Opinion ID: 510320
Heading Depth: 2
Heading Rank: 3

Heading: Credit for Settlements

Text: 46 The next issue, raised by Runyan, Peterson and Barlow, is whether the trial court erred in denying credit to the defendants for the full amounts received by USI in settlement from parties originally named as defendants. 47 Before trial USI and HI recovered at least $3.08 million in settlement from 21 parties to the litigation. When the defendants moved after trial to receive credit for the settlement amounts, however, the district court allowed them to set off only $544,719, representing the value of Schoonmaker's consulting services and the amounts allocated by USI to the FEA related claims. 16 The court said that USI's allocation of the various settlement amounts to the other claims 48 [has] too many other variables that militate against credit. For example, credit should not be given for that amount allocated to the 1969 Exchange claims, since we do not know if plaintiff might have succeeded on those claims if defendants Robert Rice and Melby had been parties at the time of trial. In addition, no credit should be given to the amounts allocated to the non-FEA breach of fiduciary duty claims, the misappropriation of corporate opportunities claims, or the unallocated amounts, since it is not clear enough that the amounts were for injuries to plaintiff that went to the jury, e.g. whether the amounts were for HE or for some claim that never went to the jury. 49 36 R. 7354. As a result, the trial court declined to give the defendants full credit for the amounts received in settlement. 17 50 On appeal, the defendants have mounted a two-pronged attack against the trial court's refusal to allow full credit for the settlement amounts: first, they object generally to the district court's analysis of the credit issue; and second, they question USI's allocation of the settlement amounts among the various claims. 51 Defendants' challenge to the trial court's analysis of the credit issue involves the use of a syllogism. First, the defendants characterize the plaintiff's case as a giant single conspiracy within which many factors came together to produce the ... claimed single injury. Brief of Appellant George S. Peterson, Jr., at 26. Next, they note that under the one satisfaction rule, a party may only recover once for an injury. Finally, for the conclusion, the defendants contend that since USI claimed only one injury, and since it may recover only once for that injury, any settlements made before trial were in satisfaction of that injury. Thus the settlements should be credited to the trial [d]efendants also claimed to be a part of the overall conspiracy. Id. at 29. 52 Defendants' characterization of the one satisfaction rule cannot be disputed. It is a fundamental legal principle that an injured party is ordinarily entitled to only one satisfaction for each injury. Harris v. Union Elec. Co., 846 F.2d 482, 485 (8th Cir.1988). 18 When a plaintiff receives an amount from a settling defendant, therefore, it is normally applied as a credit against the amount recovered by the plaintiff from a non-settling defendant, provided both the settlement and the judgment represent common damages. Howard v. General Cable Corp., 674 F.2d 351, 358 (5th Cir.1982). Accord Hendrix v. Raybestos-Manhattan, Inc., 776 F.2d 1492, 1508 (11th Cir.1985); Ratner, 719 F.2d at 803-04; Harrington v. Texaco, Inc., 339 F.2d 814, 820 (5th Cir.1964), cert. denied, 381 U.S. 915, 85 S.Ct. 1538, 14 L.Ed.2d 435 (1965). See also Restatement (Second) of Torts Sec. 885(3) and comments e and f (1977). 53 Nonetheless, we do not believe that the one satisfaction rule controls here. The purpose of the rule is to prevent a plaintiff from receiving double compensation for an injury. Marcus, Stowell, 797 F.2d at 233; Howard, 674 F.2d at 358. Consequently, the rule applies only where the defendants' conduct resulted in a single injury. 19 54 By contrast, where two or more defendants are responsible for separate injuries, an amount received in settlement from one defendant for one of the injuries may not be used to reduce the liability of the other defendant for the other injury. See, e.g., Hendrix, 776 F.2d at 1509 (amount received by spouse who settled claim for loss of consortium should not be set off against damages received at trial because the damages sustained by a spouse are exclusive of those suffered by her husband); Baughman v. Cooper-Jarrett, Inc., 391 F.Supp. 671 (W.D.Pa.1975), aff'd in part, vacated in part on other grounds, 530 F.2d 529 (3d Cir.1976) (where amount of settlement with one defendant included items of damage that were not part of judgment, non-settling defendant was entitled to credit only for the amount of settlement duplicated in the verdict); Carr v. Cove, 33 Cal.App.3d 851, 109 Cal.Rptr. 449 (1973) (where plaintiff sued two defendants for injuries sustained in separate automobile accidents occurring more than two months apart, non-settling defendant was not entitled to credit for the amount received by plaintiff in settlement with other defendant). The critical issue is whether the jury awarded damages to USI for a single indivisible injury, or whether the jury found that USI suffered separate and distinct injuries, some or all of which may have been uncompensated by the settlements. 20 55 We agree with the trial court that USI's cause of action cannot be correctly characterized as a single case of a single injury. 36 R. 7353. Indeed, from our reading of the record, it seems clear that USI alleged two alternative theories of recovery. First, USI alleged a series of injuries arising from a single overriding conspiracy 21 ; second, USI contended that it received several injuries as a result of a number of discrete individual acts and conspiracies. As the trial court noted in its Memorandum Opinion Regarding Entry of Judgment, [i]t is true that plaintiff was primarily concerned with making out the existence of one large all-encompasing conspiracy throughout much of the litigation. It developed, however, that plaintiff was also pursuing the claims of a number of smaller conspiracies and individual violations of law. 36 R. 7353. 56 More importantly, the trial court did not charge the jury on USI's theory of a single conspiracy. Instead, the court expressly instructed the jury that the plaintiff had alleged a number of separate conspiracies. 324 R. 16,969. In this situation, the court continued, 57 you are not to consider any acts or declarations against the defendant unless you find from a preponderance of the evidence that the person doing the act or making the declaration was a member of the same conspiracy as was that defendant. 58 When the evidence distinctly shows, therefore, more than one conspiracy which does not involve a particular defendant, then you cannot consider evidence of a separate conspiracy in which that defendant was not a party. 59 324 R. 16,969. As a result, we believe that the jury must have perceived USI's claims as involving several conspiracies and individual violations rather than one all-encompasing conspiracy. 60 Finally, we believe that the form in which the case was sent to the jury effectively precluded it from finding that the plaintiff had suffered a single injury arising from one conspiracy. The special verdict forms divided USI's claims into a series of discrete conspiracies: the 1969 acquisition of HI by USI; the 1973 sale of FEK to HI; the Colorado Development Company transactions; and the creation and operation of HE. For each separate conspiracy, the jury was required to find the parties who had engaged in the conspiracy, the amount of damages suffered by USI arising from the conspiracy, and, if applicable, the misrepresentations or omissions that were committed in furtherance of the conspiracy. In light of the detail and specificity of the special verdict forms, therefore, the jury could have considered USI's grand conspiracy claim only by ignoring the forms themselves. 61 We cannot believe that the jury rejected the special verdict forms. In our view, it seems indisputable that the jury found that USI suffered several separate and distinct injuries rather than one single injury. As a result, the trial court did not err in refusing to give the defendants full credit for the amounts received in settlement. 62 This conclusion does not dispose of all the defendants' arguments. Defendants also contend that the trial court erred 22 in accepting the allocations made by USI because they were gerrymander[ed] ... to make them applicable to causes of action which had little likelihood of success.... Id. at 34. Defendants cite the facts that Kenneth Melby allocated one dollar (out of settlement payments of nearly $709,000.00) and Robert Rice allocated one dollar to the FEA claims out of a total settlement of nearly 1.4 million dollars. Brief of Appellant George S. Peterson, Jr., at 37-38. These unfair apportionments, the defendants conclude, are undeniable proof that USI stack[ed] the deck against the non-settling defendants, in contraven[tion of] equity and public policy. Id. at 38. 63 We find the defendants' arguments unpersuasive. The defendants' examples of unfairness in the settlement allocations have been effectively refuted by USI. While Robert Rice paid USI $1.00 in settlement of FEA-related claims, USI points out, Rice also paid HI $150,000.00 in settlement of FEA-related claims. Brief of Appellee and Cross-Appellant U.S. Industries, at 68. USI explains that under the present judgment Peterson has received credit for that [$150,000] sum. Id. at 69. Furthermore, USI justifies its allocation of the nominal sum of one dollar to Melby's settlement of the FEA claim on the grounds that discovery failed to establish that Melby was a participant in FEA, and because Melby represented as a condition of his settlement that he was not involved with FEA. Id. See also Transcript of Hearing on July 13, 1983, at 70. 64 We agree that the allocations were fair. 23 Clearly, in dollar amounts the greatest potential liability to the settling defendants arose from the 1969 sale of Kennibec to USI. Thus, it seems reasonable that the greatest portion of the money received in settlement would be allocated to the claims arising from that sale. 65 Finally, we note that the trial court accepted the allocations made between USI and the settling defendants only after carefully review[ing] the memoranda in the file, the arguments presented on July 13, 1983, and its own knowledge of the litigation from its beginning.... 36 R. 7353. In light of the trial judge's intimate knowledge of the entire proceedings, we uphold his acceptance of the allocations. We are not left with the definite and firm conviction that a mistake has been committed. Anderson v. City of Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948)). Thus, we hold that the trial court did not err in accepting the allocations among the various claims made between USI and the settling defendants, and we affirm the trial court's resolution of the credit issue.