James BUTTRAM, Plaintiff and Respondent, v. OWENS–CORNING FIBERGLAS CORPORATION, Defendant and Appellant.
Appellant Owens–Corning Fiberglas Corporation (OCF or appellant) appeals from a products liability judgment in the amount of $1,519,475 entered against it in a trial involving alleged exposure to asbestos-containing products and the consequent development of mesothelioma, an asbestos-caused form of cancer. The only issues on appeal are (a) the applicability of Proposition 51, now Civil Code section 1431.2, to the case and (b) the appropriateness of certain credits for prior settlements effected by the plaintiff. We affirm the trial court's judgment and actions, although remanding the case to that court for amendment of its judgment to provide further specificity with respect to possible future set-offs.
II. FACTUAL AND PROCEDURAL HISTORY
Plaintiff James Buttram is a decorated Vietnam veteran who served from 1964 to 1968 in the United States Navy. He was assigned to a destroyer and, both while the ship was in dry dock for repairs and during its active service, frequently worked in the boiler room. The boilers and steam pipes in the boiler room were all insulated with asbestos, and Buttram was present in that room when the insulation was both being removed and repaired. Also, and during the ship's active service, breaks often would appear in the insulated pipes which Buttram would also have to repair.
After Buttram left the Navy in 1968, he had no further work with asbestos-containing materials and, commencing in 1978, worked as a maintenance mechanic with a chemical manufacturer. An annual physical examination in 1991 included a chest x-ray; this resulted in a technician advising Buttram that he should see a doctor due to a possible problem with his lung. After a series of tests at Kaiser Hospital, a biopsy revealed that he had pleural mesothelioma. He was advised there was no cure for this disease, and that he would eventually die from it.
Subsequently, Buttram had a lung removed, underwent electric shock therapy to slow down his heart rate, and was given chemotherapy. He filed suit in 1992. Settlements were soon effected with several named defendants, and a trial as to OCF followed the next year. After a bifurcated trial (phase I being on causation and damages, with exposure and liability being addressed in phase II), the jury returned a verdict in his favor for a total of $1,519,475. Of this amount, $450,000 was allocated by the jury to non-economic damages. In a third phase of the trial, the jury declined to award any punitive damages against OCF.
Two post-trial motions, the results of which form the entire basis of the present appeal, were heard and determined by the court. The first involved cross-motions by the parties with respect to the applicability of Civil Code section 1431.2 to plaintiff's case. The court found, based on unrebutted testimony from a doctor, that plaintiff probably had cancer cells at least seven years before discovery of the fluid in his lungs in 1991. Based on that testimony, the trial court held that, because Civil Code section 1431.2 was not retroactive, it did not apply to any aspect of plaintiff's case.
Plaintiff also moved, pursuant to Code of Civil Procedure section 877, subdivision (a) to allocate certain “settlement credits” in accordance with settlements it had negotiated with several other defendants in the same litigation. This motion, which was opposed by OCF, asked the court to allocate two-thirds of the settlements with the other defendants to Buttram's tort action and the remaining one-third to a potential future wrongful death action on behalf of his daughter, Mary Sue Buttram, age 21 at the time of trial. The motion also asked that no credit be given OCF for plaintiff's contingent settlements with defendants Western MacArthur and Fibreboard Corporation inasmuch as those settlements were contingent upon the receipt of funds by those companies from their putative insurers.
After further briefing and argument, the court ultimately resolved the “settlement credit” issue in favor of the positions advanced by plaintiff. OCF timely appealed.
A. The Applicability of Proposition 51
In one of the post-trial motions at issue here, OCF argued that Proposition 51, and its principle of several liability for non-economic damages, applies to this case.
Proposition 51, the core provision of which is now Civil Code section 1431.2, became effective immediately upon its adoption as an initiative on June 4, 1986. However, our Supreme Court has held that it does not apply to causes of action which accrued before its effective date. (See Evangelatos v. Superior Court (1988) 44 Cal.3d 1188, 1192–1193, fn. 2, 246 Cal.Rptr. 629, 753 P.2d 585.) Thus, the issue of whether Buttram's cause of action for tort damages arising from his mesothelioma accrued before June 4, 1986, is obviously critical. If so, the pre-Proposition 51 rule of joint and several liability for all damages, economic and non-economic, would apply. Conversely, if Buttram's cause of action accrued after June 4, 1986, Proposition 51 provides that, with respect to non-economic damages, the rule of several liability applies, i.e., “each defendant is liable for only that portion of the plaintiff's non-economic damages which is commensurate with that defendant's degree of fault for the injury.” (Evangelatos v. Superior Court, supra, 44 Cal.3d at p. 1198, 246 Cal.Rptr. 629, 753 P.2d 585.) 1
In Evangelatos, both the alleged wrongful acts and the injury involved in that case occurred years before the effective date of Proposition 51. Additionally, “delayed discovery” was not an issue in the case. As a consequence, the Evangelatos court did not (because it did not need to) delve into the issue of when a cause of action “accrues” for purposes of deciding which law applies.
The determination of the date upon which a plaintiff's cause of action for asbestos-caused mesothelioma accrues is not simple. As the record in this case made clear, many years can pass between initial exposure to asbestos and asbestos products and the development of mesothelioma; additionally, it may be years thereafter before a mesothelioma tumor becomes large enough to be detected.
The parties adopt predictably opposite positions with respect to when Buttram's cause of action accrued for purposes of determining the applicability of Proposition 51. OCF contends that the date Buttram either discovered he had, or was “diagnosable for,” mesothelioma applies, citing numerous statute of limitations cases applying the familiar “delayed discovery” principle.2 On the other hand, Buttram contends that Proposition 51 has no applicability whatsoever to his case because, he argues, his cause of action accrued when the injury-producing wrongful act was committed. He contends, substantially based on precedent involving insurance coverage litigation, that this is the date of his initial exposure to asbestos. Alternatively, Buttram urges, the court should apply a “date of appreciable harm” standard.
It is easy to see how important the “accrual date” becomes when these different standards are applied to this case. If a “date of discovery” standard is applied, that date would almost inevitably be 1991 or 1992, several years after the effective date of Proposition 51, hence triggering its applicability to the non-economic portion of plaintiff's damages. Conversely, Buttram rather clearly was first exposed to asbestos-containing products when his Navy tour of duty commenced in 1964, over two decades before the passage of Proposition 51.
The application of the “appreciable harm” standard is a little less exact because, as the trial court here acknowledged, the pertinent medical opinion evidence is itself inexact “because of the progressive nature of asbestosis-related diseases.” However, the trial court did note that there was unrebutted testimony that the plaintiff probably had cancer cells seven years before the 1991 discovery of fluid in his lungs. It held, based on this testimony, that the latest date by which plaintiff suffered “appreciable harm” was 1984, two years prior to the effective date of Proposition 51. The trial court held that the “appreciable harm” standard was the correct one to apply in this case. (Evangelatos v. Superior Court, supra, 44 Cal.3d at p. 1188, 246 Cal.Rptr. 629, 753 P.2d 585; Aetna Cas. & Surety Co. v. Ind. Acc. Com. (1947) 30 Cal.2d 388, 182 P.2d 159.) As a consequence, it ruled, Proposition 51 was inapplicable to any part of plaintiff's damage recovery. For the reasons stated below, we agree.
To take OCF's contention first, it is basically that the date of “discovery” or “manifestation of appreciable harm” should control. This argument is based almost entirely on cases holding that, for purposes of the statute of limitations, a cause of action does not “accrue” until the plaintiff either discovers or reasonably should have discovered his/her injury. (See, e.g., Velasquez v. Fibreboard Paper Products Corp., supra, 97 Cal.App.3d at p. 887, 159 Cal.Rptr. 113; Budd v. Nixen (1971) 6 Cal.3d 195, 203, 98 Cal.Rptr. 849, 491 P.2d 433; Pereira v. Dow Chemical Co. (1982) 129 Cal.App.3d 865, 873, 181 Cal.Rptr. 364.) We suggest that, in relying on this line of authority, OCF is trying to insert a square peg into a round hole. The cases it relies upon are strictly statute of limitations cases and their rationale—to redress problems which might be created by an overly-strict application of the statute of limitations—is simply inapplicable to the issue presented here. We are not concerned here with possibly providing a remedy to a person who otherwise would be without one because his/her injury could not reasonably be discovered. Rather, we are endeavoring to comply with the ruling of our Supreme Court in Evangelatos that Proposition 51 is prospective in application only, i.e., it does not apply to causes of action which existed prior to June of 1986.3 In so doing, it is obviously incumbent on us to consider whether or not Buttram's cause of action may be said to have “existed” in June of 1986. If so, Proposition 51 simply cannot apply to it.
The difference between the issue involved here and that in statute of limitations “delayed discovery” cases was a subject thoroughly and, we believe, correctly addressed in a recent Illinois appellate court decision. (See Fetzer v. Wood (1991) 211 Ill.App.3d 70, 155 Ill.Dec. 626, 569 N.E.2d 1237.) The court there had before it the issue of whether a plaintiff's medical malpractice action based on a latent injury “accrued” before the effective date of a statute modifying Illinois' comparable fault doctrine. There, as here, the defendant argued that, when the time of injury is not readily ascertainable, the only appropriate basis for determining the accrual of a cause of action is when it was discovered. There, as here, the defendant relied on statute of limitations cases involving latent—and for a while undiscovered—injuries. The Illinois appellate court rejected this argument stating: “ ‘We do not agree that a cause of action is nonexistent prior to the time of accrual [for the purpose of the statute of limitations]. Logic dictates that a plaintiff cannot bring a cause of action until he knows or reasonably should know of his injury, and also knows or reasonably should know that the injury was caused by the wrongful acts of another. However, that does not mean that the plaintiff does not have an existing cause of action of which he is unaware.’ [Citation.] ․ [¶] In addition, we feel compelled to point out that too much reliance by defendants on the ‘discovery rule’ is misplaced. First, statutes of limitations, like other statutes, must be viewed in light of their objectives. [Citation.] The purpose of the statute of limitations is certainly not to shield a wrongdoer; rather, it is to discourage the presentation of stale claims and to encourage diligence in the bringing of actions. [Citation.] Second, the discovery rule concerns charging a plaintiff with knowledge of an injury and its wrongful cause for purposes of the running of a statute of limitations. Such is not at issue here. Rather, this case concerns if and when facts existed to support a cause of action for purposes of determining the applicability of the modified comparative negligence statute. Moreover, the discovery rule does not actually provide for new accrual rules; it instead tolls the running of the statute of limitations, until a plaintiff's ‘discovery,’ of an existing cause of action.” (Id., 155 Ill.Dec. at p. 632, 569 N.E.2d at p. 1243, italics in original.)
We need not dwell as long on plaintiff's first contention that the “date of exposure” is tantamount to the date of injury and, hence, the date on which Buttram's cause of action first accrued. In the first place, we think this is contrary to established law, which is that injury is an essential element of any cause of action based on negligence or strict liability. Thus, the fact that Buttram was exposed to asbestos products as early as 1964 did not give him a cause of action against defendants based on that exposure only. Any such cause of action arose only when he suffered some sort of appreciable, meaning compensable, harm or injury. (Sinai Temple v. Kaplan (1976) 54 Cal.App.3d 1103, 1113, 127 Cal.Rptr. 80; Larcher v. Wanless (1976) 18 Cal.3d 646, 656, fn. 11, 135 Cal.Rptr. 75, 557 P.2d 507; Steingart v. White (1988) 198 Cal.App.3d 406, 413–414, 243 Cal.Rptr. 678; Alhino v. Starr (1980) 112 Cal.App.3d 158, 176, 169 Cal.Rptr. 136.)
Second, our Supreme Court has indicated that the “appreciable harm” test is the appropriate one upon which to determine when a cause of action accrues in a medical malpractice action involving latent injuries. (See Larcher v. Wanless, supra, 18 Cal.3d at p. 656, fn. 11, 135 Cal.Rptr. 75, 557 P.2d 507; see also Steketee v. Lintz, Williams & Rothberg (1985) 38 Cal.3d 46, 54, 210 Cal.Rptr. 781, 694 P.2d 1153; Brown v. Bleiberg (1982) 32 Cal.3d 426, 437, fn. 8, 186 Cal.Rptr. 228, 651 P.2d 815; Mason v. Marriage & Family Center (1991) 228 Cal.App.3d 537, 542–543, 279 Cal.Rptr. 51; Steingart v. White, supra, 198 Cal.App.3d at pp. 413–414, 243 Cal.Rptr. 678; Alhino v. Starr, supra, 112 Cal.App.3d at p. 176, 169 Cal.Rptr. 136.)
As noted above, plaintiff acknowledges that the “appreciable harm” standard would be appropriate. We agree. Thus, and as applied to this case, we believe that, for purposes of determining the applicability of Proposition 51, a cause of action accrues when the injury reaches the point that it is “compensable,” i.e., when the plaintiff suffers such “appreciable harm” that he would be entitled to commence an action for damages. As applied to this case, this simply means that there be reasonably reliable evidence that the plaintiff suffered appreciable harm before the effective date (June 4, 1986) of Proposition 51. There was clearly such evidence here.
B. The “Settlement Credits” to which OCF is Entitled
The only other issue raised by OCF which we need to address 4 is that the trial court did not give it sufficient “credit” under Code of Civil Procedure section 877, subdivision (a),5 for prior settlements with other defendants in the litigation. OCF first argues that, pursuant to the agreement between the plaintiff and the settling defendants, it unfairly received credit for only two-thirds of the prior settlements, inasmuch as the remaining one-third was allocated by the settling parties to a wrongful death claim (not yet reduced to a complaint, of course) by Buttram's daughter. OCF contends, as it argued to the court below, that a 90%–10% split in favor of the Buttram tort claim would be more equitable.
Second, OCF contends that contingent settlements negotiated by the plaintiff with settling defendants Fibreboard and Western MacArthur should have been, but were not, set-off against the judgment rendered against it. These two settlements were referred to the parties in post-trial papers presented to the court, but only one was quantified: the Western MacArthur settlement was for a total of $300,000. It, however, was represented to be contingent upon Western MacArthur being indemnified by the “Minnesota Guarantee Association” (apparently an insurer). Another settlement by plaintiff, with the Fibreboard Corporation, was represented to be “contingent upon Fibreboard winning litigation against its insurer․” 6 Buttram's position before the trial court was that both of these settlements were presently of no value but that, if monies were ever received from either of those settling defendants, those monies would be promptly paid over to OCF as and for additional credits against his judgment. The trial court, agreeing with plaintiff, valued both settlements at “zero,” stating: “Secondly, with regard to the monies not yet received by the plaintiff from Western MacArthur and Fibreboard, they will be valued at zero at the present time, subject to valuation at their actual figure at such time as any monies are received from those defendants, with those monies being assigned to—should there be any such monies—those monies being assigned to Owens–Corning Fibreglass and paid directly to them by the payor. [¶] You can appropriately provide language in the judgment which carries out that intent.”
A few preliminary observations are in order before addressing these two issues. In the first place, the motion regarding credits to which OCF was entitled against its judgment was brought by Buttram, not OCF. It was supported by declarations of plaintiff's counsel which provided details regarding the settlements with the other defendants and the allocations made therein. Next, the motion was not one under Code of Civil Procedure section 877.6 to adjudicate the “good faith” nature of the prior settlements.7 Nor did appellant respond to this motion with either a section 877.6 motion of its own 8 or any evidentiary showing of any sort as to the unfairness or unreasonableness of any aspect of the proposed set-off. Rather, OCF merely filed memoranda of points and authorities arguing, inter alia, that if some modest value were given to the Fibreboard and Western MacArthur settlements, and if only 10% of the entire settlement “package” were allocated to Buttram's daughter's prospective wrongful death action, then OCF would owe plaintiff nothing or practically nothing on the judgment in the present case. Essentially, OCF simply argued unfairness in the credits proposed in the court below, and did not even attempt to sustain a position as to a more appropriate basis for the credits.9
To go, then, to the issue of the allocation of the settlement funds between the plaintiff's tort action (for which OCF was entitled to a credit, of course) and the prospective wrongful death action by Buttram's daughter (for which it was not), we note that plaintiff supported its proposed allocation with declarations of its counsel to the effect that the settlement agreements with the settling defendants “include language that apportions the settlement by attributing two-thirds of the total settlement to James Buttram's personal injury cause of action and one-third of the settlement to the heir's wrongful death claim.” The same declarations included several additional paragraphs providing further information on comparable cases, all designed to support the proposed allocation and consequent set-off against the judgment against OCF.
Similar to its posture below, OCF's arguments to this court on this point rely almost entirely on generic authority regarding the nature and extent of damages available in wrongful death actions, to the exclusion of any reference to any evidence in the record. This sort of argument is unavailing. While it is the burden of one or more of the parties effecting the settlement to present to the court the pertinent facts and figures relating to it, once that is done the party resisting the amount of the proposed credit has the burden of showing a lack of good faith or any other element of possible unfairness to it in the proposed credit or credits. This is so for at least two reasons. First of all, and as a general proposition, a defendant seeking an offset against a money judgment generally has the burden of proving it. (See Conrad v. Ball Corp. (1994) 24 Cal.App.4th 439, 444, 29 Cal.Rptr.2d 441.) Second, we think it is clear that the unequivocal mandate of Code of Civil Procedure section 877.6, subdivision (d), that “[t]he party asserting the lack of good faith shall have the burden of proof on that issue” 10 is equally applicable to a motion under section 877, subdivision (a), inasmuch as “good faith” means the same thing in both provisions. (See Tech–Bilt, Inc. v. Woodward–Clyde & Associates (1985) 38 Cal.3d 488, 496, 213 Cal.Rptr. 256, 698 P.2d 159.) 11
In short, if OCF thought the two-thirds/one-third allocation proffered by plaintiff and agreed to previously by plaintiff and the settling defendants was unfair to it, it was incumbent on it to provide some concrete evidence to the trial court to that effect. This it utterly failed to do.
The issue with regard to the Fibreboard and Western MacArthur settlements is slightly more difficult. The actual payment of any money pursuant to these settlements was represented to be “contingent” on the receipt of insurance monies by the respective settling defendants. OCF did not, and does not now, contend otherwise. Indeed, OCF's only complaint regarding the underlying facts before the trial court seemed to be that it needed more information disclosed to it regarding the nature of this plaintiff's settlement with Fibreboard.
OCF contends here that it was entitled to full credit for the sum stipulated between plaintiff and Western MacArthur in that settlement and that the judgment below must be reversed both for that reason and, additionally, because the trial court did not require plaintiff to provide facts sufficient to permit an evaluation of the Fibreboard settlement. A resolution of these issues necessarily implicates the interpretation and application of Code of Civil Procedure section 877. In Abbott Ford, Inc. v. Superior Court (1987) 43 Cal.3d 858, 239 Cal.Rptr. 626, 741 P.2d 124, our Supreme Court articulated the goals and philosophies underlying both that section and section 877.6 as follows:
“Section 877 establishes that a good faith settlement bars other defendants from seeking contribution from the settling defendant (§ 877, subd. (b)), but at the same time provides that the plaintiff's claims against the other defendants are to be reduced by ‘the amount of consideration paid for’ the settlement (§ 877, subd. (a)). Thus, while a good faith settlement cuts off the right of other defendants to seek contribution or comparative indemnity from the settling defendant, the nonsettling defendants obtain in return a reduction in their ultimate liability to the plaintiff.” (Abbott Ford, Inc. v. Superior Court, supra, 43 Cal.3d at p. 873, 239 Cal.Rptr. 626, 741 P.2d 124.)
“By requiring a settling defendant to settle ‘in the ballpark’ in order to gain immunity from contribution or comparative indemnity, the good faith requirement of sections 877 and 877.6 assures that—by virtue of the ‘set-off’ embodied in section 877, subdivision (a)—the nonsettling defendants' liability to the plaintiff will be reduced by a sum that is not ‘grossly disproportionate’ to the settling defendant's share of liability, thus providing at least some rough measure of fair apportionment of loss between the settling and nonsettling defendants.” (Abbott Ford, Inc. v. Superior Court, supra, 43 Cal.3d at p. 874, 239 Cal.Rptr. 626, 741 P.2d 124.)
With that background, we turn to OCF's principal contention regarding the two “contingent” settlements. OCF argues that, when the term “stipulated” is used in Code of Civil Procedure section 877, subdivision (a), it means the total sum for which the plaintiff settles with the particular settling defendant. This is simply incorrect, as a reading of Arbuthnot v. Relocation Realty Service Corp. (1991) 227 Cal.App.3d 682, 278 Cal.Rptr. 135 makes clear. In that case, the plaintiffs had settled with one defendant for the entry of a default judgment for $531,350, a covenant not to execute on that judgment, and other non-monetary consideration. The non-settling defendant went to trial and had judgment taken against it for slightly in excess of $200,000. It rather naturally urged the trial court, and then Division One of this court, that it was entitled to a set-off of the entire $531,350 figure mentioned in the prior settlement, a prior settlement which had (unlike the settlements at issue here) been approved by the trial court, presumably under Code of Civil Procedure section 877.6. It urged that the actual consideration passing between the plaintiff and the settling defendant was immaterial because the settlement agreement “stipulated” to a higher figure, $531,350. Division One disagreed. It cited and then quoted approvingly from a Ninth Circuit case which directly addressed this issue under Code of Civil Procedure section 877, subdivision (a). (Federal Sav. and Loan Ins. Corp. v. Butler (9th Cir.1990) 904 F.2d 505.) The court in that case held: “ ‘The agreement on the amount of setoff should be very specific before the plaintiff is considered to have agreed to a setoff larger than what he received in consideration from the settling defendant. A stipulation as to a defendant's liability, or proportional liability, or liability discounted by the risk of litigation is not a specific agreement as to a setoff greater than the consideration he actually receives.’ ” (Id. at p. 512.) “A stipulation of the amount owed is simply not the same as the amount of the consideration paid nor a stipulation of the amount to be set off against the claims of the other defendants.” (Id. at p. 513.)
Clearly agreeing with this interpretation of the statute, Division One concluded on this issue: “Although it is possible $531,350 represents a reasonable estimate of the setoff, we conclude that the parties did not stipulate to this amount nor did the trial court determine that this was the amount of the consideration given by Spaulding.” (Arbuthnot v. Relocation Realty Service Corp., supra, 227 Cal.App.3d at pp. 688–689, 278 Cal.Rptr. 135.)
As applied to this case, this means that it does not follow that, because plaintiff Buttram and original defendant Western MacArthur settled for $300,000, $300,000 was the amount “stipulated” to be set off against any judgment against a non-settling defendant such as OCF for purposes of Code of Civil Procedure section 877, subdivision (a). That sum would still have to be determined by the trial court (in a section 877.6 hearing or otherwise) under the language of section 877, subdivision (a).
In Abbott Ford, Inc. v. Superior Court, supra, 43 Cal.3d 858, 239 Cal.Rptr. 626, 741 P.2d 124, the Court explained how section 877 can and may mesh with a “sliding scale” type of contingent settlement agreement. One aspect of the Abbott Ford decision was summarized in Arbuthnot as follows: “The Supreme Court acknowledged that in cases where payment is contingent, the trial court may have difficulty in evaluating the accuracy of the settling parties' valuation and that it ‘may not be able to do more than simply make its best estimate․’ [Citation.] The non-settling defendant, however, is not entitled to a ‘mini-trial’ on the valuation issue, and the nature and extent of the procedure to be followed when a challenge is made is left to the discretion of the trial court. [Citation.] Certainly the trial court could proceed based on affidavits or declarations submitted by the parties.” (Arbuthnot v. Relocation Realty Service Corp., supra, 227 Cal.App.3d at pp. 689–690, 278 Cal.Rptr. 135.)
The cases make abundantly clear that the trial court's discretion is very much implicated in almost all of the determinations mandated by section 877, subdivision (a). Thus, in Tech–Bilt, Inc. v. Woodward–Clyde Associates, supra, 38 Cal.3d 488, 213 Cal.Rptr. 256, 698 P.2d 159 the court held: “[o]rdinarily, a determination as to whether a settlement is in good faith must be left to the discretion of the trial court.” (Id. at p. 502, 213 Cal.Rptr. 256, 698 P.2d 159.) And, in Erreca's v. Superior Court (1993) 19 Cal.App.4th 1475, 24 Cal.Rptr.2d 156 the Court of Appeal expanded upon this: “Evaluation of the parties' allocation of settlement proceeds is committed to the sound discretion of the trial court in the good faith settlement approval process.” (Id. at p. 1489, 24 Cal.Rptr.2d 156.) “The Supreme Court has indicated repeatedly that the discretion of the trial court must be accorded a wide scope and the exercise of such discretion must be accorded due deference in order for the system to work as fairly as possible.” (Id. at p. 1504, 24 Cal.Rptr.2d 156.)
From these several statements, it is clear that where, as here, an amount payable by a settling party to a plaintiff is entirely contingent on an outside and problematic event, and when the settling parties have not, via a Code of Civil Procedure section 877.6 procedure, bilaterally “valued” their settlement,12 much of the substance and procedure of the valuation of the prior settlement for “set-off” purposes can and should be left to the trial court's discretion.
In this case, the trial court was presented with at least one party's evaluation of the Western MacArthur and Fibreboard settlements: plaintiff, through his counsel, opined that they were worth “zero” at the present, but might be worth something as and when either of those two settling defendants received additional indemnity from their putative insurers. He offered to stipulate that, as and when any payments were received by plaintiff against those two settlements, those amounts would be paid over to OCF as and for additional credits against the judgment against OCF.
OCF's position was, essentially, that the face amount of the settlement was the amount which should be credited as it was the amount “stipulated.” As we have already seen, this position is simply incorrect, but OCF suggested no alternative position. The settling defendants were not heard from, due obviously to the absence of a section 877.6 motion. The court, after argument, ultimately agreed with the plaintiff's position (although its verbal order of August 23, 1993, on this point was never amended into the judgment). Its position was that, inasmuch as there was no assurance that there would ever be anything paid against the Western MacArthur or Fibreboard settlements due to those defendants' apparent problems with their insurance carriers, it would be inequitable to give the non-settling defendant, OCF, the benefit of these contingent settlements via any sort of a credit for monies the plaintiff never got.
We agree with this conclusion. It seems to us that it is compelled by the straight-forward language of Code of Civil Procedure section 877, subdivision (a), to the effect that the release shall reduce the claims against the non-settling party or parties “in the amount stipulated by the release ․ or in the amount of the consideration paid for it whichever is the greater.” As we have seen, there simply was no amount “stipulated” by either release for set-off purposes. Therefore, the only measure of the set-off statutorily authorized is the amount of the consideration “paid for it.” It is undisputed that, at least as of the date of judgment, that amount was zero. It follows that “zero” should likewise be the amount of the set-off.
Although we would like to cite California authority in support of this resolution, there apparently is none, at least not in this precise context. The closest either party—or we—have come to authority on point is a recent decision of the Colorado Supreme Court. (See Fibreboard Corp. v. Fenton (Colo.1993) 845 P.2d 1168.) That case involved a Colorado statute, since amended, which has the same derivation as our Code of Civil Procedure section 877 13 and tracks the critical language of subdivision (a) of our statute almost exactly. Under it, the Colorado Supreme Court held that an unpaid settlement sum owing from the Manville Trust, a trust organized in connection with the bankruptcy of the Johns Manville Corporation, did not have to be set off against a judgment against the non-settling defendant. The court held that, under the circumstances there present, “it is the non-settling tortfeasors who bear the risk of the insolvency of parties who are jointly and severally liable, and not the innocent plaintiff.” (Id. at p. 1177.)
We agree that this should likewise be the result in these circumstances. In so holding, we are not, however, ruling that in every circumstance of non-payment by a settling defendant of its agreed-upon settlement sum the non-settling defendant should receive zero credit, but only that in the circumstances obtaining here (insolvency of a settling defendant and/or exhaustion of or non-recourse to insurance) 14 this outcome is well within the court's discretion and hence correct under the applicable statutory provisions.
The judgment below is affirmed in all respects, except that the case is remanded to the trial court with directions to amend its judgment to conform with its verbal order of August 23, 1993, regarding the set-offs authorized and contingently authorized.
1. Because of the possibility that the court might rule that Proposition 51 was applicable to the case, the jury was asked to, and did, supply a percentage figure for OCF's “fault.”
2. OCF's position on this issue on this appeal has been subject to some variation. In its opening brief, it flatly argued for “discoverability.” In its reply brief, it backed away from this term and argued for a “manifestation of appreciable harm” or “diagnosable disease” standard. At oral argument, it articulated its position as “diagnosability,” citing Velasquez v. Fibreboard Paper Products Corp. (1979) 97 Cal.App.3d 881, 159 Cal.Rptr. 113 (a statute of limitations case).
3. A law has been applied retroactively if it affects rights which exist prior to adoption of the statute. (See Aetna Cas. & Surety Co. v. Ind. Acc. Com., supra, 30 Cal.2d at p. 391, 182 P.2d 159.)
4. A third issue briefed by the parties was the proper allocation of the prior settlements as between “economic” and “non-economic” damages. This briefing assumed that Civil Code section 1431.2 applied to this case. However, in view of our holding in Part III, A, ante, it is unnecessary to resolve this issue.
5. Respondent asserted, both in its brief and at oral argument, that its motion was not brought under this section and did not specifically ask for any “good faith” determination. The latter point is undoubtedly true, but the former cannot be: we know of no other statutory provision than Code of Civil Procedure section 877, subdivision (a) upon which a motion such as respondent made below could be based.In any event, this section provides, in relevant 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, or to one or more other co-obligors mutually subject to contribution rights, it shall have the following effect: [¶] (a) It shall not discharge any other such party from liability unless its terms so provide, but it shall reduce the claims against the others in the amount stipulated by the release, the dismissal or the covenant, or in the amount of the consideration paid for it whichever is the greater․” (Code Civ.Proc. § 877, subd. (a).)
6. It was represented that the agreement was “a matter of record in this case.” However, it is not included in the record on appeal and was also allegedly something of a mystery to OCF's counsel.
7. Buttram's counsel, in response to a question from the trial court, acknowledged that such motions are not the norm in asbestos litigation.
8. Such a motion would clearly have been appropriate under Code of Civil Procedure section 877.6, subdivision (a)(1), which provides: “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․” (Italics supplied.) Alternatively, and because no formal section 877.6 finding of “good faith” was made, conceivably OCF could have brought an action for contribution or equitable indemnity.
9. Buttram suggests that the arguments presented in this appeal by OCF with respect to the unfairness of the credits proposed by him and approved by the trial court are raised “for the first time on appeal” by OCF. This is incorrect; OCF did raise these issues in the court below.
10. OCF seems to contend that this provision is inapplicable because plaintiff brought the post-trial Code of Civil Procedure section 877, subdivision (a), motion. This argument is completely without merit. The issue of which party has the “burden” on such a point has nothing to do with which party files the motion raising the issue.
11. We think the correct interpretation of Code of Civil Procedure section 877.6, subdivision (d), is that, no matter what the procedure, the party resisting the application of a “good faith” label to a settlement bears the burden of showing a lack of good faith or otherwise defeating approval of the proposed settlement or credit. This is confirmed by Fisher v. Superior Court (1980) 103 Cal.App.3d 434, 447–449, 163 Cal.Rptr. 47, which held that this was the rule under section 877, subdivision (a), before the passage of section 877.6. We think application of this principle here is most appropriate inasmuch as it appears to us that, by its opposition below, OCF was essentially attacking the good faith nature of the several settlements, at least as they impacted on it, but doing so without troubling itself to follow the procedure explicitly designed to test that issue, much less adducing any evidence in support of its position.
12. If the parties to, e.g., the plaintiff-Western MacArthur settlement had moved the court to approve that agreement under Code of Civil Procedure section 877.6, that motion would have supplied the mechanism for the bilateral valuation of that settlement envisioned by the Supreme Court in Abbott Ford. That process would admittedly have been helpful to the valuation process the lower court was faced with here, but its omission is in no way fatal. Section 877 was, after all, both effective and utilized for 23 years before section 877.6 was adopted.
13. The Colorado statute at issue was enacted in 1977 and was part of the “Uniform Contribution Among Tortfeasors Act.” (See Fibreboard Corp. v. Fenton, supra, 845 P.2d at p. 1175.) Our Code of Civil Procedure section 877, subdivision (a), was enacted twenty years earlier but has the same source. (See Tech–Bilt, Inc. v. Woodward–Clyde & Associates, supra, 38 Cal.3d at p. 494, fn. 4, 213 Cal.Rptr. 256, 698 P.2d 159; River Garden Farms, Inc. v. Superior Court (1972) 26 Cal.App.3d 986, 995–996, 103 Cal.Rptr. 498.)
14. The “financial conditions and insurance policy limits of settling defendants” have been expressly recognized to be “relevant considerations” to a determination of a good faith settlement. (Tech–Bilt, Inc. v. Woodward–Clyde & Associates, supra, 38 Cal.3d at p. 499, 213 Cal.Rptr. 256, 698 P.2d 159.)
HAERLE, Associate Justice.
SMITH, Acting P.J., and PHELAN, J., concur.