Burlington Northern R. Co. v. Superior Court

• Decision Date: 03 December 1982
• Citation: 137 Cal.App.3d 942,187 Cal.Rptr. 376
• Court: California Court of Appeals Court of Appeals
• Parties: The BURLINGTON NORTHERN RAILROAD COMPANY, Petitioner, v. SUPERIOR COURT OF the CITY AND COUNTY OF SAN FRANCISCO, Respondent. James R. NOYES and Paccar, Inc., Real Parties in Interest. AO18202.

Page 376

187 Cal.Rptr. 376

137 Cal.App.3d 942

The BURLINGTON NORTHERN RAILROAD COMPANY, Petitioner, v. SUPERIOR COURT OF the CITY AND COUNTY OF SAN FRANCISCO, Respondent.

James R. NOYES and Paccar, Inc., Real Parties in Interest.

AO18202.

Court of Appeal, First District, Division 1, California.

Dec. 3, 1982.

Hearing Denied Feb. 16, 1983.

Peter W. Davis, John A. Reding, James C. Martin, Crosby, Heafey, Roach & May, Oakland, for petitioner.

Bernard C. Kearns, Stephen M. Bickford, Bronson, Bronson & McKinnon, San Francisco, for Real Party in Interest, Paccar, Inc.

McCutchen, Doyle, Brown & Enersen, David M. Heilbron, Charles A. Ferguson, San Francisco, for amicus curiae General Motors Corp.

Girard Fisher, Long & Levit, Los Angeles, for amicus curiae City of Beverly Hills.

Overton, Lyman & Prince, Roger E. Hawkins, P.C., J. Douglas Post, Los Angeles, for amicus curiae Southern California Gas Co.

NEWSOM, Associate Justice.

Petitioner Burlington Northern Railroad Company is the defendant below in a personal injury action brought by James R. Noyes, a Burlington employee who was injured while off-duty but in the course of his employment. Petitioner seeks a peremptory writ of mandate or prohibition directing the court below to vacate its decision finding the settlement between Burlington and Noyes was not made in good faith. We grant the writ.

A perusal of the record below discloses that Noyes received a grievous, paralyzing injury when the door of a refrigeration car owned by Burlington and manufactured by real party Paccar, Inc. fell on him. Noyes and Burlington arrived at a sliding scale agreement whereby Burlington guaranteed that Noyes would receive $2,000,000 at the end of all litigation. Paccar did not settle. When Noyes and Burlington sought a finding by the trial court that the settlement was in good faith, Paccar challenged it. The trial court agreed with Paccar and found the settlement was not made in good faith because it both ignored equitable apportionment and failed to promote settlement of litigation.

By the terms of the settlement, Noyes would continue to prosecute his case against Paccar. He can accept no settlement from Paccar for less than $2,000,000 without the express written consent of Burlington. Should he fail to recover any amount from Paccar after a trial, or recover an amount less than $2,000,000, Burlington guarantees to pay him whatever amount is necessary in order that he recover $2,000,000. Notable, too, is a provision that Burlington, as a condition of is guarantee, reserves the right to reject a settlement between Noyes and Paccar for less than $2,000,000.

Under Code of Civil Procedure section 877 ¹ a settlement between a plaintiff and one of several joint tortfeasors before a trial verdict is rendered discharges that tortfeasor from all liability for any contribution to any other tortfeasors. Section 877.5 requires that any sliding scale recovery agreement by one or more but not all tortfeasors be disclosed to the court where the action is pending. Section 877.6 allows any party to an action in which a proposed settlement will affect the plaintiff and one or more but not all joint tortfeasors to require a hearing on the good faith of the settling parties.

In American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, 146 Cal.Rptr. 182, 578 P.2d 899, our Supreme Court held that while, by its terms, section 877 released a settling tortfeasor only from liability for contribution and not for partial indemnity, logical necessity dictates that a good faith tortfeasor who settles must be freed from any indemnity claims made by a joint tortfeasor. Quoting Stambaugh v. Superior Court (1976) 62 Cal.App.3d 231, 236, 132 Cal.Rptr. 843, the court offered this rationale: "Few things would be better calculated to frustrate [Code of Civil Procedure] [section 877's] policy, and to discourage settlement of disputed tort claims, than knowledge that such a settlement lacked finality and would lead to further litigation with one's joint tortfeasors, and perhaps further liability." (20 Cal.3d at p. 604, 146 Cal.Rptr. 182, 578 P.2d 899.)

It is clear, then, that a settlement between a plaintiff and one or more but not all of several joint tortfeasors may allow those who settle to later escape the obligation of indemnifying nonsettling joint tortfeasors. (Cardio Systems, Inc. v. Superior Court (1981) 122 Cal.App.3d 880, 890, 176 Cal.Rptr. 254 ²; Dompeling v. Superior Court (1981) 117 Cal.App.3d 798, 808-809, 173 Cal.Rptr. 38.) While inequity may result, it has been thought that the policy of encouraging settlement, and of removing at least the settling party from the case, would suffer serious impairment if it were subordinated to a policy requiring equitable apportionment. (Fisher v. Superior Court (1980) 103 Cal.App.3d 434, 446, 163 Cal.Rptr. 47; Stambaugh v. Superior Court, supra, 62 Cal.App.3d 231, 236, 132 Cal.Rptr. 843.)

The Legislature has decreed that the only condition to releasing a settling joint tortfeasor from liability for contribution to nonsettling tortfeasors, is that the settlement be made in good faith. (Mill Valley Refuse Co. v. Superior Court (1980) 108 Cal.App.3d 707, 711, 166 Cal.Rptr. 687.) Here, the trial court, taking a narrower view than has traditionally been taken of the meaning of "good faith," has found that element absent because the sliding scale settlement ignores equitable apportionment and promotes the continuation of litigation at least as between Noyes and Paccar.

We cannot agree that good faith is absent whenever in sliding scale agreements equitable apportionment or final settlement of litigation are not achieved. (Fisher v. Superior Court, supra, 103 Cal.App.3d at p. 445, 163 Cal.Rptr. 47; River Garden Farms, Inc. v. Superior Court (1972) 26 Cal.App.3d 986, 997, 103 Cal.Rptr. 498.) Rather, the requirement of good faith is meant to insure that the settling parties do not tortiously injure the nonsettling parties. "Bad faith is not established by a showing that a settling defendant paid less than his theoretical proportionate or fair share of the value of the...