Case Name: Fidelholtz et al., Appellants, v. Peller et al.; Ong et al., Appellees
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1998-03-11
Citations: 81 Ohio St. 3d 197
Docket Number: No. 96-1777
Parties: Fidelholtz et al., Appellants, v. Peller et al.; Ong et al., Appellees.
Judges: Moyer, C.J., Resnick and Pfeifer, JJ., concur.
Reporter: Ohio State Reports, Third Service
Volume: 81
Pages: 197–207

Head Matter:
Fidelholtz et al., Appellants, v. Peller et al.; Ong et al., Appellees.
[Cite as Fidelholtz v. Peller (1998), 81 Ohio St.3d 197.]
(No. 96-1777
Submitted October 22, 1997 at the Muskingum County Session
Decided March 11, 1998.)
Allen Schulman & Associates Co., L.P.A., and Allen Schulman, Jr., for appellants.
Roetzel & Andress, Thomas A. Treadon and Sue Ellen Salsbury, for appellees.

Opinion:
Francis E. Sweeney, Sr., J.
We are asked to decide whether former R.C. 2307.32(F), now 2307.33(F), entitled a nonsettling defendant to set off funds received by a plaintiff pursuant to a settlement agreement with a co-defendant who was never determined to be a tortious party. Because we find that former R.C. 2307.32(F) required that the settling defendant must first be found to be "liable in tort" before a setoff is permitted, we reverse the judgment of the court of appeals and reinstate the jury verdict of $250,001 against appellees.
Former R.C. 2307.32(F) provided:
"When a release or a covenant not to sue or not to enforce judgment is given in good faith to one of two or more persons liable in tort for the sanie injury or loss to person , the following apply:
"(1) The release or covenant does not discharge any of the other tortfeasors from liability for the injury unless its terms otherwise provide, but it reduces the claim against the other tortfeasors to the extent of any amount stipulated by the release or the covenant, or in the amount of the consideration paid for it, whichever is the greater;
"(2) The release or covenant discharges the tortfeasor to whom it is given from all liability for contribution to any other tortfeasor." (Emphasis added.) 142 Ohio Laws, Part I, 1673.
This court had the opportunity to construe former R.C. 2307.32(F) in Ziegler v. Wendel Poultry Serv., Inc. (1993), 67 Ohio St.3d 10, 615 N.E.2d 1022. Appellees contend that Ziegler is supportive of their position that they are entitled to a setoff.
The facts in Ziegler reveal that on the first day of trial, two of the defendants, Wendel Poultry, and its employee, Terry Hummel (collectively, "Wendel"), informed the court that they had entered into a "high-low" settlement agreement with the plaintiff, agreeing to pay the plaintiff $325,000 regardless of the jury verdict and up to $425,000 if the jury found it (Wendel) liable. ' The fact of the settlement was not revealed to the jury, and Wendel remained in the lawsuit. The positions of Wendel and the other defendant were adversarial, and Wendel presented its case with vigor. The jury found the co-defendant liable and Wendel not liable. In accordance with the settlement agreement, Wendel paid the plaintiff $325,000. The trial court refused to set off this amount from the total jury award pursuant to former R.C. 2307.32(F).
On appeal to this court, the plaintiff argued that the trial court correctly refused to reduce the award because Wendel was found not to be liable and, thus, was not a joint tortfeasor. This court rejected that argument, finding that the setoff provision of former R.C. 2307.32(F) should be applied to reduce the total award. We held that there need not be a judicial determination of liability for a settling defendant to be considered a tortfeasor within the meaning of the contribution statutes. Even though the jury had found Wendel not liable, this court found pertinent that the agreement was executed in contemplation of the defendants' being found jointly and severally liable. Thus, we said that the situation at the time of settlement controls. We believed that a contrary holding would permit a plaintiff to obtain a double recovery, something that the statute was designed to prevent. Id. at 17-18, 615 N.E.2d at 1029.
A majority of courts have taken a similar position. See, e.g., Nguyen v. Tilwalli (1986), 144 Ill.App.3d 968, 99 Ill.Dec. 183, 495 N.E.2d 630; Levi v. Montgomery (N.D.1963), 120 N.W.2d 383. See, generally, Annotation (Supp.1989 and 1992), 34 A.L.R.2d 1107. The Restatement of Torts is in accord with this line of cases. See 4 Restatement of the Law 2d, Torts (1965), Section 885(3) and Comment ƒ.
Appellants argue against such an absolute rule, which provides for an automatic setoff to a nonsettling co-defendant when a co-defendant settles. Appellants assert that this rule is unfair in cases where the defendant receiving the benefit of the settlement is the only party responsible for the injury. Instead, appellants urge this court to overrule Ziegler and adopt a rule of law giving the trial court discretion to determine whether the settling defendant was a person "liable in tort," which would then trigger the right of setoff.
We agree that Ziegler's absolute rule is too harsh under certain facts, such as those presented here. A settlement is not tantamount to an admission of liability. Chitlik v. Allstate Ins. Co. (1973), 34 Ohio App.2d 193, 198, 63 O.O.2d 364, 367, 299 N.E.2d 295, 299. Defendants settle for many reasons, such as the avoidance of bad publicity and litigation costs, the possibility of an adverse verdict, and the maintenance of favorable commercial relationships.
Recognizing that an automatic setoff may prove unduly harsh in some cases, a minority of courts have held that there must be some showing, either by judicial determination, the release itself, or stipulations of the parties, that the settling defendant's actions contributed to the harm. Rocco v. Johns-Manville Corp. (C.A.3, 1985), 754 F.2d 110, 114-116. See, also, Med. Ctr. of Delaware, Inc. v. Mullins (Del.1994), 637 A.2d 6, 8-9; Collier v. Eagle-Picher Industries, Inc. (1991), 86 Md.App. 38, 56-60, 585 A.2d 256, 265-267. The rationale underpinning these holdings is that where only one of several defendants was responsible for the injury, that defendant would have been obligated to pay the entire damage amount if the settling party had not settled. Thus, the former should not reap the benefit of a settlement by the latter. Mullins, 637 A.2d at 9.
We believe that these cases offer the more reasoned view. Moreover, they are in accord with our recent case of MetroHealth Med. Ctr. v. Hoffmann-LaRoche, Inc. (1997), 80 Ohio St.3d 212, 685 N.E.2d 529, the language of the statute, and the goals it seeks to accomplish.
In MetroHealth, a thirty-nine-year-old woman died, allegedly because of a drug administered during a gastroscopy. Her estate sued MetroHealth and the wrong drug company. Eventually, the estate brought in what it believed to be the responsible drug company, Hoffmann-LaRoche ("Hoffmann"). However, by this time, the statute of limitations had run and Hoffmann was dismissed from the lawsuit. MetroHealth later settled the case. MetroHealth and Hoffmann were both named in the release. MetroHealth then filed a separate action for contribution and indemnification from Hoffmann.
We were asked to decide whether a right to contribution exists where the underlying claim against the responsible co-defendant was dismissed because of the statute of limitations. We answered in the affirmative. We noted that at common law, contribution, ie., the right of one who has discharged a common liability to recover from another the portion that the other should have paid, was not allowed between concurrent or joint tortfeasors. Id., 80 Ohio St.3d at 214, 685 N.E.2d at 531. We found that the General Assembly enacted R.C. 2307.31 and 2307.32 to alleviate this inequity. Id. In enacting these statutes, the General Assembly recognized that it would be inequitable to force one defendant to bear the entire burden of compensating an injured plaintiff where the plaintiffs injuries were caused by the combined negligence of two or more tortfeasors. The statutes permit a defendant who is found jointly and severally liable for the plaintiffs injuries to recover from the other tortfeasor(s) a portion of monies paid to the plaintiff.
In construing "liable in tort" in the context of former R.C. 2307.31(A), we determined that the phrase meant that the contribution defendant must have acted tortiously and thereby caused damages. Id. at 215, 685 N.E.2d at 532. Justice Cook, in her dissent, recognized that "liability" has been defined as " 'responsibility for torts.' " Id. at 218, 685 N.E.2d at 534 (Cook, J., dissenting), quoting Black's Law Dictionary (5 Ed.1979) 823. Thus, we concluded that MetroHealth's right to contribution was not extinguished by Hoffmann's dismissal from the lawsuit because of the running of the statute of limitations.
A principle of statutory construction states that where statutory words and phrases have acquired a particular meaning, whether by legislative definition or otherwise, the words must be construed accordingly. R.C. 1.42; Klemas v. Flynn (1993), 66 Ohio St.3d 249, 250, 611 N.E.2d 810, 812. In MetroHealth, we stated that in R.C. 2307.31(A), "liable in tort" "means no more than that the contribution defendant acted tortiously and thereby caused damages." Id., 80 Ohio St.3d at 215, 685 N.E.2d at 532. Having so defined "liable in tort"- in one section of the Contribution Among Tortfeasors Act, we must accord the same definition to another section of the Act. This definition clearly implies that some finding of liability is required before a setoff is permitted. If the General Assembly had intended an automatic setoff, it would have used different wording. Instead of persons "liable in tort" it easily could have said "a named defendant," or words to that effect. Basic fairness and justice dictate that a tortfeasor should not benefit from a plaintiffs good fortune in reaching settlements with other potential defendants not determined to be liable. Granting a nonsettling tortfeasor an automatic setoff would subsidize tortious conduct.
We agree with appellees that two policy objectives for these statutes were to encourage settlement and to prevent double recovery. However, we believe that the broader and more important goal was to ensure that where multiple tortfeasors were at fault in bringing about the injury to the innocent party, each tortfeasor would share the burden of making the injured party whole again. It seems only logical that a party found to have acted alone in causing the harm should not be entitled to a reduction in the damage award.
Accordingly, we hold that former R.C. 2307.32(F) (now R.C. 2307.33[F]) entitles a defendant to set off from a judgment funds received by a plaintiff pursuant to a settlement agreement with a co-defendant where there is a determination that the settling co-defendant is a person "liable in tort." A person is "liable in tort" when he or she acted tortiously and thereby caused harm. The determination may be a jury finding, a judicial adjudication, stipulations of the parties, or the release language itself. To the extent that Ziegler is inconsistent with the rule of law announced today, it is overruled.
Here, the evidence reveals that Dr. Ong failed to forward the crucial piece of information (slide number four) to Dr. Sebek. Dr. Sebek testified that had he examined this, slide, he never would have diagnosed a benign tumor. All witnesses, including Dr. Ong and his expert, were in agreement that Dr. Sebek was not negligent. Thus, appellees were solely responsible for the harm. The trial court could easily have made this determination when it was asked to rule upon the motion for judgment notwithstanding the verdict.
We hold that payments made to appellants by defendants who were not determined to be persons "liable in tort" do not entitle appellees to a setoff. Accordingly, we reverse the judgment of the court of appeals and reinstate the original jury verdict of $250,001 against appellees.
Judgment reversed and verdict reinstated.
Moyer, C.J., Resnick and Pfeifer, JJ., concur.
Douglas, J., dissents.
Cook and Lundberg Stratton, JJ., separately dissent.
. The statutes referred to in this opinion are the former versions that existed before the Am.Sub.H.B. No. 350 amendment effective January 27,1997.