Opinion ID: 454262
Heading Depth: 3
Heading Rank: 1

Heading: The Trial Court Erred in Admitting the Release

Text: 26 Rule 408 of the Federal Rules of Evidence governs the admissibility of evidence of compromise offers or agreements in federal trials. The rule provides in its entirety: 27 Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as either to validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations is likewise not admissible. This rule does not require the exclusion of evidence otherwise discoverable merely because it is presented in the course of compromise negotiations. This rule also does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness, negativing a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution. 28 The exclusion of evidence of settlement offers is justifiable on two grounds. First, the rule illustrates Congress' desire to promote a public policy favoring the compromise and settlement of claims by insulating potential litigants from later being penalized in court for their attempts to first resolve their dispute out of court. Second, such evidence is of questionable relevance on the issue of liability or the value of a claim, since settlement may well reflect a desire for peaceful dispute resolution, rather than the litigants' perceptions of the strength or weakness of their relative positions. See Fed.Rule of Evid. 408, advisory committee note. 29 In analyzing the impact of Rule 408 on the admissibility of the Poirier release, we shall initially allay any doubts that the Rule applies to cases which are posturally like the one now before us. The settlement agreement at issue here was entered into between a litigant and a third party, rather than between the two litigants themselves. The Advisory Committee Note clearly acknowledges that the policies underlying the exclusionary rule are equally applicable to such a situation. The note states that: 30 While the rule is ordinarily phrased in terms of offers of compromise, it is apparent that a similar attitude must be taken with respect to completed compromises when offered against a party thereto. The latter situation will not, of course, ordinarily occur except when a party to the present litigation has compromised with a third person. 31 Fed.Rule of Evid. 408, advisory committee note (emphasis added). 32 In the context of settlements between a litigant and a third party, it is true that Rule 408 is more commonly invoked to bar the admission of agreements between a defendant and a third party to compromise a claim arising out of the same transaction as the one being litigated. See e.g., Sun Oil v. Govostes 474 F.2d 1048, 1049 (2d Cir.1973); Kendrick v. Jim Walter Homes, Inc., 545 F.Supp. 541, 543 n. 4 (S.D.Ind.1981). If the policies underlying Rule 408 mandate that settlements may not be admitted against a defendant who has recognized and settled a third party's claim against him, it is axiomatic that those policies likewise prohibit the admission of settlement evidence against a plaintiff who has accepted payment from a third party against whom he has a claim. The admission of such evidence would discourage settlements in either case. In addition, the relevance of the settlement to the validity of the claim cannot logically be considered stronger in the former instance than in the latter. Accord Fidelity & Deposit Co. of Md. v. Hudson United Bank, 493 F.Supp. 434, 445 (D.N.J.1980). A number of recent federal cases have adopted this position, holding that Rule 408 bars evidence of settlements between plaintiffs and third party joint tortfeasors or former co-defendants. See Quad/Graphics, Inc., v. Fass, 724 F.2d 1230, 1235 (7th Cir.1983) (evidence of plaintiff's settlement with two defendants in contract action not admissible at trial of remaining defendants); McHann v. Firestone Tire & Rubber Co., 713 F.2d 161, 165-66 (5th Cir.1983) (Plaintiff's covenant not to sue service station was not admissible in products liability action against defendant tire manufacturer); United States v. Contra Costa County Water District, 678 F.2d 90, 92 (9th Cir.1982) (in suit by United States against water district for cost of erecting wall necessitated by actions of landowner, evidence of settlement between United States and landowner not admissible). 33 Although Rule 408 bars the admission of evidence of settlement to prove liability or the validity of a claim, it expressly allows such evidence offered for other purposes. See Breuer Electric Manufacturing Company v. Tornado Systems of America, 687 F.2d 182 (7th Cir.1982). A critical inquiry in the instant case, therefore, is for what purpose the Poirier release was admitted at trial. We think it evident from a reading of the trial transcript that the district judge admitted the evidence as tending to prove that it was Mrs. Poirier's collision with the plaintiff, not the shattering of the motorcycle clutch housing, that in fact severed the plaintiff's leg. 34 The defendants began their case in chief at trial by calling Patricia McInnis to the stand. Their attorney, over strenuous objection by the plaintiff, entered the release into evidence and questioned McInnis at length about its significance. The objective of his line of questioning was manifest--he was attempting to elicit an admission from McInnis that she received $60,000 from Florence Poirier because it was Mrs. Poirier alone who caused her injury. While McInnis persistently maintained that she had received the money because Mrs. Poirier had been responsible for setting the accident in motion, defense counsel repeatedly suggested that the $60,000 represented compensation for the full extent of her injuries. Trial Transcript, p. 1346-56. 35 The trial judge's comments in overruling the plaintiff's objection to the admission of the release further illuminate the purpose of that evidence. The judge stated: 36 It seems to me that there's an issue in this case which relates to the question of who caused what, what injuries were sustained as a result of the contact with the Poirier vehicle, and what injuries the plaintiff had were the responsibilities of the defendants in this case; and it may well be that the reliance [sic] represents an admission on the part of the plaintiff. I don't see that it comes within 408 because it's not offered to prove liability or invalidity of the claims or its amount. I'm going to allow it. You may have an exception. 37 Trial transcript p. 1345c-1345d. 38 From this record it is apparent that the release was admitted as relevant to the issue of causation in fact. 39 As we shall discuss in more detail later, the defendants have argued that they introduced the release to attack McInnis' credibility rather than to disprove causation. Although this contention may have some superficial appeal, we see it as an attempt to obfuscate the critical issue. The release could logically impeach McInnis' credibility only by tending to show that she brought suit against the defendants knowing all the while and it was Mrs. Poirier, and not the defendants, who caused the injury to her leg. Such impeachment evidence is simply camouflaged causation evidence. 40 Having concluded that the Poirier release was offered as relevant to the issue of causation, we have no difficulty in ruling that the evidence of causation or non-causation is fully subsumed under Rule 408's meaning of validity or invalidity of a claim. Causation in fact is an integral component of a tort claim; without causation there can be no liability. In the instant case, it is obvious that the defendants wanted the jury to infer that Mrs. Poirier would not have paid the significant sum of $60,000 to the plaintiff unless it was she, and not the defendants, who had caused the plaintiff's injury. Whether cast in terms of causation, responsibility, or the validity of the claim, the defendants wanted the jury to conclude from the fact of settlement that the defendants could not be held liable for the amputation of the plaintiff's leg. This clearly flouts the most basic policies underlying Rule 408. 41 Other federal courts have held in closely analogous situations that this type of jury inference is unquestionably improper under the Federal Rule. In McHann v. Firestone Tire and Rubber Co., 713 F.2d 161 (5th Cir.1983), for example, the Fifth Circuit reversed the trial court's admission of a covenant not to sue given by a plaintiff in a products liability action to a third party service station owner. The plaintiff had sued the defendant Firestone Tire for injuries he sustained when a tire on his vehicle exploded, alleging that the defendant had negligently designed and manufactured the tire. Id. at 162-3. Firestone introduced evidence at trial that the plaintiff had previously given a covenant not to sue to a service station owner whose employee had mounted the tire. The Fifth Circuit held the covenant inadmissible under Rule 408, since the evidence might lead the jury to deny [plaintiff's] claim against Firestone on the perception that Green Oaks Exxon would not have paid the substantial sum of $27,000 if it ... were not the party at fault. Id. at 166. 42 The McHann case illustrates the applicability of the policies underlying rule 408 to a situation such as the one now before us. Certainly, the admission of settlement evidence to prove or disprove causation would discourage a plaintiff from settling with one of several potential defendants. In addition, the fact of settlement, as the Advisory Committee has observed, is of questionable relevance to the issue. An innocent third party may settle, even for a large amount, merely to avoid the burdens of litigation. In the instant case, in fact, the Poirier release is even more doubtfully relevant to the causation issue than was the covenant not to sue in McHann. Since neither of the parties contests the fact that the Poirier vehicle negligently struck the plaintiff's motorcycle, Mrs. Poirier is liable for the ultimate injury to the plaintiff, whether or not the collision itself was the immediate cause. Under elementary principles of proximate cause, Mrs. Poirier is legally responsible for any harm that could foreseeably result from her tortious act. Roberts v. Kettelle, 116 R.I. 283, 356 A.2d 207, 215 (1976); Aldcroft v. Fidelity & Gas Co., 106 R.I. 311, 259 A.2d 408, 411 (1969). We think it obvious that it is reasonably foreseeable that once struck by a car, a motorcycle may crash, causing serious bodily injury to its driver. Cf. Day v. Wynne, 702 F.2d 10 (1st Cir.1983) (holding that harm resulting from negligent treatment of doctor was a foreseeable result of the original negligent injury); Roberts, 356 A.2d at 215 (holding that the negligence of another driver was foreseeable). The fact that Poirier settled or the amount she paid, therefore, cannot reasonably be indicative of the harm that was in fact caused by the collision between her car and the motorcycle as opposed to that which was in fact caused by the shattering of the clutch housing. 43 Defendants offer several creative, but rather illusory arguments for exempting the Poirier release from the exclusionary provisions of Rule 408. They first assert that the plaintiff's claim for relief against the defendants is grounded in a legal theory that Mrs. Poirier and the defendants are successive rather than joint tortfeasors. They claim that because there were two separate accidents involved in the case--the collision with the Poirier car and the crashing of the motorcycle--each party is liable only for the allegedly divisible portion of the plaintiff's injury that their respective acts immediately caused. Accordingly, the defendants maintain that the evidence of the plaintiff's $60,000 settlement with Florence Poirier should be admissible as tending to clarify the portion of the harm she caused. In other words, this evidence would supposedly aid the jury in conceptually segregating the physical damage that was caused by each of the two accidents. 44 While, for a number of reasons, we view the defendants' two accident argument as a convoluted attempt to circumvent the prohibitions of Rule 408, we dispose of it merely by ruling that Mrs. Poirier and the defendants are indeed joint tortfeasors with regard to any injury that was in fact caused by the shattering of the clutch housing. First, contrary to the defendants' representations, the plaintiff has never advanced the successive tortfeasor or two accident theory. 9 Second, as a matter of Rhode Island law, Mrs. Poirier and the defendants are joint tortfeasors. Under R.I.Gen.Laws Sec. 10-6-2, a joint tortfeasor means two persons jointly or severally liable in tort for the same injury to person or property. The parties are jointly and severally liable if they are both the legal cause of harm that cannot be apportioned, whether conduct is concurring or consecutive. Restatement (Second) of Torts, Sec. 879. See also Day v. Wynne, supra, 702 F.2d at 12. Contrary to the implication of the defendants' argument, it is obvious that Patricia McInnis' injury, the almost total severance of her leg, cannot be apportioned or divided. Assuming, as we already have, that Mrs. Poirier proximately or legally caused the ultimate injury, the defendants are joint tortfeasors unless they are simply not liable to the plaintiff. 10 45 The defendants have asserted on appeal that our recent opinion in Day v. Wynne, 702 F.2d 10 (1st Cir.1983), lends support to their argument. In Day, the plaintiff fractured her leg in a two car automobile accident and was later treated by the defendant physician. The leg did not heal properly, and the plaintiff, after releasing the driver of the other vehicle, sued the physician. The plaintiff received a jury verdict in her favor and the defendant appealed. Our opinion indicates that during the trial, the district judge admitted evidence of the settlement with the driver, and instructed the jury that they could find damages in excess of the settlement amount only to the extent that they were solely attributable to the defendant's negligence. Id. at 12. This case cannot assist the defendants for two reasons. First, we did not decisively indicate in Day the purpose for which the settlement was admitted at trial. Second, the admission of the settlement was not appealed and was therefore neither reviewed nor reviewable by us. The fact that it was admitted by the trial judge, therefore, does not bind this court to ratification of its admissibility. 46 The defendants also suggest that they introduced the Poirier release for a purpose other than proving causation--to impeach McInnis' testimony. Specifically, they sought to undermine her assertion that the injury to her leg occurred only after the clutch housing shattered. They wanted the jury to infer that if Patricia McInnis accepted $60,000 from Mrs. Poirier, it was because she believed her to be responsible for the injury. The introduction of the release, then, would allegedly discredit her present claim against the defendants. 47 Even if the record were not clear, as it is, that the release was admitted to prove causation, the defendants' deft paralogism would still fail. The use of the settlement for this purpose implicitly requires the jury to infer some indicia of causation in fact from the existence of the release; otherwise it would be of no logical relevance to the issue of McInnis' credibility. We cannot permit the defendants to avoid the policies of rule 408 by merely recasting the issue of who caused the injury as an issue of who the plaintiff believed caused it. 11 48 The defendants finally assert that the release must be admitted to ensure that the plaintiff does not recover twice for the same injury. Def.Br., p. 39. Considering the circumstances of this case, the argument is frivolous. The plaintiff explicitly offered during the trial to reduce any verdict entered against the defendants by $60,000--the amount she has received from Mrs. Poirier under the release. This is the proper procedure for guarding against over compensation when Rule 408 precludes the admission of a settlement agreement. See McHann, supra, 713 F.2d at 166. 2. The Trial Judge's Error Was Not Harmless 49 Because we have found that the district court erred in admitting evidence of the Poirier release, we must grant the plaintiff a new trial unless the defendant can show the error was harmless. Prior to the Federal Rules of Evidence, a trial court's failure to exclude evidence of a settlement agreement was generally considered sufficiently prejudicial to warrant a new trial. See Paster v. Pennsylvania R.R., 43 F.2d 908, 911 (2d Cir.1930). Because Rule 408 had broadened the scope of the common law exclusionary rule to include statements made in the course of settlement negotiations, however, it is advisable for an appellate court to examine the evidence and the context in which it was admitted to determine whether in each individual case it is more probable than not that it conveyed an impression of liability or non-liability to the jury. 2, Weinstein's Evidence, Sec. 408. We think that the great emphasis placed on the release by the defendants, both during their examination of Patricia McInnis and during their closing arguments, compels us to conclude that the jury most likely drew the desired but improper inference. 50 The defendants have argued that, even if the trial court erred, a new trial is not warranted because the jury would have returned a verdict for the defendants even without being aware of the Poirier release. We note that the jury could have legitimately rejected the plaintiff's claim based on either or both of the following findings: that the defendants did not in fact cause the injury, or that the motorcycle was crashworthy. Only the former finding would have been influenced by the admission of the release. Since the jury did not respond to interrogatories, however, we have no insight into the actual basis of their verdict, and accordingly, we may not assume that the jury found for the defendants solely on the strength of their argument that the motorcycle was not defectively designed. We must grant a new trial, therefore, if the plaintiff presented ample evidence to permit the jury to find in their favor on both the causation and the crashworthiness issues. After a searching review of the trial transcript, we conclude that the plaintiff presented such evidence. Both sides offered the testimony of medical and engineering experts, anatomists, and eye witnesses, and it would be impossible to characterize the weight of the evidence as clearly favoring the defendants on either crucial issue. 51 The defendants alternatively contend that any error the trial judge made was cured by his instructions to the jury. In his instructions he directed: 52 In your consideration of the release by Plaintiff, you will not consider the language of the release as a defense to this claim but you may consider the release as evidence of her claim against persons other than the defendants, to be considered together with all the evidence in the case. 53 First, we note that it is doubtful that any instructions, no matter how clear and comprehensive, could eradicate the prejudice engendered by the admission of the release in this case. In addition, however, we do not believe the judge's instruction was even arguably curative. The judge's admonition was most likely intended to ensure that the jury did not assume that the release of Mrs. Poirier would also release the defendants from liability, thereby barring recovery against them. This is the question of law which is the subject of the cross appeal in this case and indeed was not a proper issue for jury consideration. We do not believe that the instruction, either explicitly or implicitly guards against an inference of causation from the existence of the release. 54 C. Propriety of the Judge's Denial of Defendants' Directed Verdict Motion 55 Notwithstanding the fact that the jury returned a verdict in the defendants' favor, the defendants subsequently moved the Court to direct a verdict on the legal issue of the applicability of the Poirier release to the defendants as joint tortfeasors. The trial judge refused to grant the motion on the ground that in light of the jury's disposition of the case, the question was moot. Defendants, on cross appeal, seek reversal of this ruling. 56 The judge never reached the difficult legal issues raised by the defendants' motion, which have as yet, not been decisively resolved by the Rhode Island Supreme Court. Accordingly, although recent decisions of this court and the Rhode Island court may provide some guidance on this question, we may not resolve it here. See Day v. Wynne, supra, 702 F.2d 10; Lennon v. MacGregor, 423 A.2d 820, 821 n. 1 (R.I.1980). We note, however, that in light of the present reversal, the district court may wish to reconsider the defendants' motion for summary judgment based on the effect of the release. 12 57 For the foregoing reasons, the judgment of the district court is hereby reversed, and the cause is remanded for further proceedings not inconsistent with this opinion.