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Confidential Settlements are Discoverable to Determine Joint Tortfeasor Status and Contribution
In Richard Tempel, et al. v. Elena L. Murphy, et al., No. 1199 Sept. Term 2010 (Oct. 28, 2011), the Court of Special Appeals addressed two questions: (1) whether a non-settling defendant has a right to inspect the settling defendants settlement agreements prior to judgment; and (2) whether Plaintiffs' evidence of the decedent's future economic loss is speculative if his retirement age cannot be proven with certainty.

Right to Inspect Settlement Agreements

After learning that co-defendants had settled with plaintiffs, co-defendants Dr. Richard Tempel and his employer, Osler Drive Emergency Physicians Association, requested a copy of the settlement agreements and releases on the basis that they "would significantly impact upon plaintiffs' defense strategy." Plaintiffs also suggested that they were entitled to determine if the release was a joint tortfeasor type release and the amounts paid by the other defendants on the basis that it would "dramatically impact upon defense strategies." The co-defendants refused to provide the releases but stated that they were "standard non-Swigert Joint Tortfeasor Releases" and that the amounts of settlement were not relevant until after a verdict had been rendered against the non-settling defendants to determine the appropriate amount owed by them. Unsatisfied with this response, the non-settling defendants filed a motion to compel production of the settlement agreements. The trial court ruled that the non-settling defendants were absolutely entitled to know what type of release was negotiated so that they could know how to proceed at trial, but denied the plaintiffs from discovering the settlement amounts contained therein.

The Court of Special Appeals cited Rule 2-402(a) for the proposition that:

a party may obtain discovery regarding any matter that is not privileged, including the existence, description, nature, custody, condition, and location of any documents . . . and tangible . . . if the matter sought is relevant to the subject matter involved in the action, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party. It is not ground for objection that the information sought is already known to or otherwise obtainable by the party seeking discovery or that the information will be inadmissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.

"Absent some fact in a given case that would change the result, the settlement amount contained in a joint tortfeasor release is not relevant at the pre-verdict stage." "Here, the settlement amounts did not, in any way, concern the facts relevant to a determination of [the non-settling defendants] liability or the amount of any damages; thus, they were not relevant at the pre-verdict stage." Even after final judgment, "the settlement would not be evidence relevant to any issue in the case other than the ministerial apportionment of damages." Bullinger. Here, the releases were relevant pre-trial because the nature of the releases would determine whether the non-settling defendants, if liable, would receive an automatic pro rata reduction or whether the joint tortfeasor status of the settling parties would have to be adjudicated. Accordingly, the Court of Special Appeals in affirming the trial court's ruling found that the non-settling defendants were properly provided with the pertinent information at the stage in the proceedings in which the information was relevant.

Sufficiency of Evidence to Determine Economic Loss

As to the second issue, the Appellants argued that the trial court erred by not granting their motion for judgment notwithstanding the verdict "as to the speculative nature of the jury's award for loss of Mr. Murphy's financial support" because plaintiffs' failed to prove this element of their claim." Defendants asserted that the award of $600,000 was "overly speculative" because there was no evidence upon which the jury could have concluded that Mr. Murphy, who died at the age of 59, would have retired at age 66 or 67, rather than 61, 62, or 70.

The evidence at trial was from plaintiffs' economic expert, Dr. Thomas Borzilleri, who testified that his calculations were based upon the decedent's W-2 forms and the Social Security Administration's "growth rates" and the assumption that Mr. Murphy would work until age 66 or 67 using the "Work Life Expectancy" calculation and the U.S. Pension Benefit Guarantee Corporation's "Life Expectancy Table." There was additional testimony from the decedent's family members regarding his work habits, outlook, savings habits and intentions of saving enough money to send his children to college.

The Court of Special Appeals held that the plaintiffs did not have to prove a specific age at which decedent would have retired. The Court also held that the jury could consider the totality of the evidence as to the decedent's age, health, employment, financial situation, and general population statistics (i.e. life expectancy and work life expectancy) provided by Dr. Borzilleri and the testimony from decedent's family members describing the decedent prior to the events which gave rise to the lawsuit, to determine the amount of lost support.

Posted by Robert D. Anderson, Esq. on 11/15/2011 at 05:27 PM

Novel settlement coupled with assignment of contribution claim against co-defendant in D.C.
In Estate of Kurstin v. Lordan, No. 07-CV-1221 (D.C. July 21, 2011), the D.C. Court of Appeals approved an unusual settlement arrangement in a medical malpractice action, in which the settlement agreement preserved the settling anesthesiologist's claim of contribution from the non-settling surgeon, but solely for the purpose of assigning that claim back to the plaintiff for her ultimate benefit.

The surgeon, Dr. Kurstin, had performed abdominal hernia repair on the plaintiff, assisted by an anesthesiologist, Dr. Lordan. To avoid deep venous thrombosis to the patient, the surgeon directed the anesthesiologist to administer an anti-clotting drug during surgery. The anti-clotting drug caused spinal bleeding that brought paralysis to the plaintiff's right foot, impaired sensation and caused chronic pain in both legs, and brought loss of bowel control.

The plaintiff sued both the surgeon and the anesthesiologist for medical negligence as joint tortfeasors. On the first day of trial, plaintiff's counsel and counsel for the anesthesiologist disclosed the existence of an agreement by their clients providing for dismissal of "all claims" by the plaintiff against both the anesthesiologist and the surgeon. The agreement further provided an express reservation by the anesthesiologist of the right to pursue "contribution/indemnification" from the surgeon. Plaintiff's counsel announced that he would represent the anesthesiologist against the surgeon on a cross-claim for contribution. The jury trial for malpractice was therefore converted into a bench trial on the anesthesiologist's equitable cross-claim. Under the settlement agreement with plaintiff, the anesthesiologist had agreed to pay the plaintiff $2 million. The anesthesiologist agreed to fully cooperate with counsel in bringing the contribution claim against the surgeon, and retained no interest in any proceeds.

After the bench trial, the trial court issued findings of fact and conclusions of law, stating that the surgeon had breached the national standard of care and, as the proximate cause of the plaintiff's injuries, was a joint tortfeasor. The trial court awarded the anesthesiologist $1 million from the surgeon as a pro rata contribution on the cross-claim, i.e., half of the amount the anesthesiologist paid the plaintiff pursuant to their agreement. Thus, the plaintiff received the total amount of $3 million.

The surgeon appealed, arguing among other things that the explicit terms of the plaintiff's settlement agreement with the anesthesiologist released both doctors "from all claims and demands of whatever nature" without effectively reserving a claim for contribution. Essentially, the argument was that by releasing all claims against both defendants in the settlement agreement's release clause, the plaintiff left no liability on the part of the surgeon to which the anesthesiologist's right of contribution could attach. The reservation of the contribution claim was accomplished in a later paragraph of the settlement agreement, and the argument was that such a reservation was hollow.

The Court rejected that argument, finding that the parties intended only the release of all claims by the plaintiff against the anesthesiologist and the surgeon, leaving the anesthesiologist free to pursue his own, separate claim for contribution against the surgeon.

The Court also rejected the argument that this settlement arrangement was unlawful. Based on D.C. precedent, the Court confirmed the legality of the following arrangement:

(1) a plaintiff's complete release of two joint tortfeasors as consideration for payment of money damages by a settling defendant, (2) coupled with reservation of the settling defendant's claim for contribution (not just indemnification), (3) accompanied by assignment of the contribution claim back to the plaintiff as a way of, (4) achieving full consideration for the releases, that is, a package of money in hand plus a money claim calculated, in combination, to afford complete relief.

In addition, on appeal the surgeon challenged whether the settling anesthesiologist had been judicially determined or stipulated by all parties to be a tortfeasor. The Court of Appeals noted that the present case is the first to address the question whether something less than a judicial ruling or an all parties stipulation can serve to establish a settling defendant's join liability with the non-settling defendant for purposes of determining the settler's right of contribution against a joint tortfeasor.

In the present case, in his settlement agreement with the plaintiff, the anesthesiologist acknowledged that he was "a joint tortfeasor." The Court held that a settling defendant can establish a claim for contribution by acknowledging joint tortfeasor status in his settlement with the plaintiff, coupled with the establishment of the liability of the non-settling tortfeasor and the reasonableness of his settlement with the injured person.

The Court noted that in this cae, rather th erebut the anesthesiologist's stipulation that he was a joint tortfeasor, the surgeon took the position throughout the trial that the anesthesiologist was the sole responsible tortfeasor, a litigation strategy tantamount to stipulating the anesthesiologist's culpability.

The Court of Appeals also outlined for future cases a shifting burden of persuasion that will govern the analysis of the trial court:

First, because the settling defendant/cross-plaintiff must establish that he or she is a tortfeasor, the settler has the burden of persuasion to do so. Second, the admission of liability in a formal settlement agreement, coupled with valuable consideration payable to the injured plaintiff, establishes, as we have said, a prima facie showing we hold sufficient to shift the burden of production to the non-settler who would question the settler's status as a joint tortfeasor. Third, because the settler has the burden to prove reasonableness of the settlement (subject to reduction for failure of proof), the settler will present in court evidence which the non-settler may attack with a view to rebutting (if desired) the settler's prima facie showing of culpability, as well as the reasonableness of the settlement. Finally, the factfinder, properly informed about the parties' respective burdens of persuasion and production, can be asked to resolve separately, if contested, whether the settling defendant/cross-plaintiff was a joint tortfeasor.

The lesson this case teaches is that there is a new procedure for a joint tortfeasor to "settle around" a co-defendant who intends to go to trial. From the point of view of plaintiff's counsel, this mode of settlement prevents the remaining defendant from using the "empty chair" argument, by pointing to the absent defendant and attempting to shift all the blame to absent defendant. Under this arrangement, the settling defendant's liability is admitted and the issue is whether the remaining defendant is also liable. In addition, the contribution claim is an equitable claim, tried to the court, not a jury.

Posted by David B. Stratton on 09/06/2011 at 02:35 PM
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