Case Name: Jared K. Barton, Respondent, v. The Department of Transportation, Petitioner, Korrine C. Linvog et al., Respondents
Court: Washington Supreme Court
Jurisdiction: Washington
Decision Date: 2013-08-15
Citations: 178 Wash. 2d 193
Docket Number: No. 86924-3
Parties: Jared K. Barton, Respondent, v. The Department of Transportation, Petitioner, Korrine C. Linvog et al., Respondents.
Judges: C. Johnson, Owens, J.M. Johnson, Stephens, and González, JJ., and Chambers, J. Pro Tem., concur.
Reporter: Washington Reports
Volume: 178
Pages: 193–226

Head Matter:
[No. 86924-3.
En Banc.]
Argued October 4, 2012.
Decided August 15, 2013.
Jared K. Barton, Respondent, v. The Department of Transportation, Petitioner, Korrine C. Linvog et al., Respondents.
Robert W. Ferguson, Attorney General, and Michael P. Lynch and Michael A. Nicefaro Jr., Assistants, for petitioner.
Ralph J. Brindley, Paul N. Luvera Jr., and David M. Beninger (of Luvera Barnett Brindley Beninger & Cunningham)-, Howard M. Goodfriend (of Smith Goodfriend PS)-, and Brent W. Beecher (of Hackett Beecher & Hart), for respondents.
George M. Ahrend and Bryan P. Harnetiaux on behalf of Washington State Association for Justice Foundation, amicus curiae.
Stewart A. Estes and Michael B. King on behalf of Washington Defense Trial Lawyers, amicus curiae.

Opinion:
Fairhurst, J.
¶1 This case concerns a partial settlement agreement made between a plaintiff and some, but not all, defendants in the aftermath of a motorcycle and motor vehicle accident. In the underlying suit, Jared K. Barton sued Korrine C. Linvog; Korrine's parents, Thomas and Madonna Linvog (hereinafter the Linvogs); and the State of Washington. Prior to trial, Barton executed an agreement with the Linvogs. In the agreement, the Linvogs agreed to advance Barton $20,000 in exchange for Barton's promise not to execute on a judgment against them above their insurance policy limits. Neither Barton nor the Linvogs initially disclosed the agreement to the court or the State. After a 16 day trial, the jury awarded Barton $3.6 million and the court entered judgment against the State, Korrine, and the Linvogs. In the process of paying the judgment, the State learned about the agreement. The State moved to vacate the judgment on the grounds of fraud and misrepresentation. The trial court denied the motion to vacate but sanctioned Barton's attorney for failing to disclose the agreement pursuant to discovery requests. We affirm.
FACTS AND PROCEDURAL HISTORY
¶2 Korrine was driving her parents' car when she pulled into an intersection and collided with Barton, who was approaching the intersection on his motorcycle with the right of way. Barton suffered serious injuries, including brain damage. Barton sued Korrine for negligence and sued the Linvogs under the family car doctrine. Barton also sued the Washington State Department of Transportation under the theory of negligent highway design and maintenance.
¶3 William Spencer, attorney for the Linvogs, offered to settle with Barton for the limits of the Linvogs' insurance policy — $100,000. Ralph Brindley, Barton's attorney, refused the settlement offer because he wanted to maintain joint liability between Korrine, the Linvogs, and the State. However, Brindley apparently told Spencer that his normal policy was not to pursue claims against individuals in excess of their insurance policy limits.
¶4 Almost two years after the accident occurred, Brindley sought a $20,000 advance from the Linvogs to pay for medical expenses incurred by Barton, who was uninsured. Spencer, seeing an opportunity to cap the liability of his clients in the event of a verdict rendered solely against the Linvogs, drafted a document entitled "Stipulation of Parties Regarding Advanced Payment" (the Stipulation). Clerk's Papers (CP) at 924-25. The Stipulation provided that the Linvogs (through their insurance company Mutual of Enumclaw) would pay Barton $20,000, and such payment would reduce (by $20,000) any future settlement or verdict against the Linvogs. The Stipulation further provided that Barton "would not execute on any judgment" he obtained from the Linvogs in excess of their liability insurance. CP at 925. The Stipulation concluded that "the advance payment does not represent a settlement of any claims Plaintiff Jared Barton has brought in this matter against Defendants." Id. Brindley signed the Stipulation, but it was not signed by anyone else. Spencer and Brindley did not intend the Stipulation to affect Korrine's liability to Barton or the State's contribution rights against Korrine or the Linvogs. Mutual of Enumclaw tendered a $20,000 check to Barton, which he cashed.
¶5 Some months earlier, the State had sent discovery requests to Barton and the Linvogs, asking whether the parties had entered into any pretrial settlements, releases, or agreements. In their initial responses, both Barton and the Linvogs denied the existence of any such agreement, which was true at the time. After executing the Stipulation, however, neither Brindley nor Spencer thought to supplement their answers to the State's requests.
¶6 After a 16 day trial, the jury returned a $3.6 million verdict in Barton's favor. The jury found Korrine 5 percent at fault ($180,000) and the State 95 percent at fault ($3.42 million). Because the court had earlier granted summary judgment on the issue of Barton's comparative fault— finding Barton fault free — Korrine, the Linvogs, and the State were jointly and severally liable for Barton's injuries. The court entered judgment against Korrine, the Linvogs, and the State.
¶7 The State appealed the trial court's evidentiary rulings and the court's granting of Barton's motion for summary judgment on the issue of comparative fault. But the Court of Appeals affirmed and remanded. Barton v. Dep't of Transp., noted at 147 Wn. App. 1021, 2008 WL 4838687, 2008 Wash. App. LEXIS 2609, review denied, 166 Wn.2d 1012, 210 P.3d 1018 (2009). After remand, Barton sought to collect his judgment from the Linvogs and the State. Mutual of Enumclaw paid Barton the balance of the Linvogs' policy limits — $80,000. Brindley executed a partial satisfaction of judgment in the amount of $100,000. In the course of discussing the payment of the judgment with Spencer and Brindley, the State learned about the Stipulation and obtained a copy of the Stipulation from Spencer.
¶8 Soon after learning about the Stipulation, the State filed a motion to vacate the judgment of the trial court and for new trial and for sanctions. The State alleged that Barton and the Linvogs' failure to disclose the Stipulation (1) amounted to fraud and misrepresentation, (2) warranted severe discovery sanctions, (3) constituted a "Mary Carter" agreement that improperly realigned the interests of the parties, and (4) resulted in an unfair trial because (a) the State was unable to cross-examine Korrine to establish bias and (b) the family car doctrine jury instruction inaccurately stated that the parents were liable for Korrine's share of fault. The State deposited its share of the judgment ($3.42 million) in the registry of the court, requesting that the funds be held in trust pending the motion to vacate.
f 9 The trial court denied the State's motion to vacate. In a detailed memorandum decision, the trial court found that the failure to disclose the Stipulation did not prejudice the State and did not affect the outcome of the trial. The trial court found discovery sanctions were warranted for Brindley's failure to supplement his interrogatory answers (Spencer was not subject to sanctions). The trial court ordered that Barton would not receive $146,000 in interest that he otherwise would have been entitled to receive (interest that accrued over the nine months between the State's depositing the judgment with the court and the release of the funds to Barton). The State appealed, arguing that the trial court erred by denying the State's motion to vacate. In an unpublished decision, the Court of Appeals affirmed the trial court on all grounds. Barton v. Dep't of Transp., noted at 164 Wn. App. 1024, 2011 WL 5175599, 2011 Wash. App. LEXIS 2423.
¶10 The trial court ordered the State to pay Barton's judgment balance ($80,000). The trial court also entered judgment against Korrine and the Linvogs in favor of the State on its claim for contribution in the amount of $92,632.30 ($80,000 plus interest), plus interest at the judgment rate. The State filed a petition for review, which we granted. Barton v. Dep't of Transp., 174 Wn.2d 1008, 278 P.3d 1112 (2012).
ISSUES
¶11 A. Does an agreement between a plaintiff and some, but not all, defendants, in which the defendants give the plaintiff an advance payment in exchange for plaintiff's promise not to execute on a judgment in excess of defendants' insurance policy limits, release the defendants so that they are not jointly and severally liable with nonagreeing defendants?
¶12 B. Did the Stipulation negate Korrine and the Linvogs' contribution liability?
¶13 C. Did the trial court abuse its discretion in its choice of sanctions?
ANALYSIS
A. Does an agreement between a plaintiff and some, but not all, defendants, in which the defendants give the plaintiff an advance payment in exchange for plaintiff's promise not to execute on a judgment in excess of defendants' insurance policy limits, release the defendants so that they are not jointly and severally liable with nonagreeing defendants?
¶14 We granted review on the State's question of whether the Stipulation destroyed joint and several liability between the State, Korrine, and the Linvogs. Essentially, the State asks this court to determine whether the Stipulation released the Linvogs within the meaning of RCW 4.22.060 and .070 — a question not reached by the trial court or the Court of Appeals. The State argues that the operative legal effect of the Stipulation released the Linvogs, thus destroying joint and several liability and negating the State's contribution rights. The State argues that the trial court's failure to accord the Stipulation its operative legal effect was reversible legal error. After discussing the standard of review and Washington's joint and several liability scheme as it relates to released parties, we turn to the question of whether the Stipulation released the Linvogs. We hold that the Stipulation did not release the Linvogs under RCW 4.22.070; thus, they were jointly and severally liable for Barton's damages.
¶15 Standard of Review. We generally review a trial court's decision on a motion to vacate for abuse of discretion. Haley v. Highland, 142 Wn.2d 135, 156, 12 P.3d 119 (2000). In this case, however, we granted review to determine whether the Stipulation destroyed joint liability under RCW 4.22.070(1), which requires the court to define the term "release" as used in that statute. We review issues of statutory interpretation and alleged errors of law de novo. Jongeward v. BNSF Ry., 174 Wn.2d 586, 592, 278 P.3d 157 (2012) (citing State v. Breazeale, 144 Wn.2d 829, 837, 31 P.3d 1155 (2001)).
1. Under Washington's joint and several liability scheme, a "released" defendant is not jointly and severally liable and is not liable for contribution to other defendants against whom judgment is entered
¶16 To understand the issue presented by this case, it is necessary to briefly outline Washington's joint and several liability scheme. Generally, when multiple tortfeasors cause a plaintiff's injuries, each tortfeasor is liable only for damages corresponding to its proportionate share of fault as determined by the trier of fact. RCW 4.22.070(1). However, when multiple tortfeasors are responsible for a plaintiff's injuries and the plaintiff is zero percent at fault, tortfeasors against whom judgment is entered are jointly and severally liable for the sum of their proportionate shares of the plaintiff's damages. RCW 4.22.070(l)(b).
¶17 A plaintiff must obtain a judgment against each defendant before multiple defendants are jointly and severally liable. Gerrard v. Craig, 122 Wn.2d 288, 298, 857 P.2d 1033 (1993). "Settling parties, released parties, and immune parties are not parties against whom judgment is entered and will not be jointly and severally liable under RCW 4.22.070(l)(b)." Kottler v. State, 136 Wn.2d 437, 447, 963 P.2d 834 (1998) (citing Washburn v. Beatt Equip. Co., 120 Wn.2d 246, 294, 840 P.2d 860 (1992); Anderson v. City of Seattle, 123 Wn.2d 847, 852, 873 P.2d 489 (1994) (A released party "cannot under any reasonable interpretation of RCW 4.22.070(l)(b) be a defendant against whom judgment is entered.")).
¶18 A joint and severally liable defendant who pays more than his or her proportionate share may seek contribution from another defendant against whom judgment has been entered pursuant to RCW 4.22.040, .050, and .060. RCW 4.22.070(2). But joint and several liability must exist before a defendant has a right to contribution from another defendant. "Contribution is conditioned on the existence of joint and several liability because absent such common joint and several liability one party will have no duty to pay another's liability for damages and, thus, no cause for subsequent reimbursement." Kottler, 136 Wn.2d at 442. Since "released" tortfeasors cannot be jointly and severally liable with nonreleased tortfeasors, released tortfeasors are not liable for contribution.
2. A plaintiff who executes a settlement device listed in RCW4.22.060 with some, hut not all, defendants does not necessarily "release" a defendant under RCW 4.22.070
¶19 Washington's comparative fault statutes, chapter 4.22 RCW, do not define "release." "Our fundamental purpose in construing statutes is to ascertain and carry out the intent of the legislature." In re Marriage of Schneider, 173 Wn.2d 353, 363, 268 P.3d 215 (2011) (citing Lake v. Woodcreek Homeowners Ass'n, 169 Wn.2d 516, 526, 243 P.3d 1283 (2010)). "We determine the intent of the legislature primarily from the statutory language." Id. (citing Lacey Nursing Ctr., Inc. v. Dep't of Revenue, 128 Wn.2d 40, 53, 905 P.2d 338 (1995)). "In the absence of ambiguity, we will give effect to the plain meaning of the statutory language." Id. (citing TracFone Wireless, Inc. v. Dep't of Revenue, 170 Wn.2d 273, 281, 242 P.3d 810 (2010)).
¶20 The term "release" is not ambiguous. The plain meaning of "release" is the "surrender of a claim, which may be given for less than full consideration, or even gratuitously." DeNike v. Mowery, 69 Wn.2d 357, 366, 418 P.2d 1010, 422 P.2d 328 (1966); see also Black's Law Dictionary 1403 (9th ed. 2009) (defining "release" as "[liberation from an obligation, duty, or demand; the act of giving up a right or claim to the person against whom it could have been enforced"); W. Page Keeton et al., Prosser and Keeton on the Law of Torts 332 (5th ed. 1984) ("a release is a surrender of the cause of action, which may be gratuitous, or given for inadequate consideration"); Warren Freedman, Joint and Several Liability: Allocation of Risk and Apportionment of Damages 70 (1987) (a "release" is "a surrender of the cause of action, gratuitously or for some consideration").
¶21 The State advocates for a different interpretation of RCW 4.22.070(1) and the term "release." The State points out that RCW 4.22.060, the statute governing the effect of settlement agreements, also uses the term "release." RCW 4.22.060(1) requires notice and court approval of "a release, covenant not to sue, covenant not to enforce judgment, or similar agreement." RCW 4.22.060(2) discharges the contribution liability of one who obtains a "release, covenant not to sue, covenant not to enforce judgment, or similar agreement." The State reads RCW 4.22.060 together with RCW 4.22.070 to conclude that a defendant who is a party to "a covenant not to sue," "a covenant not to enforce judgment," or "similar agreement" is "released" under RCW 4.22.070(1).
¶22 The State's argument is not without merit. The Court of Appeals has read RCW 4.22.060 together with RCW 4.22.070 to conclude that when a defendant enters into "a release, covenant not to sue, covenant not to enforce judgment, or similar agreement," RCW 4.22.060, then the defendant is "released" under RCW 4.22.070(1). See Maguire v. Teuber, 120 Wn. App. 393, 396, 85 P.3d 939 (2004) ("Read as a whole, this statute suggests that releases, covenants and similar agreements all constitute 'releases' for purposes of determining who had been 'released' under RCW 4.22.070." (footnote omitted)); Romero v. W. Valley Sch. Dist., 123 Wn. App. 385, 387, 98 P.3d 96 (2004) (adopting the analysis from Maguire).
¶23 The Maguire court based its holding, in part, on the opinion of Washington law review articles that speculated that a "covenant not to sue, covenant not to enforce judgment, or similar agreement," RCW 4.22.060, would release covenanting parties under RCW 4.22.070. See, e.g., J. Michael Philips, Looking out for Mary Carter: Collusive Settlement Agreements in Washington Tort Litigation, 69 Wash. L. Rev. 255, 273-74 (1994) ("The language of the 1986 Tort Reform Act and its interrelationship with the 'effects of settlement' statute suggest that the legislature intended Mary Carter-type agreements to be treated as settlements." (footnote omitted) (quoting RCW 4.22.070, .060)); Cornelius J. Peck, Reading Tea Leaves: The Future of Negotiations for Tort Claimants Free from Fault, 15 U. Puget Sound L. Rev. 335, 344 (1992) ("a court will treat a contract not to execute as a release or settlement under RCW 4.[22].070"); Gregory C. Sisk, Interpretation of the Statutory Modification of Joint and Several Liability: Resisting the Deconstruction of Tort Reform, 16 U. Puget Sound L. Rev. 1, 50 (1992) (citing Peck, supra). The commentators were concerned that litigants would use these settlement devices to falsely manufacture joint and several liability.
¶24 We disagree with the Maguire court's interpretation of RCW 4.22.070 because it does not account for the plain, unambiguous meaning of the term "released." The Maguire court, rather than determining the plain meaning of "released" in RCW 4.22.070, looked solely to "closely related statutes" to ascertain "the underlying legislative purpose" and concluded that all settlement devices listed in RCW 4.22.060 have the effect of "releas [ing]" a defendant under RCW 4.22.070. Maguire, 120 Wn. App. at 396 (citing Gallo v. Dep't of Labor & Indus., 119 Wn. App. 49, 54, 81 P.3d 869 (2003)); see also David Beninger & Joel Cunningham, Settlement Agreements: Are Lions Now Tigers and Bears (Oh My)?, Trial News, Jan. 2006, at 5 (suggesting that the Maguire court used a "grammatical trick" to equate the types of settlement devices listed in RCW 4.22.060 to the term "released" in RCW 4.22.070). By not considering the plain meaning of the term "release," the Maguire court erroneously equated a "covenant not to sue, covenant not to enforce judgment, or similar agreement," RCW 4.22.060, to complete "releases."
¶25 The Maguire court also thought its interpretation of RCW 4.22.070 was "consistent with case law," specifically Kottler and Shelby v. Keck, 85 Wn.2d 911, 541 P.2d 365 (1975). Maguire, 120 Wn. App. at 397. As discussed in the following section, we do not find that these cases mandate the result reached by the Maguire court. The Maguire court failed to take into account the fact that Washington courts have enforced partial, pretrial settlement devices that do not completely release a covenanting defendant. For instance, Washington courts have found that covenants not to sue, covenants not to execute judgment, and loan receipt agreements do not necessarily "release" a defendant.
¶26 Despite the State's arguments to the contrary, we find such settlement devices tend to further the underlying policies of the tort reform act of 1981, chapter 4.22 RCW. See Jensen v. Beaird, 40 Wn. App. 1, 10, 696 P.2d 612 (1985) (partial settlement devices "encourage out-of-court settlements, help solve the economic needs of an injured person confronted with the delays in the court system, and . . . simplify complex multiparty litigation"). In particular, partial settlement devices encourage tortfeasors "to place a substantial sum of money at [their] victim's disposal, with the possibility of no recoupment," when "the injured party... might otherwise have to wait several years while prolonged and varied court battles are waged." Id. The Maguire court's interpretation of RCW 4.22.070 ignores precedent distinguishing partial settlement devices from releases and interferes with a plaintiff's ability to settle his or her claims.
¶27 We hold the execution of a "covenant not to sue, covenant not to enforce judgment, or similar agreement," RCW 4.22.060(1), does not necessarily "release" a defendant under RCW 4.22.070. We find the Maguire court's analysis flawed because the Court of Appeals ignored the plain meaning of "release," failed to distinguish between releases and other partial settlement agreements, and reached a result that interferes with a plaintiff's ability to settle his or her claims. To the extent that the Court of Appeals analyzed RCW 4.22.070 together with .060 in Maguire and Romero, those cases are overruled. However, as discussed in the following section, the holdings of Maguire and Romero remain intact because reading RCW 4.22.070 together with .060 was not necessary to the outcome of those cases.
¶28 In summary, we reject the State's argument that the Stipulation — essentially a covenant not to execute judgment — had the operative legal effect of releasing the Linvogs. We are mindful that partial settlement devices executed between plaintiffs and some, but not all, defendants pose the risk of collusion between parties. But we find that the requirements of disclosure and reasonableness hearings sufficiently address these concerns. Furthermore, we find that partial settlement devices do not undermine the tort reform act because they encourage out-of-court settlements and speedy compensation to injured victims. In the following section, we apply traditional principles of contract interpretation to determine whether the Stipulation "released" the Linvogs under RCW 4.22.070.
.3. Pretrial, partial settlement agreements should, he interpreted under traditional principles of contract interpretation
f29 Barton and the Linvogs argue that the Stipulation should be given the effect that the parties intended. We agree. We hold that the Stipulation did not release the Linvogs because Barton and the Linvogs did not intend the Stipulation to release the Linvogs. Like the trial court and the Court of Appeals, we do not analyze issues of contract formation or defenses to enforcement (i.e., impossibility, mutual mistake, contrary to public policy) because the parties do not address these issues.
¶30 "A release is a contract and its construction is governed by contract principles subject to judicial interpretation in light of the language used." Nationwide Mut. Fire Ins. Co. v. Watson, 120 Wn.2d 178, 187, 840 P.2d 851 (1992); see also Del Rosario v. Del Rosario, 152 Wn.2d 375, 382, 97 P.3d 11 (2004) ("This court has consistently held that personal injury releases are contracts governed by contract principles."); 1 Settlement Agreements in Commercial Disputes: Negotiating, Drafting & Enforcement § 9.01 [B], at 9-3 (Richard A. Rosen ed., 2008) (hereinafter Settlement Agreements) ("Because releases are contracts, contract law governs the formation and interpretation of releases"). "A court's primary task in interpreting a written contract is to determine the intent of the parties." U.S. Life Credit Ins. Co. v. Williams, 129 Wn.2d 565, 569, 919 P.2d 594 (1996); see also Mills v. Inter Island Tel. Co., 68 Wn.2d 820, 829, 416 P.2d 115 (1966) ("[T]he distinction between a covenant not to sue and a release will be preserved according to the intention of the parties."); 1 Settlement Agreements, supra, § 9.03[A], at 9-19 (if a release is ambiguous, "the court will proceed to consider the intent of the parties"). In determining whether the partial settlement agreement releases a covenanting defendant, Washington courts have explicitly, or implicitly, looked to the intent of the parties to resolve ambiguity.
¶31 In Shelby, Gary Keck accidently shot and killed Verna Shelby in a tavern and Shelby's estate sued Keck and the restaurant that had served alcohol to Keck prior to the shooting. 85 Wn.2d at 912. Keck reached an agreement with Shelby's estate where Keck's insurance company paid the estate $25,000 — Keck's insurance policy limits — and the estate agreed not to execute on a judgment against Keck. Id. The trial court granted the restaurant's motion to dismiss Keck from the lawsuit. Id. at 912-13. This court affirmed Keck's dismissal. Id. at 917. We noted the parties intended the agreement to be a "binding settlement" that left "no justiciable issue to be resolved between [the] parties." Id. at 918. In other words, we found that the estate intended to completely release Keck in exchange for his payment of $25,000.
¶32 In Maguire, John Maguire sued Steven Teuber after Teuber rear-ended Maguire's car. 120 Wn. App. at 394. Maguire also sued the State — for faulty highway design— and the owner of the car, William Hadsall. Id. Maguire executed an agreement with Teuber and Hadsall where they agreed to pay Maguire $100,000 — their insurance policies limits — and Maguire promised not to execute a judgment against either Teuber or Hadsall. Id. After disclosure of the agreement, the State moved to dismiss Teuber and Hadsall but the trial court denied the State's motion.
¶33 The Court of Appeals reversed, holding (1) the covenant not to execute "released" Teuber and Hadsall under RCW 4.22.070, (2) the trial court erred in entering judgment against Teuber and Hadsall, and (3) the trial court erred in dismissing Teuber and Hadsall. Maguire, 120 Wn. App. at 399. In holding that the agreement released Teuber and Hadsall, the Court of Appeals reasoned that the agreement was " 'intended to constitute a complete resolution of all claims.' " Id. at 397-98, 399 (quoting covenant not to execute). Above, we held that the Maguire court erred by analyzing RCW 4.22.070 together with .060 to conclude that the covenant not to execute "released" Teuber and Hadsall. Nevertheless, the Maguire court properly held that the agreement released Teuber and Maguire because the parties intended the agreement to be a "complete resolution of all claims." Id. at 397-98, 399.
¶34 In Romero, Michael and Carrie Romero sued the West Valley School District for negligence after a vehicle struck and killed the Romeros' young child in the school's load and unload zone. 123 Wn. App. at 387. Mr. Romero and the child's estate cross-claimed against Ms. Romero, who had been responsible for picking the child up from school. Id. Mr. Romero and the child's estate executed an agreement with Ms. Romero with the following terms:
Ms. Romero agreed to pay the limits of her automobile insurance and $5,000. Mr. Romero and the estate agreed that if they obtained a judgment of more than $30,000 against the District, they would reimburse Ms. Romero $1 for every $2 they collected from the District over the $30,000 amount, up to $5,000. They also agreed that Ms. Romero would remain in the suit as a defendant. But Mr. Romero and the estate would not execute on any judgment obtained against her.
Id. at 388. The parties submitted the agreement to the trial court, which found the agreement reasonable. Id. After trial, the jury found the school district 75 percent responsible for the Romeros' damages and Ms. Romero 25 percent responsible. Id. at 389. The trial court entered judgment against the school district and Ms. Romero.
¶35 The Court of Appeals — relying on Maguire — held that the agreement "released" Ms. Romero. The Court of Appeals reversed the judgment so that the school district was not jointly and severally liable for Ms. Romero's share of fault. Id. at 392. The Court of Appeals found that the agreement was a "classic 'Mary Carter' agreement" that was made for the purpose of "avoid[ing] the 'several' liability scheme." Id. at 389-90. The Court of Appeals concluded that "the intended result [of the agreement] is contrary to the letter and spirit of the tort reform act." Id. at 392.
¶36 In the present case, the Stipulation did not have the effect of releasing the Linvogs because the parties did not intend the Stipulation to release the Linvogs. Barton has consistently argued that he did not intend to release either Korrine or the Linvogs. The Linvogs have consistently taken the position that they believed they remained liable for Korrine's proportionate share of fault above the Linvogs' insurance policy limits. Neither Barton nor the Linvogs intended the Stipulation to negate the State's right to seek contribution from the Linvogs. The trial court found, "Plaintiff's counsel and Linvogs' counsel believed the agreement was valid and enforceable on these terms." CP at 9.
¶37 Shelby, Maguire, and Romero each involved a settlement agreement that released the covenanting defendant or defendants. These cases can be distinguished from the case at bar.
¶38 Unlike the parties in Shelby, Barton and the Linvogs did not intend to make a "binding settlement" that left "no justiciable issue to be resolved between [the] parties." 85 Wn.2d at 918. The Stipulation expressly stated that it "[did] not represent a settlement of any claims" between Barton and any defendants. CP at 925. Also, despite the execution of the Stipulation, justiciable issues remained concerning the Linvogs' liability to Barton. The State could still seek contribution from the Linvogs, and the Linvogs' liability to Barton could have been anywhere from $20,000 to $100,000. Shelby is distinguishable from the case at bar.
¶39 In Maguire, the Court of Appeals found that the agreement between Maguire, Teuber, and Hadsall constituted a "complete resolution of all claims." 120 Wn. App. at 397-98. In this case, the parties did not intend to make a complete resolution of Barton's claims against the Linvogs. The Maguire agreement contained "release language." Id. at 398. The Stipulation in this case does not.
¶40 Romero can be distinguished by the fact that it involved a "classic 'Mary Carter' agreement" that sought to avoid Washington's several liability scheme in contrast to the "letter and spirit of the tort reform act." 123 Wn. App. at 392. The Stipulation is not a Mary Carter agreement. In fact, it is more like a high-low agreement, a type of partial settlement agreement that has been approved in other jurisdictions. We agree with the trial court that the Stipulation did not realign the interests of the parties or attempt to artificially manufacture joint and several liability between an individual and a deep pocket institutional defendant. The State's right to seek contribution was not affected. In short, the Stipulation does not present the same concerns as the agreement in Romero.
¶41 In conclusion, the Stipulation did not release the Linvogs; therefore, they were jointly and severally liable with the State for Barton's damages. The trial court and Court of Appeals denied the State's motion to vacate on the grounds that the State was not prejudiced by the Stipulation. At the State's request, we granted review on the question of whether the Stipulation released the Linvogs under RCW 4.22.070. We hold that it did not.
B. Did the Stipulation negate Korrine and the Linvogs' contribution liability?
¶42 In its petition for review, the State argues, "RCW 4.22.060(2) mandates that a covenant not to execute negates contribution liability." Pet. for Review at 4. The State further asks, "Can a covenant not to execute be written in a way so that it does not negate contribution liability?" Id. Above, we held that the Stipulation did not release the Linvogs because the parties did not intend to completely release them. The Linvogs were jointly and severally liable with the State for Barton's damages. Accordingly, judgment was entered against the Linvogs. It follows that the State's right to seek contribution from the Linvogs was preserved. Without accepting the State's invitation to rule on whether a covenant not to execute will always negate contribution rights, we hold that the Stipulation in this case did not negate the State's contribution rights.
¶43 A joint and severally liable defendant who pays more than his proportionate share may seek contribution from another defendant against whom judgment has been entered pursuant to RCW 4.22.040, .050, and .060. RCW 4.22.070(2). "[I]t is well to observe that it is not easy to find a procedural mechanism whereby a settling defendant could be certain that claims of contribution and/or indemnity would be cut off as part of the settlement with the plaintiff." Freedman, supra, at 73.
¶44 In this case, the State, Korrine, and the Linvogs were jointly and severally liable for Barton's injuries. The trial court entered judgment against the defendants. The State paid more than its proportionate share of Barton's damages and obtained a contribution judgment against the Linvogs. RCW 4.22.060(2) seeks to protect released or covenanting defendants from contribution claims brought by other defendants who did not settle with the plaintiff. The Linvogs did not seek to hide behind the protections of RCW 4.22.060(2) but instead recognized their obligation to pay the State's contribution claim. After collecting contribution from the Linvogs, the State will have paid only its share of fault as assigned by the jury. The Stipulation did not negate the State's right to contribution against the Linvogs.
C. Did the trial court abuse its discretion in its choice of sanctions?
¶45 The State argues that Barton's and the Linvogs' failure to disclose the Stipulation pursuant to discovery rules and RCW 4.22.060 merits serious sanctions such as a new trial. We disagree and hold that the trial court did not abuse its discretion in sanctioning Barton.
¶46 Standard of review. We review a trial court's order of sanctions for abuse of discretion. Rivers v. Wash. State Conf. of Mason Contractors, 145 Wn.2d 674, 684, 41 P.3d 1175 (2002). " '[Discretionary determination should not be disturbed on appeal except on a clear showing of abuse of discretion, that is, discretion manifestly unreasonable, or exercised on untenable grounds, or for untenable reasons.' " Id. at 684-85 (alteration in original) (internal quotation marks omitted) (quoting Burnet v. Spokane Ambulance, 131 Wn.2d 484, 494, 933 P.2d 1036 (1997)). "The abuse of discretion standard recognizes that deference is owed to the judicial actor who is 'better positioned than another to decide the issue in question.' " Wash. State Physicians Ins. Exch. & Ass'n v. Fisons Corp., 122 Wn.2d 299, 339, 858 P.2d 1054 (1993) (internal quotation marks omitted) (quoting Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 403, 110 S. Ct. 2447, 110 L. Ed. 2d 359 (1990)). We give wide latitude to a trial court in fashioning an appropriate sanction for discovery abuse. Id.
¶47 Analysis. Generally, "the court may impose only thé least severe sanction that will be adequate to serve its purpose in issuing a sanction." Teter v. Deck, 174 Wn.2d 207, 216, 274 P.3d 336 (2012). To support imposition of one of the greater sanctions — such as a new trial — the record must clearly show (1) one party willfully or deliberately violated the discovery rules and orders, (2) the opposing party was substantially prejudiced in its ability to prepare for trial, and (3) the trial court explicitly considered whether a lesser sanction would have sufficed. Magana v. Hyundai Motor Am., 167 Wn.2d 570, 584, 220 P.3d 191 (2009) (citing Burnet, 131 Wn.2d at 494). The purposes of sanctions are to deter, punish, compensate, educate, and ensure that the wrongdoer does not profit from the wrong. Fisons, 122 Wn.2d at 356.
¶48 The State is correct in arguing that Barton and the Linvogs' failure to disclose the Stipulation violated RCW 4.22.060(1) and CR 26(e)(2). RCW 4.22.060(1) requires that a party, "prior to entering into a release, covenant not to sue, covenant not to enforce judgment, or similar agreement," shall give notice of the settlement to the court and other parties and the court shall hold a hearing to determine whether the settlement was reasonable. The statute does not set forth any consequences for failing to disclose. CR 26(e)(2) requires parties to "seasonably" amend or supplement discovery requests. Under CR 26(e)(4), failure to comply with CR 26(e)(2) "will subject the party to such terms and conditions as the trial court may deem appropriate." CR 37 "sets forth the rules regarding sanctions when a party fails to make discovery." Magana, 167 Wn.2d at 583-84. "CR 37(d) authorizes a court to impose the sanctions in CR 37(b)(2), which range from exclusion of evidence to granting default judgment when a party fails to respond to interrogatories and requests for production." Id. at 584.
¶49 Barton and the Linvogs concede that they failed to comply with the disclosure requirements of RCW 4.22-.060 and failed to supplement their responses to the State's discovery requests. But the trial court found that the parties' failure to disclose the Stipulation was not willful or deliberate and the State's ability to prepare for trial was not substantially prejudiced. The trial court sanctioned Barton and Brindley by not requiring the State to pay $146,000 in interest the State otherwise would have owed to Barton. This is a significant sanction. The State has not made any showing that the severe sanctions it has requested are justified. We hold that the trial court did not abuse its discretion in sanctioning Barton and Brindley.
CONCLUSION
f50 We hold that the Stipulation did not release the Linvogs under RCW 4.22.070. The Linvogs were jointly and severally liable with the State for Barton's damages. The Stipulation did not affect the State's right to contribution against the Linvogs. The trial court did not abuse its discretion in sanctioning Brindley and Barton. We affirm the Court of Appeals.
C. Johnson, Owens, J.M. Johnson, Stephens, and González, JJ., and Chambers, J. Pro Tem., concur.
¶51 (concurring/dissenting) — The majority's analysis is based on an incorrect assumption about the nature of the "Stipulation" (hereafter agreement) between plaintiff Jared Barton and Thomas and Madonna Linvog (collectively Linvogs), the parents of Korrine Linvog (Korrine). The majority incorrectly assumes that the agreement falls within the scope of RCW 4.22.060. In addition, the majority seems to accept the State's contention that if the agreement released the Linvogs, joint and several liability was destroyed and the State should have been only severally liable for damages due to its own fault. However, Korrine was not a party to the agreement and she remained liable for damages attributed to her fault. Regardless of whether the Linvogs were released, joint and several liability remained because Korrine was jointly and severally liable for 100 percent of the damages suffered.
We refer to Korrine by her first name for sake of clarity. No disrespect is intended.
See Booth v. Mary Carter Paint Co., 202 So. 2d 8 (Fla. Dist. Ct. App. 1967).
Under the common law, the release of one defendant released all other defendants, regardless if there was a full satisfaction of the claim. Scott I. Anderson, Contribution Among Tort-Feasors in Washington: The 1981 Tort Reform Act, 57 Wash. L. Rev. 479, 493 (1982) (citing cases). In order to avoid this harsh common law rule, parties began executing covenants not to sue. 'While a release relinquishes all rights to a claim against another party, the covenant not to sue retains those rights and grants a promise not to enforce them." Freedman, supra, at 81; see also 1 Settlement Agreements in Commercial Disputes: Negotiating, Drafting & Enforcement § 9.04, at 9-22 (Richard A. Rosen ed., 2008) ("A covenant not to sue does not relinquish any claims, but rather constitutes an agreement not to initiate litigation against specific parties").
Prior to tort reform, Washington courts consistently distinguished covenants not to sue from releases. See, e.g., Mills v. Inter Island Tel. Co., 68 Wn.2d 820, 829, 416 P.2d 115 (1966) (holding covenant not to sue did not release a joint tortfeasor where there is no double recovery); Haney v. Cheatham, 8 Wn.2d 310, 322, 111 P.2d 1003 (1941) (under the common law rule, a covenant not to sue releases a covenanting defendant when the defendant reasonably compensates the plaintiff); Richardson v. Pac. Power & Light Co., 11 Wn.2d 288, 317, 118 P.2d 985 (1941) (whether an agreement is a release or a covenant not to sue depends on the consideration exchanged, the effect of the agreement, and the circumstances attending its execution). But see Monjay v. Evergreen Sch. Dist. No. 114, 13 Wn. App. 654, 659, 537 P.2d 825 (1975) ("A covenant not to sue will be treated as a release of all tort-feasors if reasonably compensatory consideration has been paid by one or more tort-feasors to the plaintiff").
A "covenant not to levy execution" or "covenant not to execute" "is a device that does not interfere with plaintiff securing the judgment, at least in the eyes of all other tortfeasors." Freedman, supra, at 83. In the insurance context, "A covenant not to execute coupled with an assignment and settlement agreement does not release a tortfeasor from liability; it is simply 'an agreement to seek recovery only from a specific asset — the proceeds of the insurance policy and the rights owed by the insurer to the insured.' " Besel v. Viking Ins. Co. of Wis., 146 Wn.2d 730, 737, 49 P.3d 887 (2002) (quoting Safeco Ins. Co. of Am. v. Butler, 118 Wn.2d 383, 399, 823 P.2d 499 (1992)).
A "loan receipt agreement" is "a lawful arrangement by which the insurer advances to its insured the amount of a covered loss as a loan, repayable only and to the extent that the insured obtains a net recovery from others also liable." U.S. Oil & Ref. Co. v. Lee & Eastes Tank Lines, Inc., 104 Wn. App. 823, 832, 16 P.3d 1278 (2001); David K. DeWolf & Keller W. Allen, 16 Washington Practice: Tort Law and Practice § 12.49 (2012). This type of agreement "has been upheld in almost all the cases."Monjay, 13 Wn. App. at 660 n.3 (citing Clow v. Nat'l Indem. Co., 54 Wn.2d 198, 339 P.2d 82 (1959)); see also Jensen v. Beaird, 40 Wn. App. 1, 10, 696 P.2d 612 (1985); Bolton v. Ziegler, 111 F. Supp. 516 (N.D. Iowa 1953).
A Mary Carter agreement is a settlement device that generally contains three basic provisions: (1) "the settling defendant guarantees the plaintiff a minimum payment, regardless of the court's judgment"; (2) "the plaintiff agrees not to enforce the court's judgment against the settling defendant"; and (3) "the settling defendant remains a party in the trial, but his exposure is reduced in proportion to any increase in the liability of his codefendants over an agreed amount." John E. Benedict, It's a Mistake To Tolerate the Mary Carter Agreement, Note, 87 Colum. L. Rev. 368, 369-70 (1987). Some agreements might also require that "the agreement be kept secret between the settling parties." Id. at 370. The name "Mary Carter agreement" is taken from the first case to analyze these types of settlement devices, Booth v. Mary Carter Paint Co. The Stipulation is not a Mary Carter agreement because the third element is not met. Since this case does not involve a Mary Carter agreement, we will wait until this issue is squarely presented to rule on the validity of such agreements in Washington.
In a high-low agreement, the covenanting defendant promises to pay plaintiff a minimum amount, regardless of the verdict, but defendant's liability is capped at an agreed upon maximum amount. See, e.g., Ziegler v. Wendel Poultry Sens., Inc., 67 Ohio St. 3d 10, 615 N.E.2d 1022, 1029-30 (1993) (high-low settlement agreement was valid because the settling defendant still had an incentive to keep the amount of damages down), overruled on other grounds hy Fidelholtz v. Peller, 81 Ohio St. 3d 197, 1998-Ohio-462, 690 N.E.2d 502, 505; Hodesh v. Korelitz, 123 Ohio St. 3d 72, 2009-0hio-4220, 914 N.E.2d 186, 190 (relying on Ziegler).