Opinion ID: 172209
Heading Depth: 2
Heading Rank: 2

Heading: Common Damages and Settlement Allocation

Text: Relying on Hess Oil Virgin Islands Corp. v. UOP, Inc., 861 F.2d 1197 (10th Cir.1988) and United States v. Burlington Northern Railroad, 200 F.3d 679 (10th Cir.1999), Mr. Friedland argues that the district court erred in reducing his damages by the full amount of the USF & G and Travelers settlements because those settlements do not represent damages in common with the ones at issue in this case. We disagree. In Hess Oil, Hess Oil sued UOP and other defendants after a fire caused several million dollars in damage to one of Hess Oil's refineries. 861 F.2d at 1199. Defendants other than UOP settled with Hess Oil for $1.5 million. Id. at 1207. After a jury verdict against UOP, the district court credited it with the $1.5 million settlement and required it to pay only the remaining balance on Hess Oil's damages. Id. at 1199, 1206-07. We rejected Hess Oil's argument on appeal that UOP was not entitled to a credit. Id. at 1209. We reasoned that under the one satisfaction rule, when the conduct of multiple defendants results in a single injury with common damages, and one of the defendants settles with the plaintiff, the amount of the settlement is credited against the amount that may be recovered from the non-settling defendants. Id. at 1208. We found a single injury and common damages in that case because the settlement agreement referred to all damages and all causes of action; it did not expressly apportion damages to specific claims. Id. We reinforced this proposition in Burlington Northern. The United States sued a wood treatment facility, BIC, to recover cleanup costs on a 64-acre tract of land. Burlington Northern, 200 F.3d at 681, 683. During the suit, the United States learned that another company, a predecessor of Burlington Northern Railroad, had owned 17.5 acres of the tract during the time of the polluting activities. Id. at 687. Thus, the United States added Burlington as a defendant. Id. Thereafter, the court entered summary judgment against the first defendant, BIC, concluding that it was liable for all response costs for the entire 64-acre tract. Id. After a bench trial on Burlington's liability, the court found Burlington liable only for the costs to clean up the 17.5-acre portion of the tract. Id. at 687-88, 695-96. It reasoned that there were two separate and distinct areas of contamination in the tract, and that Burlington only owned one of those areas. After the judgment, BIC settled with the United States for $10.7 million. Id. at 696. Although the settlement agreement did not allocate cleanup costs between the two distinct polluted areas, the district court ruled that the harm was divisible (that is, not common to both defendants) and thus Hess Oil was distinguishable. Id. at 698. The court accordingly credited Burlington's liability with only a portionrather then the full amountof the $10.7 million that the United States had received from BIC. Thus, under Hess Oil and Burlington Northern, if Mr. Friedland's injury and the damages he alleges in this lawsuit are the same as those addressed by the USF & G and Travelers settlements, then the defendants are entitled to a full credit in the amount of the settlements. [5] We agree with the district court that this is the case. Mr. Friedland admitted as much in his responses to the defendants' interrogatories. When asked to [i]dentify Your costs, damages, injuries or expenses arising from or caused by the Cost Recovery Action for which You seek contribution in the lawsuit, Mr. Friedland responded: The costs, damages, injuries or expenses caused by the Cost Recovery Action for which Plaintiff seeks contribution in this lawsuit are the amounts he paid to settle the CERCLA claims against him by the State of Colorado and the United States, i.e., $20,288,081, and the additional response costs Plaintiff incurred when he paid $435,100 for the Conceptual Remediation Plan [for a total of $20,723,181]. And when the defendants asked Mr. Friedland to identify all payments he had received related to his costs, damages, injuries or expenses arising from or caused by the Cost Recovery Action for which You seek contribution in the lawsuit, costs which Mr. Friedland himself had admitted extended only to the $20,723,181 settlement amounthe disclosed that he had received the USF & G and Travelers settlements. He further characterized those settlements as resolving his claims for damages he sustained in the Cost Recovery Action, which we interpret as referencing the $20,723,181 settlement figure. (Emphasis added.) Thus, by Mr. Friedland's own admissions, the USF & G and Travelers settlements remedied the $20,723,181 he incurred in settling the cost-recovery action with the United States and Colorado, and this contribution action reasserts the same injury and resultant damages. In an apparent attempt to create divisible harm where it otherwise does not exist, Mr. Friedland also contended in his interrogatory responses that a substantial portion of the amounts recovered in the USF & G and Travelers settlements were attributable to his $28 million in defense costs and not to the $20,723,181 settlement amount. The USF & G and Travelers settlement agreements, however, do not expressly or impliedly allocate the settlement money toward amounts Mr. Friedland paid in settling the underlying litigation on the one hand and for legal defense costs on the other. In Hess Oil, we held that the plaintiff's failure to allocate costs in this manner was fatal to its contention that the defendant was not entitled to a credit in the settlement amount. Hess Oil, 861 F.2d at 1209 (If [Hess Oil] wanted to have any particular application of its settlement with the settling defendants [allocated] towards UOP's liability, it should have specifically stipulated in the settlement documents what allocations of damages were applicable to each cause of action.). In the district court, Mr. Friedland's expert witness submitted an opinion concerning which portions of the USF & G and Travelers settlements were paid to indemnify him and which portions were paid for defense costs. Mr. Friedland argues that the court rejected that testimony without first performing the gatekeeping function required by Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). See Goebel v. Denver & Rio Grande W. R.R., 215 F.3d 1083, 1087 (10th Cir.2000) ([The] gatekeeper function requires the judge to assess the reasoning and methodology underlying the expert's opinion, and determine whether it is scientifically valid and applicable to a particular set of facts. (citing Daubert, 509 U.S. at 592, 113 S.Ct. 2786)). We disagree. It is apparent from the district court's order that it did not refuse to consider the expert opinion based on deficiencies in the expert's qualifications or methodology. Rather, the court simply explained that [g]iven the silence of the settlement agreements regarding allocation, this testimony is far too speculative to be admissible and consequently, does not create a genuine issue of material fact for trial. Friedland v. The Indus. Co., 2008 WL 185693, at  n. 4 (D.Colo. Jan.18, 2008). This was not an abuse of discretion. See Eastridge Dev. Co. v. Halpert Assocs., Inc., 853 F.2d 772, 782-83 (10th Cir.1988) (trial court did not abuse its discretion in excluding expert testimony regarding the allocation of settlement money to particular claims when the settlement agreement did not contain an express allocation; proposed testimony was tentative and speculative). Finally, Mr. Friedland suggests that the district court's conclusion rested on the erroneous view that USF & G and Travelers are joint tortfeasors. The district court pointed out that attorneys' fees are not recoverable in CERCLA contribution actions, see 42 U.S.C. § 9607(a)(4); Key Tronic Corp. v. United States, 511 U.S. 809, 817-19, 114 S.Ct. 1960, 128 L.Ed.2d 797 (1994), and that settling parties should therefore make any variance from the statute absolutely clear. We agree that this statement is misplaced, as Mr. Friedland did not sue USF & G and Travelers under CERCLA. A review of the entire order, however, clarifies that this lone misstatement was harmless. The district court had already determined that Mr. Friedland's claims are not divisible, and the general rule of [ Hess Oil ], permitting defendants full credit for the amount of any settlement, applies in the absence of an express allocation in the settlement agreements themselves. Friedland, 2008 WL 185693, at . As we explained, that conclusion is correct, and any further commentary was simply superfluous.