Opinion ID: 1981374
Heading Depth: 1
Heading Rank: 5

Heading: the extent of credit to be applied against subsequent judgment

Text: The next question is the extent to which the nonsettling defendants are entitled to credit against any subsequent judgment for the amounts State Farm paid, loaned, or guaranteed on behalf of Rodenburg. In order to give effect to the UCAJTA, this court will attempt to look to substance and not form, at reality and not illusion. We will look at what the agreement does, not what it says it does. Rodenburg is a joint tort-feasor in that it is charged that he produced the injury to the plaintiffs with Chrysler and Ford. For this purpose, he is charged as a wrongdoer and he is a joint wrongdoer with Chrysler and Ford. It seems unlikely that State Farm would pay (or loan) $85,000, and guarantee an additional $115,000, a total of $200,000, the full extent of their insurance coverage limits, if he were not. Despite the guarantee of payment of $200,000 the agreement purports to give no credit to either Chrysler or Ford unless they are determined to be joint tort-feasors with Rodenburg. In addition, the agreement requires Schick to repay the $85,000 loan to State Farm only if Schick's judgment against Chrysler and Ford exceeds $200,000, and then repayment is required only to the extent that Schick's judgment against Chrysler and Ford exceeds $200,000. Instead of attempting to reduce litigation, the agreement promotes litigation because under the agreement the plaintiff must sue Chrysler and Ford in order to get the balance of his guaranteed payment of $115,000. The agreement as written was a clever device to guarantee payment of $200,000 to the plaintiffs while attempting to withhold credit from Chrysler and Ford for the settling funds, and possibly even returning part of those funds to State Farm. A settling defendant cannot, by mere terminology, determine the amount of credit to be given nonsettling defendants under the UCAJTA. That is the job of the courts based on the facts, and reality. Therefore, the UCAJTA and our prior case law require that the minimum credit to which Chrysler and Ford are entitled against any subsequent judgment is neither $85,000 nor $115,000 but $200,000. This is so whether or not Rodenburg is later determined to be a joint tort-feasor by the fact finder. We hold that the agreement be given effect as a loan agreement only to the extent that the money advanced thereunder, $85,000, is to be repaid by plaintiff to State Farm. [9] For example, assume plaintiff obtains a judgment against Chrysler and Ford for $300,000. This would require plaintiff to pay back the $85,000 loan to State Farm, and would entitle Chrysler and Ford to credit against plaintiff's judgment of $200,000, or more based on the percentage of Rodenburg's liability as ultimately determined by the fact finder. Accordingly, we reverse and order the trial court judgment modified to reflect that South Dakota substantive law governs interpretation of the loan receipt and release agreement, and that Chrysler and Ford, as alleged joint tort-feasors, are entitled to credit for the greater of the amount of settlement or the percentage of Rodenburg's liability as is ultimately determined by the fact finder.