Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-01384/USCOURTS-cand-3_07-cv-01384-1/pdf.json

Nature of Suit Code: 371
Nature of Suit: Truth in Lending
Cause of Action: 15:1601 Truth in Lending

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

ROSA REYNA,

Plaintiff,

v.

WACHOVIA BANK, as Successor In

Interest to World Savings; TRI STAR

FINANCIAL, INC.; PATRICIA VERA;

MUSAED ENAYEK; DOES 1 through 50,

Inclusive,

Defendants.

 

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No. C-07-01384 SC

ORDER GRANTING MOTION

FOR DETERMINATION OF

GOOD FAITH SETTLEMENT

I. INTRODUCTION

Plaintiff Rosa Reyna ("Plaintiff" or "Reyna") brought this

suit against Defendants Wachovia Bank ("Wachovia"), Tri Star

Financial, Inc., Patricia Vera, Musaed Enayek, and fifty "Does,"

alleging violations of the Truth In Lending Act, 15 U.S.C. § 1602,

et seq. ("TILA"), and the Home Ownership Equity Protection Act, 15

U.S.C. § 1635, et seq. ("HOEPA"). See Compl., Docket No. 1, Ex.

A. Plaintiff also brought claims for breach of fiduciary duty,

negligence, and fraud against all of the defendants other than

Wachovia. 

Reyna and Wachovia (the "Settling Parties") have reached an

agreement to settle the dispute between them, and jointly move the

Court for a determination that the settlement is in good faith and

Case 3:07-cv-01384-SC Document 18 Filed 09/05/07 Page 1 of 4
United States District Court

For the Northern District of California

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for an order barring indemnity and contribution claims. See Mot.,

Docket No. 9; Yandell Decl., Ex. A ("the Settlement"). Defendants

Tri Star Financial, Patricia Vera, and Musaed Enayek (the "NonSettling Defendants") filed a statement of non-opposition to the

Motion. See Docket No. 16.

For the reasons set forth herein, the Court finds that the

Settlement is in good faith and GRANTS the Settling Parties'

Motion.

II. BACKGROUND

In early 2006, Reyna secured a mortgage from Wachovia, using

the Non-Settling Defendants as mortgage brokers. Reyna alleges

that all of the Defendants failed to disclose certain material

financial terms of the mortgage, in violation of both TILA and

HOEPA. See Compl., ¶¶ 11-17. Wachovia made its first formal

settlement offer to Reyna on April 27, 2007. Yandell Decl., ¶ 3. 

After the first offer, Reyna and Wachovia exchanged numerous

offers and counteroffers, and finalized the Settlement on May 30,

2007. Id.

As a result of the Settlement, Wachovia has agreed to lower

the interest rate on Reyna's loan, to change the interest on the

loan from variable rate to fixed rate, and to waive other fees for

modifying or prepaying the loan. Id.; Settlement, Ex. A. 

Wachovia also agreed to pay a portion of Reyna's attorney's fees. 

Yandell Decl., ¶ 3; Settlement, § III.B.

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III. DISCUSSION

Reyna asserts claims under both federal and state law, so the

Court must make a determination regarding the good faith of the

Settlement under California and federal law. However, federal

courts look to state law in order to determine the effect of a

partial settlement in a federal tort claim. See e.g., Owen v.

United States, 713 F.2d 1461, 1463-64 (9th Cir. 1983) (applying

California rules for determination of good faith settlement in

suit brought under the Federal Tort Claims Act). Under California

law, a court determining whether a settlement was reached in good

faith must consider a number of factors, 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." Tech-Bilt, Inc. v.

Woodward-Clyde & Assocs., 698 P.2d 159, 166 (Cal. 1985); see also

Bay Dev. Ltd. v. Superior Court, 791 P.2d 290, 298-99 (Cal. 1990). 

"A determination by the court that the settlement was made in good

faith shall bar any other joint tortfeasor or co-obligor from any

further claims against the settling tortfeasor or co-obligor for

equitable comparative contribution, or partial or comparative

indemnity, based on comparative negligence or comparative fault." 

Cal. Code Civ. Proc. § 877.6(c).

The Court concludes that the Settlement was reached in good

faith. The Settling Parties assert, and the Non-Settling

Defendants do not dispute, that the Settlement is fair because

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1Although the Truth In Lending Act limits a plaintiff to one

recovery, even where there are multiple obligors, 15 U.S.C. §

1640(d), other federal courts have approved proportional

settlements in TILA cases. See e.g., Desselles v. Mossy Motors,

Inc., 442 F. Supp. 897, 902-03 (E.D. La. 1978).

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"Wachovia had no real contact with Reyna during the transaction at

issue and was not involved in the alleged misrepresentations to

Reyna by the non-settling defendants." Mot., at 4. Further, the

Settlement between Reyna and Wachovia will reduce the total

possible liability for the Non-Settling Defendants on Reyna's TILA

and HOEPA claims.1 

IV. CONCLUSION

For the foregoing reasons, the Court determines that the

Settlement between Reyna and Wachovia was reached in good faith

and is fair to the Non-Settling Defendants. The Court therefore

GRANTS the Settling Parties' Motion. Under California Code of

Civil Procedure § 877.6(c), any claims for indemnification or

contribution by the Non-Settling Defendants are barred. 

 

IT IS SO ORDERED.

Dated: September 5, 2007

 UNITED STATES DISTRICT JUDGE

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