Court Opinion

ID: 9700557
Source: CourtListenerOpinion
Date Created: 2023-08-25 21:35:16.823626+00
Date Added: 2024-06-11T18:21:11.205327
License: Public Domain

EAKIN, J.,
dissenting:
¶ 1 The majority holds the trial court erred as a matter of law in failing to give effect to the Manville Personal Injury Settlement Trust’s pro tanto release. I respectfully dissent, and would affirm the trial court’s order molding the verdict.
¶ 2 The issue before this Court is the effect of plaintiffs settlement with one tortfeasor, the Trust, on the remaining non-settling tortfeasor, AC&S; in dollars and cents terms, the issue is whether AC&S should bear the $410,000 shortfall between the consideration paid by the Trust and its allocated share of damages.
¶ 3 The majority gives the release pro tanto effect (according to its terms), holding AC&S must make up the $410,000 shortfall. The majority determines Pennsylvania is a state with multiple set-off rules for purposes of the Trust Distribution Process (TDP), looking broadly at the law of set-off and contribution and determining both pro tanto and pro rata releases are authorized in Pennsylvania, depending on the nature of the underlying action.40 I would look directly at strict liability actions, since this ease proceeded on a strict liability basis. In such eases, the pro rata approach is preferable because, as discussed fully below, it reflects the reality of the Trust’s limited fund status, gives effect to the terms of the TDP, and follows the guidance of cases most relevant to this issue.
¶4 Massive asbestos litigation spawned this issue, which essentially pits its unique complexity against fundamentals of Pennsylvania law on set-off and contribution. The Trust evolved from the bankruptcy proceedings of Johns-Manville Corpora*1156tion, a manufacturer and distributor of asbestos products. See In re Joint Eastern and Southern Districts Asbestos Litigation (Findley v. Falise), 878 F.Supp. 473 (E. & S.D.N.Y.1995), aff'd in part, rev’d in part, 78 F.3d 764 (2d Cir.1996), on remand, 929 F.Supp. 1 (E. & S.D.N.Y.), aff'd, 100 F.3d 944 (2d Cir.1996). The Trust succeeded to Manville’s extensive asbestos liabilities and recognized injured plaintiffs and manufacturer co-defendants as beneficiaries.41 Trust assets were intended to compensate a class (and subclasses) of persons with personal injury and contribution claims against the Trust. The Findley court certified the following class:
All past, present and future Beneficiaries of the Manville Personal Injury Settlement Trust each of whom has or will have a claim either for wrongful death or personal injury caused by exposure to asbestos, or a claim for warranty, guarantee, indemnification or contribution arising from an obligation of the Trust for the payment of death or personal injury claims.
Findley, 878 F.Supp. at 575. The court designated six subclasses including three plaintiff subclasses and three defendant subclasses. Findley, 78 F.3d at 770. This was a mandatory, non opt-out settlement class, bound by the terms of a Stipulation of Settlement agreed to by the parties and subject to the procedures of the TDP, a document appended to that agreement. Classwide settlement was designed to remove the Trust from the tort system and equitably distribute limited Trust assets among its beneficiaries. Findley, 878 F.Supp. at 491-95. The class was certified as a limited fund settlement class, pursuant to F.R.C.P. 23(b)(1)(B),42 by the United States District Court.43 The Bakers are members of this mandatory, non opt-out class.
¶ 5 The Findley settlement seeks to preserve a limited fund for the entire class and prevent exhaustion of the fund through early claims against it. Findley, 878 F.Supp. at 564. The Findley Court found the Trust’s “liabilities far outweigh its assets and, absent the instant class action, the current piecemeal liquidation and payment of some claims at full value by the Trust would deplete the Trust’s assets and would deprive most present and future Beneficiaries of their right to be compensated for their claims by the Trust.” Id.
¶ 6 When Mr. Baker accepted the Trust’s offer of settlement, he signed a “Manville Trust Disposition Process Joint Tortfeasor Release Amended for the State of Pennsylvania,” which provided in pertinent part:
In the event of a verdict against others, any judgment entered on the verdict that takes into account the status of the Trust as a joint tortfeasor legally responsible for my injuries shall be re*1157duced only by the amount of the Liquidated Trust payment as defined in Section H(3)(a)(i) of the TDP, since it is the intention of the parties that this Joint Tortfeasor Release provide for a pro tanto reduction of any damages recoverable against all other tortfeasors, as provided in Section H(3) of the TDP, as applicable. This Joint Tortfeasor Release does not provide, and shall not be construed to provide, for a reduction, to the extent of the pro rata share of the Trust, of my damages recoverable against all other tortfeasors. (Emphasis provided).tion H(3)(a)(i) of the TDP, since it is the intention of the parties that this Joint Tortfeasor Release provide for a pro tanto reduction of any damages recoverable against all other tortfeasors, as provided in Section H(3) of the TDP, as applicable. This Joint Tortfeasor Release does not provide, and shall not be construed to provide, for a reduction, to the extent of the pro rata share of the Trust, of my damages recoverable against all other tortfeasors. (Emphasis provided).
¶ 7 Thus, for $30,000, Mr. Baker gave-the Trust a release limiting its set-off to that amount (a pro tanto release). By contrast, when the Bakers settled with Owens-Corning Fiberglas Corporation, Pfizer, Inc., and Asbestos Claims Management Corporation, they executed releases providing for a pro rata set-off ($440,000 for each allocated share of the damages awarded).
¶ 8 The TDP provides that set-off is the preferred method of satisfying co-defendant claims. TDP § H.2. Set-off is to be calculated according to applicable state law. TDP § H.3. The TDP recognizes different rules for different categories of states: (1) pro tanto states, in which the judgment against a nonsettling defendant is reduced by the amount paid or agreed to be paid by a released party; (2) pro rata states, in which the total liability is divided equally among all defendants found to be legally responsible tortfeasors, and the judgment is reduced by a released party’s pro rata share of liability; (3) apportionment states, in which the amount of the judgment is to be reduced with reference to the apportioned share of a released or absent tortfeasor; (4) states where the law provides for several liability; and (5) states with multiple set-off rules. TPD § H.S (b), (c), (d), (e) and (f). Moreover, with respect to pro tanto or pro rata states, the TDP alters state set-off rules by indemnifying the Trust against eontri-bution claims arising from judgments obtained by health claimants44 if a set-off credit is awarded by the trial court in accordance with the TDP and local law. Findley, 78 F.3d at 770-71.
¶ 9 Section H(3)(c) of the TDP governs the calculation of set-off in pro rata states:
(c) Pro Rata States. In pro rata states, total liability is divided equally among all defendants found by the fact finder to be legally responsible tortfeasors (or agreed by the parties to be legally responsible tortfeasors, if applicable law so provides), including released parties. In such states, judgments against nonset-tling defendants are reduced, as provided by applicable law, by either the pro rata share attributable to released parties or the amount paid or agreed to be paid by released parties. Solely for the purposes of. obtaining a set-off in a pro rata state, pursuant to this subsection 3(c), regardless of whether the Trust has been given a release, or the wording of any such release, claimants in pro rata states shall be deemed to have given the Trust a joint tortfeasor release and indemnified the Trust against contribution and indemnity claims by Co-Defendants against the Trust arising from a judgment obtained by such claimants.
(i) Liquidated claims. Where the underlying claim has been liquidated, the set-off amount shall be either (a) the Liquidated Trust payment, or (b) the Trust’s pro rata share of the judgment, as provided by applicable law.
(ii) Unliquidated claims. Where the underlying claim has not been liquidated, the set-off amount shall be either (a) the Unliquidated Trust payment, or (6) the Trust’s pro rata *1158share of the judgment, as provided by applicable law.
¶ 10 Section H(3)(f) of the TDP governs the calculation of set-off in states with multiple set-off rules:
(f) States with multiple set-off rules. In some states, different set-off rules (pro tanto, pro rata or apportionment) govern different causes of action or parts thereof or different elements of damages. In such states, applicable law shall govern which set-off rules apply to each cause of action or part thereof and each element of damages.
¶ 11 Relying on Walton v. Avco Corp., 530 Pa. 568, 610 A.2d 454 (1992) and Ball v. Johns-Manville Corp., 425 Pa.Super. 369, 625 A.2d 650 (1993), the trial court determined Pennsylvania is a pro rata state in strict products liability cases. If correct in this conclusion, the trial court must be affirmed. By contrast, upon review of the law of contribution and set-off in Pennsylvania, the majority concludes Pennsylvania is a state with multiple set-off rules, because liability is allocated differently depending on the nature of the underlying cause of action. However, accepting the majority’s proposition that Pennsylvania is a state with multiple set-off rules does not defeat the more precise proposition that Pennsylvania is a pro-rata state for purposes of this strict liability litigation.
¶ 12 The trial court found this reasoning dispositive:
Although the Walton court did not go on expressly to state that apportionment among strictly liable defendants must be on a pro rata basis, i.e., divided proportionately in accordance with the number of joint tortfeasors, this is clearly a necessary corollary of the Walton decision. Justice Papdakos, concurring in Walton, specifically interpreted the majority opinion in this manner, stating:
I join the majority opinion because I believe it says the following:
III. As between and among strictly liable defendants, any defendant who has settled with plaintiffs prior to verdict has settled for its pro-rata share of the verdict and is not entitled to contribution from any other defendant found strictly liable, whether the verdict is for a greater or lesser amount than the settlement amount.
The non-settling strictly liable defendants are obligated to the plaintiffs for a pro-rata share of the verdict and are not entitled to contribution from the settling, strictly liable defendants. Id. at 584-85, 610 A.2d at 463 (Papadakos, J., concurring).
Trial Court Memorandum, 9/11/96, at 3 (quoting Ball, at 658). The trial court found this to be an uncomplicated issue, resolved solely by § H(3)(e) of the TDP and the court’s determination “[t]he gold standard of set-off in Pennsylvania products liability actions is a pro rata share.” Trial Court Memorandum, 9/11/96, at 4. I must agree.
¶ 13 Walton was a strict products liability action arising from a helicopter crash. In Walton, the plaintiff gave a release to one defendant, stating any recovery against the nonsettling defendant must be reduced by the greater of the consideration paid (pro tanto) or the settling defendant’s pro rata share of liability. As it turned out, the defendant’s settlement payment was greater than its pro rata share of the verdict. Nevertheless, the Supreme Court disregarded the pro tanto language of release and held the plaintiffs recovery would be reduced only by the settling defendant’s pro rata share of the verdict. Walton, 610 A.2d at 463.
¶ 14 The Ball case was an asbestos action against several defendants on negligence and strict liability theories. Certain defendants filed for bankruptcy, others were dismissed on summary judgment and still others settled with the plaintiffs. The case resulted in a jury verdict against the two remaining defendants. On appeal, a panel of this Court was asked to determine whether the trial court properly refused to charge the jury on apportionment of liability among defendants, particularly where both negligence and strict liability are alleged. The Court found that although not barred by Walton, apportionment on negli*1159gence grounds was barred for lack of sufficient evidence regarding relative causal fault. Ball, at 658-59. Significantly the Court also reasoned:
Although the Walton court did not go on expressly to state that apportionment among strictly liable defendants must be on a pro rata basis, i.e., divided proportionately in accordance with the number of joint tortfeasors, this is clearly a necessary corollary of the Walton decision.
Ball, at 658.
¶ 15 Based on this reasoning, I must agree with the trial court: Ball and Walton mandate holding AC&S liable only for its pro rata share. In both Walton and the case on which it relied, Charles v. Giant Eagle, 518 Pa. 474, 522 A.2d 1 (1987), the settling tortfeasors paid in excess of their pro rata shares of allocated liability. Nevertheless, the respective courts required the non-settling tortfea-sors to pay their full pro rata shares as well, based on policies of promoting settlement and avoiding windfalls to non-settling tortfeasors. I see no reason why this approach should not apply where the settling tortfeasor paid less than its full pro rata share (as is the case herein).
¶ 16 I see no basis for a rule that pro tanto/pro rata allocation depends on the ultimate ratio of settlement to verdict, as the majority’s result suggests. Can the applicable principles of law change with the specific mathematics of the verdict? Does the law apply one standard when settlement exceeds the pro rata share, and another standard when it does not? I find neither logic nor fairness in such a dichotomous approach.
¶ 17 Moreover, I believe the TDP trumps the Baker/Trust release. It is important to understand certain aspects of the Findley class proceedings and how the parties resolved the final terms of the TDP. The TDP provides set-off is the “preferred method of satisfying Co-defendant claims.” TDP § H(2)(a). Judge Weinstein acknowledged the TDP’s set-off provisions are “byzantine,” but that merely reflects the complexity of accommodating the laws of forty-nine states. Findley, 878 F.Supp. at 545. Judge Weinstein’s comments in this regard are worth noting:
The parties have done as well as they could to simplify administration. The parties were free to agree to modify the effect of state laws to accommodate the litigants as part of a class action settlement, and this is what they have done. The TDP is the product of full discussion among the parties; it is eminently fair. There is no evidence that any group’s interests were not fully represented as to any state’s law.
Id. The TDP and the Stipulation of Settlement were the result of extensive negotiations among the parties to the Findley litigation, including the parties herein. The District Court’s class certification findings plainly show the parties were ably represented at those negotiations by the appointed representatives of their class and subclass. Findley, 878 F.Supp. at 563. Despite the fact they could not opt out of the class, the Bakers had ample notice of the class settlement proceedings and its effect on their claim against the Trust. Before final approval of the settlement class, the District Court held fairness hearings and gave purported class members adequate opportunity to object to settlement if they so desired. See Findley, 878 F.Supp. at 492-93. The record does not reveal whether the Bakers objected to the settlement, although the Findley decisions suggest their counsel was involved in the process that resulted in the TDP. In any event, as the majority points out, AC&S received valuable benefits from the settlement negotiations and similarly, the settlement assured the Bakers of some measure of damages, even if less than desired.
¶ 18 It may seem unjust that the Trust pays less than its joint tortfeasor, AC&S, but this is a reflection of the limited fund nature of the class settlement. The District Court approved the limited fund settlement class “to ensure some payment to all claimants,” Findley, 878 F.Supp. at 480, *1160and concluded “the Settlement was a fair one founded on a delicate balancing of interests.” Findley, 78 F.3d at 779. Absent the refuge of limited fund status for the Trust, the Bakers conceivably could have received no recovery for their claims. Findley, 878 F.Supp. at 564 (“... payment of some claims at full value by the Trust would deplete the Trust’s assets and would deprive most present and future beneficiaries of their right to be compensated for their claims by the Trust”).
¶ 19 There is no reason to disregard the hard-fought negotiations of the parties in Findley, and the resulting balancing of interests, to give effect to a side agreement between two of the parties, especially where doing so would require a remaining party to pay almost twice the share otherwise required under the TDP and Pennsylvania law.
¶ 20 To summarize, I agree with the trial court: under Walton and Ball, Pennsylvania is clearly a pro rata state for purposes of set-off in strict liability cases such as this one. I find no abuse of discretion in the trial court’s interpretation of the TDP; the amount of set-off for the Trust’s share of liability to the Bakers is a pro rata share, $440,000. Opinion Sur Post-Trial Motions, 1/16/97 at 4-5.; Trial Court Memorandum, 9/11/96, at 3-4. Under the terms of the TDP, and under Walton and Ball, claimants including the Bakers, must be deemed to have given the Trust a pro rata joint tortfeasor release regardless of the wording of the actual release.
¶ 21 The Uniform Contribution Among Tortfeasors Act (UCATA)45 does not compel a different result since under Ball, application of the UCATA is not required in strict liability actions:
As between and among strictly liable defendants, any defendant who has set-tied with plaintiffs prior to verdict has settled for its pro-rata share of the verdict and is not entitled to contribution from any other defendant found strictly liable, whether the verdict is for a greater or lesser amount than the settlement amount. The non-settling strictly liable defendants are obligated to the plaintiffs for a pro-rata share of the verdict and are not entitled to contribution from the settling, strictly hable defendants.
Ball, 625 A.2d at 658 (quoting Walton, 610 A.2d at 463 (Papadakos, J., concurring)).
¶ 22 For the foregoing reasons, I would affirm the learned trial court, and am constrained to dissent from the holding of the majority.
¶ 23 President Judge McEWEN and Judge JOYCE join this Dissenting Opinion.

. There are difficulties inherent in either approach. If we accept Pennsylvania is a state with multiple set-off rules for purposes of the TDP, Section H.3(f) of that document (the multiple set-off provision) directs us to "applicable law [which] shall govern which set-off rules apply to each cause of action." This language brings us back to Walton v. Avco Corp., 530 Pa. 568, 610 A.2d 454 (1992) and Ball v. Johns-Manville Corp., 425 Pa.Super. 369, 625 A.2d 650 (1993){see discussion, infra ), which hold joint tortfeasors in a strict liability case are liable only for their pro rata share. If Pennsylvania is a pro rata state for strict liability purposes, TDP § H.3(c) (the pro-rata provision) provides in pro-rata states "judgments against nonsettling defendants are reduced, as provided by applicable law, by either the pro rata share attributable to released parties or by the amount paid ...” (emphasis added), bringing us to Section 8326, see infra at 1157, of the Uniform Contribution Among Tortfeasors Act.

. Specifically, Trust beneficiaries include:
(a) persons suffering, or who will in the future suffer, from asbestos-related diseases caused in whole or in part by exposure to Manville asbestos or asbestos-containing products, (b) entities formerly joined with Manville as co-defendants in asbestos-related litigation, and (c) manufacturers and distributors of Manville asbestos or asbestos-containing products who have claims against Manville for indemnity or contribution.
Findley, 78 F.3d at 769.

. F.R.C.P. 23(b)(1)(B) provides for the maintenance of a mandatory, non opt-out class where:
(1) the prosecution of separate actions by or against individual members of the class would create a risk of ...
(B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests.

. See Findley, 878 F.Supp. 473 and 78 F.3d 764, for a comprehensive history of the bankruptcy and class proceedings.

. The Trust evaluated Mr. Baker’s claim as an “Exigent Health and Extreme Hardship Claim” and offered $300,000, to be paid at 10%.

. The UCATA provides in pertinent part:
A release by the injured person of one joint tortfeasor, whether before or after judgment, does not discharge the other tortfeasors unless the release so provides, but reduces the claim against the other tortfeasors in the amount of the consideration paid for the release or in any amount or proportion by which the release provides that the total claim shall be reduced if greater than the consideration paid.
42 Pa.C.S. § 8326.