Court Opinion

ID: 9669506
Source: CourtListenerOpinion
Date Created: 2023-08-24 02:57:48.732976+00
Date Added: 2024-06-11T18:15:57.447050
License: Public Domain

CARTER, Justice.
This interlocutory appeal challenges an order of the district court allowing a defendant in a products liability action to im-plead a third-party defendant protected against a personal judgment by federal bankruptcy law. After considering the arguments presented, we conclude that the impleader approved by the district court was improper and reverse that court’s order.
The present controversy arose in a products liability action filed by plaintiff, Michael Pepper, as a result of injuries suffered while operating a front-end skidloader designed and manufactured by Owaton-na Manufacturing Company, Inc. (Owaton-na). Plaintiff’s original petition named Ow-atonna as the defendant against whom his claim was being made. After he learned that Owatonna was in the midst of a chapter 7 bankruptcy proceeding in federal court in Minnesota, plaintiff filed an amended petition deleting Owatonna as a defendant and adding Star Equipment, Ltd. (Star Equipment) as the defendant against whom claim was being made.
The amended petition sought recovery from Star Equipment on theories of strict liability and negligence, each based on the sale of the skidloader by Star Equipment to plaintiff’s employer. Star Equipment re*157sponded by asserting affirmative defenses of contributory fault and distributor’s immunity under Iowa Code section 613.18(1) (1989). Star Equipment also moved the district court to permit the filing of a third-party petition against Owatonna.
Attached to the latter motion was an order of the bankruptcy court in Minnesota allowing Star Equipment to assert a claim against Owatonna for the sole purpose of apportioning fault to that entity in the trial of plaintiff’s claim against Star Equipment. The order of the bankruptcy judge provided that the automatic stay provisions imposed by the chapter 7 proceeding would bar an attempt to satisfy any judgment in the state court action from Owatonna’s assets. In keeping with this order, the prayer for relief in Star Equipment’s third-party claim merely stated:
[Tjhird-party plaintiff Star Equipment, Ltd. prays that the fault of third-party defendant Owatonna Manufacturing Company be determined for purposes of Iowa Code Chapter 668.
The primary thrust of plaintiff’s argument against allowing impleader of Owa-tonna is that this would frustrate a legislative exception to distributor immunity under section 613.18(1)(b) for certain product liability claims when the manufacturer is insolvent. He also urges that to allow impleader of a third-party defendant against whom no valid personal judgment may be obtained frustrates the basic tenets of comparative fault actions as established in Iowa Code chapter 668.
Star Equipment responds by urging that nothing in section 613.18 purports to deal with the present issue one way or the other. It also points out that, unlike the Uniform Comparative Fault Act from which chapter 668 was derived, the Iowa law contains no special rules of fault apportionment for insolvent defendants.1
We do not base the result that we reach in this decision on section 613.18. We believe the answer to the parties’ disagreement is to be found in our prior decisions interpreting chapter 668. In Peterson v. Pittman, 391 N.W.2d 236 (Iowa 1986), we reviewed a situation in which a county employee sued a contractor working on a county project for injuries allegedly caused by the contractor’s negligence. The contractor sought to add as third-party defendants the county and the coemployee who supervised plaintiff. No affirmative relief was claimed against either. The prayer for relief merely requested “that the jury examine [defendants’] conduct and be allowed to allocate a certain percentage of the negligence to those parties.” We held that it was improper to bring parties into an action for purposes of ascertaining their degree of fault in the absence of some claim for affirmative relief against those parties. Id. at 238.
Star Equipment seeks to distinguish Peterson on the basis that, in the present case, both plaintiff and Star Equipment are precluded from making any claim against Owatonna as a result of the latter’s bankruptcy. We believe, however, that the strategy of adding a party solely for purposes of fault allocation will almost always arise in situations in which the added party has some special defense against a claim for affirmative relief. In Peterson, any claim by the plaintiff or the defendant contractor against the third-party defendants was precluded by the exclusive remedy bar of the workers’ compensation statutes. In the present case, the bar to seeking affirmative relief against Owatonna rests in the federal bankruptcy law. We find that the reason for not permitting impleader is equally persuasive in either situation.
There is a more fundamental reason why the effort to implead Owatonna solely for purposes of fault allocation should be denied. That is because under the applicable substantive law no fault is properly alloca-ble to Owatonna under the circumstances that exist in the present case. We have *158previously recognized in Schwennen v. Abell, 430 N.W.2d 98 (Iowa 1988), and Reese v. Werts Corp., 379 N.W.2d 1 (Iowa 1985), that, if a defendant or third-party defendant has a defense to the plaintiffs claim, that party’s fault is not to be considered in the allocation of aggregate causal fault by the trier of fact. Schwennen, 430 N.W.2d at 102-03; Reese, 379 N.W.2d at 6.
The rule adopted in Schwennen and Reese has not been limited to situations in which there is an absence of causal fault on the part of the extra party. It also applies when that party has a special defense to the plaintiffs claim, irrespective of fault. In Reese, as in Peterson, the special defense of the third-party defendant was based on the exclusive-remedy provisions of the workers’ compensation laws. In Schwennen, the defendant’s special defense was based on the rule that no action lies between a deprived spouse and an injured spouse inter se for loss of consortium. Although Star Equipment suggests that the automatic stay provision of the pending chapter 7 bankruptcy should not be equated with the affirmative defenses that were involved in Schwennen and Reese, we believe this is a distinction that is without significance.
The requirement that a third-party defendant’s fault may not be considered in the apportionment of aggregate fault unless the plaintiff has a viable claim against that party is not a mere mechanical rule. It is based on policy considerations arising in the application of chapter 668. As we recognized in Schwennen, 430 N.W.2d at 103-04, the presence of a third-party defendant in an action may siphon off a portion of aggregate fault from the defendant against whom the plaintiff is claiming. This can result in the plaintiff receiving a lesser recovery than if the third-party defendant were not in the case.
Under Iowa Code section 668.4 (1989), if a defendant is found to bear fifty percent or more of the aggregate fault, that party is liable for the total damages assessed, diminished only by the plaintiff’s percentage of fault and fault attributable to released parties.2 If a defendant is found to bear less than fifty percent of the aggregate fault, that party’s liability is arrived at by multiplying the total damages found by the trier of fact by that defendant’s percentage of fault. In the application of these rules, a slight difference in fault allocation may produce a substantial difference in recovery.
A plaintiff’s only real protection against this type of recovery diminution is to claim directly against the third-party defendant on the same cause of action alleged against the primary defendant. The statute of limitations has been relaxed under section 668.8 to permit this to be done in nearly all cases. See Betsworth v. Morey’s & Raymond’s, 423 N.W.2d 196, 197 (Iowa 1988). If, however, as in the present case, the plaintiff has no possibility of obtaining an enforceable judgment against the third-party defendant, plaintiff has no protection against fault siphoning. In addition, this situation is aggravated by the fact that the defendant against whom plaintiff has claimed will normally attempt to shift blame for the occurrence to the bankrupt third-party defendant who has no interest in the result of the litigation and thus no motive to defend against the claims. On balance, we believe that, in the absence of liability insurance, the same reasons that exist for not considering fault of phantom or nonjoined parties, see Payne Plumbing & Heating Co. v. Bob McKiness Excavating & Grading, Inc., 382 N.W.2d 156, 159 (Iowa 1986), favor denial of impleader of parties protected against a personal judgment by federal bankruptcy laws.
We have considered all issues presented and conclude that the order of the district court should be reversed and the case remanded to that court for further proceedings not inconsistent with this opinion.
REVERSED AND REMANDED.
All Justices concur except SNELL, J., who dissents.

. Neither the Uniform Comparative Fault Act nor chapter 668 deal with the issue of a defendant’s insolvency or bankruptcy before judgment. Section 2(d) of the Uniform Comparative Fault Act provides for postjudgment reallocation of fault attributable by verdict to a party against whom a judgment has proved to be uncollectible. See 12 Uniform Laws Annot. 48 (Supp.1991). No similar provision is contained in chapter 668.

. To the extent that the decision in Christopherson v. Deere & Co., 941 F.2d 692, 695-96 (8th Cir.1991), is in conflict with this conclusion, we believe it represents a misinterpretation of the joint and several liability rules established by § 668.4.