COLOGNE, Associate Justice.
Tech-Bilt, Inc. appeals a judgment which granted a motion for summary judgment and dismissed its cross-complaint against Woodward-Clyde & Associates.
Mr. and Mrs. Andrew Fabula, owners of a residential property, brought this action against Tech-Bilt Construction Corporation (the developer), Woodward-Clyde & Associates (soils engineers), and others on various theories to recover damages for structural defects in their residence. During February and March 1981, the attorneys for Fabula and for Woodward-Clyde negotiated a settlement. Believing their action against Woodward-Clyde to be barred by the applicable 10-year statute of limitations (CODE CIV.PROC., § 337.15)1 and the proceedings against the engineers would be costly, time consuming and without merit, Fabula agreed to dismiss with prejudice its suit against Woodward-Clyde in exchange for Woodward-Clyde's waiver of costs which we understand to be about $55. Dismissal was entered March 6, 1981.
On April 29, 1981, Tech-Bilt filed an amended cross-complaint for indemnity and declaratory relief and on June 9, 1981, named Woodward-Clyde as a party cross-defendant. On September 2, 1981, Woodward-Clyde then brought motions for an order to confirm its agreement with Fabula as a good faith settlement and for summary judgment as to all cross-complaints against it. After a hearing, the court found the settlement to be in good faith and entered summary judgment dismissing Tech-Bilt's cross-complaint against Woodward-Clyde. Tech-Bilt appeals, asserting the same question of law it argued before the lower court.
The issue is whether a settlement by a defendant with the plaintiff for waiver of costs operates as a settlement in good faith so as to bar a cross-complaint for comparative negligence or indemnity by a nonsettling defendant against the settling defendant.
The statutes which govern this case are sections 877 and 877.6. Section 877 states, in pertinent part:
"Where a release, dismissal with or without prejudice, or a covenant not to sue or not to enforce judgment is given in good faith before verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the same tort--
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"(b) It shall discharge the tortfeasor to whom it is given from all liability for any contribution to any other tortfeasors."
Section 877.6 states, in pertinent part:
"(a) Any party to an action wherein it is alleged that two or more parties are joint tortfeasors 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 ....
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"(c) A determination by the court that the settlement was made in good faith shall bar any other joint tortfeasor from any further claims against the settling tortfeasor 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."
In American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, 146 Cal.Rptr. 182, 578 P.2d 899, the California Supreme Court stated the legislative policy expressed in section 877 supports the holding that a "settlement" in good faith of the plaintiff's claim would also discharge a defendant from any claim for partial or comparative indemnity.
"Although section 877 reflects a strong public policy in favor of settlement, this statutory policy does not in any way conflict with the recognition of a common law partial indemnity doctrine but rather can, and should, be preserved as an integral part of the partial indemnity doctrine that we adopt today. Thus, while we recognize that section 877, by its terms, releases a settling tortfeasor only from liability for contribution and not partial indemnity, we conclude that from a realistic perspective the legislative policy underlying the provision dictates that a tortfeasor who has entered into a 'good faith' settlement (see River Garden Farms, Inc. v. Superior Court, supra, 26 Cal.App.3d 986 ) with the plaintiff must also be discharged from any claim for partial or comparative indemnity that may be pressed by a concurrent tortfeasor. As the Court of Appeal noted recently in Stambaugh v. Superior Court (1976) 62 Cal.App.3d 231, 236 ...: 'Few things would be better calculated to frustrate [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.' This observation is as applicable in a partial indemnity framework as in the contribution context." (American Motorcycle Assn. v. Superior Court, supra, 20 Cal.3d 578, 603-604 [146 Cal.Rptr. 182, 578 P.2d 899].)
In Dompeling v. Superior Court (1981) 117 Cal.App.3d 798, at pages 805 to 806, 173 Cal.Rptr. 38, the court discussed in some detail the concept of "good faith" as contained in section 877:
" 'Collusion' between settling parties was identified in River Garden Farms, Inc. [26 Cal.App.3d 986, 103 Cal.Rptr. 498], 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., supra, 26 Cal.App.3d 986, 996-997 .)
"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 , the court stated: 'The conduct and motivations of all parties in regard to settlement will be in question.' In dicta, Fisher v. Superior Court, supra, 103 Cal.App.3d 434, 444 specifically mentions the wealth of the settling defendant as evidence that may be admissible on trial of the good faith issue. In Stambaugh v. Superior Court, supra, 62 Cal.App.3d 231, 238 , the court said: '... even where the claimant's damages are obviously great, and the liability therefor certain, a disproportionately low settlement figure is often reasonable in the case of a relatively insolvent, and uninsured, or underinsured, joint tortfeasor.'
"However, in the Stambaugh case, the court held that no colorable claim of bad faith had been shown and the trial court was in error in denying the settling tortfeasor's motion for summary judgment on the cross-complaint, stating: 'Except in rare cases of collusion or bad faith, ..., a joint tortfeasor should be permitted to negotiate settlement of an adverse claim according to his own best interests, whether for his financial advantage, or for the purchase of peace and quiet, or otherwise. His good faith will not be determined by the proportion his settlement bears to the damages of the claimant. For the damages are often speculative, and the probability of legal liability therefor is often uncertain or remote.' (Stambaugh v. Superior Court, supra [62 Cal.App.3d 231, 132 Cal.Rptr. 843], at pp. 238-239 ; italics added.)"
The reason for this often relied on position is found later in the Dompeling case:
"Ours is an adversary system; one who settles before trial expects to pay less than would be required if after trial the verdict were not in his favor. This is a moving factor in personal injury settlements, which afford both 'peace and quiet' to defendant and needed relief without delay to an injured plaintiff. (See Stambaugh v. Superior Court, supra, 62 Cal.App.3d 231, 238 .) ' "The law wisely favors settlements, ..." ' (Potter v. Pacific Lumber Co. (1951) 37 Cal.2d 592, 602 ...; Fisher v. Superior Court, supra, 103 Cal.App.3d 434, 441 .)
"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 plaintiff's case. A settlement always removes the settling defendant from the action; this necessarily results in a possibility that the remaining defendants will suffer judgment greater in amount than if there had been no settlement.
"Where plaintiff settles with fewer than all defendants, the...
