A good faith settlement determination in California is a court process allowing a settling joint tortfeasor or co-obligor to be discharged from further claims for contribution or indemnity by nonsettling parties. This determination promotes settlement while ensuring fairness to all parties involved in multi-party litigation.
Any party to an action alleging two or more parties are joint tortfeasors or co-obligors on a contract debt is entitled to a hearing on the good faith of a settlement entered into by the plaintiff or other claimant and one or more alleged tortfeasors or co-obligors 1. A settling party may also provide notice of settlement to all parties and the court, along with an application for a good faith settlement determination and a proposed order 1. If no nonsettling party files a motion to contest the good faith of the settlement within 25 days of mailing or 20 days of personal service, the court may approve the settlement 1. However, this alternative procedure does not apply to settlements with confidentiality agreements 1. A court determination that a settlement was made in good faith bars any other joint tortfeasor or co-obligor from further claims against the settling tortfeasor or co-obligor for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault 2. The party asserting the lack of good faith bears the burden of proof on that issue 2.
The issue of a settlement's good faith can be decided by the court based on affidavits served with the notice of hearing and any counter-affidavits filed in response 2. The court may also, in its discretion, receive other evidence at the hearing 2. A party aggrieved by the court's determination of good faith or lack thereof may petition the proper court to review the determination by writ of mandate 2. This petition must be filed within 20 days after service of written notice of the determination, or within any additional time not exceeding 20 days as the trial court may allow 2. The court must decide whether to hear the writ within 30 days of receiving all materials and notify the parties 2. If a hearing is granted, it receives special precedence over other civil matters, except those with equal or greater precedence by law 2. The period for dismissal of an action is tolled during the review of a determination 2.
Separately, in the context of liability insurance, a claim of bad faith against an insurer may arise if the insurer fails to accept a reasonable settlement demand within policy limits 3. To establish such a claim, the plaintiff must prove, among other elements, that the insurer's failure to accept the demand was the result of unreasonable conduct 3. A settlement demand within policy limits is considered reasonable if the insurer knew or should have known that a potential judgment against the insured was likely to exceed the demand based on the claimant's injuries and the insured's probable liability 3. However, a demand can be unreasonable for reasons other than the amount 3.
Furthermore, if a court dismisses an action without prejudice and retains jurisdiction to enforce a settlement, a party may file an application for determination of good faith settlement 4.
The provided sources do not define what constitutes "good faith" in the context of a settlement determination under CCP 877.6, nor do they outline the specific factors a court considers when making such a determination. The sources also do not cover the procedural aspects of filing the notice of hearing or the application for determination beyond the initial steps. The sources do not address the impact of a good faith settlement on non-monetary terms or other types of claims not involving contribution or indemnity among joint tortfeasors or co-obligors.
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