..

• <

l II PHILLlPS, GREENBERG & HAUSER, L.L.P.

•
JERRY R. HAUSER, SBN. 11 1568
i

- f
�l ·-

...
I•< " , ,- ._
I
r -
i

2 111
4 Embarcadero Center, 39 Floor
San Francisco, California 941 11
3
Telephone: (415) 981-7777
4 Facsimile: (415) 398-5786

5 Attorneys for Defendants

Bradford 0. Baugh and Baugh & Goodley
6

8 IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA

9 IN AND FOR THE COUNTY OF SANTA CLARA

10
l-01- -
11
SUHASINI RAMALINGAM CASE NO. CV 809833
12
Plaintiff,
13 MEMORANDUM OF POINTS AND
-v- AUTHORITIES IN SUPPORT OF
14 DEFENDANTS BRADFORD BAUGH
BRADFORD 0. BAUGH,, an individual; AND BAUGH & GOODLEY'S MOTION
15
BAUGH & GOODLEY, a business entity, FOR A GOOD_FAITH SETTLEMENT
16 form unknown; MICHAEL S. THOMPSON, DETERMINATION
an individual; DELUCCHI, HAWN & CO.,
17 LLP, a limited liability partnership; GRECO,
FILICE & THOMPSON, a partnership, and Date: October 25, 2005
18
DOES 1 tlu·ough 20, inclusive, Time: q � A.M.
Dept: 2
19
Defendants. Trial Date: Not Set
20

21

22

23

24

25

26

27

28

MEMORANDUM OF POINTS AND AUTHORJTIES IN SUPPORT OF DEFENDANTS'

MOTION FOR SUMMARY JUDGMENT
 TABLE OF CONTENTS

2
Page(s)
_)
..,

5 I. INTRODUCTION AND PROCEDURAL BACKGROUND 1

II. FACTUAL BACKGROUND 4

7

8
III. LAW AND ARGUMENT 6
9
A. The Settlement between Plaintiff and Mr. Baugh 7
10 Falls within the Tech-Bilt Ballpark

11
B. Mr. Thompson's Settlement Conduct Lowers the 10
12 Appropriate Ballpark

13
IV. CONCLUSION 11
14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

MEMORANDUM OF POINTS AND AUTHORJTIES IN SUPPORT OF MOTION FOR SUMMARY

JUDGMENT
 TABLE OF AUTHORITIES
Page(s)

3
Case Law

4
Abbott Ford. Inc. v. Superior Court 7, 9, 10, 11
5 43 Cal. 3d 858 (1987)

6 Rankin v. Curtis 10
1183 Cal.App.3d 939 (1986)
7

8 Standard Pacific of San Diego v. A.A. Baxter Corp. 7

176 Cal.App.3d 577 (1986)
9
Tech-Bilt v. Woodward-Clvde and Associates 7, 8, I 0
10 38 Cal.3d 488 (1985)
1l

12
Statutes
13
Code of Civil Procedure
14 § 877.5 7
§ 877.5(c) 7
15
§ 877.6 10
16 § 877.6(a) 6
§ 877.6(b) 6
17

18
Miscellaneous
19

20
Weil and Brown, California Practice Guide, "Civil Procedure Before Trial," 7-8
21 § 12:771 at 12(II( 42))

22

23

24

25

26

27

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR SUMMARY II

JUDGMENT
 l I. INTRODUCTION AND PROCEDURALBACKGROUND

2
On July 29, 2002, plaintiff Suhasini Rarnalingam filed a complaint against Bradford Baugh
3
for legal malpractice with regard to legal services performed in her dissolution proceeding with her
4
former husband, N.A. Narayanswarni ("Swami"). On October 3 1, 2002, plaintiff filed her First
5
Amended Complaint against Michael S. Thompson and his firm, Greco, Filice & Thompson, for
6
accountant malpractice in the same dissolution proceeding. 1
7
The primary claim in the complaint against Mr. Baugh and Mr. Thompson is that they
8
negligently prepared a vesting schedule for stock options and stock compensation grants that Swami
9
obtained as a result of his employment with Johnson & Johnson. Plaintiff further contends that Mr.
10
Baugh and Mr. Thompson did not conduct a proper investigation in order to trace when the options
11
and grants were exercised and when the shares acquired were sold. Plaintiff also asserted that Mr.
12
Baugh and Thompson used the wrong formula to determine the character of the shares acquired
13
through the exercise of the options. Plaintiff contends that as a result of this negligence, the family
14
law court awarded all of the Johnson & Johnson shares, 21,000, to Swami as a separate prope1iy on
15
May 25, 2000 (Exhibit "A" to the Declaration of Jerry R. Hauser ("Hauser Dec.")), which was
16
affirmed on appeal. (Hauser Dec., Exhibit "B") Plaintiff has also asserted claims against Thompson
17
unrelated to Mr. Baugh.
18
The vesting schedule that was used in the underlying family law proceeding was prepared by
19
Thompson, the parties' joint accountant, whose scope of duties included investigating the pa1iies'
20
assets and conducting discovery to determine what was separate (SP) and community (CP) property.
21
The vesting schedule prepared by Thompson established that all shares acquired through the options
22
and stock compensation grants were SP, except for 5,87 1 shares. These CP shares were acquired
23
tluough stock compensation grants, but the majority of the shares that remained as of the date of
24
separation were acquired through the exercise of stock options. Based on Thompson's vesting
25

26

27 1 Thompson has filed a motion for Summary Judgment to be heard on December 5, 2005, primarily based on the claim he
is immune from liability.

28
DEFENDANT BRADFORD BAUGH'S GOOD FAITH P&A
 schedule, the parties entered into a stipulation with regard to the characterization of the shares
Ii
1

2 acquired before separation (Hauser Dec., Exhibit "C"). The only issue to be tried by the family law

3 court was whether the 5,87 1 shares that Thompson found to be community property were sold during

4 the marriage and, if so, the remaining shares, 2 l ,000 as of the date of separation, would be Swami's

5 separate property.

6 At the trial of the action, Swami testified that all of the stock options were exercised and

7 acquired prior to marriage and the CP shares acquired through stock compensation grants were sold

1
8 during the marriage. Sv,1ami presented absolutely no documentation to back up his testimony. Mr.

9 Baugh argued that without the proper documentation, the presumption should be that the community

l0 property shares, which were co-mingled with SP shares, were not sold. This argument was rejected

11 by the trial court and the Court of Appeal.

12 During the course of this litigation, plaintiff established that Thompson used the wrong

13 vesting schedule for the options; and the proper vesting schedule would have shown that a

14 substantial po1iion of the Johnson & Johnson options vested during the marriage, and at least 11,628

15 of the remaining shares as of the date of separation were CP. Based on Swami's testimony there

16 would have been no need for a trial on whether the CP option shares were sold, because he admitted

17 that the only shares sold during the ma1Tiage \Vere obtained tlu·ough the grants. Further, a proper

18 vesting schedule would have also established that a portion of Swami· s SP options vested after

19 marriage and therefore CP funds were used to exercise them creating a CP interest in said shares.

20 The damages in this case are based on the lost value of plaintiffs community properly interest

21 in the Johnson & Johnson shares that were awarded to Swami as a result of the e1Toneous vesting

22 schedule. There are many different ways to value the lost interest, but for settlement purposes only

23 the parties agreed that the damage range is £675,000 to $993,000. The damage range is primarily due

24 to how to value the use of CP funds to exercise SP options. In addition to damages stemming from

25 plaintiffs lost interest in the Johnson & Johnson shares, plaintiff is also seeking $100,000 as damages

26 from Thompson unrelated to Mr. Baugh.

27

28
DEFENDANT BRADFORD BAUGH'S GOOD FAITH P&A 2
 In an attempt to settle the case, the parties retained the Honorable Michael Ballachey to

2 conduct a mediation. The parties were unsuccessful in reaching a global settlement at the mediation.

3 Mr. Thompson's counsel will not agree to waive the confidentiality provisions with regard to the

4 mediation, so Mr. Baugh is precluded from setting faith the mediator's recommendation or

5 Thompson's response. In separate negotiations after the mediation, with the assistance of Judge

6 Ballachey, plaintiff and Mr. Baugh agreed to use $800,000 as the appropriate figure for plaintiffs

7 damages, for settlement purposes only, and as the basis for the guarantee in the sliding scale

8 agreement. In these subsequent negotiations, plaintiff also indicated that the $800,000 number

9 represented what she would accept for a global settlement. The key terms of the settlement are as

10 follows (a copy of the agreement is attached as Exhibit "D" to the Declaration of Jerry R. Hauser):

11 I. Settlement A.mount. The Baugh Defendants, through Lawyers'

Mutual Insurance Company ("LMIC"), shall pay to Plaintiff, the stm1 of TWO
12 I-IU1\TDRED THOUSANT DOLLARS ($200,000) (the "Settlement Amount").
The Settlement Amount shall be paid by a check made payable to Plaintiff and
13
her attorneys and delivered to Plaintiff's Attorneys within I 0 business days of
14 the entry of order finding this settlement to be in good faith pursuant to
paragraph 19 herein.
15
II. Additional Payment. (a) The Baugh Defendant will agree to pay
16 Plaintiff an additional sum, not to exceed FOUR HUNDRED THOUSAND
DOLLARS ($400,000) based on the difference between the amount of any
17
judgment Plaintiff receives against the Thompson Defendants, plus the
18 Settlement Amount, and EIGHT HUNDRED THOUSAND DOLLARS
($800,000)( the "Additional Swn"). The amount of the potential judgment
19 against the Thompson Defendants used to compute the amount of the
Additional Sum shall be before any offsets and include any prejudgment interest
20 that may be awarded. For example if a judgment is rendered against the
Thompson Defendants, including prejudgment interest, in the amount of
21
$600,000 or more, then there will be no Additional Payment; if the judgment is
22 for $400,000, then the Additional Payment would be $200,000; and if the
judgment is $200,000 or less, then the additional payment would be $400,000.
23 (b) If Plaintiff settles with the Thompson Defendants prior to a judgment being
rendered, then the amount of the Additional Sum shall be based on the
24 difference between the amount of any settlement with the Thompson
25 Defendants, plus the Settlement Amount, and EIGHT HUNDRED
THOUSAND DOLLARS ($800,000), but under such circumstances the
26 Additional Sum shall not exceed TWO HUNDRED THOUSAND DOLLARS
($200,000). For example, if Plaintiff settles with the Thompson Defendants for
27 $600,000 or more, then there will be no additional payment; if the settlement is

28
DEFENDANT BRADFORD BAUGH'S GOOD FAITH P&A 3
 $400,000 or less than the Additional Payment will be $200,000. Any judgment
rendered pursuant to CCP§ 998 shall be considered to be a prejudgment
2 settlement for purposes of calculating the Additional Payment. (c) The payment
of the Additional Payment referred to in this paragraph shall be made at the
3
following times: 1. Within 30 days of written notice of a settlement prior to the
4 rendition of a judgment; or (2) Within 30 days of \VTitten notice that final
judgment has been entered against the Thompson Defendants.
5

6 Since Mr. Baugh agreed that if Mr. Thompson enters into a settlement within 30 days of the

7 good faith finding, he will pay an additional $200,000, the value of the settlement is $400,000 until

8 30 days after a good faith finding and $200,000 thereafter. 2 The settlement between Mr. Baugh and

9 plaintiff is clearly in good faith, especially since Thompson's conduct prevented the global

10 settlement. This is not even a close call. Mr. Baugh is paying $200,000 regardless of the outcome and

11 has the potential to be liable for an additional payment up to $400,000. The primary, if not the sole

12 cause of the stock loss was the e1Toneous vesting schedule for the Johnson & Jolmson options

13 prepared by Mr. Thompson. Even though Mr. Baugh maybe be held liable to plaintiff for failing to

14 discover Mr. Thompson's error, Mr. Thompson is still primarily liable under the doctrine of equitable

15 apportionment. Mr. Baugh' s share of any liability for the Johnson & Johnson loss is less than 50%,

16 and at worse is 50%. Mr. Thompson had an opportunity to enter into a reasonable settlement and

17 chose not to.

18 ll. FACTUALBACKGROUND

I9 Prior to Mr. Baugh' s retention, plaintiff and Swan1i agreed to retain a CPA to act as a joint

20 accountant to determine the nature and extent of the community and separate property of the parties;

21 the value of the community property; the extent of the community property interest in such property

22 if, in fact, the community had an interest; and the equal division of the community assets (Hauser

23 Dec., Exhibit "E"). Pursuant to that stipulation, plaintiff and Swami jointly retained Mr. Thompson

24 in August of 1997 (Hauser Dec., Exhibit "F"). This stipulation and retention of Mr. Thompson was

25

26 2 In the negotiations subsequent to the mediation, Mr. Baugh agreed that if plain ti ff could reach a settlement with
Thompson, he would be willing to pay 50% of the amount, $800,000, plaintiff needed to reach a global settlement.
27 Plaintiff's council had direct communications with Thompson's malpractice carrier after the mediation, but Thompson's
carrier was not willing to pay an amount necessary to reach the global settlement number.

28
DEFENDANT BRADFORD BAUGH'S GOOD FAITH P&A 4
 done at a time when plainti ff was being represented by Robert H. Miller.

2 Mr. Baugh substituted in as plaintiffs attorney in November of 1997. Shortly thereafter, Mr.

3 Baugh received a letter from Mr. Thompson where he stated that, "I was engaged by Paul Jacobs and

4 Robert Miller to do discovery and to list all assets and debts in the above-mentioned case." (Hauser

5 Dec., Exhibit "G") Thompson was to work directly with plaintiff and Swami in gathering the

6 information and documents.

7 Mr. Thompson received his initial information with regard to the Johnson & Jolmson shares

8 from Swami who claimed that all of the shares as of the date of separation were acquired prior to

9 marriage (Hauser Dec., Exhibit "H"). In January of 1999, Mr. Baugh issued a subpoena to Jolmson

10 & Johnson for all records pe1iaining to Swami's stock options and/or grants. On March 2, 1999,

11 Johnson & Johnson responded to Mr. Baugh's subpoena, informing him that many of the records

12 were destroyed in 1996, but it did have some information from the computer system, and attached a

13 copy of the ·'stock option contract." (Hauser Dec., Exhibit "I") The stock option contract referred to

14 in the March 2, 1990 letter was, in fact, the "stock compensation agreement," which showed that the

15 vesting schedule was over a three-year period. This information was forwarded on to Mr. Thompson.

16 On October 13, 1999, Mr. Thompson provided his analysis based on the new information that

17 Mr. Baugh obtained tlu·ough his subpoena to Johnson & Johnson (Hauser Dec., Exhibit "J"). In his

18 analysis, Mr. Thompson erroneously applied the vesting period for the stock compensation grants to

19 the stock options, and as a result, determined all shares obtained tlu·ough options, except 26 1 shares,

20 were SP. Mr. Thompson also stated that the Stock Compensation Agreement contained contradictory

21 information.

22 On November 2, 1999, Mr. Baugh responded to Mr. Thompson's letter complaining about the

23 lack of records from Swami and specifically requested that Mr. Thompson contact Jolmson &

24 Johnson to clarify contradictory information and to confirm his inferences(Hauser Dec., Exhibit "K").

25 On November 4, 1999, Mr. Thompson responded by setting forth his vesting schedules and stating

26 that he did not contact Johnson & Johnson because he resolved the issues himself (Hauser Dec.,

27 Exhibit "L"). Thompson found that certain shares obtained through compensation grants were CP,

28
DEFENDANT BRADFORD BAUGH'S GOOD FAITH P&A 5
 (the total CP shares were 5,871) and since all shares obtained from stock compensation grants during

2 the marriage were sold based on Swami's statements, the remaining shares were Swami's SP.

3 Thereafter the parties entered into a stipulation, based on Thompson's vesting schedules, that all the

4 shares Swami acquired through the stock option and stock compensation grants were SP, except

5 5,871 (Hauser Dec., Exhibit "M"). The only issue in dispute was whether any of these CP shares

6 were part of the remaining Johnson & Johnson shares that existed as of the date of separation.

7 At trial, Swami testified that all of the shares that he obtained from the stock options were

8 exercised prior to the date of his marriage, and that all of the stock compensation shares were same-

9 day sales transactions and therefore sold. Swami also testified that all shares of Johnson & Johnson,

10 whether separate or community, sold during the marriage were used for community purposes (Hauser

11 Dec., Exhibit "N"). Swami had absolutely no documentation for this claim. Swami took the position

12 that if the proceeds from the sale of the Johnson & Jolmson shares were used for community

13 purposes, then community property shares were sold first. Mr. Baugh's position was that there is no

14 such presumption and Swami had the burden of tracing in order to establish that the CP shares were

15 sold first. The trial court, as well as the Cami of Appeal, adopted Swami's position.

16 There is no dispute that the vesting schedule for the options prepared by Mr. Thompson was

17 in error. Mr. Thompson used a tlu·ee year period set forth in the grant contract instead of the six year

18 period in the option contract. In addition, Mr. Thompson's analysis assumed all of the options were

19 exercised prior to marriage. A vesting schedule based on the six year period would have revealed that

20 almost all of the options, CP and SP, vested during the marriage and therefore community funds were

21 used to exercise the SP options.

22 III. LA'V AND ARGUMENT

23 CCP § 877.6 (a),(b), provides that a plaintiff may settle with one of several joint tortfeasors

24 and when the settlement is in good faith and the non-settling joint tortfeasors are not released from

_)
r the plaintiffs claim, then the settlement bars equitable contribution for comparative indemnity

26 against the settling defendants by the other non-settling defendants. Two equitable policies are

27 designed to be furthered by the provision: encouragement of settlements, and equitable allocation of

28
DEFENDANT BRADFORD BAUGH'S GOOD FAITH P&A 6
 costs among joint tort[easors. Standard Pacific of San Diego v. A.A Baxter Corp. (1986) 176

2 Cal.App.3d 577.
..,
.) Section 877.5 of the Code of Civil Procedure governs disclosure of sliding scale recovery

4 agreements, in which the settling defendant agrees to pay an amount that is dependent on the amount

5 of recovery the plaintiff able to recover from a non-agreeing defendant. Subsection ( c) requires that

6 the settling parties provide at least 72 hams notice to the non-settling pai1y of their intent to enter into

7 the sliding scale agreement. On September 15, 2005 Mr. Baugh and plaintiff gave notice to

8 Thompson of their intent to enter into the sliding scale agreement as set forth above (a copy of the

9 notice is attached as Exhibit "O" to the Declaration of Jerry R. Hauser. In Abbott Ford. Inc. v.

10 Superior Court (1987) 43 Cal. 3d 858, 888, the Supreme Court found that the following factors

11 control with regard to whether a sliding scale settlement gets good faith treatment:

12
In sum, we conclude: (I) that Tech-Bill's good faith standard applies to
13 sliding scale agreements, (2) that to satisfy the statutory objective of a fair
app011iomnent of loss (i) the "consideration" paid by a defendant who enters
14 into a sliding scale agreement must fall within the Tech-Bilt "ballpark" and
(ii) the plaintiffs' claims against the remaining defendants must be reduced by
15 the ainount of the "consideration paid" by the settling defe.ndant, [* 887] (3)
that anv unreasonable or bad faith conduct of the nonsettling defendants
16
which impeded the settlement process and led to the sliding scale agreement
17 may be taken into account in determining whether the agreement satisfies the
"ballpark" standard. and (4) that any provision which purpo11s to give a
18 settling defendant a "veto" over subsequent settlements is valid only if it is
limited to settlements which would leave the earlier settling defendant to bear
19 more than its fair share of liability for the plaintiffs damages. [Emphasis
added]
20

21
A. The Settlement Between Plaintiff and Mr. Baugh Falls Within The Tecl1-Bilt Ballpark
22
The good faith of a settlement is based upon the factors set fo11h in Tech-Bilt v. Woodward-

Clyde and Associates (1985) 38 Cal.3d 488 at 499. Weil and Brown, California Practice Guide,
24
"Civil Procedure Before Trial'',§ 12:771 at 12(II(42)) sets forth the following test for determining
25
good faith:
26
There is no precise yardstick for measuring good faith of a settlement
27 with one of several to11feasors. But it must harmonize the public policy

28
DEFENDANT BRADFORD BAUGH'S GOOD FAITH P&A 7
 favoring settlements with the competing public policy favoring
equitable sharing of costs among tortfeasors. To accomplish this, the
2 settlement must be within the "reasonable range" (within the
"ballpark") of the settling tortfeasor's share of liability for the
3
plaintiffs injury - taking into consideration the facts and circumstances
4 of the particular case. Citing Tech-Bilt at p. 499.

5 Specifically, the following factors should be considered: (1) a rough approximation of the plaintiffs'

6 total recovery; (2) the settlor's proportionate liability; (3) the amount paid in settlement; (4) the

7 allocation of settlement proceeds among plaintiff; (5) a recognition that a setiler should pay less in

8 settlement than he would if he were found liable after a trial; (6) the existence of any collusion, fraud,

9 or tortious conduct aimed to injure the interests of non-settling defendants; and (7) the insurance

10 policy limits of the settling defendants. Tech-Bilt, supra, 38 Cal.3d at 499.

1I Applying each of the Tech-Bi It factors, it is clear that the settlement was reasonable. The

12 value of plaintiffs lost interest in the Johnson & Jolmson shares is $675,000 to $993,000, and for

13 settlement purposes the parties are using $800,000. Mr. Baugh's share of any liability for the Joh11son

14 & Jolmson loss is less than 50%. Even if Mr. Baugh's liability was 50%, his share of any settlement

15 should be less since the court's recognize that a paiiy should pay less in settlement. More

16 importantly, Mr. Baugh, after the mediation, was willing to pay $400,000 towards a global

17 settlement. .

18 Under the settlement agreement between plaintiff and Mr. Baugh, Mr. Baugh agreed to pay

19 $200,000 up front, and up to an additional $400,000 depending on the outcome of plaintiffs case

20 against Mr. Thompson. In addition, Mr. Baugh can still be liable for an additional payment even if

21 Mr. Thompson settles with plaintiff. If such settlement takes place within 3 0 days of the good faith

22 finding, Mr. Baugh will have to pay $200,000 regardless of the terms of such settlement. The parties

23 have placed a $400,000 value on the settlement for the 30-day period following the good faith finding

24 and £200,000 thereafter, if such valuation is required. Certainly, this amount is consistent with Mr.

25 Baugh's portion of liability since he was less than 50% liable, and he could have to pay up to75% of

26 the total settlement. At a bare minimum, he will have paid 25% of the total amount. Mr. Thompson

27 cannot assert that the settlement was the result of any collusion, fraud, or tortious conduct on the pa1i

28
DEFENDANT BRADFORD BAUGH'S GOOD FAITH P&A 8
 I I of Mr. Baugh. Finally, Mr. Baugh has a one million dollar professional liability insurance policy, of
2 which has been reduced by $ 100,000 as a result of fees and costs incurred in defending this litigation.

3 As the Iitigation continues, the policy will be further depleted. Of the approximately $915,000

4 remaining on Mr. Baugh's policy, at least $200,000, and up to $600,000 will be spent on the

5 settlement.

6 The parties to a sliding scale agreement, who are in the best position to place a monetary

7 figure on its value, are responsible for establishing the monetary value of the sliding scale agreement.

8 "In many cases, negotiations between the parties will have included a traditional "straight" settlement

9 as an alternative to the sliding scale agreement, and this background will give the settling parties a

10 vantage point in declaring the agreement's value." Abbott, supra, 43 Cal 3d at 879. This is required

11 because in most sliding scale agreements, the settling defendant pays nothing up front and may not

12 pay anything depending on the recovery against the non-settling parties. This case is not the typical

13 sliding scale settlement since Mr. Baugh is making an unconditional $200,000 payment and has no

14 veto power over any futme settlement between plaintiff and Mr. Thompson. The value is self evident.

15 The burden is on Mr. Thompson to prove that the settlement is worth more. Tel. Indeed, it is even

16 proper for a settling defendant to pay less than this prop01tionate share of the anticipated damages.

17 Abbott Ford, supra, 43 Cal. 3 d at 882. All that is required is that the settlement not be grossly

18 disproportionate to a defendant's fair share. Id. Here, one cannot allege with a straight face that that

19 the settlement was disproportionate to Mr. Baugh's share of liability, let alone grossly

20 disproportionate. Id.

21 Ce1tainly the amount of the settlement is well within the ballpark of Mr. Baugh's share of

22 liability. The primary, if not the sole cause of the stock loss was the erroneous vesting schedule for

23 the Johnson & Johnson options prepared by Mr. Thompson. Even though Mr. Baugh maybe be held

24 liable to plaintiff for failing to discover Mr. Thompson's error or obtain additional information with

25 regard to the stock, Mr. Thompson is still primarily liable under the doctrine of equitable

26 apportio1m1ent.

27 II

28
DEFENDANT BRADFORD BAUGH'S GOOD FAITH P&A 9
 The Legislature intended the "good faith" concept of CCP§ 877.6 to be a flexible principal

2 imposing on reviewing comis the obligation to guard against the numerous ways in which the

3 interests of non-settling defendants bay become unfairly prejudiced. Rankin v. Curtis (1986) 1 183

4 Cal.App.3d 939. There is absolutely no risk of prejudice to Mr. Thompson. Despite being primarily

5 liable to plaintiff, he may escape having paid even less than half of the damages. If anything, Mr.

6 Baugh has been prejudiced by Mr. Thompson's umeasonableness during the negotiations. The

7 settlement between Mr. Baugh and plaintiff is reasonable and in good faith under the Tech-Bil!

8 factors.

9 B. Mr. Thompson's Settlement Conduct Lowers the Appropriate Ballpark

10 The trial comt's "ballpark" determination may also appropriately be adjusted to take into

11 account any unreasonable or bad faith conduct of a non-settling party which may have impeded the

12 settlement process. Abbot Ford, supra, 43 Cal.3d at 882. If the court finds that the party challenging

13 the settlement engaged in such conduct, it may reduce the lower threshold of the "ballpark" cutoff,

14 and find a settlement in good faith even if the "consideration" paid for, i.e., the "value" of, the sliding

15 scale agreement is somewhat lower than the court would otherwise have found acceptable.

16 While a defendant is, of course, ordinarily under no "legal obligation" to enter

into a settlement with the plaintiff and has the "right" to insist that the
17
plaintiff prove its case at trial, when a defendant acts unreasonably in
18 settlement negotiations and its action or refusal to act tlu·eatens to frustrate
the good-faith settlement efforts of other defendants and the plaintiff, such a
19 defendant may be on shaky equitable grounds when it thereafter seeks to
attack the "good faith" of a sliding scale agreement that has been occasioned
20
by its own recalcitrance. We agree with Abbott that in such a setting it is
21 appropriate for a trial court to take into consideration the conduct of the
nonsettling defendant in determining whether a sliding scale agreement is a
22 good faith settlement for purposes of sections 877 and 877.6. n24 In
evaluating the "reasonableness" or "good faith" of a nonsettling defendant's
23 negotiating conduct, it may be particularly appropriate for the court that is
making the good faith settlement determination to take into account whether
24
the sliding scale agreement was the product of the efforts of a settlement
25 judge. Id at 881.

26

27

28
DEFENDANT BRADFORD BAUGH'S GOOD FAITH P&A 10
 As discussed previously, Thompson has prevented the parties from revealing what took place

2 at the mediation, including the mediator's recommendations, but his conduct post mediation clearly

3 shows that prevented a global settlement from going forward on reasonable terms. Mr. Thompson's

4 conduct was merely an attempt to be unreasonable and prevent a reasonable settlemenr from going

5 forward with the hope that Mr. Baugh would simply pick up his share in order to avoid substantial

6 fees and costs. The court can take this into account in determining whether the settlement between

7 Mr. Baugh and plaintiff was in the ballpark. "If the court finds that the party challenging the

8 settlement engaged in such conduct (prevented a straight settlement from going forward), it may

9 reduce the lower tlu·eshold of the "ballpark" cutoff, and find a settlement in good faith even if the

10 "consideration" paid for, i.e., the "value" of, the sliding scale agreement is somewhat lower than the

11 court would otherwise have found acceptable." Id. at 882. When this added factor is added in, the

12 settlement is clearly in good faith.

13 IV. CONCLUSION

14 For the foregoing reasons, this court should issue a determination that the settlement between

15 Mr. Baugh and plaintiff is in good faith, and that Mr. Thompson is bared from seeking equitable

16 contribution for comparative indemnity against Mr. Baugh.

17
DATE: October 6, 2005 PHILLIPS, GREENBERG & HAUSER, L.L.P.
18

19

20

21

22

23

24

25

26

21 I
28 1
DEFENDANT BRADFORD BAUGH'S GOOD FAITH P&A 11