Preview
Electronically Filed
9/9/2020 4:17 PM
Superior Court of California
1 Summit S. Dhillon (State Bar No. 258681)
sdhillon@wshblaw.com County of Stanislaus
2 WOOD, SMITH, HENNING & BERMAN LLP Clerk of the Court
7108 North Fresno Street, Suite 250 By: Sabrina Bouldt, Deputy
3 Fresno, California 93720-2952
Phone: 559-437-2860 ♦ Fax: 559-705-1934
4
5 Attorneys for Cross-Defendant, MODESTO EXECUTIVE ELECTRIC, INC.
6
7
8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 IN AND FOR COUNTY OF STANISLAUS
10
11 MODESTO CITY SCHOOLS, Case No. 9000745
WOOD, SMITH, HENNING & BERMAN LLP
TELEPHONE 559-437-2860 ♦ FAX 559-705-1934
7108 NORTH FRESNO STREET, SUITE 250
12 Plaintiff, OPPOSITION TO DEFENDANT/CROSS-
FRESNO, CALIFORNIA 93720-2952
COMPLAINANT CORE BRANDS LLC’S
13 v. MOTION TO DENY MODESTO
Attorneys at Law
EXECUTIVE ELECTRIC, INC.’S
14 PANAMAX LLC, CORE BRANDS LLC, and APPLICATION FOR GOOD FAITH
DOES 1 to 20, inclusive, SETTLEMENT
15
Defendants. Date: September 22, 20202
16 Time: 8:30 a.m.
Dept.: 22
17
[Assigned for All Purposes to Judge Stacey Speiller, Dept. 22]
18
Action Filed: 2/13/2018
19 AND RELATED CROSS-ACTIONS.
Trial Date: None Set
20
21 Cross-Defendant, Modesto Executive Electric, Inc., submits the following Memorandum
22 of Points and Authorities in Opposition to Defendant/Cross-Complainant Core Brands LLC’s
23 Motion to Deny Cross-Defendant Modesto Executive Electric, Inc.’s Application for Good Faith
24 Settlement.
25 ///
26 ///
27 ///
28 ///
15242687.1:05472-0498
OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY
MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT
1 TABLE OF CONTENTS
Page
2
3 I. INTRODUCTION ..................................................................................................................4
4 II. PROCEDURAL AND FACTUAL BACKGROUND ...........................................................4
5 III. LEGAL STANDARD ............................................................................................................6
6 IV. ARGUMENT .........................................................................................................................7
7 A. Modesto Executive’s Application Establishes that the Settlement Amount is
“Within the Ball Park” Per the Tech-Bilt Factors.......................................................7
8
1. Evidence to Date Suggests Modesto Executive Was Not Negligent
9 in Installing the Subject Transformer ............................................................8
10 2. Core Brands’ Motion Does Not Meet Its Burden Challenging the
Good Faith of the Settlement Between Plaintiff and Modesto
11 Executive ........................................................................................................9
WOOD, SMITH, HENNING & BERMAN LLP
TELEPHONE 559-437-2860 ♦ FAX 559-705-1934
7108 NORTH FRESNO STREET, SUITE 250
12 3. Settlement Between Plaintiff and Modesto Executive is Therefore
FRESNO, CALIFORNIA 93720-2952
Within The Ball Park Under Tech-Bilt .........................................................10
13
Attorneys at Law
B. Arguments Made and Cases Cited in Core Brands’ Motion are Inapt and do
14 Not Apply to the Case at bar ....................................................................................11
15 1. Core Brands’ Cites no Controlling or Persuasive Case Law for its
Position .........................................................................................................11
16
2. Core Brands’ Argument that Plaintiff’s Claims Against Modesto
17 Executive Are Time-Barred and Therefore Prima Facie Evidence of
Bad Faith is Misplaced .................................................................................12
18
V. CONCLUSION ....................................................................................................................14
19
20
21
22
23
24
25
26
27
28
15242687.1:05472-0498 -2-
OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY
MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT
1 TABLE OF AUTHORITIES
2 Page
3 CASES
4 City of Grand Terrace v. Superior Court
(1987) 192 Cal.App.3d 1251 ................................................................................................. 6
5
Dole Food Co., Inc. v. Superior Court
6 (2015) 242 Cal.App.4th 894 .................................................................................................. 6
7 Hinckley v. La Mesa R.V. Center, Inc.
(1984) 158 Cal.App.3d 630 ................................................................................................. 11
8
Long Beach Memorial Medical Center v. Superior Court
9 (2009) 172 Cal.App.4th 865 .......................................................................................... 11, 12
10 Mattco Forge, Inc. v. Arthur Young & Co.
(1995) 38 Cal.App.4th 1337 .......................................................................................... 11, 13
11
WOOD, SMITH, HENNING & BERMAN LLP
Tech-Bilt, Inc. v. Woodward-Clyde & Associates
TELEPHONE 559-437-2860 ♦ FAX 559-705-1934
7108 NORTH FRESNO STREET, SUITE 250
12 (1985) 38 Cal.3d 488 ............................................................................................................. 7
FRESNO, CALIFORNIA 93720-2952
13 Torres v. Union Pacific R.R. Co. (1984) 157 Cal.App.3d 499.......................................................... 7
Attorneys at Law
14 Widson v. International Harvester Co.
(1984) 153 Cal.App.3d 45 ................................................................................................... 13
15
16 STATUTES
17 Code of Civil Procedure section 877.6(d) ......................................................................................... 6
18
19
20
21
22
23
24
25
26
27
28
15242687.1:05472-0498 -3-
OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY
MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT
1 I. INTRODUCTION
2 This action arises out of a fire that occurred at Peter Johansen High School, part of the
3 Modesto City School District (hereinafter “Plaintiff”), on or about June 18, 2015 (“Subject Fire”),
4 in Modesto, California. The Subject Fire occurred when surge protectors manufactured by
5 Defendant/Cross-Complainant, Core Brands, LLC (hereinafter “Core Brands”), began popping
6 and sparking eventually causing the Subject Fire to begin in an upstairs computer lab of Building
7 B at Peter Johansen High School. The Subject Fire and resulting smoke damage to Building B
8 caused Plaintiff and Plaintiff’s insurance carrier to incur significant damages in the effort to
9 restore Building B and also provide temporary classrooms for students while restoration was being
10 completed, with estimates ranging from $14 million to $18 million.
11 Fundamentally, Plaintiff alleges that Core Brands is liable to them for the damages
WOOD, SMITH, HENNING & BERMAN LLP
TELEPHONE 559-437-2860 ♦ FAX 559-705-1934
7108 NORTH FRESNO STREET, SUITE 250
12 incurred in restoring Building B because the surge protectors failed to perform their basic function
FRESNO, CALIFORNIA 93720-2952
13 and caused the Subject Fire directly. Core Brands argues that Cross-Defendant Modesto
Attorneys at Law
14 Executive Electric, Inc. (hereinafter “Modesto Executive”) negligently installed an electrical
15 transformer in Building B in 2010 (hereinafter “Subject Transformer”), which then caused voltage
16 surges in Building B which then, in turn, caused the Core Brands' surge protectors to pop, spark
17 and cause the Subject Fire. Core Brands further argues that Plaintiff is comparatively liable for
18 the damages caused by the Subject Fire for failure to maintain the Subject Transformer in the time
19 between its installation in 2010 and the Subject Fire in 2015. Modesto Executive argues that the
20 Subject Transformer was properly installed and that any alleged “loose connections” which may
21 have caused voltage surges in Building B were unrelated to the installation of the Subject
22 Transformer and was the result of intervening events and omissions.
23 II. PROCEDURAL AND FACTUAL BACKGROUND
24 On or about February 13, 2018, Plaintiff filed suit against Defendants Panamax, LLC, Core
25 Brands LLC, and DOES 1-20, inclusive, alleging negligence, strict liability, breach of express
26 warranty, breach of implied warranty and negligent misrepresentation. (Declaration of Summit S.
27 Dhillon (“Dhillon Decl.”), ¶ 2.) Thereafter, on or about October 10, 2019, Core Brands filed a
28 cross-complaint against Modesto Executive for implied equitable indemnity, contribution,
15242687.1:05472-0498 -4-
OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY
MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT
1 comparative fault, and declaratory relief. (Dhillon Decl., ¶ 3.) There is currently a trial setting
2 conference on calendar for December 14, 2020. (Dhillon Decl., ¶ 4.)
3 This case arose from allegations that the Subject Fire occurred when Core Brands’ surge
4 protectors being used in the computer lab of Building B at Peter Johansen High School were seen
5 and heard popping, sparking and burning. (Dhillon Decl., ¶ 5.) Plaintiff then filed suit against
6 Core Brands for the ensuing fire damage and costs incurred in restoring Building B. (Dhillon
7 Decl., ¶ 6.) Core Brands, upon discovering that Modesto Executive had replaced two transformers
8 at Peter Johansen High School in Building B and the school gymnasium in 2010, but despite there
9 being no electrical problems in Building B between 2010 and the Subject Fire, filed a cross-
10 complaint against Modesto Executive. (Dhillon Decl., ¶ 7.)
11 Core Brands' cross-complaint is based on an alleged “loose connection” which allegedly
WOOD, SMITH, HENNING & BERMAN LLP
TELEPHONE 559-437-2860 ♦ FAX 559-705-1934
7108 NORTH FRESNO STREET, SUITE 250
12 then caused the Subject Transformer in Building B to become “ungrounded,” resulting in a
FRESNO, CALIFORNIA 93720-2952
13 “floating neutral,” thereby causing the very surges in power in Building B that its surge protectors
Attorneys at Law
14 were designed and marketed to protect against. Put simply, Core Brands alleges that when
15 Modesto Executive installed the transformer in 2010, it did so negligently which then manifested
16 itself 5+ years later on the morning of the Subject Fire, but at no other time in the intervening 5+
17 years, and therefore Modesto Executive is liable to Plaintiff and Core Brands for damages caused
18 by the Subject Fire. (Dhillon Decl., ¶ 8.) Modesto Executive maintains that any alleged negligent
19 installation of the transformer in Building B would have resulted in electrical anomalies long
20 before the Subject Fire, something the evidentiary record of devoid of. (Dhillon Decl., ¶ 9;
21 Declaration of Michael O’Connor (“O’Connor Decl.”), ¶ 4.)
22 Core Brands also contends that Plaintiff’s failure to maintain the Subject Transformer was
23 a contributing cause of the Subject Fire. (Core Brands’ Memorandum of Points and Authorities In
24 Support of Motion to Deny Application for Good Faith Settlement (“Core Brands’ Motion”), p.
25 6:6-25; Mijanovic Decl. at ⁋ 8.) Plaintiff in turn argues, inter alia, that any alleged lack of
26 maintenance of the Subject Transformer was the result of Modesto Executive’s failure to advise
27 them to perform such maintenance on an annual basis, as is recommended according to Matt Stall,
28 the Modesto Executive employee who performed the installation of the Subject Transformer.
15242687.1:05472-0498 -5-
OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY
MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT
1 (Exhibit "A" to the Dhillon Decl., ¶10, p. 29:17-21.) A judgment reduced for any determined
2 comparative fault on Plaintiff’s behalf opens Modesto Executive up to an indemnity and
3 contribution claim from Plaintiff down the line, a potentially costly and risky proposition for
4 Modesto Executive, which resulted in the settlement as outlined in Modesto Executive’s Notice of
5 Settlement and Application for Determination of Good Faith Settlement.
6 Core Brands now argues that the proposed settlement between Plaintiff and Modesto
7 Executive, for the sum of $700,000.00, is per se collusion and therefore bad faith because claims
8 by Plaintiff against Modesto Executive would be time barred. A copy of the Settlement
9 Agreement is attached to the Declaration of Summit S. Dhillon filed concurrently herewith.
10 (Exhibit "B" to the Dhillon Decl., ¶ 11.) While this may be true of certain claims, claims for
11 indemnity and/or contribution based on an alleged failure to maintain the Subject Transformer are
WOOD, SMITH, HENNING & BERMAN LLP
TELEPHONE 559-437-2860 ♦ FAX 559-705-1934
7108 NORTH FRESNO STREET, SUITE 250
12 as-of-yet unripe. Plaintiff and Modesto Executive have a significant interest in minimizing the
FRESNO, CALIFORNIA 93720-2952
13 risks and costs associated with any potential further litigation and have therefore entered into a
Attorneys at Law
14 settlement agreement.
15 III. LEGAL STANDARD
16 In any proceeding before the Court on a request for good faith determination, the burden to
17 show the settlement is not in good faith is on the contesting party, in this case Core Brands.
18 Modesto Executive, through its Application for Determination of Good Faith Settlement
19 (hereinafter “Application”), has established that its settlement with Plaintiff in the reasonable
20 settlement range. As such, Core Brands must now meet its burden in order to show that the
21 settlement lacks good faith.
22 Where, as here, an opposition is filed, the moving party is required to make a more
23 substantial showing as to the nature of the settlement. “Once there is a showing made by the
24 settlor of the settlement, the burden of proof on the issue of good faith shifts to the nonsettlor who
25 asserts that the settlement was not made in good faith.” (City of Grand Terrace v. Superior Court
26 (1987) 192 Cal.App.3d 1251, 1261.) As provided in Code of Civil Procedure section 877.6(d),
27 “[t]he party asserting the lack of good faith shall have the burden of proof on that issue.” (Dole
28 Food Co., Inc. v. Superior Court (2015) 242 Cal.App.4th 894, 909.) Furthermore, the party
15242687.1:05472-0498 -6-
OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY
MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT
1 asserting the lack of good faith must demonstrate that the “settlement is so far ‘out of the ballpark’
2 in relation to [the Tech-Bilt] factors” as to be inconsistent with the equitable objectives of Section
3 877.6. (Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499-501.) Thus,
4 any party challenging the Application shall bear the heavy burden of proving lack of good faith.
5 Core Brands has not presented any reasonable, credible evidence suggesting that the
6 settlement between Plaintiff and Modesto Executive is in bad faith or is unreasonable in any way.
7 Rather, Core Brands improperly asserts that all potential claims Plaintiff may have against
8 Modesto Executive would be time barred, which is untrue, and simultaneously that Modesto
9 Executive is largely responsible for the Subject Fire and therefore the settlement amount is
10 unreasonably low but also that the lack of evidence suggests the settlement figure of $700,000.00
11 is somehow a sham figure. The argument that for these reasons the settlement between Plaintiff
WOOD, SMITH, HENNING & BERMAN LLP
TELEPHONE 559-437-2860 ♦ FAX 559-705-1934
7108 NORTH FRESNO STREET, SUITE 250
12 and Modesto Executive do not meet the Tech-Bilt factors is ill-founded and supported.
FRESNO, CALIFORNIA 93720-2952
13 Further, the five-year gap in time between the installation of the Subject Transformer
Attorneys at Law
14 without a single electrical anomaly occurring in Building B suggests that the installation of the
15 Subject Transformer by Matt Stall in 2010 was proper and that any alleged “loose connection”
16 likely developed in the interim, prior to the date of the Subject Fire. Although there are questions
17 regarding Modesto Executive’s duty to Plaintiff regarding maintenance recommendations for the
18 Subject Transformer, the settlement allocation of three percent is a sign of bad faith or collusion is
19 disingenuous at best. Tech-Bilt expressly recognizes that a settling party should pay less in
20 settlement than it would if found liable after trial. “A defendant’s settlement figure must not be
21 grossly disproportionate to what a reasonable person, at the time of the settlement, would estimate
22 the settling defendant’s liability to be.” (Torres v. Union Pacific R.R. Co. (1984) 157 Cal.App.3d
23 499, 509.)
24 IV. ARGUMENT
25 A. Modesto Executive’s Application Establishes that the Settlement Amount is
26 “Within the Ball Park” Per the Tech-Bilt Factors
27 As set out more fully in the Application, under the factors set out in Tech-Bilt, the
28 settlement between Plaintiff and Modesto Executive is within the ballpark of reason and is
15242687.1:05472-0498 -7-
OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY
MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT
1 therefore made in good faith. Core Brands’ Motion argues that Modesto Executive did not meet
2 the burden required under Code of Civil Procedure Section 877.6(a)(2), but this mistakenly
3 attempts to shift the burden to the settling parties, which is inappropriate as outlined above.
4 Further, a copy of the Settlement Agreement between Plaintiff and Modesto Executive, containing
5 all relevant terms, is attached as Exhibit “B” to the declaration of Summit Dhillon. (Exhibit "B" to
6 the Dhillon Decl., ¶ 11.)
7 1. Evidence to Date Suggests Modesto Executive Was Not Negligent in
8 Installing the Subject Transformer
9 The Subject Fire occurred in June 2015, and the installation of the Subject
10 Transformer was completed in 2010 by Matt Stall. Structural, civil, electrical and mechanical
11 engineering expert Michael O’Connor, PE, SE, ME, EE, with over 42 years of relevant
WOOD, SMITH, HENNING & BERMAN LLP
TELEPHONE 559-437-2860 ♦ FAX 559-705-1934
7108 NORTH FRESNO STREET, SUITE 250
12 experience, has had the opportunity to review the relevant documents, materials, testimony and
FRESNO, CALIFORNIA 93720-2952
13 other pertinent evidence and information relevant to the Subject Fire occurring at Peter Johansen
Attorneys at Law
14 High School on or about June 18, 2015. (Declaration of Michael O’Connor (“O’Connor Decl.”),
15 ⁋⁋ 2, 3.)
16 Based on Mr. O’Connor’s expert professional opinion, the Subject Transformer
17 installed by Matt Stall in Building B at Peter Johansen High School in 2010 was done properly
18 and not negligently and met the standard of care required. (O’Connor Decl., ⁋ 4.) Negligent
19 installation of the Subject Transformer, including a failure to secure all relevant connections of the
20 Subject Transformer would have resulted in electrical anomalies including voltage surges
21 throughout Building B, long before 2015. (Id.)
22 The “floating neutral” that allegedly existed in Building B on the day of the Subject
23 Fire in June 2015 cannot, within a reasonable degree of scientific certainty, be attributed to the
24 installation of the Subject Transformer more than five years prior by Matt Stall. (O’Connor Decl.,
25 ⁋ 5.) Mr. O’Connor reviewed the declaration of Paul Way, P.E., wherein he declared that the
26 surge protectors were defective and failed when a sustained overvoltage occurred. Mr. O’Connor
27 agrees with his conclusions regarding the failure of the surge protector power strips and the
28 assertion that surge protector power strips have metal oxide varistors (MOVs) in them that shunt
15242687.1:05472-0498 -8-
OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY
MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT
1 voltage spikes to ground. If there is a sustained overvoltage, the MOVs become extremely hot and
2 fail. Such heat can and does start fires. Accordingly, the MOVs are protected by thermal fuses
3 that cut power to the MOVs in such circumstances. In this case, it appeared that the thermal fuses
4 failed to cut power to the MOVs and the fire resulted. (O’Connor Decl., ⁋ 6.) As such, the cause
5 of the Subject Fire at Building B was, within a reasonable degree of scientific certainty, the failure
6 of the Core Brands surge protectors to perform their core function resulting in popping and
7 sparking which then ignited the contents of Building B. (O’Connor Decl., ⁋ 7.)
8 2. Core Brands’ Motion Does Not Meet Its Burden Challenging the Good
9 Faith of the Settlement Between Plaintiff and Modesto Executive
10 In support of its Motion, Core Brands submits the expert declaration of William M.
11 Grady, Ph.D., which opines that the cause of the Subject Fire was a “floating neutral” that could
WOOD, SMITH, HENNING & BERMAN LLP
TELEPHONE 559-437-2860 ♦ FAX 559-705-1934
7108 NORTH FRESNO STREET, SUITE 250
12 have only occurred due to negligent installation and that Core Brands’ surge protectors were
FRESNO, CALIFORNIA 93720-2952
13 “subjected…to numerous extremely high, inconsistent, and sustained overvoltage conditions that
Attorneys at Law
14 ultimately led to the Subject Fire.” (Declaration of William Mack Grady in Support of Core
15 Brands’ Motion, ⁋ 8.)
16 Dr. Grady’s conclusory statement regarding sustained overvoltage conditions is
17 without foundation and is therefore insufficient basis for Core Brands’ Motion to Deny Good
18 Faith. (Objections to Evidence in Support of Opposition to Core Brands’ Motion, No. 1.)
19 Specifically, there is no evidentiary basis to support this opinion, given the complete lack of
20 electrical issues or anomalies observed in Building B in the five years that elapsed between
21 installation of the Subject Transformer and the Subject Fire. (O’Connor Decl., ⁋ 4.)
22 On the day of the Subject Fire, custodian Danny Haltom noted that the carpet
23 shampooer he was using in Building B was making surging voltage noises and its circuit breaker
24 was tripping. (Core Brands’ Memorandum of Points and Authorities in Support of Motion for
25 Summary Judgment, p. 4:11-16, attached to the Dhillon Decl., ¶ 12.) That this was the first
26 electrical anomaly observed in Building B between 2010 and 2015, and occurred on the same day
27 as the failure of the Core Brands surge protectors is a significant indicator that the Subject
28 Transformer was properly installed and functioned properly for a full five years before the Subject
15242687.1:05472-0498 -9-
OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY
MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT
1 Fire occurred, and that no such “sustained overvoltage” events led to the failure of the Core
2 Brands surge protectors.
3 3. Settlement Between Plaintiff and Modesto Executive is Therefore
4 Within The Ball Park Under Tech-Bilt
5 Plaintiff’s alleged damages range from $14 million to $18 million. Core Brands
6 argues that the $700,000.00 settlement figure is so unreasonable as to not be within the parking
7 lot, let alone the ballpark of reason. As set forth above, this argument is based entirely on the
8 conclusory position that an alleged “floating neutral” could have only been the result of negligent
9 installation of the Subject Transformer five years prior to the Subject Fire, rather than some
10 intervening acts, events or omissions.
11 While Core Brands’ Motion argues that the settlement amount is unreasonably low
WOOD, SMITH, HENNING & BERMAN LLP
TELEPHONE 559-437-2860 ♦ FAX 559-705-1934
7108 NORTH FRESNO STREET, SUITE 250
12 and that the amount reflect a “costs of litigation” figure which is patently absurd, there is a
FRESNO, CALIFORNIA 93720-2952
13 reasonable risk that a hypothetical jury could assign anywhere between 0-10% to Modesto
Attorneys at Law
14 Executive based on the evidence to date and the expert opinions obtained. As per the factors set
15 forth by Tech-Bilt and more fully set out in Modesto Executive’s Application, a reasonable
16 settlement figure should reflect the fact that a settling defendant would pay less to settle a claim
17 than may otherwise be awarded at trial. A finding of 10% of fault on behalf of Modesto Executive
18 based on a damages evaluation of $14 million would result in a judgment of $1.4 million, and the
19 settlement figure reflect the risks both Plaintiff and Modesto Executive would face in the event of
20 trial, judgment and subsequent actions for indemnity and contribution that would then ripen, given
21 the potential for comparative fault on Plaintiff’s behalf for an alleged failure to maintain.
22 Given the foregoing, the evidence suggesting that electrical anomalies were limited
23 to the day of the Subject Fire, the expert opinion of Mr. O’Connor, the numerous factors set forth
24 in Tech-Bilt which are met in this case, and the public policy favoring settlement, Modesto
25 Executive believes the record supports a finding of good faith by the Court with respect to the
26 settlement between Plaintiff and Modesto Executive.
27 ///
28 ///
15242687.1:05472-0498 -10-
OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY
MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT
1 B. Arguments Made and Cases Cited in Core Brands’ Motion are Inapt and do
2 Not Apply to the Case at bar
3 1. Core Brands’ Cites no Controlling or Persuasive Case Law for its
4 Position
5 First, confirming that Core Brands’ fundamental argument is not based on
6 evidence, their Motion expressly argues that res ipsa loquitur forms the basis of its liability theory
7 against Modesto Executive and cites Hinckley v. La Mesa R.V. Center, Inc. (1984) 158 Cal.App.3d
8 630. That case, involving multiple fires in a motorhome and where the defendant denied it
9 negligently performed wiring repairs to the motorhome, requires that the Court analyze several
10 factors integral to the determination of whether res ipsa is applicable. One of those factors is the
11 control element, requiring that the defendant have exclusive control of the instrumentality or that
WOOD, SMITH, HENNING & BERMAN LLP
TELEPHONE 559-437-2860 ♦ FAX 559-705-1934
7108 NORTH FRESNO STREET, SUITE 250
12 the condition of the instrumentality remained unchanged after leaving defendant’s possession. (Id.
FRESNO, CALIFORNIA 93720-2952
13 at 640.) While the evidentiary record is that none of Plaintiff’s employees disturbed the Subject
Attorneys at Law
14 Transformer, there is no evidence that in the five years between installation and the Subject Fire
15 that the condition of the Subject Transformer did not change or was not altered in some way,
16 whether by its own operation, seismic events or other countless intervening events. As such, Core
17 Brands’ attempt to classify this as a res ipsa loquitur case is misguided and only serves as
18 confirmation that actual, tangible evidence of liability on Modesto Executive’s part is nonexistent.
19 Second, Core Brands cites cases such as Mattco Forge, Inc. v. Arthur Young & Co.
20 (1995) 38 Cal.App.4th 1337 and Long Beach Memorial Medical Center v. Superior Court (2009)
21 172 Cal.App.4th 865, for the proposition that the settlement between Plaintiff and Modesto
22 Executive is not in the ballpark of reason. In Mattco Forge, the settling defendant settled for less
23 than one percent of the potential damage figure and presented no evidence supporting their
24 position that such a proportion was reasonable. (Mattco, supra, 38 Ca1.App.4th 1337, 1350.) The
25 Court cited the lack of evidence and affidavits in support of the settling defendant’s position. In
26 the case at bar, Modesto Executive has submitted concurrently herewith the declaration of an
27 expert with 42 years’ experience, opining that the “floating neutral” presenting five years post-
28 installation of the Subject Transformer was not the result of negligent installation and that
15242687.1:05472-0498 -11-
OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY
MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT
1 negligent installation would have resulted in electrical anomalies long before 2015. As such, the
2 settlement figure is both supported by evidence and reasonable under the circumstances.
3 In Long Beach Memorial, cited by Core Brands as basis for arguing against good
4 faith and regarding the availability of coverage for Modesto Executive as rationale for the
5 settlement figure being unreasonably low, the facts are completely inapposite. The Court noted
6 that the defendant/cross-defendant that settled after the remaining parties settled, had previously
7 floated a proposition which saw it paying a significantly larger portion of the total damage figure,
8 indicating the final proposed settlement was unreasonably low. (Id. at 875.) Further, the settling
9 defendant/cross-defendant in that case waited for the remaining parties to settle the claim for a
10 global figure all parties agreed was reasonable, only to then turn around and settle for an amount
11 which the record showed was unreasonably low. (Id. at 876.) Here, no such issues exist. The
WOOD, SMITH, HENNING & BERMAN LLP
TELEPHONE 559-437-2860 ♦ FAX 559-705-1934
7108 NORTH FRESNO STREET, SUITE 250
12 parties engaged in mediation simultaneously, and Core Brands made it known from the beginning
FRESNO, CALIFORNIA 93720-2952
13 it would not entertain any global settlement which did not see Modesto Executive accept the lion’s
Attorneys at Law
14 share of the liability, notwithstanding the absence of evidence of negligence regarding installation
15 of the Subject Transformer. Only after it became clear to Plaintiff, Modesto Executive and
16 mediator Ken Gack that Core Brands’ view of the case and position did not align with the
17 evidence or the view of the remaining participants did Plaintiff and Modesto Executive work to
18 resolve potential claims Plaintiff may have against Modesto Executive independent of Core
19 Brands. (Dhillon Decl., ⁋ 13.)
20 2. Core Brands’ Argument that Plaintiff’s Claims Against Modesto
21 Executive Are Time-Barred and Therefore Prima Facie Evidence of
22 Bad Faith is Misplaced
23 As noted above, Plaintiff may have claims for indemnity and contribution against
24 Modesto Executive following trial in this matter. In the event a jury determines that Plaintiff was
25 comparatively at fault for a failure to maintain the Subject Transformer, which is established by
26 the evidentiary record and undisputed, Plaintiff can assert causes of action against Modesto
27 Executive stemming from that finding, the corresponding reduction of recovery at trial and the
28 allegation that Modesto Executive did not meet its standard of care with respect to advising
15242687.1:05472-0498 -12-
OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY
MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT
1 Plaintiff of the need to maintain the Subject Transformer. In the event a jury finds Plaintiff 25%
2 responsible for the damages which are between $14 million and $18 million, which is not
3 unreasonable as set forth in Core Brands’ Motion for Summary Judgment, Plaintiff would have a
4 contribution and indemnity claim against Modesto Executive in the range of $4 million. Modesto
5 Executive’s Application sets forth how the Tech-Bilt factors include consideration of the
6 uncertainty associated with trial and how that lends itself to viewing settlements in a favorable
7 light. In this case, there are two potential trials at stake with costs, risks and uncertainty associated
8 with each, and therefore settlement in the amount and by the terms set forth in the Settlement
9 Agreement is reasonable and in good faith.
10 Lastly, running counter to Core Brands’ Motion’s assertions, the Court in Mattco
11 Forge cited to Widson v. International Harvester Co. (1984) 153 Cal.App.3d 45, in making its
WOOD, SMITH, HENNING & BERMAN LLP
TELEPHONE 559-437-2860 ♦ FAX 559-705-1934
7108 NORTH FRESNO STREET, SUITE 250
12 decision and the analysis therein is relevant here. In citing to Widson to support its ultimate
FRESNO, CALIFORNIA 93720-2952
13 ruling, the Court noted and stated: “Widson and Louetto entered into a good faith settlement, even
Attorneys at Law
14 though Widson had no viable claim against Louetto because the applicable three-year period for
15 service of summons had expired…Further, the fact Widson had no viable cause of action against
16 Louetto did not preclude a good faith settlement between Widson and Louetto. The court
17 reasoned: ‘It would be unreasonable to hold that because Louetto was not a defendant it lost its
18 ability to resolve its exposure to the plaintiff.’” (Mattco, supra, 38 Ca1.App.4th 1337, 1347-
19 1348.)
20 This analysis is directly on point, notwithstanding that Plaintiff may have as-of-yet
21 unripe claims against Modesto Executive stemming from a potential duty to advise Plaintiff
22 regarding maintenance of the Subject Transformer. The Court in Mattco Forge, cited in the Core
23 Brands’ Motion, considered that a settling cross-defendant may settle directly with a plaintiff
24 despite not being a direct defendant in the action and despite potential claims being time-barred.
25 The language in Mattco Forge states that the policy favors compromises over litigation, and
26 expressly considers that the Court should not stand in the way of a cross-defendant attempting to
27 resolve its exposure to the plaintiff. Therefore, Core Brands’ argument regarding the time-barred
28 nature of Plaintiff’s potential claims against Modesto Executive fail on several grounds and the
15242687.1:05472-0498 -13-
OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY
MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT
1 Court should find that Core Brands has not met its burden challenging the settlement between
2 Plaintiff and Modesto Executive and that the settlement is in good faith.
3 V. CONCLUSION
4 Based upon the foregoing arguments in Opposition to Core Brands’ Motion, Core Brands
5 has not met its burden of proof, as set forth in California Code of Civil Procedure Section 877.6,
6 subsection (d), and demonstrated the settlement agreement described herein and reflected in the
7 Settlement Agreement lacks good faith. Therefore, Modesto Executive, on
Preview
Electronically Filed 9/9/2020 4:17 PM Superior Court of California 1 Summit S. Dhillon (State Bar No. 258681) sdhillon@wshblaw.com County of Stanislaus 2 WOOD, SMITH, HENNING & BERMAN LLP Clerk of the Court 7108 North Fresno Street, Suite 250 By: Sabrina Bouldt, Deputy 3 Fresno, California 93720-2952 Phone: 559-437-2860 ♦ Fax: 559-705-1934 4 5 Attorneys for Cross-Defendant, MODESTO EXECUTIVE ELECTRIC, INC. 6 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 IN AND FOR COUNTY OF STANISLAUS 10 11 MODESTO CITY SCHOOLS, Case No. 9000745 WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE 559-437-2860 ♦ FAX 559-705-1934 7108 NORTH FRESNO STREET, SUITE 250 12 Plaintiff, OPPOSITION TO DEFENDANT/CROSS- FRESNO, CALIFORNIA 93720-2952 COMPLAINANT CORE BRANDS LLC’S 13 v. MOTION TO DENY MODESTO Attorneys at Law EXECUTIVE ELECTRIC, INC.’S 14 PANAMAX LLC, CORE BRANDS LLC, and APPLICATION FOR GOOD FAITH DOES 1 to 20, inclusive, SETTLEMENT 15 Defendants. Date: September 22, 20202 16 Time: 8:30 a.m. Dept.: 22 17 [Assigned for All Purposes to Judge Stacey Speiller, Dept. 22] 18 Action Filed: 2/13/2018 19 AND RELATED CROSS-ACTIONS. Trial Date: None Set 20 21 Cross-Defendant, Modesto Executive Electric, Inc., submits the following Memorandum 22 of Points and Authorities in Opposition to Defendant/Cross-Complainant Core Brands LLC’s 23 Motion to Deny Cross-Defendant Modesto Executive Electric, Inc.’s Application for Good Faith 24 Settlement. 25 /// 26 /// 27 /// 28 /// 15242687.1:05472-0498 OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT 1 TABLE OF CONTENTS Page 2 3 I. INTRODUCTION ..................................................................................................................4 4 II. PROCEDURAL AND FACTUAL BACKGROUND ...........................................................4 5 III. LEGAL STANDARD ............................................................................................................6 6 IV. ARGUMENT .........................................................................................................................7 7 A. Modesto Executive’s Application Establishes that the Settlement Amount is “Within the Ball Park” Per the Tech-Bilt Factors.......................................................7 8 1. Evidence to Date Suggests Modesto Executive Was Not Negligent 9 in Installing the Subject Transformer ............................................................8 10 2. Core Brands’ Motion Does Not Meet Its Burden Challenging the Good Faith of the Settlement Between Plaintiff and Modesto 11 Executive ........................................................................................................9 WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE 559-437-2860 ♦ FAX 559-705-1934 7108 NORTH FRESNO STREET, SUITE 250 12 3. Settlement Between Plaintiff and Modesto Executive is Therefore FRESNO, CALIFORNIA 93720-2952 Within The Ball Park Under Tech-Bilt .........................................................10 13 Attorneys at Law B. Arguments Made and Cases Cited in Core Brands’ Motion are Inapt and do 14 Not Apply to the Case at bar ....................................................................................11 15 1. Core Brands’ Cites no Controlling or Persuasive Case Law for its Position .........................................................................................................11 16 2. Core Brands’ Argument that Plaintiff’s Claims Against Modesto 17 Executive Are Time-Barred and Therefore Prima Facie Evidence of Bad Faith is Misplaced .................................................................................12 18 V. CONCLUSION ....................................................................................................................14 19 20 21 22 23 24 25 26 27 28 15242687.1:05472-0498 -2- OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT 1 TABLE OF AUTHORITIES 2 Page 3 CASES 4 City of Grand Terrace v. Superior Court (1987) 192 Cal.App.3d 1251 ................................................................................................. 6 5 Dole Food Co., Inc. v. Superior Court 6 (2015) 242 Cal.App.4th 894 .................................................................................................. 6 7 Hinckley v. La Mesa R.V. Center, Inc. (1984) 158 Cal.App.3d 630 ................................................................................................. 11 8 Long Beach Memorial Medical Center v. Superior Court 9 (2009) 172 Cal.App.4th 865 .......................................................................................... 11, 12 10 Mattco Forge, Inc. v. Arthur Young & Co. (1995) 38 Cal.App.4th 1337 .......................................................................................... 11, 13 11 WOOD, SMITH, HENNING & BERMAN LLP Tech-Bilt, Inc. v. Woodward-Clyde & Associates TELEPHONE 559-437-2860 ♦ FAX 559-705-1934 7108 NORTH FRESNO STREET, SUITE 250 12 (1985) 38 Cal.3d 488 ............................................................................................................. 7 FRESNO, CALIFORNIA 93720-2952 13 Torres v. Union Pacific R.R. Co. (1984) 157 Cal.App.3d 499.......................................................... 7 Attorneys at Law 14 Widson v. International Harvester Co. (1984) 153 Cal.App.3d 45 ................................................................................................... 13 15 16 STATUTES 17 Code of Civil Procedure section 877.6(d) ......................................................................................... 6 18 19 20 21 22 23 24 25 26 27 28 15242687.1:05472-0498 -3- OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT 1 I. INTRODUCTION 2 This action arises out of a fire that occurred at Peter Johansen High School, part of the 3 Modesto City School District (hereinafter “Plaintiff”), on or about June 18, 2015 (“Subject Fire”), 4 in Modesto, California. The Subject Fire occurred when surge protectors manufactured by 5 Defendant/Cross-Complainant, Core Brands, LLC (hereinafter “Core Brands”), began popping 6 and sparking eventually causing the Subject Fire to begin in an upstairs computer lab of Building 7 B at Peter Johansen High School. The Subject Fire and resulting smoke damage to Building B 8 caused Plaintiff and Plaintiff’s insurance carrier to incur significant damages in the effort to 9 restore Building B and also provide temporary classrooms for students while restoration was being 10 completed, with estimates ranging from $14 million to $18 million. 11 Fundamentally, Plaintiff alleges that Core Brands is liable to them for the damages WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE 559-437-2860 ♦ FAX 559-705-1934 7108 NORTH FRESNO STREET, SUITE 250 12 incurred in restoring Building B because the surge protectors failed to perform their basic function FRESNO, CALIFORNIA 93720-2952 13 and caused the Subject Fire directly. Core Brands argues that Cross-Defendant Modesto Attorneys at Law 14 Executive Electric, Inc. (hereinafter “Modesto Executive”) negligently installed an electrical 15 transformer in Building B in 2010 (hereinafter “Subject Transformer”), which then caused voltage 16 surges in Building B which then, in turn, caused the Core Brands' surge protectors to pop, spark 17 and cause the Subject Fire. Core Brands further argues that Plaintiff is comparatively liable for 18 the damages caused by the Subject Fire for failure to maintain the Subject Transformer in the time 19 between its installation in 2010 and the Subject Fire in 2015. Modesto Executive argues that the 20 Subject Transformer was properly installed and that any alleged “loose connections” which may 21 have caused voltage surges in Building B were unrelated to the installation of the Subject 22 Transformer and was the result of intervening events and omissions. 23 II. PROCEDURAL AND FACTUAL BACKGROUND 24 On or about February 13, 2018, Plaintiff filed suit against Defendants Panamax, LLC, Core 25 Brands LLC, and DOES 1-20, inclusive, alleging negligence, strict liability, breach of express 26 warranty, breach of implied warranty and negligent misrepresentation. (Declaration of Summit S. 27 Dhillon (“Dhillon Decl.”), ¶ 2.) Thereafter, on or about October 10, 2019, Core Brands filed a 28 cross-complaint against Modesto Executive for implied equitable indemnity, contribution, 15242687.1:05472-0498 -4- OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT 1 comparative fault, and declaratory relief. (Dhillon Decl., ¶ 3.) There is currently a trial setting 2 conference on calendar for December 14, 2020. (Dhillon Decl., ¶ 4.) 3 This case arose from allegations that the Subject Fire occurred when Core Brands’ surge 4 protectors being used in the computer lab of Building B at Peter Johansen High School were seen 5 and heard popping, sparking and burning. (Dhillon Decl., ¶ 5.) Plaintiff then filed suit against 6 Core Brands for the ensuing fire damage and costs incurred in restoring Building B. (Dhillon 7 Decl., ¶ 6.) Core Brands, upon discovering that Modesto Executive had replaced two transformers 8 at Peter Johansen High School in Building B and the school gymnasium in 2010, but despite there 9 being no electrical problems in Building B between 2010 and the Subject Fire, filed a cross- 10 complaint against Modesto Executive. (Dhillon Decl., ¶ 7.) 11 Core Brands' cross-complaint is based on an alleged “loose connection” which allegedly WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE 559-437-2860 ♦ FAX 559-705-1934 7108 NORTH FRESNO STREET, SUITE 250 12 then caused the Subject Transformer in Building B to become “ungrounded,” resulting in a FRESNO, CALIFORNIA 93720-2952 13 “floating neutral,” thereby causing the very surges in power in Building B that its surge protectors Attorneys at Law 14 were designed and marketed to protect against. Put simply, Core Brands alleges that when 15 Modesto Executive installed the transformer in 2010, it did so negligently which then manifested 16 itself 5+ years later on the morning of the Subject Fire, but at no other time in the intervening 5+ 17 years, and therefore Modesto Executive is liable to Plaintiff and Core Brands for damages caused 18 by the Subject Fire. (Dhillon Decl., ¶ 8.) Modesto Executive maintains that any alleged negligent 19 installation of the transformer in Building B would have resulted in electrical anomalies long 20 before the Subject Fire, something the evidentiary record of devoid of. (Dhillon Decl., ¶ 9; 21 Declaration of Michael O’Connor (“O’Connor Decl.”), ¶ 4.) 22 Core Brands also contends that Plaintiff’s failure to maintain the Subject Transformer was 23 a contributing cause of the Subject Fire. (Core Brands’ Memorandum of Points and Authorities In 24 Support of Motion to Deny Application for Good Faith Settlement (“Core Brands’ Motion”), p. 25 6:6-25; Mijanovic Decl. at ⁋ 8.) Plaintiff in turn argues, inter alia, that any alleged lack of 26 maintenance of the Subject Transformer was the result of Modesto Executive’s failure to advise 27 them to perform such maintenance on an annual basis, as is recommended according to Matt Stall, 28 the Modesto Executive employee who performed the installation of the Subject Transformer. 15242687.1:05472-0498 -5- OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT 1 (Exhibit "A" to the Dhillon Decl., ¶10, p. 29:17-21.) A judgment reduced for any determined 2 comparative fault on Plaintiff’s behalf opens Modesto Executive up to an indemnity and 3 contribution claim from Plaintiff down the line, a potentially costly and risky proposition for 4 Modesto Executive, which resulted in the settlement as outlined in Modesto Executive’s Notice of 5 Settlement and Application for Determination of Good Faith Settlement. 6 Core Brands now argues that the proposed settlement between Plaintiff and Modesto 7 Executive, for the sum of $700,000.00, is per se collusion and therefore bad faith because claims 8 by Plaintiff against Modesto Executive would be time barred. A copy of the Settlement 9 Agreement is attached to the Declaration of Summit S. Dhillon filed concurrently herewith. 10 (Exhibit "B" to the Dhillon Decl., ¶ 11.) While this may be true of certain claims, claims for 11 indemnity and/or contribution based on an alleged failure to maintain the Subject Transformer are WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE 559-437-2860 ♦ FAX 559-705-1934 7108 NORTH FRESNO STREET, SUITE 250 12 as-of-yet unripe. Plaintiff and Modesto Executive have a significant interest in minimizing the FRESNO, CALIFORNIA 93720-2952 13 risks and costs associated with any potential further litigation and have therefore entered into a Attorneys at Law 14 settlement agreement. 15 III. LEGAL STANDARD 16 In any proceeding before the Court on a request for good faith determination, the burden to 17 show the settlement is not in good faith is on the contesting party, in this case Core Brands. 18 Modesto Executive, through its Application for Determination of Good Faith Settlement 19 (hereinafter “Application”), has established that its settlement with Plaintiff in the reasonable 20 settlement range. As such, Core Brands must now meet its burden in order to show that the 21 settlement lacks good faith. 22 Where, as here, an opposition is filed, the moving party is required to make a more 23 substantial showing as to the nature of the settlement. “Once there is a showing made by the 24 settlor of the settlement, the burden of proof on the issue of good faith shifts to the nonsettlor who 25 asserts that the settlement was not made in good faith.” (City of Grand Terrace v. Superior Court 26 (1987) 192 Cal.App.3d 1251, 1261.) As provided in Code of Civil Procedure section 877.6(d), 27 “[t]he party asserting the lack of good faith shall have the burden of proof on that issue.” (Dole 28 Food Co., Inc. v. Superior Court (2015) 242 Cal.App.4th 894, 909.) Furthermore, the party 15242687.1:05472-0498 -6- OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT 1 asserting the lack of good faith must demonstrate that the “settlement is so far ‘out of the ballpark’ 2 in relation to [the Tech-Bilt] factors” as to be inconsistent with the equitable objectives of Section 3 877.6. (Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499-501.) Thus, 4 any party challenging the Application shall bear the heavy burden of proving lack of good faith. 5 Core Brands has not presented any reasonable, credible evidence suggesting that the 6 settlement between Plaintiff and Modesto Executive is in bad faith or is unreasonable in any way. 7 Rather, Core Brands improperly asserts that all potential claims Plaintiff may have against 8 Modesto Executive would be time barred, which is untrue, and simultaneously that Modesto 9 Executive is largely responsible for the Subject Fire and therefore the settlement amount is 10 unreasonably low but also that the lack of evidence suggests the settlement figure of $700,000.00 11 is somehow a sham figure. The argument that for these reasons the settlement between Plaintiff WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE 559-437-2860 ♦ FAX 559-705-1934 7108 NORTH FRESNO STREET, SUITE 250 12 and Modesto Executive do not meet the Tech-Bilt factors is ill-founded and supported. FRESNO, CALIFORNIA 93720-2952 13 Further, the five-year gap in time between the installation of the Subject Transformer Attorneys at Law 14 without a single electrical anomaly occurring in Building B suggests that the installation of the 15 Subject Transformer by Matt Stall in 2010 was proper and that any alleged “loose connection” 16 likely developed in the interim, prior to the date of the Subject Fire. Although there are questions 17 regarding Modesto Executive’s duty to Plaintiff regarding maintenance recommendations for the 18 Subject Transformer, the settlement allocation of three percent is a sign of bad faith or collusion is 19 disingenuous at best. Tech-Bilt expressly recognizes that a settling party should pay less in 20 settlement than it would if found liable after trial. “A defendant’s settlement figure must not be 21 grossly disproportionate to what a reasonable person, at the time of the settlement, would estimate 22 the settling defendant’s liability to be.” (Torres v. Union Pacific R.R. Co. (1984) 157 Cal.App.3d 23 499, 509.) 24 IV. ARGUMENT 25 A. Modesto Executive’s Application Establishes that the Settlement Amount is 26 “Within the Ball Park” Per the Tech-Bilt Factors 27 As set out more fully in the Application, under the factors set out in Tech-Bilt, the 28 settlement between Plaintiff and Modesto Executive is within the ballpark of reason and is 15242687.1:05472-0498 -7- OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT 1 therefore made in good faith. Core Brands’ Motion argues that Modesto Executive did not meet 2 the burden required under Code of Civil Procedure Section 877.6(a)(2), but this mistakenly 3 attempts to shift the burden to the settling parties, which is inappropriate as outlined above. 4 Further, a copy of the Settlement Agreement between Plaintiff and Modesto Executive, containing 5 all relevant terms, is attached as Exhibit “B” to the declaration of Summit Dhillon. (Exhibit "B" to 6 the Dhillon Decl., ¶ 11.) 7 1. Evidence to Date Suggests Modesto Executive Was Not Negligent in 8 Installing the Subject Transformer 9 The Subject Fire occurred in June 2015, and the installation of the Subject 10 Transformer was completed in 2010 by Matt Stall. Structural, civil, electrical and mechanical 11 engineering expert Michael O’Connor, PE, SE, ME, EE, with over 42 years of relevant WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE 559-437-2860 ♦ FAX 559-705-1934 7108 NORTH FRESNO STREET, SUITE 250 12 experience, has had the opportunity to review the relevant documents, materials, testimony and FRESNO, CALIFORNIA 93720-2952 13 other pertinent evidence and information relevant to the Subject Fire occurring at Peter Johansen Attorneys at Law 14 High School on or about June 18, 2015. (Declaration of Michael O’Connor (“O’Connor Decl.”), 15 ⁋⁋ 2, 3.) 16 Based on Mr. O’Connor’s expert professional opinion, the Subject Transformer 17 installed by Matt Stall in Building B at Peter Johansen High School in 2010 was done properly 18 and not negligently and met the standard of care required. (O’Connor Decl., ⁋ 4.) Negligent 19 installation of the Subject Transformer, including a failure to secure all relevant connections of the 20 Subject Transformer would have resulted in electrical anomalies including voltage surges 21 throughout Building B, long before 2015. (Id.) 22 The “floating neutral” that allegedly existed in Building B on the day of the Subject 23 Fire in June 2015 cannot, within a reasonable degree of scientific certainty, be attributed to the 24 installation of the Subject Transformer more than five years prior by Matt Stall. (O’Connor Decl., 25 ⁋ 5.) Mr. O’Connor reviewed the declaration of Paul Way, P.E., wherein he declared that the 26 surge protectors were defective and failed when a sustained overvoltage occurred. Mr. O’Connor 27 agrees with his conclusions regarding the failure of the surge protector power strips and the 28 assertion that surge protector power strips have metal oxide varistors (MOVs) in them that shunt 15242687.1:05472-0498 -8- OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT 1 voltage spikes to ground. If there is a sustained overvoltage, the MOVs become extremely hot and 2 fail. Such heat can and does start fires. Accordingly, the MOVs are protected by thermal fuses 3 that cut power to the MOVs in such circumstances. In this case, it appeared that the thermal fuses 4 failed to cut power to the MOVs and the fire resulted. (O’Connor Decl., ⁋ 6.) As such, the cause 5 of the Subject Fire at Building B was, within a reasonable degree of scientific certainty, the failure 6 of the Core Brands surge protectors to perform their core function resulting in popping and 7 sparking which then ignited the contents of Building B. (O’Connor Decl., ⁋ 7.) 8 2. Core Brands’ Motion Does Not Meet Its Burden Challenging the Good 9 Faith of the Settlement Between Plaintiff and Modesto Executive 10 In support of its Motion, Core Brands submits the expert declaration of William M. 11 Grady, Ph.D., which opines that the cause of the Subject Fire was a “floating neutral” that could WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE 559-437-2860 ♦ FAX 559-705-1934 7108 NORTH FRESNO STREET, SUITE 250 12 have only occurred due to negligent installation and that Core Brands’ surge protectors were FRESNO, CALIFORNIA 93720-2952 13 “subjected…to numerous extremely high, inconsistent, and sustained overvoltage conditions that Attorneys at Law 14 ultimately led to the Subject Fire.” (Declaration of William Mack Grady in Support of Core 15 Brands’ Motion, ⁋ 8.) 16 Dr. Grady’s conclusory statement regarding sustained overvoltage conditions is 17 without foundation and is therefore insufficient basis for Core Brands’ Motion to Deny Good 18 Faith. (Objections to Evidence in Support of Opposition to Core Brands’ Motion, No. 1.) 19 Specifically, there is no evidentiary basis to support this opinion, given the complete lack of 20 electrical issues or anomalies observed in Building B in the five years that elapsed between 21 installation of the Subject Transformer and the Subject Fire. (O’Connor Decl., ⁋ 4.) 22 On the day of the Subject Fire, custodian Danny Haltom noted that the carpet 23 shampooer he was using in Building B was making surging voltage noises and its circuit breaker 24 was tripping. (Core Brands’ Memorandum of Points and Authorities in Support of Motion for 25 Summary Judgment, p. 4:11-16, attached to the Dhillon Decl., ¶ 12.) That this was the first 26 electrical anomaly observed in Building B between 2010 and 2015, and occurred on the same day 27 as the failure of the Core Brands surge protectors is a significant indicator that the Subject 28 Transformer was properly installed and functioned properly for a full five years before the Subject 15242687.1:05472-0498 -9- OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT 1 Fire occurred, and that no such “sustained overvoltage” events led to the failure of the Core 2 Brands surge protectors. 3 3. Settlement Between Plaintiff and Modesto Executive is Therefore 4 Within The Ball Park Under Tech-Bilt 5 Plaintiff’s alleged damages range from $14 million to $18 million. Core Brands 6 argues that the $700,000.00 settlement figure is so unreasonable as to not be within the parking 7 lot, let alone the ballpark of reason. As set forth above, this argument is based entirely on the 8 conclusory position that an alleged “floating neutral” could have only been the result of negligent 9 installation of the Subject Transformer five years prior to the Subject Fire, rather than some 10 intervening acts, events or omissions. 11 While Core Brands’ Motion argues that the settlement amount is unreasonably low WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE 559-437-2860 ♦ FAX 559-705-1934 7108 NORTH FRESNO STREET, SUITE 250 12 and that the amount reflect a “costs of litigation” figure which is patently absurd, there is a FRESNO, CALIFORNIA 93720-2952 13 reasonable risk that a hypothetical jury could assign anywhere between 0-10% to Modesto Attorneys at Law 14 Executive based on the evidence to date and the expert opinions obtained. As per the factors set 15 forth by Tech-Bilt and more fully set out in Modesto Executive’s Application, a reasonable 16 settlement figure should reflect the fact that a settling defendant would pay less to settle a claim 17 than may otherwise be awarded at trial. A finding of 10% of fault on behalf of Modesto Executive 18 based on a damages evaluation of $14 million would result in a judgment of $1.4 million, and the 19 settlement figure reflect the risks both Plaintiff and Modesto Executive would face in the event of 20 trial, judgment and subsequent actions for indemnity and contribution that would then ripen, given 21 the potential for comparative fault on Plaintiff’s behalf for an alleged failure to maintain. 22 Given the foregoing, the evidence suggesting that electrical anomalies were limited 23 to the day of the Subject Fire, the expert opinion of Mr. O’Connor, the numerous factors set forth 24 in Tech-Bilt which are met in this case, and the public policy favoring settlement, Modesto 25 Executive believes the record supports a finding of good faith by the Court with respect to the 26 settlement between Plaintiff and Modesto Executive. 27 /// 28 /// 15242687.1:05472-0498 -10- OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT 1 B. Arguments Made and Cases Cited in Core Brands’ Motion are Inapt and do 2 Not Apply to the Case at bar 3 1. Core Brands’ Cites no Controlling or Persuasive Case Law for its 4 Position 5 First, confirming that Core Brands’ fundamental argument is not based on 6 evidence, their Motion expressly argues that res ipsa loquitur forms the basis of its liability theory 7 against Modesto Executive and cites Hinckley v. La Mesa R.V. Center, Inc. (1984) 158 Cal.App.3d 8 630. That case, involving multiple fires in a motorhome and where the defendant denied it 9 negligently performed wiring repairs to the motorhome, requires that the Court analyze several 10 factors integral to the determination of whether res ipsa is applicable. One of those factors is the 11 control element, requiring that the defendant have exclusive control of the instrumentality or that WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE 559-437-2860 ♦ FAX 559-705-1934 7108 NORTH FRESNO STREET, SUITE 250 12 the condition of the instrumentality remained unchanged after leaving defendant’s possession. (Id. FRESNO, CALIFORNIA 93720-2952 13 at 640.) While the evidentiary record is that none of Plaintiff’s employees disturbed the Subject Attorneys at Law 14 Transformer, there is no evidence that in the five years between installation and the Subject Fire 15 that the condition of the Subject Transformer did not change or was not altered in some way, 16 whether by its own operation, seismic events or other countless intervening events. As such, Core 17 Brands’ attempt to classify this as a res ipsa loquitur case is misguided and only serves as 18 confirmation that actual, tangible evidence of liability on Modesto Executive’s part is nonexistent. 19 Second, Core Brands cites cases such as Mattco Forge, Inc. v. Arthur Young & Co. 20 (1995) 38 Cal.App.4th 1337 and Long Beach Memorial Medical Center v. Superior Court (2009) 21 172 Cal.App.4th 865, for the proposition that the settlement between Plaintiff and Modesto 22 Executive is not in the ballpark of reason. In Mattco Forge, the settling defendant settled for less 23 than one percent of the potential damage figure and presented no evidence supporting their 24 position that such a proportion was reasonable. (Mattco, supra, 38 Ca1.App.4th 1337, 1350.) The 25 Court cited the lack of evidence and affidavits in support of the settling defendant’s position. In 26 the case at bar, Modesto Executive has submitted concurrently herewith the declaration of an 27 expert with 42 years’ experience, opining that the “floating neutral” presenting five years post- 28 installation of the Subject Transformer was not the result of negligent installation and that 15242687.1:05472-0498 -11- OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT 1 negligent installation would have resulted in electrical anomalies long before 2015. As such, the 2 settlement figure is both supported by evidence and reasonable under the circumstances. 3 In Long Beach Memorial, cited by Core Brands as basis for arguing against good 4 faith and regarding the availability of coverage for Modesto Executive as rationale for the 5 settlement figure being unreasonably low, the facts are completely inapposite. The Court noted 6 that the defendant/cross-defendant that settled after the remaining parties settled, had previously 7 floated a proposition which saw it paying a significantly larger portion of the total damage figure, 8 indicating the final proposed settlement was unreasonably low. (Id. at 875.) Further, the settling 9 defendant/cross-defendant in that case waited for the remaining parties to settle the claim for a 10 global figure all parties agreed was reasonable, only to then turn around and settle for an amount 11 which the record showed was unreasonably low. (Id. at 876.) Here, no such issues exist. The WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE 559-437-2860 ♦ FAX 559-705-1934 7108 NORTH FRESNO STREET, SUITE 250 12 parties engaged in mediation simultaneously, and Core Brands made it known from the beginning FRESNO, CALIFORNIA 93720-2952 13 it would not entertain any global settlement which did not see Modesto Executive accept the lion’s Attorneys at Law 14 share of the liability, notwithstanding the absence of evidence of negligence regarding installation 15 of the Subject Transformer. Only after it became clear to Plaintiff, Modesto Executive and 16 mediator Ken Gack that Core Brands’ view of the case and position did not align with the 17 evidence or the view of the remaining participants did Plaintiff and Modesto Executive work to 18 resolve potential claims Plaintiff may have against Modesto Executive independent of Core 19 Brands. (Dhillon Decl., ⁋ 13.) 20 2. Core Brands’ Argument that Plaintiff’s Claims Against Modesto 21 Executive Are Time-Barred and Therefore Prima Facie Evidence of 22 Bad Faith is Misplaced 23 As noted above, Plaintiff may have claims for indemnity and contribution against 24 Modesto Executive following trial in this matter. In the event a jury determines that Plaintiff was 25 comparatively at fault for a failure to maintain the Subject Transformer, which is established by 26 the evidentiary record and undisputed, Plaintiff can assert causes of action against Modesto 27 Executive stemming from that finding, the corresponding reduction of recovery at trial and the 28 allegation that Modesto Executive did not meet its standard of care with respect to advising 15242687.1:05472-0498 -12- OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT 1 Plaintiff of the need to maintain the Subject Transformer. In the event a jury finds Plaintiff 25% 2 responsible for the damages which are between $14 million and $18 million, which is not 3 unreasonable as set forth in Core Brands’ Motion for Summary Judgment, Plaintiff would have a 4 contribution and indemnity claim against Modesto Executive in the range of $4 million. Modesto 5 Executive’s Application sets forth how the Tech-Bilt factors include consideration of the 6 uncertainty associated with trial and how that lends itself to viewing settlements in a favorable 7 light. In this case, there are two potential trials at stake with costs, risks and uncertainty associated 8 with each, and therefore settlement in the amount and by the terms set forth in the Settlement 9 Agreement is reasonable and in good faith. 10 Lastly, running counter to Core Brands’ Motion’s assertions, the Court in Mattco 11 Forge cited to Widson v. International Harvester Co. (1984) 153 Cal.App.3d 45, in making its WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE 559-437-2860 ♦ FAX 559-705-1934 7108 NORTH FRESNO STREET, SUITE 250 12 decision and the analysis therein is relevant here. In citing to Widson to support its ultimate FRESNO, CALIFORNIA 93720-2952 13 ruling, the Court noted and stated: “Widson and Louetto entered into a good faith settlement, even Attorneys at Law 14 though Widson had no viable claim against Louetto because the applicable three-year period for 15 service of summons had expired…Further, the fact Widson had no viable cause of action against 16 Louetto did not preclude a good faith settlement between Widson and Louetto. The court 17 reasoned: ‘It would be unreasonable to hold that because Louetto was not a defendant it lost its 18 ability to resolve its exposure to the plaintiff.’” (Mattco, supra, 38 Ca1.App.4th 1337, 1347- 19 1348.) 20 This analysis is directly on point, notwithstanding that Plaintiff may have as-of-yet 21 unripe claims against Modesto Executive stemming from a potential duty to advise Plaintiff 22 regarding maintenance of the Subject Transformer. The Court in Mattco Forge, cited in the Core 23 Brands’ Motion, considered that a settling cross-defendant may settle directly with a plaintiff 24 despite not being a direct defendant in the action and despite potential claims being time-barred. 25 The language in Mattco Forge states that the policy favors compromises over litigation, and 26 expressly considers that the Court should not stand in the way of a cross-defendant attempting to 27 resolve its exposure to the plaintiff. Therefore, Core Brands’ argument regarding the time-barred 28 nature of Plaintiff’s potential claims against Modesto Executive fail on several grounds and the 15242687.1:05472-0498 -13- OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT CORE BRANDS LLC’S MOTION TO DENY MODESTO EXECUTIVE ELECTRIC, INC.’S APPLICATION FOR GOOD FAITH SETTLEMENT 1 Court should find that Core Brands has not met its burden challenging the settlement between 2 Plaintiff and Modesto Executive and that the settlement is in good faith. 3 V. CONCLUSION 4 Based upon the foregoing arguments in Opposition to Core Brands’ Motion, Core Brands 5 has not met its burden of proof, as set forth in California Code of Civil Procedure Section 877.6, 6 subsection (d), and demonstrated the settlement agreement described herein and reflected in the 7 Settlement Agreement lacks good faith. Therefore, Modesto Executive, on