Opinion ID: 1481758
Heading Depth: 1
Heading Rank: 5

Heading: damage setoff

Text: In the Armstrong case, the jury returned a compensatory damage verdict against Owens-Illinois, together with defendants Owens-Corning Fiberglas and Eagle-Picher, in the amount of $730,000. In the Wood case, the jury returned a compensatory damage verdict against Owens-Illinois and Owens-Corning Fiberglas in the amount of $657,000. The jury in both cases also determined that Owens-Illinois and Owens-Corning Fiberglas were liable for punitive damages. The punitive damage phase of the trial was to commence the following day. Subsequent to the verdicts, but before the punitive damage phase, Armstrong and Wood reached a settlement with Owens-Corning Fiberglas. Under the terms of the settlement, Owens-Corning Fiberglas would pay its full pro rata share of each compensatory damage award (one-third of the award in the Armstrong case and one-half of the award in the Wood case) plus an additional amount to settle the punitive damage claims. In the Armstrong case, Owens-Corning Fiberglas paid $304,166.33, which Owens-Illinois acknowledges represents $60,833 to settle the punitive damage claim and $243,333.33 (one-third of $730,000) to settle the compensatory damage claim. In the Wood case, Owens-Corning Fiberglas paid $410,625, which Owens-Illinois acknowledges represents $82,125 to settle the punitive damage claim and $328,500 (one-half of $657,000) to settle the compensatory damage claim. At the conclusion of the case, the trial judge reduced the amount of each compensatory damage verdict by the amount that Owens-Corning Fiberglas paid to settle the compensatory damage award. Again, in each case, that amount equalled Owens-Corning Fiberglas' pro rata share of the award. Owens-Illinois contends that the judge should have reduced the amount of each compensatory damage verdict by the full amount of compensation paid by Owens-Corning Fiberglas, including the punitive damage settlement amount. The Maryland version of the Uniform Contribution Among Tortfeasors Act, Maryland Code (1957, 1991 Repl.Vol.), Article 50, § 19 (hereinafter UCATA) provides that: A release by the injured person of one joint tortfeasor, whether before or after judgment, does not discharge the other tort-feasors unless the release so provides: but reduces the claim against the other tort-feasors 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. (Emphasis added). Section 19 of the UCATA specifically provides that the amount of consideration paid in excess of a pro rata share shall reduce the total claim. The purpose of the Act is to prevent double recovery. The amount recoverable from the non-settling defendant when added to the amount recoverable from the settling defendant cannot exceed the plaintiff's verdict. See Martinez v. Lopez, 300 Md. 91, 476 A.2d 197 (1984). The Court of Special Appeals in Exxon Corp. v. Yarema, 69 Md. App. 124, 138, 516 A.2d 990, 997 (1986), addressed the scope of § 19 and held that the Uniform Contribution Among Tortfeasors Act does not apply to punitive damages. We adopt the rationale of that opinion. We first note that, although Owens-Illinois and Owens-Corning Fiberglas are joint tortfeasors with regard to the compensatory damage claims, they are not joint tortfeasors with regard to punitive damage claims. In contending that each damage award should have been reduced by the entire settlement amount, Owens-Illinois fails to recognize this distinction. Examining the purposes of the UCATA in light of the inherently different functions that punitive and compensatory damages serve, it is apparent that the Act does not envision a reduction of a nonsettling tortfeasor's liability by another's settlement of punitive damages. The UCATA is derived, with the omission of certain sections not here relevant, from the statute promulgated by the Commissioners on Uniform State Laws in 1939 (the 1939 Model Act). Martinez, 300 Md. at 97, 476 A.2d at 200. As noted by the Court of Special Appeals in Exxon, the Commissioners' Prefatory Note to the 1939 Model Act provides in part: It is apparent that an injury resulting from the joint tort of two or more persons involves each of them, jointly and severally, in liability for the entire damage. It is equally apparent that this is an instance of a common obligation resting on two or more, the discharge of which by one of them accrues to the advantage of the others. 69 Md. App. at 136, 516 A.2d at 996. We agree with the Court of Special Appeals' conclusion in Exxon that the drafters intended section 19 to deal with the common liability of two or more joint tortfeasors and not with the unique liability of an individual wrongdoer. Exxon, 69 Md. App. at 136, 516 A.2d at 996. Thus, the Act envisions joint tortfeasors sharing the responsibility for compensating an injured party for the harm that he or she suffered or prospectively will suffer. This, obviously, is the purpose of compensatory damages. See Restatement of Torts (Second), § 903 (1979). In contrast, the award of punitive damages is not an attempt to compensate the injured party for harm suffered, but rather is, as the name implies, punitive in nature. This Court explained in Embrey v. Holly, 293 Md. 128, 442 A.2d 966 (1982), punitive damages `... are awarded, over and above full compensation, to punish the wrongdoer, to teach him not to repeat his wrongful conduct and to deter others from engaging in the same conduct.' Id. at 141, 442 A.2d at 973 (quoting Wedeman v. City Chevrolet Co., 278 Md. 524, 531, 366 A.2d 7, 12 (1976)). The Court went on to explain that punitive damages in order to be fair and effective, must relate to the degree of culpability exhibited by a particular defendant and that party's ability to pay. Punitive damages, in essence, represent a civil fine, and as such, should be imposed on an individual basis. Id. [293 Md.] at 141-42, 442 A.2d at 973. The Court in Embrey recognized that punitive damages could be awarded in different amounts against each defendant or that they could be awarded against one defendant and not another, depending on evidence presented as to the degree of culpability, the existence or nonexistence of malice, and the financial worth of each defendant. Id. at 142-43, 442 A.2d at 973-74. Because a compensatory award is a joint and several liability against all the joint tortfeasors while a punitive damage award is an individual liability, the settlement of a punitive damage claim by one tortfeasor will not reduce the compensatory or punitive damage award against the nonsettling tortfeasors. Armstrong and Wood contend, and we agree, that the UCATA does not entitle Owens-Illinois to benefit from the fact that the jury found Owens-Corning Fiberglas liable for punitive damages and that Owens-Corning Fiberglas made a payment to avoid that liability. The settlement here at issue contained two distinct liabilities and reflected settlement of both liabilities separately. Owens-Illinois argues that allowing a plaintiff to apportion his or her settlement between compensatory and punitive damages invites abuse. In the instant case, to settle the compensatory damage claims, Owens-Corning Fiberglas paid to each plaintiff its full pro rata share of the compensatory damages assessed by the jury. There was no abuse, chicanery, or collusion. Instead, Owens-Corning Fiberglas was clearly attempting, in good faith, to separately settle its compensatory damage liability and its punitive damage liability. Consequently, we affirm the Court of Special Appeals' judgment that the trial court did not err when it reduced Owens-Illinois' liability only by the amount of the compensatory settlement.