Provides, in tort cases where one defendant has settled, that remaining defendants must elect, prior to trial, whether to reduce liability by the amount of the settlement or by the amount of the equitable share of damages delegated to the settler in the verdict.
TITLE OF BILL: An act to amend the general obligations law, in relation to settlements in tort actions; and to repeal certain provisions of such law relating thereto
PURPOSE: To amend Section 15-108 of the General Obligations Law to provide that in tort cases, where one defendant has settled, remaining defendants must elect prior to trial as to reduction in liability.
SUMMARY OF PROVISIONS: Section One: Amends Section 15-108 of the General Obligations Law to provide that in tort cases when a settlement is reached with one of two or more persons who are liable in tort for the same injury or wrongful death it does not discharge any other tortfeasor from liability unless its terms expressly provide. However, each of the remaining tortfeasors may choose to reduce his or her liability to the plaintiff by the stated settlement amount, the consideration actually paid or the settling tortfeasor's equitable share of the damages under Article 14 of the CPLR. This choice must be made in open court or in writing prior to the first opening statement of the trial, unless the party making the election only later becomes aware of the settlement.
Section Two: Provides that this Act shall take effect on the first of January next succeeding the date on which it shall have become a law, and shall be applicable to any action commenced on or after such effective date.
JUSTIFICATION: Section 15-108 of the General Obligations Law sets forth what happens when a personal injury or wrongful death plaintiff releases from liability one or more, but fewer than all, of the alleged tortfeasors. Although the statute was enacted to encourage settlements, most commentators have concluded that it generally rewards nonsettlors at the expense of settlors and that, by doing so, it actually discourages settlement.
The key feature of the statute, and the feature most criticized by the statute's detractors, is that it rewards defendants who do not settle and can penalize plaintiffs and defendants who do. It does this by allowing the non-settlor to reduce its liability to the plaintiff by the greatest of: (1) the amount that plaintiff received in settlement, (2) the amount that plaintiff was stipulated to receive in settlement, and (3) the settling tort feasor's "equitable share" of the damages. The first two alternatives are almost always equivalent, usually leaving the non-settlor with the choice of an "amount paid" reduction or an "equitable share" reduction.
This benefits the non-settlor in two ways. First, in those instances in which the settling tortfeasor's payment turns out to exceed what the trier of fact later determines to be the settlor's equitable share of the damages, the non-settlor benefits by the difference between those two sums. The second benefit accorded to the non-settlor is that the risk of settlor's solvency, formerly borne by the non-settlor, is now eliminated. The non-settlor is able to deduct settlor's equitable share whether or not settlor actually could have paid such sum. By virtue of these features, the non-settlor often obtains windfall reductions of liability usually, albeit not always, at the plaintiffs expense.
In 1986, the Law Revision Commission proposed that the non-settling tortfeasor obtain a reduction of only the "amount" paid by a settling tortfeasor, unless the settlement was itself made in "bad faith." Such plan was modeled upon section 4 of the 1955 Uniform Contribution Amongst Tortfeasors Act. This proposal goes too far in the other direction and treats non-settlors unfairly. The non-settlor's liability would be effectively increased by virtue of a settlement to which the non-settlor did not accede and which the non-settlor was powerless to prevent More-over, this proposal would inevitably spawn litigation over whether particular settlements Were made in good faith.
This bill would allow the non-settlor the same alternatives as currently exist, but require that the choice be made BEFORE, rather than after, trial. The non-settlor still would get to choose whether it will reduce its liability to plaintiff by the amount of the settlor's payment to plaintiff or by the amount of the settlor's equitable share of the damages. The difference is that because the non-settlor would have to make the choice before the verdict was rendered, there Would be an added incentive to a defendant to settle, rather than to sit back and choose the "best of both worlds."
So as to avoid disputes, selection would be effective only if made in writing or on the record in open Court. If the non-settlor failed timely to make an election and thus "defaulted", he or she thereby would be presumed to have elected an "equitable share" credit.
The statute is vague as to which agreements will trigger its operation. Currently, it requires a formal release to be exchanged. The courts, however, have ignored this requirement. Under this proposal, the statute would be triggered by the occurrence of a "settlement", thus codifying the case law.
The current statute also is ambiguous as to the manner in which the non-settlors' liability is calculated in those instances in which the plaintiff reaches settlement with more than one tortleasor. This proposal, consistent with recent Court of Appeals decisions, adopts the "aggregate," rather than "pick and choose," method of calculation.
Neither GOL § 15-108 nor CPLR Article 16 (the "limited liability" law, which partially abrogates the general rule of joint and several liability) specifies the interrelationship between those provisions. There are a number of logically tenable methods in which the statute could be applied to a given fact pattern; selection of one such method rather than another could conceivably make hundreds of thousands of dollars' difference to the parties. The instant measure precisely delineates the manner in which the two statutes would operate, essentially codifying the approach adopted in IN RE BROOKLYN NAVY YARD ASBESTOS, 971 F.2d 831 (2nd Cir. 1992).
The statute has been construed by the courts to render the settling defendant immune from contribution claims but not from indemnity claims. Because, as a practical matter, it often is difficult to distinguish a contribution claim from a claim for common law indemnity, it is not uncommon for a defendant who thinks that he or she has "bought peace" to be rudely surprised with a successful indemnity claim. This serves as yet another disincentive to settle. This bill would apply the statute to common law indemnification, but not to contractual indemnification. Public employees could, however, seek common law indemnification. But, while rendering the settlor immune from common law indemnity claims, this measure would not otherwise displace the rule set forth in RIVI-ELLO V. WALDRON, 47 N.Y.2d 297 (1979).
RIVIELLO held that a non-settlor who stands vicariously liable for a settling defendant's wrong is entitled to an "amount paid" credit but cannot claim an "equitable share" credit. An "equitable share" apportionment in such a case would result in a total elimination of the non-settlor's liability, thereby defeating the purpose of vicarious liability.
This bill would allow a tortfeasor, upon settlement with the plaintiff, also to "buy" the plaintiffs claims against one or more other tortfeasors. There are many cases in which this option would streamline the litigation and induce quicker settlements. The current statute is silent as to the manner in which a structured settlement should be valued for its purposes. This measure would require structured settlements to be valued in terms of their cost.
Finally, we note that the instant measure has been modified slightly from past versions. A new provision has been added (see: proposed 15-108(a)(4)), which would precisely specify the manner in which a settlement would be credited towards and reduce a non-settlor's liability in actions governed by Article 50-A or 50-B of the Civil Practice Law and Rules in which the future damages are paid periodically. This is a matter not currently addressed by any statute, and it has caused confusion, To resolve that confusion, this measure would require the settlement credit to be apportioned pro rata between past and future damages.
LEGISLATIVE HISTORY: S.2390 of 2009 Referred to Senate Judiciary Committee S.7482 of 2008 Referred to Senate Rules Committee
FISCAL IMPLICATIONS: None.
LOCAL FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: January 31st next succeeding the date on which it shall have become a law and apply only to actions and proceedings commenced on or after such effective date.
STATE OF NEW YORK ________________________________________________________________________ 3766 2011-2012 Regular Sessions IN SENATE March 3, 2011 ___________Introduced by Sens. BONACIC, DeFRANCISCO -- read twice and ordered printed, and when printed to be committed to the Committee on Judici- ary AN ACT to amend the general obligations law, in relation to settlements in tort actions; and to repeal certain provisions of such law relating thereto THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 15-108 of the general obligations law is REPEALED and a new section 15-108 is added to read as follows: S 15-108. SETTLEMENTS IN TORT ACTIONS. (A) EFFECT OF SETTLEMENT. (1) A SETTLEMENT REACHED WITH ONE OF TWO OR MORE PERSONS WHO ARE LIABLE OR CLAIMED TO BE LIABLE IN TORT FOR THE SAME INJURY OR WRONGFUL DEATH DOES NOT DISCHARGE ANY OTHER TORTFEASOR FROM LIABILITY UNLESS ITS TERMS EXPRESSLY SO PROVIDE, EXCEPT THAT EACH OF THE REMAINING TORTFEASORS MAY CHOOSE TO REDUCE HIS OR HER LIABILITY TO THE PLAINTIFF OR CLAIMANT BY THE STATED SETTLEMENT AMOUNT, THE CONSIDERATION ACTUALLY PAID, OR THE SETTLING TORTFEASOR'S EQUITABLE SHARE OF THE DAMAGES AS DETERMINED UNDER ARTICLE FOURTEEN OF THE CIVIL PRACTICE LAW AND RULES. (2) WHEN MORE THAN ONE PERSON SETTLES WITH A PLAINTIFF OR CLAIMANT, EACH OF THE REMAINING TORTFEASORS MAY CHOOSE TO REDUCE HIS OR HER LIABILITY TO THE PLAINTIFF OR CLAIMANT BY THE TOTAL OF ALL STATED SETTLEMENT AMOUNTS, THE TOTAL CONSIDERATION ACTUALLY PAID FOR ALL OF THE SETTLEMENTS, OR THE TOTAL OF THE SETTLING TORTFEASORS' EQUITABLE SHARES OF THE DAMAGES AS DETERMINED UNDER ARTICLE FOURTEEN OF THE CIVIL PRAC- TICE LAW AND RULES. (3) THE CHOICE AUTHORIZED BY THIS SUBDIVISION SHALL BE MADE IN OPEN COURT OR IN A WRITING SUBSCRIBED ON BEHALF OF THE PARTY SEEKING TO LIMIT LIABILITY, AND SHALL BE MADE PRIOR TO THE FIRST OPENING STATEMENT OF THE TRIAL UNLESS THE PARTY MAKING THE ELECTION ONLY LATER BECOMES AWARE THAT A SETTLEMENT HAS OCCURRED. IN THE LATTER EVENT, THE ELECTION SHALL BEEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD03086-01-1 S. 3766 2
MADE AS SOON AS REASONABLY PRACTICABLE AFTER THE PARTY MAKING THE ELECTION IS APPRISED OF THE SETTLEMENT OR SETTLEMENTS IN ISSUE, AND, IF FEASIBLE, PRIOR TO THE RETURN OF A VERDICT. IN THE ABSENCE OF SPECIFIC AND TIMELY ELECTION OTHERWISE, A PARTY LIMITING LIABILITY WILL BE DEEMED TO HAVE ELECTED REDUCTION IN THE TOTAL AMOUNT OF THE EQUITABLE SHARE OR SHARES OF ALL SETTLING TORTFEASORS. (4) FOR PURPOSES OF CALCULATING THE REDUCTION OF LIABILITY UNDER THIS SUBDIVISION IN A CASE WHERE A REMAINING TORTFEASOR IS SUBJECT TO A PERI- ODIC PAYMENT JUDGMENT PURSUANT TO ARTICLE FIFTY-A OR ARTICLE FIFTY-B OF THE CIVIL PRACTICE LAW AND RULES, THE MANNER IN WHICH SUCH REDUCTION IS EFFECTED SHALL DEPEND ON THE TYPE OF CREDIT CHOSEN BY THE REMAINING TORTFEASORS. (A) IN THOSE INSTANCES IN WHICH THE REMAINING TORTFEASOR HAS ELECTED PURSUANT TO PARAGRAPH ONE OF THIS SUBDIVISION TO RECEIVE A CREDIT EQUIV- ALENT TO THE AMOUNT OR AMOUNTS WHICH THE PLAINTIFF OR CLAIMANT RECEIVED IN SETTLEMENT, THE CREDIT PROVIDED BY THIS SUBDIVISION SHALL BE RATABLY APPORTIONED BETWEEN THE PAST DAMAGES OF THE PLAINTIFF AND THE FUTURE DAMAGES. THIS SHALL BE DONE BY DETERMINING THE RATIO BETWEEN THE PLAINTIFF'S PAST DAMAGES AND THE PLAINTIFF'S TOTAL DAMAGES, AND THEN APPORTIONING THAT SAME PERCENTAGE OF THE SETTLEMENT TOWARDS PAYMENT OF THE PLAINTIFF'S PAST DAMAGES. THE REMAINDER OF THE SETTLEMENT CREDIT WOULD BE CREDITED TOWARDS, AND WOULD THUS REDUCE, THE PLAINTIFF'S FUTURE DAMAGES. FOR PURPOSES OF THE APPORTIONMENT OF THE SETTLEMENT CREDIT BETWEEN PAST AND FUTURE DAMAGES, THE RATIO BETWEEN PAST DAMAGES AND TOTAL DAMAGES WILL BE PREMISED UPON THE AMOUNTS OF DAMAGES AWARDED BY THE TRIER OF FACT AFTER ADJUSTMENT HAS ALREADY BEEN MADE FOR ALL OTHER SET- OFFS, CREDITS AND REDUCTIONS OTHERWISE DICTATED BY SUBDIVISION (A) OF SECTION FIVE THOUSAND THIRTY-ONE, OR SUBDIVISION (A) OF SECTION FIVE THOUSAND FORTY-ONE OF THE CIVIL PRACTICE LAW AND RULES, AND BEFORE CONSIDERATION OF ANY OF THE CALCULATIONS DICTATED BY SUBDIVISION (B), (C), (D) OR (E) OF SUCH SECTIONS. (B) IN THOSE INSTANCES IN WHICH THE REMAINING TORTFEASOR HAS ELECTED PURSUANT TO PARAGRAPH ONE OF THIS SUBDIVISION TO RECEIVE AN EQUITABLE SHARE CREDIT, EACH OF THE PLAINTIFF'S AWARDS FOR PAST DAMAGES AND FOR FUTURE DAMAGES AS REMAIN AFTER ALL OTHER SET-OFFS, CREDITS AND REDUCTIONS OTHERWISE DICTATED BY SUBDIVISION (A) OF SECTION FIVE THOU- SAND THIRTY-ONE OR SUBDIVISION (A) OF SECTION FIVE THOUSAND FORTY-ONE OF THE CIVIL PRACTICE LAW AND RULES SHALL BE REDUCED BY THE SETTLOR'S EQUI- TABLE SHARE OF THE TOTAL CULPABILITY. (B) LIABILITY OF SETTLING TORTFEASOR. EXCEPT AS OTHERWISE PROVIDED IN SUBDIVISION (F) OF THIS SECTION, A SETTLEMENT BETWEEN THE PLAINTIFF OR CLAIMANT AND A TORTFEASOR RELIEVES SUCH TORTFEASOR FROM LIABILITY TO ANY OTHER PERSON FOR CONTRIBUTION OR INDEMNIFICATION. (C) WAIVER OF CONTRIBUTION AND INDEMNIFICATION. EXCEPT AS OTHERWISE PROVIDED IN SUBDIVISIONS (D) AND (F) OF THIS SECTION, A TORTFEASOR WHO HAS SETTLED WITH THE PLAINTIFF OR CLAIMANT SHALL NOT BE ENTITLED TO CONTRIBUTION OR INDEMNIFICATION FROM ANY OTHER PERSON. (D) SETTLING TORTFEASOR'S LIMITED RIGHT TO CONTRIBUTION OR INDEMNIFI- CATION. NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION (C) OF THIS SECTION, A TORTFEASOR WHO HAS ENTERED INTO A SETTLEMENT WITH A PLAINTIFF OR CLAIMANT MAY SEEK CONTRIBUTION OR INDEMNIFICATION FROM ANY OTHER TORTFEASOR IF, IN CONSIDERATION FOR SUCH SETTLEMENT, THE PLAINTIFF OR CLAIMANT HAS RELEASED FROM LIABILITY THE PERSON OR PERSONS FROM WHOM CONTRIBUTION OR INDEMNIFICATION IS SOUGHT. CONTRIBUTION OR INDEMNIFICA- TION SHALL BE AVAILABLE PURSUANT TO THIS SUBDIVISION EXCEPT TO THES. 3766 3
EXTENT THAT IT IS ESTABLISHED BY THE PARTY OR PARTIES FROM WHOM CONTRIB- UTION OR INDEMNIFICATION IS SOUGHT THAT THE AMOUNT PAID IN SETTLEMENT WAS NOT REASONABLE. (E) RELATIONSHIP WITH ARTICLE SIXTEEN OF THE CIVIL PRACTICE LAW AND RULES. IF A PERSON SEEKS TO LIMIT LIABILITY PURSUANT TO BOTH SUBDIVISION (A) OF THIS SECTION AND ARTICLE SIXTEEN OF THE CIVIL PRACTICE LAW AND RULES, THE LIMITATION SHALL BE MADE BY DETERMINING THE PERCENTAGE THAT THE PLAINTIFF'S OR CLAIMANT'S NON-ECONOMIC LOSS BEARS TO SUCH PERSON'S TOTAL LOSS, AND THEN APPLYING THE SAME PERCENTAGE OF THE SETTLEMENT CREDIT TO THE PLAINTIFF'S OR CLAIMANT'S NON-ECONOMIC LOSS. A PERSON WHOSE LIABILITY IS REDUCED UNDER THIS SECTION SHALL BE ENTITLED TO AN ADDITIONAL REDUCTION OF LIABILITY PURSUANT TO ARTICLE SIXTEEN OF THE CIVIL PRACTICE LAW AND RULES, BUT ONLY TO THE EXTENT THAT SUCH PERSON'S REMAINING LIABILITY FOR NON-ECONOMIC LOSS EXCEEDS THE LIMITATION OF LIABILITY, IF ANY, ESTABLISHED BY SUCH ARTICLE. (F) EXEMPTIONS. NOTHING CONTAINED IN THIS SECTION SHALL BE CONSTRUED TO AFFECT OR IMPAIR: (1) ANY CLAIM FOR INDEMNIFICATION IF, PRIOR TO THE ACCIDENT OR OCCUR- RENCE ON WHICH THE CLAIM IS BASED, THE PARTY SEEKING INDEMNIFICATION AND THE PARTY FROM WHOM INDEMNIFICATION IS SOUGHT HAD ENTERED INTO A WRITTEN CONTRACT IN WHICH THE LATTER HAD EXPRESSLY AGREED TO INDEMNIFY THE FORMER FOR THE TYPE OF LOSS SUFFERED; OR (2) A CLAIM FOR INDEMNIFICATION BY A PUBLIC EMPLOYEE, INCLUDING INDEM- NIFICATION PURSUANT TO SECTION FIFTY-K OF THE GENERAL MUNICIPAL LAW OR SECTION SEVENTEEN OR SECTION EIGHTEEN OF THE PUBLIC OFFICERS LAW. (G) SETTLEMENTS WITHIN THE SCOPE OF THIS SECTION. AN AGREEMENT BETWEEN A PLAINTIFF OR CLAIMANT AND A PERSON WHO IS LIABLE OR CLAIMED TO BE LIABLE IN TORT SHALL BE DEEMED A SETTLEMENT FOR THE PURPOSES OF THIS SECTION ONLY IF: (1) THE AGREEMENT COMPLETELY OR SUBSTANTIALLY TERMINATES THE DISPUTE BETWEEN THOSE PARTIES; (2) THE PLAINTIFF OR CLAIMANT RECEIVES, AS PART OF THE AGREEMENT, MONETARY CONSIDERATION GREATER THAN ONE DOLLAR; AND (3) SUCH SETTLEMENT OCCURS PRIOR TO ENTRY OF A JUDGMENT. (H) VALUATION OF STRUCTURED SETTLEMENTS. WHERE THE MONETARY CONSIDER- ATION FOR A SETTLEMENT INCLUDES ONE OR MORE PAYMENTS WHICH ARE TO BE MADE MORE THAN ONE YEAR AFTER THE DATE OF THE SETTLEMENT, THE VALUE OF SUCH FUTURE PAYMENTS SHALL, FOR PURPOSES OF SUBDIVISION (A) OF THIS SECTION, BE DEEMED TO BE THE SETTLING TORTFEASOR'S COST IN PROVIDING SUCH PAYMENTS. S 2. This act shall take effect on the thirty-first of January next succeeding the date on which it shall have become a law, and shall be applicable to any action commenced on or after such effective date.