Tentative Rulings

Case Number: BC668987    Hearing Date: October 24, 2019    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Plaintiff Rudy Montiel (“Montiel”) filed this wage and hour action on July 18, 2017 against Defendants LGI Association, Inc. (“LGI”) and John C. Chiu (“Chiu”). The operative Second Amended Complaint (“SAC”) was filed on April 20, 2018. Montiel seeks damages totaling approximately $66,000.

On July 13, 2018, LGI and its principals filed a Cross-Complaint against Chiu and certain Chiu-related entities.

Montiel alleges that he worked as a handyman for LGI and Chiu at various apartment buildings owned by Chiu and managed by LGI. (SAC, ¶¶ 1, 5.) Montiel alleges that he was not paid all wages earned and was not reimbursed for necessary business expenses incurred while performing his job duties. (SAC, ¶ 1.)

Montiel and Chiu have entered into a settlement agreement, wherein Montiel agrees to dismiss his claims against Chiu in exchange for payment of $8,500, subject to a court order determining that the settlement is in good faith.

Chiu now moves for an order determining that the settlement is in good faith pursuant to Code of Civil Procedure section 877.6. LGI opposes.

Legal Standard

“[Code of Civil Procedure] Section 877.6 was enacted by the Legislature in 1980 to establish a statutory procedure for determining if a settlement by an alleged joint tortfeasor has been entered into in good faith and to provide a bar to claims of other alleged joint tortfeasors for equitable contribution or partial or comparative indemnity when good faith is shown.” (Irm Corp. v. Carlson (1986) 179 Cal.App.3d 94, 104.)

Section 877.6, subdivision (a)(1) provides, in relevant part, that, on noticed motion, “[a]ny party to an action in which it is alleged that two or more parties are joint tortfeasors or co-obligors on a contract debt 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 tortfeasors or co-obligors.” (Code Civ. Proc., § 877.6(a)(1).) “The party asserting the lack of good faith shall have the burden of proof on that issue.” (Code Civ. Proc., § 877.6(d).)

“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.” (Code Civ. Proc., § 877.6(c).)

In Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, the California Supreme Court identified the following nonexclusive factors courts are to consider in determining if a settlement is in good faith under section 877.6: “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 conditions 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.” (Id. at p. 499.) The evaluation of whether a settlement was made in good faith is required to “be made on the basis of information available at the time of settlement.” (Ibid.) If the party contesting the settlement can show, with admissible evidence, that the settlement is “so far ‘out of the ballpark’ in relation to [the above-referenced factors] as to be inconsistent with the equitable objectives of the statute,” then the court should find the settlement to be lacking in good faith. (Id. at pp. 499-500.)

Discussion

Chiu contends that $8,500, which is approximately 13% of the roughly $66,000 sought by Montiel, is within the ballpark of reasonableness. Chiu also disclaims any liability in this matter, pointing to evidence that the management contracts between himself and LGI show that employees like Montiel were employees of LGI, which was responsible for hiring and properly paying its employees. (Schwartz Decl., ¶ 2, Ex. 1, § 2(E).)

LGI opposes primarily on two grounds. First, LGI argues that the management contracts between LGI and Chiu include an indemnification provision wherein Chiu agrees to indemnify LGI for damages “relating to the management, leasing, rental, security deposits, or operation of the property by LGI, or any person in LGI firm, or the performance or exercise of any of the duties, powers or authorities grant[ed] to LGI.” (Karandish Decl., ¶ 15, Ex. 1, § 3(B).) One of the authorities and powers granted to LGI is that of paying “all disbursements for all persons employed in the operation of [the] building from the Owner’s fund.” (Karandish Decl., ¶ 15, Ex. 1, § 2(H).) However, as LGI itself acknowledges, a good faith determination under Code of Civil Procedure section 877.6 does not bar a claim for express indemnity against a co-tortfeasor. (C.L. Peck Contractors v. Superior Court (1984) 159 Cal.App.3d 828, 834 [“We hold that an indemnity claim against a codefendant based on express contract survives a good faith section 877.6 settlement.”].) Thus, the existence of an express indemnity claim against a settling defendant does not have any bearing on whether the settlement is in good faith.

Second, LGI contends that the settlement between Montiel and Chiu is not in good faith because the settlement amount is not within the “ballpark” of what a reasonable person would determine Chiu’s liability to be. LGI argues that Chiu was very hands-on in his management of the properties but does not cite to any evidence in support of this assertion. LGI also contends that Chiu took direct control of the purse strings concerning payment of Montiel’s wages by closing down the bank accounts accessible by LGI and opening new accounts that were inaccessible to LGI. (Karandish Decl., ¶ 12.) LGI asserts that it is effectively out of business, so it does not have the ability to contribute to settlement, but Chiu still owns a significant amount of real estate so Chiu should shoulder more of the financial burden of resolving this case.

Based on a consideration of all of the applicable Tech-Bilt factors and the argument and evidence presented by the parties, the Court finds that LGI has not shown that the settlement is so far out of the “ballpark” as to lack good faith.

Conclusion

Based on the foregoing, Chiu’s motion for a good faith determination is granted.

Chiu is ordered to provide notice of this ruling.

DATED: October 24, 2019 ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court