CRESTBROOK INSURANCE COMPANY VS CITY OF BEVERLY HILLS

Tentative Rulings

Case Number: BC663164    Hearing Date: January 10, 2020    Dept: 48

MOTION FOR JUDGMENT ON THE PLEADINGS

MOVING PARTY: Defendant Behnam Ghodsian

RESPONDING PARTY(S): Plaintiff Crestbrook Insurance Company

PROOF OF SERVICE:

• Correct Address: Served by electronic service; stipulation to e-service filed on April 13, 2018.
• 16/25 (CCP § 1005(b): OK. Served by electronic service on December 9, 2019.

• DENY motion for judgment on the pleadings as to the fourth cause of action.

  ANALYSIS

  Motion For Judgment On The Pleadings

  Plaintiff’s Evidentiary Objections

  Declaration of Rey Yang

  No. 1: GRANT. Counsel’s characterization of the Court’s findings re: motion for determination of good faith settlement is not properly considered on a motion for judgment on the pleadings.

Discussion

1. Fourth Cause of Action (Negligence/Negligence Per Se).

The question of whether Plaintiff or Defendant is primarily liable is a question of fact which cannot be determined on a motion for judgment on the pleadings.

Moreover, regardless of whether the Wastewater Ordinance of the City of Beverly Hills (BHMC § 6-1-301) applies to the duty of care question, a negligence per se cause of action is not a separate cause of action for violation of the ordinance. Rather, it is a common law action for negligence, and the ordinance merely affects the evidentiary burden at trial.

Generally, “ ‘[t]he doctrine of negligence per se is not a separate cause of action, but creates an evidentiary presumption that affects the  [*738] standard of care in a cause of action for negligence.’ [Citation.] [¶] The doctrine of negligence per se does not provide a private right of action for violation of a statute. [Citation.]” (Johnson v. Honeywell Internat. Inc. (2009) 179 Cal.App.4th 549, 555–556 [101 Cal. Rptr. 3d 726], quoting Millard v. Biosources, Inc., supra, 156 Cal.App.4th at p. 1353, fn. 2.) Under the doctrine, “the plaintiff ‘borrows’ statutes to prove duty of care and standard of care.” (179 Cal.App.4th at p. 558.)

Evidence Code section 669 provides that “negligence is presumed if the plaintiff establishes four elements: (1) the defendant violated a statute, ordinance, or regulation of a public entity; (2) the violation proximately caused death or injury to person or property; (3) the death or injury resulted from an occurrence … the nature of which the statute, ordinance, or regulation was designed to prevent; and (4) the person suffering the death or the injury to his person or property was one of the class of persons for whose protection the statute, ordinance, or regulation was adopted. The first two elements are normally questions for the trier of fact, while the latter two elements are determined by the trial court as a matter of law. [Citation.]” (Galvez v. Frields (2001) 88 Cal.App.4th 1410, 1420 [107 Cal. Rptr. 2d 50].)

Das v. Bank of America, N.A. (2010) 186 Cal.App.4th 727, 737-38.

In any event, BHMC § 6.1.307(G) is alleged in the 1AC to provide in part: “Maintenance and repair of house connection sewers . . . from the point of connection with the internal facility plumbing to the connection to the public sewer shall be the sole responsibility of the property owner.” 1AC, ¶ 25. The 1AC alleges that Doe 1 (demurring Defendant herein) was negligent in failing to properly maintain and repair the sewer lateral connection from the property, allowing penetration of tree roots and/or foreign materials to enter the City’s sewer system. 1AC, ¶¶ 25, 26. The allegations of the 1AC are taken to be true for purposes of a motion for judgment on the pleadings. County of Orange v. Association of Orange County Deputy Sheriffs (2011) 192 Cal.App.4th 21, 32-33. The allegations are sufficient to give rise to a duty on the part of Defendant to maintain the sewer lateral connection on Defendant’s property.

Defendant did not request that the Court take judicial notice of the BHMC. Further, Defendant’s argument that Defendant had no independent access to the areas underneath the alley does not address Defendant’s ability to access the sewer lateral connection beneath his property (i.e., for instance by way of a scope inspection).

The motion for judgment on the pleadings as to the fourth cause of action is DENIED.

Case Number: BC663164    Hearing Date: January 03, 2020    Dept: 48

MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT

MOVING PARTY: Plaintiff Crestbrook Insurance Company

RESPONDING PARTY(S): Defendant Behnam Ghodsian

PROOF OF SERVICE:

• Correct Address: Served by electronic service; stipulation to e-service filed on April 13, 2018.
• 16/25 (CCP § 1005(b): OK. Served by electronic service on October 25, 2019.

• DENY motion for leave to file a second amended complaint without prejudice.

  ANALYSIS

  Motion for Leave to File Second Amended Complaint

  Plaintiff’s Evidentiary Objections

  Declaration of Rey S. Yang

  No. 1: OVERRULED. Goes to weight.

  No. 2: OVERRULED. Goes to weight.

  No. 3: SUSTAINED. Irrelevant.

  No. 4: SUSTAINED. Irrelevant.

  No. 5: SUSTAINED. Irrelevant.

  No. 6: OVERRULED. Settlement discussions are inadmissible to prove liability. Evid. Code § 1152(a).

  No. 7: SUSTAINED. Irrelevant.

  No. 8: SUSTAINED. Irrelevant.

  No. 9: SUSTAINED. Irrelevant.

  No. 10: OVERRULED. Not inadmissible; permissible attorney argument.

  Defendant’s Evidentiary Objections

  Supplemental Declaration of Jeffrey C. Sparks

  No. 1: SUSTAINED. Submitted for first time in support of reply.

  Discussion

  Plaintiff Crestbrook Insurance Company moves for leave to file a second amended complaint.

  The Declaration of Jeffrey C. Sparks fails to comply with CRC Rule 3.1324(b) which states:

  (b)Supporting declaration a separate declaration must accompany the motion and must specify:

  (1)  The effect of the amendment;

  (2)  Why the amendment is necessary and proper;

  (3)  When the facts giving rise to the amended allegations were discovered; and

  (4)  The reasons why the request for amendment was not made earlier.

  Indeed, even the Reply Sparks Declaration fails to address CRC Rule 3.1324(b).

  The motion for leave to file a second amended complaint is DENIED without prejudice.

Case Number: BC663164    Hearing Date: November 21, 2019    Dept: 48

MOTION TO CONTEST APPLICATION FOR GOOD FAITH DETERIMINATION OF SETTLEMENT

MOVING PARTY: Defendant Benham Ghodsian

RESPONDING PARTY(S): Defendant/Cross-Complainant City of Beverly Hills

PROOF OF SERVICE:

• Correct Address: Served by email; stipulation to e-service filed on April 13, 2018.
• 16/25 (CCP § 1005(b): OK. Served by email on September 25, 2019.

• DENY motion to contest the application for good faith determination of settlement filed by Defendant City of Beverly Hills.

  ANALYSIS

  Motion to Contest Good Faith Determination

  Defendant’s Evidentiary Objections

  Declaration of Rey S. Yang

  Nos. 1 – 5: OVERRULED. It appears that Defendant produced the document.

  No. 6, 7: SUSTAINED. Lack of foundation.

  Nos. 8, 9: SUSTAINED. Lack of authentication.

  No. 10: SUSTAINED. Lack of authentication.

  No. 11: SUSTAINED. Lack of foundation.

  No. 12: SUSTAINED. Lack of foundation.

  No. 13: SUSTAINED. Lack of authentication.

  No. 14: SUSTAINED. Lack of foundation.

  Discussion

  Defendant Benham Ghodsian contests the application for good faith determination of settlement filed by Defendant City of Beverly Hills on the ground that the proposed $400,000 settlement between the City of Beverly Hills and Plaintiff Crestbrook Insurance Company lacks good faith under CCP § 877.6 and the factors enumerated in Tech-Bilt.

  Moving party argues that the $400,000 settlement is not within the ballpark of the City’s proportionate share of liability because prior to the subject incident, there had been an alarming number of sewer overflows in the City’s sewers due to root blockage in lateral sewer lines, yet the City failed to inspect the lateral sewer lines between the Kachans’ and Ghodsian’s properties for more than a year, despite its maintenance schedule calling for 30-60-90 day preventative maintenance. On the date of the incident, the City found a mass of roots blocking 90% of the mainline at 30’ north of the downstream manhole at a location in a public alley. Ghodsian characterizes this as a dangerous condition on publicly-owned portions of the sewer system, subjecting the City to 100 percent of liability.

  Ghodsian also argues that the City’s settlement exposes Ghodsian to $2.5 million in liability when in fact, he had no knowledge of any issues in the City’s main sewer or in his own lateral sewer line. Meanwhile, the City’s $400,000 settlement accounts for less than 14% of Crestbrook’s $3 million demand for economic damages. Moreover, had the Kachans had a functioning backwater valve, the water would not have backed up into their property. Ghodsian objects to the shifting of the City’s and the Kachans’ own neglect onto Ghodsian.

  Ghodsian also points to the City’s insurance policy with AIG, which has a $15,000,000 per incident/$30,000,000 aggregate limit, and ARCH Insurance, which has a $15,000,000 per incident/$20,000,000 aggregate limit.

  The party asserting the lack of good faith has the burden of proof on that issue. CCP § 877.6(d). The Supreme Court has set forth several factors to consider when determining the good faith nature of a settlement: 1) rough approximate of plaintiff’s total recovery, 2) the settlor’s proportionate liability, 3) amount paid in settlement, 4) allocation of settlement proceeds among the plaintiffs, 4) recognition that a settler should pay less in settlement that he would if he were found liable after trial, 5) financial condition and insurance policy limits of the settling defendants, 6) the existence of collusion, fraud, or tortuous conduct aimed to injury the interests of non-settling defendants. Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499. In assessing the good faith of any settlement, the trial court must properly consider whether the proposed settlement was within the reasonable range of the settling tortfeasor’s total liability, taking into account the settling tortfeasor’s potential liability for indemnity. Far West Financial Corp. v. D&S Co. (1988) 46 Cal. 3d 796, 814-815.

  The California Supreme Court’s August 15, 2019 decision in City of Orville v. Superior Court (2019) 7 Cal.5^th 1091 effectively eliminated Plaintiff’s subrogated inverse condemnation claim against the City in holding as follows:

  When public improvements damage private property, property owners not compensated earlier may seek recovery through inverse condemnation claims. But to succeed, such claims must demonstrate more than just a causal link—however tenuous—between the existence of the public improvement and the property damage. Instead, inverse condemnation liability depends on whether the property damage was the probable result or necessary effect of an inherent risk associated with the design, construction, or maintenance of the relevant public improvement.

  The damage to WGS's property arguably bears some connection to the design, operation, and maintenance of the sewer system: The sewage passed through the system before emerging in the dentists' office, and it was perhaps possible in principle to design a sewage system that made backwater valves entirely redundant. Yet we cannot say the damage was substantially caused by that system when WGS failed to fulfill a responsibility to install a backwater valve, and that reasonable requirement would have prevented or substantially diminished the risk of the mishap that spawned this case. The backup of sewage into WGS's offices was not the necessary result or unavoidable consequence of any risk posed by the sewer system. And the City acted reasonably in adopting the sewer design and presuming private property owners would comply with the law by installing and maintaining backwater valve devices to prevent sewage backups into private property. The City is not liable in inverse condemnation. We reverse the judgment of the Court of [*1112]  Appeal and vacate its order denying the petition for writ of mandate and direct the Court of Appeal to remand this case to the superior court for further proceedings consistent with this opinion.

  City of Oroville v. Superior Court (2019) 7 Cal.5th 1091, 1111-12. (bold emphasis and underlining added).

  The City of Oroville court addressed the “substantial causation” requirement for inverse condemnation liability; it was not addressing liability for trespass or dangerous condition of public property, which were alternative theories of liability asserted against the City in the 1AC.

  If we adopted the reasoning from City of Palo Alto, as WGS urges, we would overlook a crucial aspect of the inverse condemnation inquiry. Indeed, under WGS's analysis, liability for the public entity would attach whenever a public improvement is a concurrent cause of damage to private property, regardless of whether private property owners acted to defeat the deliberate design or construction of the improvement. The principles underlying article I, section 19 cut against this conclusion. (Bacich, supra, 23 Cal.2d at p. 350 [citing concerns that “compensation allowed too liberally will seriously impede, if not stop, beneficial public improvements because of the greatly increased cost”].) Instead, a court reviewing an inverse condemnation claim arising from sewage overflow must consider whether the damages to private property were the direct and necessary effect of the inherent risks posed by the public improvement as deliberately designed, constructed, or maintained. And in a case like this, a reviewing court must also assess whether the damages were the result of a risk created not by the public improvement, but by the acts of the private property owner. A causal connection between the public improvement and the property damage alone is insufficient to sustain a finding of inverse condemnation liability.

  City of Oroville v. Superior Court (2019) 7 Cal.5th 1091, 1109 (bold emphasis added).

  The Supreme Court’s decision in City of Oroville did not eliminate the City’s potential liability for a dangerous condition of public property, as to which responsibility for a concurrent cause of injury will suffice. Bakity v. County of Riverside (1970) 12 Cal.App.3d 24, 29-30.

  While City of Oroville did not eliminate the dangerous condition of public property as a viable cause of action against the City, it did provide a basis for finding that the Kachans were contributorily negligent in failing to have a functioning backwater valve as required by law, to such a large degree that the City’s potential liability under this theory was relatively small. Contributory negligence is available as a defense in suits involving dangerous conditions on public property. Chase v. Shasta Lake Union School Dist. (1968) 259 Cal.App.2d 612, 615.

  Here, the evidence is that the Kachans failed to install a legally-required backwater valve. Under City of Oroville, there is a high probability that the blockage in the City’s sewage system would be found not to have been a substantial cause of the Kachans’ damages, because the installation of a backwater valve would have prevented or substantially diminished their damages. In this regard, even in the unlikely event that the City were found to be largely responsible for the damage to the Kachans’ property, the $400,000 settlement figure accounts for the recognition “that a settlor should pay less in settlement than he would if he were found liable after a trial.” Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499.

  In this regard, Ghodsian has failed to demonstrate that the $400,000 is so grossly disproportionate to what a reasonable person at the time of the settlement would estimate the City’s liability to be (Tech-Bilt, supra, 38 Cal.3d at 499-500), especially after the Supreme Court decided City of Oroville. For the sake of argument, even if the roots intruding in the private lateral did emanate from trees on Ghodsian’s property places some fault upon Ghodsian for failing to maintain his lateral drain (which Ghodsian disputes), this caused a blockage in the City’s sewage system. Vis-à-vis the City’s sewage system, the Kachans’ failure to install a legally-required backwater valve would be contributory negligence, equally available to Ghodsian at trial. There is a strong chance that a jury would find that the Kachans’ failure to install a legally-required backwater valve was the primary cause of their damages and that installation would have prevented the extensive damage to their home. Thus, the risk of Ghodsian’s exposure to liability for the full amount of damages sought by Plaintiff appears to be low. In any event, the City’s exposure to liability for the full amount of damages is low, and the potential liability for indemnity to Ghodsian as the non-settling defendant would also be low, even if the City had an opportunity to perform maintenance to clear the root blockage.

  In light of the foregoing, the Court finds that the $400,000 settlement is within the reasonable range of the City’s total liability, taking into account its potential liability for indemnity to Ghodsian. The Court does not find that the settlement was entered into as a product of collusion or fraud aimed to injure Ghodsian’s interests. The settlement was reached with the assistance of retired federal Magistrate Judge, Leo Papas, mediator with Judicate West, after the Supreme Court’s Oroville decision. Declaration of Saskia T. Asamura, ¶¶ 18 – 20. The decision to settle was made to avoid further litigation costs, including a motion for summary judgment scheduled to be heard in March 2020. Id. At ¶ 5.

  The Court notes that Ghodsian’s argument in the Reply brief that the City could be subjected to punitive damages ignores the fact that a public entity may not be held liable for punitive damages. Gov. Code § 818.

  Accordingly, the motion to contest the application for good faith determination of settlement filed by Defendant City of Beverly Hills is DENIED.