Opinion
B296344
03-09-2020
ONLINE TRUCKING, INC. et al., Petitioners, v. THE SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; INTERMODAL WEST, INC., et al., Real Parties in Interest.
Ivie, McNeill & Wyatt, APLC, Chandler A. Parker, Bryon M. Purcell and Marie B. Maurice for Petitioners. No appearance for Respondent. Daniels, Fine, Israel, Schonbuch & Lebovits, LLP., and Mark R. Israel for Real Parties in Interest.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. BC662594) ORIGINAL PROCEEDING. Petition for writ of mandate, Peter A. Hernandez, Judge. Petition for writ of mandate granted. Ivie, McNeill & Wyatt, APLC, Chandler A. Parker, Bryon M. Purcell and Marie B. Maurice for Petitioners. No appearance for Respondent. Daniels, Fine, Israel, Schonbuch & Lebovits, LLP., and Mark R. Israel for Real Parties in Interest.
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Petitioners OnLine Trucking and Anthony Kuybus challenge the trial court's determination that a settlement between the plaintiff and another defendant was entered in good faith, barring OnLine's indemnity claims. Because the record contains no evidence that a settlement was entered, we grant the petition.
FACTUAL AND PROCEDURAL SUMMARY
This matter arises out of a motor vehicle accident involving three vehicles. Plaintiff Juan Villa was the front driver, and was struck from the rear in a collision in which a truck owned by Intermodal West, Inc. (Intermodal) and driven by Rafael Leiva was directly behind him, and a truck owned by OnLine Trucking, Inc. and driven by Anthony Kuybus (hereinafter OnLine) was the last vehicle in the line of collision. In a complaint filed in May 2017, Villa sued OnLine, and Doe defendants, alleging that their negligence caused the accident. OnLine, in a cross-complaint filed in May 2018, sued Intermodal and its driver for indemnity, negligence, comparative negligence, and declaratory relief. Approximately one month later, Villa filed an amendment, naming Intermodal as Doe One.
Although a fourth vehicle was also involved, its driver is not a party to these proceedings.
Intermodal did not answer the complaint, instead asking Villa to dismiss his claims. In July 2018, Villa filed a request for dismissal without prejudice. Later that same month, Intermodal filed a motion for good faith settlement pursuant to Code of Civil Procedure sections 877 and 877.6.
All further statutory references, unless otherwise specified, are to the Code of Civil Procedure.
In its motion, Intermodal argued that Villa had revealed in discovery that Intermodal had no fault in the accident and that, in any event, he knew Intermodal's identity at the time of the accident. As a result, it asserted both that Villa's claims were barred by relevant statute of limitations provisions, as the Doe amendment was filed too late, and that it had no liability for the accident. Intermodal attached numerous documents, drawn from discovery, in support of its motion, and submitted a declaration from counsel concerning her discussions with Villa's counsel.
The motion asserted that, in their discussions concerning the case, counsel for Intermodal explained to Villa's counsel that the Doe amendment was untimely, and that, after consideration, Villa's counsel agreed to dismiss. As a result, Intermodal argued, the dismissal was made in good faith, and OnLine's indemnity cross complaint should be dismissed. The motion also argued that there was a settlement, reached through negotiations, which took into account Intermodal's lack of liability and which was not collusive.
Intermodal sought dismissal of the cross-complaint against Leiva as well, despite the fact that Intermodal was the only party named as a Doe, and the only party dismissed by Villa. Counsel's declaration contains no mention of Leiva.
Counsel's declaration in support of the motion described the discovery taken, and Villa's description of the accident in his discovery responses. With respect to the discussions leading to the dismissal, the declaration described the initial email correspondence requesting a dismissal on statute of limitations grounds, and on the ground that Villa's claims against Intermodal had no merit. Two days later, counsel sent another email, described as again requesting a dismissal, after which counsel scheduled a conference call. According to the declaration, which characterized that telephonic conference as a meet and confer prior to Intermodal filing a demurrer, counsel spoke on July 3, 2018. Villa's counsel agreed to consult with his client to confirm that he had obtained identifying information at the time of the accident. On July 11, Villa's counsel, by email, agreed to dismiss Intermodal; the declaration stated the dismissal was "presumably in exchange for waiver of costs." Intermodal did not attach the emails to the declaration, and the emails are not contained in the records of this proceeding.
Following the dismissal, Intermodal asked OnLine to dismiss both Intermodal and Leiva from the cross-complaint, asserting that the dismissal had been in exchange for a waiver of costs. OnLine did not do so.
OnLine opposed the motion for good faith settlement, arguing that the settlement had not been made in good faith. Noting the claims were in excess of $2 million, OnLine argued that the evidence demonstrated that Intermodal was at least 33 percent liable for the injuries. In addition, it argued that there had been no articulation of the amount of costs that had been waived, noting that no answer had been filed; in any event, dismissals based on waiver of costs based on statute of limitations grounds do not serve the statutory purposes. Counsel's declaration in support of the opposition attached additional discovery materials in support of OnLine's allocation of liability.
In reply, Intermodal and Leiva argued that the evidence that they bore any liability was "completely worthless" and not credible, while Villa's testimony absolved them. They further asserted that a settlement for waiver of costs only was in good faith, in light of the absence of liability.
After hearing, the court found that plaintiff had agreed to dismiss both Intermodal and Leiva; that OnLine's evidence had not established Leiva's liability; that the settlement was reasonable and within Intermodal's and Leiva's zero share of liability; and that the settlement was reached through arm's length negotiations. The trial court granted the motion.
OnLine filed this petition for writ of mandate, asserting that there had been no settlement, and that there was no basis for the finding of good faith. This Court requested opposition from Intermodal and, having reviewed it, issued an order to show cause.
DISCUSSION
I. Intermodal Provided No Evidence Of A Settlement
In Tech-Bilt, Inc. v. Woodard-Clyde & Associates (1985) 38 Cal.3d 488, the Supreme Court described the requirements to establish a good faith settlement under sections 877 and 877.6. Citing River Garden Farms, Inc. v. Superior Court (1972) 26 Cal.App.3d 986, 993, 998, the Court explained: """[t]he major goals of the 1957 tort contribution legislation are, first, equitable sharing of costs among the parties at fault, and second, encouragement of settlements. [Citation] In interpreting this legislation, the courts therefore properly attempted to accommodate both objectives, even though the goals of equitable sharing and encouragement of settlements are not always necessarily harmonious. "[I]f the policy of encouraging settlements is permitted to overwhelm equitable financial sharing, the possibilities of unfair tactics are multiplied. Neither statutory goal should be applied to defeat the other."" (Tech-Bilt, supra, 38 Cal.3d at p. 494.)
The Tech-Bilt court cited with approval the conclusion of the Ninth Circuit in Commercial U. Ins. Co. v. Ford Motor Co. (9th Cir. 1981) 640 F.2d 210, 213, that "'the expansion of § 877 to prevent a party from seeking indemnification from another should apply only when the policy of settlement has been furthered and a settlement is made in good faith. [¶] In determining whether the policy of settlement has been furthered, we look to the conduct of the parties. When a plaintiff dismisses an action, the policy is furthered only when the dismissal resulted from a mutual decision to settle the dispute. At that stage of the inquiry, the testimony of counsel recounting the basis for dismissal is relevant. [¶] Section 877 applies to settlement [sic] made in good faith only. Individuals not participating in the settlement are barred from seeking contribution only if the settling parties acted in good faith with respect to them. Hence, good faith of the dismissal alone is not sufficient. The dismissal must represent a settlement which is a good faith determination of relative liabilities. Only in this situation are both policies behind § 877 equity and settlement furthered." [Citation.]).'" (Tech-Bilt, supra, 38 Cal.3d at pp. 496-497.)
Thus, the first inquiry must be whether there is a settlement between the parties. While, on appeal, we generally review the determination of whether a settlement is in good faith for abuse of discretion (Tech-Bilt, supra, 38 Cal.3d at p. 502), the resolution of factual issues is reviewed for substantial evidence. (Dole Food, Inc. v. Superior Court (2015) 242 Cal.App.4th 894, 909; Erreca's v. Superior Court (1993) 19 Cal.App.4th 1475, 1490.)
The factual determination that there had been a settlement in this case is not, however, supported by any evidence. None of the emails detailing the discussions leading to the dismissal were placed in the record by Intermodal, which bore the burden of proof on this issue. (City of Grand Terrace v. Superior Court (1987) 192 Cal.App.3d 1251, 1261 [settling party seeking good faith determination must establish existence of settlement before burden shifts to objector].)
Indeed, a portion of the court's finding was directly contradicted by the record: Leiva was not named in the amendment, not dismissed by the dismissal, and not discussed by counsel.
The declaration of counsel, which is the only evidence of a purported agreement, treads carefully on the central issue of consideration: counsel does not assert that there had been a waiver of costs, but only that "presumably" there had been such a waiver. As a direct participant in the discussions, counsel either knows or does not know what was discussed; counsel's failure to aver that there had been such a waiver leaves the court with no basis to rely on a presumption.
Counsel was willing, when not under oath, to assert there had been a waiver when requesting OnLine to dismiss its cross-complaint. The silence when under oath is deafening.
Without evidence of a waiver of costs, and indeed without any evidence that there were recoverable costs less than 30 days after the filing of the amendment, there is no evidence of the required benefit on one side, and detriment on the other, to establish consideration for any purported agreement between the parties. (See Civ. Code, § 1605.)
Civil Code section 1605, defines good consideration as follows: "Any benefit conferred, or agreed to be conferred, upon the promisor, by any other person, to which the promisor is not lawfully entitled, or any prejudice suffered, or agreed to be suffered, by such person, other than such as he is at the time of consent lawfully bound to suffer, as an inducement to the promisor, is a good consideration for a promise."
In these proceedings, Intermodal relies on two cases to demonstrate consideration: Booth v. Bond (1942) 56 Cal.App.2d 153 and Baker v. Philbin (1950) 97 Cal.App.2d 393. Neither involves a good faith settlement, and neither is persuasive.
In Booth, a breach of contract case, there was a written release between the parties that specified the consideration for the agreement. While the plaintiffs later claimed the consideration had failed because recovery had at all times been barred by the statute of limitations, the court found that "'[t]he cancellation of a preexisting debt, the release of security or the forbearance to sue, even though it subsequently appear that the forbearer might not have been successful in the suit, furnish sufficient consideration to uphold a contract.'" (Booth, supra, 56 Cal.App.2d at p. 157.) None of those factors have been shown in this matter.
Similarly, in Baker, the court found a preexisting oral contract to be sufficient consideration for a compromise, even though the claimant might have been unsuccessful in a lawsuit to enforce that contract.
On this record, however, there is no defined consideration, of any kind.
In contrast, courts confronted with good faith settlement claims carefully examine the claimed consideration. In Tech-Bilt, Woodward Clyde advised plaintiff that the claims against it were barred by the statute of limitations, and stated that it intended to file a motion for summary judgment on that basis unless plaintiffs agreed to dismiss. Woodward Clyde offered a cost waiver; plaintiff dismissed. (Tech-Bilt, supra, 38 Cal.3d at pp. 491-492.) The Court explained that this meant that plaintiffs received nothing for the dismissal of their action other than relief from costs: "The same net situation would have existed if, mindful of the running of the statute of limitations against them, plaintiffs had not sued Woodward-Clyde in the first place. To say that section 877.6 cloaks Woodward-Clyde with immunity from liability to joint tortfeasors under these circumstances would not serve the goal of encouraging settlement, and it would frustrate the goal of allocating costs equitably among multiple tortfeasors." (Tech-Bilt, supra, 38 Cal.3d at pp. 501-502.) In this case, the situation is more extreme than in Tech-Bilt: there is no evidence of a waiver of costs. Like the plaintiff in Tech-Bilt, Villa also obtained no benefit but was placed in the same situation he would have been in had he properly considered the statutory bar.
Moreover, Intermodal gave up nothing of value. Instead, by characterizing the dismissal as a settlement and obtaining a determination of good faith, it placed itself in a better position than if it had filed the demurrer it now asserts it gave up the right to file. A demurrer on the grounds of the statute of limitations, like a summary judgment on that ground, would not bar the claims for indemnity. Villa's action against OnLine was timely brought, and OnLine's cross complaint was also timely. The fact that Villa's claims against Intermodal were barred does not bar OnLine's timely claims. (Tech-Bilt, supra, 38 Cal.3d at p. 492.) Thus, far from giving up a right, Intermodal obtained an advantage and the right to seek relief without further discovery and the necessity of filing a summary judgment motion or proceeding to trial to defeat the indemnity claims.
Intermodal, in the context of a demurrer, could only have established that Villa's claims were barred. It could not have relied on material outside the pleadings, the material it used here, to argue that it had no potential liability and to gain dismissal of the cross complaint. (Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 482 [demurrer challenges defects on face of pleading; only matters outside the pleading subject to judicial notice may be considered].) --------
II. Even Had There Been A Waiver Of Costs, The Record Does Not Support The Court's Exercise of Discretion To Grant The Motion
Even had Intermodal presented facts establishing its claim for a costs waiver as consideration for a settlement, supported by evidence that there were costs to waive, settlements of this nature require careful evaluation by the trial court. To protect the interests of the non-settling defendants, courts must consider whether there is "collusion, fraud, or tortious conduct aimed to injure the interests of nonsettling defendants." (Tech-Bilt, supra, 38 Cal.3d at p. 499; see also Southern Cal. Gas Co. v. Superior Court (1986) 187 Cal.App.3d 1030, 1036 [failure to set out value of portion of settlement and allocation impaired rights of non- settling defendants to offset precluded finding of good faith]; Grand Terrace, supra, 192 Cal.App.3d at p. 1263 ["requirement of good faith in sections 877 and 877.6, which a settling defendant must satisfy to invoke the statutory bar against indemnity claims, was imposed primarily to protect the interests of non-settling defendants"].)
In this case, as there was no basis on which the court could determine the value of the consideration, there was no ability to credit the non-settling defendants, even if that credit was minimal. Courts need sufficient information to allocate the consideration given for the settlement to determine whether that settlement adequately protects the rights of the non-settling defendants. (Alcal Roofing & Insulation v. Superior Court (1992) 8 Cal.App.4th 1121, 1123, 1128-1129 ["At a minimum, a party seeking confirmation of a settlement must explain to the court and to all other parties: who has settled with whom, the dollar amount of each settlement, if any settlement is allocated, how it is allocated between issues and/or parties, what nonmonetary consideration has been included, and how the parties to the settlement value the nonmonetary consideration."])
As in Tech-Bilt, the dismissal was tactical in nature, with all benefits to the party seeking approval, and all detriment to the non-settling defendants, who were given only a limited, and summary, opportunity to demonstrate any fault of Intermodal. Villa received nothing in return for the dismissal, except, at most, relief from costs if any existed; and Intermodal was given immunity from liability. Here, as in Tech-Bilt, "to say that section 877.6 cloaks [Intermodal] with immunity from liability to joint tortfeasors under these circumstances would not serve the goal of encouraging settlement, and it would frustrate the goal of allocating costs equally among multiple tortfeasors." (Tech Bilt, supra, 38 Cal.3d at pp. 502-503.)
On this record, the trial court abused its discretion in finding a good faith settlement without evidence necessary to evaluate the dealings between the parties.
DISPOSITION
The petition for writ of mandate is granted. The Superior Court is directed to vacate its order granting the approval of good faith settlement, and to enter a new order denying relief to Intermodal and Leiva. Petitioners are to recover their costs in this proceeding.
ZELON, J. We concur:
PERLUSS, P. J.
FEUER, J.