Court Opinion

ID: 9537479
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:18:53.369685+00
Date Added: 2024-06-11T14:56:42.998714
License: Public Domain

GORDON, Justice
(specially concurring):
I concur with the majority that, in the posture of this case, the trial court did not improperly refuse to permit disclosure of the Gallagher1 agreement to the jury. I am however, deeply concerned about Gallagher agreements, and I believe they present several thorny problems for our adversary system of justice.
The term “Gallagher agreement” is a generic term referring to a variety of contractual devices used in a multiple defendant lawsuit. Plaintiff promises one or more agreeing defendants that, in the event of a judgment against both agreeing and non-agreeing defendants, plaintiff will execute only, or at least in the first instance, against non-agreeing defendants. In return, the agreeing defendants are to remain as parties to the suit, and they promise to give valuable consideration to the plaintiff. This consideration may be a guaranteed recovery for plaintiff, as in City of Tucson v. Gallagher, 108 Ariz. 140, 493 P.2d 1197 (1972),2 and the present case. It may be a promise to loan money without interest, as in Sequoia Manufacturing Company, Inc. v. Halec Construction Co., Inc., 117 Ariz. 11, 570 P.2d 782 (App.1977). It may be something other than money. See Mustang Equipment, Inc. v. Welch, 115 Ariz. 206, 564 P.2d 895 (1977). The variations on the Gallagher agreement are “limited only by the ingenuity of counsel and the willingness of the parties to sign * * *.” Maule Industries, Inc. v. Roundtree, 264 So.2d 445, 447 (Fla.App.1972), rev’d. 284 So.2d 389 (Fla. 1973).
In the instant case, as is typically the situation with Gallagher agreements, the agreeing defendant stood to improve his position financially if there were a judgment against the nonagreeing defendant. If that judgment were large enough, even if it were also against the agreeing defendant as well as the nonagreeing defendant, the former would end up paying nothing *520and the latter would pay for the negligence of both defendants. Ironically, the agreeing defendant would incur its maximum liability under the agreement if the plaintiff lost completely in the lawsuit! Such a situation naturally raises the specter of collusion.
In the present case we have been required to examine the closing argument of counsel for the agreeing defendant to see if he, in fact, did not allow the agreement to alter what he would normally say. In the past, this Court has considered whether an agreement caused a party to adopt a trial strategy it would not have otherwise used. See Mustang Equipment, Inc. v. Welch, supra; City of Tucson v. Gallagher, supra. Following Sequoia Manufacturing Co., Inc. v. Halec, supra, we have today placed a burden on the trial court to carefully observe the behavior of the parties at trial to make sure the agreement does not distort the proceedings. Implicit in the present opinion is the responsibility of the trial court to determine exactly when the agreement was made. See Sequoia Manufacturing, supra.
Gallagher agreements thus create situations rife with temptation to act dishonestly and collusively. The courts must carefully monitor the proceedings to insure that the parties honestly and vigorously contest the issues as they would have, but for the agreement. Such an artificial posture cannot improve the public’s confidence in our adversary system of justice. Cf. Mustang Equipment, Inc., supra.
In addition to raising problems of collusion and unfairness at trial, Gallagher agreements are financially inequitable. They permit one defendant, at a relatively modest cost, to pass all liability onto the shoulders of another defendant, regardless of the relative degrees of fault among the. parties. Of course, the agreement only makes certain an outcome which would be possible in any event, since plaintiff could execute against any party he wishes, and the defendant who paid the judgment could not seek contribution from co-defendants. Cf. Mustang Equipment, supra; City of Glendale v. Bradshaw, 16 Ariz.App. 348, 493 P.2d 515, supplemented on rehearing, 16 Ariz.App. 483, 494 P.2d 383, aff’d. in part, rev’d. in part, 108 Ariz. 582, 503 P.2d 803 (1972).
Gallagher agreements have been held invalid in several jurisdictions. E. g., Cox v. Kelsey-Hayes Co., 594 P.2d 354 (Okl.1978); Lum v. Stinnett, 87 Nev. 402, 488 P.2d 347 (Nev.1971). The Ethics Committee of the State Bar of Arizona, in its Opinion No. 70-18, issued July 28, 1970, condemned secret Gallagher agreements. Although that opinion stated that both their secrecy and the weakening of the adversary nature of the trial engendered by these agreements were unethical, our courts have upheld these agreements as long as there has been prompt disclosure to the court and other parties. See Mustang Equipment, supra; City of Glendale v. Bradshaw, supra.
Although Gallagher agreements create problems, I would not, under the present state of tort law, hold them per se invalid. A defendant in a multiple defendant lawsuit is under great pressure to limit his potential liability, since he may ultimately be required to pay, without contribution, for the damages caused by all defendants. The plaintiff, on the other hand, is understandably reluctant to completely release any alleged tort-feasors from the lawsuit. See, City of Tucson v. Gallagher, supra.
I believe that a rule permitting contribution among joint tortfeasors would ameliorate the problem of partial settlements in a multiple defendant lawsuit. The pressure upon defendants to enter into Gallagher agreements would be diminished and the validity of these agreements, as a defense to a claim for contribution by non-agreeing defendants against agreeing defendants, would be framed in a new perspective.
The rule prohibiting contribution among joint tortfeasors is ripe for change by our Legislature 3 or ought to be reconsidered by *521this Court when the issue is properly before it. From the original English rule prohibiting contribution among intentional tortfeasors who acted in concert, most courts in this country, having lost sight of the rule’s origins, extended the proscription against contribution to include tort-feasors who were merely negligent and who had acted concurrently rather than in concert. See Prosser, Law of Torts, § 50 (4th Ed. 1971).
The judicially created rule in Arizona does not rest on a firm foundation. Its origin appears to be Schade Transfer and Storage Co., Inc. v. Alabama Freight Lines, 75 Ariz. 201, 254 P.2d 800 (1953). Schade involved a claim for indemnity by a defendant against an impleaded third party defendant. After finding that the relationship between the defendant and third party defendant did not create a right to indemnity, this Court stated that the only basis for a recovery on the third party claim would be if the latter had been independently negligent and had been the sole proximate cause of injury. Finding that both parties had acted together to cause the injury, the Court said: “If this constitutes a tort the parties were joint tortfeasors, and we are not aware of any law that permits the recovery of one against the other under such circumstances.” 75 Ariz. at 204, 254 P.2d at 802. The Court cited neither authority nor policy consideration for its decision.
Schade was followed by Blakely Oil, Inc. v. Crowder, 80 Ariz. 72, 292 P.2d 842 (1956), which also involved a third party claim for indemnity. The Court held that the defendant had no cause of action for indemnity when its liability to plaintiff was based on its own negligence. Assuming the third party defendant was also negligent, he would be a joint tortfeasor against whom an action for contribution could not be maintained. Blakely Oil, Inc., supra. For this last proposition, the Court relied primarily on a Pennsylvania indemnity case. It also cited Schade, supra.
At the present time, at least thirty-five states permit contribution by statute and four permit it by judicial decision. Comment, Denying Contribution Between Tortfeasors in Arizona: a Call for Change, 1977 Ariz.St.L.J. 673. It is, perhaps, time for this state to join the majority.

. Named for City of Tucson v. Gallagher, 108 Ariz. 140, 493 P.2d 1197 (1972).

. The terms of the agreement are set out more completely in the Court of Appeals opinion in City of Tucson v. Gallagher, 14 Ariz.App. 385, 483 P.2d 798 (1971).

. A version of the Uniform Contribution Among Tortfeasors Act was introduced last year in the Legislature on February 1, 1979. It did not become law.