Mattco Forge, Inc. v. Arthur Young & Co.

Cross-complainants and appellants Arthur Young & Company, Richard E. Lamping, Thomas W. Blumer and Ernst & Young (collectively Young) appeal an order dismissing their cross-complaint against attorneys James B. Helmer, Jr., and Robert L. Neff, Jr. (Helmer & Neff), cross-defendants and respondents, pursuant to a “good faith” settlement.

The essential issue presented is whether the trial court abused its discretion in finding the subject settlement to be in good faith. (Code Civ. Proc., § 877.6.)

Because no substantial evidence was presented regarding the settling party’s proportionate liability, and for the additional reasons discussed below, the order is reversed.

Factual and Procedural Background

1. The federal action.

Mattco Forge, Inc., and Mateo Minguez (collectively Mattco) sued General Electric (G.E.) in federal court, claiming G.E.’s elimination of Mattco as an approved subcontractor was racially motivated. Helmer & Neff represented Mattco in that action. To help establish Mattco’s damages, Young, an accounting firm, was retained as a consultant and expert witness.

On September 12, 1988, Judge Gadbois issued a sanctions order against Mattco. The judge found,…