Opinion ID: 4530356
Heading Depth: 2
Heading Rank: 4

Heading: Set-off of Orbital Settlement 21

Text: Next, all Appellants argue that the District Court improperly failed to set-off the value of AFS’s settlement with Orbital from the compensatory damages it awarded to AFS, as purportedly mandated by the Pennsylvania Uniform Contribution Among Tortfeasors Act (“PUCATA”). According to Appellants, they are entitled to a set-off under PUCATA because Orbital was a joint-tortfeasor. The District Court held that Appellants had failed to put either AFS or the Court on notice that a “setoff theory was fair game at trial[.]” Post-Judgment Op., 381 F. Supp. 3d at 383. We agree. The Huber Parties carry the ball for the Appellants on this issue and assert that it is not forfeited, for four reasons: (i) they were not required to file a formal pleading requesting setoff; (ii) AFS was on notice that Appellants would seek set-off of the Orbital settlement; (iii) Orbital’s status as a joint tortfeasor was tried by the parties’ implied consent; and (iv) Federal Rule of Civil Procedure 52(a)(5) permits them to, for 21 The District Court held that Appellants failed to provide fair notice to AFS that they would be seeking setoff with respect to the Orbital settlement. “We review a District Court’s decision as to the waiver of an affirmative defense for abuse of discretion.” In re Asbestos Prods. Liab. Litig. (No. VI), 921 F.3d 98, 104 (3d Cir. 2019). 32 the first time, raise the set-off issue after judgment. 22 Those arguments, individually and collectively, fail. As to the first argument, whether or not Appellants were obligated to formally plead set-off under PUCATA is beside the point. The District Court did not hold that Appellants forfeited their set-off argument solely because they neglected to plead it. Rather, the Court noted the Appellants’ complete failure to raise the issue at any point in the litigation, up to and including trial. Appellants cite no case in which a party seeking to set off the amount of a co-defendant’s settlement against a damages award did not plead, attempt to plead, or otherwise squarely raise that issue before judgment was rendered. As shown by cases on which Appellants themselves rely, the party invoking PUCATA must provide some clear indication that, even if it did not plead the set-off, it actually raised the issue in some fashion. See Kilbride Invs. Ltd. v. Cushman & Wakefield of Pennsylvania, Inc., Civil Action No. 13-5195, 2019 WL 3713878, –7 (E.D. Pa. Aug. 6, 2019) (denying the plaintiff’s pre-trial motion to voluntarily dismiss a defendant where co-defendant objected on the grounds that dismissal would inhibit its ability to claim an “offset” from the to-be-dismissed defendant where issue of joint tortfeasor status had “been an actively debated issue for well over a year,” and the court had previously “ordered briefing on the narrow issue of joint tortfeasor status between the then-remaining 22 The Livingston Parties do not address in their briefing the question of whether they forfeited this issue before the District Court by failing to raise it before judgment was entered. 33 defendants”); Nat’l Liberty Life Ins. Co. v. Kling P’ship, 504 A.2d 1273, 1277–78 (Pa. Super. Ct. 1986) (denying pre-trial motion specifically raising issue of contribution and indemnity from settling co-defendants). 23 Second, the contention that Appellants did not waive the set-off issue because “AFS was on adequate and early notice that [Appellants] would seek a set-off of the Orbital settlement agreement[,]” is belied by the record and Appellants’ conduct. Huber Parties Opening Br. at 40. None of the examples cherrypicked by Appellants from the voluminous record makes any mention of either set-off or joint-tortfeasor liability. To the extent those examples speak to anything beyond the undisputed fact that AFS reached a settlement with Orbital and that Orbital was dismissed from this case, we agree with the District Court that they suggest only that Appellants sought to use the settlement agreement to impugn the objectivity and credibility of testimony and other evidence provided by Orbital sources. 24 Significantly, the Huber Parties’ briefing has no 23 Appellants’ reliance on Mazer v. Lipshutz, 360 F.2d 275 (3d Cir. 1966), is likewise misplaced. The release at issue in that case, although not pled, nevertheless was considered on appeal because the release had been admitted into evidence in two different, consecutive trials involving the parties, without objection. Id. at 277. 24 See Livingston Parties’ Statement of Facts and Conclusions of Law (ECF 247-2) at ¶¶ 142–43 (noting that AFS dismissed Orbital from suit after settling and arguing the settlement consideration should not be considered evidence of AFS’s competence to perform work); Huber Parties’ Trial Exhibit List (ECF 295) at 7 (identifying settlement agreement 34 explanation as to why, if set-off was truly an issue before the District Court, not a single defendant murmured a negative word about Orbital’s dismissal from the case, despite those codefendants having the burden of proving that Orbital was a joint-tortfeasor. 25 In belatedly raising the issue for the first and release as exhibit); App. at 2221–40 (copies of the settlement agreement and related AFS/Orbital commercial agreement); App. at 2800–01 (trial testimony of Orbital employee pertaining to cooperation provision in AFS/Orbital settlement agreement); App. at 3015–16 (trial testimony of AFS employee regarding profitability of contract with Orbital resulting from settlement); App. at 4726 (Huber Parties’ requested finding of facts and conclusions of law highlighting cooperating provision in AFS’s settlement agreement with Orbital); App. at 4762 (same); App. at 5777–78 (noting that AFS dismissed Orbital from suit after settling and emphasizing Orbital promised in settlement agreement to cooperate with AFS in AFS’s pursuit of its claims against the other defendants in this case). 25 See Montgomery Cty. v. Microvote Corp., 320 F.3d 440, 450 (3d Cir. 2003) (holding defendants waived their Rule 60(b) claim to set-off plaintiff’s settlement with purported joint-tortfeasor where, inter alia, “[defendants] did not attempt to keep [the settling defendant] in the case in order to apportion liability, nor did they request substitution of a settlement that delineated [the settling defendant]’s pro-rata share of liability” and “the settlement did not mention the non-settling defendants’ liability”); Rocco v. Johns-Manville Corp., 754 F.2d 110, 115 (3d Cir. 1985) (“One would have expected the nonsettling defendants to either have requested substitution of [releases in which the plaintiff agrees to a pro rata reduction 35 time after trial and judgment, Appellants, without justification, unreasonably deprived AFS of a fair opportunity to address it at trial or any time prior thereto. For largely the same reasons, the assertion that the issue of set-off was tried by the parties’ “implied consent” necessarily fails. “[I]mplied consent depends on three factors: ‘whether the parties recognized that the unpleaded issue entered the case at trial, whether the evidence that supports the unpleaded issue was introduced at trial without objection, and whether a finding of trial by consent prejudiced the opposing party’s opportunity to respond.’” Liberty Lincoln-Mercury, Inc. v. Ford Motor Co., 676 F.3d 318, 327 (3d Cir. 2012) (quoting Douglas v. Owens, 50 F.3d 1226, 1236 (3d Cir.1995)). At a minimum, Appellants cannot satisfy the first or third criteria because the record shows that neither AFS nor the District Court was aware that set-off was an issue at trial, and that lack of awareness unfairly deprived AFS of an opportunity to present evidence on the issue of whether Orbital and Appellants were joint-tortfeasors. See Post-Judgment Op., 381 F. Supp. 3d at 383 (“[N]o defendant ever so much as hinted that the isolated evidence on which they now rely–the AFSOrbital settlement agreement, AFS’s initial verified complaint in this case, and an isolated passage … [of] trial testimony–was introduced for the purpose of establishing Orbital as a joint tortfeasor.”). equal to the settlement amount from any judgment awarded against nonsettling defendants] or judicial determination of liability. The nonsettling defendants took no action, apparently acquiescing in the settling part[y’s] absence from the trial. That failure to act may be considered a waiver of any benefit from the [settling defendant’s release] or the amounts paid for [it].”). 36 Finally, there is no merit in the contention that Federal Rule of Civil Procedure 52(a)(5) somehow excuses Appellants’ complete failure to raise the set-off issue before judgment was entered. Rule 52(a)(5) allows a party to “question the sufficiency of the evidence supporting” a finding of fact that a district court actually makes. Fed. R. Civ. P. 52(a)(5). The Court did not make any relevant findings regarding set-off, including whether Orbital was a jointtortfeasor. And that, undoubtedly, was because the issue was never raised. Rule 52(a)(5) does not, as the Huber Parties necessarily argue, contemplate new or additional findings of fact, nor does it sanction the injection of an entirely new and previously unintroduced legal theory into proceedings. The Huber Parties cite no authority that would sustain their novel construction of Rule 52(a)(5), and we reject it, as it runs contrary both to the plain language of the rule and to the general notions of fairness, equity, and finality in dispute resolution that pervade the Federal Rules of Civil Procedure. Accordingly, the District Court did not err in excluding the Orbital settlement from its compensatory damages calculation.