Opinion ID: 1337405
Heading Depth: 1
Heading Rank: 2

Heading: Analysis of Reasoning of Other Jurisdictions

Text: Based upon the absence of any definitive authority in West Virginia on this issue, the reasoning and conclusions of other jurisdictions are particularly instructive. As recently recognized by the South Dakota Supreme Court, a split of authority exists in other jurisdictions addressing similar issues regarding a plaintiff's release or covenant not to sue an agent tortfeasor and the effect of such release upon the principal. Estate of Williams ex rel. Williams v. Vandeberg, 620 N.W.2d 187 (S.D.2000). The majority of jurisdictions have held that a principal/employer is released from liability when the agent/employee is released via a settlement agreement. Id. at 189. [13] A. The Statutory Basis Prior to extensive discussion of the weight of such well-reasoned authority, a significant distinction must be recognized; in those jurisdictions deviating from what Williams recognized as the majority posture, application of the Uniform Contribution Among Joint Tortfeasors Act (UCAJTA) has typically played a predominant and decisive role. West Virginia has not adopted the UCAJTA and has relied upon West Virginia Code § 55-7-12, as discussed above, for resolution of issues regarding the release of tortfeasors. Where the UCAJTA is implicated, some jurisdictions have applied the language of their unique UCAJTA-based statutes to conclude that a principal is indeed deemed a joint tortfeasor with the agent actually engaging in the wrongdoing. In Saranillio v. Silva, 78 Hawai'i 1, 889 P.2d 685 (1995), for instance, the precise language of the UCAJTA statute and the statutory definition of joint tortfeasor provided the reviewing court little choice. The statute provided as follows: A release by the injured person of one joint tortfeasor, whether before or after judgment, does not discharge the other tortfeasors unless the release so provides; but reduces the claim against the other tortfeasors in the amount of the consideration paid for the release, or in any amount or proportion by which the release provides that the total claim shall be reduced, if greater than the consideration paid. 889 P.2d at 693-94. The Saranillio court observed that the statute was designed to abrogate the common law rule that a release of one joint tortfeasor acted as a release to other joint tortfeasors and recognized the dilemma of application in matters involving principal and agent relationships. Id. at 694. The court reasoned that [i]t clearly applies to joint tortfeasors as that term traditionally has been used; that is, it applies to `wrongdoers' who act in concert or concurrently. Traditionally, however, an employer was not considered a joint tortfeasor with his/her employee when the employer's liability was based on respondeat superior. Id. The Saranillio court struggled with the proper application of the statute, explaining, On its face, therefore, Section 4 would seem not to apply to vicariously liable parties because they are not ordinarily considered joint tortfeasors. Id. Upon application of the 1939 version of the UCAJTA, however, the Saranillio court observed that the UCAJTA does not define joint tortfeasors in the traditional sense. Id. The statute provides that for purposes of this statute, the term `joint tortfeasors' means two or more persons jointly or severally liable in tort for the same injury to person or property, whether or not judgment has been recovered against all or some of them. Id. (quoting 1939 UCATA § 1, HRS § 663-11 (1985) (emphasis supplied)). The UCAJTA definition of joint tortfeasor is based upon liability rather than negligence and is exceedingly broad and goes beyond the traditional meaning of the term. Holve v. Draper, 95 Idaho 193, 505 P.2d 1265, 1267 (1973). Thus, where a reviewing court is limited to the definition of joint tortfeasor provided in the act, as in Saranillio, many courts have held that the definition encompasses the principal liable only vicariously based upon the following reasoning: The basis of liability is not relevant, nor is the relationship among those liable for the tort. In short, it makes no difference whether the . . . [employer's] liability is based on the doctrine of respondeat superior or any other legal concept. The point is that both it and the [employee] are (at least) severally liable for the same injury to the plaintiff. Therefore, the Uniform Contribution Among Tort-feasors Act applies. Blackshear v. Clark, 391 A.2d 747, 748 (Del. 1978). [14] Similar reasoning was employed in applying a statute containing the liable in tort definition in Wrenn v. Maria Parham Hospital, 135 N.C.App. 672, 522 S.E.2d 789 (1999). The statute, codifying the UCAJTA as North Carolina General Statute §§ 1B-1 to 1B6, provided that: When a release or a covenant not to sue. . . is given in good faith to one of two or more persons liable in tort for the same injury or the same wrongful death: (1) It does not discharge any of the other tort-feasors from liability for the injury or wrongful death unless its terms so provide[.] 522 S.E.2d at 793 ( quoting N.C. Gen.Stat. § 1B-4 (1983) (emphasis supplied)). The Wrenn Court observed: Initially, it did not appear that the Uniform Act made any change in the established law of master and servant since the two were not considered to be joint tortfeasors. However, in Yates v. New South Pizza, Ltd., 330 N.C. 790, 412 S.E.2d 666, reh'g denied, 331 N.C. 292, 417 S.E.2d 73 (1992), our Supreme Court held that the term tort-feasors as used in the Uniform Act included vicariously liable masters. Thus, the release of a servant did not release a vicariously liable master, unless the terms of the release provided for release of the master. In Yates, the plaintiff was injured in an accident with a pizza deliveryman who was working for New South Pizza, Ltd., d/b/a Domino's Pizza. The plaintiff settled with the driver for $25,000.00, the amount of his insurance coverage, and executed a covenant not to sue the driver or the driver's insurer, but expressly reserved all rights to proceed against defendant . . . employer. Id. at 791, 412 S.E.2d at 667. In a divided opinion, our Supreme Court held that for purposes of this Act, a `tort-feasor' is one who is liable in tort. Id. at 794, 412 S.E.2d at 669 (emphasis in original). Id. at 793. B. The Weight of Well-Reasoned Authority: A Vicariously Liable Entity is Not a Tortfeasor Some jurisdictions, as examined above, have confined their evaluation to the strict language of their UCAJTA-based statutes. In the absence of deliberation of the fundamental tort principles and the differences between a joint tortfeasor and a vicariously liable entity, however, a decision regarding this subject is more a matter of linguistics than logic. Where jurisdictions have thoroughly examined the jurisprudential development of the law of tort, specifically the inclusion of the principal/master/employer as a party to be implicated where the impropriety was committed by the agent and the principal is completely free of wrongdoing, the well-reasoned decisions have released the vicariously liable principal upon the release of the agent. An excellent illustration of such reasoning is found in Biddle v. Sartori Memorial Hospital, 518 N.W.2d 795 (Iowa 1994), wherein an emergency patient was negligently discharged from the hospital by her physician. Her legal representative released the physician from liability after a settlement had been reached with the physician. The hospital was thereafter sued for the physician's negligence on a vicarious liability claim. The Iowa Supreme Court acknowledged the fundamental distinction between the full recovery permitted under the doctrine of joint and several liability, and the limitations inherent in a claim that rests on the doctrine of vicarious liability. Id. at 798. The Biddle court emphasized the need to address head-on this important distinction. Id. The Biddle court discussed opinions of other jurisdictions holding that settlement with the tortfeasor removes the basis for any additional recovery from the principal upon the same acts of negligence. The Biddle court adopted the theory that the agent and the principal should be treated as one, applying the single share theory for liability to permit a settlement with an agent [to] effectively adjudicate[ ] and satisf[y] the vicarious claim. Id. (citing Glover v. Tacoma Hosp., 98 Wash.2d 708, 658 P.2d 1230, 1238 (1983)). An opposite outcome, the Biddle court reasoned, would generate multiplicity of civil actions and a circuity of claims. The court noted that the doctor's settlement would not be protected if a cause of action were permitted to go forward against the hospital. 518 N.W.2d at 799. This is because of the well settled rule that a principal found vicariously liable for the negligent acts of an agent retains a right of full indemnity against the actual tortfeasor. . . . The potential for enforcement of such a right. . . would clearly have discouraged rather than encouraged settlement. . . . Id. at 799 (citations omitted). The Biddle court utilized the reasoning of the North Dakota Supreme Court in Horejsi v. Anderson, 353 N.W.2d 316 (N.D.1984). Horejsi expressed the theory of vicarious liability as follows: The percentage of negligence attributable to the conduct of the servant constitutes the entire single share of liability attributable jointly to the master and servant.. . . Because this percentage of negligence represents the single share of liability covered by the common liability of the master and servant, the master is necessarily released from vicarious liability for the released servant's misconduct. Id. at 318. Utilizing this single share theory, [15] the South Dakota Supreme Court in Williams clearly and conclusively stated that the plaintiff cannot recover against the principal once recovery against the agent has been completed. 620 N.W.2d at 190. The Williams court reasoned: The rationales of preventing circuity of action and encouragement of settlement complement one another. The complementary aspects of both rationales serve another important goal: finality. Public policy favors finality, thus avoiding circuity of action that is merely derivative. . . . Id. Our holding today fosters the principle of finality while attempting to limit circuity of action and multiplicity of lawsuits, which in this Court's wisdom, is the fairer result. Id. at 191. Similarly, in Copeland v. Humana of Kentucky, Inc., 769 S.W.2d 67 (Ky.Ct.App.1989), the Kentucky tribunal found that because vicarious liability derives solely from the principal's legal relation to the wrongdoer, settlement, through a covenant not to sue, with the tortfeasor removes the basis for any additional recovery from the principal upon the same acts of negligence. Id. at 70. As far as the vicarious liability issue, we find that other courts have spoken to this issue with persuasive reasoning which we paraphrse and adopt. The covenant not to sue not only operated to discharge the anesthesiologists, Schafer and Nash, P.S.C. (the servants/employees) as the parties primarily responsible, it affected a complete discharge of the hospital (the master/employer) who is only secondarily liable, despite the attempted reservation by the Copelands in the covenant of all their rights against the hospital. Id. The Kentucky court found the the plaintiffs had but one cause of action which the law gave to compensate them for their daughter's injuries. This cause of action for the allegedly tortious conduct of Schafer and Nash was assertable against the hospital only because Schafer and Nash were allegedly acting in their function as employees or ostensible agents of the hospital. . . . Id. Settlement with the wrongdoers repaired the wrong. Id. This acquittance inured to the benefit of the hospital, for the discharge of the primary tortfeasor (Schaefer and Nash) must be held to discharge the secondary tortfeasor (the hospital) also from further responsibility, as the hospital's liability for the tortious act was vicarious in nature and derived solely from its legal relation to the wrongdoer, Schafer and Nash. Id. A plurality of the Michigan Supreme Court, in an extensive and discerning opinion in Theophelis v. Lansing General Hospital, 430 Mich. 473, 424 N.W.2d 478 (1988), held that release of the agent is release of the principal even where a plaintiff indicates an express reservation of the right to sue the principal. In Theophelis, representatives of the decedent signed a release absolving the doctor and nurse of liability, expressly reserving the right to sue other entities. The Michigan court evaluated the effect of the following Michigan statute: When a release or a covenant not to sue or not to enforce judgment is given in good faith to 1 of 2 or more persons liable in tort for the same injury or the same wrongful death: (a) It does not discharge any of the other tortfeasors from liability for the injury or wrongful death unless its terms so provide. Id. at 481, 424 N.W.2d 478 (emphasis supplied in original). The court reasoned that [t]he principal, having committed no tortious act, is not a `tortfeasor' as the term is commonly defined. 430 Mich. at 483, 424 N.W.2d 478 ( citing Black's Law Dictionary (5th ed.) (defining a tortfeasor as a wrongdoer; one who commits or is guilty of a tort.)). The Michigan court concluded that release of the culpable agent discharges any liability of the principal. Id. at 486, 424 N.W.2d 478. The single share theory was adopted, citing the Horejsi rationale, as discussed above. The Michigan court elaborated as follows: Put in another context, if A, B and C are sued because each is guilty of negligence which resulted in injury to a plaintiff, their pro-rata shares of the common liability are to be determined under the contribution statute without regard to whether A 's principal, not a wrongdoer, is also joined as a fourth defendant. As between A, an agent, and his principal, there is only one tortfeasor, and they represent only one share of the common liability. 430 Mich. at 491, 424 N.W.2d 478. In Andrade v. Johnson, 345 S.C. 216, 546 S.E.2d 665 (App.2001), the Court of Appeals of South Carolina evaluated the claims of a consumer against a heating contractor and an electric and gas utility company. The consumer had executed a covenant not to sue the contractor, and had specifically reserved the right to proceed against the utility. The issue before the court was whether a covenant not to sue the agent also released the principal, the utility company. The court held that the UCATJA [16] governs only those situations involving joint tortfeasors and does not apply to an employer who is only derivatively liable. The consumer had urged the court to expand the definition of tortfeasor under the UCATA to include vicariously liable parties. 546 S.E.2d at 669. The court explained that the key inquiry is whether the liability arises only vicariously because of the negligence of another party or whether the parties are true joint tortfeasors, both being independently negligent toward the third party. Id. The court concluded that the covenant not to sue [17] terminated both the consumer's claims against the contractor and the utility company's derivative liability. Were we to find the covenant released . . . [the agent] but not . . . [the principal], it would necessarily follow that . . . [the principal] could seek indemnification from . . . [the agent] and recover the entire amount of any verdict against it from him. This would effectively strip the covenant not to sue of any real meaning and result in what the court in Nelson v. Gillette described as a corrosive circle of indemnity. 571 N.W.2d 332, 339 (N.D.1997). Id. at 670. Based upon this reasoning, the South Carolina court concluded that even if it were to expand the definition of tortfeasor as North Carolina did in Yates, we find the UCATA simply is not applicable to cases involving indemnity. Id. In Anne Arundel Medical Center, Inc. v. Condon, 102 Md.App. 408, 649 A.2d 1189 (1994), a plaintiff released an allegedly negligent pathologist and attempted to sue the medical center on the theory of vicarious liability. The court held that where liability of the medical center was based exclusively upon the negligent conduct of the purported agent, the center and the pathologist were not joint tortfeasors for purposes of the effect of the release under the UCAJTA. [18] The patient's release of the pathologist was therefore found to function as a release of the medical center as a matter of law. Id. at 1191. Recognizing the split in authority regarding whether a principal and an agent are considered joint tortfeasors, the Maryland court was persuaded that the better reasoned approach is to hold that Maryland's version of the UCATA does not include vicariously liable defendants and, therefore, that an agent and his principal are not joint-tortfeasors under . . . [the act]. Id. at 1193. The Maryland court considered the argument that the statute should be applied to all entities jointly or severally liable in tort, regardless of the modality of liability. Id. The court astutely recognized, however, that such holding would require it to ignore the basic and significant distinctions between vicarious and joint liability. 649 A.2d at 1193. Reviewing those basis distinctions, the court held that [i]t is because of their independent wrongdoing [in the case of true joint tortfeasors] that . . . a plaintiff is permitted to bring an action against one joint tortfeasor after having released another joint tortfeasor from liability. Id. Each tortfeasor faces liability for his or her own wrongdoing. Id.