Opinion ID: 2276662
Heading Depth: 2
Heading Rank: 2

Heading: GWU's Appeal (97-CV-50): The Settling Defendant's Cross-Claim for Contribution.

Text: GWU asserts that the trial court abused its discretion in denying its motion to file a cross-claim for contribution against Dr. Bier following the jury verdict. It maintains that there is no equitable reason why it should be required to pay the full amount of the jury verdict while Dr. Bier receives a free pass, and that such an inequitable result conflicts with this court's longstanding policy of encouraging out-or-court settlements. As we noted earlier in connection with Paul's appeal, a question at issue in this case is whether, even assuming the timeliness of GWU's motion, GWU could claim a right to contribution as a joint tortfeasor given that its liability to the plaintiff was neither judicially determined nor the product of a stipulation by the parties. See supra notes 10 and 11. [12] Assuming that GWU, as a settling defendant, had a right of contribution against the nonsettling Dr. Bier, we recognize that the settling defendant must have available a procedural mechanism to establish the predicate joint tortfeasor liability, even though as a result of settlement, it is no longer party to the lawsuit. This court, however, has yet to decide the issue whether a settling defendant has a right to contribution. See, e.g., Washington Hosp. Ctr., 722 A.2d at 342-43 & nn. 13-15. We do not reach either question, however, because we hold that, even if GWU is a joint tortfeasor with a right to contribution, the trial court did not abuse its discretion in disallowing the cross-claim on the ground that GWU's failure to timely assert its right to contribution was prejudicial to Dr. Bier, the nonsettling defendant. [13] The decision whether to grant or deny a motion to file a cross-claim under Civ. R. 13(a) or to amend a pleading under Rule 15 is within the sound discretion of the trial court, and we review the decision for abuse of discretion. We are mindful, however, of the liberal construction we place on pleading rules to achieve substantial justice over formalism. See Goldkind v. Snider Bros., Inc., 467 A.2d 468, 474 (D.C.1983); Eskridge v. Jackson, 401 A.2d 986, 988 (D.C.1979) (per curiam); Eagle Wine & Liquor Co. v. Silverberg Elec. Co., 402 A.2d 31, 34 (D.C.1979). Although a trial court may not deny a motion to amend the pleadings simply because of undue delay, the lateness of a motion may well provide the predicate for a proper determination that prejudice to the opposing party would result if an amendment were allowed. Eagle Wine & Liquor Co., 402 A.2d at 35; see also Gordon v. Raven Sys. & Research, Inc., 462 A.2d 10, 13 (D.C.1983) (no abuse of discretion in denying leave to amend complaint requested eighteen months after filing and after close of discovery, noting that movant gave no reason for delay and opposing party would be prejudiced by having to begin anew the pretrial and trial proceedings). In evaluating the timeliness of GWU's motion to file a cross-claim and its potential prejudice to Dr. Bier, we start with the familiar principle we have already discussed in connection with Paul's appeal that a right of contribution does not arise without a finding that the party seeking contribution is a joint tortfeasor along with the party from whom contribution is sought. Hall, supra note 13, 621 A.2d at 850. GWU argues that it did not have a right of contribution against Dr. Bier until he was found to be a tortfeasor, and thus, that GWU could not have filed its cross-claim before the jury's verdict. Here, GWU sought leave to file its cross-claim not only three months after the jury's verdict but also five weeks after the trial court had ruled on Dr. Bier's motion for a pro tanto credit. Thus, GWU also argues that its contribution claim was not untimely because it did not accrue until after the trial court awarded a pro tanto credit to Dr. Bier and it became clear that GWU had paid a disproportionate share of the liability. According to our case law, a right of contribution accrues when two or more parties are joint tortfeasors. Hall, supra note 13, 621 A.2d at 850 (citations omitted), but is enforceable only after the one seeking it has been forced to pay. Bair v. Bryant, 96 A.2d 508, 510 (D.C. 1953). Although we do not decide whether GWU was a joint tortfeasor, we note that if GWU was not a joint tortfeasor then it had no right to contribution, and if, as GWU subsequently postulated, it was a joint tortfeasor, its right of contribution (assuming that settling defendants have such a right) would have become enforceable at the time, while the litigation against Dr. Bier was still in progress, when it agreed to pay Paul $2,000,000. Moreover, it would not be the trial court's application of the pro tanto credit in mid-September 1996, but the verdict at the end of July 1996, that would have alerted GWU to the disproportionality of its settlement with Paul. [14] We therefore are not persuaded that GWU had a reason, based in law, to delay asserting its claim of contribution. In Washington, this court held that a nonsettling defendant is barred from filing a cross-claim for contribution post-trial in the parallel situation to the one in this appeal, where the nonsettling defendant's share of liability after application of a pro tanto credit was more than its pro rata share. 579 A.2d at 186-88 & n. 11. Even though the right to contribution does not accrue until the nonsettling defendant's status as joint tortfeasor is established, a cross-claim for contribution against a settling defendant must be asserted before the verdict is rendered as the claimant is expected to safeguard any legitimate claim it might have to lessen the burden of a plaintiff's verdict by asserting it during trial. Id. at 188 (citation omitted). Likewise, in Hall v. General Motors Corp., 207 U.S.App.D.C. 350, 647 F.2d 175 (1980), the court indicated that where a nonsettling defendant has a clear opportunity to clarify the issue of a settling defendant's liability by filing a cross-claim during trial and does not do so, the nonsettling defendant is not entitled to a pro rata reduction of judgment based on joint liability. See Id. at 358-59, 183-84, 647 F.2d 175; see also Berg, 673 A.2d at 1250 n. 10 (noting nonsettling defendant's responsibility to file cross-claim against settling defendant in principal action to ensure right to a pro rata contribution); Otis Elevator Co., 514 A.2d at 786 (concluding that where a nonsettling defendant does not cross-claim against a settling defendant for contribution, and neither the judge nor the jury ever considered liability of settling defendant, nonsettling defendant is only entitled to pro tanto contribution). In formulating this rule, we have focused on the prejudice caused by the nonsettling defendant's late assertion of a claim for contribution on the settling defendant, see Berg, 673 A.2d at 1250 n. 10, and on the plaintiff, see Washington, 579 A.2d at 188 (because [ pro rata ] credit's consequences are visited upon the plaintiff .... injured party in settling with one tortfeasor effectively bears the burden that otherwise would fall upon the settling tortfeasor to make contribution). We see no reason why the same principle should not apply when it is the settling defendant claiming contribution. As the trial court aptly noted: If equity bars a late-filed cross-claim for contribution by the non-settling defendant even where its share of liability after a pro tanto credit is more than its pro rata share, it is hard to see why equity should entertain an after-the-fact cross-claim by the settling defendant when the verdict goes the other way. Like a nonsettling defendant, a settling defendant sleeps on its rights when it fails to file a timely cross-claim to determine the respective liability of the defendants. Fairness dictates that all defendants, whether they choose to settle or litigate, file cross-claims for contribution before the verdict in order to give notice to other defendants that they will be required to pay their fair share of damages to a joint tortfeasor in the event that they are found liable. [15] We recognize that a nonsettling defendant does not need the spur of a claim for contribution to defend itself against a plaintiff's claim of liability. The manner of defense and trial strategy may be different, however, in light of a claim for contribution by an alleged joint tortfeasor. In this case, as we noted earlier in consideration of Paul's appeal, there was no request to apportion the injury attributable to Dr. Bier from that attributable to GWU. See supra note 5. Although there can be no doubt that it was in Dr. Bier's interest even prior to GWU's settlement to separate its responsibility from that of GWU if it could have reduced his potential liability to Paul as a result, Dr. Bier may have considered that the most effective defense with the jury was one that denied all liability on his part and attempted to minimize the injury alleged by Paul. Had Dr. Bier been put on notice of GWU's intent to claim for contribution, he would have had an incentive to build a case during trial that separated his liability from that of GWU if he knew that joint tortfeasor liability would be a central feature of his responsibility to GWU. See Washington, supra note 9, 579 A.2d at 188 (noting ways in which plaintiff might have litigated differently in light of request for pro rata credit even if it meant shifting theories before jury). In this case, were the court to grant GWU, a settling defendant, leave to file its belated cross-claim for contribution against Dr. Bier, in the words of the trial court, GWU would have all of the benefits of a claim for contribution with none of the burdens that should, in equity, attend such a claim. Given that the $2,000,000 settlement amount equals the jury verdict, the pro tanto credit protects GWU against any contribution claim by Dr. Bier. Even if GWU's pro rata share of the verdict had exceeded the settlement amount, and Dr. Bier had claimed a right to contribution, the indemnification clause in the settlement agreement between Paul and GWU ensures that GWU will be shielded from any further contribution. See Rose, 163 U.S.App.D.C. at 250, 501 F.2d at 810 (noting that settling defendants cannot equitably insist on a continuing involvement in the litigation for the purpose of invoking contribution to lessen their [settlement] payment when they have no exposure to an increase in payment if contribution should be sought from them). Dr. Bier, on the other hand, would be precluded from filing a cross-claim for contribution against GWU after the verdict. See Washington, supra note 9, 579 A.2d at 187-88. Thus, as the trial court observed, GWU filed its cross-claim only after it was protected from any downside risk of contribution to Dr. Bier. A requirement that all defendants file cross-claims for contribution before verdict is in line with our longstanding policy of encouraging settlements. See, e.g., Moses-Ecco Co. v. Roscoe-Ajax Corp., 115 U.S.App.D.C. 366, 371 & n. 4, 320 F.2d 685, 690 & n. 4 (1963) (citing Martello, 112 U.S.App.D.C. at 130, 300 F.2d at 722, and McKenna v. Austin, 77 U.S.App.D.C. 228, 234, 134 F.2d 659, 665 (1943)). Had GWU filed a timely cross-claim for contribution, Dr. Bier would have been put on notice that, should the jury find him negligent, he would be required to pay his pro rata share of the damages award. While this information may not have induced Dr. Bier to settle, especially if he believed that he would be exonerated by the jury, at the very least a contribution cross-claim would have informed Dr. Bier's strategic choices and should, therefore, have been filed during the course of the litigation. Accordingly, the trial court did not abuse its discretion in denying as untimely GWU's motion to cross-claim for contribution, filed several months after GWU knew the jury verdict awarding $2,000,000 to Paul and the trial court's order granting Dr. Bier's motion for a pro tanto credit against the verdict. [16] For the foregoing reasons, we affirm the trial court's application of a pro tanto credit and denial of GWU's a post-verdict motion to amend its pleadings to include a cross-claim for contribution. So ordered. RUIZ, Associate Judge, concurring: I write separately to urge that the court finally decideif necessary, en banca question that we narrowly avoid in this appeal, whether a settling defendant has a right to sue a nonsettling joint tortfeasor for contribution. I also think that the en banc court should reconsider the opinion in Berg v. Footer, 673 A.2d 1244 (D.C.1996), which in part drives the result we reach today, with respect to the rights of the injured plaintiff. In so doing, we should comprehensively address the issue of the proper application of pro tanto and pro rata credits and provide litigants with clear guidance on the applicable rules so that they, in turn, can make informed decisions in the course of litigation and structure their private agreements accordingly. This is the first case where this court has been presented with a situation where both the injured plaintiff seeks a pro rata credit in order to recover more than the jury verdicta situation we allowed in Berg, 673 A.2d at 1257and a settling tortfeasor claims contribution in order to avoid paying (through its settlement with the plaintiff) more than its pro rata share of the jury verdict. Although both argue for application of a pro rata credit against the verdict, they are at odds over which party should receive the benefit: the injured plaintiff argues that after application of a pro rata credit that will reduce the jury verdict by half, she should receive the adjudicated tortfeasor's pro rata share of the jury verdict (in this case, when combined with the settlement, another $1,000,000 in excess of the amount the jury awarded in compensatory damages), but the settling tortfeasor claims that it should be able to recover that amount from the adjudicated tortfeasor. [1] These conflicting claims reveal tensions in our jurisprudence that should be addressed. Even though Berg did not squarely address the conflicting claims before us, I do not believe that we are free to do equity as the dissent suggests. Berg clearly holds that whenever the plaintiff settles with a joint tortfeasor, the nonsettling defendant shall receive a pro rata credit under Martello, reflecting the [nonsettling] defendant's equitable right to contribution and no more, even when the plaintiff's recovery from all defendants will exceed the amount of the verdict and thus violate the one satisfaction rule. Id. at 1245 (referring to Martello v. Hawley, 112 U.S.App.D.C. 129, 300 F.2d 721 (1962)). Given application of a pro rata credit against the verdict, and the resulting obligation of the adjudicated tortfeasor to pay the remaining verdict to the plaintiff, Berg would not appear to admit the possibility that the settling tortfeasor can step in to intercept monies that otherwise would be payable to the plaintiff. I would overrule Berg to the extent it permits a plaintiff to request application of a pro rata credit where the result will be that the plaintiff will recover more than the jury verdict; and I would preclude settling defendants from suing for contribution. I make these proposals fully aware that they are not completely satisfactory. In particular, precluding a settling tortfeasor from contribution (while permitting a suit for contribution against the settlor) is subject to criticism as discouraging settlement because the settling tortfeasor can have no assurance that settlement finally fixes its liability. [2] But all possible solutions have drawbacks. As we noted in Berg, 673 A.2d at 1252, there are three possible solutions to this highly debated issue: [3] a) settlement extinguishes the plaintiff's claim against the settling tortfeasor and a pro tanto credit is applied against the jury verdict; the nonsettling defendant retains a claim for contribution against the settling tortfeasor if the remaining verdict exceeds the nonsettling defendant's equitable share; b) settlement extinguishes both the plaintiff's claim and any claim for contribution by the nonsettling tortfeasor, usually subject to a determination of the fairness of the settlement. Once such a hearing is provided for, and the finality of settlement suspended, the incentive to settle is diminished; and c) settlement extinguishes the plaintiff's claim against the settling tortfeasor, and the verdict is reduced by the equitable share of the settling tortfeasor's liability in recognition of the nonsettlor's right of contribution. A pro rata credit against the verdict represents the nonsettling defendant's right to contribution from the settling defendant when both have been found liable for the plaintiff's injuries. Berg, 673 A.2d at 1248. A pro rata credit, therefore, acts as a substitute for the non-settling defendant's actual claim for contribution that persists after the dismissal of the principal claim against a settling defendant. Id. (quoting Washington v. Washington Hosp. Ctr., 579 A.2d 177, 187 (D.C. 1990)). Thus, it is the nonsettling defendant's right to contribution, not the plaintiff's right to compensation, which is given effect in the application of a pro rata credit. The pro tanto credit, on the other hand, is not premised on ensuring equity between joint tortfeasors, but is based on the rationale that the plaintiff is entitled to no more than the loss actually suffered. See Berg, 673 A.2d at 1248-49. In this appeal, it is undisputed that the plaintiff received $2,000,000 in settlement from the settling defendant, which equaled the total amount of the jury verdict. Application of the pro tanto credit, which eliminated the nonsettling defendant's obligation to the plaintiff, merely recognized the reality that, by the time the jury returned its verdict, the plaintiff had no uncompensated damage outstanding. This is a good and sufficient reason not to recognize a plaintiff's right to contest application of a pro tanto credit where the plaintiff has received the full amount of the jury verdict. [4] It makes no sense to entitle a fully-compensated plaintiff to assert the nonsettling defendant's right to contribution as a way of achieving a windfall when the nonsettling defendant is not asserting its own right. [5] I also would hold that settlement extinguishes the settling tortfeasor's right of contribution against other joint tortfeasors. This is a more controversial point. Most states prohibit a settling tortfeasor from seeking contribution once it turns out that the settlement amount is more than that defendant's proportionate share of the damages awarded after trial. See Berg, 673 A.2d at 1253-54 & n. 17 (citing McDermott, 511 U.S. at 211 n. 13, 114 S.Ct. 1461). [6] Noting the principle of equity underlying the contribution doctrine, the United States Court of Appeals for the District of Columbia Circuit has explained that [t]he settling party has settled his share of the case for a specified amount. That amount may not be increased because his settlement turns [out] to be for less than a pro rata share.[ [7] ] [Therefore, i]t should not be subject to reduction through contribution because he has settled for what turns out to be greater than a pro rata share. Rose, 163 U.S.App.D.C. at 250 n. 10, 501 F.2d at 810 n. 10. We have also noted a contrary view, at least in cases where application of pro tanto credit would eliminate the nonsettling defendant's liability. See Berg, 673 A.2d at 1253-54 n. 17 (citing McKenna v. Austin, 77 U.S.App.D.C. 228, 234, 134 F.2d 659, 665 (1943)). Although there are arguments to be made for each approach, I believe that ensuring the maximum finality of settlements freely reached by the parties, will prove to be the best incentive to settlement. [8] In his dissent, Judge Schwelb argues for a different proposition. The en banc court can consider the alternatives and decide, in a comprehensive context, the set of rules that will better promote the desirable policy of encouraging fair settlements, without unduly penalizing litigants who prefer an adjudication of liability. Sitting en banc, the court can do what the Berg division felt it could not accomplish because of the binding precedent set by Martello. As the Berg opinion noted, If Martello were not the law, recognizing the nonsettling tortfeasor's right (at least when the settlement is less than half the verdict) to a pro rata credit, we might look at this case differently. There is much to be said for an across the board pro tanto (without contribution) rule, coupled with a required showing of a good faith settlement. Under such a rule, whether the settling defendant is a joint tortfeasor or not, (1) settlement pressure on all defendants is great, and (2) a plaintiff, by settling with one defendant and successfully litigating against another, will always be made whole in the amount of the jury's verdict. Bound by precedent, however, we are not free to consider overruling our bifurcated system of credit rules under Martello and Snowden even if one uniform credit rule regime would be demonstrably superior. 673 A.2d at 1244. However the full court ultimately decides these issues, the most important goal is that they be settled in a definitive manner so that litigants have a clear set of rules by which to make decisions in the course of litigation. I would leave it to the parties, in their litigation decisions and private agreements, to determine who is to bear the risk of settlingor notfor an amount that turns out not to be fair (from a particular litigant's perspective). This is not the sporting theory of justice the dissent laments, which usually can only be so characterized with the benefit of 20/20 hindsight. The reality is that the amount of settlement, as here, is usually kept confidential, and litigants act out of a sense of enlightened self interest based on their view of what a jury is likely to do given the evidence presented, not on foolish (and potentially very expensive) bets. Short of holding matters in abeyance until all the information is in, which I believe is the greatest disincentive of all to settlement, there is no way to ensure mathematical fairness in an ongoing and sometimes unpredictable process during which parties perforce make decisions based on imperfect information. I would resist the temptation to try to have the rules of contribution operate as a judicial deus ex machina to make all things right (by our lights) in the end. REID, Associate Judge, concurring: Although I join Judge Ruiz' opinion for the court, I am of the view that the issues raised by this matter should be considered by the en banc court, after supplemental briefing. SCHWELB, Associate Judge, dissenting: In my opinion, The George Washington University (GWU) should have been permitted to file its cross-claim. On the merits, I believe that GWU is entitled to contribution from Dr. Bier in the amount of one million dollars. Because the majority holds otherwise, I must respectfully dissent.