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Sunterra Corp. v. Perini Building Company


July 14, 2009


The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge



In the present action, Plaintiff sued Defendant Perini Building Company ("Perini") for various breach of contract and breach of warranty claims in connection with the construction of Plaintiff's EVR Lake Tahoe Resort facility located in Lake Tahoe California. Perini acted as the general contractor on the project and it, in turn, filed cross claims against a variety of subcontractors involved with the project, including Cross-Defendant Overhead Fire Protection, Inc. ("Overhead").

Overhead now seeks to obtain a judicial determination that its settlement with Perini in the amount of $40,000.00 is a good faith settlement within the meaning of California Code of Civil Procedure § 877.6. That section provides in pertinent part, as follows:

(a) (1) Any party to an action wherein it is alleged that two or more parties are joint tortfeasors shall be entitled to a hearing on the issue of the good faith of a settlement entered into by the plaintiff or other claimant and one or more alleged tortfeasors . . .


(c) 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.

(d) The party asserting the lack of good faith shall have the burden of proof on that issue.

Cal. Code of Civ. Proc. § 877.6.

The California Supreme Court, in Tech-Bilt, Inc. v. Woodward-Clyde & Assoc., 38 Cal. 3d 488, 494 (Cal. 1985) found that the main purpose of § 877.6 is to encourage both settlement and the equitable sharing of costs among the parties at fault. A district court may properly consult the provisions of § 877.6 in determining whether an early settlement meets the requisite good faith scrutiny. See, e.g., Federal Sav. and Loan Ins. Corp. v. Butler, 904 F.2d 505, 511 (9th Cir. 1990).

The party asserting an absence of good faith has the burden or proof in establishing that the settlement is so far our of the ballpark in relation to the factors identified by Tech-Bilt*fn1 so as not to merit protection under § 877.6.

Significantly, no opposition has been filed by any of the numerous parties to this litigation suggesting that Overhead's settlement was not made in good faith. The evidence shows that the settlement was reached following extensive negotiations with Peter Dekker, the special master assigned to this case. In addition, Overhead has produced evidence suggesting that the amount of its settlement substantially exceeds its share of the remediation costs claimed by Plaintiffs in connection with the construction project underlying this litigation.

Given these factors, and good cause appearing, Overhead's Motion for Determination of Good Faith Settlement (Docket No. 757) is GRANTED.*fn2 The Court accordingly finds as follows:

1. That the settlement between Overhead and Perini in the amount of Forty Thousand Dollars ($40,000.00) was made in good faith pursuant to California Code of Civil Procedure § 877.6 and the standards for good faith as set forth in Tech-Bilt, supra;

2. That such settlement bars any pending or future cross claims or complaints by alleged joint tortfeasors or co-obligors, against Overhead, for equitable contribution or partial, comparative, or implied indemnity related in any way to the construction project at issue herein;

3. That Perini's cross claim, to the extent it names Overhead, shall be dismissed, with prejudice.


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