Opinion ID: 2974059
Heading Depth: 3
Heading Rank: 1

Heading: Tort Theories

Text: We begin by addressing the plaintiffs’ claims that the defendants are entitled to neither a credit under Tennessee’s comparative fault system nor contribution under the Tennessee Uniform Contribution Among Tort-Feasors Act, TENN. CODE ANN. § 29-11-101, et seq., for the compensation the plaintiffs received in the settlement in Engstrom I for the loss of their $200,000 investment. Plaintiffs first contend that, under Tennessee’s comparative fault system, the defendants are not entitled to a credit for the settlement paid to the plaintiffs by ISD and the other defendants in Engstrom I. Plaintiffs rely on Varner v. Perryman, 969 S.W.2d 410, 413 (Tenn. Ct. App. 1997), for the proposition that under Tennessee’s comparative fault system, a non-settling tortfeasor is not entitled to a credit for settlement amounts paid by a settling tortfeasor. Defendants respond that despite the adoption of comparative fault, Tennessee has long recognized the principle that there can be but one satisfaction for the same injury. See, e.g., Brown v. Kencheloe, 43 Tenn. 192, 197 (1866); TSC Industries, Inc. v. Tomlin, 743 S.W.2d 169, 172 (Tenn. Ct. App. 1987); Rosenbaum v. First American Nat’l Bank of Nashville, 690 S.W.2d 873, 877 (Tenn. Ct. App. 1985). However, the cases cited by the defendants preceded McIntyre v. Balentine, 833 S.W.2d 52 (Tenn. 1992), in which the Supreme Court of Tennessee adopted a modified system of comparative fault, and our review of recent precedent from the Supreme Court of Tennessee convinces us that the “one satisfaction rule” no longer survives under the Tennessee’s comparative fault system. “[U]nder principles of 7 comparative fault, a non-settling defendant is not entitled to a credit for amounts paid by a settling defendant because the non-settling defendant is required to pay damages based on his or her percentage of fault.” Williams Holding Co. v. Willis, 166 S.W.3d 707, 712 (Tenn. 2005) (emphasis in original). Indeed, the court went on to state that “the mere possibility that plaintiffs may, by settling with some defendants, receive more than their actual damages does not change the fact that non-settling defendants are obligated to pay damages based on the percentage of their fault.” Id. We are aware that, in general, “[a]llowing a plaintiff to sue defendants in separate, consecutive actions would defeat the efficiency and fairness that are the objectives of the principles of comparative fault.” Samuelson v. McMurtry, 962 S.W.2d 473, 476 (Tenn. 1998). The Supreme Court of Tennessee, however, has clarified that a plaintiff’s settling with one co-defendant in one lawsuit does not establish a basis for the dismissal of remaining co-defendants in a second separate but identical lawsuit, provided that there has been no adjudication of or allocation of fault in the first lawsuit and the current defendant has not been denied the opportunity to have fault apportioned against the settling defendant under the affirmative defense of comparative fault. McNabb v. Highways, Inc., 98 S.W.3d 649, 653-55 (Tenn. 2003). There was no adjudication or allocation of fault in the lawsuit against ISD and the other defendants from Engstrom I, and while the current defendants did not plead the comparative fault of the settling defendants as an affirmative defense, they may presumably request leave of court to do so. We therefore hold that, based on the prevailing precedent in Tennessee, the district court erred in granting summary judgment to the defendants and this case must be remanded for trial so that a jury can assess the comparative fault, if any, of Mayfield and Baker Donelson to determine whether they are liable for any percentage of the plaintiffs’ actual damages. 8 Our analysis is not changed by the defendants’ novel assertion, which was accepted by the district court, that they are entitled to contribution under the Tennessee Uniform Contribution Among Tort-Feasors Act, T.C.A. § 29-11-101, et seq. To be sure, the Supreme Court of Tennessee has held that contribution may still be viable in certain limited circumstances under Tennessee’s comparative fault system, including “in the appropriate case in which fairness demands.” General Electric Co. v. Process Control Co., 969 S.W.2d 914, 916 (Tenn. 1998) (internal quotation marks omitted). The plaintiffs are correct, however, that there is no authority in Tennessee to support the defendants’ claim that a credit is appropriate under a theory of contribution under the facts of this case. The Supreme Court of Tennessee has made clear that a statutory “right of contribution exists only in favor of a tort-feasor who has paid more than the proportionate share of the shared liability between two (2) or more tort-feasors for the same injury . . . .” Willis, 166 S.W.3d at 712 (quoting T.C.A. § 29-11-102(b)) (emphasis in original). Because Mayfield and Baker Donelson have not – at least as yet – paid any portion of the plaintiffs’ losses, they are not as yet entitled to a right of contribution under Tennessee law.