Saturday, September 29, 2007

Broad Definition of Joint Tortfeaser Used to Allocate Settlement Funds in Multiparty Construction Defect Cases

Nuisance Cannot Be Stated as a Separate Action If It Relies Upon the Same Facts as a Negligence Cause of Action

El Escorial Owners' Association v. DLC Plastering, Inc. (Sept. 6, 2007, B173829, Second District)
32 p. opinion

The El Escorial opinion provides an overview of the complexity of allocating settlement amounts as credits against damage awards in multiparty construction defect cases. In a typical multiparty construction defect case, many of the subcontractors settle out of the action and obtain rulings that their settlements were made in good faith. This always raises the issue of the extent to which those settlement amounts should be credited as offsets to damages for which the nonsettling defendants have been found liable at trial.

El Escorial affirms the judgment in a case where the trial court, with advance notice to the remaining parties, re-examined and altered the allocation of settlement funds in response to the evidence presented at trial. As the Court of Appeal noted: "In a complex multiparty construction defect case the court may have to use 'rough categories' to initially determine good faith settlement allocations for the various types of construction defects."

The Court of Appeal rejected the plaintiff's assumption that the defendants could not be joint tortfeasors with many of the settling defendants. At least in construction defect cases, the term joint tortfeasor is broad. If multiple defendants do not act in concert but the damage caused by their acts is indivisible, each defendant is liable for the whole amount of damage. It does not matter whether the defendant's acts were successive or contemporaneous.

On a different issue, the Court of Appeal rejected the plaintiff's contention that it could state a cause of action for nuisance. Where negligence and nuisance causes of action rely upon the same facts about lack of due care, the nuisance claim is a negligence claim.
Presding Justice Gilbert wrote the opinion. Justices Yegan and Perren concurred.

Comment: The Court declined to apply Kaufman & Broad Communities, Inc. v. Performance Plastering, Inc. (2006) 136 Cal.App.4th 212 retroactively, but that case is something for practitioners to keep in mind for current and future cases. It held that when the insured was a suspended corporation (and thus unable to prosecute or defend an action) its insurance company had a duty to intervene in the lawsuit.

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