New York Law Review

Tag: General Obligations Law § 15-108

  • Whalen v. Kawasaki Motors Corp., 92 N.Y.2d 294 (1998): Determining Set-Offs in Cases with Comparative Fault and Settlement

    Whalen v. Kawasaki Motors Corp., 92 N.Y.2d 294 (1998)

    In cases involving both comparative fault and settlement with some defendants, the settlement amount should be deducted from the gross verdict before applying the plaintiff’s percentage of fault.

    Summary

    Robert Whalen was injured while driving an ATV manufactured by Kawasaki and sold by Robinson Cycle Sales. Whalen settled with Kawasaki before trial. At trial against Robinson, the jury found Whalen 92% at fault and Robinson 8% at fault, awarding $2,415,000 in damages. Robinson sought a set-off for the Kawasaki settlement under General Obligations Law § 15-108(a). The court addressed whether the set-off should be applied before or after reducing the verdict by Whalen’s comparative fault. The Court of Appeals held that the settlement amount should be deducted first, before calculating the reduction for comparative fault to align with statutory goals of encouraging settlements and equitable apportionment.

    Facts

    Robert Whalen suffered injuries when the Kawasaki ATV he was driving crashed. The ATV was designed and manufactured by Kawasaki and sold by Robinson Cycle Sales to Whalen’s friend. Whalen sued both Kawasaki and Robinson, alleging negligence, strict products liability, and breach of warranty.

    Procedural History

    Whalen settled with Kawasaki for $1,600,000 during jury selection, withdrawing all claims against Robinson derivative of Kawasaki’s liability. The trial proceeded against Robinson alone. The jury found Whalen 92% negligent and Robinson 8% negligent, awarding $2,415,000. Robinson then moved to amend its answer to assert General Obligations Law § 15-108 set-off, which the trial court initially denied. The Appellate Division reversed, allowing the amendment and applying the set-off *after* reducing the verdict by Whalen’s fault, resulting in no monetary responsibility for Robinson. The Court of Appeals granted leave to appeal.

    Issue(s)

    1. Whether Robinson waived the benefits of General Obligations Law § 15-108(a) by failing to seek apportionment of liability against Kawasaki before the verdict.

    2. Whether, in cases involving both comparative fault and settlement, the settlement amount should be deducted from the gross verdict before or after applying the plaintiff’s percentage of fault.

    Holding

    1. No, because Robinson did not waive all benefits of General Obligations Law § 15-108(a) as the statute provides three modes of setoff, and failing to seek apportionment against Kawasaki only foreclosed one of them.

    2. Yes, the settlement amount should be deducted from the gross verdict first, because this approach best promotes the statutory goals of encouraging settlements and ensuring equitable apportionment of responsibility.

    Court’s Reasoning

    The Court reasoned that Robinson’s failure to seek apportionment against Kawasaki only foreclosed the possibility of using Kawasaki’s equitable share of fault as a setoff; the other two setoff options (amount stipulated or paid) remained available. Regarding the timing of the setoff, the Court adopted the “settlement-first” approach. This method aligns with the statutory purpose of encouraging settlements. The court noted, “the Kawasaki settlement in turn may be said to approximate the parties’ intuitive assessment of Kawasaki’s fault and damages.” Deducting the settlement first provides a more precise allocation of loss, as it accounts for the settling defendant’s share before determining the remaining liability based on comparative fault. The Court also emphasized that settlement-first provides an incentive for defendants to settle, because nonsettling defendants risk increasing their liability as others settle. The Court explicitly rejected the “fault-first” approach, noting that it could allow a nonsettling defendant to escape responsibility altogether, undermining the goals of General Obligations Law § 15-108. The court found that the settlement-first approach, “results in defendant Robinson being liable to plaintiff in an amount reached after deducting the settlement amount from the gross jury verdict and then discounting the remainder by plaintiffs comparative fault”.

  • Williams v. Niske, 81 N.Y.2d 437 (1993): Calculating Liability Reduction with Multiple Settling Tortfeasors

    Williams v. Niske, 81 N.Y.2d 437 (1993)

    When multiple tortfeasors settle, and some settle before trial without a determination of their equitable share, the non-settling defendant’s liability is reduced by the amount of the pre-trial settlements, and then the remaining liability is apportioned based on the equitable fault assigned by the jury to the trial defendants.

    Summary

    In a case involving multiple defendants, some of whom settled before trial without an assessment of their equitable share of damages, the New York Court of Appeals addressed how to calculate the reduction in liability for the non-settling defendant. The court rejected methods that either failed to account for pre-trial settlements or unfairly altered the jury’s allocation of fault. It affirmed the Appellate Division’s method, which first deducts the pre-trial settlement amounts from the verdict and then apportions the remaining damages based on the equitable fault assigned by the jury to the remaining defendants, ensuring the non-settling defendant only pays its equitable share.

    Facts

    An infant plaintiff, Ramsar Williams, was severely burned in a fire caused by other children. Williams and his father sued the children, their parents, and manufacturers/distributors of the clothing worn by Williams. Prior to trial, the plaintiffs settled with four defendants for $900,000. During trial, they settled with two more defendants for $100,000 and another defendant on a high-low agreement guaranteeing a minimum recovery of $500,000. The remaining defendant, Billy the Kid (BTK), did not settle. The jury returned a verdict of $2,600,000, apportioning liability: 35% to BTK, 30% to one set of settling defendants, and 35% to another settling defendant. The equitable share of the defendants who settled before trial was not determined.

    Procedural History

    The Supreme Court reduced BTK’s liability to $10,000. The Appellate Division modified this decision, holding BTK liable for $595,000. BTK appealed, and the plaintiffs cross-appealed. The New York Court of Appeals granted leave to appeal.

    Issue(s)

    How should a plaintiff’s claim against a non-settling tortfeasor be reduced under General Obligations Law § 15-108(a) when multiple tortfeasors are claimed to be liable for the same injury, and some tortfeasors settle before trial without a determination of their equitable share of the damages?

    Holding

    No, the method for calculating the reduction of liability to the non-settling defendant should involve first deducting the amount of the pre-trial settlements from the total verdict, and then apportioning the remaining liability according to the equitable fault assigned by the jury to the defendants who proceeded to trial, because this method most closely aligns with the language and purposes of General Obligations Law § 15-108(a), ensuring that non-settling defendants do not pay more than their equitable share of the damages.

    Court’s Reasoning

    The Court of Appeals analyzed three methods for calculating the reduction in BTK’s liability under General Obligations Law § 15-108(a). The statute, designed to encourage settlements and ensure equitable loss-sharing, dictates that a release reduces a plaintiff’s claim against other tortfeasors by the settlement amount or the settling tortfeasor’s equitable share, whichever is greater.

    The court rejected the plaintiffs’ method, which aggregated the equitable shares of all settling defendants (assigning zero to those who settled pre-trial) and compared it to the total settlement payments. The court found this approach made a “false comparison” because “no equitable share was determined as to the four defendants who settled before trial.”

    The court also rejected BTK’s method, which initially reduced the $2,600,000 verdict by 65% (the combined equitable liability of the defendants who settled during trial) and then subtracted the $900,000 pretrial settlements. The Court found that BTK’s method improperly altered the jury’s fault allocation, because “BTK is not entitled to both a percentage reduction of the $900,000 and subtraction of the $900,000.”

    The court affirmed the Appellate Division’s approach. This method first deducts the $900,000 pretrial payments from the verdict, treating the case as if total liability were $1,700,000. The remaining defendants’ shares are then calculated based on the jury’s apportionment of fault. In the Court’s opinion, “[t]hat method best accomplishes the purposes of General Obligations Law § 15-108 (a).”

    The court emphasized that while the statute aims to encourage settlements, it also seeks to prevent non-settling defendants from paying more than their equitable share. The court quoted the Appellate Division, noting that crafting a single verdict reduction method that achieves the statute’s objectives “appears all but insuperable…In the end then, it will be up to the courts to determine the method of verdict reduction which best promotes the statute’s broad objectives.” (181 AD2d 307, 312.)

  • Mitchell v. New York Hospital, 61 N.Y.2d 212 (1984): Enforceability of Stipulations Waiving Statutory Rights

    Mitchell v. New York Hospital, 61 N.Y.2d 212 (1984)

    Parties to a civil dispute can stipulate away statutory rights, including the protection against contribution claims provided by General Obligations Law § 15-108(c), if the stipulation is made knowingly, openly, and does not offend public policy.

    Summary

    In a personal injury lawsuit, New York Hospital settled with the plaintiff and sought contribution from third-party defendants, despite General Obligations Law § 15-108(c) generally prohibiting such claims by settling tortfeasors. All parties had stipulated to allow the hospital to pursue these claims. The New York Court of Appeals held that the stipulation was enforceable, allowing the hospital to seek contribution. The court reasoned that parties can waive statutory rights through stipulations, and that enforcing this particular agreement fostered the public policy goals of encouraging settlement and ensuring equitable sharing of liability among tortfeasors. The court modified the Appellate Division’s order, reinstating the contribution claims against some of the third-party defendants.

    Facts

    Michael Mitchell, a steamfitter employed by Wolf & Munier, Inc. (W & M), was injured while working at New York Hospital. He was scalded by steam or hot water from a ruptured pipe during renovation work. Mitchell sued the Hospital, alleging failure to provide a safe workplace. The Hospital then initiated a third-party action against W & M, Syska & Hennessy, Inc. (S & H), Utilex Demolition, Inc. (Utilex), and Regal Insulation Corp. for contribution and indemnification.

    Procedural History

    The parties informed the trial court that they had reached a settlement, stipulating that the Hospital would settle with the plaintiff and then pursue its third-party claims for contribution or indemnification. The third-party defendants later moved to dismiss the Hospital’s third-party complaint, arguing that General Obligations Law § 15-108(c) barred the contribution claim. The trial court denied the motion, holding that the third-party defendants had waived the statute’s protection. The Appellate Division reversed regarding contribution, holding the statutory right could not be waived. The Court of Appeals granted leave to appeal after dismissing an earlier appeal as nonfinal.

    Issue(s)

    Whether subdivision (c) of section 15-108 of the General Obligations Law, which prohibits a settling tort-feasor from obtaining contribution from another person, can be waived by agreement of all parties to the litigation.

    Holding

    Yes, because parties to a civil dispute can stipulate away statutory rights unless public policy is affronted, and enforcing this stipulation furthers the policy goals of encouraging settlements and ensuring equitable sharing of liability among tortfeasors. The statute was not intended to be nonwaivable.

    Court’s Reasoning

    The Court of Appeals emphasized the long-standing judicial preference for stipulations as a means of resolving disputes efficiently. The court stated that parties are generally free to chart their own litigation course and can even stipulate away statutory and constitutional rights, as long as public policy is not violated. Here, the court found that the stipulation did not offend public policy; rather, it promoted the fair compensation of the injured party and facilitated the equitable sharing of liability among the tortfeasors.

    The court analyzed the legislative history of General Obligations Law § 15-108, noting that it was enacted to balance the competing policies of encouraging settlement and ensuring equitable apportionment of liability. While subdivision (c) generally prohibits settling tortfeasors from seeking contribution, the court found no indication that the Legislature intended this protection to be nonwaivable. The court reasoned that enforcing the stipulation would remove a barrier to settlement and allow for a more equitable distribution of liability.

    The court distinguished prior cases, such as Lettiere v. Martin Elevator Co., where the nonsettling tortfeasor was not a party to the stipulation. The court also clarified that Rock v. Reed-Prentice and McDermott v. City of New York were not applicable because they involved different factual scenarios. Finally, the court upheld the principle that a plaintiff can advance inconsistent theories of recovery, such as contribution and contractual indemnity.

    The court emphasized the importance of enforcing stipulations that are “freely, knowingly and openly agreed to by all of the named parties.” By allowing the Hospital to pursue contribution claims, the stipulation removed a barrier to settlement and promoted the equitable sharing of liability.

  • Rock v. Reed-Prentice Div. of Package Mach. Co., 39 N.Y.2d 34 (1976): Enforceability of Contribution Judgment After Settlement

    Rock v. Reed-Prentice Div. of Package Mach. Co., 39 N.Y.2d 34 (1976)

    A settlement between a plaintiff and one tortfeasor does not preclude the settling tortfeasor from enforcing a previously obtained judgment for contribution against another tortfeasor, but the amount of contribution is limited to the non-settling tortfeasor’s equitable share of the settlement amount.

    Summary

    David Rock sued Reed-Prentice for injuries sustained while using their machine. Reed-Prentice then sued Rock’s employer, Westbury Plastics, for contribution. The jury apportioned liability. Reed-Prentice settled with Rock for $250,000 after a $400,000 verdict. Reed-Prentice sought to enforce its judgment against Westbury. The New York Court of Appeals held that Reed-Prentice could enforce the contribution judgment, but only to the extent of Westbury’s equitable share of the settlement amount, not the original judgment amount. The court reasoned that the settlement satisfied the judgment, entitling Reed-Prentice to contribution, and that General Obligations Law § 15-108 was intended to promote settlements, not nullify existing judgments.

    Facts

    David Rock was injured operating a plastic molding machine manufactured by Reed-Prentice while employed by Westbury Plastics. Rock sued Reed-Prentice for negligence and breach of implied warranty. Reed-Prentice initiated a third-party action against Westbury Plastics, claiming Westbury’s negligence caused the injury.

    Procedural History

    The trial court instructed the jury to determine the proportionate share of liability if both defendants were negligent. The jury found both Reed-Prentice and Westbury negligent, awarding Rock $400,000 against Reed-Prentice and Reed-Prentice $50,000 against Westbury. Reed-Prentice settled with Rock for $250,000 while appealing to the Appellate Division. Westbury declined to join the settlement, and both defendants proceeded with the appeal concerning the third-party judgment. The Appellate Division affirmed. Westbury appealed to the New York Court of Appeals.

    Issue(s)

    Whether the settlement between Rock and Reed-Prentice precludes Reed-Prentice from enforcing the judgment for contribution against Westbury.

    Holding

    No, because the settlement does not extinguish Reed-Prentice’s right to enforce the contribution judgment, but the amount is limited to Westbury’s equitable share of the settlement amount.

    Court’s Reasoning

    The Court of Appeals reasoned that Reed-Prentice’s judgment against Westbury was based on contribution within the meaning of CPLR 1402 and General Obligations Law § 15-108, which codified the apportionment rule from Dole v. Dow Chem. Co. The court distinguished between contribution and indemnity, noting that contribution involves proportional reimbursement, while indemnity involves a shifting of culpability. While CPLR 1402 states the amount of contribution is the excess paid over the defendant’s equitable share, Reed-Prentice did fully satisfy the judgment. The court found that General Obligations Law § 15-108 aims to promote settlements by defining their effect on collateral rights, not to nullify existing judgments. The court stated the intent of the statute was to alter rules that inhibited settlements. Specifically, the court noted, “The overall scheme and purpose of the section is to promote settlements in multiple-party tort cases by clearly defining the effect the settlement will have on collateral rights and liabilities in future litigation. There is nothing at all to suggest that this statute was ever intended to nullify a pre-existing judgment.” However, Westbury is not obligated to pay the full $50,000. Because the jury allocated Westbury’s responsibility at 12.5% of the loss, Reed-Prentice is only entitled to 12.5% of the $250,000 settlement, or $31,250.