Good Faith Settlement Under Code of Civil Procedure Section 877.6: Settling Out When You Are One of Several Defendants

Last updated: November 2026. Reviewed by Pavel Kolmogorov, California business litigation attorney (State Bar No. 321018).

A good faith settlement determination is a court order finding that one defendant's settlement with the plaintiff was made in good faith. Under California Code of Civil Procedure section 877.6, that finding bars the other defendants from pursuing the settling defendant for equitable contribution or comparative indemnity. In exchange, they receive a credit against the plaintiff's claims. The order does not erase an express contractual promise to indemnify. Kolmogorov Law, P.C. represents businesses that settle out of multi-party cases and businesses that remain in them.

Call (909) 235-6116 or contact us online to discuss a settlement in a case with more than one defendant.

What the determination does

The procedure is available in any action in which two or more parties are alleged to be joint tortfeasors or co-obligors on a contract debt. (Code Civ. Proc., § 877.6, subd. (a)(1).) A finding of good faith bars any other joint tortfeasor or co-obligor from further claims against the settling party for equitable comparative contribution, or for partial or comparative indemnity, based on comparative negligence or comparative fault. (Code Civ. Proc., § 877.6, subd. (c).)

Section 877 states the trade. A good faith release given before verdict or judgment does not discharge the other parties unless its terms say so. It reduces the claims against them by the amount stipulated in the release or the consideration paid for it, whichever is greater. And it discharges the settling party from all liability for contribution to the others. (Code Civ. Proc., § 877, subds. (a), (b).) That section does not apply to co-obligors who have expressly agreed in writing to apportion liability among themselves. (Code Civ. Proc., § 877, subd. (c).)

For a defendant that wants out, the order is the difference between leaving the case and being pulled back in by a cross-complaint.

What it does not do: express indemnity survives

The bar reaches equitable claims, not contracts. The California Supreme Court has held that a settlement, even one made in good faith, does not relieve the settling defendant of an express contractual obligation to indemnify a nonsettling defendant. A claim for implied contractual indemnity is treated as a form of equitable indemnity and is barred. (Bay Development, Ltd. v. Superior Court (1990) 50 Cal.3d 1012.)

Picture a staffing vendor and its customer sued together by a third party. Their services agreement requires the vendor to indemnify the customer. The vendor settles with the plaintiff and obtains a good faith order. The customer's equitable indemnity cross-complaint falls away, but its claim on the written indemnity clause does not. Our page on indemnification clause disputes covers that claim.

The two procedures and their deadlines

The first route is a noticed motion. Any party may have the question heard on regular motion notice, and the court may shorten time for good cause so that the ruling comes before trial. (Code Civ. Proc., § 877.6, subd. (a)(1).)

The second route is an application. The settling party gives notice of the settlement to all parties and the court, with an application and a proposed order. The application must state the settling parties and the basis, terms, and amount of the settlement. Service is by certified mail, return receipt requested, or by personal service. A nonsettling party then has 25 days from mailing, or 20 days from personal service, to file a notice of motion contesting good faith. If nobody does, the court may approve the settlement. This shorter route is unavailable when a confidentiality agreement covers the case or the settlement terms. (Code Civ. Proc., § 877.6, subd. (a)(2).)

The court may decide on affidavits and counteraffidavits or receive other evidence, and the party asserting a lack of good faith carries the burden of proof. (Code Civ. Proc., § 877.6, subds. (b), (d).) Immediate review is by petition for a writ of mandate, filed within 20 days after service of written notice of the determination. The trial court may allow up to 20 more. (Code Civ. Proc., § 877.6, subd. (e).) Courts of Appeal are divided on whether the ruling can also be challenged on appeal from the final judgment, so the writ petition is the safe course.

How a court decides good faith

The Supreme Court set the test in 1985. A court considers a rough approximation of the plaintiff's total recovery and the settling party's proportionate liability, the amount paid, and the allocation of the proceeds among plaintiffs. It recognizes that a settling party should pay less than it would after losing at trial. It also weighs the settling party's financial condition and insurance limits, and any collusion, fraud, or tortious conduct aimed at the nonsettling defendants. The evaluation rests on the information available at the time of settlement. An objector must show the settlement is so far "out of the ballpark" in relation to those factors that it defeats the statute's equitable objectives. (Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499.)

In Bay Development the court directed trial judges to take any contractual relationship between the settling and nonsettling defendants into account when estimating each one's share.

If you are the defendant settling out

Make the settlement conditional on the good faith order, and say who will seek it and when.
Assemble the evidence of your proportionate share before you move, since the court will measure the payment against it.
Decide early whether the terms can be disclosed. The application route requires the amount and is closed to confidential settlements.
Read every contract with the other defendants for an express indemnity clause, because that exposure remains.
Match the release to the order. Our page on settlement agreements and releases covers who and what a release reaches.

If you are a defendant left in the case

Calendar the 25-day or 20-day window the day the application arrives. Decide whether you have evidence that the payment is far below the settling party's share. Protect any express indemnity claim by pleading it on the contract. Then recalculate your own position. The plaintiff's claims against you are reduced as section 877 provides, and your equitable claims against the settling party are barred. That is a natural moment to weigh a section 998 offer or mediation.

What to bring to the first meeting

The complaint and every cross-complaint.
The settlement agreement or term sheet, and any application or motion for a good faith determination, with its proof of service.
Contracts among the defendants, especially indemnity and insurance clauses.
The best available estimates of total damages and of each defendant's share.
Insurance policy limits for the settling party, if known.

Frequently asked questions

We are one of three defendants and want to settle. Can the other defendants still sue us for contribution afterward?

Not on equitable theories, if the court finds your settlement was in good faith. Under California Code of Civil Procedure section 877.6, subdivision (c), that finding bars the other defendants' claims for equitable comparative contribution and partial or comparative indemnity. A written indemnity clause you signed with a co-defendant is different. The Supreme Court has held that an express indemnity obligation survives.

A co-defendant settled with the plaintiff for a small amount and left us holding the rest. Can we challenge that settlement?

Yes, but the burden is yours and the window is short. In California a nonsettling party served with an application for a good faith determination has 25 days from mailing, or 20 days from personal service, to file a motion contesting it. You must show the settlement is far outside the reasonable range under the court's factors, which include the settling party's proportionate share and any collusion aimed at the remaining defendants.

What is a good faith settlement in California?

It is a settlement between the plaintiff and one of several defendants that a court has found, under California Code of Civil Procedure section 877.6, to be within the reasonable range of that defendant's share of liability. The finding protects the settling defendant from equitable indemnity and contribution claims by the others, who receive an offset.

How much credit do the remaining defendants get?

Section 877 of the California Code of Civil Procedure reduces the claims against the remaining parties by the amount stipulated in the release or the consideration paid for it, whichever is greater. The release does not discharge them unless its terms so provide. How the credit applies to particular categories of damages can require further analysis.

How is a good faith settlement ruling reviewed?

By a petition for a writ of mandate. Under California Code of Civil Procedure section 877.6, subdivision (e), the petition must be filed within 20 days after service of written notice of the determination. The trial court may extend that time by no more than 20 additional days. Courts of Appeal disagree on whether a party may instead wait and appeal after judgment, so skipping the writ is a risk.

Talk to a California business litigation attorney

If you are settling out of a multi-defendant case, or a co-defendant's settlement has just been served on you, call (909) 235-6116 or contact us online. Kolmogorov Law, P.C. is a business litigation firm in Irvine, California. See also our pages on enforcing settlement agreements and civil litigation.

This page provides general information about California law and is not legal advice. Outcomes depend on the settlement terms, the contracts among the parties, and the court.