Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-01398/USCOURTS-casd-3_12-cv-01398-1/pdf.json

Nature of Suit Code: 365
Nature of Suit: Personal Injury - Product Liability
Cause of Action: 28:1441 Petition for Removal

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UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF CALIFORNIA

MARIA KUBAL, et al., 

Plaintiffs,

CASE NO. 12-CV-1398-IEG (BGS)

ORDER GRANTING DEFENDANT

FLORES’S MOTION FOR

DETERMINATION OF GOOD

FAITH SETTLEMENT

[Doc. No. 55]

v.

DISCOUNT TIRE.COM, et al.,

Defendants.

Before the Court is Defendant Hugo Flores’s motion for determination of

good faith settlement under California Code of Civil Procedure § 877.6. [Doc. No.

55.] For the reasons below, the Court GRANTS Flores’s motion. 

BACKGROUND

On November 5, 2009, Andrew Kubal was killed when his car collided with a

truck driven by Gary Sharbono near Winterhaven, California. [See Doc. No. 1.] On

October 27, 2011, Kubal’s wife and two children filed a complaint in Imperial

County Superior Court, bringing claims of negligence and products liability against

several named defendants (as well as unnamed Doe defendants). [Id.] On April 24,

2012, Plaintiffs filed a First Amended Complaint (“FAC”) adding several

defendants, including Defendant Hugo Flores who allegedly sold a defective tire to

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Sharbono.1 [Id.] On diversity grounds, Defendants removed to this Court on June 8,

2012. [Id.] Flores’s insurer filed a separate declaratory relief action in the District

of Arizona (“Arizona action”) to determine applicable liability limits under Flores’s

insurance policy. [Doc. No. 55-1 at 4.] 

Plaintiffs and Flores have now reached a settlement of both actions. [Doc.

No. 55-1 at 4.] Per the settlement, Flores’s insurer will pay Plaintiffs at least

$250,000 out of Flores’s insurance policy,2

 with the precise amount to be determined

in the Arizona action. [Id. at 4-5.] In exchange, Plaintiffs will release, and move to

dismiss with prejudice, their claims against Flores. [Id. at 5.] By the present

motion, Flores requests a determination under California Code of Civil Procedure §

877.6 that his settlement with Plaintiffs was made in good faith. [Doc. No. 55.]

DISCUSSION

In a diversity case such as this, “the court applies federal law to procedural

matters and the law of the state in which it sits to substantive matters.” ABF Freight

Systems, Inc. v. U.S., 2013 WL 842856, at *3 (N.D. Cal. March 6, 2013) (citing Erie

Railroad Co v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938)). 

“‘The major substantive provision [governing good faith settlement under California

law] is section 877’of the California Code of Civil Procedure.” Id. (quoting Federal

Savings and Loan Insurance Corp. v. Butler, 904 F.2d 505, 511, (9th Cir. 1990). 

Under section 877, a “release, [or] dismissal . . . given in good faith before verdict or

judgment . . . discharge[s] the party to whom it is given from all liability for any

contribution to any other parties.” Cal. Civ. Proc. Code § 877.

“By contrast, ‘section 877.6 [] is essentially a procedural statute,’” providing

that a party to a settlement may move the court to determine whether the settlement

was made in good faith. ABF Freight Systems, 2013 WL 842856, at *3 (quoting

1 In their FAC, Plaintiffs also allege that Flores negligently failed to properly inspect, repair, and mount the allegedly defective tire on Sharbono’s truck. [Id.]

2 The balance of Flores’s insurance policy is to be paid to the heirs of Sharbono in a separate settlement in the Arizona action. [Doc. No. 55-1.] 

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Federal Savings, 904 F.2d at 511); see also Cal. Civ. Proc. Code § 877.6. 

“Nonetheless, the Ninth Circuit has recognized that ‘the addition of section 877.6(c)

[made] a substantive modification . . . . [to] section 877,” and thus, “[a]lthough the

remainder of section 877.6 is procedural, and therefore not binding on the court, the

Ninth Circuit has determined that there is no federal procedural impediment to a

district court’s entertaining ‘a motion for an early determination of the good faith

question,’ and so such a motion can be properly brought before the court.” ABF

Freight Systems, 2013 WL 842856, at *3 (quoting Federal Savings, 904 F.2d at

511); see also Cal. Civ. Proc. Code § 877.6(c) (“determination by the court that the

settlement was made in good faith shall bar any other joint tortfeasor . . . from any

further claims against the settling tortfeasor . . .”). 

Good faith under Cal. Civ. Proc. Code § 877.6 depends on “a number of

factors . . . including”: (1) a “rough approximation of plaintiffs’ total recovery and

the settlor’s proportionate liability”; (2) the “amount paid in settlement”; (3) the

“allocation of settlement proceeds among plaintiffs”; (4) a “recognition that a settlor

should pay less in settlement than he would if he were found liable after a trial”; (5)

the “financial conditions and insurance policy limits of settling defendants”; and (6)

the “existence of collusion, fraud, or tortious conduct aimed to injure the interests of

nonsettling defendants.” Tech-Bilt, Inc. v. Woodward-Clyde & Assocs., 38 Cal. 3d

488, 499 (1985). But the “party asserting the absence of good faith carries the

burden of proof.” Res-Care Inc. v. Roto-Rooter Services Co., 2011 WL 3610701, at

*2 (N.D. Cal. Aug. 17, 2011); see also Cal. Civ. Proc. 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.’” Res-Care, 2011 WL

3610701, at *2 (quoting City of Grand Terrace v. Superior Court, 192 Cal. App. 3d

1251, 1261 (Cal. Ct. App. 1987)). “That is to say, when no one objects, the

barebones motion which sets forth the ground of good faith, accompanied by a

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declaration which sets forth a brief background of the case is sufficient.” Marine

Group, LLC v. Marine Travelift, Inc., 2013 WL 416407, at *4 (S.D. Cal. Jan. 30,

2013).

Here, no party has objected or otherwise disputed the good faith nature of the

settlement. Accordingly, the Court “need not evaluate the settlement under the

Tech-Bilt factors.” Res-Care, 2011 WL 3610701, at *2. Still, the Court has

reviewed the settlement and is satisfied that it was made in good faith. Defendant

Flores’s liability is uncertain, [see Doc. No. 55-1 at 7 (recognizing “lack of evidence

connecting sale” of tire to Flores], and aside from his insurance policy, Flores has

“no other significant assets” with which to satisfy a judgment, [id. at 9]. Under the

settlement, Plaintiffs will receive at least $250,000 from Flores’s insurer, which

appears reasonable given the uncertainty as to Flores’s liability and ability to satisfy

a judgment. Moreover, nothing in the record suggests collusion, fraud, or prejudice

to the interests of non-settling defendants. Accordingly, the Court determines that

the settlement was made in good faith.

CONCLUSION

For the foregoing reasons, the Court hereby GRANTS Defendant Flores’s

motion and finds that his settlement with Plaintiffs was made in good faith. 

IT IS SO ORDERED.

DATED: August 13, 2013 

IRMA E. GONZALEZ

United States District Judge

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