Opinion ID: 2194805
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Heading: Graham-Field Could Assign its Equitable Indemnity Claim to Mr. Caglioti as Part of the Settlement Agreement

Text: We have established above that Graham-Field obtained a claim for equitable indemnity and that such a claim was freely assignable. We turn now to the central issue in this case: whether the equitable indemnity cause of action could be assigned to Mr. Caglioti pursuant to the Settlement Agreement. We conclude that a claim for equitable indemnification can be assigned by the settling defendant to the plaintiff as part of the Settlement Agreement. Mr. Caglioti argues that the assignment of the equitable indemnification claim to him by Graham-Field is wholly consistent with prior decisions of this court favoring a policy of free assignability of claims. See, e.g., Brandenburger, supra, 771 A.2d at 988. We agree that such an assignment is consistent with District of Columbia law. The assignment of an equitable indemnification claim to a plaintiff as part of a settlement agreement can serve to limit the appellees' total exposure, because (as is true of Mr. Caglioti here) the plaintiff cannot recover more than the settlement amount. Additionally, this type of assignment releases appellees from being subject to direct negligence claims without depriving them of a full and fair opportunity to contest the settlement agreement and to contest their share of the responsibility for appellant's injuries. We note that several jurisdictions allow such an assignment. See, e.g., Kimball Int'l, Inc. v. Northfield Metal Prods., 334 N.J.Super. 596, 760 A.2d 794 (2000); Bush v. Superior Court of Sacramento, 10 Cal.App.4th 1374, 13 Cal. Rptr.2d 382 (Cal.App. 3 Dist.1992); Robarts, supra note 8, 581 So.2d at 915. For example, in Robarts, the court construed the Uniform Contribution Among Tortfeasors Act adopted in Florida and upheld the assignment of a claim for contribution to a plaintiff. Robarts, supra, note 8, 581 So.2d at 915. The decision is instructive because the mechanics of the contribution claim pursuant to the Florida statute are analogous to an indemnification claim at common law in the District of Columbia. [12] Appellant also cites Bush in support of the assignment. In Bush, homeowners sued their insurance carrier alleging that it failed to pay benefits under their insurance policy after their home burned down. Bush, supra, 10 Cal.App.4th at 1379, 13 Cal.Rptr.2d 382. In a separate action, the homeowners sued Drs. Wright and Bush for medical malpractice and American Therapeutics for products liability. Id. They alleged that their permanent injuries were caused by the side effects of a drug prescribed to treat emotional distress suffered by one of the homeowners, who received therapy for emotional distress which, resulted from the home being burned down and not receiving an insurance settlement for the damage. Id. The homeowners settled their claims with the insurance company for a sum of money and an assignment of the insurance companies' claims against the doctors and American Therapeutics. Id. The court held that an indemnification claim was assignable to the homeowners. The California court noted that the homeowners properly stood in the shoes of the insurer and could therefore assert the homeowners' claim that was assigned to them. The court further noted the public policy favoring settlements, and cautioned against allowing the petitioners in the case to profit from their wrong by escaping payment for the harm. Id. at 1382-85, 13 Cal.Rptr.2d 382. We note that California, like the District of Columbia, has a statute which provides that a chose in action is presumptively assignable. [13] Another notable case upholding this type of assignment is Kimball International, Inc., which involved a worker who was injured while sitting in a defective chair and subsequently settled with the chair manufacturer. The settlement included a partial assignment of the manufacturer's indemnity claim against the supplier of the chair's malfunctioning component part. Kimball Int'l, Inc., supra, 760 A.2d at 794. The New Jersey Superior Court held that based on New Jersey's expansive view of the assignability of claims for money damages, the indemnification claim was assignable to the injured person. Id. at 803. Although New Jersey recognizes a prohibition against the assignment of tort claims, the court in Kimball noted that the assignment of an equitable indemnification claim was not analogous to assigning a tort. Id. The prohibition on assigning torts was to protect the injured person from unscrupulous individuals, and the court concluded that those circumstances were not present in an assignment of an indemnification action. Because the injured person is the very one for whose protection the rule against the assignment of tort claims was designed, it would be anomalous to invoke the rule to bar the assignment of an indemnification claim to that person. Id. That court further noted that, the assignment to the injured party of an alleged tortfeasor's claim against another alleged tortfeasor may serve the interests of both the injured party and efficient judicial administration by providing an additional means of settling the underlying personal injury case. Kimball Int'l, supra, 760 A.2d at 803 (internal citation omitted). Although Kimball deals with indemnity that arises pursuant to a contract, not the type of equitable indemnity contemplated in the instant case, the distinction is of little significance as New Jersey also recognizes equitable indemnity, and New Jersey has a similar statute which provides that choses in action that arise pursuant to contract are freely assignable. N.J. STAT. ANN. § 2A 5-1 (West 2002) ([A]ll choses in action arising on contract are assignable.). The underlying rationale in jurisdictions which have upheld the assignment of claims to the plaintiff, is the free assignablity of claims. [14] Having expressed a strong preference for the free assignability of claims, we are not persuaded by the appellees' arguments to the contrary in reliance on a Wisconsin case, Hartley v. St. Francis Hospital, 24 Wis.2d 396, 129 N.W.2d 235 (1964). In that case, the plaintiff, Mr. Hartley, was injured by a truck, and his injuries were aggravated by the hospital. Plaintiff settled with the truck owner's insurance company, and as part of the settlement, plaintiff released the insurer and was assigned any claim for damages the insurer may have had against the hospital. Hartley gave a general release and did not reserve the right to sue the defendant (the hospital) for their malpractice in treating him. However, the court did not recognize this assignment, concluding that, [i]t would be fundamentally inconsistent for the plaintiff to be allowed to acquire by assignment a right to recover damages for the malpractice in addition to the $25,000.00 at which he fixed the value of his entire cause of action. This right is recognized in the insurance company only for the purpose of allowing it to recoup a part of the sum which it paid in settlement of the plaintiff's cause of action. Hartley, supra, 24 Wis.2d at 401, 129 N.W.2d at 237. However, Hartley was overruled, in part, because it relied on a common law rule no longer applicable in Wisconsin, namely the rule that a release discharges the liability of concurrent tortfeasors. See Krenz v. Med. Protective Co., 57 Wis.2d 387, 204 N.W.2d 663 (1973) (overruling the common law rule applied in Hartley that a release discharged the liability of concurrent tortfeasors); cf. Kovalesky v. Giant Rug Market, 422 Pa.Super. 116, 618 A.2d 1044 (1993) (where the court held that the injured person could not recover pursuant to the right of contribution assigned to him because the settlement agreement [unlike Mr. Caglioti's Settlement Agreement], did not extinguish the liability of the tortfeasor from whom contribution was sought and the settling parties actually conspired to subject the non-settling tortfeasor to greater liability than paid in the settlement.). We also reject appellees' contention that we should invalidate the assignment in this case because it may result in a windfall to Mr. Caglioti or promote additional litigation. Of course, Mr. Caglioti hopes to increase his total recovery by pursuing the equitable indemnification claim against the medical providers. If he is successful, he will be able to add the sums recovered from the medical providers (less 25%) to the amounts already received from or promised by Graham-Field and the other released parties. However, the assignment may actually limit the potential for a windfall because appellant agrees that he cannot recover more from the medical providers than the settlement amount specified in the Settlement Agreement. In any event, other courts have upheld similar assignments despite the possibility of additional recovery. In Rubenstein v. Royal Ins. Co. of Am., 45 Mass. App.Ct. 244, 696 N.E.2d 973, 975-76 (1998), the Massachusetts court rejected the notion that the assignment should be void because of a possible windfall, noting that other jurisdictions have upheld an assignment of rights even if it may provide additional recovery for the same loss. (citing Bush, supra, 10 Cal.App.4th at 1374, 13 Cal.Rptr.2d 382 [15] and Robarts, supra note 8, 581 So.2d at 915). Indeed, there are other instances where for policy reasons a plaintiff is allowed a windfall or double recovery. As a general proposition, the collateral source rule provides that when a tort plaintiff's items of damage are reimbursed by a third-party who is independent of the wrongdoer, the plaintiff may still seek full compensation from the tortfeasor even though the effect may be a double recovery. Jacobs v. H.L. Rust Co., 353 A.2d 6, 7 (D.C.1976) (emphasis added). If appellant is not allowed to pursue his claim, it is the medical providers who could potentially be the recipients of any windfall as they could evade liability and not have to pay any amount, even if they were negligent as alleged. Block v. Pepper Constr. Co., 304 Ill.App.3d 809, 237 Ill.Dec. 662, 710 N.E.2d 85, 89 (1999) (prohibiting the assignment of a right of contribution, in effect, contravenes the equitable sharing of damages because if the right of contribution is eliminated completely, the [appellees] would receive the windfall because the [appellees] would not contribute at all). The first amended complaint alleges Graham-Field's negligence only caused relatively minor orthopedic injuries, whereas appellant alleges that the medical providers caused major injuries including neurological and pulmonary injuries. There is no dispute that Mr. Caglioti's injuries were massive with extensive medical expenses and lost income. Additionally, Mr. Caglioti, forty-two years old at the time of the injury, no longer has the intellectual or physical ability to continue practicing law. Jurisdictions which have allowed an assignment such as the one contemplated here, have focused on the promotion of settlements as a key public policy consideration in permitting the assignment. In the District of Columbia, the settlement of a dispute is an important policy consideration. See, e.g., Makins v. District of Columbia, 861 A.2d 590, 597 (D.C.2004) (settlement of disputes, both in trial courts and on appeal, is to be encouraged as sound public policy.); Gabrielian v. Gabrielian, 473 A.2d 847, 850 (D.C.1984) ([p]ublic policy encourages drafting of settlement agreements; if valid, they are binding on the parties.); Bullard, supra, note 7, 367 A.2d at 131 ([u]nless a claim is unreasonable or the compromise imprudently consummated, the public policy of encouraging settlements should be recognized.). [16] Although in this instance the assignment of the equitable indemnity claim perhaps has prolonged the litigation, in other instances the assignment could provide an additional means of settling the underlying case. [17] See Rubenstein, supra, 696 N.E.2d at 975. Additionally, the assignment fosters settlement with the tortfeasor most willing to settle. Bush, supra, 10 Cal.App.4th at 1386, 13 Cal.Rptr.2d 382. We are also not persuaded that the medical providers are exposed to a greater burden because of this assignment. Any litigation against the medical defendants is the same litigation that the wheelchair manufacturer could or would have pursued if it had not assigned its claim for equitable indemnification to appellant. See Bush, supra, 10 Cal.App.4th at 1383, 13 Cal.Rptr.2d 382 (petitioners are not exposed to any greater liability or burden than would be the case without the assignment.). Mr. Caglioti cannot recover damages unless he can prove that Graham-Field was entitled to indemnification; thus, payment is not inevitable. Cf. M. Pierre Equip. Co. v. Griffith Consumers Co., 831 A.2d 1036, 1039 (D.C.2003) (A settling tortfeasor has the burden of establishing the liability of the non-settling tortfeasor and the reasonableness of its settlement with the injured person[s].). In M. Pierre, a case involving the assignment of a tort claim, we held that the trial judge's comprehensive instructions to the jury regarding the manner in which to assess the reasonableness of the claimed damages, specifically by covering general categories of damages and providing detailed guidance regarding how to assess the damages, were appropriate and necessary to avoid prejudice. Id. If Graham-Field pursued the equitable indemnity claim, it would have to demonstrate that the medical providers are liable for injuries to Mr. Caglioti. As in a medical malpractice case, Graham-Field would have the burden of proving the applicable standard of care, a deviation from that standard and a causal relationship between the deviation and the injury. See Travers v. District of Columbia, 672 A.2d 566, 568 (D.C.1996). Mr. Caglioti, in pursuing the assignment of the equitable indemnification claim, must meet this same standard, which certainly does not guarantee his recovery, particularly since the medical providers could assert the defense that the money paid in the settlement between Graham-Field and Mr. Caglioti was unreasonable and far beyond any damages suffered by Mr. Caglioti. Finally, appellees assert that it would be unfair to allow Mr. Caglioti to pursue the claim, because he will be a much more sympathetic plaintiff than Graham-Field. We are not persuaded by this argument. A trial judge has ample authority to manage the litigation so that the jury understands that Mr. Caglioti is pursuing a claim for equitable indemnification in the place of Graham-Field.