Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
Sonoma County Super. Ct. No. SCV231965
Pollak, Acting P. J.
Plaintiff challenges a posttrial order offsetting in its entirety a $15,600 jury verdict in his favor. Plaintiff sued several defendants for damages arising from defects in his newly purchased home. After entering a judicially approved good faith settlement agreement with other defendants for $34,000, plaintiff proceeded to trial against the remaining defendants, Rodan Termite Control, Inc. and its agent Daniel Madrid (collectively, Rodan), and obtained a verdict for $15,600. Thereafter, the trial court granted Rodan’s motion, pursuant to Code of Civil Procedure section 877, to offset the settlement proceeds against the verdict and reduce the judgment to zero. Plaintiff has timely appealed from the resulting judgment for zero dollars. We shall affirm.
The action was brought by Ruben Guerrero and Adelle Guerrero. Adelle Guerrero died in January 2006 and Ruben Guerrero was appointed her successor in interest prior to trial.
All statutory references are to the Code of Civil Procedure unless otherwise indicated.
Factual and Procedural History
In April 2002, plaintiff purchased a home in Santa Rosa from Elizabeth Gonsalves. Both plaintiff and Gonsalves were represented in the transaction by Al Kojasteh, an agent for Help-U-Sell Realty, which is owned by Maurine Grisso (collectively, Help-U-Sell). Prior to the close of escrow, the home was inspected by Rodan. Shortly after the close of escrow, plaintiff began to remodel his home and discovered dryrot in the bathroom and kitchen. Plaintiff also found evidence of unpermitted and undisclosed repairs to both the structure of the home and the bathroom.
Plaintiff filed suit against Gonsalves, Help-U-Sell, and Rodan. The first amended complaint sought compensatory damages and injunctive relief against Help-U-Sell for breach of statutory duties; fraudulent concealment; breach of contract; breach of warranty; breach of implied covenant of good faith and fair dealing; negligence; breach of fiduciary duty; constructive fraud; and violations of the Unfair Business Practices Act (Bus. & Prof. Code, § 17200 et seq.), the Consumer Legal Remedies Act (Civ. Code, § 1750 et seq.), and the Cartwright Act (Bus. & Prof. Code, § 16700 et seq.). One cause of action for negligence was alleged against Rodan. Shortly before the start of trial, plaintiff settled with Help-U-Sell for $34,000 and agreed to dismiss the complaint with prejudice and release all claims against Help-U-Sell. The settlement agreement did not allocate the $34,000 to any particular cause of action.
Gonsalves was dismissed at the start of trial.
A cross-defendant brought into the action by Help-U-Sell contributed $2,000 to the $34,000 settlement.
Help-U-Sell moved under section 877.6 for a determination that the settlement was in good faith. In support of the motion, Help-U-Sell presented evidence that plaintiff had documented $25,301 in material and labor costs to repair defects to his home and, in addition, the cost of repair for the dryrot was estimated at approximately $16,000. Help-U-Sell asserted that plaintiff failed to support his wage loss claim and that his claim for emotional distress damages was barred under California case law. Help-U-Sell also contended that only a portion of a claimed $7,000 loss for the purchase and use of a motor home could be attributed to the alleged construction problems. Help-U-Sell asserted that the agreed settlement amount was “a reasonable compromise between the higher limit of damages claimed by the plaintiff[] and the denial of liability and actual damages sustained by the plaintiff[],” and “a fair approximation of [Help-U-Sell’s] potential liability and is not ‘grossly disproportionate’ to its liability.” (See Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488.)
Plaintiff filed a statement in support of the motion, stating in part that “[i]t was and is plaintiff’s contention that the purpose and funds of the settlement be attributed to the litigation risk revolving around the consumer protections statutes alleged in the complaint.” Plaintiff requested the court to grant the motion for determination of good faith “without offset to the damages found by the jury, if any, in the matter against defendant Rodan.” Rodan filed a notice of non-opposition to the motion, but asserted that plaintiff had suffered a single indivisible injury and that, under Kohn v. Superior Court (1983) 142 Cal.App.3d 323 (Kohn), and Leko v. Cornerstone Bldg. Inspection Service (2001) 86 Cal.App.4th 1109 (Leko), it would be entitled to offset the full amount of the settlement against any recovery against it. At the hearing on the motion, the trial court indicated that under Leko, plaintiff appeared to suffer an indivisible harm. The signed order granting the motion did not address this issue but was in standard form, finding the $34,000 settlement to be in good faith, dismissing any cross-complaints for indemnity or contribution, and barring any claims against the settling defendants for equitable comparative contribution or indemnity. The order made no allocation of any portion of the settlement proceeds to any particular cause of action.
At the start of trial, Rodan filed an in limine motion reiterating its contention that it was entitled to a full credit and offset for the settlement amount. Plaintiff filed an opposition, but urged the court to decide the offset issue after trial. The case proceeded to trial and the jury returned a special verdict for plaintiff in the amount of $15,600. After further briefing on the offset issue, the court ruled as follows: “Motion for offset/credit for amount of settlement by joint tortfeasors is granted. First, the court finds that plaintiff’s injury was ‘indivisible’ within the meaning of the appropriate cases. Further, the court finds that the settlement by one tortfeasor for an indivisible injury operates as a credit or offset as to the liability of the remaining tortfeasors.” The court thus entered judgment for zero dollars and plaintiff filed a timely notice of appeal.
Discussion
Standard of Review
“[T]he determination of whether a settlement is in good faith is left to the discretion of the trial court, and may be reversed only upon a showing of abuse of discretion. [Citation.] However, where, as here, the issue is one of statutory interpretation and application of the statute to undisputed facts, the question is one of law subject to the appellate court’s independent review.” (Be v. Western Truck Exchange (1997) 55 Cal.App.4th 1139, 1143.)
The injuries asserted against Rodan and Help-U-Sell are indivisible and subject to offset under Code of Civil Procedure section 877.
Plaintiff argues that the special verdict was not subject to an offset undersection 877 because his complaint asserted “divisible” injuries arising from the conduct of the various defendants. We disagree.
Section 877 provides in relevant part: “Where a release . . . is given in good faith before verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the same tort . . . it shall have the following effect: [¶] (a) It shall not discharge any other such party from liability unless its terms so provide, but it shall reduce the claims against the others in the amount stipulated by the release . . . or in the amount of the consideration paid for it whichever is the greater. . . .” “[S]ection 877 requires that an offset be given reducing the judgment by the amount of consideration paid for a dismissal given ‘to one or more of a number of tortfeasors claimed to be liable for the same tort.’ ” (Knox v. County of Los Angeles (1980) 109 Cal.App.3d 825, 832 (Knox).)
In Kohn, supra, 142 Cal App.3d 323, a purchaser of real property sued the seller, the seller’s realtors, and a pest control company for failing to disclose fire damage to the property, and a contractor for making negligent repairs to the fire-damaged property. The purchasers settled with the contractor before trial and the other defendants opposed a motion to determine the good faith of the settlement and dismiss the cross-complaint against them. The nonsettling defendants contended that section 877 did not apply because they and the settling defendant were not “ ‘claimed to be liable for the same tort.’ ” (Id. at p. 328.) Our predecessors in this division of the court rejected this argument: “Here, there was but one injury, [the] purchase of a house that was worth less than plaintiff believed. [Citation.] The alleged tortious activities by the contractor, pest control inspector, and seller were not independent, but combined to create one indivisible injury which took place when the sale was consummated.” (Id. at p. 329.)
In Leko, supra, 86 Cal.App.4th 1109, purchasers of real property sued the sellers and a real estate broker for failing to disclose property defects. The broker cross-complained against two home inspection companies for equitable contribution. The trial court granted one inspection company judgment on the pleadings and the other summary judgment, finding that the broker was barred from seeking equitable indemnity from the two inspection companies. (Id. at p. 1114.) The Court of Appeal reversed, holding that the broker and the inspection companies each had statutory duties to discover and disclose certain property defects and their failure to do so “may be a proximate cause of a single indivisible injury to the person to whom the disclosure should have been made.” (Id. at p. 1116.)
Plaintiff contends that their claims against Help-U-Sell for violations of the several consumer protection statutes alleged in the complaint distinguish this case from Kohn and Leko. Plaintiff contends that the alleged “consumer related injuries” are injuries of “economics to the general public” and “being forced to make an illegal choice,” so that the settlement proceeds are not “capable of allocation.” It is not clear why plaintiff believes his argument would be strengthened by showing that the settlement proceeds could not be allocated, rather than that they simply were not allocated, but in all events his argument lacks merit. The fact that there can be damages arising from the violation of other statutes that differ from the damages plaintiff suffered here—which is all that the single case cited by plaintiff demonstrates—does not establish that plaintiff suffered a divisible injury. As the trial court properly concluded, regardless of the theory of liability, plaintiff suffered an indivisible injury when he purchased his home with undisclosed defects. When all is said and done, the plaintiff’s injury is the same: “[The] purchase of a house which was worth less than plaintiffs believed.” (Kohn, supra, 142 Cal.App.3d at p. 329.)
Plaintiff cites Classen v. Weller (1983) 145 Cal.App.3d 27 to establish that “an antitrust injury is a legal injury.” That case, however, bears no similarity to the present case and hardly establishes that plaintiff suffered injuries here that are divisible. In Classen v. Weller, a home builder at the request of a client purchased property from a developer. As a condition of sale, the developer required the builder to agree to use a particular real estate broker’s services when he re-sold the property to his client. The contractor built a home on the property and resold the property to his client without using the broker. The real estate broker sued the contractor for the sales commission and the builder cross-complained against the real estate broker and the developer for engaging in an illegal tying arrangement in violation of the Cartwright Act. On appeal from summary judgment against the contractor, the court held that although the builder was “not prevented from buying, building upon, or selling the lot, he was in fact forced to defend this action for the ‘tied’ commission” and thus “injured” by having to face the “adverse alternatives” of losing his customer, signing the sales agreement, or defending the action when he refused to pay the broker’s commission. (Id. at p. 39.) Here, plaintiff faced no such “adverse alternatives.” He was simply put to the expense of repairing the defects in his home.
Absent a judicially approved allocation of some portion of the settlement amount to injuries for which Rodan was not found responsible, Rodan is entitled to a setoff of the entire settlement amount.
Plaintiff argues that the burden was on Rodan to establish that the full amount of the settlement was intended to apply to the claim for which Rodan was found liable, and that Rodan waived its right to apply the settlement recovery to the damages for which it was liable by failing at the good faith settlement hearing to secure an allocation of the settlement amount to the claim against it. Plaintiff’s position incorrectly reverses the burden to negate the nonsettling defendant’s right to a setoff.
Initially, Rodan was under no obligation to establish its right to a setoff when the settlement was approved, or at any point prior to the determination of its liability. “[S]ection 877 does not specify how nonsettling defendants shall raise the claim of an offset based thereon.” (Knox, supra, 109 Cal.App.3d at p. 834.) Deferring the determination of the right to a setoff until after trial and the determination of liability is common and acceptable. (Id. at pp. 834-835; River Garden Farms, Inc. v. Superior Court (1972) 26 Cal.App.3d 986, 1003; Lareau v. Southern Pac. Transportation Co. (1975) 44 Cal.App.3d 783, 796.)
More importantly, if any portion of the settlement is to be applied to claims other than those asserted against nonsettling parties, such an allocation must be included in the terms of the settlement agreement and found by the court to be in good faith. (Knox, supra, 109 Cal.App.3d at pp. 836-837.) “Under subdivision (a) of section 877, the amount of the setoff is, in the absence of a stipulation, ‘the amount of consideration paid for [the release or dismissal].’ ” (Franklin Mint Co. v. Superior Court (2005) 130 Cal.App.4th 1550, 1557.) When “the cash amount of the settlement does not dictate the amount of the offset, the settling parties must include an allocation or a valuation in their agreement.” (Alcal Roofing & Insulation v. Superior Court (1992) 8 Cal.App.4th 1121, 1124-1125.) The parties to the settlement agreement, “since they are in the best position to place a monetary figure on its value, should have the burden of establishing the monetary value.” (Abbott Ford, Inc. v. Superior Court (1987) 43 Cal.3d 858, 879.) “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.” (Erreca’s v. Superior Court (1993) 19 Cal.App.4th 1475, 1491, citing Knox, supra, at pp. 836-837.) Absent an agreement between plaintiff and Help-U-Sell allocating the settlement funds between the causes of action and an evidentiary showing to justify such allocation, approved by the court as being in good faith, Rodan is entitled to a setoff of the entire settlement amount. (See Knox, supra, at pp. 836-837.)
The trial court here was never presented with any argument, much less evidence, as to how the two settling parties intended the settlement proceeds to be allocated among the sundry causes of action asserted against Help-U-Sell, much less whether any such allocation could be justified as in good faith. Plaintiff failed to meet his burden to justify an allocation, and he made no offer to do so. Plaintiff did not satisfy his burden by making the unsupported assertion that “[i]t was and is plaintiff’s contention that the purpose and funds of the settlement be attributed to the litigation risk revolving around the consumer protections statutes alleged in the complaint.” Certainly, the trial court never determined that such an allocation met the criteria for a good faith settlement. The trial court therefore correctly applied the full amount of the settlement against Rodan’s obligation to plaintiff, thus extinguishing its liability.
Disposition
The judgment is affirmed. Rodan shall recover its costs on appeal.
We concur: Siggins, J., Horner, J.
Judge of the Alameda County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.