holding that because a nonsettling defendant may challenge the settlement amount, it is appropriate to place the burden of assigning value of consideration on the parties to the agreement who have particular knowledge of the facts
How later courts described this case
- holding that because a nonsettling defendant may challenge the settlement amount, it is appropriate to place the burden of assigning value of consideration on the parties to the agreement who have particular knowledge of the facts
- noting the "enormous variety of contractual arrangements” that are considered Mary Carter agreements
- approving a sliding-scale settlement that potentially could be reduced to zero by later recoveries
- criticizing the majority's use of this "sport-page idiom” as potentially puzzling to the reader of the text 25 or 50 years hence
Written by the judges who cited it.
The opinion
BROUSSARD, J.
I concur in the majority opinion. I write separately to express one substantial reservation.
The majority opinion concludes: “Once the parties to the agreement have declared its value, a nonsettling defendant either (1) can accept that value and attempt to show that the settlement is not in good faith because the assigned value is not within the settling defendant’s Tech-Bilt [ 38 Cal.3d 488 ] ballpark, or (2) can attempt to prove that the parties’ assigned value is too low and that a greater reduction in plaintiff’s claim against the remaining defendants is actually warranted.” (Maj. opn., p. 879; see also p. 883, fn. 25; p. 885.)
I would prefer to delete the second alternative for several reasons. As the majority recognized in its footnote to the above quotation, the evaluation of a sliding scale agreement is a complex matter with the court able to do no more than make its best estimate. The second alternative provides a substantial danger that efforts to establish the proper value will require a minitrial with actuaries and economists testifying at length. And ordinarily the evaluation will not serve any legitimate purpose of the nonsettling defendant but will only result in delays.
In Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488 [213 Cal.Rptr 256, 698 P.2d 159 ], we adopted the “ballpark” rule after pointing out the numerous considerations which enter into the determination of a settlor’s proportionate liability. (Id. at pp. 499-500.) The “ball *888 park” rule is itself an attempt to make only a “rough approximation of plaintiffs’ total recovery and the settlor’s proportionate liability” modified by several considerations. (Id. at p. 499.) To evaluate a sliding scale agreement, we compare many of the same considerations to the amount of the guaranty and the likelihood that the guaranty will be reduced by recovery from a nonsettling defendant. Because we start with a “rough approximation,” the further calculations become exceedingly complex with some discount allowed for the roughness of the approximation. Factoring the additional considerations mentioned in Tech-Bilt into the equation will be a substantial undertaking. We must bear in mind that in trying to roughly approximate the amount that the settling defendant will have to pay under his guarantee, we must determine the likely amount that the nonsettling defendant will have to pay which will be deducted in part or in toto from the guarantee.
In Tech-Bilt we were concerned that the pretrial settlement approval procedure would be converted into an extended minitrial. (Id. at p. 499.) While a trial judge could attempt to undertake the complex calculation of the estimate of the value of the sliding scale agreement on the basis of affidavits, I believe that most judges will want the experts before them, and we will have an extended minitrial.
It is not at all clear that any valid purpose is served by an extended inquiry to determine a rough estimate of value of the agreement once it is clear that the settlement figure is within the “ballpark.” Plaintiff and the settling defendant should be permitted to settle within the “ballpark” with the settling defendant discharged on the claim for indemnity. The value placed on the agreement serves as an offset reducing damages recoverable from the nonsettling defendant, and the settling defendant and the plaintiff are directly affected by its amount. For this reason, we may expect that sliding scale agreements will contain a provision that the agreement is void not only if the court finds that the settlement figure furnished by the parties is less than the “ballpark” figure, but also if the court finds that the agreement is worth more than that figure. In either event we may expect that the settling parties will often come up with a new settlement. We may then have a second minitrial.
I would prefer that the second alternative be deleted.