Opinion ID: 6109720
Heading Depth: 2
Heading Rank: 2

Heading: Sky View's Settlement Credits

Text: Sky View argues that the courts below erred in failing to apply the one-satisfaction rule and denying it settlement credits for the settlements Martinez entered into with Kittleman, San Jacinto, Fidelity, and Walker. Sky View asserts that Martinez consistently pled, proved, and asked the jury to compensate him for a single, indivisible injury from all seven defendants-nonpayment of the $1.275 million Note. Thus, Sky View argues, it was entitled to settlement credits to offset the jury's damages award against it and prevent Martinez's double recovery. The court of appeals erred, Sky View contends, when it examined the causes of action Martinez asserted against each defendant rather than the injury he allegedly sustained. Sky View asks this Court to reduce the judgment by the $2.3 million settlement funds Martinez received and any applicable interest. Martinez asserted several claims against Kittleman arising out of Kittleman's actions during the Martinez loan closing-actions Martinez alleged resulted in his inability to recover the amount due on the Note when Sky View later defaulted. 9 Martinez also asserted causes of action against San Jacinto based on Solis's handling of the closing, and he alleged that this negligence resulted in Israely's later assertion that he did not sign the loan documents and therefore was not liable for the Note's repayment. Martinez sought damages from both Kittleman and San Jacinto equal to the amount of lost principal and interest due on the Note and the attorney's fees he incurred in seeking its repayment. 10 Thus, as a result of both Kittleman's and San Jacinto's alleged actions, Martinez alleged to have suffered the same injury-nonpayment of the Note. Similarly, the claims Martinez asserted against Fidelity arose from its role in the Martinez loan transaction and Sky View's default. Martinez alleged that Fidelity acted negligently in allowing San Jacinto-an agent authorized to issue insurance policies on its behalf-to operate as it did, and that Fidelity breached the title insurance policy by denying Martinez's claim and engaging in unfair settlement practices. As to damages from Fidelity's conduct, Martinez asserted that Fidelity should be responsible for covering Martinez's loss under  the title insurance policy. Finally, Martinez asserted claims against Walker based on Walker's initial representation of Martinez in its suit against Sky View seeking repayment of the Note-specifically, that Walker failed to take any steps to protect Martinez's lien interest in the Property before Compass Bank's foreclosure, and that this delay resulted in Fidelity's denial of Martinez's claim under the title insurance policy. Martinez sought to recover actual and special damages from Walker, including the benefit of his mortgagee title insurance policy which was lost ... [and] exemplary damages from Walker due to its gross negligence and breach of fiduciary duty. Further, the only damages evidence Martinez provided at trial was based on his financial loss after Sky View defaulted on the Note. Martinez's damages evidence included the loan documents, Martinez's testimony about what was due on the Note-by his calculation, $2,665,832.72, which included prejudgment interest up to the date of trial-and expert testimony as to Martinez's reasonable and necessary attorney's fees. Martinez's only damages question lumped together all of his damages arising from the Note, the guaranties, and the alleged fraud. Accordingly, the jury assessed Martinez's damages under this question with one amount-$2,665,832.72, the amount Martinez claimed was due on the Note. This is the same recovery Martinez sought against each settling defendant. The court of appeals erred in examining only the causes of action Martinez asserted against each of the settling defendants when our precedent makes clear that the causes of action pled are not the proper inquiry in applying the one-satisfaction rule. See Stewart Title , 822 S.W.2d at 7-8 . The proper question is whether the plaintiff has suffered a single, indivisible injury. See id. Here, although he asserted various causes of action against the seven defendants, all of Martinez's allegations were based on the same injury-nonpayment of the Note. In addition, other than the exemplary damages he sought against Walker, which we address below, all of the damages Martinez sought against each of these defendants was for an amount equivalent to his economic loss of the loan's principal and accumulated interest plus the attorney's fees he incurred in pursuing the litigation. Thus, although not adjudicated to be tortfeasors, Sky View and the settling defendants cannot reasonably be said to have caused separate injuries. See First Title , 860 S.W.2d at 79 . In response to Martinez's motion for judgment, Sky View alleged that Martinez benefitted from settlement agreements with Kittleman, San Jacinto, Fidelity, and Walker based on the same injury for which the jury awarded him damages, and thus, allowing Martinez to recover the full amount of the jury's award would result in his double recovery. This is a proper time and method to raise the one-satisfaction rule. See Utts , 81 S.W.3d at 830 (holding that a nonsettling defendant properly raised the settlement-credit issue in response to the plaintiff's motion for judgment). Additionally, after the trial court rendered judgment for Martinez, Sky View filed several motions, again asserting the one-satisfaction rule. Sky View presented affidavit evidence as to the amount of each settlement, and Martinez's counsel stipulated to those amounts. Thus, Sky View successfully raised a presumption that it was entitled to settlement credits equal to those amounts. See id. at 829 ; Ellender , 968 S.W.2d at 927 . At this point, the burden shifted to Martinez to rebut this presumption by showing that the settlement proceeds were allocated to an injury or damages different from  the one for which he recovered against Sky View, see Utts , 81 S.W.3d at 829 , so that receiving the full jury award would not amount to a double recovery or windfall. See First Title , 860 S.W.2d at 78 . Martinez asserted various arguments in response to Sky View's request for application of the one-satisfaction rule, but he never offered any evidence regarding any allocation of the settlement proceeds, as our precedent requires. 11 See Utts , 81 S.W.3d at 829 (requiring a plaintiff to provide evidence to rebut the presumption of settlement credits); Casteel , 22 S.W.3d at 391-92 ; Ellender , 968 S.W.2d at 928 ; First Title , 860 S.W.2d at 78-79 . Martinez's settlement agreements with Kittleman and San Jacinto are both in the record. Both agreements show that all parties denied any liability, but both agreements also establish that Martinez sought recovery against these defendants for the same injury for which he recovered against Sky View-his loss of the loan's principal and accumulated interest after Sky View defaulted on the Note. 12 Both agreements provide that the parties will bear their own attorney's fees and costs, thereby excluding the attorney's fees Martinez incurred in those actions from the settlement proceeds, and preventing Martinez's double recovery of attorney's fees under the trial court's judgment. The record does not contain the Fidelity and Walker settlement agreements, only the affidavit evidence Sky View offered stating the amounts of those settlements. Because Martinez did not offer any evidence allocating those settlement amounts, and the record does not reflect any such allocation, Martinez failed to rebut the presumption that Sky View is entitled to settlement credits equal to those amounts. See Utts , 81 S.W.3d at 828-29 ; Ellender , 968 S.W.2d at 927-28 . Though Martinez sought exemplary damages against Walker, Ellender made clear that the burden is on the plaintiff to tender a valid settlement agreement allocating between actual and punitive damages to the trial court in order to avoid a settlement credit. 968 S.W.2d at 928 . In sum, Martinez complained of a single injury against each defendant-nonpayment of the $1.275 million Note-varying his causes of action and allegations according to each defendant's alleged role in causing Martinez to suffer the claimed damages. See Casteel , 22 S.W.3d at 390 (recognizing that the one-satisfaction rule applies when defendants commit technically different acts that result in a single injury). Thus, when Sky View offered evidence of the settlement amounts, it successfully raised a presumption that it was entitled to offset the judgment by those amounts. See Utts , 81 S.W.3d at 828 ;  Ellender , 968 S.W.2d at 927 . When Martinez failed to rebut this presumption, the trial court should have applied the settlement credits in order to prevent Martinez's double recovery on his single, indivisible injury of nonpayment of the Note.