United States District Court, E.D. California
FINDINGS AND RECOMMENDATIONS APPROVING SETTLEMENT AGREEMENT AND DISMISSING CASE WITH PREJUDICE (Doc. 424)
BARBARA A. McAULIFFE, Magistrate Judge.
In this Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") action, Plaintiffs/Counter-Defendants and Defendants/Counter-Claimants jointly move for good faith settlement determination pursuant to California Code of Civil Procedure Section 877.6. (Doc. 424). On August 7, 2014, the Court deemed the matter suitable for decision without oral argument pursuant to Local Rule 230(g), and vacated the hearing scheduled for August 15, 2014. (Doc. 429). Having reviewed the motion as well as the supporting documentation, this Court recommends the Motion for Good Faith Settlement Determination be GRANTED.
Pursuant to Plaintiffs' Second Amended Complaint ("SAC"), Plaintiffs own real property located at 1319 G. Street, Reedley, California ("Site"). SAC at ¶ 4, Doc 154. Prior to Plaintiffs taking ownership of 1319 G. Street, Mabel and Herbert Lee owned and/or operated a dry cleaning business at that location from approximately the 1940s through the 1970s. SAC at ¶ 4. Orelia Florez and Sieto Yamaguchi owned and/or operated real property at 1340 G. Street, Reedley, California, which is across the street from Plaintiff's Site. SAC at ¶ 4. Finally, John Pearce and Patty and Louie Martinez "each owned and/or operated real property across the street from Plaintiffs' Site." SAC at ¶ 4.
The instant action concerns remediation of hazardous substance contamination of the soil and groundwater underlying and/or surrounding the properties located on G Street in Reedley, California. The SAC alleges that the properties either currently or previously owned by Defendants caused Plaintiffs' Site environmental contamination. SAC at ¶ 3. Plaintiffs specifically allege that Pearce, Yamaguchi, Lee, and Martinez released volatile organic compounds on or around the Sites due to their operation of various businesses. SAC at ¶¶ 36-38, Doc. 154. Plaintiffs further allege it has incurred past costs related to sampling its Site and that it will incur future costs of response related to Defendants' prior operations. SAC at ¶¶ 39, 42. Defendants denied any liability for the alleged environmental contamination beneath the Site and disputed Plaintiffs' allegations regarding the source and cause of the contamination as well as the extent of response costs alleged. In their counter-claims, Defendants contend that the contamination beneath the Site originated from offsite sources and/or preexisted Defendants' tenancy and operations. Defendants further assert that Enns has substantial liability arising from the ownership of the Site(s) and releases from operations of those Sites. (Doc. 424 at 5).
Plaintiffs filed suit on July 19, 2007. Over the course of approximately six (6) years, the parties engaged in vigorous litigation including extensive discovery and dispositive and non-dispositive motion practice. In conducting expert discovery, the parties retained two separate experts to determine the source and nature of the alleged contamination and the resulting estimated cost of clean-up and remediation of the Site. Enns' expert, Wade Allmon, estimated that the costs of remediation and monitoring would total somewhere between $2.6 million and $3.8 million. Caufield Decl. at p. 3, Doc. 424-5. Pearce's expert, Bruce Myers, estimated that the costs of remediation and monitoring would total approximately $1.4 million. Caufield Decl. at p. 2, Doc. 424-4.
On September 19, 2012, the parties participated in the first of three mediations before JAMS mediator, Lester Levy, with other mediation sessions occurring on June 4, 2013, and January 24, 2014. After the three lengthy negotiations led by Mr. Levy, the parties entered into a settlement agreement which, among other things, required the parties to collectively pay $3.1 million into the "Reedley Environmental Remediation Trust as either a Designated Settlement Fund or a Qualified Settlement Fund.'" Caufield Decl. Ex. A at 5, Doc. 424-3. The parties now jointly move for a determination that the collective settlement agreement was entered into in good faith pursuant to California Code of Civil Procedure § 877.6.
A. Legal Standard
A motion for good faith settlement is governed by California Code of Civil Procedure §§ 877 and 877.6, both which apply to federal court proceedings and authorize the Court to determine whether a settlement agreement was entered into in good faith. See Slottow v. Am. Cas. Co. of Reading, Penn., 10 F.3d 1355 (9th Cir. 1993) (en banc). A court has discretion to determine that a settlement is in good faith pursuant to California Code of Civil Procedure Section 877. Mason & Dixon Intermodal, Inc. v. Lapmaster Int'l LLC, 632 F.3d 1056, 1064 (9th Cir. 2011). The good faith provision of section 877 mandates that the courts review agreements purportedly made under its aegis to insure that such settlements appropriately balance the contribution statute's dual objectives. Tech-Bilt, Inc. v. Woodward-Clyde & Assocs., 38 Cal.3d 488 (Cal. 1985). The good faith provision further provides that when a settlement is determined by a court to have been made in good faith, the settlement "bar[s] 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. Civ. Proc. Code § 877.6(C). The party applying for a good faith settlement determination is required to give notice of its application to all other parties and to the court. Cal. Civ. Proc. Code § 877.6(a). "A settling tortfeasor's section 877.6, subdivision (c) good faith settlement determination discharges indemnity claims by other tortfeasors, whether or not named as parties, so long as the other tortfeasors were given notice and an opportunity to be heard." Gackstetter v. Frawley, 135 Cal.App.4th 1257, 1273 (Cal.App. 2d Dist. 2006).
To determine whether a settlement was entered into in good faith, Courts consider the Tech-Bilt factors which include:(1) a rough approximation of plaintiff's total recovery and the settler's proportionate liability; (2) the amount paid in settlement; (3) a recognition that a settler should pay less in settlement than if found liable after trial; (4) the allocation of the settlement proceeds; (5) the settling party's financial condition and the availability of insurance; and (6) evidence of any collusion, fraud or tortious conduct between the settler and the plaintiff aimed at requiring the non-settling parties to pay more than their fair share. Tech-Bilt, Inc., 38 Cal.3d at 499. "Once there is a showing made by the settlor of the settlement, the burden of proof on the issue of good faith shifts to the nonsettlor who asserts that the settlement was not made in good faith." City of Grand Terrace v. Superior Court, 192 Cal.App.3d 1251, 1261 (1987). A party opposing the settlement agreement "must demonstrate... that the settlement is so far out of the ballpark' in relation to these factors as to be inconsistent with the equitable objectives of the statute." Tech-Bilt, Inc., 38 Cal.3d at 499-500.
B. Terms of the Settlement
Pursuant to the Settlement Agreement, all parties agree to the following material terms of ...