Opinion ID: 561305
Heading Depth: 2
Heading Rank: 5

Heading: Envirodyne's Potential Claims Against Navistar

Text: 71 The final argument advanced by Envirodyne in its attempt to show that it was released from claims by the plaintiffs concerns the possibility that Envirodyne might bring claims against Navistar as a result of this litigation. Plainly, the settlement agreement releases Navistar from any further liabilities stemming from its sale of the Division to the subsidiaries of Envirodyne. Therefore, if as a result of this suit Navistar were exposed to additional liability, plaintiffs' suit would violate the terms of the settlement agreement. 72 In his order granting Envirodyne's motion to dismiss, Judge Moran addressed the possibility that the defendant would bring a claim against Navistar. He concluded that a suit by Envirodyne against Navistar was a possibility at the time that the plaintiffs entered into the settlement agreement. Therefore, it was not, in Judge Moran's view, relevant that at the conclusion of the trial in Pension Ben. Guaranty Corp. v. Envirodyne Industries, Inc., he held that Navistar was liable only for pension benefits accruing until 1977, the year the Division was sold to the subsidiaries of the defendant. See District Court Memorandum and Order of November 7, 1989, at 9-10 (Plaintiffs' Br. at A-10--A-11). 73 The district court's analysis was incomplete concerning Navistar's potential liability to Envirodyne, for Judge Moran's decision at trial does not provide the only bar to any suit Envirodyne might bring against Navistar. As the plaintiffs correctly point out, their alter ego claims against Envirodyne are in fraud, alleging that Envirodyne knowingly set up undercapitalized subsidiaries in order to escape any liabilities for claims arising out of its acquisition of the Division. Envirodyne cannot impute its fraud to another party. If it is liable to the plaintiffs under an alter ego theory, then it is liable for its own improper intentional actions and cannot obtain indemnification from Navistar. 74 Moreover, any right of contribution that Envirodyne might have against Navistar is properly limited by the method this Court has identified for determining contribution rights under ERISA. Contrary to the plaintiffs' assertion, a non-settling defendant does possess a right of contribution under ERISA. Donovan v. Robbins, 752 F.2d 1170 (7th Cir.1985). The Donovan Court identified this right to contribution, but went on to reject the traditional rule that imposes no limit on the non-settling defendant's right to contribution. Id. at 1180. Instead, Donovan advocated the adoption of a rule based on comparative fault. Under a comparative fault regime, no party pays more than its adjudicated fair share. As explained in Donovan: 75 [T]he court fixes the percentage of the plaintiff's damages that is attributable to the fault of the settling defendants, multiplies that percentage by the judgment against the nonsettling defendants, and deducts the resulting amount from the judgment. 76 Id. Judge Moran has in essence satisfied the comparative fault inquiry recommended in Donovan by establishing that Navistar was liable for pension benefits due to the plaintiffs only up to the time of the sale of the Division. 9 Envirodyne no longer has any possible claim against Navistar. 10