Opinion ID: 2388031
Heading Depth: 1
Heading Rank: 3

Heading: avco's claim for contribution

Text: On June 4, 1984, Avco and the Walton and Tincher plaintiffs executed a settlement agreement which was entitled as follows: Contingent Joint Tortfeasor Release and Indemnity Agreement. Avco settled the Walton action for $922,355.00 and the Tincher action for $1,000,000.00. Both settlement figures exceeded the ultimate jury award which was entered against both Avco and Hughes: $891,203.00 to the Waltons and $415,902.00 to the Tinchers. [12] Relevant portions of the Walton release agreement follow: . . . It is further understood and agreed and it is the express intent of the parties to this agreement that this release shall not in any way affect the rights of Avco . . . to pursue claims for contribution and/or indemnity arising out of the same accident against Summa Corporation and/or Executive Helicopters, Inc. of Atlanta, Georgia. IT IS FURTHER UNDERSTOOD AND AGREED, however, that if it should be determined that any person, firm or corporation not being released by the terms of this release is jointly or severally liable to the claimants with any party herein released, in tort or otherwise, the claim against and damages recoverable from such other person, firm or corporation shall be reduced by the greater of the amounts determined as follows: a. The amount of the consideration paid for this release; or b. The amount determined by the sum of the pro-rata share of legal responsibility or legal liability for which the parties herein released are found to be liable as a consequence of the aforesaid accident of September 1, 1978. R.R. at 44a. The trial court granted Avco's post-trial motion seeking contribution from Hughes, and awarded Avco one-half of the jury verdict entered in favor of the Waltons: $445,601.50. [13] In so doing, the trial court relied on the specific terms of the parties' release agreement as well as particular provisions of the Uniform Contribution Among Tortfeasors Act (U.C.A.T.A.), See 42 Pa.C.S.A. §§ 8321 to 8327. We find that, as to the Walton plaintiffs, Avco is entitled to contribution from Hughes. The Walton plaintiffs claim that Avco is not entitled to receive any contribution from Hughes because, relying on the opinion of our supreme court in Charles v. Giant Eagle Markets, 513 Pa. 474, 522 A.2d 1 (1987), the Waltons believe that they are entitled to recover from Hughes the full amount of Hughes' share of the jury verdict. We have carefully reviewed the Charles decision and we are convinced that it does not provide the relief the Waltons seek. Under the U.C.A.T.A, a tortfeasor has a right to contribution from a joint tortfeasor where he has by payment discharged the common liability or has paid more than his pro rata share thereof. 42 Pa.C.S.A. § 8324(b). [14] In Charles, the appellant, George Charles (Charles), instituted suit against Giant Eagle Markets, Inc. (Giant Eagle) after he fell near the entrance to one of Giant Eagle's retail stores. Giant Eagle joined Stanley Magic Door, Inc. (Stanley) as an additional defendant. Prior to trial, Giant Eagle and Charles executed a settlement agreement which contained the following provision: . . . I [Charles] further agree that any recovery that I may obtain against any . . . corporation other than Giant Eagle Markets, Inc. . . . shall be reduced to the extent of the pro rata share of . . . Giant Eagle. Id., 513 Pa. at 482, 522 A.2d at 5. The jury returned a verdict in favor of Charles in the amount of $31,000.00. The jury found Giant Eagle to be sixty percent negligent and Stanley to be forty percent negligent. Stanley paid only $8,500.00 to Charles, taking the position that Charles was only entitled to receive the amount of the jury verdict minus the settlement payment it had already received from Giant Eagle. The Supreme Court reversed and ordered Stanley to pay the full amount of its proportionate share of the jury verdict to Charles: $12,400.00. In reaching this conclusion, the Charles Court recognized that [t]he responsibility of the settling tortfeasor should be finally resolved by the terms of the settlement and that [t]he obligations of the remaining defendants . . . are determined by the verdict. Id., 513 Pa. at 478-479, 522 A.2d at 3. The Supreme Court reasoned as follows: . . . where a release has been executed, the verdict is reduced only by the proportionate share of the settling tortfeasor. The actual amount of the release, if it exceeds this sum, is of no consequence in the satisfaction of the judgment of the remaining defendants. The fact that the plaintiff may receive a larger dollar amount in damages than that fixed by the jury does not militate against such an approach. Id. [15] The Court cited the following language from the Supreme Court of Colorado as a statement of the policy considerations underlying its holding in Charles: . . . If the plaintiff knew that any settlement reached would be deducted from the proportionate share owed to the plaintiff by another tortfeasor, the plaintiff would be less likely to settle. Similarly, tortfeasors might refuse to settle, hoping that their share of damages would be reduced by the settlement amount paid by another tortfeasor. Id. (citation omitted). The Charles Court concluded that its holding was consistent with not only the Comparative Negligence Statute, 42 Pa.C.S.A. § 7102, but also with the U.C.A.T.A. The Court dismissed any claim of contribution on the part of Stanley because Stanley had not been required to pay `more than' the pro-rata share. 42 Pa.C.S.A. § 8324(b). Further, Giant Eagle had no viable claim for contribution because Giant Eagle had elected to pay the consideration for the release to avoid further involvement in the lawsuit. Id., 513 Pa. at 480, 522 A.2d at 4. The Court found § 8326 of the U.C.A.T.A. to be compatible with its holding by employing the following analysis: Section 8326 of the UCATA provides: A release by the injured person of one joint tort-feasor, 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. 42 Pa.C.S.A. § 8326. This section affords the parties to the release an option to determine the amount or proportion by which the total claim shall be reduced provided that the total claim is greater that the consideration paid. In this instance the release specifically provided: . . . I further agree that any recovery that I may obtain against any . . . corporation other than Giant Eagle Markets, Inc. . . . shall be reduced to the extent of the pro rata share of . . . Giant Eagle. We find no inconsistency with the UCATA, given the clear language of both that statute and the release executed by Charles and Giant Eagle, in reducing the jury's verdict by Giant Eagle's proportionate share of the damages. . . Id., 513 Pa. at 481-482, 522 A.2d at 4-5. Unlike the settling tortfeasor in Charles, the settling tortfeasor here, Avco, did not pay consideration to the plaintiffs to be released unconditionally from further involvement in the lawsuit. On the contrary, Avco specifically provided in its release agreement with plaintiffs that its involvement in the lawsuit would continue in so far as Avco retained the right to seek contribution. Avco conditioned its payment of the settlement monies on the basis that if had overestimated its own liability to the plaintiffs, it could remedy this mistake by pursuing its contribution rights against other liable parties. The terms of Avco's release agreement controls Avco's right to seek contribution from Hughes. Our result in this regard is simply unaffected by the Charles decision where the parties to the settlement agreement had merely provided that the total claim would be reduced by Giant Eagle's pro rata share of the jury verdict. Finally, apart from the terms of its release agreement with the plaintiffs, we believe that Avco's right to seek contribution can be said to arise from the operation of § 8324(b) of the U.C.A.T.A. Avco has, by paying plaintiffs a greater settlement amount than the jury awarded to the plaintiffs as damages, discharged the common liability of Avco and Hughes. See 42 Pa.C.S.A. § 8324(b). Our conclusion in this regard is of course based upon our finding that no part of Hughes' share of the jury verdict is owed to the plaintiffs. In the present case, the plaintiffs agreed in the release they executed with Avco that any damages recovered from another defendant in the case (assuming this defendant and Avco were found to be jointly and severally liable) would be reduced by the greater of the consideration paid by Avco for its release or Avco's pro-rata share of the total damages awarded. The Charles Court recognized that 42 Pa.C.S.A. § 8326 provides an opportunity for the parties to determine, by way of their release and settlement contract, the effect that the release will have on the plaintiff's ability to recover damages at trial from other joint tortfeasors. Charles, supra, 513 Pa. at 482, 522 A.2d at 4. If the settlement amount exceeds the ultimate claim recovered at trial against all defendants, as in the instant case, then the parties executing a release agreement have no option as to the amount by which the judgment will be reduced. Under those circumstances, the judgment is essentially cancelled out by the previous settlement payment to the plaintiff. It is where the consideration paid for the previous release agreement is less than the total claim ultimately recovered by the plaintiff at trial, as in Charles, that the parties to a release agreement have the option to determine the amount or proportion by which the total claim shall be reduced. Id. Our conclusion under the particular facts of the present case comports with the policy considerations announced by the Supreme Court in Charles. The plaintiff is encouraged to settle in view of the fact that he will recover at least the amount of the jury verdict entered against the joint defendants and perhaps a greater amount where the release consideration exceeds the total jury verdict. The nonsettling defendant, where the settling defendant has preserved the right to seek contribution, has no incentive to allow the case to go to trial in hopes of securing a windfall at the settling defendant's expense. The settling defendant, who protected his contribution rights, has appropriately reached an agreement which is satisfactory to the plaintiff and has at the same time protected his own interests in a fair and reasonable manner. In the final analysis, it is particularly difficult to accept the plaintiffs' claim to Hughes' share of the jury verdict because the plaintiffs' accepted and agreed to the clear terms of the release agreement they executed with Avco. We therefore uphold Avco's right to seek contribution from Hughes and we affirm the denial of plaintiffs' claim to receive a portion of the jury verdict from Hughes.