CSAA Insurance Exchange v. Best Buy Co., Inc.

Filing 67

ORDER by Magistrate Judge Donna M. Ryu granting 63 Joint Motion for Settlement. (dmrlc2, COURT STAFF) (Filed on 2/13/2017)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 CSAA INSURANCE EXCHANGE, Case No. 15-cv-02899-DMR Plaintiff, 8 v. 9 10 BEST BUY CO., INC., et al., Defendants. ORDER GRANTING UNOPPOSED JOINT MOTION FOR GOOD FAITH SETTLEMENT Re: Dkt. No. 63 United States District Court Northern District of California 11 Defendants LG Electronics U.S.A., Inc. (“LG”) and Best Buy Co. (“Best Buy”) 12 13 (collectively “Defendants”) move the court for a good faith settlement determination pursuant to 14 California Code of Civil Procedure 877.6. Plaintiff CSAA Insurance Exchange (“Plaintiff”) filed 15 no opposition. The motion is suitable for resolution without oral argument pursuant to Civil Local 16 Rule 7-1(b). For the reasons below, the court grants the motion. 17 I. 18 STATEMENT OF FACTS The underlying action between Plaintiff and Defendants is a subrogation action. Plaintiff, 19 an insurance company, paid $164,426.25 to Mona Verducci, its insured, for property-related 20 damage and associated loss of use expenses related to water damage in her home. [Joint Mot. at 1- 21 2]. Plaintiff alleges that the water damage was caused by a leak in the LG refrigerator Verducci 22 purchased from Best Buy. Plaintiff filed this action against LG, the manufacturer of the 23 refrigerator, and Best Buy, the seller of the refrigerator, seeking reimbursement for the amounts it 24 paid to Verducci. 25 On May 11, 2015, Plaintiff commenced this action in state court, alleging causes of action 26 for strict products liability, negligence, and negligent failure to recall or retrofit against LG and 27 Best Buy, and breach of implied warranty against Best Buy. [Joint Mot. at 2]. Best Buy removed 28 the action on June 20, 2015. [Joint Mot. at 2]. The parties thereafter participated in case 1 management conferences and engaged in discovery. [Joint Mot. at 2]. The trial date was set for 2 December 5, 2016. [Joint Mot. at 2]. On November 2, 2016, the parties participated in a mandatory settlement conference before 3 4 the Honorable Joseph C. Spero, during which they reached a settlement on the following terms: 5 LG agreed to pay Plaintiff $90,000.00 and Best Buy agreed to pay Plaintiff $10,000.00, for a total 6 settlement of $100,000.00. [Joint Mot. at 2]; Thomas Decl., ¶ 3 [Ex. A to Joint Mot.]. Defendants 7 now move for a determination of good faith settlement. [Joint Mot. at 1-10]. They contend that 8 the settlement met the “good faith” standard set forth in Tech-Bilt, Inc. v. Woodward-Clyde & 9 Assocs., 38 Cal. 3d 488, 499 (1985). [Joint Mot. at 6-9]. 10 II. LEGAL STANDARD United States District Court Northern District of California 11 California Code of Civil Procedure sections 877 and 877.6 govern this motion.1 These 12 statutes govern settlements among joint tortfeasors and are aimed at two objectives: “equitable 13 sharing of costs among the parties at fault, and . . . encouragement of settlements.” River Garden 14 Farms, Inc. v. Superior Court, 26 Cal. App. 3d 986, 993(1972); see also Tech–Bilt, Inc., 38 Cal.3d 15 at 494. The good faith requirement “mandates that the courts review agreements purportedly 16 made under [the section's] aegis to insure that such settlements appropriately balance the 17 contribution statute's dual objectives.” Tech–Bilt, 38 Cal.3d at 494. Any party is entitled to a 18 hearing on the issue of a good faith settlement; however, a settling party may proactively file a 19 motion for good faith determination of the settlement. Cal. Civ. Proc. Code § 877.6(a). The 20 application must “indicate the settling parties, and the basis, terms, and amount of the settlement.” 21 Cal. Civ. Proc. Code § 877.6(a)(2). In the absence of any opposition, the court may approve the 22 motion without a hearing. Id. Finding that the settlement was made in good faith “shall bar any 23 other joint tortfeasor . . . from any further claims against the settling tortfeasor . . . for equitable 24 1 25 26 27 “Where, as here, a court sits in diversity, state substantive law applies to the state law claims.” Res-Care Inc. v. Roto-Rooter Servs. Co., No. C 09-3856 EDL DMR, 2011 WL 3610701, at *1 (N.D. Cal. Aug. 17, 2011) (citing In re Larry's Apartment, LLC, 249 F.3d 832, 837 (9th Cir. 2001)). “California Code of Civil Procedure section 877 constitutes substantive law.” Res-Care Inc, 2011 WL 3610701 at *1 (citing Fed. Sav. & Loan Ins. Corp. v. Butler, 904 F.2d 505, 511 (9th Cir. 1990)). 28 2 1 comparative contribution, or partial or comparative indemnity, based on comparative negligence 2 or comparative fault.” Cal. Civ. Proc. Code § 877.6(c). 3 In Tech–Bilt, the California Supreme Court established a set of factors to determine 4 whether the “good faith” requirement is satisfied when reviewing a motion submitted under 5 section 877.6: [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 the existence of collusion, fraud, or tortious conduct aimed to injure the interests of nonsettling defendants. 6 7 8 9 10 United States District Court Northern District of California 11 12 13 38 Cal.3d at 499. A party opposing a determination of good faith “must demonstrate . . . 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.” Id. at 499–500. 14 A party asserting the absence of good faith carries the burden of proof. Cal. Civ. Proc. 15 16 17 Code § 877.6(d). On account of this burden, “only when the good faith nature of a settlement is disputed” must the court “consider and weigh the Tech–Bilt factors.” City of Grand Terrace v. Superior Court, 192 Cal. App. 3d 1251, 1261 (1987). Otherwise, if no party objects, “the 18 barebones motion which sets forth the ground of good faith, accompanied by a declaration which 19 sets forth a brief background of the case is sufficient” to establish that the settlement was reached 20 in good faith. Id.; see also Res-Care Inc., 2011 WL 3610701, at *1–2 (collecting cases). 21 22 III. DISCUSSION Defendants jointly assert that the settlement meets the good faith standard when evaluated 23 24 under the Tech-Bilt factors because (1) the settlement is within the “reasonable range” of their proportional share of liability for Plaintiff’s injuries, (2) the amount of the settlement is less than 25 what they would have to pay if they were found liable after a trial, (3) there has been no collusion 26 among Defendants and (4) the settlement was the result of an “arms-length negotiation.” [Joint 27 Mot. at 7-9]. Defendants also provided the essential terms of the settlement pursuant to section 28 3 1 877.6(a)(2). Since Plaintiff has not filed an opposition to the motion, the court does not need to evaluate 2 3 the settlement under the Tech-Bilt factors. See Cal. Civ. Proc. Code § 877.6(d) (indicating 4 presumption of good faith); Res-Case Inc., 2011 WL 3610701 at *3. Nonetheless, in an 5 abundance of caution, the court undertakes the analysis pursuant to Tech–Bilt as presented by 6 Defendants in the unopposed joint motion. Several of the Tech–Bilt factors are not at issue here. There was no evidence of collusion, 7 8 fraud, or tortious conduct. Nor is there evidence that Defendants were burdened by financial 9 conditions or insurance policy limits. Thus, the court focuses on the remaining salient Tech–Bilt factors, which are the amounts paid and Defendants’ proportionate liability. The amounts paid 11 United States District Court Northern District of California 10 must not be “grossly disproportionate to what a reasonable person, at the time of settlement, would 12 estimate the settling defendant's liability to be.” Torres v. Union Pac. R. Co., 157 Cal. App. 3d 13 499, 509 (1984). Here, the court finds that the total settlement of $100,000.00 ($90,000.00 from LG and 14 15 $10,000.00 from Best Buy) was fair and reasonable and within the “ballpark” range set by Tech– 16 Bilt for several reasons. First, the water leak occurred more than 8 years after the delivery of the 17 LG refrigerator. This presents a significant causation hurdle for Plaintiff. Additionally, there 18 appears to be at least a triable dispute as to whether the leak from the LG refrigerator was 19 responsible for the extent of the water damage in Verducci’s home. See Kovarsky Expert Report 20 [Exhibit B] at 16. Furthermore, while some of the amounts Plaintiff paid to Verducci for mold- 21 related damage appear to be reasonable, others seem excessive, such as the approximately 22 $100,000.00 in construction costs on Verducci’s home. Lastly, Defendant’s expert opined that a 23 reasonable settlement of Plaintiff’s claim was $76,101.96, so a settlement of $100,000.00 would 24 be within a reasonable range. [Joint Mot. at 7]. Defendants’ motion for good faith settlement is therefore granted. 25 26 // 27 // 28 // 4 1 IV. CONCLUSION For the foregoing reasons, the court grants the unopposed motion for determination of 2 good faith settlement. IT IS SO ORDERED. 5 Dated: February 13, 2017 RT 8 Jud ER 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 A H 9 FO NO 7 ______________________________________ Donna M. Ryu . Ryu Unitede Donna M g States Magistrate Judge LI 6 DERED O OR IT IS S R NIA UNIT ED 4 S DISTRICT TE C TA RT U O S 3 N F D IS T IC T O R C

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