Res-Care, Inc. v. Roto-Rooter Services Company et al

Filing 321

Order Signed by Magistrate Judge Donna M. Ryu GRANTING re 309 Joint Motion for Determination of Good Faith Settlement. (dmrlc1, COURT STAFF) (Filed on 8/17/2011)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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OAKLAND DIVISION

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RES-CARE INC.,

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No. C 09-3856 EDL (DMR)

Plaintiff,

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For the Northern District of California

United States District Court

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v.
ROTO-ROOTER SERVICES COMPANY,
ROTO-ROOTER CORPORATION,
BRADFORD-WHITE CORPORATION,
LEONARD VALVE COMPANY, and
DOES 1 through 20, inclusive,

ORDER GRANTING JOINT MOTION
FOR DETERMINATION OF GOOD
FAITH SETTLEMENT

Defendants.
____________________________________/

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Plaintiff Res-Care, Inc. (“Res-Care”) and Defendant Leonard Valve Company (“Leonard

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Valve”) jointly move for determination of good faith settlement pursuant to California Code of Civil

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Procedure section 877.6. Defendants Roto-Rooter Services Company and Roto-Rooter Corporation

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(collectively, “Roto-Rooter”) submitted a statement of non-opposition to the joint motion,

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requesting that the court allocate the full amount of the settlement between Res-Care and Leonard

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Valve against any judgment entered against them. The motion is suitable for resolution without oral

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argument pursuant to Civil Local Rule 7-1(b), and accordingly, the August 25, 2011 hearing on the

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motion is VACATED.

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I. STATEMENT OF FACTS

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The settlement between Res-Care and Leonard Valve arises from a scalding incident at a

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Res-Care facility where a resident, Theresa Rodriguez, was severely burned in the shower while

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under the care of Res-Care personnel. (Joint Mot. 1.) The Estate and Conservator of Theresa

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Rodriguez initially brought suit against Res-Care in a separate state court action, and the two parties

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reached a settlement of $8.5 million. (Joint Mot. 3.) Res-Care then filed this action for equitable

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indemnity, contribution, and declaratory relief against Defendants Leonard Valve, Bradford-White

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Corporation (“Bradford-White”), and Roto-Rooter. (Joint Mot. 3.)

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In June 2010, Res-Care and Bradford-White reached a settlement whereby Bradford-White
agreed to pay Res-Care $115,000, and both parties agreed to mutually release any and all claims

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For the Northern District of California

United States District Court

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arising out of the dispute. Magistrate Judge Laurel Beeler subsequently granted an unopposed

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motion for determination of good faith settlement. [Docket No. 266.]

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On April 8, 2011, the parties participated in a mandatory settlement conference before the

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undersigned, and Res-Care and Leonard Valve reached a settlement on the following terms: Leonard

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Valve agreed to pay Res-Care $125,000, with Res-Care waiving the right to pursue a motion to tax

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costs in the underlying state court action and releasing with prejudice all claims against Leonard

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Valve. (Joint Mot. 2.) The parties now move for determination of good faith settlement. They

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argue that the settlement payment “represents a fair and substantial resolution of Leonard Valve’s

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potential liability in this case as viewed in the light of pertinent facts, existing law, the parties’

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available claims and defenses, and the future costs and risks of pursuing relief through litigation.”

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(Joint Mot. 4.)

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On July 19, 2011, Roto-Rooter, the remaining defendant in the action, filed a statement of

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non-opposition to the motion requesting that the court allocate the entire $125,000 settlement as a

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credit applied to any judgment entered against Roto-Rooter. (Def.’s Resp. 2-3.)

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II. LEGAL STANDARD

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California Code of Civil Procedure sections 877 and 877.6 govern this motion.1 These

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statutes, covering settlements among joint tortfeasors, are aimed at two objectives: “equitable

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sharing of costs among the parties at fault, and . . . encouragement of settlements.” River Garden

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Farms, Inc. v. Superior Court, 26 Cal. App. 3d 986, 993 (1972); see also Tech-Bilt, Inc. v.

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Woodward-Clyde & Assocs., 38 Cal. 3d 488, 494. The good faith requirement “mandates that the

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courts review agreements purportedly made under [the section’s] aegis to insure that such

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settlements appropriately balance the contribution statute’s dual objectives.” Tech-Bilt, 38 Cal. 3d

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at 494. Section 877 identifies the effects of a good faith settlement of one joint tortfeasor on
another, and section 877.6 sets forth the procedural requirements for reaching such a determination.

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For the Northern District of California

United States District Court

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Any party is entitled to a hearing on the issue of a good faith settlement; however, a settling

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party may proactively file a motion for good faith determination of the settlement. Cal. Civ. Proc.

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Code § 877.6(a). The application must “indicate the settling parties, and the basis, terms, and

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amount of the settlement.” Cal. Civ. Proc. Code § 877.6(a)(2). In the absence of any opposition,

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the court may approve the motion without a hearing. Id. Finding that the settlement was made in

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good faith “shall bar any other joint tortfeasor . . . from any further claims against the settling

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tortfeasor . . . for equitable comparative contribution, or partial or comparative indemnity, based on

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comparative negligence or comparative fault.” Cal. Civ. Proc. Code § 877.6(c).
In Tech-Bilt, the California Supreme Court established a set of factors to determine whether

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the “good faith” requirement is satisfied when reviewing a motion submitted under section 877.6:

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[T]he intent and policies underlying section 877.6 require that a
number of factors be taken into account including 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

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Where, as here, a court sits in diversity, state substantive law applies to the state law claims. In re
Larry’s Apartment, LLC, 249 F.3d 832, 837 (9th Cir. 2001). California Code of Civil Procedure
section 877 constitutes substantive law. Fed. Sav. & Loan Ins. Corp. v. Butler, 904 F.2d 505, 511
(9th Cir. 1990).
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the existence of collusion, fraud, or tortious conduct aimed to injure
the interests of nonsettling defendants.

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38 Cal. 3d at 499. A party opposing a determination of good faith settlement “must demonstrate . . .

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that the settlement is so far ‘out of the ballpark’ in relation to these factors as to be inconsistent with

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the equitable objectives of the statute.” Id. at 499-500.

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A party asserting the absence of good faith carries the burden of proof. Cal. Civ. Proc. Code

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§ 877.6(d). On account of this burden, “only when the good faith nature of a settlement is disputed”

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must the court “consider and weigh the Tech-Bilt factors.” City of Grand Terrace v. Superior Court,

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192 Cal. App. 3d 1251, 1261 (1987). Otherwise, if no party objects, “the barebones motion which
sets forth the ground of good faith, accompanied by a declaration which sets forth a brief

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For the Northern District of California

United States District Court

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background of the case is sufficient” to establish that the settlement was reached in good faith. Id.;

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Hernandez v. Sutter Med. Ctr. of Santa Rosa, No. 06-3350, 2009 WL 322937, at *3 (N.D. Cal. Feb.

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9, 2009); Bonds v. Nicoletti Oil Inc., No. 07-1600, 2008 WL 4104272, at *5 (E.D. Cal. Sept. 3,

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2008).

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III. DISCUSSION
Res-Care and Leonard Valve argue that the settlement meets the standard for good faith

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when evaluated under the Tech-Bilt factors. They state that the settlement “is the result of arms-

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length, informed, and independent mediation.” (Joint Mot. 6.) They maintain that the settlement is

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within the “reasonable range of Leonard Valve’s proportional share of comparative liability for

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plaintiff’s injuries.” (Joint Mot. 6.) They acknowledge that “the entire amount can be used to offset

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any judgment obtained against the non-settling defendants,” and accordingly, “there is nothing

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about the amount of the settlement . . . aimed at harming the non-settling defendant.” (Joint Mot. 6.)

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Res-Care and Leonard Valve also provided the essential details of the settlement pursuant to section

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877.6(a)(2).

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Roto-Rooter does not oppose the joint motion. (Def.’s Resp. 2-3.) On account of Roto-

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Rooter’s non-opposition, the court does not need to evaluate the settlement under the Tech-Bilt

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factors. See Cal. Civ. Proc. Code § 877.6(d) (indicating presumption of good faith); Hernandez,

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2009 WL 322937, at *3. Nonetheless, in an abundance of caution, the court undertakes the analysis

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pursuant to Tech-Bilt as presented by the parties in the joint motion.

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Several of the Tech-Bilt factors do not apply here. There was no evidence of collusion,

financial conditions or insurance policy limits of particular relevance to this settlement. The

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remaining salient Tech-Bilt factors are the amount paid and Leonard Valve’s proportionate liability.

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The amount must not be “grossly disproportionate to what a reasonable person, at the time of

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settlement, would estimate the settling defendant’s liability to be.” Torres v. Union Pac. R. Co., 157

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Cal. App. 3d 499, 509 (1984). Although the facts and legal theories supporting Leonard Valve’s

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liability for Theresa Rodriguez’s injury were not as strong as those supporting the culpability of

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For the Northern District of California

fraud, or tortious conduct, there was only a single plaintiff, and Leonard Valve was not burdened by

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United States District Court

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other responsible parties, Leonard Valve nevertheless faced significant products liability exposure

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and had strong incentive to settle. The settlement amount was fair and reasonable under the

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circumstances, and thus meets the Torres standard. The settlement is within the “ballpark” range set

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by Tech-Bilt. See 38 Cal. 3d at 499-500. The motion for determination of good faith settlement is

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therefore granted.

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Remaining before the court is Roto-Rooter’s request for a settlement credit for the full

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amount of the settlement between Res-Care and Leonard Valve pursuant to Espinoza v. Machonga,

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9 Cal. App. 4th 268, 272-73 (1992). Roto-Rooter requests that “100% of the settlement monies . . .

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should be applied to any judgment entered” against them in the underlying trial with Res-Care.

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(Def.’s Resp. 3.) After Roto-Rooter submitted its statement of non-opposition requesting a

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settlement credit, the Honorable Elizabeth D. Laporte issued the Findings of Fact and Conclusions

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of Law in the underlying trial. [Docket No. 314.] In it, Magistrate Judge Laporte designated the

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specific apportionment of the settlement as related to Roto-Rooter’s judgment. [Docket No. 314 at

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27-28.] Accordingly, Roto-Rooter’s request for a full settlement credit is denied as moot.
IV. CONCLUSION

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For the foregoing reasons, the court GRANTS the unopposed motion for determination of
good faith settlement.
IT IS SO ORDERED.
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For the Northern District of California

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United States District Court

M. Ryu

UNITED STATESge Donna
d MAGISTRATE JUDGE

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DONNA M. RYU

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Dated: August 17, 2011

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