Opinion ID: 882157
Heading Depth: 1
Heading Rank: 6

Heading: Dollar Offset

Text: The jury awarded the Prada family combined damages of $1,680,000 and attributed negligence: 0% to Prada, 42% to Whiting, 58% to the State. The District Court, pursuant to § 27-1-703, MCA, ruled that the State was jointly and severally liable for these damages, less a $300,000 offset (to account for the Whiting settlement), and entered judgment for Pradas in the amount of $1,380,000. The State contends that it should only be liable for 58% of the combined Prada award, or just $974,400, arguing that the 1987 amendment to § 27-1-703, MCA, dealing with joint and several liability among joint tortfeasors, wiped out the dollar offset rule as set out in the case of State ex rel. Deere v. District Court (1986), 224 Mont. 384, 730 P.2d 396. Stated differently, the State contends that the District Court erred when it deducted only $300,000 (dollar offset), rather than deducting the award by 42%, or $705,600 (percent credit equal to Whiting's negligence). Therefore, the question presented is what effect should the settlement by the settling tortfeasor have upon the liability to the plaintiff of the non-settling tortfeasor. In Deere, ruling under § 27-1-703, MCA (1985), this Court decided this very same issue saying: [T]he claim of the plaintiff against the remaining tortfeasors is to be reduced by a dollar credit in the amount of consideration paid by the settling tortfeasor, and not by a percentage amount proportional to the degree of fault of the settling tortfeasor. Deere at 386, 730 P.2d at 398, citing Black v. Martin (1930), 88 Mont. 256, 265, 292 P. 577, 580; and Azure v. City of Billings (1979), 182 Mont. 234, 596 P.2d 460. In Deere, plaintiff was injured when a bulldozer, manufactured by Deere & Co. and driven by an employee of Wade's Backhoe, backed into him. Before judgment was entered by the district court, plaintiff settled his claim against Deere for $25,000. Wade, the non-settling concurrent tortfeasor sought to bring Deere, the settling concurrent tortfeasor, back into the litigation by means of a third party complaint for contribution or indemnity. This Court held that, pursuant to § 27-1-703, MCA (1985), a joint tortfeasor, who has settled before judgment is entered in the district court, is not subject to claims of a non-settling joint tortfeasor for contribution and that, therefore, Deere's settlement with plaintiff prevented contribution claims against Deere. Deere 224 Mont. at 386, 730 P.2d at 398. This is because contribution, according to § 27-1-703, MCA (1985), shall be proportional to the liability of the parties against whom recovery is allowed. We reasoned that this language (unchanged by the 1987 amendments) meant that no right of contribution exists from a settling tortfeasor because a settling tortfeasor is completely exonerated from any further liability for plaintiff's damages which precludes any further recovery from a settling tortfeasor. Having reached that conclusion, we next determined the effect the settlement by Deere had upon Wade's liability to the plaintiff. Counsel for Wade argued that even though Deere is no longer liable to plaintiff by reason of a settlement, it may still be liable for contribution to Wade, if Deere's proportional fault of plaintiff's judgment exceeds $25,000. In short, Wade proposed a percent credit rule to calculate damages, while Deere proposed a dollar offset rule. We held that plaintiff's recovery is diminished by a dollar offset, not percent, in the amount paid or to be paid by the settling concurrent tortfeasor. We rejected the percent credit rule in favor of the longstanding dollar offset rule by stating: In reality, our decision on this issue is hinged upon our earlier interpretation of the statute herein that no right of contribution exists from a settling tortfeasor. Deere at 396, 730 P.2d at 404. [W]e determine the better practice is to follow what has long been the standard in Montana, that the plaintiff's recovery is diminished pro tanto, that is, given dollar credit based on the consideration paid or to be paid by the settling concurrent tortfeasor. Such a holding encourages compromise, lends finality to such compromises, and keeps in force a practice which the legislature has not been shown to have intended to change. Deere at 397, 730 P.2d at 405. Such was the state of the law after Deere. We now consider our holding in Deere in light of the 1987 amendments to § 27-1-703, MCA. Section 27-1-703, MCA (1987) provides: Multiple defendants  determination of liability. (1) Except as provided in subsection (2) and (3), whenever the negligence of any party in any action is an issue, each party against whom recovery may be allowed is jointly and severally liable for the amount that may be awarded to the claimant but has the right of contribution from any other person whose negligence may have contributed as a proximate cause to the injury complained of. (2) Any party whose negligence is determined to be 50% or less of the combined negligence of all persons described in subsection (4) is severally liable only and is responsible only for the amount of negligence attributable to him, except as provided in subsection (3). The remaining parties are jointly and severally liable for the total less the amount attributable to the claimant. (3) A party may be jointly liable for all damages caused by the negligence of another if both acted in concert in contributing to the claimant's damages or if one party acted as an agent of the other. (4) On motion of any party against whom a claim is asserted for negligence resulting in death or injury to person or property, any other person whose negligence may have contributed as a proximate cause to the injury complained of may be joined as an additional party to the action. For purposes of determining the percentage of liability attributable to each party whose action contributed to the injury complained of the trier of fact shall consider the negligence of the claimant, injured person, defendants, third party defendants, persons released from liability by the claimant, persons immune from liability to the claimant, and any other persons who have a defense against the claimant. The trier of fact shall apportion the percentage of negligence of all such persons. However, on attributing negligence among persons, the trier of fact may not consider or determine any amount of negligence on the part of any injured person's employer or coemployee to the extent that such employer or coemployee has tort immunity under the Workers' Compensation Act or the Occupational Disease Act of this state, of any other state, or of the federal government. Contribution shall be proportional to the liability of the parties against whom recovery is allowed. Nothing contained in this section shall make any party indispensable pursuant to Rule 19, Montana Rules of Civil Procedure. (5) If for any reason all or part of the contribution from a party liable for contribution cannot be obtained, each of the other parties shall contribute a proportional part of the unpaid portion of the noncontributing party's share and may obtain judgment in a pending or subsequent action for contribution from the noncontributing party. A party found to be 50% or less negligent for the injury complained of is liable for contribution under this section only up to the percentage of negligence attributable to him. (The emphasis supplied indicates the language added to § 27-1-703, MCA by the 1987 amendment.) According to paragraphs (1), (2) and (3), read together, the State is jointly and severally liable for the total amount that was awarded to Prada, although the State has a right of contribution from other parties under certain circumstances. Paragraph (4) contains key language regarding the State's right of contribution, which was also contained in the 1985 version of the section: Contribution shall be proportional to the liability of the parties against whom recovery is allowed.  (Emphasis added.) In Deere, we concluded that this very same language required the necessary result that no right of contribution exists from a settling tortfeasor. Deere at 393, 730 P.2d at 402. The 1987 amendments left this crucial language intact. As a result, there is no basis for changing our holding in Deere on this issue. We therefore conclude that our holding in Deere controls in the present case. As such, we hold that Whiting, the joint tortfeasor in this case, who settled with the Pradas before judgment on the claim was entered in the District Court, is not subject to any claim for contribution from the State, the nonsettling tortfeasor. Our next task is to determine how much credit is due on the judgment against the State because of the Whiting settlement, which was in the amount of $300,000. The plaintiffs contend that the credit due should be limited to the $300,000 paid, whereas the State contends that 42% of the total judgment, or $705,600, should be deducted. According to subsection (2) of § 27-1-703, MCA, those who are 50% or less negligent (as determined by subsection (4)) are severally liable for their own proportional fault and those who are 51% or more negligent are jointly and severally liable for the total less the amount attributable to the claimant. We now must determine the meaning of the phrase: jointly and severally liable for the total less the amount attributable to the claimant, since the State claims that this language means that a tortfeasor, whose negligence is 51% or more, is jointly liable for only its proportional fault of the damage award. Subsection (2) of the statute clearly states that such liability shall extend to the total (of the award) less the amount attributable to the claimant. The statute, as amended, clearly assesses joint and several liability to the State, the non-settling concurrent tortfeasor whose negligence is 58%, for all of the Prada award rather than just 58% of the award. Therefore, a plain reading of the statute lends no support to the State's contentions. Policy considerations, as noted in Deere, warrant our adoption of the dollar offset rule. Under the percent credit rule, a plaintiff will never recover the full amount of any judgment against the non-settling tortfeasor if he settled for an amount less than the amount of the judgment attributable to the fault of the settling tortfeasor. This, in our estimation, is not adequate protection for the plaintiff. The dollar credit rule, on the other hand, is more effective in encouraging compromise and settlement, does not lead to inequities, and is a method which the legislature has not shown an intention to change. In the case of a jointly liable non-settling tortfeasor, the dollar offset rule assures plaintiff of recovering the entire amount of any judgment rendered  such is the protection of joint and several liability. We are aware of the burden which the dollar credit rule places on a jointly liable nonsettling tortfeasor  namely, to insure plaintiff against his own poor judgment when settling for less than he is entitled. We conclude this is an appropriate result in encouraging fair and just settlements. The compelling reasons which we described in Deere in favor of the dollar offset rule are still applicable. Furthermore, the linchpin of this holding was our reasoning that a right of contribution does not exist as to a settling tortfeasor. This linchpin still exists. We therefore hold that the judgment of the non-contributorily negligent Pradas against the State is to be reduced by a dollar credit in the amount of $300,000 which was paid by Whiting, the settling tortfeasor, and not by $705,600 which equals the 42% of the Prada judgment. The District Court correctly applied the precepts set out in Deere and the provisions of § 27-1-703, MCA as amended in 1987, in ruling that the State was jointly and severally liable for Pradas' damages, less a $300,000 offset for the Whiting settlement. The judgment of the District Court is hereby affirmed. TURNAGE, C.J., and HUNT, WEBER, McDONOUGH, TRIEWEILER, and GRAY, JJ., concur.