Dompeling v. Superior Court

• Citation: 173 Cal.Rptr. 38,117 Cal.App.3d 798
• Court: California Court of Appeals
• Decision Date: 08 April 1981
• Parties: Richard James DOMPELING et al., Petitioners, v. The SUPERIOR COURT OF STANISLAUS COUNTY, Respondent; Robert R. WEICHERT et al., Real Parties in Interest. Civ. 5871.

Page 38

173 Cal.Rptr. 38

117 Cal.App.3d 798

Richard James DOMPELING et al., Petitioners, v. The SUPERIOR COURT OF STANISLAUS COUNTY, Respondent Robert R. WEICHERT et al., Real Parties in Interest.

Civ. 5871.

Court of Appeal, Fifth District, California.

April 8, 1981.

Hearing Denied June 10, 1981.

Low, Ball & Lynch, David B. Lynch and James D. Miller, Menlo Park, for petitioners.

No appearance for respondent.

Don E. Bailey, San Francisco, and Albert E. Cronin, Jr., Stockton, for real parties in interest.

PAULINE HANSON, Associate Justice.

On February 14, 1977, in the fog, petitioner Richard Dompeling was driving a Peterbilt truck on Faith Home Road at a speed of about 40 miles an hour ¹ when he came upon a Chatom Union School District (Chatom) bus stopped partially off the road.

There is disagreement as to whether the lights and turn signal of the bus were on. In his deposition, Richard Dompeling stated that he tried to miss the bus and did not see plaintiff Robert R. Weichert's (Weichert) Honda Civic automobile until he swerved. The truck hit the small car and plaintiff, then 24 years old, was injured seriously, perhaps permanently.

Plaintiff filed an action for damages for personal injuries in Stanislaus County Superior Court, naming as defendants Richard James Dompeling and John Dompeling, individually and doing business as Dompeling Livestock Transport, and Chatom Union School District. Chatom filed a cross-complaint for partial indemnity against Dompeling as did the Dompelings against Chatom.

Plaintiff's settlement conference statement, attached as exhibit E to the answer of real party Chatom, and prepared on February 29, 1980, indicates that plaintiff's demand for settlement was $325,000.

Petitioners allege that they entered into a settlement agreement with plaintiff Weichert in June 1980. The covenant not to execute or enforce judgment provides for payment by petitioners' insurance carrier of the policy limits of $100,000, and possible payment by petitioners up to $10,000 above the $100,000 on a sliding scale depending upon plaintiff's recovery from Chatom. The settlement was initially conditioned on court approval. (See Code Civ.Proc., §§ 877, 877.5.)

However, the trial court denied petitioners' motions for approval of the settlement agreement as a settlement in good faith and for entry of judgment for petitioners on Chatom's cross-complaint for indemnity. (Code Civ.Proc., § 877; see American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, 146 Cal.Rptr. 182, 578 P.2d 899.) Petitioners did not seek review of the trial court's denial of the motion for summary judgment on the cross-complaint. The trial court granted Chatom's motion for a separate trial, to precede the personal injury action, on the issue of whether the settlement was entered into in good faith.

On August 22, 1980, after the settlement with present petitioners, plaintiff served a statutory offer to compromise of $150,000 on Chatom. (Exhibit G to answer; Code Civ.Proc., § 998.)

At the deposition of Richard Dompeling, Chatom inquired exhaustively into petitioner's personal and business assets. Mr. Dompeling, on instructions of counsel, refused to answer on the ground that such information was not discoverable under California law and was irrelevant to a claim of bad faith settlement.

Chatom moved to compel answers and the trial court ordered petitioner to answer the deposition questions. ² Chatom renoticed Richard Dompeling's deposition; after the notice to appear was served, petitioners filed this proceeding seeking a writ of mandate ordering the trial court to vacate its order granting Chatom's motion to compel answers to financial questions. A conditional stay order was filed by this court ³ and Chatom filed a petition for rehearing; upon reconsideration the petition for writ of mandate was denied.

Petitioners sought a hearing in the Supreme Court which was granted on September 24, 1980 and the case was retransferred to this court for a hearing on the merits. ⁴

Petitioners contend that the trial court abused its discretion in ordering discovery of the Dompeling finances. We agree.

Petitioners argue that a defendant's financial status is admissible and therefore discoverable only in cases where punitive damages are alleged. (Coy v. Superior Court (1962) 58 Cal.2d 210, 23 Cal.Rptr. 393, 373 [117 Cal.App.3d 804] P.2d 457; Doak v. Superior Court (1968) 257 Cal.App.2d 825, 65 Cal.Rptr. 193.) If the only possible relevance of a defendant's finances is to defendant's ability to respond in damages, authorities hold that defendant's personal finances, as opposed to the existence and amount of liability insurance, are not discoverable. (Ibid.; see Cal. Civil Discovery Practice (Cont.Ed.Bar 1975) § 1.32, p. 27; Annot., Pretrial Discovery of Defendant's Financial Worth on Issue of Damages (1969) 27 A.L.R.3d 1375.) If relevant to another issue in the lawsuit, however, financial information has been held to be discoverable. (See Valley Bank of Nevada v. Superior Court (1975) 15 Cal.3d 652, 125 Cal.Rptr. 553, 542 P.2d 977; Willis v. Superior Court (1980) 112 Cal.App.3d 277, 169 Cal.Rptr. 301.)

Chatom reasons that the financial information is relevant to Chatom's claim that the settlement between Weichert and the Dompelings was in bad faith, and therefore Chatom is entitled to discovery.

The Stanislaus County Superior Court, in denying petitioners' motion for summary judgment and setting the question for trial before the personal injury portion of the case, determined that there is a triable issue of fact with regard to the fairness of the settlement. As stated above, there was no petition for review of the court's denial of the summary judgment.

Chatom urges that the Dompelings are more culpable than Chatom as the cause of the accident, that the damages are substantial and that settlement for $100,000 to $110,000 is therefore suspect. There are very few cases discussing bad faith in this context and none fully defining the circumstances that may constitute bad faith. (See River Garden Farms, Inc. v. Superior Court (1972) 26 Cal.App.3d 986, 996-997, 103 Cal.Rptr. 498; Lareau v. Southern Pac. Transportation Co. (1975) 44 Cal.App.3d 783, 118 Cal.Rptr. 837; Stambaugh v. Superior Court (1976) 62 Cal.App.3d 231, 132 Cal.Rptr. 843; Fisher v. Superior Court (1980) 103 Cal.App.3d 434, mod. 104 Cal.App.3d 766c, 163 Cal.Rptr. 47 (as modified).) While the cases cited here may intimate that a disproportionately low settlement may be a settlement in bad faith, we believe that their definition of the concept is not so simple. Furthermore, the cases, except Fisher, were decided before American Motorcycle Assn. v. Superior Court, supra, 20 Cal.3d 578, 146 Cal.Rptr. 182, 578 P.2d 899, which held in applying comparative negligence principles to indemnity among joint tortfeasors that a tortfeasor who settles with the plaintiff in good faith is discharged from any claim for comparative indemnity as well as contribution, and that "a plaintiff's recovery from nonsettling tortfeasors should be diminished only by the amount that the plaintiff has actually recovered in a good faith settlement, rather than by an amount measured by the settling tortfeasor's proportionate responsibility for the injury." (Id., at pp. 603, 604, 146 Cal.Rptr. 182, 578 P.2d 899.)

Section 877 of the Code of Civil Procedure reflects a strong policy in favor of settlement. (American Motorcycle Assn. v. Superior Court, supra, 20 Cal.3d at 603-604, 607, fn. 9, 146 Cal.Rptr. 182, 578 P.2d 899.) In River Garden Farms, Inc. v. Superior Court, supra, 26 Cal.App.3d 986, 103 Cal.Rptr. 498 authored by Justice Friedman, a unanimous court interpreted the "good faith" clause of Code of Civil Procedure section 877 ⁵ to provide a cause of action for damages to a nonsettling defendant against other parties who settle in bad faith. "Collusion" between settling parties was identified in River Garden Farms, Inc., as a major element of bad faith.

"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. Applied pro tanto to the ultimate judgment, such a settlement contributes little toward equitable even though unequal sharing. As we noted earlier, unreasonably low settlements with the other tortfeasors and the fear of a large unshared judgment may propel the last remaining defendant into a settlement exceeding the plaintiff's remaining damages and transcending that defendant's equitable share. 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.

"....

"(However,) (l)ack of good faith encompasses many kinds of behavior. It may characterize one or both sides to a settlement. When profit is involved, the ingenuity of man spawns limitless varieties of unfairness. Thus, formulation of a precise definition of good faith is neither possible nor practicable. The Legislature has here incorporated by reference the general equitable principle of contribution law which frowns on unfair settlements, including those which are so poorly related to the value of the case as to impose a potentially disproportionate cost on the defendant ultimately selected for suit." (River Garden Farms, Inc. v. Superior Court, supra, 26 Cal.3d 986, 996-997, 103 Cal.Rptr. 498.)

The cases emphasize that the question of good or bad faith is a question of fact and suggest the possible relevance of a settling party's financial status. In Lareau v. Southern Pac. Transportation Co., supra, 44 Cal.App.3d 783, 798, 118 Cal.Rptr. 837, the court stated: "The conduct and motivations of all parties in regard to settlement will...