Court Opinion

ID: 9748597
Source: CourtListenerOpinion
Date Created: 2023-08-27 16:07:38.540328+00
Date Added: 2024-06-11T07:25:37.507367
License: Public Domain

RUIZ, Associate Judge,
concurring:
I write separately to urge that the court finally decide — if necessary, en banc — a question that we narrowly avoid in this appeal, whether a settling defendant has a right to sue a nonsettling joint tortfeasor for contribution. I also think that the en banc court should reconsider the opinion in Berg v. Footer, 673 A.2d 1244 (D.C.1996), which in part drives the result we reach today, with respect to the rights of the injured plaintiff. In so doing, we should comprehensively address the issue of the proper application of pro tanto and pro rata credits and provide litigants with clear guidance on the applicable rules so that they, in turn, can make informed decisions in the course of litigation and structure their private agreements accordingly.
This is the first case where this court has been presented with a situation where both the injured plaintiff seeks a pro rata credit in order to recover more than the jury verdict — a situation we allowed in Berg, 673 A.2d at 1257 — and a settling tortfeasor claims contribution in order to avoid paying (through its settlement with the plaintiff) more than its pro rata share of the jury verdict. Although both argue for application of a pro rata credit against the verdict, they are at odds over which party should receive the benefit: the injured plaintiff argues that after application of a pro rata credit that will reduce the jury verdict by half, she should receive the adjudicated tortfeasor’s pro rata share of the jury verdict (in this case, when combined with the settlement, another $1,000,000 in excess of the amount the jury awarded in compensatory damages), but the settling tortfeasor claims that it should be able to recover that amount from the *50adjudicated tortfeasor.1 These conflicting claims reveal tensions in our jurisprudence that should be addressed.
Even though Berg did not squarely address the conflicting claims before us, I do not believe that we are free to “do equity” as the dissent suggests. Berg clearly holds that “whenever the plaintiff settles with a joint tortfeasor, the nonsettling defendant shall receive a pro rata credit under Martello, reflecting the [nonsettling] defendant’s equitable right to contribution and no more, even when the plaintiffs recovery from all defendants will exceed the amount of the verdict and thus violate the one satisfaction rule.” Id. at 1245 (referring to Martello v. Hawley, 112 U.S.App.D.C. 129, 800 F.2d 721 (1962)). Given application of a pro rata credit against the verdict, and the resulting obligation of the adjudicated tortfeasor to pay the remaining verdict to the plaintiff, Berg would not appear to admit the possibility that the settling tortfeasor can step in to intercept monies that otherwise would be payable to the plaintiff.
I would overrule Berg to the extent it permits a plaintiff to request application of a pro rata credit where the result will be that the plaintiff will recover more than the jury verdict; and I would preclude settling defendants from suing for contribution. I make these proposals fully aware that they are not completely satisfactory. In particular, precluding a settling tortfeasor from contribution (while permitting a suit for contribution against the settlor) is subject to criticism as discouraging settlement because the settling tortfeasor can have no assurance that settlement finally fixes its liability.2 But all possible solutions have drawbacks.
As we noted in Berg, 673 A.2d at 1252, there are three possible solutions to this highly debated issue:3
a) settlement extinguishes the plaintiffs claim against the settling tortfeasor and a pro tanto credit is applied against the jury verdict; the nonsettling defendant retains a claim for contribution against the settling tortfeasor if the remaining verdict exceeds the nonsettling defendant’s equitable share;
b) settlement extinguishes both the plaintiffs claim and any claim for contribution by the nonsettling tortfeasor, usually subject to a determination of the “fairness” of the settlement. Once such a hearing is provided for, and the finality of settlement suspended, the incentive to settle is diminished; and
c) settlement extinguishes the plaintiffs claim against the settling tortfeasor, and the verdict is reduced by the equitable share of the settling tortfeasor’s liability in recognition of the nonsettlor’s right of contribution.
A pro rata credit against the verdict represents the nonsettling defendant’s “right to contribution” from the settling defendant when both have been found ha-ble for the plaintiffs injuries. Berg, 673 *51A.2d at 1248. A pro rata credit, therefore, acts as “a substitute for the non-settling defendant’s actual claim for contribution that persists after the dismissal of the principal claim against a settling defendant.” Id. (quoting Washington v. Washington Hosp. Ctr., 579 A.2d 177, 187 (D.C.1990)). Thus, it is the nonsettling defendant’s right to contribution, not the plaintiffs right to compensation, which is given effect in the application of a pro rata credit. The pro tanto credit, on the other hand, is not premised on ensuring equity between joint tortfeasors, but is based on the rationale that the plaintiff is entitled to no more than the loss actually suffered. See Berg, 673 A.2d at 1248-49. In this appeal, it is undisputed that the plaintiff received $2,000,000 in settlement from the settling defendant, which equaled the total amount of the jury verdict. Application of the pro tanto credit, which eliminated the nonsettling defendant’s obligation to the plaintiff, merely recognized the reality that, by the time the jury returned its verdict, the plaintiff had no uncompensated damage outstanding. This is a good and sufficient reason not to recognize a plaintiffs right to contest application of a pro tanto credit where the plaintiff has received the full amount of the jury verdict.4 It makes no sense to entitle a fully-compensated plaintiff to assert the nonset-tling defendant’s right to contribution as a way of achieving a windfall when the non-settling defendant is not asserting its own right.5
I also would hold that settlement extinguishes the settling tortfeasor’s right of contribution against other joint tortfea-sors. This is a more controversial point. Most states prohibit a settling tortfeasor from seeking contribution once it turns out that the settlement amount is more than that defendant’s proportionate share of the damages awarded after trial. See Berg, 673 A.2d at 1253-54 & n. 17 (citing McDermott, 511 U.S. at 211 n. 13, 114 S.Ct. 1461).6 Noting the principle of equity un*52derlying the contribution doctrine, the United States Court of Appeals for the 'District of Columbia Circuit has explained that
[t]he settling party has settled his share of the case for a specified amount. That amount may not be increased because his settlement turns [out] to be for less than a pro rata shared[7] [Therefore, i]t should not be subject to reduction through contribution because he has settled for what turns out to be greater than a pro rata share.
Rose, 163 U.S.App.D.C. at 250 n. 10, 501 F.2d at 810 n. 10. We have also noted a contrary view, at least in cases where application of pro tanto credit would eliminate the nonsettling defendant’s liability. See Berg, 673 A.2d at 1253-54 n. 17 (citing McKenna v. Austin, 77 U.S.App.D.C. 228, 234, 134 F.2d 659, 665 (1943)).
Although there are arguments to be made for each approach, I believe that ensuring the maximum finality of settlements freely reached by the parties, will prove to be the best incentive to settlement.8 In his dissent, Judge Schwelb argues for a different proposition. The en banc court can consider the alternatives and decide, in a comprehensive context, the set of rules that will better promote the desirable policy of encouraging fair settlements, without unduly penalizing litigants who prefer an adjudication of liability. Sitting en banc, the court can do what the Berg division felt it could not accomplish because of the binding precedent set by Martello. As the Berg opinion noted,
If Martello were not the law, recognizing the nonsettling tortfeasor’s right (at least when the settlement is less than half the verdict) to a pro rata credit, we might look at this case differently. There is much to be said for an across the board pro tanto (without contribution) rule, coupled with a required showing of a good faith settlement. Under such a rule, whether the settling defendant is a joint tortfeasor or not, (1) settlement pressure on all defendants is great, and (2) a plaintiff, by settling with one defendant and successfully litigating against another, will always be made whole in the amount of the jury’s verdict.
Bound by precedent, however, we are not free to consider overruling our bifurcated system of credit rules under Mar-tello and Snowden even if one uniform credit rule regime would be demonstrably superior.
673 A.2d at 1244.
However the full court ultimately decides these issues, the most important goal is that they be settled in a definitive manner so that litigants have a clear set of rules by which to make decisions in the course of litigation. I would leave it to the parties, in their litigation decisions and private agreements, to determine who is to bear the risk of settling — or not — for an amount that turns out not to be “fair” *53(from a particular litigant’s perspective). This is not the sporting theory of justice the dissent laments, which usually can only be so characterized with the benefit of wh hindsight. The reality is that the amount of settlement, as here, is usually kept confidential, and litigants act out of a sense of enlightened self interest based on their view of what a jury is likely to do given the evidence presented, not on foolish (and potentially very expensive) bets. Short of holding matters in abeyance until all the information is in, which I believe is the greatest disincentive of all to settlement, there is no way to ensure mathematical fairness in an ongoing and sometimes unpredictable process during which parties perforce make decisions based on imperfect information. I would resist the temptation to try to have the rules of contribution operate as a judicial deus ex machina to make all things right (by our lights) in the end.

. In Berg, the interests of the plaintiff and the settling tortfeasor hospital were aligned.

. As we have seen in Berg and in this appeal, however, settling tortfeasors can protect themselves contractually in the event they are called upon for contribution. See ante at note 11.

. Traditionally, the Restatement had taken no position on the matter. See Restatement (Second) of Torts § 886A & cmt. m. The Uniform Law Commissioners have been of various minds on the subject, sequentially adopting each of the three solutions, in 1939, 1955, and 1977. See id. “Case authorities and statutes are also divided and there is no semblance of a consensus.’’ Id. In 1999, recognizing that "no perfect method exists for apportioning liability among a plaintiff, a settling tortfeasor and a nonsettling tortfeasor,” the Restatement adopted application of a credit "by the comparative share of damages attributed to a settling tortfeasor who otherwise would have been liable for contribution” to a nonsettling tortfeasor, even if it results in the plaintiff's recovering more than the verdict awarded by the jury. Restatement (Third) of Torts, § 16 & cmts. c. & e. Contrary to our jurisprudence, a nonsettling tortfeasor would have no right of contribution against a settling tortfeasor Id., § 23 cmt. c.

. On the other hand, the plaintiff can properly claim an interest in contesting application of a pro rata credit where its application would reduce the plaintiffs actual receipt of compensation below the jury verdict, i.e., where the plaintiff settled for less than the settling tortfeasor's equitable share, as measured by the jury verdict. See District of Columbia v. Shannon, 696 A.2d 1359, 1368 (D.C.1997). But see Martello, 112 U.S.App.D.C. at 132, 300 F.2d at 724 (in cases where application of a pro rata credit will yield the plaintiff less than the jury verdict, she has no cause to complain because "by [her] settlement, the plaintiff has sold one-half of [her] claim for damages”).

. Although the result in Berg was to allow the fully satisfied plaintiff to receive a windfall, the court did not come to that conclusion, as the dissent suggests, because such a result "is preferable to a similar windfall” for the defendant who has been adjudicated to be negligent. Rather, Berg explains that the windfall to the plaintiff is the result of application of the neutral principle announced in Martello, by which the Berg division was bound, see M.A.P. v. Ryan, 285 A.2d 310 (1971), not moral outrage because the nonsettling defendant might end up paying less than its fair share. 673 A.2d at 1257 ("We are persuaded, as the Supreme Court was in McDermott, that consistency with established precedent applicable to settlement with joint tortfeasors weighs in favor of applying Martello, not the one satisfaction rule in Snowden, to the unusual facts of this case.”) (referring to Snowden v. D.C. Transit Sys., Inc., 147 U.S.App.D.C. 204, 454 F.2d 1047 (1971)).

.The Uniform Contribution Among Tortfea-sors Act, adopted by a majority of the states, prohibits contribution to a settling tortfeasor from another tortfeasor "whose liability ... is not extinguished by the settlement.” Restatement (Third) of Torts: Apportionment of Liability § 23, Reporters’ Note on Comment h (quoting § 2(3) of the 1939 version and § 1(d) of the 1955 version of the Uniform Contribution Among Tortfeasors Act). The reporters of the Restatement explain that the “clear implication is that a settlor can obtain contribution when the settlement extinguishes the liability of the other tortfeasor.” Id. Cf. id. (noting that three states, New York, Texas and Minnesota, do not permit settlors to obtain contribution). The Restatement provides that the liability of the person against whom contribution is sought may be extinguished either by obtaining a release in favor of the nonsettlor or by satisfying the judgment. Id. § 23 cmt. b. Our holding in Berg would appear to preclude the settling tortfeasor’s right to contribution under the Restatement's proposal because Berg dictates payment of the *52nonsettling tortfeasor’s pro rata share to the plaintiff, so that settlement would not have de facto extinguished the nonsettling tortfeasor’s liability to plaintiff. The new Restatement provision requiring a showing “only that the settlement was reasonable,” id. § 23 cmt. h., also would overturn "the essential prerequisite for entitlement to contribution ... that the parties be joint tortfeasors,” District of Columbia v. Washington Hosp. Ctr., 722 A.2d 332, 336 (D.C.1998) (en banc).

. The settlement amount could, of course, be increased if the nonsettling tortfeasor sues for contribution. It is usual for settlement agreements to provide, however, that the plaintiff will indemnify the settling tortfeasor against such an eventuality. See opinion of the court, ante at note 11. But see Restatement, supra note 5, § 23 cmt. i. (precluding right of contribution against a settling tortfeasor).

. The greatest incentive to settlement is provided if settlement automatically extinguishes not only the plaintiff’s claim, but also both joint tortfeasors’ rights to contribution. This has been considered also to provide a risk of collusion between the plaintiff and the settling tortfeasor, leading to the requirement of a "fairness hearing” on the terms of the settlement before it can be deemed to preclude the nonsettlor’s right of contribution.