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Gauss v. GAF Corp.11/25/2002
As modified December 23, 2002; no change in judgment, respondents’ petition for rehearing denied.
CERTIFIED FOR PARTIAL PUBLICATION
These consolidated appeals raise a question about the enforceability of mass tort settlements under Code of Civil Procedure section 664.6. Specifically, can section 664.6 be used to enforce a settlement that was signed by a party's agent, rather than the party itself, when the agent had sole and exclusive authority to settle claims on the party's behalf? Reluctantly, we conclude the answer is no. The summary, expedited enforcement procedure afforded by section 664.6 is only available when a settlement satisfies the statutory requirements designed to ensure the parties have actually consented to the terms of the settlement. A writing not signed by one of the parties (and, in this case, silent as to the extent of a party's obligation) does not satisfy section 664.6. Because the trial court entered judgment in these appeals pursuant to section 664.6, and reserved ruling on the plaintiffs' alternative motions for summary judgment, we reverse the judgments and remand for further proceedings.
BACKGROUND
I. The CCR
In 1988, several companies that previously manufactured, distributed or sold asbestos-containing products joined together to form a nonprofit corporation called the Center for Claims Resolution (CCR). The companies, referred to as "members," established the CCR to administer all aspects of the litigation of asbestos-related claims brought against the companies. In a founding document, called the "Producer Agreement Concerning Center for Claims Resolution" (Producer Agreement), each member company designated the CCR its "sole agent to administer and arrange on [the member's] behalf for the evaluation, settlement, payment or defense of all asbestos-related claims" against the member. Further, each member agreed to give the CCR "exclusive authority" to settle, pay or defend asbestos-related claims asserted against the member. While individual members ceded to the CCR their ability to negotiate or enter separate settlements with asbestos claimants, they also agreed to a formula (set forth in "Attachment A" to the Producer's Agreement) for apportioning shares of liability and expenses among themselves in each particular case. The CCR generally bills members for their apportioned shares of a settled claim within 60 to 90 days before the claim is due to be paid. Often, members' shares are determined after the CCR settles a claim. Since its inception in 1988, the CCR has settled over 200,000 claims asserted against its members across the country.
Appellant GAF Corporation (GAF) was one of the founding members of the CCR in 1988. Over the years, the CCR settled numerous asbestos claims on behalf of GAF, and GAF paid its share of the settlements according to the CCR's calculations. However, in late 1999, the companies had a falling out. The CCR claimed GAF had violated the Producer's Agreement by refusing to pay its apportioned shares of asbestos settlements the CCR had entered on its behalf. On December 17, 1999, GAF received notice from the CCR that GAF's membership in the CCR would be terminated, effective January 17, 2000. The parties disputed the extent of GAF's responsibility to pay shares of settlements the CCR had allocated to GAF before its expulsion. Pursuant to the Producer's Agreement, this dispute was submitted to confidential alternative dispute resolution proceedings. As of February 15, 2000, the CCR estimated the total amount of GAF's share of settlements, which had been billed to GAF but remained unpaid, exceeded $50 million.
II. The Alameda County Settlements
The
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