Court Opinion

ID: 9587760
Source: CourtListenerOpinion
Date Created: 2023-08-21 23:25:58.466954+00
Date Added: 2024-06-11T18:00:32.894521
License: Public Domain

Judge METZGER
concurring in part and dissenting in part.
I respectfully dissent from part VI of the majority opinion holding that the manufacturer is not due a credit for the settlement with Coppola.
I believe that § 13-50.5-105, C.R.S. (1987 Repl.Vol. 6A) is inapplicable to this case. That statute concerns the effect of a release or covenant not to sue upon a judgment involving multiple tortfeasors. It is intended to reduce the aggregate claim against the non-settling tortfeasors to the extent of any degree or percentage of fault or negligence attributable to the settling tortfeasor. Of importance to this case is that the statute expressly provides that it applies only:
When a release or a covenant not to sue or not to enforce judgment is given in good faith to one of two or more persons liable in tort of the same injury or the same wrongful death.... (emphasis added)
When a jury determines that a person is not negligent or not at fault, that person cannot be considered to be “liable in tort” or to be a tortfeasor within the meaning of § 13-50.5-105. Wesley v. United Services Automobile Ass’n, 694 P.2d 855 (Colo.App.1984).
Even though Coppola entered into the settlement and covenant not to execute, he remained a defendant throughout trial. The jury verdict attributed 0% fault to him. Accordingly, Coppola was not “liable in tort” within the meaning of § 13-50.5-105 and that statute is thus inapplicable.
I would hold, however, that the judgment against the manufacturer must be reduced pursuant to § 13-21-111.6, C.R.S. (1987 Repl.Vol. 6A).
The statute, a codification of the common-law collateral source rule, provides in pertinent part:
In any action by any person ... to recover damages for a tort resulting in ... injury to person or property, the court, after the finder of fact has returned its verdict stating the amount of damages to be awarded, shall reduce the amount of the verdict by the amount by which such person ... has been or will be wholly or partially indemnified or compensated for his loss by any other person, corporation, insurance company, or fund in relation the injury ... sustained; except that the verdict shall not be reduced by the amount by which such person ... has been or will be wholly or partially indemnified or compensated by a benefit paid as a result of a contract entered into and paid for by or on behalf of such person. The court shall enter judgment on the reduced amount.
The jury awarded $850,000 to Mrs. Simon and $25,000 to Mr. Simon. After reduction to the 75% attributable to the manufacturer, the court entered judgment against the manufacturer for $637,500 and 18,750 plus prejudgment interest.
In my view, the court erred when it did not reduce the amount of the verdict, pursuant to § 13-21-111.6, by the $300,000 received by the Simons in their settlement with Hawkeye Insurance Company on behalf of defendant Coppola and his employees Anderton and Wolf.
*26Contrary to the homeowners’ contention, the settlement does not fall within that statutory exemption because the covenant should not be construed as a contract which the homeowners entered into and for which they gave consideration.
A release or covenant not to execute which accompanies and is executed with a settlement agreement fails to transform the settlement monies into a “benefit paid as a result of a contract entered into and paid for by or on behalf of such person.”
I do not read the supreme court’s opinion in Van Waters & Rogers, Inc. v. Keelan, 840 P.2d 1070 (Colo.1992), as expanding the definition of contract so broadly as to include the covenant not to execute here within the statutory exception.
In that case, the court held that the clause in question was:
[B]road enough to cover contracts for which a plaintiff gives some form of consideration, whether it be in the form of money or employment services, with the expectation of receiving future benefits in the event they become payable under the contract.
Van Waters & Rogers, Inc. v. Keelan, supra, at 1079.
In my view, in Van Waters the supreme court intended to extend the exception only to benefits received through an employment contract, under which the employee gives consideration in the form of services rather than money. See Combined Communications Corp. v. Public Service Co. of Colorado, 865 P.2d 893 (Colo.App.1993). That interpretation, while consistent with the purpose of the statute, does not extend to the type of contract at issue here. See Martinez v. Shapland, 833 P.2d 837 (Colo.App.1992) (exception does not apply to PIP benefits as they flow from insurance contract).
In Van Waters, the supreme court reviewed the legislative history of the statute before it interpreted the clause to include benefits received under an employment contract. It noted a legislative discussion which evidenced an intention that the exception include not only benefits from private insurance contracts for which someone pays monetary premiums but other types of benefits, such as “individually held disability and life insurance, social security benefits, death benefits and maybe some unemployment benefits.” Van Waters & Rogers, Inc. v. Keelan, supra, 840 P.2d at 1079.
Given this history, the court determined that, while the' general legislative intent was to limit double recoveries, the General Assembly did not seek to “deny a plaintiff compensation to which he is entitled by virtue of a contract that either he, or someone on his behalf, entered into and paid for with the expectation of receiving the consequent benefits at some point in the future.” Van Waters & Rogers, Inc. v. Keelan, supra, 840 P.2d at 1078. Thus, it held that the benefits received under the plaintiffs employment contract, though not directly paid for by the plaintiff or someone on his behalf, were nevertheless covered under the exemption.
Virtually all settlements are incorporated in or accompanied by some form of contract, be it a release or, as here, a covenant not to enforce judgment. Further, plaintiffs who enter into settlements generally have the anticipation of receiving the benefit of the settlement at the time of its execution, not the expectation of receiving consequent benefits of the contract at sometime in the future. And, while plaintiffs do give consideration in the form of release or abandonment of the right to pursue legal claims, such consideration is not equivalent to services to be performed or moneys to be paid over time where such services or moneys are unrelated to the litigation.
If such were not so, the result would be that the General Assembly has enacted a statute which requires a court to offset the proceeds of a settlement received by the plaintiff and then to allow those same proceeds to be exempted from offset in virtually every case because of the ancillary contract which invariably accompanies such a settlement.
To so construe the statute would lead to the absurd result of the exception swallowing the rule. It must be presumed that the General Assembly did not intend such a result. City of Ouray v. Olin, 761 P.2d 784 (Colo.1988).
Accordingly, I would hold that the indemnity or compensation received from proceeds *27of a settlement, which includes a contract in the form of a release or covenant not to execute, reached with a defendant who remains a party but is found not to be at fault is subject to the provisions of § 13-21-111.6,' C.R.S. (1987 Repl.Vol. 6A) and is not exempted by the statutory exception by reason of the accompanying contract.
This conclusion is in accord with cases which have held that settlement proceeds must be deducted from the award when the settling party is. designated as a nonparty but found not to be at fault. See generally Smith v. Zufelt, 856 P.2d 8 (Colo.App.1992); Gutierrez v. Bussey, 837 P.2d 272 (Colo.App. 1992); United States Fidelity & Guaranty Co. v. Salida Gas Service Co., 793 P.2d 602 (Colo.App.1989).
Thus, pursuant to § 13-21-111.6, C.R.S. (1987 Repl.Vol. 6A), the court should have deducted the $300,000 settlement received by the Simons from defendant Coppola’s insurance carrier from the verdict and entered judgment on the reduced amount. Accordingly, I would reverse as to this issue and would remand for entry of an appropriate judgment. In all other respects, I concur with the majority opinion.