In Oak Springs Villa Homeowners Association v. Advanced Truss Systems, Inc. (2012) 206 Cal.App.4th 1304 (Oak Springs), a Court of Appeal held that a trial court’s good faith settlement determination is a non-appealable interlocutory ruling that is only reviewable by a timely petition for writ of mandate pursuant to Code of Civil Procedure § 877.6.

In Oak Springs, the homeowners association (HOA) brought an action against the developers, roof subcontractor, roof material supplier (ATS) and structural engineering firm for construction defects. The HOA settled with all defendants except ATS. The trial court determined that the parties settled in good faith. ATS did not file a petition for writ of mandate, but instead appealed from the order approving the settlement.

The Court dismissed ATS’ appeal. The Court rejected ATS’ argument that it could appeal from an order resulting in the dismissal of its cross-complaint for indemnity against the developer: “The final judgment rule cannot be interpreted to allow a party who remains in the action to base its appeal on an order involving a different party [i.e. the party that settled].” In doing so, the Court expressly disagreed with the Court of Appeal in Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939 (Cahill), which had recently determined that a writ petition under § 877.6 was not the sole means of challenging a trial court’s good faith settlement determination. (Notably, the appellant in Cahill, unlike ATS, filed a petition for writ of mandate, which was denied, before filing its appeal.) Oak Springs called Cahill’s analysis “bare" and disagreed with its conclusion because it would give parties two appeals on the same issue: one from the order approving the good faith settlement, and the other from the final judgment.

The Oak Springs and Cahill decisions (from the Second and the Fourth Districts of the Court of Appeal, respectfully) represent a clear split of authority as to whether a non-settling party may appeal from an order approving a good faith settlement. The Supreme Court may ultimately decide this issue. Until then, you must timely file a petition for writ of mandate to seek review of an order approving a good faith settlement.

The bottom line: In lawsuits involving multiple defendants, Oak Springs gives an advantage to those parties that settle. Parties who do not settle have little practical recourse if the trial court approves the settlement because appellate courts grant less than one in ten of all writ petitions.