trial court in determining whether to approve a settlement by an alleged tortfeasors.” TSI Seismic Tenant Space, Inc. v. Superior Court (2007) 149 Cal.App.4th 159, 166. “The settling party’s proportionate liability is one of the most important factors.” Long Beach Memorial Medical Center v. Superior Court (2009) 172 Cal.App.4th 865, 873. This is especially so when the “true value [for Settling Defendants] in the ‘settlement’ [with Plaintiff] was not the dismissal of [Plaintiff’s] claims as to [Settling Defendants]…but rather the dismissal of the indemnity claims of [the Other Defendants].” West v. Superior Court (1994) 27 Cal.App.4th 1625, 1636. The good faith evaluation is made based on the information available at the time of the settlement and cannot be grossly disproportionate as to what a reasonable person at the time of the settlement would estimate the settling defendant’s liability to be. Mattco Forge, Inc. v. Arthur Young & Co. (1995) 38 Cal.App.4th 1337, 1349. “In any action for personal injury, property damage, or wrongful death, based upon principles of comparative fault, the liability of each defendant for non-economic damages shall be several only and shall not be joint.” Civ. Code § 1431.2(a) (emphasis added).

The nonsettling parties, who are named only in cross-complaint for indemnity filed by the Moving Defendants, have failed to oppose the present motion for good faith settlement. The present motion was served on all parties on October 22, 2019. No oppositions have been filed.

The moving party generally bears the initial burden of proof on its motion.  Therefore, lack of opposition does not automatically entitle plaintiff to prevail on the motion.  However, a party’s failure to file opposition can be considered as an admission that the motion is meritorious and the Court can refuse to hear oral argument from such party.  Oral argument should not be allowed because it is improper to introduce legal theories without notice to opposing counsel and the court.  Sexton v. Superior Court (1997) 58 Cal.App.4th 1403, 1410.

Here, the settlement complies with CCP § 877.6. The Court finds Moving Defendants offer of $179,500.00 is not grossly disproportionate to their potential liability. Although Plaintiff initially alleged $1,509,450 as the cost to repair. Moving Defendants’ expert countered the cost to repair was no more than $71,101.13. The settlement offer exceeds the cost to repair by $100,000. Moreover, Moving Defendants persuasively argue their potential liability in this action could be $0 based on the running of the statutes of limitations. It appears that construction was substantially completed in July 2007. The Supreme Court recently held the Right to Repair Act exclusively controls claims for construction defects, like those alleged here. McMillan Albany LLC v. Superior Court (2018) 4 Cal.5th 241. The Right to Repair Act establishes a statute of limitations that bars defect actions filed ten years after substantial completion of the construction. Civ. Code § 941(a). Because the action was filed in November 2017 and the construction was substantially completed in July 2007, the entire action is barred. Moving Defendants argue their $179,500.00 settlement offer was made to avoid the cost of a trial. There is no evidence of collusion between these settling parties and all parties were represented by counsel in arms-length settlement negotiations presided over by a mediator. The settlement proceeds will go to the single Plaintiff.

Accordingly, Defendants Harvard 345, LLC; Hersel Neman; Robert Neman; Hong S. Jeon; B. Raeen Construction Inc.; and Indigo Construction, Inc.’s motion for good faith determination of settlement is GRANTED.

SO ORDERED.

Date: _________________ ____________________________

Hon. Judge Dalila Corral Lyons

Los Angeles Superior Court