Rhodes
Bullock Realty
Filed 5/28/13 Rhodes v. Decker
Bullock Realty CA1/5
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST
APPELLATE DISTRICT
DIVISION
FIVE
and Appellants,
and Respondents.
A136629
(
Super.
This
appeal arises from an action involving a sale of real property. The buyer of the property, Marion Hill, sued
the sellers, appellants Jesse and Brenda Rhodes,
and the sellers’ agents, respondents Decker Bullock Realty, Inc., William
Bullock, and Lydia Sarkissian (collectively DBR), claiming the Rhodes and DBR
had failed to make adequate disclosures in connection with the sale of the
property. Both Jesse and Brenda filed
cross-complaints against DBR.
DBR
and Hill eventually agreed to settle Hill’s claims for $150,000. DBR then moved for a determination of
Procedure section 877.6.
name="_ftnref2" title="">[2] The trial court granted the motion over the Rhodeses’
opposition, and its order dismissed all pending cross-complaints against DBR.
The
Rhodes now appeal from the order granting the
motion. They argue the trial court
erroneously dismissed a contract cause of action in Jesse’s
cross-complaint. They also contend the
trial court made a number of errors in assessing DBR’s potential liability,
both to Hill and to them. We find none
of these arguments persuasive and affirm the challenged order.
Factual and
Procedural Background
The
Rhodes purchased the property at issue (a house in San Rafael) in 1998. DBR represented the seller in that
transaction. The Rhodes initially lived
in the house but moved out in 2002 pending divorce proceedings. In 2005, the Rhodes listed the property for
sale, and DBR again served as the listing broker. In August 2006, the Rhodes sold the property
to Hill for $4.2 million.
In
a complaint she filed below, Hill claimed that when she visited the property
prior to the 2006 sale, DBR’s agent told her that improvements located at the
rear of the property were all part of the property. Hill alleged the real estate disclosures
provided by DBR and the Rhodes were inadequate because they failed to reveal a
lot line adjustment on the property and an existing encroachment of the
property into open space areas owned by the City of San Rafael (the City). DBR was alleged to have become aware of these
problems when it handled the 1998 sale to the Rhodes and to have made full
disclosure of these issues to the Rhodes in connection with that sale.
The
real estate transfer disclosure statement signed by Jesse and Hill for the
August 2006 sale noted that the sellers were aware of the existence of
“encroachments, easements or similar matters that may affect your interest in
the subject property.†A handwritten explanation
states, “The prior owner has installed deer fencing outside the lot line and
into open space that is land locked and no[t] accessible to the public.â€
Hill
also alleged that in 2007, she had received a notice from the City informing
her that in 2000, the City had requested that the Rhodes remove certain private
improvements encroaching on the City’s open space. In March 2010, the City filed suit against
Hill, alleging causes of action for trespass and abatement of a public
nuisance. That action was tried before
Judge Roy Chernus in April 2012 and resulted in an order enjoining Hill to
abate the encroachment and assessing a penalty of $30,000. In his statement of decision, Judge Chernus
noted that Hill “was advised that there was an encroachment when she purchased
the property (but, to be fair to her, she was not told the full extent of it).â€
Hill
later sued the Rhodes and DBR, and her third amended complaint, filed
April 2012, alleged six causes of action.
The first, second, and fifth involved only the Rhodes, and sought relief
for breach of contract, violation of Civil Code section 1102,
et seq., and rescission. The third
and fourth causes of action pled claims against both the Rhodes and DBR (and
individual agents of DBR) for fraud, deceit, and negligence. The sixth cause of action, for negligence,
involved only DBR. Hill sought $4.2
million plus interest on her rescission claim and damages according to proof on
the remaining claims.
Jesse
and Brenda filed separate cross-complaints against DBR and Tiburon Land
Company, which had represented Hill during the sale of the property. Jesse’s cross-complaint pled causes of action
for equitable implied indemnity, “total indemnity,†implied contractual
indemnity, contribution, declaratory relief, breach of contract, and breach of
fiduciary duty. The last two claims were
pled only against DBR and its agents.
Brenda’s cross-complaint alleged causes of action for
another, total indemnity, implied contractual indemnity, contribution, and
declaratory relief.
On
April 9, 2012, Hill settled with DBR and its agents for $150,000. Counsel for DBR then filed a motion pursuant
to section 877.6 seeking a determination of good faith settlement, a
motion which the Rhodes opposed. After
hearing argument from counsel, on June 24, 2012, Judge Chernus granted the
motion for determination of good faith settlement. The order granting the motion dismissed “any
pending cross-complaints†against DBR and its agents.
The
Rhodes filed a notice of appeal on September 19, 2012.
Discussion
The
Rhodes raise a number of challenges to the trial court’s determination of good
faith settlement. They first contend
Jesse’s “separate and distinct†contract claim against DBR was erroneously
dismissed, because section 877.6 does not apply to contract claims. They also argue the trial court’s
determination fails to account for DBR’s degree of culpability and for DBR’s
potential liability to the nonsettling parties.
Finally, they contend the settlement does not meet the test articulated
by the California Supreme Court in Tech-Bilt,
Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488 (
standard of review, we address these arguments in turn.
I.
Section
877.6 provides in pertinent part, “(a)(1)
Any party to an action in which it is alleged that two or more parties
are joint tortfeasors or co-obligors on a contract debt 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 or co-obligors,
upon giving notice in the manner provided in subdivision (b) of Section
1005. . . . [¶] [¶] (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.â€
In
Tech-Bilt, supra, 38 Cal.3d 488, at
page 499, our state Supreme Court identified a number of factors a trial court
should consider in making a good faith settlement determination, “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.â€
We
review the trial court’s decision granting a motion for good faith settlement
determination for abuse of discretion. (
(2011) 194 Cal.App.4th 939, 957 (Cahill).)
II.
Jesse’s Contract Claim Against DBR.
The
Rhodes argue that Jesse’s breach of contract claim against DBR is not subject
to section 877.6. They contend this
case does not fall within the language of the statute because Jesse’s sixth
cause of action does not sound in tort, and Jesse and DBR are not co-obligors
on a contract debt. We disagree.
The
Rhodes cite no authority for their reading of the statute, and it appears
contrary to available case law. It is
true that the benefits of section 877.6 apply only to codefendants who are
either joint tortfeasors or co-obligors on a single contract. (See Tiffin
Motorhomes, Inc. v. Superior Court (2011) 202 Cal.App.4th 24, 29-30, 33
[§ 877.6 does not apply to claims against different manufacturers all sued
for breach of separate warranties].) In
this case, however, the requirements of the statute are met. DBR is a party to an action in which it and
the Rhodes are alleged to be joint tortfeasors.
(See § 877.6, subd. (a)(1).)
That fact makes this case unlike those in which section 877.6 has
been held inapplicable. (E.g.,
(1994) 29 Cal.App.4th 753, 759-760 [§ 877.6 does not apply to protect
settling insurer from contribution claims of co-insurer because obligations to
insured arise out of separate contracts].)
Moreover,
as Division Four of this appellate district explained in Cal-Jones Properties v. Evans Pacific Corp. (1989) 216 Cal.App.3d
324, at page 327, “[a]llowing a joint tortfeasor to bring an affirmative claim
for damages that is actually an artfully pleaded claim for indemnity would
contravene the purposes of the statute.â€
Trial courts have discretion “to ferret out those claims that are in
fact claims for indemnity.†(
claim is based on the same facts as his claims for indemnification. DBR’s handling of the disclosure to Hill is
alleged to have failed to meet the applicable standard of care for real estate
brokers. This is the gist of Jesse’s
breach of contract claim, which alleges DBR failed to exercise due diligence in
selling the property; failed to act in good faith to effect the sale; and failed
to exercise reasonable skill and care in the performance of their duties. Since all of Jesse’s claims against DBR arise
out of DBR’s allegedly improper handling of the sale to Hill, the trial court
could properly conclude that his breach of contract cause of action was an
artfully pleaded claim for indemnity.
(See Gackstetter v. Frawley
(2006) 135 Cal.App.4th 1257, 1277-1279 [where all claims involved alleged
mismanagement of trusts, and joint tortfeasors caused same injury to plaintiff,
settlement barred all claims against settling tortfeasor, including those for
breach of attorney-client retainer agreement]; Norco Delivery Service, Inc. v. Owens-Corning Fiberglas, Inc.
(1998) 64 Cal.App.4th 955, 963-964 [“direct†or “independent†causes of action against
settling tortfeasor held to be claims for indemnity or contribution].)
We
therefore conclude the trial court did not err in dismissing Jesse’s contract
claim against DBR.
II. The
Trial Court Did Not Abuse its Discretion in Applying the Tech-Bilt Factors to
the Settlement Between DBR and Hill.
The
Rhodes next contend the trial court made two errors in applying the
issue. They first argue that the trial
court failed to properly weigh DBR’s “proportional share of comparative
liability for the plaintiff’s injuries.â€
(Tech-Bilt, supra, 38 Cal.3d
at p. 499.) They then appear to
argue that in making its good faith settlement determination, the trial court
considered only DBR’s potential liability to Hill and did not consider DBR’s
potential liability to them.
name="_ftnref3" title="">[3] We find no merit in either contention.
As
to the issue of DBR’s proportional share of comparative liability to Hill, the
Rhodes make a cursory, one-paragraph argument that they are not more culpable
than DBR. This argument is based solely
on the claim that a DBR agent was the only person who incorrectly represented
to Hill that the rear property line was located at the deer fence.
acknowledges, Hill also claimed to have been damaged by Jesse’s “misleading
‘disclosures,’ which did not call out any encroachment issues or notice of any
abatement actions[.]†Her complaint
alleged that Jesse checked the boxes on the real estate disclosure statements
“that affirmatively represented . . . [that] there were no common
property features, encroachments, boundary disputes, or notices of abatement or
citations against the Property that would affect its value and/or
desirability.†In light of these facts,
the Rhodes have not persuaded us that the trial court abused its discretion in
weighing DBR’s proportional share of comparative liability to the plaintiff.
The
Rhodes also contend the trial court failed in its obligation to address DBR’s
failures as brokers and agents in causing or contributing not only to Hill’s
damages, but also to their damages. This
contention seems untenable on the record before us. In the court below, the Rhodes raised this
argument both orally and in their opposition to DBR’s motion.
court presumes the trial court performed its duty and followed applicable
law. (Cahill, supra, 194 Cal.App.4th at p. 956.) Because the Rhodes specifically asked the
trial court to consider DBR’s potential liability to them in making its
determination, we may presume the court did so.
They point to nothing in the record that demonstrates otherwise. (Id.
at p. 965 [“there is nothing in the record showing the trial court did not
consider†settling defendant’s potential liability to nonsettling tortfeasor].)
III. The
Settlement Figure Is Not Grossly Disproportionate to a Reasonable Estimate of
DBR’s Potential Liability.
The
Rhodes argue the trial court abused its discretion because the settlement
amount does not fairly represent DBR’s potential liability. They begin this argument by listing what they
assert are the “quantifiable components†of Hill’s damages. These include the claimed value difference in
the property ($423,000), attorney fees incurred in both Hill’s action against
them and in the City’s action against Hill (total $650,000), and the total
amount of the City’s penalty claim against Hill ($406,000). To this they add $190,000 in attorney fees
they themselves have incurred, bringing the total potential damages to $1,669,000.
The
Rhodes argue that the good faith analysis must start with this estimated amount
of damages. To the contrary, “‘[a]
plaintiff’s claims for damages are not determinative in finding [a settlement
was made in] good faith.
[Citation.] Rather, the court is
called upon to make a “rough approximation†of what the plaintiff would
actually recover.’ [Citation.]†(Cahill,
supra, 194 Cal.App.4th at p. 964.)
Here, the trial court could conclude, based on the information available
to it and its own judicial experience, that Hill was likely to recover far less
than her claimed damages. (
For
example, the Rhodes claim that the attorney fees incurred in Hill’s action
against Rhodes and in the City’s action against Hill should be included as part
of the potential damages. Nevertheless,
they do not articulate a legal theory on which those fees could be
recovered. Nor do they explain the basis
for claiming the $190,000 in attorney fees they have incurred in this
action. Even if one assumes the trial
court failed to consider the element of attorney fees in its good faith
determination, the Rhodes have not shown the court abused its discretion. “Without a viable theory for [their] attorney
fees claim, [appellants] cannot show the trial court abused its discretion by
failing to consider that claim when determining [that DBR and Hill] settled in
good faith.†(PacifiCare of California v. Bright Medical Associates, Inc. (2011)
198 Cal.App.4th 1451, 1469.)
As
to the remaining elements of damages, the trial court could also rationally
conclude that Hill’s own negligence in failing to investigate more fully the
encroachment disclosed to her would reduce or eliminate her potential recovery
at trial. (Cahill, supra, 194 Cal.App.4th at pp. 962-965 [given evidence
of plaintiff’s contributory negligence, trial court could conclude possibility
of recovery against settling defendant was remote].) Indeed, in the City’s action against Hill,
Judge Chernus had already decided that prior to the sale, Hill was made aware
of the encroachment that formed the basis of her complaint against the Rhodes
and DBR. We need not decide whether this
finding would have had issue preclusive effect against Hill in her suit against
Rhodes and DBR. For even if it would
not, the trial court could have concluded that Hill had a duty of inquiry once
placed on notice of these facts, a duty she arguably failed to discharge.
v. Grossman (1997) 57 Cal.App.4th 634, 644.) On these facts, the trial court might well have
concluded that Hill’s negligence would reduce or eliminate her potential
recovery at trial. (See
pp. 964-965.)
The
Rhodes make much of the potential damages on Hill’s rescission cause of action,
but the trial court could reasonably have concluded that Hill was unlikely to
obtain relief based on rescission.
Hill’s complaint alleged that the representations made to her were false
and fraudulent, but she reasonably relied on them and believed them to be
true. But none of the evidentiary
materials attached to the Rhodeses’ opposition suggests that DBR was anything
other than negligent in failing to make a fuller disclosure. And if the court found that Hill had
neglected her own duty to make a diligent investigation of the disclosed
encroachment, then rescission would not be available as a remedy even if her
complaint could be construed as seeking rescission based on mistake rather than
on fraud. (Civ. Code, § 1577; see
169 Cal.App.4th 1064, 1074 [equitable remedy of reformation unavailable for
mistake of fact caused by neglect of legal duty].)
The
remaining element of Hill’s potential recovery is the difference in the value
of the property after subtracting the encroachment from the lot size, which is
estimated at $423,000. The settlement
figure of $150,000 represents more than one-third of the total value
difference. Since courts recognize “that
a settlor should pay less in settlement than he would if he were found liable
after a trial,†the amount certainly does not appear to be “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.)
Accordingly,
we conclude the trial court did not abuse its discretion in finding that the
settlement was made in good faith.
Disposition
The
order from which the appeal is taken is affirmed. Respondents shall recover their costs on
appeal. (Cal. Rules of Court,
rule 8.278(a)(1), (2).)
_________________________
Jones,
P.J.
_________________________
Needham, J.
_________________________
Bruiniers, J.
collectively as “the Rhodes†but will use their first names when the context
requires that they be identified individually.
Unless otherwise indicated, all
further statutory references are to the Code of Civil Procedure.
