Weekly Law Resume - June 28, 2012: Noting Split of Authority, Court Holds That Review of Good Faith Settlement Must Be By Writ

by Low, Ball & Lynch
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[author: Thomas J. LoSavio]

Oak Springs Villas Homeowners Association v. Advanced Truss Systems, Inc.
California Court of Appeal, Second Appellate District (June 14, 2012)

This case raises the question: once the trial court has made its determination that a settlement has been made in good faith, what is the means by which a non-settling defendant that remains in the case may obtain review of that ruling by the court of appeal, that is, by a writ, by an appeal or by both?

Ever since the 1986 passage of Proposition 51 (enacted as Civil Code §1431.2) a California tortfeasor’s liability for “non-economic damages” (i.e., subjective, non-monetary losses) has been several, not joint, and limited to that defendant’s percentage of fault. In order to facilitate fair and early settlements that are not disproportionate to a settling defendant’s liability, the Legislature adopted the good faith settlement determination process (Code of Civil Procedure (“CCP”) §877.6) by which a settling defendant may obtain a bar of other joint tortfeasors’ claims of equitable comparative contribution or partial or comparative indemnity based on comparative negligence or fault (although not if based on contractual indemnity).

The Oak Spring Villas Homeowners Association (“HOA”) brought suit against the Developers and others related to a 24-condominium 8 building complex located in Santa Clarita, California, for construction defects, including framing deficiencies which caused the roof to sag. After the plaintiff HOA reached a settlement with the Developers, which was approved by the trial court, ATS, a non-settling defendant which had supplied the roof trusses and truss plans and had opposed the good faith settlement, filed a notice of appeal.

The Court of Appeal dismissed ATS’ appeal. It concluded that ATS had appealed from a non-appealable interlocutory ruling and that to obtain immediate review, ATS should have filed a timely writ within 20 days of the ruling, as provided in CCP § 877.6. The Appellate Court recognized that it had discretion to treat the improper appeal as if it were a petition for writ of mandate, but declined to do so, finding no unusual circumstances that would justify that use of discretion.

The Court of Appeal noted that it disagreed with the case of Cahill v San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939. In that case, the non-settling defendant had filed a timely writ under section 877.6, which was denied. The non-settling defendant then filed a notice of appeal. When the settling parties objected, moved to dismiss the appeal and argued that the writ was the sole means of challenging the trial court’s determination, the court of appeal disagreed and denied the motion to dismiss the appeal. While noting that there was a split of authority regarding whether a writ petition pursuant to section 877.6 is the sole means of challenging a trial court’s good faith determination, the Oak Springs court declined to reach that issue. Rather, it declined to follow Cahill on the basis that its analysis of the issue was “bare” and that it provided no legal support for its conclusion. The Oak Springs court noted that there was a difference between a party who is no longer in the proceedings seeking review by an appeal (because it would be unfair for him to wait for the final adjudication of the other parties’ rights and duties) and a party who remains in the case seeking a review before there has been a final adjudication of its rights and duties.

COMMENT

Because there is a split of authority, definitive resolution of the issue must await a ruling by the California Supreme Court. In the meantime, prudent practice would dictate that review of an adverse good faith settlement determination be made by immediate writ review, rather than by an appeal.

For a copy of the complete decision see:

http://www.courtinfo.ca.gov/opinions/documents/B234568.PDF


 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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