Code of Civil Procedure, Section 877.6 “was enacted by the Legislature in 1980 to establish a statutory procedure for determining if a settlement by an alleged joint tortfeasor has been entered into in good faith and to provide a bar to claims of other alleged joint tortfeasors for equitable contribution or partial or comparative indemnity when good faith is shown.” (IRM Corp. v. Carlson (1986) 179 Cal.App.3d 94, 104.)

The “good faith” concept in Section 877.6 is a flexible principle imposing on reviewing courts the obligation to guard against the numerous ways in which the interests of non-settling defendants may be unfairly prejudiced. (Rankin v. Curtis (1986) 183 Cal.App.3d 939, 945.) “[O]ne of the main goals of section 877.6 is ‘allocating costs equitably among multiple tortfeasors.’” (TSI Seismic Tenant Space, Inc. v. Super. Ct. (2007) 149 Cal.App.4th 159, 166; Mattco Forge, Inc. v. Arthur Young & Co. (1995) 38 Cal.App.4th 1337, 1349.”

Legal Standard

On noticed motion, “[a]ny party to an action in which it is alleged that two or more parties are joint tortfeasors or co-obligors on a contract debt 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 or co-obligors.” (Code of Civ. Proc., § 877.6(a)(1).) “A determination by the court that the settlement was made in good faith shall bar any other joint tortfeasor or co-obligor from any further claims against the settling tortfeasor or co-obligor for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault.” (Code of Civ. Proc., § 877.6(c).)

The California Supreme Court identified the nonexclusive factors courts are to consider in determining if a settlement is in good faith. (Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488.) These factors include “a rough approximation of plaintiffs’ total recovery and the settlor’s proportionate liability, the amount paid in settlement, the allocation of settlement proceeds among plaintiffs, and a recognition that a settlor should pay less in settlement than he would if he were found liable after a trial. Other relevant considerations include the financial conditions and insurance policy limits of settling defendants, as well as the existence of collusion, fraud, or tortious conduct aimed to injure the interests of nonsettling defendants.” (Id. at p. 499.)

Another key factor is the settling tortfeasor's potential liability for indemnity to joint tortfeasors. (Far West Financial Corp. v. D & S Co. (1988) 46 Cal.3d 796, 816, fn. 16.) “[A] court not only looks at the alleged tortfeasor's potential liability to the plaintiff, but it must also consider the culpability of the tortfeasor vis-à-vis other parties alleged to be responsible for the same injury. Potential liability for indemnity to a nonsettling defendant is an important consideration for the trial court in determining whether to approve a settlement by an alleged tortfeasor.” (TSI Seismic Tenant Space, Inc. v. Superior Court (2007) 149 Cal.App.4th 159, 166.)

“[W]hether a settlement is in good faith is a matter left to the discretion of the trial court.” (Mattco Forge, Inc. v. Arthur Young & Co. (1995) 38 Cal.App.4th 1337, 1349.) The trial court's discretion, however, in ruling on a motion under section 877.6 is not unlimited and should be exercised in view of the equitable goals of the statute, in conformity with the spirit of the law and in a manner that serves the interests of justice. (New Albertsons, Inc. v. Super. Ct. (2008) 168 Cal.App.4th 1403, 1420.)

The evaluation of whether a settlement was made in good faith is required to “be made on the basis of information available at the time of settlement.” (Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499.) If the party contesting the settlement can show, with admissible evidence, that the settlement is “so far ‘out of the ballpark’ in relation to [the above-referenced factors] as to be inconsistent with the equitable objectives of the statute,” then the court should find the settlement to be lacking in good faith. (Id. at pp. 499-500.)

Burden of Proof

“Good faith may be found only if there has been no collusion between the settling parties and where the settlement amount appears to be within the ‘reasonable range’ of the settling party's proportionate share of comparative liability for a plaintiff's injuries.” (North County Contractor's Assn. v. Touchstone Ins. Services (1994) 27 Cal.App.4th 1085, 1089-1090.)

“Of the hundreds of motions for good faith determination presented for trial court approval each year, the overwhelming majority are unopposed and granted summarily by the trial court. At the time of filing in many cases, the moving party does not know if a contest will develop. If each motion required a full recital by declaration or affidavit setting forth a complete factual response to all of the Tech-Bilt factors, literally thousands of attorney hours would be consumed and inch-thick motions would have to be read and considered by trial courts in an exercise which would waste valuable judicial and legal time and clients’ resources.... That is to say, when no one objects, the barebones motion which sets forth the ground of good faith, accompanied by a declaration which sets forth a brief background of the case is sufficient.” (City of Grand View Terrace v. Super. Ct. (1987) 192 Cal.App.3d 1251, 1260-1261.)

“If the good faith settlement is contested, section 877.6, subdivision (d), sets forth a workable ground rule for the hearing by placing the burden of proving the lack of good faith on the contesting party. Once there is a showing made by the settlor of the settlement, the burden of proof on the issue of good faith shifts to the nonsettlor who asserts that the settlement was not made in good faith. If contested, declarations by the nonsettlor should be filed which in many cases could require the moving party to file responsive counterdeclarations to negate the lack of good faith asserted by the nonsettling contesting party.” (City of Grand View Terrace v. Superior Court (1987) 192 Cal. App. 3d 1251, 1260-1261; Abbott Ford, Inc. v. Superior Court (1987) 43 Cal.3d 858, 872.)