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Vescio v. Federated Dep't Stores

June 15, 2009

PETER VESCIO AND JANE VESCIO
v.
FEDERATED DEPARTMENT STORES, INC., ET AL.



The opinion of the court was delivered by: The Honorable Christina A. Snyder

CIVIL MINUTES - GENERAL

Proceedings: DEFENDANTS MACY'S INC. AND MACY'S LOGISTICS AND OPERATIONS MOTION FOR DETERMINATION OF GOOD FAITH SETTLEMENT (filed 5/12/09) THIRD-PARTY DEFENDANTS CHARLENE LAYTON'S AND LAYTON INSURANCE AGENCY'S MOTION FOR AN ORDER DETERMINING GOOD FAITH IN SETTLEMENT (filed 5/12/09)

INTRODUCTION AND BACKGROUND

On September 28, 2007, plaintiffs Peter Vescio ("Vescio") and Jane Vescio (collectively, the "Vescio plaintiffs") filed a complaint in the Los Angeles County Superior Court against defendants Federated Department Stores, Inc.; Federated Corporate Services, Inc.; Federated Logistics and Operations; and Does 1 through 100, inclusive (collectively, "Macy's").*fn1 On November 26, 2007, Macy's removed the instant action to this Court.

The Vescio plaintiffs allege that Vescio is a partner/owner of Apparel Rack Systems ("Apparel"). The Vescio plaintiffs allege that, in February 2007, Vescio, acting on behalf of Apparel, entered into a contract (the "equipment agreement") with Macy's, wherein Apparel agreed to remove equipment from a Macy's facility in Houston, Texas. Macy's agreed that Apparel would own any equipment removed by Apparel.

The Vescio plaintiffs allege that on or about March 13, 2007, Vescio was injured on the premises of the Macy's facility when he fell through a hole in a second-story catwalk that Macy's designed and manufactured. Compl. ¶¶ 5, 7, 10, 22. The Vescio plaintiffs allege that the catwalk was defective and unsafe in manufacture and design and that these defects caused Vescio's injuries. Compl. ¶¶ 7, 8, 10. Vescio alleges claims against Macy's for (1) strict products liability, (2) strict premises liability, and (3) negligence. Jane Vescio, Vescio's wife, alleges a claim against Macy's for lossof consortium.

On July 14, 2008, Macy's filed a third party complaint against Apparel, John W. Perkins ("Perkins"), and Does 1-10. Macy's alleges that Perkins is Vescio's partner and co-owner of Apparel. Compl. ¶ 6. Macy's alleges that Apparel, Perkins, and Does 1-10 expressly agreed to indemnify, defend, hold harmless, and release Macy's regarding any incidents arising from the equipment removal from the facility. Third Party Compl. ¶ 26. Macy's further alleges that Apparel, Perkins, and Does 1-10 violated the equipment agreement by failing to procure insurance naming Macy's as an additional insured. Third Party Compl. ¶ 26. Macy's alleges claims for (1) express indemnity; (2) implied indemnity; (3) apportionment of fault and contribution; (4) declaratory relief; and (5) breach of contract.

On July 16, 2008, Macy's filed a counterclaim against Vescio, individually and dba Apparel, alleging that, in the equipment agreement between Vescio and Macy's, Vescio agreed to indemnify, defend, and hold harmless Macy's regarding any incident arising from the equipment removal from the facility. Counterclaim ¶ 22. Macy's alleges that Vescio failed to name Macy's as an additional insured on Apparel's insurance policies, in breach of the equipment agreement. Counterclaim ¶¶ 14-15, 41. Macy's alleges claims for (1) express indemnity; (2) implied indemnity; (3) apportionment of fault and contribution; (4) declaratory relief; and (5) breach of contract.

On August 7, 2008, Vescio filed a third party complaint against third-party defendants Charlene Layton, individually and dba Layton Insurance Agency, and Layton Insurance Agency (collectively, "Layton") and Colony Insurance Company, Colony National Insurance Company, Colony Specialty Insurance Agency, and Colony Group (collectively, "Colony"). In his third party complaint, Vescio alleges that, prior to entering into the equipment agreement with Macy's, Apparel obtained commercial general liability insurance coverage from Colony through "insurance broker/agent" Layton. Vescio Third Party Compl. ¶ 11-12. Vescio alleges that, after he received the proposed equipment agreement from Macy's, Vescio contacted Layton and requested that Macy's be added as an additional insured under Apparel's commercial general liability insurance policy with Colony. Vescio Third Party Compl. ¶ 12. Vescio alleges that Layton, acting as an agent of Colony, represented to him that such additional coverage had been issued by Colony. Vescio Third Party Compl. ¶ 12. Vescio alleges that Layton also issued a certificate of liability insurance confirming that Macy's had been added as an additional insured. Vescio Third Party Compl. ¶ 12, Ex. B. Vescio alleges that, in June 2008, after Macy's filed its counterclaim, Vescio learned that in fact no such additional coverage for Macy's had been issued. Vescio Third Party Compl. ¶ 26-27. Vescio's third party complaint asserts claims against both Layton and Colony for (1) breach of oral contract; (2) negligent failure to obtain insurance coverage; (3) negligent misrepresentation; (4) fraud; and (5) declaratory relief. In addition, the third party complaint asserts claims against Layton for breach of fiduciary duty, and against Colony for (1) reformation and (2) breach of implied covenant of good faith and fair dealing.

On December 30, 2008, Perkins filed a counterclaim against Vescio, Layton, and Does 1-10. Perkins alleges that he instructed Vescio to confirm in writing that Layton had included Macy's as an additional insured under Apparel's general liability insurance policy, but that Vescio failed to do so. Counterclaim ¶ 25. Perkins alleges claims for (1) equitable indemnification (against Vescio); and (2) declaratory relief (against Vescio and Layton). Under both causes of action, Perkins seeks attorney's fees and costs.

On February 23, 2009, the Court granted summary judgment in favor of third party defendants Colony. Colony is therefore no longer a party to this action.

On May 12, 2009, Macy's filed the instant motion for determination of good faith settlement. Also on May 12, 2009, Layton filed the instant motion for an order determining good faith settlement. Perkins filed oppositions thereto on May 18, 2009. Macy's filed a reply on May 21, 2009. Layton filed a reply on May 22, 2009. Perkins filed a sur-reply to Macy's reply on May 22, 2009. A hearing was held on June 15, 2009. After carefully considering the arguments set forth by the parties, the Court finds and concludes as follows.

LEGAL STANDARD

In determining whether a settlement was entered into in good faith for the purposes of Cal. Code Civ. P. ยง 877.6, courts are to consider several 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 & Associates, 38 Cal. 3d 488, 499 (1985). Other relevant considerations include "the financial conditions and insurance policy ...


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