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)

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