EDMON, P. J.—
This mass tort litigation arises out of an environmental investigation which revealed that soil beneath a housing tract in Carson, California, was contaminated with residual petroleum hydrocarbons. In this writ proceeding challenging the trial court's determination of good faith settlements, we are called upon to address whether a government-ordered environmental cleanup was part of the settlement consideration, and whether the good faith settlement could be approved without an individualized
Petitioners Dole Food Company, Inc. (Dole), Oceanic Properties, Inc. (Oceanic), and Barclay Hollander Corporation (Barclay Hollander) (collectively, Developer Defendants) seek a writ of mandate directing respondent superior court to vacate its order approving good faith settlements (Code Civ. Proc., § 877.6)
The essential issues presented are twofold. First, we address whether the trial court erred in approving the good faith settlements without first calculating the monetary value of Shell's obligation to comply with a cleanup and abatement order of the California Regional Water Quality Control Board (Water Board) to implement a remedial action plan (RAP) which allegedly will cost Shell $146 million. The nonsettling Developer Defendants contend the exclusion of the cost of the RAP from the settlement valuation is collusive and will enable Plaintiffs to obtain a windfall, by reducing the amount that will be set off against the nonsettling defendants' liability. Second, we address whether the trial court erred in approving the $90 million good faith settlement between Plaintiffs and Shell without an allocation of the settlement proceeds among the various Plaintiffs, and between their economic and noneconomic damages.
We conclude that Shell's compliance with the RAP, which was mandated by the Water Board pursuant to the state's police powers, was not part of the settlement consideration, and therefore should not be included in the valuation of the good faith settlement. Although the trial court gave some weight to the value of the RAP remediation in approving the good faith settlements, the error was harmless; on the record presented, the $90 million monetary payment, standing alone, was well within the range of Shell's proportionate liability.
Finally, the determination of good faith settlement did not require an allocation of the $90 million settlement consideration among the 1,491
The petitioners, the three Developer Defendants, are codefendants in two related actions currently pending in respondent superior court, Acosta v. Shell Oil Co. (Super. Ct. L.A. County, No. NC053643 and related cases) (the Acosta action) and City of Carson v. Shell Oil Co. (Super. Ct. L.A. County, No. BC499369 and related cases) (the Carson action).
Real parties in interest are codefendants Shell and Equilon, whose joint motion for determination of good faith settlement was granted by the trial court; approximately 1,491 individual plaintiffs in the Acosta action (Plaintiffs), who settled their claims against Shell; and plaintiff Carson, which also settled its claims against Shell.
The 1,491 individual plaintiffs lived or worked in or near the Carousel housing tract, a neighborhood of approximately 285 homes in Carson, California. Between the 1920's and the early 1960's, Shell owned and operated three crude oil storage reservoirs, known as the Kast Tank Farm, at the site which later was developed as the Carousel tract. It is alleged that at least one of the storage tanks was leaking its contents into the soil, causing the site to become contaminated with toxic substances.
In October 1965, Shell entered into an agreement to sell the land to Richard Barclay and his associates (Barclay), a group of residential developers that intended to convert the property into a residential subdivision. Shell transferred title to the property in October 1966. In preparation for the change in use, the oil storage reservoirs were decommissioned, the reservoir walls were torn down and buried on site, and the land was graded for home construction.
In 2008, after discovering contamination nearby, the Water Board directed Shell to conduct environmental testing at the Carousel tract. These investigations revealed the presence of petroleum hydrocarbons in the areas where Shell's former oil reservoirs had been located. In March 2011, the Water Board issued a cleanup and abatement order to Shell, directing it to submit a proposed remediation plan. This order was based on Shell's "ownership of the former Kast Property Tank Farm" and its "former operation of a petroleum hydrocarbon tank farm at the Site."
After submitting an initial RAP that was rejected, Shell submitted a revised RAP in June 2014, with an addendum in October 2014.
Shell's corporate representative, William Platt, has estimated it will cost Shell $146 million to implement the RAP.
Apart from the Water Board proceeding, there are three pending actions in the superior court relating to Shell's use and sale of the site.
In October 2009, 17 months after the Water Board ordered Shell to conduct an investigation of the site, the numerous individual plaintiffs filed their lawsuit. They are current and former Carousel homeowners and other persons who lived or worked in the vicinity of the site.
The operative second amended complaint (SAC), filed in May 2011, named as defendants Shell and Equilon, the alleged purchasers of the Kast property in 1922, as well as three successors to the original developers,
As against Shell, the SAC alleged, inter alia, that Shell's liability arises out of its ownership and operation of the leaking oil reservoirs, that Shell sold the site to the developers "without fully disclosing the true extent of the dangerous contamination," and that "[d]espite [its] superior knowledge of [the] hazards and likely injury to individuals such as PLAINTIFFS, [Shell] failed to disclose [its] knowledge and/or take any actions to warn subsequent purchasers of the [presence of] toxic chemicals."
The trial court subsequently granted Shell's motion to strike Plaintiffs' claims for property damage as against Shell on statute of limitations grounds. (§ 338.)
In January 2013, Carson, represented by the same law firm representing Plaintiffs, filed suit against Shell and Developer Defendants alleging public nuisance and inverse condemnation. By way of relief, Carson requested "full and total abatement of the contamination down to approximately 40 feet below the Carousel neighborhood." Before the parties engaged in any discovery, the trial court stayed the Carson action.
In May 2014, Shell sued Barclay Hollander and others, seeking indemnity and contribution with respect to the Acosta action, the Carson action, and the cost of complying with Water Board orders. Shell alleged it had already incurred more than $40 million in costs and expenses for site investigation and remediation.
In October 2014, Shell reached settlements with Plaintiffs and Carson, with an effective date of November 10, 2014.
The Acosta settlement agreement requires Shell to pay Girardi Keese (counsel for both Plaintiffs and Carson) $90 million in "full and final settlement of all Claims of all Plaintiffs," with Girardi Keese to be "solely responsible for determining the process by which the Settlement Funds are allocated" among the Plaintiffs.
Under the terms of the Acosta settlement agreement, Shell would deliver 90 percent of the settlement funds to Girardi Keese once certain conditions are satisfied, including Girardi Keese's delivery to Shell's counsel of signed individual releases from at least 90 percent of the individual Plaintiffs (with Girardi Keese remaining under a continuing obligation to secure releases from the remaining Plaintiffs); issuance of a final order approving all settling minors' compromises; issuance of a final order determining the settlement to be in good faith; and the filing of executed requests for dismissal with prejudice of the Acosta litigation and the Carson action, with the parties to bear their own fees and costs.
The Acosta agreement expressly addresses the Water Board proceeding. At paragraph 3.6, it requires Plaintiffs and Girardi Keese "to cooperate in good faith in the ongoing regulatory proceedings overseen by the Water Board," and requires Plaintiffs to "waive and release any rights to challenge any decision of the Water Board in evaluating and approving the RAP for the Carousel Tract." It also includes an acknowledgement that the "Agreement fully and fairly addresses and compensates [Plaintiffs] for any and all claims against Shell for alleged nuisance ... and/or any other RAP-related impacts created by the alleged contamination of the Carousel Tract and implementation of the RAP." Paragraph 3.7 thereof requires Plaintiffs to provide access for investigation and RAP implementation, and provides that "Shell's work on the Carousel project shall continue to be done only in accordance with Water Board-approved work plans." To enforce these provisions, the agreement requests that the superior court "retain jurisdiction over the Parties and the Actions for purposes of finalizing and enforcing the Agreement, including,
To determine the allocation of the $90 million settlement proceeds among the 1,491 individual Plaintiffs, Shell and Plaintiffs stipulated to, and the trial court ordered, the appointment of retired Justice Edward Panelli as special master to oversee the settlement and subsequent apportionment of the funds.
The Acosta settlement agreement does not differentiate between economic and noneconomic damages. If there were a pro rata distribution, each plaintiff would receive approximately $60,362 minus attorney fees and costs. Once the Acosta settlement is funded, Justice Panelli will make an allocation to each plaintiff, based upon the plaintiff's inclusion in one of four categories: cancer claims; non-cancer personal injury claims; medical monitoring and/or fear of cancer only; or property damage without physical personal injury.
Unlike the Acosta settlement, the Carson settlement did not include a cash payment. Rather, it consisted of mutual releases of all claims (although it does not appear that Shell had asserted any claims against Carson) and a waiver of costs. The Carson settlement defined the term "claim(s)" as specifically excluding "any benefits provided for in the revised [RAP]," and it included a representation by Shell that "the RAP is separate from this Agreement and any other settlement agreements in this Action." The Carson settlement required Carson to "cooperate in good faith" in the Water Board proceedings and the "implementation of the RAP," and sought retention of jurisdiction by the superior court in "implementation of the RAP" and enforcement of the settlement agreement.
On December 12, 2014, Shell filed a motion for an order determining that the two settlements, between Plaintiffs and Shell, and Carson and Shell, were entered into in good faith, so as to bar any claims against Shell for indemnity or contribution arising out of this matter. Shell asserted its payment of $90 million to settle Plaintiffs' clams, along with Carson's dismissal of its public
Shell emphasized that a good faith settlement does not require "perfect or even nearly perfect apportionment of liability. In order to encourage settlement, it is quite proper for a settling defendant to pay less than his proportionate share of the anticipated damages. What is required is simply that the settlement not be grossly disproportionate to the settlor's fair share." (Abbott Ford, Inc. v. Superior Court (1987) 43 Cal.3d 858, 874-875 [239 Cal.Rptr. 626, 741 P.2d 124] (Abbott Ford).) Further, a plaintiff's claims for damages are not determinative in finding good faith; rather, the court is called upon "to make a `rough approximation' of what the plaintiff would actually recover" (West v. Superior Court (1994) 27 Cal.App.4th 1625, 1636 [34 Cal.Rptr.2d 409] (West)), with the evaluation to be made "on the basis of information available at the time of settlement" (Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499 [213 Cal.Rptr. 256, 698 P.2d 159] (Tech-Bilt)).
Shell asserted that notwithstanding the sizable claims by the numerous Plaintiffs, it had "multiple defenses to liability that must be factored. Shell sold the property in its as-is condition, with the crude oil storage reservoirs in place, to the Developer Defendants, who took responsibility to decommission the reservoirs and remove residual wastes. Property damage claims cannot be recovered against Shell in light of the Court's prior ruling and Shell's RAP-related efforts. Personal injury claims are likely subject to challenge on general and specific medical causation grounds, among other defenses. In addition, there have been no expert designations or discovery yet on the issue of Plaintiffs' alleged damages. [¶] Given the facts and circumstances of these cases where liability is contested and fault lies with the non-settling Developer Defendants, Shell's $90 million settlement payment is well `within the ballpark' of its potential liability. It cannot be shown that the settlement is `grossly disproportionate' to what a reasonable person at the time of settlement would estimate Shell's proportionate liability to be."
The supporting declaration of Attorney Deanne Miller stated in part: The trial court randomly selected 50 test plaintiffs, and the pool subsequently was narrowed to 35 individuals. Extensive fact discovery was conducted regarding each of the test plaintiffs, which revealed their claims were subject to substantial potential defenses. There were no clusters of disease among the test plaintiffs, most of whom claimed a variety of common illnesses and ailments. Further, although no expert discovery had been conducted yet on causation, establishing causation would be challenging for Plaintiffs. For example, one of the test plaintiffs was a 79-year-old man who asserted a claim for prostate cancer. However, medical literature indicates that 80
With respect to Shell's alleged liability vis-à-vis Developer Defendants, the Miller declaration relied, inter alia, on a letter dated December 1, 1965, indicating that Barclay sought permission from Shell, prior to close of sale, to conduct "site clearing work" on the property. The Barclay letter stated, "We would like to begin immediately to remove the liquid waste and petroleum residues from the property.... We estimate it will take about three months for completion. [¶] As we discussed, the removal of waste should improve the value of your property and, therefore, there should be no exposure to Shell Oil Company other than possible public liability, which may be incurred during the course of the work. To protect Shell against this possibility, we will furnish you with liability insurance in such form as you may require." Miller also cited a March 1966 letter from Pacific Soils Engineering, Inc., to the original developers, indicating the soil beneath one of the reservoirs at the Kast site was "highly oil stained," and that the soils had a "petroleum odor."
The Miller declaration also asserted Plaintiffs were incapable of prevailing against Shell on their fraud claims, in that discovery conducted to date indicated that Plaintiffs had no interaction with Shell—they purchased their homes from the original developers. Thus, Plaintiffs did not rely on any statements by Shell, let alone any misrepresentation by Shell.
In opposition, Developer Defendants contended that the settling parties' joint attempt to exclude from the settlement consideration of the $146 million value of the RAP was a "transparent effort to improperly minimize Developer Defendants' offset." Developer Defendants argued that the trial court "should either include the full amount of the remediation in determining good faith or deny Shell's motion."
Developer Defendants attacked the Acosta settlement as lacking in good faith. They contended Shell failed to show the $90 million settlement amount,
Developer Defendants also contended the Carson settlement was not in good faith because it purported to exclude Shell's costs in implementing the RAP. By excluding the value of the RAP, the Carson settlement "is a walk away in which Shell is not paying a dime," even though the Carson action sought abatement of the contamination to a depth of 40 feet below the Carousel neighborhood.
Developer Defendants argued that the entire settlement consideration must be assigned a dollar value, including any non-monetary relief. "[A]ny settlement that is not purely cash must be assigned a dollar value." Here, by excluding the value of the RAP remediation, the settlement failed the good faith standard.
Developer Defendants also argued that Shell's failure to allocate the settlement proceeds was fatal to a good faith determination. "There are 1,491 individual Plaintiffs with varying claims. Allocating the settlement proceeds among them and their alleged injuries is necessary to ensure that the offset, and thus the settlement, are fair to Developer Defendants." They contended the trial court could not determine good faith without knowing how the settlement proceeds were being allocated between Plaintiffs' economic and non-economic damages, and among the 1,491 individual plaintiffs.
On January 30, 2015, the matter came on for hearing. After hearing arguments of counsel, the trial court granted the motion for good faith settlement consistent with its tentative ruling, which provided in substance:
"The test plaintiffs' settlement demands, when extrapolated over the full set of 1,400 [plus] plaintiffs produce a very large number, but any experienced civil judge (or [personal injury] litigator) knows that there is huge
"This case is complicated by the fact that the settlement includes Shell's promise to comply with the final abatement order from the [Water Board]. Shell's [designated person most knowledgeable deponent, William Platt] put the anticipated cost of compliance with the anticipated [Water Board] order at $146M. While hard to quantify in value terms, this should be seen by any rational individual plaintiff or by the City of Carson as a promise of overwhelming value since it solves the root cause of the tort claims even though it cannot magically eliminate the tort plaintiffs' accumulated claims for past damage to real estate and personal injury. The fact that it is hard to quantify does not, however, make it worthless.
"Given the amount of the $90M cash settlement (over $60,000 per plaintiff on a straight pro rata basis, but still subject to Justice Panelli's actual allocation process), combined with the hard-to-value promise to abate the underlying problem to the satisfaction of the relevant state government agency charged with responsibility for this exact type of problem, it is hard to find this inadequate or collusive. The Court is therefore satisfied that moving parties have made a sufficient showing to put any objecting party to its/their burden to show that the settlement is not made in good faith. Simply put, the combination of the $90M hard cash settlement promise and the harder-to-value promise to abate per [Water Board] direction is a large enough payment of consideration by Shell and its affiliates as to be `within the ballpark' for purposes of Tech-Bilt. ...
"Plaintiffs and their very experienced trial counsel have tried to make this case look as valuable as possible but they lack any persuasive showing at this time that there are clusters of cancer or other diseases plausibly associated with the in-ground petrochemical pollution at issue here. While the [Water Board] has issued cautionary messages to the residents of the housing tract to limit their exposure to their own yards, the [Water Board] is obviously well informed of the conditions in the area, and it has not directed to the Court's knowledge that even one of the many homes should be temporarily or permanently vacated. Politely put, plaintiffs have done an excellent job in maximizing the potential value of their claims ... but these inflated numbers tell an experienced judge very little about the actual value of the [personal
"Having found that the Moving Parties have fulfilled the Tech-Bilt factors and that Developer Defendants have failed to carry their burden of proof and persuasion, the motion [is] granted."
Developer Defendants filed a petition for writ of mandate, challenging the trial court's approval of the good faith settlement on the ground it failed to "monetize" the value of the RAP and failed to allocate the consideration among the 1,491 individual plaintiffs and between their economic and non-economic damages.
This court summarily denied the petition. Developer Defendants filed a petition for review. The Supreme Court granted the petition for review and transferred the matter back to this court with directions to vacate its order denying mandate and to issue an order to show cause. We issued an order to show cause and set the matter for hearing.
Developer Defendants contend the trial court erred in failing to assign a dollar value to Shell's contractual commitment to remediate the Carousel tract; the trial court further erred in finding good faith in the absence of an allocation of the settlement consideration among the 1,491 individual Plaintiffs and their alleged economic and noneconomic damages; and the trial court's failure to calculate Developer Defendants' offset was legally erroneous.
The factors to be taken into account in the determination of whether a settlement is in "good faith" include a rough approximation of the plaintiff's total recovery and the settlor's proportionate liability, the amount paid in settlement, the allocation of settlement proceeds among the plaintiffs, and a recognition that a settlor should pay less in settlement than if found liable after a trial. (Tech-Bilt, supra, 38 Cal.3d at p. 499.) 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 at injuring the interests of nonsettling defendants. (Ibid.) The Tech-Bilt factors are nonexhaustive and "may not apply in all cases." (PacifiCare of California v. Bright Medical Associates, Inc. (2011) 198 Cal.App.4th 1451, 1464 [130 Cal.Rptr.3d 756].) Further, practical considerations obviously require that the evaluation be made on the basis of information available at the time of settlement. (Tech-Bilt, supra, at p. 499.) "`[A] defendant's settlement figure must not be grossly disproportionate to what a reasonable person, at the time of the settlement, would estimate the settling defendant's liability to be.' [Citation.]" (Ibid.)
Developer Defendants' theory is that in ruling on the motion for good faith settlement, the trial court was required to assign a dollar value to Shell's implementation of the RAP, in addition to the $90 million cash settlement, in order to determine the proper amount of the offset to which the nonsettling parties would be entitled. This raises, as a threshold question, whether Shell's cost of complying with the RAP should be included at all in evaluating the good faith settlements.
As indicated, the trial court approved the settlements as being in good faith without assigning a specific value to the RAP. It simply found "the combination of the $90M hard cash settlement promise and the harder-to-value promise to abate per [the Water Board's] direction is a large enough payment of consideration by Shell ... as to be `within the ballpark....'"
In their returns to the petition, Plaintiffs, Carson and Shell take the position that the remediation is not part of the consideration paid by Shell in settlement and therefore Developer Defendants are not entitled to a valuation or an offset in any amount for Shell's cost of remediation.
Accordingly, we reject Developer Defendants' argument that this court cannot address the threshold issue of whether the RAP remediation was part
Shell's performance of environmental remediation at the site of the former Kast Tank Farm is not pursuant to its settlements with Plaintiffs and Carson, and is not contingent on the fate of any good faith settlement motion. Rather, the remediation already was mandated by the Water Board in March 2011, pursuant to Water Code section 13304, well before Plaintiffs, Carson and Shell reached settlements in this litigation.
Further, because Shell's remediation in compliance with the RAP is not part of the consideration it paid in settlement, there is no merit to Developer Defendants' contention that the settling parties' exclusion of the cost of the RAP from the settlements was collusive and intended to minimize the amount that would be set off against the nonsettling parties' liability.
Although the trial court erred to the extent that it relied on Shell's remediation of the site, in addition to the $90 million cash settlement, to find "a large enough payment of consideration by Shell ... as to be `within the ballpark,'" on the record presented the error was harmless because the $90 million, in and of itself, is well within the "ballpark."
Turning to the adequacy of the consideration given by Shell, on the record presented, the $90 million payment to Plaintiffs is not "`grossly disproportionate to what a reasonable person, at the time of the settlement, would estimate the settling defendant's liability to be.'" (Tech-Bilt, supra, 38 Cal.3d at p. 499.)
The Miller declaration, filed in support of Shell's motion for good faith settlement, demonstrated the difficulty Plaintiffs would have in proving causation and in prevailing on their personal injury claims. The pool of test plaintiffs showed there were no clusters of disease among them, most claimed a variety of common illnesses and ailments such as asthma, allergies, headaches, diabetes, heart conditions and high blood pressure, with the causal connection between those diagnoses and environmental conditions in the Carousel neighborhood appearing to be questionable. One of the test plaintiffs was a 79-year-old man who asserted a claim for prostate cancer, but medical literature shows that prostate cancer at that age is ubiquitous. Another test plaintiff decedent allegedly died of stomach cancer, but that allegation was inconsistent with her medical records. Thus, at the time of settlement, as Shell has argued, evidence of a causal connection between Plaintiffs' diagnoses and environmental conditions in the Carousel neighborhood was "tenuous at best." Tech-Bilt teaches that "practical considerations obviously require that the evaluation be made on the basis of information available at the time of settlement." (Tech-Bilt, supra, 38 Cal.3d at p. 499.) Given the slight evidence
As for Shell's proportionate liability, vis-à-vis Developer Defendants, we begin with the premise that "a settlor should pay less in settlement than he would if he were found liable after a trial." (Tech-Bilt, supra, 38 Cal.3d at p. 499.) Shell's moving papers below presented evidence that Barclay sought permission from Shell in 1965, prior to the close of sale, to conduct "site clearing work" on the property. The Barclay letter stated, "We would like to begin immediately to remove the liquid waste and petroleum residues from the property." The evidence also included a March 1966 letter from a soils engineer to the original developers, indicating the soil beneath one of the reservoirs at the Kast site was "highly oil stained," and that the soils had a "petroleum odor." Thus, there is substantial evidence to show the original developers were aware of the contamination at the site, and that it was the original developers who undertook to remove the liquid waste and petroleum residues to prepare the site for home development. Given this showing that substantial liability should be allocated to Developer Defendants, Shell's payment of over $60,000 on a pro rata basis for its share of Plaintiffs' purported personal injuries does not appear to be "`grossly disproportionate to what a reasonable person, at the time of the settlement, would estimate [Shell's] liability to be.'" (Tech-Bilt, supra, 38 Cal.3d at p. 499.)
Turning to the Carson settlement, which provided for mutual releases and a waiver of costs, Developer Defendants characterize it as a "walk away" by Shell, which gives Carson nothing of substance if the RAP remediation cost is excluded. However, Developer Defendants' argument disregards the nature of the relief which Carson sought in this litigation. Carson's complaint did not seek monetary damages; rather, it requested "full and total abatement of the contamination down to approximately 40 feet below the Carousel neighborhood."
The RAP will achieve abatement, albeit not to the depth originally sought by Carson. Pursuant to the Water Board's order, Shell will excavate to a depth of five to 10 feet beneath the homes, following excavation will install a vapor extraction and venting mechanism, and will institute comprehensive long-term monitoring. Developer Defendants admit in their petition that "[t]hrough its promise to remediate down to depths of 5 to 10 feet, Shell is substantially providing the relief that Carson sought." (Italics added.) That being the case, it would appear that Shell did not need to provide any additional consideration in its good faith settlement with Carson. Because the
Developer Defendants contend the trial court erred in finding good faith without an allocation of the entire settlement consideration among the 1,491 individual Plaintiffs and between their economic and noneconomic damages. Our conclusion that the estimated $146 million cost of complying with the RAP is not part of the settlement consideration makes it unnecessary to address Developer Defendants' arguments with respect to the calculation and allocation of an offset for the RAP remediation costs. Therefore, we confine our analysis to the allocation of the $90 million monetary payment among Plaintiffs. For the reasons discussed below, we reject Developer Defendants' allocation arguments.
Developer Defendants contend that two decisions, Knox v. County of Los Angeles (1980) 109 Cal.App.3d 825 [167 Cal.Rptr. 463] (Knox,) and Alcal Roofing & Insulation v. Superior Court (1992) 8 Cal.App.4th 1121 [10 Cal.Rptr.2d 844] (Alcal,) "control the analysis here," so as to require an allocation among the individualized claims at the time of the good faith determination. It appears to this court that Developer Defendants' reliance on Knox and Alcal is misplaced.
In Knox, three plaintiffs sued a market and three of its employees (the market defendants) as well as three governmental defendants, for unlawful arrest and other causes of action, arising out of a single incident in which the plaintiffs were arrested by sheriff's deputies for allegedly violating a temporary restraining order regulating picketing. (Knox, supra, 109 Cal.App.3d at pp. 828-829.) The plaintiffs reached a pretrial settlement with the market defendants amounting to $4,000 per plaintiff, for a total of $12,000. (Id. at pp. 829-830.) At trial, the governmental defendants were found liable for a total of $52,500 in damages. (Id. at pp. 830-831.) Following trial, the court denied the governmental defendants' request for a $12,000 offset for the amount the three plaintiffs received in settlement from the market defendants. (Id. at p. 831.)
Clearly, Knox does not stand for the proposition that the allocation must be made at the time of the good faith settlement determination. Rather, as stated in the Erreca's decision, Knox held, "Where the settling parties have agreed to allocate less than all of the settlement amount to a portion of the causes of action, an evidentiary showing is required to justify such allocation. (Knox v. County of Los Angeles[, supra,] 109 Cal.App.3d 825, 836-837 [167 Cal.Rptr. 463] ....)" (Erreca's, supra, 19 Cal.App.4th at p. 1491.)
The concern expressed in Knox about an "allocation which operates to exclude any portion of the settlement from the setoff" (Knox, supra, 109 Cal.App.3d at p. 837) is not present here. In the instant case, the $90 million settlement was entirely unallocated. Therefore, in ruling on the motion for good faith settlement, the trial court was not called upon to scrutinize an allocation which excluded some portion of the settlement from the setoff.
Alcal agreed with the roofer that the lower court erred in approving the settlement. (Alcal, supra, 8 Cal.App.4th at p. 1123.) It explained: "We
To reiterate, in the instant case, no portion of the $90 million was allocated and excluded from the setoff. Therefore, the concern present in Alcal, where only a fraction of the settlement was allocated to roofing issues to the detriment of the nonsettling roofer, has no application here. (See Erreca's, supra, 19 Cal.App.4th at p. 1491 [by allocating only $1.5 million of total settlement to soils issues, parties reduced amount of setoff available to soils defendants].)
Here, the full $90 million is theoretically available as a setoff to the nonsettling Developer Defendants. Because no portion of the settlement fund was excluded from the setoff, the allocation issue is simply the distribution of the $90 million among the 1,491 Plaintiffs, and between their economic and noneconomic damages. Hypothetically, Justice Panelli may award one plaintiff $30,000 and may award a neighboring plaintiff $120,000. However, how much each of the Plaintiffs will receive in settlement, and what each one's ratio of economic and noneconomic damages will be, appears to have slight bearing on whether the $90 million settlement, in the aggregate, is fair to Developer Defendants.
The trial court ruled the lack of an allocation of the $90 million settlement proceeds did not require it to deny the motion for good faith settlement; instead, the allocation could be determined at a later date—after each trial, the court would allocate that plaintiff's settlement proceeds by applying the jury's ratio of economic to noneconomic damages. The trial court gave the following illustration: if Justice Panelli were to award $50,000 to lead plaintiff Adelino Acosta, and the jury later were to determine that Mr. Acosta's damages against Developer Defendants were two-thirds noneconomic, then two-thirds of his $50,000 Shell settlement would be deemed noneconomic and not available to Developer Defendants as an offset.
We note the concluding footnote in Espinoza states: "We do not here reach the issue of whether a trial court presiding over a good faith settlement hearing should make any such allocation if it is requested to do so." (Espinoza, supra, 9 Cal.App.4th at p. 277, fn. 9, italics added.)
The question left open by Espinoza is presented here. Our analysis is informed by the Supreme Court's seminal decisions in Tech-Bilt and Abbott Ford. In Tech-Bilt, the court adopted the "ballpark" rule, which is "an attempt to make only a `rough approximation of plaintiffs' total recovery and the settlor's proportionate liability' modified by several considerations." (Abbott Ford, supra, 43 Cal.3d at pp. 887-888, conc. opn. of Broussard, J., quoting
Under Developer Defendants' theory, the trial court would have had to conduct 1,491 mini-trials to scrutinize or determine any individualized allocations of the $90 million settlement fund. Developer Defendants' argument is not tenable in light of the cautionary language found in Tech-Bilt and Abbott Ford. Moreover, an approach requiring individualized allocations of the settlement fund at the good faith settlement stage would severely impede good faith settlements in multi-plaintiff cases of this complexity.
The order to show cause is discharged. The stay of proceedings previously ordered by this court is lifted upon finality of this opinion. The petition for writ of mandate is denied. Real parties in interest shall recover their costs in this proceeding. (Cal. Rules of Court, rule 8.493.)
