Tarob M&C Investors, LLC v. Boowhan Corporation

Filing 114

Order by Magistrate Judge Howard R. Lloyd granting 110 Ex Parte Application for Good Faith Settlement Determination. (hrllc3S, COURT STAFF) (Filed on 3/23/2017)

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E-filed 3/23/2017 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 TAROB M&C INVESTORS, LLC, Plaintiff, 8 9 10 United States District Court Northern District of California 11 12 Case No.14-cv-04291-HRL ORDER GRANTING APPLICATION FOR GOOD FAITH SETTLEMENT DETERMINATION v. BOOWHAN CORPORATION, et al., Re: Dkt. No. 110 Defendants. Plaintiff Tarob M&C Investors, LLC (“Tarob”) and Defendants William Herbert, as trustee 13 of the Herbert Family Living Trust (“Herbert”), and Boowhan Corporation, dba Norge Village 14 (“Boowhan”) (collectively, “Defendants”) have settled the claims between them and apply to the 15 court for an order determining that their settlement was made in good faith pursuant to California 16 Code of Civil Procedure Section 877.6. For the reasons described below, the court grants the 17 motion for a good faith settlement determination. BACKGROUND 18 19 Tarob purchased property on Palo Alto’s California Avenue in 2011. Dkt. No. 45, ¶¶ 9, 20 10. Next door, Herbert owns property that is currently leased to Boowhan, which is operating a 21 drycleaner on that location. Id., ¶ 11. Herbert and Boowhan’s predecessors operated drycleaning 22 establishments, as well. Id., ¶ 15. 23 Tarob alleges that the drycleaners have used hazardous substances that contaminated the 24 soil under both properties and claims that it incurred costs related to testing the soil and 25 remediating the contamination. Id., ¶¶ 15, 19. Tarob’s Second Amended Complaint alleges 26 claims under the Comprehensive Environmental Response, Compensation, and Liability Act 27 (“CERCLA”) and the California Hazardous Substance Account Act (“HSAA”); as well as claims 28 for trespass, nuisance, and negligence. Dkt. No. 45. Defendants deny that there is contamination 1 and argue that their own testing revealed their compliance with applicable standards. Dkt. No. 2 110, Till Decl., ¶ 9. Defendants also counterclaimed against Tarob for, inter alia, contribution, 3 trespass, abatement of a private nuisance, negligence, and breach of contract. Dkt. No. 49. 4 Finally, Defendants have filed a third-party complaint alleging numerous claims against various 5 third-party defendants, each of whom were past owners or operators of the drycleaning 6 establishment. Dkt. No. 60. Only two third-party defendants, Michael and Diane Teehan, have 7 filed answers. Dkt. No. 74. 8 9 In January 2016, Plaintiff and Defendants informed the court that they had agreed on a settlement. Dkt. No. 107. One month later, Defendants filed an ex parte application for a good faith settlement determination pursuant to California Code of Civil Procedure Section 877.6. Dkt. 11 United States District Court Northern District of California 10 No. 110. Defendants served the application upon potentially interested non-parties, and none of 12 the non-parties (and no parties to this action) filed objections. Dkt. No. 113. 13 14 LEGAL STANDARD District courts may decide motions requesting early determinations of whether settlement 15 agreements are made in good faith. Fed. Sav. & Loan Ins. Corp. v. Butler, 904 F.3d 505, 511 (9th 16 Cir. 1990). California law bars tortfeasors who have been released in good faith before a verdict 17 from all liability for contribution to other joint tortfeasors claimed to be liable for the same tort. 18 Cal. Civ. Proc. Code § 877; Schaeffer v. Gregory Village Partners, L.P., No. 13-cv-04358-JST, 19 2015 WL 5316357, at *2 (N.D. Cal. Sep. 11, 2015). To protect joint tortfeasors who are not 20 parties to a settlement involving such a release, the court must determine that the settlement 21 agreement has been entered in good faith before it can become final. Cal. Civ. Proc. Code § 22 877.6. “When a settlement is determined to have been made in good faith, further negligence- 23 based equitable contribution or comparative indemnity claims against settling parties are barred 24 ‘so long as the other tortfeasors were given notice and an opportunity to be heard.’” PAG-Daly 25 City, LLC v. Quality Auto Locators, Inc., No. C 12-3907 WHA, 2014 WL 807415, at *1 (N.D. 26 Cal. Feb. 27, 2014) (quoting Gackstetter v. Frawley, 135 Cal. App. 4th 1257, 1273 (2006)). 27 28 In determining whether a settlement is made in good faith pursuant to Section 877.6, the court weighs the factors described in Tech-Bilt, Inc. v. Woodward-Clyde & Associates; however, if 2 1 “no party objects to the proposed settlement, the court may bypass the Tech-Bilt factors and enter 2 a finding of good faith when presented merely with ‘the barebones motion which sets forth the 3 ground of good faith, accompanied by a declaration which sets forth a brief background of the 4 case.’” Schaeffer, 2015 WL 5316357, at *2 (quoting City of Grand Terrace v. Superior Court of 5 San Bernadino Cnty., 192 Cal. App. 3d 1251, 1261 (1987)); PAG-Daly City, LLC, 2014 WL 6 807415, at *1-2. DISCUSSION 7 The court has reviewed the application and the supporting declaration. The only non- 8 9 settling parties to this litigation, third-party defendants Michael Teehan and Diane Teehan, received electronic notice of the application upon its filing. Moving defendants further provided 11 United States District Court Northern District of California 10 notice via certified mail to three non-parties. More than 25 days have passed since the mailing of 12 the notice, and no parties or non-parties have objected to the application. Because the motion is 13 uncontested, it is unnecessary to weigh the Tech-Bilt factors. The application is therefore 14 granted.1 CONCLUSION 15 For the reasons explained above, the court grants the unopposed motion for determination 16 17 18 19 20 21 22 23 24 25 26 27 28 1 All parties that have appeared in this action have consented to magistrate judge jurisdiction. Dkt. Nos. 6, 22, 35, 103. The court further concludes that consent is not needed from the non-parties served with notice of Defendants’ application. In the Ninth Circuit, to determine whether a motion that is not listed in 28 U.S.C. § 636 is dispositive (and thus whether a magistrate requires consent to decide it), the court adopts “a functional approach that look[s] to the effect of the motion, in order to determine whether it is properly characterized as ‘dispositive or nondispositive of a claim or defense of a party.’” Flam v. Flam, 788 F.3d 1043, 1046 (9th Cir. 2015) (quoting United States v. Rivera-Guerrero, 377 F.3d 1064, 1068 (9th Cir. 2004)) (internal quotation marks omitted). The effect of a good-faith settlement determination is to bar claims from non-settling parties (here, the Teehans, who have consented) and from non-parties that have been served with notice of the application. Though the members of the latter group have not consented to magistrate judge jurisdiction, they are not parties to this suit. Thus, the court’s good faith settlement determination, even though it may dispose of the non-parties’ potential contribution claims, does not dispose of a claim or defense “of a party.” This situation is analogous to a motion to intervene. There, the court does not need consent, because the would-be intervenor is not a party. See Robert Ito Farm, Inc. v. County of Maui, 842 F.3d 681 (9th Cir. 2016). 3 1 of good faith settlement. As a result, pursuant to California Code of Civil Procedure section 2 877.6(c), the parties to the settlement are entitled to contribution protection from all parties to this 3 action and all non-parties who received constitutionally sufficient notice (including the non- 4 appearing third-party defendants, who were served with the third-party complaint and thus 5 “brought into the litigation” prior to the settlement, see Singer Co. v. Superior Court, 179 Cal. 6 App. 3d 875 (1986)). See City of Emeryville v. Robinson, 621 F.3d 1251, 1265-66 (9th Cir. 2010); 7 PAG-Daly City, LLC v. Quality Auto Locators, Inc., No. C 12-3907 WHA, 2014 WL 807415, at 8 *1 (N.D. Cal. Feb. 27, 2014) (quoting Gackstetter v. Frawley, 135 Cal. App. 4th 1257, 1273 9 (2006)). 10 United States District Court Northern District of California 11 IT IS SO ORDERED. Dated: 3/23/2017 12 13 HOWARD R. LLOYD United States Magistrate Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4

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