2020 WL 406777

United States District Court, E.D. California.
Tim MOORE, Plaintiff,
v.
ANG TRANSPORT INC., Moore Freight Brokers Inc., Tuff Machinery LLC, Defendants.
No. 2:18-cv-02919 WBS KJN
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Signed 01/23/2020
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Filed 01/24/2020
Attorneys and Law Firms
Terry Lee Gilbeau, Law Offices of Terry L. Gilbeau, Rocklin, CA, for Plaintiff.
Stephen W. Robertson, Hardy Erich Brown & Wilson, Sacramento, CA, for Defendants.

MEMORANDUM & ORDER RE: MOTION FOR GOOD FAITH SETTLEMENT
WILLIAM B. SHUBB, UNITED STATES DISTRICT JUDGE
*1 Plaintiff Tim Moore filed this lawsuit against defendants ANG Transport, Inc. (“ANG Transport”), Tuff Machinery LLC (“Tuff Machinery”), and Moore Brokers Inc., doing business as Moore Transportation Services (“Moore Transportation”), alleging violations of state and federal laws to recover costs of a tractor destroyed while in transport. Before the court now is ANG Transport’s motion for a determination of good faith settlement. (Docket No. 49.)

I. Background
Plaintiff purchased a John Deere Model 650H LT Tractor from defendant Tuff Machinery in October 2017. (Compl. ¶ 7 (Docket No. 1).) The parties agreed that Tuff Machinery would deliver the tractor to the plaintiff. (Id. ¶ 10.) Pursuant to that agreement, Tuff Machinery hired Moore Transport to act as the shipping broker for the tractor shipment. (Id. ¶ 11.) Moore Transport then hired ANG Transport to deliver the tractor. (Id. ¶ 12.) While transporting the tractor from Texas to California in November 2017, ANG Transport’s truck transporting the tractor was involved in an accident and the tractor was destroyed. (Id. ¶ 13.) The total estimated cost of replacement parts for the tractor was approximately $63,506.79. (Decl. of Stephen W. Robertson (“Robertson Decl.”) ¶ 3 (Docket No. 51).)

After ANG Transport ignored plaintiff’s demand for payment, plaintiff filed this action against it alleging violation of the Carmack Amendment to Interstate Commerce Act, 49 U.S.C. § 14706.1 (Compl. ¶¶ 26-35.) Following the filing, Travelers Property Casualty Company of America (“Travelers”) asserted a claim in subrogation against ANG Transport relating to the damage of a roller machine that occurred in the same accident.2 (Robertson Decl. ¶ 4.) Travelers’ claims exceeded $100,000. (Id.) Plaintiff, ANG Transport, and Travelers proceeded through this court’s Voluntary Dispute Resolution Process and reached a settlement. (Id. ¶¶ 4, 7-8, Exs. B-C.) ANG Transport now seeks this court’s determination that the settlement was made in good faith. (Docket No. 49.) The motion is unopposed. (Pl.’s Statement of Non-Opp’n (Docket No. 54).)

II. Discussion

A. Applicable Law
In California, state substantive law on settlements is codified at California Code of Civil Procedure Section 877. Section 877.6, the procedural mechanism for implementing § 877, is intended to promote the equitable sharing of costs among the parties at fault and encourage settlement. Tech-Bilt, Inc. v. Woodward-Clyde & Ass’n, 38 Cal. 3d 488, 494 (1985). While the procedures set forth in § 877.6 “do not govern a federal action” like the one here, “the substantive provisions of California law” are applicable. Fed. Sav. & Loan Ins. Corp. v. Butler, 904 F.2d 505, 511 (9th Cir. 1990).

*2 Courts are permitted to approve a settlement under § 877.6 if it was made in good faith. Cal. Civ. P. § 877.6. To assess whether a settlement was made in good faith, courts must determine whether the settlement is within the “reasonable range” of the settling tortfeasor’s share of liability for the plaintiffs’ injuries. Tech-Bilt, 38 Cal. 3d at 499. Courts consider the following, among other practical factors: (1) a rough approximation of the plaintiffs’ total recovery and the settlor’s proportionate liability; (2) the amount to be paid in settlement; (3) the allocation of settlement proceeds among the plaintiffs; (4) a recognition that a settlor should pay less in settlement than he would if he were found liable after a trial; (5) the financial conditions and insurance policy limits of the settling defendants; and (6) the existence of collusion, fraud, or tortious conduct aimed to injure the interests of non-settling defendants. Id. Ultimately, the determination is left to the trial court’s discretion. Id. at 502.

B. Application to Plaintiff’s Claims
The first, second, and third Tech-Bilt factors consider whether the agreed upon settlement accurately reflects the settling parties’ proportionate liability and whether the allocation of the settlement proceeds is equitable under the circumstances. Id. at 499. Settlements need only be “in the ballpark” of the settling party’s proportionate share of liability, rather than calculated with exacting mathematical certainty. Id. at 501 n.9. Under the settlement agreement here, ANG Transport will pay a total of $100,000 between plaintiff and Travelers. (Robertson Decl. ¶¶ 6-8, Exs. A-C.) This sum represents the policy limits of ANG Transport’s insurance policy. (Robertson Decl. ¶ 6, Ex. A.) Plaintiff will recover $45,000, roughly 70 percent of the total estimated cost to repair the damage to the tractor. (Robertson Decl. ¶ 7, Ex. B.) Travelers will receive $55,000 in subrogation, slightly over half of its claim. (Robertson Decl. ¶¶ 4, 8, Ex. C.) Accordingly, this falls within the reasonable range articulated in Tech-Bilt.

The fourth factor stresses that the settling parties should pay less in settlement than they would at trial. Tech-Bilt, 38 Cal. 3d at 499. If plaintiff and Travelers were to recover the total amount claimed, ANG Transport would be liable for far more than $100,000. (See Robertson Decl. ¶¶ 3-4.) ANG Transport submits that it is waiving its right to trial and suggests that settlement would conserve the court’s and the parties’ resources. These considerations weigh in favor of settlement. See City of West Sacramento v. R & L Bus. Mgmt., No. 2:18-cv-900 WBS EFB, 2019 WL 2249629, at *3 (E.D. Cal. May 24, 2019) (citing Coppola v. Smith, No. 1:11-CV-1257 AWI BAM, 2017 WL 4574091, at *4 (E.D. Cal. Oct. 13, 2017)). Accordingly, this factor favors a finding of good faith.

The fifth factor accounts for ANG Transport’s financial conditions and insurance policy limits. Tech-Bilt, 38 Cal. 3d at 499. As discussed, the $100,000 settlement will exhaust ANG Transport’s insurance policy limit. (Robertson Decl. ¶ 6, Ex. A.) Accordingly, this favor favors approval of the settlements because ANG could not offer any greater settlement through its insurance.

Finally, the sixth factor considers the existence of collusion, fraud, or tortious conduct aimed to injure the interests of non-settling defendants. Tech-Bilt, 38 Cal. 3d at 499. ANG Transport’s counsel certified that the negotiations for both settlements were conducted at arm’s length through the Voluntary Dispute Resolution Process and the settlement was reached fairly and properly. (Robertson Decl. ¶ 9.) There is no evidence to suggest otherwise, and the settling parties agree their settlements are reasonable compromises. (Id.) Additionally, the other defendants in this matter have already settled their claims with plaintiff or had claims against them dismissed, and thus, their interests will be unimpaired by the present settlement. (See Docket Nos. 40-41.) Accordingly, this factor, too, favors the court’s finding of good faith.

*3 Overall, the Tech-Bilt factors favor a finding of good faith. Accordingly, THE COURT HEREBY FINDS that:
1. The settlement between plaintiff and ANG Transport was in good faith under Cal. Civ. P. § 877.6 and Tech Bilt, Inc. v. Woodward-Clyde & Associates, 38 Cal. 3d 488 (1985);
2. The settlement between subrogated plaintiff Travelers and ANG Transport was also in good faith under Cal. Civ. P. § 877.6 and Tech Bilt, Inc. v. Woodward-Clyde & Associates, 38 Cal. 3d 488 (1985); and
3. Any and all claims or future claims for contribution or indemnity, arising out of the facts alleged in the complaint, and as further identified and provided for in the settlement, regardless of when such claims were asserted or by whom, are barred.

IT IS THEREFORE ORDERED that ANG Transport’s motion for determination of good faith settlement (Docket No. 49) be, and the same hereby is, GRANTED;

AND IT IS FURTHER ORDERED that plaintiff’s complaint (Docket No. 1) be, and the same hereby is, dismissed with prejudice as to ANG Transport, Inc.; and the Clerk of Court is directed to close this case.

All Citations
Slip Copy, 2020 WL 406777

Footnotes

1
Plaintiff also brought a breach of contract claim against Tuff Machinery and a negligence claim against Moore Transportation. (Compl. ¶¶ 16-25, 36-46.) In July 2019, this court granted Moore Freight’s motion for good faith settlement (Docket No. 40) and granted Tuff Machinery’s motion to dismiss (Docket No. 41).

2
Travelers did not file an independent complaint. (Robertson Decl. ¶ 4.)

2020 WL 468337

NOT FOR PUBLICATION
United States District Court, D. New Jersey.
MITSUI FOODS, INC., Plaintiff,
v.
SYNERGIE CANADA, INC., Defendant.
Civil Action No. 19-14478 (SRC)
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Signed 01/28/2020
Attorneys and Law Firms
William H. Yost, III, Freehill Hogan & Mahar, New York, NY, William Joseph Pallas, III, Freehill, Hogan & Mahar LLP, Jersey City, NJ, for Plaintiff.
Timothy Michael Jabbour, Tressler LLP, Morristown, NJ, for Defendant.

OPINION
CHESLER, District Judge
*1 This matter comes before the Court upon the filing by Defendant, Synergie Canada, Inc., on a motion to dismiss a single count of the Complaint. The motion has been fully briefed, and the Court has reviewed the papers filed by the parties. It proceeds to rule on the motion without oral argument. See Fed. R. Civ. P. 78(b). For the reasons that follow, the Court will grant Defendant’s motion to dismiss Count Five of the Complaint.

I. BACKGROUND
This is a civil action wherein Plaintiff, Mitsui Foods, Inc., seeks judgment against Defendant for breach of contract and other related claims. The parties entered into a contract for the “door-to-door” delivery of Plaintiff’s orange juice product. Defendant agreed to transport loads of the product from Plaintiff’s supplier in Mexico to several of Plaintiff’s clients in Florida. The Complaint alleges that Defendant’s failure to properly transport the product resulted in the spoilage of the goods.

Plaintiff filed the subject Complaint on June 28, 2019. Plaintiffs plead the following claims: breach of contract; negligence; damages under the Carriage of Goods by Sea Act; damages under the Carmack Amendment; and fraud in the inducement. Defendant only seeks the dismissal of Count Five, fraud in the inducement, in the subject motion to dismiss.

The factual summary below is based on the allegations within the Complaint. The facts are taken as true for purposes of the motion to dismiss only.

On or around May 17, 2017, Synergie offered to provide Mitsui Foods with delivery services for the transportation of their orange juice from a supplier in Mexico to clients in Florida. On July 27, 2017, a mutual non-disclosure agreement was executed by both parties to begin negotiation of the contract. Between July 2017 and September 2017, Synergie and Mitsui Foods engaged in negotiations wherein they discussed the terms and conditions of the transportation of goods from Mexico to Florida.

On September 22, 2017, Synergie submitted a quotation for its services and sent a promotional brochure to Mitsui Foods. The Complaint alleges that prior to providing any of its services, “Synergie made several material representations to [Mitsui Foods] regarding the capabilities to manage and transport the Loads.” (Compl. ¶ 12.) The Complaint references the Synergie brochure which states that the company provides “logistics services and manages the entirety of your supply chain worldwide” and “offers door-to-door solutions for an effective and secure transport solution for your bulk liquid merchandise.” (Compl. ¶ 12.) Among other things, Synergie “held itself out as providing expertise in the transport of refrigerated bulk liquid cargo utilizing its ‘Big Red Liquiride ™’ technology.” (Compl. ¶ 15.)

In December 2017, Mitsui Foods contracted with Synergie for use of its transportation services. Under its agreement with Mitsui Foods, Synergie was to: “(1) arrange for, manage, implement and ensure proper and timely ‘door-to-door’ refrigerated transport of the Loads; (2) customs clearances; and (3) complete delivery within 20 days of loading at the supplier’s facility.” (Compl. ¶ 17.) In January 2018, Synergie began transporting the Loads from Mexico to several locations in Florida. The Complaint alleges that when Synergie began transporting the Loads, several issues were reported regarding the services that were provided. These issues, which included Synergie’s “failure to timely transport and adequately refrigerate MFI’s Loads” as agreed upon, resulted in the rejection of 6.66 Loads by Plaintiff’s client at delivery due to fermentation. (Compl. ¶ 24.) Additionally, six (6) Loads were left at a port in Mexico for more than twenty (20) days. These Loads were not shipped due to the anticipated rejection of the product. Plaintiff estimates that the spoliation of the goods resulted in damages “in an amount exceeding $389,881.91.” (Compl. ¶ 24.)

*2 On November 25, 2019, Defendant filed the instant motion to dismiss Count Five of the Complaint under Rule 12(b)(6). Defendant argues that Count Five for fraud in the inducement is not supported by the factual allegations pled in the Complaint. Defendant argues that Count Five must be dismissed because the Complaint “fails to adequately plead a claim upon which relief can be granted.” (Def. Brief 2.) Additionally, Defendant argues that the claim should be dismissed because it is barred under the economic loss doctrine.

II. LEGAL STANDARD
The issue before the Court on a Rule 12(b)(6) motion to dismiss “is not whether plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence in support of the claims.” In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1420 (3d Cir. 1997) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). To make that determination, the Court must employ the standard of review articulated by the Supreme Court in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal. A complaint will survive a motion under Rule 12(b)(6) only if it states “sufficient factual allegations, accepted as true, to ‘state a claim for relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic v. Twombly, 550 U.S. 544, 570 (2007)). The plausibility standard will be met if the complaint “pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556.) While the complaint need not demonstrate that a defendant is probably liable for the wrongdoing to meet the pleading standard of Federal Rule of Civil Procedure 8(a), allegations that give rise to the mere possibility of unlawful conduct will not do. Iqbal, 556 U.S. at 678; Twombly, 550 U.S. at 557.

III. DISCUSSION
To plead a claim for fraudulent inducement, Plaintiff must establish five elements: “(1) a material representation of a presently existing or past fact; (2) made with knowledge of its falsity; and (3) with the intention that the other party rely thereon; (4) resulting in reliance by that party; (5) to his detriment.” RNC Systems, Inc. v. Modern Technology Group, Inc., 861 F.Supp.2d 436, 451 (D.N.J. 2012) (other citations omitted). Notably, Plaintiff must show that the material representation of which it relied upon was made, by Defendant, “with knowledge of its falsity.” Id. When pleading an allegation of fraud or mistake, Federal Rule of Civil Procedure 9(b) requires that “a party must state with particularity the circumstances constituting fraud or mistake.” However, the rule permits that “malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b).

Although Rule 9(b) excuses parties from pleading “conditions of a person’s mind” under the heightened pleading standard required for fraud claims, “[i]t does not give him license to evade the less rigid—though still operative—strictures of Rule 8.” Ashcroft v. Iqbal, 556 U.S. 662, 686-87 (2009). Here, the Complaint fails to meet the more general pleading requirements imposed by Rule 8 and articulated by the Supreme Court in Iqbal and Twombly. With respect to Count Five, the Complaint merely states that Synergie made several representations to Mitsui Foods that it was capable of providing reliable transportation services to the company and that these “misrepresentations” were made with the intention that Plaintiff would rely on them when entering into the contract. (Compl. Par. 50.)

*3 The Complaint includes the following general statements regarding Defendant’s purported knowledge of its inability to perform: “Synergie knew these representations to be false because Synergie knew that it was apparently unable to fully ensure the effective and safe transport of the Loads and thus could not manage the entirety of MFI’s supply chain worldwide.” (Compl. ¶ 49.) This statement merely repeats the knowledge element that is required under the cause of action. It is devoid of any facts that establish that the Defendant knew or should have known that it was incapable of providing the services when these statements were made. The facts of the Complaint merely establish that Defendant did not perform as promised but fails to establish that Defendant was unable to perform these services or that it knew of such an inability to perform when the agreement was made. Because of this, the Complaint fails to state a claim for Count Five, fraud in the inducement.

In light of the foregoing, the Court need not and will not address the issue of dismissal based on the economic loss doctrine.

IV. CONCLUSION
For the foregoing reasons, the Court will grant Defendants’ motion to dismiss Count Five of the Complaint. An appropriate Order will be filed.

All Citations
Slip Copy, 2020 WL 468337