Travelers Property Casualty Company of America v. Toll Brothers, Inc.
- Haywood Gilliam
- 4:20-cv-03656
- U.S. District Court · Northern District of California
- 3
In Travelers v. American International, Judge Gilliam granted ILM’s application for a good-faith settlement determination under California law.
Indiana Lumbermen’s Mutual Insurance Company received the good-faith settlement determination. Travelers Property Casualty Company of America was the plaintiff seeking equitable contribution, and the determination may bar certain further contribution or comparative-indemnity claims against ILM by other joint tortfeasors or co-obligors.
What happened
Travelers Property Casualty Company of America sued Indiana Lumbermen’s Mutual Insurance Company (ILM) for equitable contribution. The parties confirmed during discovery that ILM had never received a demand or tender letter, which ILM said was required before it could have a duty to defend or indemnify. ILM sought approval of its settlement with Travelers.
The court considered California’s good-faith settlement factors, including the parties’ potential responsibility, the settlement amount, and any evidence of unfair collusion. ILM agreed to pay nothing but waived costs that were approximately $8,750. No party challenged the settlement’s good faith, and the court found it was not outside the reasonable range required by California law.
Judge Haywood S. Gilliam, Jr. granted ILM’s motion for a good-faith settlement determination. Under California law, that determination bars certain further contribution and comparative-indemnity claims against ILM by other joint tortfeasors or co-obligors.
The detailed version
- Travelers Property Casualty Company of America v. Toll Brothers, Inc. · No. 4:20-cv-03656
- Haywood Gilliam
- Oct. 31, 2022
Background
Travelers Property Casualty Company of America asserted an equitable-contribution claim against Indiana Lumbermen’s Mutual Insurance Company (ILM). ILM argued that any potential duty to defend or indemnify required Travelers to serve a demand or tender correspondence establishing a contractual duty. The parties confirmed through discovery that ILM had never received or been served with such correspondence. ILM therefore maintained that it never had a duty to defend or indemnify and that Travelers’ operative complaint failed as a matter of law.
ILM applied for a determination under California Code of Civil Procedure § 877.6 that its settlement with Travelers was made in good faith. The opinion states that ILM did not agree to compensate Travelers but did agree to waive costs, which were approximately $8,750. The text also states that no party disputed that the agreement was made in good faith.
Court’s analysis
Section 877.6 allows a court to determine whether a settlement between a plaintiff and one or more defendants was made in good faith when the action involves alleged joint tortfeasors or co-obligors on a contract debt. A good-faith determination bars other joint tortfeasors or co-obligors from pursuing certain further claims against the settling party for equitable contribution or partial or comparative indemnity based on comparative negligence or fault.
The court applied the factors identified by the California Supreme Court in Tech-Bilt, Inc. v. Woodward-Clyde Associates: an estimate of the plaintiff’s total recovery and the settling party’s proportionate liability, the amount paid, the fact that settlement usually involves paying less than a trial judgment, allocation of settlement proceeds, the settling party’s financial condition and insurance limits, and evidence of collusion, fraud, or related misconduct. The court emphasized that no party had challenged the settlement’s good faith. It also considered that ILM had not received the demand or tender correspondence that allegedly would have triggered a duty to defend or indemnify, and that ILM had agreed to waive approximately $8,750 in costs. The court concluded that the settlement was not so far outside the reasonable range as to conflict with the statute’s equitable purposes and found no evidence of collusion, fraud, or tortious conduct.
Disposition
Judge Haywood S. Gilliam, Jr. granted ILM’s motion for a good-faith settlement determination. The order did not otherwise state a disposition of Travelers’ underlying equitable-contribution claim.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.