Court Finds that Subcontractor Lacks Standing to Appeal Summary Judgment Order Simply Because Subcontractor “Might” Lose at Trial Due to Order

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Cases sometimes take unanticipated twists and turns. Atlas Construction Supply, Inc. v. Swinerton Builders, Case No. D076426 (January 26,2021), involving a tragic construction accident, a motion for summary judgment, a motion for good faith settlement, and a stipulated dismissal, is one of those cases.

The Accident

Swinerton Builders was the general contractor on a residential construction project in San Diego, California. Swinerton contracted with J.R. Construction, Inc. to perform concrete work and with Brewer Crane & Rigging, Inc. to perform crane work on the project. J.R. Construction in turn rented a concrete column formwork approximately 10 feet tall and weighing 300 to 400 pounds from Atlas Construction Supply, Inc.

One day on the construction project, Marcus Develasco, Sr. and another co-worker, employees of J.R. Construction, climbed to the top of the formwork to adjust its size. The formwork, which had been positioned on the site by Brewer, was upright but unsupported by braces. When the co-worker stepped off the formwork, Develasco’s weight caused the unsecured formwork to topple over, killing Develasco in the process.

The Wrongful Death Lawsuit

Develasco’s family filed a wrongful death lawsuit against Atlas, Swinerton and Brewer, asserting a product liability claim against Atlas and negligence claims against all three defendants. Atlas, in turn, filed a cross-complaint against Doe defendants for equitable indemnity, contribution and declaratory relief and later substituted Swinerton as one of the Doe defendants.

While the case was pending, Swinerton filed a motion for summary judgment contending that the plaintiffs’ claims against Swinerton was barred under the Privette doctrine. Under the Privette doctrine, unless an exception applies, the hirer of a contract is not liable for injuries or death of an employee of the contractor. Plaintiffs filed an opposition to Swinerton’s motion. So too did Atlas, who argued that under the Hooker exception to the Privette doctrine, Swinerton was liable because it retained control over the safety of conditions on the worksite and that Develasco was killed because of Swinerton’s failed to ensure that conditions on the worksite were safe.

The Trial Court’s Granting of Swinerton’s Motion for Summary Judgment

The trial court issued a tentative ruling granting Swinerton’s motion for summary judgment. In its tentative ruling, the trial court expressly declined to consider Atlas opposition to the motion stating that “granting the motion would not necessarily extinguish” Atlas’ cross-complaint for indemnity, contribution and declaratory relief against Swinerton. However, in its tentative ruling, the Court also directed the parties to submit supplemental briefs on whether Atlas had standing to file an opposition to the motion.

In its supplemental brief, Atlas argued that it had standing because it was adverse to Swinerton having added Swinerton as a Doe defendant in its cross-complaint for indemnity, contribution and declaratory relief. Further, argued Atlas, it had standing because it would be precluded from arguing at trial that Swinerton was liable if the trial court granted Swinerton’s motion. In its final order, the Court sided with Swinerton, noting that the summary judgment statute found at Code of Civil Procedure section 437c does not require the court to “consider multiple oppositions to a motion for summary judgment” because the statute “identifies ‘opposition’ in the singular.”

Swinerton’s Motion for Good Faith Settlement

However, rather than seeking entry of judgment on its motion for summary judgment, Swinerton negotiated a settlement with the plaintiffs, whereby the plaintiffs agreed to dismiss their claims with prejudice against Swinerton in exchange for Swinerton agreeing to waive reimbursement of its costs totaling $5,349.63.

Thereafter, Swinerton filed a motion for good faith settlement and request for dismissal of Atlas’ cross-complaint. Atlas filed an opposition to Swinerton’s motion arguing, as it did in its opposition to Swinerton’s motion for summary judgment, that Swinerton was liable under the Hooker exception to the Privette doctrine. Atlas further argued that it estimated that Plaintiffs recovery at trial would be approximately $2.7 million, that Swinerton was responsible for 75% – 85% of this amount or $2 – $2.3 million dollars, and that  Swinerton’s settlement with the Plaintiffs for a waiver of $5,349.63 in costs was not a good faith settlement.

The Trial Court’s Granting of Swinerton’s Motion for Good Faith Settlement and Atlas’ Stipulated Dismissal

The trial court granted Swinerton’s motion for good faith settlement. However, the Court declined to grant Swinerton’s request to dismiss Atlas’ cross-complaint, finding that Swinerton did not meet its “burden [of establishing] that [Atlas’] claims in the cross-complaint [were] barred by the granting of the good faith settlement” determination.

Thereafter, Swinerton and Atlas filed a stipulated request for dismissal of Atlas’ cross-complaint against Swinerton to permit Atlas to file an appeal. The stipulation stated that the trial court’s order granting Swinerton’s motion for good faith settlement “eliminated any and all rights Atlas may have to recover under [the] cross-complaint,” and “there [was] no legal basis for a trial of Atlas’ cross-complaint against Swinerton . . .” Pursuant to the parties’ stipulation, the trial court dismissed Atlas’ cross-complaint without prejudice.

Later, plaintiffs filed a request for dismissal with prejudice of their complaint against Swinerton.

Atlas then appealed.

The Appeal

On appeal, Atlas challenged three orders: (1) the trial court’s order granting Swinerton’s motion for summary judgment; (2) the trial court’s order granting Swinerton’s motion for good faith settlement; and (3) the stipulated request for dismissal of Atlas’ cross-complaint against Swinerton. Swinerton, in turn, filed a motion to dismiss the appeal on the ground that the 4th District Court of Appeal lacked jurisdiction to consider Atlas’ appeal of the three orders.

Working in reverse order, the Court of Appeal first addressed the stipulated request for dismissal of Atlas’ cross-complaint against Swinerton. On appeal, Swinerton argued that the stipulated request for dismissal was not an appealable judgment because Atlas was still a defendant in the underlying wrongful death case of Plaintiffs. The Court of Appeal disagreed. Citing cases holding that the dismissal of a cross-complaint is a final judgment as between the parties to the cross-complaint, and is appealable, the Court stated:

As Swinerton notes, Atlas remains a defendant in plaintiffs’ underlying wrongful death action. However, the order dismissing Atlas’s cross-complaint resolved all pending causes of action between cross-complainant Atlas and cross-defendant Swinerton. Though the trial court denominated the order as a dismissal without prejudice, the parties did to stipulate to toll the statutes of limitations applicable to the cross-complaint or otherwise agree to facilitate future litigation of the cross-complaint. Thus, the dismissal order is sufficiently final for purposes of the one final judgment rule. Because the order disposed of all causes of action between the parties to the cross-complaint, and those parties did not preserve the voluntarily-dismissed cross-complaint for future litigation, the dismissal order is appealable as a final adjudication of Atlas’ rights against Swinerton.

As to the trial court’s order granting Swinerton’s motion for good faith settlement, Atlas argued on appeal that the order was an intermediate ruling that was reviewable as part of Atlas’ appeal from the order dismissing its cross-complaint. In response, Swinerton argued that the  order was not appealable because Atlas did not try to first seek a writ of mandate of the order.

While noting that Code of Civil Procedure section 877.6(e) permits a losing party to seek immediate appellate review of a good faith settlement determination by filing a petition for writ of mandate, the Court of Appeal noted that there was a split of authority among Divisions within the 4th District Courts of Appeal as to whether Section 877.6(e) is the sole means by which a party may seek review of a good faith settlement determination. 

Note: While splits of authority between Courts of Appeal are rare, splits of authority between divisions of the same Court of Appeal, are even rarer.

In Main Fiber Products, Inc. v. Morgan & Franz Insurance Company (1999) 73 Cal.App.4th 1130, the 4th District Court of Appeal (Division Two) held that Code of Civil Procedure section 877.6(e) is the “exclusive means of review” of a good faith settlement determination. However, in Cahill v. San Diego Gas & Electric Company (2011) 194 Cal.App.4th 939, the 4th District Court of Appeal (Division One) held that use of the term “may” in Section 877.6(e) (“[w]hen a determination of the good faith or lack of good faith of a settlement is made, any party aggrieved by the determination may petition the proper court to review the determination by writ of mandate”) (emphasis added) demonstrated that Section 877.6(e) was permissive, not mandatory, and not the exclusive means of seeking review of a good faith settlement determination. As such, held the Court of Appeal, “we conclude that Atlas is not barred from appealing the good faith settlement determination merely because it did not file a petition for writ of mandate under section 877.6, subdivision (e).

Finally, the Court of Appeal looked at whether Atlas had standing to appeal the trial court’s order granting Swinerton’s motion for summary judgment. On appeal, Atlas argued that order was an interlocutory ruling reviewable on appeal from the order dismissing its cross-complaint. Specifically, Atlas argued that it was aggrieved because as a co-defendant with Swinerton, Atlas shared an interest with the Plaintiffs in establish the negligence of Swinerton. Further, argued Atlas, it was aggrieved because by granting Swinerton’s motion for summary judgment, Atlas would be unable to attribute fault to Swinerton at the wrongful death trial. In response, Swinerton argued that the Court of Appeal lacked jurisdiction because Atlas was not aggrieved by the order granting Swinerton’s motion for summary judgment.

The Court of Appeal agreed with Swinerton. Noting that under Code of Civil Procedure section 902 “[a]ny party aggrieved may appeal in the cases prescribed in this title,” the Court explained that Atlas was not “aggrieved” in the true sense of the word because Atlas’ arguments assumed an outcome that might not actually come to pass:

We are not convinced the mere possibility of future harm to Atlas renders Atlas aggrieved for purposes of section 902. In short, Atlas’s argument rests on a series of ifs — (1) if the wrongful death action proceeds to trial, plaintiffs may move in limine to exclude Atlas from attributing fault to, or commenting on, the absence or involvement of Swinerton; (2) if the plaintiffs file this anticipated motion in limine, the trial court may find that its prior order granting Swinerton’s motion for summary judgment under the Privette doctrine was a determination that Swinerton was “without fault” (§ 437c, subd. (l)), and the court may grant plaintiffs’ motion in limine on that basis; and (3) if Atlas is unable to attribute fault to, or comment on the absence of, Swinerton during trial, it may be found liable to plaintiffs.

“As each of these hypothetical scenarios has not come to pass,” held the Court of Appeal, “Atlas’s alleged injury is mere speculation.” Thus, held the Court, “atlas does not have standing to appeal the summary judgment order in favor of its codefendant, Swinerton.”

Conclusion

Atlas provides a reminder that the Courts of Appeal are arbiters of final judgments not possible, or even extremely likely, judgments. I can understand why it’s a tough pill to swallow for Atlas and its attorneys though. The Court of Appeal didn’t address whether the trial court should have addressed Atlas’ opposition to Swinerton’s motion for summary judgment. And, if the Court of Appeal determined that the trial court should have considered Atlas’ opposition, I would put my money on Swinerton’s motion for summary judgment being denied. Rather, left with one arm tied behind its back (due to its inability to point the finger at Swinerton), the Court of Appeal basically held that Atlas should have proceeded to trial, because it’s still possible that it could have won. Tough one.

 

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