Alcal Roofing & Insulation v. Superior Court

In Alcal Roofing & Insulation v. Superior Court (1992) 8 Cal.App.4th 1121, a construction case, the multiparty settlement agreement at issue included an allocation between types of claims to address uncertainties in the amount of the setoffs. (Id. at pp. 1122, 1124-1125.) The plaintiff filed a motion asking the trial court to find the settlements were reached in good faith under section 877.6, and the nonsettling defendant opposed. (Alcal, at pp. 1122-1123.) The plaintiff did not disclose, to either the trial court or the nonsettling defendant, the written settlement agreement or the amount of the allocation except as to one of the settling defendants. (Id. at pp. 1126-1127.) Nevertheless, the court granted the section 877.6 motion. (Alcal, at p. 1123.) The Court of Appeal vacated that decision, holding that where a section 877.6 motion is contested, a plaintiff must disclose settlement amounts, allocations, and the other information identified in the passage Crane quotes before the motion can be granted. (Alcal, at pp. 1127, 1129.) In Alcal Roofing & Insulation v. Superior Court (1992), the defendant developer settled a lawsuit with the plaintiff homeowners' association for $4.4 million with an allocation of $100,000 to roofing issues, and obtained approval from the trial court that the settlement was in good faith. (Alcal, at pp. 1122-1123.) The roofer, who was the sole nonsettling defendant, petitioned for a writ of mandate. (Id. at pp. 1121, 1122-1123.) The appellate court noted that this was not the "typical one-plaintiff, multiple-defendants, personal injury action where each tortfeasor was potentially liable for the same injury to the plaintiff," making an allocation unnecessary because "full settlement by one defendant will offset a judgment against other tortfeasors." (Alcal, at p. 1124.) Rather, it was a case where "the amount of the offset was clouded by . . . settling claims for separate injuries not all of which would be attributable to conduct of the remaining defendants." (Ibid.) Therefore, "the cash amount of the settlement did not dictate the amount of the offset," and "the settling parties must include an allocation or a valuation in their agreement." (Id. at pp. 1124-1125.) "Requiring a joint valuation by the plaintiff and the settling defendant should generally produce a reasonable valuation." (Abbott Ford, Inc. v. Superior Court (1987) 43 Cal.3d 858, 879.) This is because "a natural tension will exist between plaintiff, who benefits by undervaluing the settlement in order to permit greater recovery against the remaining defendants, and the settling defendant, who would want the settlement value high enough to be approved in order to relieve settling defendant from liability for comparative indemnity or contribution." (Alcal, at p. 1125.) In sum, in Alcal Roofing & Insulation v. Superior Court (1992), a roofer, the sole nonsettling defendant in a multiparty construction defect action, challenged the trial court's approval of a $4.4 million settlement pursuant to section 877.6. The roofer did not object to the amount of the settlement, but challenged the settling parties' allocation of only $100,000 of the settlement to roofing issues. This allocation left the roofer vulnerable to remaining damages that could reach $2 million, with an offset of only $100,000 from the settlement. (Alcal, supra, 8 Cal.App.4th at pp. 1122-1123.) Alcal agreed with the roofer that the lower court erred in approving the settlement. (Alcal, supra, 8 Cal.App.4th at p. 1123.) It explained: "We cannot determine from the documents before us what settlement or settlements took place and what parties agreed to what allocations." (Id. at p. 1128.) The settling parties "laid blame on roofer for failing to present convincing evidence that $100,000 was an improper joint allocation to roofing issues. We conclude, however, that roofer's burden to show an improper allocation did not arise during the proceedings below because the settling parties failed to present to roofer and the court a clear and complete description of the settlement or settlements. At a minimum, a party seeking confirmation of a settlement must explain to the court and to all other parties: who has settled with whom, the dollar amount of each settlement, if any settlement is allocated, how it is allocated between issues and/or parties, what nonmonetary consideration has been included, and how the parties to the settlement value the nonmonetary consideration. Because we cannot determine (1) what settlement or settlements the court approved, (2) when and in what way the subcontractors settled and joined in the allocation, and (3) the value of the assigned rights, we cannot allow the court's order to stand." (Id. at p. 1129.)