Courts Are Conflicted As To Whether A "Good Faith" Settlement Determination Can Be Reviewed Via A Writ Petition Or Appeal

Construction Law E-Alert (June 2012)

According to the decision, a non-settling defendant may only challenge a good faith determination by a petition for writ of mandate pursuant to Code of Civil Procedure section 877.6.  This decision comes on the heels of a 2011 ruling in Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, which found that a writ petition is not the sole means of challenging a trial court's good faith settlement determination. In Oak Springs Villas, supra, the condominium homeowners' association sued a developer, general contractor, and various subcontractors for alleged construction deficiencies and resultant property damage.  The association eventually settled with the developer, but not with a truss manufacturer.  The trial court approved the developer's motion for good faith settlement determination, and the truss manufacturer immediately appealed instead of filing a writ petition.  On appeal, the developer argued the good faith determination was not an appealable order.  The truss manufacturer argued Cahill applied, as well as an older case, Justus v. Atchison (1977) 19 Cal.3d 564, which allows for an appeal when there are no remaining issues as to that appealing party. The Court of Appeal ruled in the developer's favor and declined to follow Cahill, stating the truss manufacturer should have filed a writ petition, as expressly required under Section 877.6, subdivision (e). The Court also believed Justus was inapplicable because a non-settling party should not be allowed to have two appeal opportunities – one after an adverse good faith ruling, and then another after the ultimate conclusion of the case. The effect of the ruling, however, is that Cahill and Oak Springs Villas are now in conflict with one another – yet, both are still valid law.  One case allows for an appeal of a good faith settlement determination, while the other requires strict adherence to the statute.  The Supreme Court is likely to take this issue up in the near future to resolve the conflict.  In the meantime, however, parties who challenge good faith rulings should consult the statutory requirements under Section 877.6 before doing so. By Stephen A. Sunseri and Aarti Kewalramani for Gatzke Dillon & Ballance LLP