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Copper Mountain Inc. v. Poma of America Inc.2/6/1995
ed to attend. Poma did not attend however, and neither Stubbs nor Poma provided any explanation to Copper during the settlement conference for Poma's absence. Poma asserts that it assumed Copper understood Poma's failure to appear at the joint settlement conference to mean that it had settled with Stubbs.
A little over a month after the joint settlement conference, Copper and Stubbs reached an oral agreement to settle Stubbs' claims for approximately $4.5 million. Under the original agreement, Stubbs would release both Copper and Poma from liability so that Copper would be free to pursue an action for contribution against Poma. In a letter confirming the proposed terms of settlement with Copper, Stubbs formally advised Copper of the settlement agreement it had reached with Poma. Copper immediately responded by letter, stating its belief that Stubbs' failure to disclose the agreement with Poma was a "material misrepresentation of fact." Copper's letter stated that it was a "clearly understood condition precedent" to Copper's offer that Stubbs "had done and would do nothing by way of a separate settlement which would inhibit [Copper's] contribution right against Poma."
In a written reply, Stubbs stated that she would not seek to enforce the settlement if Copper desired to rescind the agreement, and that the parties could then proceed to trial. Copper elected, however, to continue working towards a settlement. After further Discussions, on June 27, 1991, Copper and Stubbs agreed to settle under substantially the same terms as were previously negotiated. Pursuant to their settlement agreement, Stubbs executed a release of all claims against Copper and Poma, and Copper paid Stubbs the amount under the settlement agreement in full.
Anticipating Copper's forthcoming claim for contribution, on July 21, 1991, Poma filed a motion for dismissal, contending that contribution was barred by its settlement with Stubbs under the provisions of section 13-50.5-105, 6A C.R.S. (1987 & 1994 Supp.). That section provides that when a covenant not to enforce judgment is executed in "good faith," it discharges the tortfeasor to whom it is given from all liability for contribution to any other tortfeasor. On August 5, 1991, Copper moved to realign the parties and for leave to file a cross-claim against Poma for contribution. Copper also initiated discovery regarding the settlement agreement between Poma and Stubbs.
On August 7, 1991, Poma filed a motion for a protective order barring all discovery. That motion was granted and, after considering evidence presented during a two-day hearing, the trial court denied Copper's motion to realign the parties and dismissed the action with prejudice. In reaching its ruling, the trial court found that the agreement between Stubbs and Poma was executed in good faith and that the existence of the agreement was not concealed or misrepresented. The court particularly emphasized the fact that Copper knew of the terms of the Poma-Stubbs settlement before it finalized its own settlement with Stubbs.
The court of appeals affirmed the decision of the trial court, holding that the test for whether a settlement is made in good faith is based on whether the parties engaged in "collusive" conduct intended to prejudice the interests of the nonsettling defendants. Stubbs v. Copper Mountain, 862 P.2d 978, 982-84 (Colo. App. 1993). The court of appeals found no evidence of collusive conduct either in the structure of the settlement between Stubbs and Poma, or in the circumstances surrounding the disclosure of the agreement. Id. at 984-86. That court also found that the trial court did not abuse its discretion in dec
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