Gauss v. Gaf Corp., A091299.

• Decision Date: 25 November 2002
• Docket Number: No. A091299.,No. A091308.,No. A092647.,A091299.,A091308.,A092647.
• Citation: 103 Cal.App.4th 1110,127 Cal.Rptr.2d 370
• Court: California Court of Appeals Court of Appeals
• Parties: Marjorie GAUSS, et al., Plaintiffs and Respondents, v. GAF CORPORATION, Defendant and Appellant. Carter Haught, Plaintiff and Respondent, v. GAF Corporation, Defendant and Appellant. In re Complex Asbestos Litigation.

127 Cal.Rptr.2d 370

103 Cal.App.4th 1110

Marjorie GAUSS, et al., Plaintiffs and Respondents, v. GAF CORPORATION, Defendant and Appellant.

Carter Haught, Plaintiff and Respondent, v. GAF Corporation, Defendant and Appellant.

In re Complex Asbestos Litigation.

No. A091299.

No. A091308.

No. A092647.

Court of Appeal, First District, Division 3.

November 25, 2002.

Certified for Partial Publication.^*

As Modified on Denial of Rehearing Dec. 23, 2002.

Review Denied March 19, 2002.^**

Seth A. Ribner, Los Angeles, David J. Woll, Linda H. Martin, Santa Ana, Simpson, Thacher & Barlett, Counsel for Appellant GAF Corporation.

Nicholas DeWitt, Kelly C. Fitzgerald, Steven F. Raspe, Los Angeles, DeWitt & Roberts, LLP, Counsel for Appellant G-I Holdings, Inc.

David McClain, Dianna Lyons, James L. Oberman, Oakland, Kazan, McClain, Edises, Abrams, Fernandez, Lyons & Farrise, Counsel for Respondents Marjorie Gauss, et al, and Fred Price, et al.

Lisa L. Oberg, Camille K. Fong, San Francisco, McKenna & Cuneo, LLP, William F. Sheehan, Shea & Gardner, Counsel for Respondents Certainteed Corporation, Maremont Corporation, and Union Carbide Corporation.

Scott R. Carpenter, Irvine, Palmieri, Tyler, Wiener, Wilhelm & Waldron, LLP, Ronald B. Rubin, Rubin & Rubin, Counsel for Respondents Pfizer, Inc. and Quigley Company, Inc.

PARRILLI, J.

These consolidated appeals raise a question about the enforceability of mass tort settlements under Code of Civil Procedure section 664.6.¹ Specifically, can section 664.6 be used to enforce a settlement that was signed by a party's agent, rather than the party itself, when the agent had sole and exclusive authority to settle claims on the party's behalf? Reluctantly, we conclude the answer is no. The summary, expedited enforcement procedure afforded by section 664.6 is only available when a settlement satisfies the statutory requirements designed to ensure the parties have actually consented to the terms of the settlement. A writing not signed by one of the parties (and, in this case, silent as to the extent of a party's obligation) does not satisfy section 664.6. Because the trial court entered judgment in these appeals pursuant to section 664.6, and reserved ruling on the plaintiffs' alternative motions for summary judgment, we reverse the judgments and remand for further proceedings.

BACKGROUND

I. The CCR

In 1988, several companies that previously manufactured, distributed or sold asbestos-containing products joined together to form a nonprofit corporation called the Center for Claims Resolution (CCR). The companies, referred to as "members," established the CCR to administer all aspects of the litigation of asbestos-related claims brought against the companies. In a founding document, called the "Producer Agreement Concerning Center for Claims Resolution" (Producer Agreement), each member company designated the CCR its "sole agent to administer and arrange on [the member's] behalf for the evaluation, settlement, payment or defense of all asbestos-related claims" against the member. Further, each member agreed to give the CCR "exclusive authority" to settle, pay or defend asbestos-related claims asserted against the member. While individual members ceded to the CCR their ability to negotiate or enter separate settlements with asbestos claimants, they also agreed to a formula (set forth in "Attachment A" to the Producer Agreement) for apportioning shares of liability and expenses among themselves in each particular case.² The CCR generally bills members for their apportioned shares of a settled claim within 60 to 90 days before the claim is due to be paid. Often, members' shares are determined after the CCR settles a claim. Since its inception in 1988, the CCR has settled over. 200,000 claims asserted against its members across the country.

Appellant GAF Corporation (GAF)³ was one of the founding members of the CCR in 1988. Over the years, the CCR settled numerous asbestos claims on behalf of GAF, and GAF paid its share of the settlements according to the CCR's calculations. However, in late 1999, the companies had a falling out. The CCR claimed GAF had violated the Producer Agreement by refusing to pay its apportioned shares of asbestos settlements the CCR had entered on its behalf. On December 17, 1999, GAF received notice from the CCR that GAF's membership in the CCR would be terminated, effective January 17, 2000. The parties disputed the extent of GAF's responsibility to pay shares of settlements the CCR had allocated to GAF before its expulsion. Pursuant to the Producer Agreement, this dispute was submitted to confidential alternative dispute resolution proceedings. As of February 15, 2000, the CCR estimated the total amount of GAF's share of settlements, which had been billed to GAF but remained unpaid, exceeded $50 million.

II. The Alameda County Settlements

The appeals now before us arose from settlements the CCR entered into with certain California asbestos plaintiffs during the several months before GAF was formally expelled from the CCR. In July 1999, counsel for the estate of James Gauss (and other asbestos plaintiffs) spoke with James McFadden, a "zone manager" for the CCR, about settling several asbestos suits against CCR members. Plaintiffs' counsel and McFadden agreed to settle the Gauss family's claims against the CCR companies for a specific amount. In accordance with this agreement, on January 25, 2000, the Gauss plaintiffs signed a document releasing their claims against all CCR members, including GAF, in consideration for receiving the agreed-upon settlement sum. However, on February 15, 2000, the CCR sent the Gauss plaintiffs a check for less than the agreed-upon settlement amount. In a cover letter, McFadden explained that the CCR was remitting payment for the agreed-upon settlement minus the portion attributable to GAF (which came to approximately one-third of the total consideration). According to McFadden, the CCR had billed GAF but GAF refused to pay its share.

A similar series of events occurred in the Haught case. On December 27, 1999, Haught's counsel (who had also represented the Gauss family) reached an agreement with McFadden to settle the claims against all CCR member companies for a specific sum. In consideration for this amount, on February 20, 2000, Haught and his family released the CCR defendants, including GAF, from all claims. Then, on March 23, 2000, the CCR presented the Haught plaintiffs with a check for less than the agreed-upon settlement amount, with an explanation that the missing money (approximately 40 percent of the total settlement) represented GAF's unpaid share.

On March 16, 2000, plaintiffs in the Gauss case filed a motion to amend their complaint to add a cause of action against GAF for breach of a settlement contract, and a motion to enforce the settlement against GAF, pursuant to section 664.6 or the court's inherent power. In the event the court did not enforce the settlement, the Gauss plaintiffs sought the alternative relief of summary judgment against GAF. Following an expedited briefing schedule, on March 23, 2000, the trial court granted both of plaintiffs' motions and entered judgment against GAF for the portion of the CCR settlement that remained unpaid. The court later modified its order, and issued a judgment amended nunc pro tunc, to clarify that it had granted the plaintiffs' motion for judgment on the settlement but had reserved ruling on the alternative motion for summary judgment.

On April 5, 2000, plaintiffs' counsel filed a similar motion to enforce the CCR settlement in the Haught case. Once again, the trial court heard the motion upon shortened time. GAF opposed the motion and sought leave to conduct expedited discovery regarding the scope of CCR's agency and its right to determine GAF's share of settlements. The court denied GAF's request to take discovery and, on April 20, 2000, granted plaintiffs' motion and entered judgment against GAF for the portion of the CCR settlement that remained unpaid.

On July 7, 2000, the same attorney who represented the Gauss and Haught plaintiffs filed a motion seeking to enforce settlements against GAF, or, in the alternative, seeking summary judgment against GAF, in 71 asbestos cases. The motion was filed in the trial court's coordinated asbestos proceedings, In re Complex Asbestos Litigation (No. 607734-0). Plaintiffs' counsel declared that, between March and November 1999, he had reached agreements with the CCR's zone manager to settle the enumerated cases for specific sums. Pursuant to these agreements, the plaintiffs had signed releases discharging their claims against all CCR defendants, including GAF. Most of these releases were executed in February and March 2000; all but four of the releases were executed after GAF's expulsion from the CCR. In each of the 71 cases, the CCR remitted payment for less than the agreed-upon settlement amount, withholding a portion said to reflect GAF's unpaid share.

After plaintiffs filed their motion, GAF served discovery on defendants represented by the CCR and sought to compel expedited responses. Upon CCR's motion, the court quashed this discovery. GAF also filed a motion to enforce the settlements at issue against the CCR defendants, claiming members of the CCR had a joint and several obligation to fund the settlements and the dispute about GAF's share was the subject of a pending arbitration. The court denied this motion. On August 29, 2000, the court issued an order granting plaintiffs' motion to enforce their settlement agreements against GAF pursuant to section 664.6. Once again, the court reserved ruling on plaintiffs' alternative motion for summary judgment. The court entered judgment against GAF in 64 cases for portions of the CCR settlement that remained unpaid.⁴

We consolidated GAF's separate appeals from judgments entered in the Gauss, Haught and In re Complex Asbestos Litigation cases.⁵ In January 2001, G-I...