Filed 11/2/26 Wu v. Super. Ct. (Gandhi) CA6
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
VERONICA WU, H053801
(Santa Clara County
Petitioner, Super. Ct. No. 20CV369179)
v.
THE SUPERIOR COURT OF SANTA
CLARA COUNTY,
Respondent;
PURVI GANDHI et al.,
Real Parties in Interest.
China Science & Merchants Investment Management Group Co., Ltd. (CSC
Group) is a Chinese private equity firm that formed Hone Capital LLC (Hone Capital) in
California to “oversee” its United States investments, predominantly in the Silicon Valley
tech industry.1 Veronica Breckenridge2 was Hone Capital’s president, and Purvi Gandhi
1
We use the term “CSC parties” to refer to CSC Group, Hone Capital, CSC
Technology (Cayman) Ltd.; Everest Cayman Ltd.; CSC Genesis Ltd.; CSC SFR
(Cayman) Ltd.; CSC Growth LLC; CSC Angel LLC; Shanghai Shizhen Investments Co.
Ltd.; CSC Evergreen LLC; China Science & Merchants (Hong Kong) Investment
Management Co., Ltd.; CSC SV GP Ltd.; SFR US Financing LLC; Xiangshuang Shan;
Qi Su; and Li Li. CSC Group is the ultimate parent entity of the other CSC parties.
2
Breckenridge was formerly identified in the trial court as Veronica Wu but in this
original proceeding in our court identifies herself as Breckenridge.
its chief financial officer. In the trial court, the CSC parties3 asserted various tort claims
against Breckenridge and Gandhi arising from alleged self-dealing; Breckenridge and
Gandhi asserted tort, contract, and employment claims seeking profit sharing and other
damages based on alleged contracts with various CSC parties and as members of CSC
Upshot Ventures Management GP, LLC (CSC Upshot GP).4 After discovery closed,
with less than two weeks before the scheduled start of trial, the parties’ efforts at
mediation led to a settlement between Gandhi and the CSC parties and Upshot parties;
Breckenridge did not settle.
Gandhi is the only party to receive money under the settlement, and the settlement
allocates a fixed value to the CSC parties’ claims against her.
Gandhi, joined by the CSC parties, sought a judicial determination that the
settlement was in good faith, under Code of Civil Procedure section 877.6.5 A good faith
determination reduces a plaintiff’s claims (for our purposes, the CSC parties’) against the
nonsettling joint tortfeasor (Breckenridge) by the greater of the amount stipulated by the
settlement or the amount of consideration paid for it. (§ 877, subd. (a).) For Gandhi’s
purposes, a good faith determination also bars “any other joint tortfeasor [Breckenridge]
… from any further claims against the settling tortfeasor [Gandhi] … for equitable
comparative contribution, or partial or comparative indemnity, based on comparative
negligence or comparative fault.” (§ 877.6, subd. (c).)
3
The CSC parties prosecuting claims against Breckenridge and Gandhi are Hone
Capital; CSC Group; CSC Growth, LLC; SFR US Financing, LLC; and SFR US
Holdings, LLC. All CSC parties participated in the settlement with Gandhi.
4
CSC Upshot GP is the general partner of CSC Upshot Ventures I, L.P. (CSC
Upshot), an investment fund established as a joint venture between the CSC Group and
Huoy-Ming Yeh. We refer to CSC Upshot, CSC Upshot GP, and Yeh as the Upshot
parties.
5
Undesignated statutory references are to the Code of Civil Procedure.
2
Over Breckenridge’s objection, the trial court granted Gandhi’s motion,
determining that the settlement was in good faith. Breckenridge then petitioned this court
for writ of mandate. (See § 877.6, subd. (e).)
We will deny the petition. Gandhi supported her motion with sufficient evidence
to support the settlement allocation as to the CSC parties’ claims against her.
Breckenridge did not carry her ultimate burden to demonstrate that the settlement was not
in good faith.
I. BACKGROUND
A. The Complaints
Hone Capital filed the first complaint in this action. A few days later,
Breckenridge and Gandhi jointly filed their original complaint in a separate action, and
the two cases were consolidated. The parties have amended their complaints several
times, adding claims and parties.
By the time of Gandhi’s settlement, Breckenridge and Gandhi were separately
represented and prosecuting claims against the CSC parties and the Upshot parties under
separate complaints. Even so, Breckenridge and Gandhi remained aligned in that they
both touted their contributions to CSC Group’s investment portfolio and alleged that CSC
entities had violated profit sharing agreements. As of July 2024, Breckenridge alleged
that she and Gandhi were owed $5.37 million in profit sharing. As of February 2025,
Gandhi alleged that she was owed at least $15 million in tax-adjusted profit sharing.
Both Breckenridge and Gandhi alleged that they would be entitled to still more from
future profitable sales of assets. Both sought compensatory damages, restitution, punitive
damages, and civil penalties under an assortment of contract, tort, common law, and
statutory theories.
3
Hone Capital’s operative complaint, now joined by CSC Group and certain other
entities,6 arose from an alleged conspiracy between Breckenridge, Gandhi, and former
corporate counsel to Hone Capital and CSC Group. Hone Capital and CSC Group
alleged that no profit-sharing agreement had ever been finalized and that Breckenridge
and Gandhi instead conspired to embezzle a share of the profits: Breckenridge and
Gandhi effectively “transferred to themselves all carried interest for managing CSC
Group’s best group of assets” via kickback agreements Breckenridge and Gandhi made
with the buyers of those assets. The CSC parties allege that Breckenridge and Gandhi
thus embezzled $4.5 million in connection with a sale of holdings in Stripe, Inc. (the
Stripe transaction) and $2.75 million in connection with a sale of real estate assets (the
SFR transaction); based on those alleged kickbacks, CSC parties claim treble damages,
punitive damages, attorney fees, and costs.7
B. Settlement
After the close of discovery, with motions for summary judgment or summary
adjudication pending and the scheduled trial date less than two weeks away, Gandhi
reached a settlement with the CSC parties and the Upshot parties.
In return for a mutual release of claims, Gandhi will receive a net payment of a
sum certain. The payment amount represents the value of Gandhi’s claims (and other
nonmonetary consideration she provided) less the value the parties expressly allocated to
the CSC parties’ tort claims against her.
6
In addition to Hone Capital and CSC Group, the listed plaintiffs are CSC
Growth, LLC; SFR US Financing, LLC; and SFR US Holdings, LLC. In addition to
Breckenridge and Gandhi, four entities are named as defendants: HC Investments, LLC;
Windward Ventures I, LLC; Minerva SFR LLC; and Minerva-Tech Ventures LLC.
7
Although the complaint did not identify the nature of the assets at issue in the
SFR transaction, there is no dispute that these were real estate assets. While other
transactions are mentioned, they are not assigned a value.
4
As nonmonetary consideration, Gandhi agreed to both assist the settling parties in
their litigation against Breckenridge and withhold such assistance from Breckenridge
except as required by subpoena or fiduciary duty as a corporate officer.
As assistance to the settling parties “Gandhi agrees to make herself reasonably
available to be interviewed or to provide support or documents” and “to testify at trial …
at the request of the CSC Parties or the Upshot Parties.” If the requested assistance (other
than “time actually spent testifying at a trial”) were to exceed “five hours of Gandhi’s
time, the CSC Parties and Upshot Parties will compensate Gandhi starting at the sixth
hour … at a rate of $1,500 per hour” and “reimburse her reasonable attorneys’ fees in
responding to such requests.”
As to withholding assistance from Breckenridge, “Gandhi agrees not to assist …
any third party, including Veronica [Breckenridge] or, to the maximum extent consistent
with any legal duties Gandhi may owe to the Corporate Defendants, any Corporate
Defendant, in suing or asserting claims against the CSC Parties or Upshot Parties.” The
agreement specified that, other than truthful testimony “in response to a lawfully issued
subpoena or order by a court or arbitrator of competent jurisdiction,” any “[a]ssistance by
Gandhi …to [Breckenridge] or any Corporate Defendant with respect to the Santa Clara
Lawsuits will be in material breach of this Settlement Agreement.”
C. The Good Faith Settlement Motion and Writ Petition
1. Moving Papers
In moving for a good faith settlement determination, Gandhi focused her attention
on the settlement’s allocation to the claims against her.8 Gandhi argued that the court
should start with a rough approximation of her total exposure, which she posited was
8
Gandhi acknowledged in passing that her claimed damages were substantial,
indicating that one model could have put her damages over $30 million.
5
$7.25 million.9 Gandhi contended that given the existence of joint tortfeasors and the
merit of Gandhi’s various defenses, the allocation agreed to in the settlement was
reasonable.
The gist of Gandhi’s defenses is as follows. First, the CSC parties lacked standing
to prosecute claims based on the Stripe and SFR transactions because by the time of the
transactions no CSC parties had any interest in the assets. Second, the evidence would
show that the Stripe and SFR transactions were disclosed to the CSC parties and
approved by them, including by Breckenridge who acted as an officer for the CSC
parties. Third, the CSC parties had imputed knowledge of the transactions through
Breckenridge and their own counsel—both of whom the CSC parties had alleged were
participants in the conspiracy. Fourth, Gandhi performed work to justify her earnings
under the side agreements that accompanied the Stripe and SFR transactions—the side
agreements were not a means to divert assets that otherwise would have been paid to the
CSC parties through the Stripe and SFR transactions but were legitimate agreements to
provide paid services. Fifth, the CSC parties would be unable to prove that the side
agreements caused them damage. As to the Stripe transaction, Breckenridge and Gandhi
were required for the transaction to go forward and the buyer would not have paid an
additional $4.5 million to the CSC parties—the $4.5 million side agreement was payment
for future services by Breckenridge and Gandhi. As to the SFR transaction, CSC was
pursuing an unpleaded loss of corporate opportunity claim raised for the first time in
opposition to summary adjudication that could not be substantiated with evidence that
CSC would have availed itself of the alleged lost opportunity to pursue further real estate
9
Through an attorney declaration, Gandhi acknowledged that the CSC parties’
complaint discussed claims beyond the Stripe and SFR transactions but stated that the
CSC parties had “never meaningfully articulated or claimed any damages related to the
other allegations in [their] complaint.”
6
investing. Moreover, CSC would have had to prove that it could have profitably pursued
the opportunity.
The CSC parties joined Gandhi’s motion. They stated that they were claiming
$7.25 million in “compensatory damages” and asserted that the settlement’s allocation to
those claims was reasonable. They asserted that this was supported by Breckenridge’s
greater responsibility for their harm and their obligation to advance Gandhi’s attorney
fees and costs without a guarantee of later recovery.
Gandhi and the CSC parties submitted declarations from counsel elaborating on
their arguments accompanied by extensive attachments.
Quyen L. Ta, representing Gandhi, discussed the mediation process. Ta declared
that the CSC parties alleged approximately $7.25 million was improperly paid to
Breckenridge, Gandhi, and others in connection with the Stripe and SFR transactions
while Gandhi was prosecuting claims that she contended were valued “well into seven or
eight figures.” Ta stated that the values reflected in the settlement agreement were the
values the settling parties assigned to the claims for settlement purposes.
Marc Feinstein, representing the CSC parties, declared that the “total amount of
compensatory damages [the CSC parties claimed] in this case is $7.25 million—$4.5
million for the Stripe claims and $2.75 million for the SFR claims.” Feinstein noted that
the CSC parties were advancing Gandhi’s attorney fees and would only recover the
advanced fees if Gandhi were “ ‘finally adjudged’ to have committed” specified
misconduct, including “ ‘intentional misconduct’ ” or “ ‘any transaction with respect to
which [Gandhi] received a benefit in money, property or services to which [she] [was]
not legally entitled.’ ”
Ellen A. Cirangle, another of Gandhi’s attorneys, summarized her view of the
evidence concerning Gandhi’s and Breckenridge’s respective roles, the Stripe and SFR
transactions, and Gandhi’s defenses. Cirangle stated that the CSC parties had never
“meaningfully articulated or claimed any damages related to” any transactions other than
7
the Stripe and SFR transactions. Cirangle acknowledged that Gandhi’s expert, in a June
2025 report, had calculated Gandhi’s claims to be valued between about $3.2 million and
$11.9 million and stated that the expert had performed previously undisclosed
calculations that could increase the damages by up to $10.4 million to $21 million.
Cirangle did not otherwise discuss Gandhi’s affirmative claims.
2. Opposition and Replies
In opposition, Breckenridge argued that the settlement was collusive and the
moving papers were misleading.
As to collusion, Breckenridge contended that Gandhi’s agreements to assist the
CSC parties and to refrain from assisting Breckenridge in the litigation between the two
was an attempt to injure Breckenridge, thus crossing the line from permissible
cooperation to impermissible collusion.
As to the moving papers, Breckenridge asserted that Gandhi and the CSC parties
failed to account for Gandhi’s total potential exposure, which included at least trebling on
the $7.25 million claim for compensatory damages and recoupment of millions of dollars
of attorney fees and costs the CSC parties had advanced for her defense. In addition,
Breckenridge contended that Gandhi had failed to establish the reasonable settlement
value of her own affirmative claims, thereby casting doubt on the valuation of the claims
against her calculated as the difference between the value of her claims and the settlement
payment she received. Separately, Breckenridge asserted that the CSC parties derived a
benefit from the settlement agreement by removing Gandhi from the litigation, reducing
their obligation to advance Gandhi the cost of her defense.10 Finally, Breckenridge
argued that the moving parties understated Gandhi’s role in the Stripe and SFR
transactions.
10
The CSC parties agreed that obviating the need to advance Gandhi’s defense
costs was a material benefit of the settlement and disputed whether that was improper.
8
Notably absent from Breckenridge’s opposition, however, was any argument that
the CSC parties’ likely actual recovery from Gandhi at trial, considering their probability
of success on the merits, exceeded the sum allocated to their claims against Gandhi in the
settlement agreement.
Instead, Breckenridge argued that it was difficult to forecast the outcome of a
potential indemnity trial between herself and Gandhi “given the weakness of the CSC
[p]arties’ claims, and the uncertainty about the basis for any liability that might be
found.” Indeed, Breckenridge characterized the allegations that she and Gandhi
participated in a conspiracy to embezzle funds as “malicious and absurd” and
characterized the CSC parties’ likelihood of success against herself as “unlikely.” As to
the Stripe transaction, Breckenridge argued that she and Gandhi had a meritorious
defense that the CSC parties lacked standing. As to the SFR transaction, Breckenridge
argued that the CSC parties were pivoting to an unpleaded claim in opposing a pending
summary adjudication motion. Breckenridge stated that the net positive payment to
Gandhi “[r]eflect[ed] the true merit of the claims made in this case.”11
In her reply, Gandhi highlighted Breckenridge’s dim view of the CSC parties’
claims. Gandhi argued that the total sum the CSC parties were seeking was immaterial,
when Breckenridge repeatedly maintained that the CSC parties’ claims were meritless
both legally and factually. Regardless, Gandhi argued that the CSC parties were unlikely
to show she had the intent necessary to an award of treble damages, so it was reasonable
to begin her analysis with the compensatory damages sought by the CSC parties.
11
With their reply, the CSC parties submitted correspondence in which
Breckenridge rejected a settlement offer that included a net settlement payment to
Breckenridge identical to what Gandhi received and a broad mutual release of all claims
in the litigation. In the correspondence, Breckenridge objected that her profit-sharing
claims were stronger than Gandhi’s and that this latest offer was “a downward departure
from the offer previously communicated to [her] by” the parties’ mediator before Gandhi
settled.
9
3. Order and Petition
Granting Gandhi’s motion, the trial court identified the CSC parties’ “estimated …
total recovery” as approximately $7.25 million. The court summarized Gandhi’s and the
CSC parties’ arguments for discounting the case for settlement. The court found that the
settlement made a sum certain allocation to the CSC parties’ claims against
Breckenridge, so that figure represented the amount paid in settlement of those claims.
The court found that the “non-assistance provision” was not evidence of collusion
because it did not prohibit Gandhi from providing assistance as required by her fiduciary
duties or from providing truthful testimony “ ‘in response to a lawfully issued subpoena
or order by a court.’ ” The court viewed the “ ‘assistance’ ” provision as evidence of
collusion, but not dispositive proof of collusion. Regardless, the court was satisfied that
“the prevention of collusion is simply a means to the end of preventing unreasonably low
settlements” and Breckenridge had failed “to meet her burden to show that the
[s]ettlement [a]mount [was] so far out of the ‘ballpark’ ” to be unreasonable.
II. DISCUSSION
The “ ‘two major goals’ of sections 877 and 877.6” are “ ‘the equitable sharing of
costs among the parties at fault and the encouragement of settlements’ ” (Fennessy v.
Altoonian (2025) 114 Cal.App.5th 613, 620), “even though the goals of equitable sharing
and encouragement of settlements are not always necessarily harmonious” (Tech-Bilt,
Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 494 (Tech-Bilt)). Good
faith review ensures that “ ‘settlements appropriately balance the contribution statute’s
dual objectives.’ ” (Abbott Ford, Inc. v. Superior Court (1987) 43 Cal.3d 858, 873
(Abbott Ford).)
“The party asserting the lack of good faith shall have the burden of proof on that
issue.” (§ 877.6, subd. (d).) To meet this burden, Breckenridge needed to “demonstrate
… that the settlement is so far ‘out of the ballpark’ … as to be inconsistent with the
equitable objectives of the statute.” (Tech-Bilt, supra, 38 Cal.3d at pp. 499–500.) But “a
10
precise definition of good faith is neither possible nor practicable,” so courts instead look
to 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. 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 to injure the interests of
nonsettling defendants.” (Id. at pp. 495, 499.)
We review the trial court’s good faith settlement determination for abuse of
discretion. (See Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939,
960 (Cahill).) In so doing, we presume the trial court’s judgment is correct. (Id. at
p. 956, citing Denham v. Superior Court (1970) 2 Cal.3d 557, 564.) “All intendments
and presumptions are made to support the judgment on matters as to which the record is
silent. [Citation.] We presume the trial court followed applicable law. [Citation.] When
no statement of decision is requested and issued, we imply all findings necessary to
support the judgment.” (Cahill, at p. 956.)
Breckenridge contends that the court abused its discretion by (1) disregarding
collusive settlement terms governing Gandhi’s future role in the litigation, which
demonstrate bad faith; (2) accepting the settling parties’ valuation of the allocation to the
CSC parties’ tort claims without substantial evidence to support the related, for
settlement purposes, valuation of Gandhi’s claims; (3) failing to consider the total value
of the CSC parties’ claims against Gandhi if the CSC parties prevailed on all theories of
liability and damages; and (4) failing to consider Gandhi’s potential liability to
Breckenridge for contribution or indemnity or Gandhi’s proportional share of the
liability.
In our deferential review, Breckenridge’s contentions do not justify disturbing the
trial court’s determination. The court properly considered the terms of Gandhi’s future
11
participation in the litigation and concluded they did not of themselves warrant a finding
of collusion. Nor was the trial court required to deny the motion because Gandhi did not
explain how she discounted her claims against the CSC parties for settlement purposes.
And Breckenridge has not shown that the trial court abused its discretion in assessing
Gandhi’s share of the liability or her potential liability to Breckenridge, considering the
CSC parties’ relative likelihood of prevailing on the merits.
A. Gandhi’s Future Role in the Litigation
Breckenridge contends that the provisions requiring Gandhi to cooperate with the
CSC parties and generally refrain from assisting Breckenridge are a collusive attempt to
give the CSC parties a tactical advantage in its ongoing litigation against Breckenridge.
Breckenridge asserts that any collusive term designed to injure the nonsettling party
precludes a finding of good faith, without consideration of any other Tech-Bilt factors.
But we are not persuaded that the trial court abused its discretion by determining that
Gandhi’s cooperation, though “evidence of collusion,” did not “establish collusion.”12
The trial court properly proceeded to conduct a Tech-Bilt analysis.
A settlement entered solely to secure the plaintiff a tactical advantage against
nonsettling defendants may not be in good faith. For example, the Ninth Circuit reversed
a finding of good faith where a plaintiff alleging injury from a defective automobile
dismissed his claims against the manufacturer to obtain “the tactical advantage” against
the remaining car dealership “of removing a deep-pocket defendant because of the
experts it could produce and the skilled trial attorneys it could retain.” (Commercial U.
Ins. Co. v. Ford Motor Co. (9th Cir. 1981) 640 F.2d 210, 214; see id. at pp. 211–212
[plaintiff alleging injury from defective automobile dismissed claims against
manufacturer to avoid manufacturer’s expert intending to proceed solely against the
12
The trial court endorsed Breckenridge’s argument that the “cooperation
provision (when coupled with the non-assistance provision) is evidence of collusion,”
finding the argument “well taken.” But the court did not find this evidence dispositive.
12
dealer]; see also Tech-Bilt, supra, 38 Cal.3d at pp. 496–497.) But we are not presented
with a simple dismissal for tactical gain.13
In this settlement, both Gandhi and the CSC parties released claims that had been
litigated to the brink of trial, Gandhi agreed to nonmonetary terms that might give the
CSC parties some benefit in their litigation against Breckenridge, the parties agreed to an
express valuation of the CSC parties’ claims against Gandhi and an implied valuation of
Gandhi’s claims and other consideration, and Gandhi received a net payment representing
the difference in those valuations. The existence of some tactical benefit to the CSC
parties does not prove that the allocation to the CSC parties’ claims lacked good faith.
(See Everman v. Superior Court (1992) 8 Cal.App.4th 466, 470, 473 (Everman); see also
TSI Seismic Tenant Space, Inc. v. Superior Court (2007) 149 Cal.App.4th 159, 165 (TSI
Seismic) [“where the exercise of discretion on the basis of established criteria may yield
but one conclusion, an abuse of discretion may be found”].) Rather, that allocation can
be analyzed in the context of the entire settlement, including but not limited to the
inclusion of terms inuring to the CSC parties’ tactical benefit in the ongoing litigation.
In this context, a trial court’s core concerns should be whether the settlement’s
express allocation to the CSC parties’ claims fairly approximates Gandhi’s share of the
liability (see PacifiCare of California v. Bright Medical Associates, Inc. (2011)
198 Cal.App.4th 1451, 1465 (PacifiCare)) and, potentially, whether any provisions injure
Breckenridge’s legitimate interests. The trial court here considered both whether the
settlement allocation was unreasonably low and whether there was sufficient evidence to
establish collusion. We identify no abuse of discretion in its mode of analysis.
13
There is no indication that the settlement here was to prevent Breckenridge from
relying on Gandhi’s damages expert, whom Gandhi alone had retained. Gandhi’s expert
provided a damages analysis that was specific to Gandhi’s claims. Nor was
Breckenridge’s claim for damages the same as Gandhi’s: In correspondence between the
parties’ counsel, Breckenridge maintained that her entitlement to profit sharing
significantly exceeded Gandhi’s.
13
In Tech-Bilt, the collusion that precluded good faith settlement findings related to
the settlement value—plaintiffs settled with the settling defendant for less than the
defendant’s proportional share of the liability for settlement purposes and thus interfered
with the remaining defendants’ legitimate interest in an equitable sharing of costs. (See
Tech-Bilt, supra, 38 Cal.3d at pp. 496–497 [discussing tactical decision to dismiss a
defendant without consideration to prevent its experts from testifying].) Such collusion
goes to the core of the Tech-Bilt analysis. Here, the cooperation and nonassistance
provisions do not of themselves resolve the fairness of the settlement’s express
allocation—that analysis must be undertaken mindful of these provisions.
In Breckenridge’s view, the settlement’s cooperation terms obviate the need for a
full Tech-Bilt analysis because they unfairly harm her legitimate interests. But, assuming
harm to legitimate interests may independently foreclose a good faith finding, we are not
persuaded that Breckenridge has a legitimate interest in preventing Gandhi from
choosing—by settlement agreement or otherwise—to cooperate with the CSC parties
instead of with her. The challenged terms only guarantee Gandhi’s voluntary cooperation
with the CSC parties, while foreclosing Gandhi’s voluntary cooperation with
Breckenridge, at a late stage in the litigation after Gandhi had participated in discovery
and sat for deposition. If the settlement had been an unqualified mutual release of claims,
neither Breckenridge nor the trial court could countermand Gandhi’s choice to
voluntarily support whom she wished in the remaining parties’ continuing litigation.14 So
14
The settlement agreement permits Gandhi to assist Breckenridge or any other
third party to the extent required by her legal duties to corporate defendants.
Breckenridge contends that this carve-out is inadequate because Gandhi also owes
Breckenridge fiduciary duties but cites no authority for the existence of such a duty that
might require Gandhi to assist Breckenridge in the prosecution of Breckenridge’s claims.
To the limited extent that Breckenridge develops this argument, it is by suggesting that
any duties Gandhi owes to Breckenridge derive from those Gandhi owes to a limited
liability company. But assistance under that fiduciary duty is permitted by the carve-out.
14
we cannot join Breckenridge in presuming that the cooperation term of the settlement
harms her legitimate interests.
Nothing in the settlement interferes with Breckenridge’s right to a fair trial. The
settlement expressly contemplates that Gandhi will “testify truthfully in response to a
lawfully issued subpoena or order by a court or arbitrator of competent jurisdiction.”
And the parties have agreed that Gandhi resides in California—there is no evidence that
she is or will be beyond the trial court’s subpoena power at the time of trial.15 (See Code
Civ. Proc., § 1989.) To the extent Gandhi’s present alignment with the CSC parties may
suggest bias or prejudice, the settlement might be admissible at trial. (See Everman,
supra, 8 Cal.App.4th at p. 471.)
Breckenridge’s preferred authority does not help her. Breckenridge invokes North
County Contractor’s Assn. v. Touchstone Ins. Services (1994) 27 Cal.App.4th 1085
(North County) for its broad pronouncement that “[g]ood faith may be found only if there
has been no collusion between the settling parties and where the settlement amount
appears to be within the ‘reasonable range’ of the settling party’s proportionate share of
comparative liability for a plaintiff’s injuries.”16 (Id. at pp. 1089–1090, quoting River
Garden Farms, Inc. v. Superior Court (1972) 26 Cal.App.3d 986, 998.) But River
Garden did not involve a “charge [of] collusion” (River Garden, at p. 998) and North
County did not involve a collusive settlement (North County, at p. 1094). Moreover,
15
Gandhi is obligated by the settlement to testify at trial at the CSC parties’
request.
16
Long Beach Memorial Medical Center v. Superior Court (2009)
172 Cal.App.4th 865, 872 quoted North County for this same language. But that court
proceeded to conduct a full Tech-Bilt analysis, reversing a good faith finding due to
collusion that affected both the settlement value and the other defendants’ legitimate
interest in prosecuting an indemnity claim against the settling defendants. (Long Beach,
at pp. 873–877.) Long Beach does not stand for the proposition that any tactical
advantage conferred by a settlement forecloses a good faith settlement finding.
15
River Garden is consistent with our analysis: “Any negotiated settlement involves
cooperation, but not necessarily collusion. It becomes collusive when it is aimed to
injure the interests of an absent tortfeasor. Although many kinds of collusive injury are
possible, the most obvious and frequent is that created by an unreasonably cheap
settlement. … Prevention of collusion is but a means to the end of preventing
unreasonably low settlements which prejudice a nonparticipating tortfeasor. The price of
a settlement is the prime badge of its good or bad faith.” (River Garden, at p. 996.)
At bottom, the cooperation and nonassistance provisions here supply no
independent basis to deny a good faith determination. They neither undermine
Breckenridge’s legitimate interest nor demonstrate of themselves that the settlement is
inconsistent with the equitable allocation of costs. However, they are properly
considered in evaluating whether the settlement is in the good faith ballpark.
B. The Allocation to CSC Parties’ Claims against Gandhi
Breckenridge contends that Gandhi as the moving party had and failed to carry an
initial burden to substantiate the reasonableness of the settlement valuation of all released
claims, both the CSC parties’ and Gandhi’s. We disagree. Gandhi satisfied any initial
burden by substantiating the reasonableness of the settlement valuation of the CSC
parties’ claims against her; she did not need to substantiate the reasonableness of the
settling parties’ valuation of her own claims. So Breckenridge bore the burden of
showing that the value allocated to the CSC parties’ claims was too low.
The good faith settlement statute itself does not expressly impose an initial burden
on the moving party. (See § 877.6.) But courts have required settling parties to allocate
the settlement among claims and provide evidence supporting the valuation in some
circumstances.
When “ ‘the cash amount of the settlement does not dictate the amount of the
offset’ ” to which a joint tortfeasor will be entitled, “ ‘the settling parties must include an
allocation or a valuation in their agreement.’ ” (Franklin Mint Co. v. Superior Court
16
(2005) 130 Cal.App.4th 1550, 1557 (Franklin Mint), quoting Alcal Roofing & Insulation
v. Superior Court (1992) 8 Cal.App.4th 1121, 1124–1125 (Alcal).) The settling parties
“ ‘are in the best position to place a monetary figure on its value,’ ” so they “ ‘have the
burden of establishing’ ” that value. (Franklin Mint, at p. 1557.) Courts expect that joint
valuation by the settling parties will “ ‘generally produce a reasonable valuation’ ”
because the settling parties have “ ‘somewhat’ ” divergent interests—“ ‘the plaintiff
would prefer the value to be on the low side to reduce the amount that its claims against
other defendants will be reduced; the settling defendant will want the value to be high
enough to assure that the agreement is found to be within its Tech-Bilt “ballpark” so as to
relieve it of liability for comparative indemnity or contribution.’ ” (Ibid., quoting Abbott
Ford, supra, 43 Cal.3d at p. 879.) So “the moving party must set forth the value of the
consideration paid and an evidentiary basis for that valuation, and must demonstrate that
the valuation ‘was reached in a sufficiently adversarial manner to justify the presumption
that a reasonable valuation was reached.’ ” (Franklin Mint, at p. 1558, quoting Erreca’s
v. Superior Court (1993) 19 Cal.App.4th 1475, 1496 (Erreca’s); see also Regan Roofing
Co. v. Superior Court (1994) 21 Cal.App.4th 1685, 1700–1701; Dillingham
Construction, N.A., Inc. v. Nadel Partnership, Inc. (1998) 64 Cal.App.4th 264, 286
(Dillingham).) “A nonsettling defendant may then challenge the settlement by
‘attempt[ing] to prove that the parties’ assigned value is too low and that a greater
reduction in plaintiff’s claims against the remaining defendants is actually warranted.’ ”
(Franklin Mint, at p. 1558, quoting Abbott Ford, at p. 879.)
Preliminarily, we agree that the cash amount of the settlement, as structured, does
not itself dictate the section 877 reduction to the CSC parties’ claim against
Breckenridge. (See Franklin Mint, supra, 130 Cal.App.4th at p. 1557.) The reduction to
which Breckenridge would be entitled, if the CSC parties were to prevail in their tort
claims against her, would be “the amount of the consideration [Gandhi] paid for” the
CSC parties’ release of their tort claims against Gandhi. (§ 877, subd. (a).) The settling
17
parties were accordingly required to include an allocation to the CSC parties’ tort claims
in their settlement. (See Alcal, supra, 8 Cal.App.4th at pp. 1124–1125.) They met this
requirement.
Gandhi satisfied any obligation to offer an evidentiary basis for the agreed
valuation in the settlement. That evidentiary basis is made up of the declarations and
attachments she submitted in support of her argument that the allocation fairly
approximated the CSC parties’ probable recovery at trial, accounting for her claimed
strong likelihood of prevailing on the merits. Breckenridge suggests that the only
evidence supporting the reasonableness of the allocation to the CSC parties’ claims are
declarations of counsel describing the settlement valuation, but she overlooks the
evidence offered by Gandhi and the CSC parties regarding the probable recovery at
trial.17
As for Breckenridge’s contention that the settling parties had to assign some value
to the CSC parties’ allegations about transactions beyond the alleged Stripe and SFR
kickbacks, Gandhi supplied an attorney declaration that supported assigning no value to
those claims by explaining that the CSC parties had failed to develop them.
Breckenridge failed to challenge this evidence in the trial court. Indeed, rather than
disputing the declaration by Gandhi’s attorney, Breckenridge argued that the CSC parties
had abandoned these non-Stripe/non-SFR allegations by failing to mention them.18
Finally, the allocation is sufficiently adversarial to justify a presumption that a
reasonable valuation was reached. The purpose of the adversity requirement is to ensure
that the settling parties had an interest in producing a reasonable valuation. (See Abbott
17
To the extent that Breckenridge suggests the trial court needed to provide record
citations in its written order, she does not support this suggestion with authority.
18
Breckenridge warned that the CSC parties should be judicially estopped from
pursuing these allegations against her if their settlement with Gandhi were determined to
be in good faith.
18
Ford, supra, 43 Cal.3d at p. 879; see also Erreca’s, supra, 19 Cal.App.4th at p. 1496
[deriving requirement from Abbott Ford while declining to require that the parties explain
the rationale behind the allocation where there is adequate evidentiary support for the
allocation]; Franklin Mint, supra, 130 Cal.App.4th at pp. 1557–1558 [discussing Abbott
Ford and Erreca’s].) It does not require a substantial divergence in the interests of the
settling parties: The Abbott Ford court relied on the conflict between a plaintiff’s desire
to keep the allocation small to enable a larger recovery from the nonsettling defendant
and the settling defendant’s desire to ensure the allocation is high enough to secure a
good faith settlement determination. (Abbott Ford, at p. 879.) The settling parties here
were in a sufficiently adversarial position to ensure they had an interest in producing a
reasonable valuation. Breckenridge may thus be held to her statutory burden of proving
that the settlement was not in good faith (§ 877.6, subd. (d)), including by demonstrating
that the valuation of the CSC parties’ release of their tort claims was too low.
As good faith settlement approval is an express condition of the settlement, it
appears that Gandhi was motivated by a desire to secure a good faith settlement
determination in her negotiation of the settlement. The trial court could conclude that
this was not a case “where only one of the parties cares” about the allocation. (Cf.
Dillingham, supra, 64 Cal.App.4th at pp. 285–286 [where settlement agreement did not
contain an allocation, allocation amounts that the settling parties were willing to put
forward at the time of trial against the proposed indemnitor were not sufficiently
adversarial].)
We recognize that the parties were not constrained by disclosed objective criteria
in selecting their allocation. The net settlement payment would be equally consistent
with assigning the allocation any value—be it $0 or $100 million—so long as the value
assigned to Gandhi’s claims differed by the fixed amount of the settlement payment. But
this aspect of a global settlement of competing claims does not undermine Gandhi’s
interest in negotiating a reasonable allocation to present to the court for approval.
19
Nor are we persuaded that we should announce a requirement that a party seeking
a good faith determination where a settlement resolves both claims against the party and
claims asserted by that party must submit evidence that the settlement value allocated to
its own claims is within the Tech-Bilt ballpark. (See Erreca’s, supra, 19 Cal.App.4th at
p. 1495 [expressing reluctance to impose requirement to explain the rationale behind an
allocation where there is adequate evidentiary support for the allocation].) The valuation
of the settling tortfeasor’s affirmative claims is a collateral issue that may tend to confirm
or undermine the allocation to the claims against the settling joint tortfeasor. But the core
issue remains whether in the allocation the settling tortfeasor accepted an appropriate
share of responsibility for the claims against her and her coparticipants. (See PacifiCare,
supra, 198 Cal.App.4th at p. 1465.) At least where, as here, the settling joint tortfeasor
has submitted ample evidence on that issue, it is the responsibility of the nonsettling joint
tortfeasor to demonstrate that the allocation is too small.19
Neither Franklin Mint, supra, 130 Cal.App.4th 1550 nor Brehm Communities v.
Superior Court (2001) 88 Cal.App.4th 730 persuade us that Gandhi must submit
admissible evidence of the value of her profit-sharing claims against the CSC parties
before imposing any burden on Breckenridge. In each case, the fundamental problem
was that there was insufficient evidence to permit the valuation of the settled claims.
(Franklin Mint, at pp. 1556, 1559, 1560, 1562 [offset of the entire settlement payment
was improper, the payment had to be discounted because most of the money would be
donated jointly in the names of the settling defendants and the plaintiffs]; Brehm, at
pp. 733–737 [rejecting $2.279 million valuation—unsupported by evidentiary
submissions—of class settlement for only nonmonetary consideration].) Here, Gandhi
submitted evidence to permit the trial court to value the CSC parties’ release of their
19
Nothing herein should be understood to foreclose a nonsettling joint tortfeasor
from arguing that the settling joint tortfeasor understated the value of its affirmative
claims. Breckenridge has not made such an argument here.
20
claims against her. It was the settlement of their tort claims as to which she sought a
determination of good faith—the valuation of Gandhi’s claims may be relevant but it is
not essential to test the reasonableness of the settlement allocation.
The settling parties expressly agreed to an allocation applicable to the common
tort claims and submitted evidence intended to demonstrate the reasonableness of that
allocation. The other consideration exchanged in the settlement agreement does not deny
Breckenridge a full and fair opportunity to carry her burden of demonstrating the lack of
good faith. Accordingly, we turn to Breckenridge’s challenge to the sufficiency of the
allocation to CSC parties’ tort claims.
C. The Total Value of the CSC Parties’ Claims, Gandhi’s Proportional Liability,
and Indemnity
Breckenridge contends that the trial court abused its discretion because it did not
acknowledge that the CSC parties would recover more than $30 million from a complete
victory at trial.20 While we agree that the implications of a complete victory for the CSC
parties are a relevant data point in approximating the CSC parties’ total recovery and
Gandhi’s proportionate liability, we are not persuaded that the trial court disregarded the
CSC parties’ potential total recovery at trial. Rather, it is Breckenridge who omits a
material data point—the CSC parties’ probability of success on the merits. Having
chosen not to engage with that factor in the trial court or in her petition, Breckenridge
cannot show that the trial court abused its discretion in concluding that the allocation
reflected Gandhi’s fair share of the liability for the CSC parties’ claims.
20
In the trial court, Breckenridge argued that the total recovery would be more
than $25 million. The increase in her writ petition is primarily attributable to her decision
to include an estimated figure for the CSC parties’ attorney fees, which Breckenridge
contends the CSC parties would be entitled to recover from Gandhi if they prevail on the
merits.
21
Preliminarily, we reject Breckenridge’s suggestion that Gandhi’s potential liability
to the CSC parties and Gandhi’s potential liability to indemnify Breckenridge should be
analyzed separately. At the time of settlement, Breckenridge and Gandhi were joint
tortfeasors facing live claims. And Breckenridge has not articulated how analysis of
these theories of liability would diverge. Breckenridge’s reliance on West v. Superior
Court (1994) 27 Cal.App.4th 1625 is inapt. There, a statute of limitations bar precluded
plaintiffs from pursuing claims against broker defendants but did not preclude seller
defendants from pursuing indemnity from the broker defendants. (West, at pp. 1628,
1632–1635.) In that context, the plaintiffs’ settlement with the broker defendants—for a
waiver of costs—was not in good faith. (Id. at pp. 1628, 1635–1637) The settlement’s
value to the broker defendants did not derive from the dismissal of the plaintiffs’
time-barred claims but from the bar against an indemnity claim from the seller
defendants. (Id. at pp. 1636–1637.) Nothing here suggests a similar divergence between
the value of the CSC parties’ claims and Breckenridge’s potential indemnity claim—our
consideration of a rough approximation of the CSC parties’ total recovery and Gandhi’s
proportionate liability addresses both sources of liability.
In opposing Gandhi’s motion, Breckenridge consistently maintained that the CSC
parties’ claims were “weak[].” She argues, however, that the first Tech-Bilt factor
considers only the plaintiffs’ recovery if the plaintiff prevails at trial, subject perhaps to
uncertainty about the measure of damages. Not so.
The first factor projects what the plaintiff would likely recover at trial, not what
the plaintiff claims. (See Dole Food Co., Inc. v. Superior Court (2015) 242 Cal.App.4th
894, 912.) So in assessing this first factor a trial court may rationally determine, for
example, that a plaintiff’s own negligence or lack of a viable theory of causation leaves
the plaintiff unlikely to win a substantial recovery despite substantial injuries. (See
Cahill, supra, 194 Cal.App.4th at p. 969.) Breckenridge is thus mistaken in focusing
22
only on the harms the CSC parties have pleaded in their complaint, without considering
their likelihood of prevailing on their claims.
The court accurately noted Breckenridge’s contention that Gandhi and the CSC
parties had understated the total value of their claims in their moving papers, omitting the
CSC parties’ pursuit of treble damages.21 But the court ultimately was not persuaded that
a rough approximation of the CSC parties’ “actual[]” recovery undermined the
settlement, at least implicitly considering the risks of proceeding to trial.22 Contrary to
Breckenridge’s contention that the court never found whether the CSC parties are likely
to prevail at trial, it follows from these findings that the court deemed the CSC parties’
probability of prevailing to be low. (Cf. Cahill, supra, 194 Cal.App.4th at p. 956 [“[w]e
presume the trial court followed applicable law” and, absent a statement of decision,
“imply all findings necessary to support the judgment”].) And the court acknowledged
that the parties had proffered evidence of Gandhi’s and Breckenridge’s conduct,
concerning their proportionate responsibility. We accept the court’s ultimate
determination that Breckenridge failed to show that the settlement was “ ‘ “out of the
ballpark” in relation to’ ” the Tech-Bilt factors (Cahill, at p. 967) or “inconsistent with the
equitable objectives of the statute” (Tech-Bilt, supra, 38 Cal.3d at pp. 499–500) to reflect
21
As Breckenridge notes, Gandhi and the CSC parties in the trial court
emphasized only the compensatory component of the CSC parties’ claimed damages—
excluding the CSC parties’ prayer for mandatory treble damages and their potential
recovery of attorney fees. But Gandhi addressed the deficiency in her reply, arguing that
even assuming Breckenridge’s “ ‘starting point,’ ” the settlement was reasonable because
Breckenridge had conceded the CSC parties’ claims were “weak, worthless, and easily
defended.”
22
The trial court omitted the fees advanced to Gandhi in summarizing
Breckenridge’s position on the total claim against Gandhi. We are not persuaded that the
omission of this detail from an express acknowledgment of Breckenridge’s argument
signifies any incomprehension of either the argument or the possibility that the CSC
parties could claw back from Gandhi attorney fees the court elsewhere noted had been
“advanced” to her.
23
that it considered these arguments and determined that the settlement, including its
allocation, was consistent with both a rough approximation of the CSC parties’ recovery
at trial and Gandhi’s proportional share of the liability.23
In asserting the allocation will lead to an unfair result if the CSC parties prevail on
their claims against her, Breckenridge never addresses the likelihood that the CSC parties
will prevail against her or would have prevailed against Gandhi.24 Given this missing
predicate, Breckenridge has not carried her burden in this court to show that the trial
court abused its discretion in concluding that she did not carry her burden there.25 (See
Cahill, supra, 194 Cal.App.4th at p. 967.)
23
The trial court’s order generally summarizes the parties’ arguments while
articulating little of its independent analysis. In line with that approach, the order does
not contain a description or analysis of the parties’ evidence on proportionate liability.
Breckenridge argues from this that the court never analyzed or determined Gandhi’s
proportionate share of liability. Not so. The court’s acknowledgment of these arguments
and the parties’ evidence makes clear that it was aware of and considered both in
reaching its ultimate conclusions.
24
In summary judgment and summary adjudication motions still pending at the
time of settlement, Breckenridge has taken the position that some or all the claims against
her fail as a matter of law.
25
Breckenridge has argued that the evidence submitted to the trial court compelled
a finding that Gandhi was at least as culpable as Breckenridge for any wrongdoing, given
Gandhi’s extensive role in the Stripe and SFR transactions. But Breckenridge has not
argued that the evidence submitted to the trial court compels a finding that the CSC
parties have a sufficiently high probability of prevailing on the merits that the allocation
is out of the ballpark, accepting her position about Gandhi’s proportionate share of
potential liability or a rough approximation of actual liability. While Breckenridge falls
back on the paucity of the court’s written analysis of Gandhi’s asserted defenses, she has
neither cited authority requiring the detailed analysis she demands nor supplied analysis
of her own—either on appeal or in the trial court—on the CSC parties’ likelihood of
overcoming those defenses.
24
D. Conclusion
We recognize that a reasonable fact finder could have reached a different
conclusion on this record. But Breckenridge has shown neither that the record permitted
only one conclusion (see TSI Seismic, supra, 149 Cal.App.4th at p. 165) nor that the trial
court’s analysis of the factors rested on an erroneous foundation. Breckenridge thus has
not shown that the trial court abused its discretion in determining the settlement to be in
good faith.
III. DISPOSITION
The petition is denied.
25
LIE, J.
WE CONCUR:
GROVER, Acting P. J.
DANNER, J.
Wu v. Superior Court
H053801