Opinion ID: 894285
Heading Depth: 2
Heading Rank: 3

Heading: Credit for Settlements

Text: As an additional issue in only the case involving the Rhodes/Cochran plaintiffs, Appeal Number 12-0522, Hartford assigns error to the circuit court’s refusal to grant Hartford a credit equal to the amount of settlements that plaintiffs received from other defendants. In this regard, Hartford argues that the circuit court erred in holding that a surety and its principal are not entitled to a setoff or credit against a judgment rendered against the principal despite the fact that the plaintiffs have already received one full recovery for their alleged injury. Hartford notes that the plaintiffs are entitled to only one satisfaction for their alleged injury. As a result of the settlement agreement with other defendants named in the action below, Rhodes/Cochran’s loan was voided, the deed of trust on the property was released, and the trade line for the account was deleted for the purposes of reporting to credit bureaus. Thus, Hartford contends that if the plaintiffs obtain an additional recovery of $50,000 from Hartford, they will receive a windfall. Respondents argue that Syllabus point 7 of Board of Education of McDowell County v. Zando, Martin & Milstead, Inc., 182 W. Va. 597, 390 S.E.2d 796 (1990), makes 27 clear that, in order to obtain a credit, a settlement must be entered prior to the judgment: Defendants in a civil action against whom a verdict is rendered are entitled to have the verdict reduced by the amount of any good faith settlements previously made with the plaintiff by other jointly liable parties. Those defendants against whom the verdict is rendered are jointly and severally liable to the plaintiff for payment of the remainder of the verdict. Where the relative fault of the nonsettling defendants has been determined, they may seek contribution among themselves after judgment if forced to pay more than their allocated share of the verdict. (emphasis added). Respondents Rhodes/Cochran note that they settled with some of the remaining defendants nearly two years after the default judgment was entered against Hartford’s principal, Equity South. This issue is easily resolved. We have explained earlier in this opinion that, because the bond issued by Hartford to Equity South is a judgment bond, the judgment against Hartford’s principal, Equity South, is binding on Hartford. In this regard, Hartford is not entitled to re-litigate defenses available to its principal. Similarly, Hartford would not be entitled to any credit that was not available to its principal in connection with the default judgment. In the instant case, the default judgment against Equity South, Hartford’s principal, was entered on October 14, 2008. Rhodes/Cochran entered into a formal settlement agreement with Nationstar and the Bank of New York, two of the remaining defendants in the case, on August 4, 2010. Clearly then, at the time of the default judgment against Equity South, there was no settlement in existence upon which to base a credit. Consequently, Hartford is entitled to no credit for the settlement that was executed almost 28 two years after the default judgment. This result is in accordance with Syllabus point 7 of the Zando opinion, which is quoted above and grants a credit for “good faith settlements previously made.” Board of Ed. of McDowell Cnty. v. Zando, Martin & Milstead, Inc., 182 W. Va. 597, 390 S.E.2d 796 (emphasis added). It is also in accordance with Syllabus point 5 of Zando, which states: “‘Where a payment is made, and release obtained, by one joint tort-feasor, the other joint tort-feasors shall be given credit for the amount of such payment in the satisfaction of the wrong.’ Point 2, Syllabus, Hardin v. The New York Central Railroad Company, 145 W. Va. 676[, 116 S.E.2d 697 (1960)].” Syllabus Point 1, Tennant v. Craig, 156 W. Va. 632, 195 S.E.2d 727 (1973). 182 W. Va. 597, 390 S.E.2d 796 (emphasis added). Simply put, no credit can be given for a settlement that is not yet in existence. To the extent that Hartford complains that failing to grant it credit for the settlement violates the one recovery rule,13 we note the circuit court’s finding that “the settlement was reached over [nineteen] months after the default judgment was entered against Equity. The amount of the settlement was influenced, at least in part, by the existence of the default judgment.” We find nothing to contradict this conclusion. 13 See Syl. pt. 3, State Farm Mut. Auto. Ins. Co. v. Schatken, 230 W. Va. 201, 737 S.E.2d 229 (2012) (“‘It is generally recognized that there can be only one recovery of damages for one wrong or injury. Double recovery of damages is not permitted; the law does not permit a double satisfaction for a single injury.’ Syl. Pt. 7, in part, Harless v. First Nat’l Bank in Fairmont, 169 W. Va. 673, 289 S.E.2d 692 (1982).”). 29 For the reasons set out above, we find the circuit court did not err in failing to grant Hartford, as surety, credit for a settlement that was not executed until nineteen months after entry of the default judgment against Hartford’s principal.