New York Law Review

Tag: Settlement

  • 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.)

  • Mighty Midgets, Inc. v. Centennial Ins. Co., 47 N.Y.2d 12 (1979): Duty to Inform Court of Mootness

    47 N.Y.2d 12 (1979)

    Attorneys have a duty to inform the court of any developments, such as a settlement, that render a pending appeal moot; agreements to conceal such information will be disregarded.

    Summary

    Mighty Midgets, Inc. brought a declaratory judgment action against Centennial Insurance Co. regarding the insurer’s duty to defend Mighty Midgets in an underlying tort action. The Court of Appeals addressed whether the settlement of the tort action rendered the declaratory judgment action moot. The Court held that it did, and that the attorneys had a duty to inform the court of the settlement regardless of any agreement to conceal it. The Court emphasized that attorneys cannot, by agreement, prevent the court from dismissing a case on mootness grounds or predetermine the scope of appellate review.

    Facts

    Mighty Midgets, Inc. was involved in a tort action. Centennial Insurance Co. was Mighty Midgets’ insurer. A dispute arose as to whether Centennial had a duty to defend Mighty Midgets in the tort action. Mighty Midgets then filed a declaratory judgment action seeking a determination of Centennial’s obligations. The underlying tort action was settled during the pendency of the declaratory judgment action appeal.

    Procedural History

    Mighty Midgets, Inc. filed a declaratory judgment action in Supreme Court. The Appellate Division heard an appeal. The Court of Appeals granted review. During the appeal process at some point the underlying tort action was settled. The Court of Appeals reversed the Appellate Division’s order and remitted the case to the Supreme Court with directions to dismiss the action as moot.

    Issue(s)

    Whether the settlement of an underlying tort action, which was the subject of a declaratory judgment action regarding the duty to defend, renders the declaratory judgment action moot.

    Holding

    Yes, because the settlement of the tort action eliminates the justiciable controversy regarding the insurer’s duty to defend, thus rendering the declaratory judgment action moot.

    Court’s Reasoning

    The Court reasoned that the settlement of the underlying tort action eliminated any live controversy concerning the insurer’s obligation to defend. Because there was no longer a case or controversy, the declaratory judgment action was moot. The Court stated that any agreement between the parties to conceal the settlement from the court would be disregarded. The Court emphasized the attorneys’ duty to keep the court informed of matters pertinent to the disposition of a pending appeal. The court stated, “The attorneys for litigants in our court have an obligation to keep the court informed of all such matters pertinent to the disposition of a pending appeal and cannot, by agreement between them, foreclose its disposition on the ground of mootness or otherwise predetermine the scope of our review.”
    The Court makes clear that parties cannot, through private agreement, dictate the scope of the Court’s review or prevent the Court from dismissing a case when it lacks a live controversy.

  • 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.