Legal Question in Civil Litigation in California

I have no idea what you mean by "so that the may follow the case." The answer to your question, however, is that there is nothing preventing one party settling out of a case before other parties are served. I would be concerned if I was the attorney for Party #1 because without you in the case, Party 1 can't make a motion to have the court order the settlement to be a fair settlement of Party 1's liability. So if you think Party 1 didn't pay their fair share of the liability and left you to pay the rest, you can sue Party 1 for indemnity and contribution. Meaning Party 1 hasn't really safely gotten out of the case. But as I said, there is nothing preventing Party 1 and the plaintiff from settling before you were served.

Under these facts, the case can proceed to trial against Defendant 2. The Court should have notice that Defendant 1 is out of the case. The case will now function as though Defendant 1 was never a party, for all purposes of setting a trial and conducting discovery.

The amount Defendant 1 paid in settlement is important for a number of reasons. For example, it may be an offset of the amount that you might ultimately owe. You should discuss this with a lawyer in your area.