In multi-party litigation, the Plaintiff(s) can reach a settlement with some, but not all, of the Defendants. Under Alabama law, the remaining Defendant (or Defendants) are then entitled to a credit for the amount paid in compensatory damages.[1]The remaining Defendant has two options as to how to receive that credit: (1) they may prove the amount paid to the jury at trial and allow the jury to credit that amount in arriving at their verdict or (2) the defendant(s) may remain silent as to the prior settlement and allow the Court to apply the credit to any verdict returned against the defendant (if there is one). Which option is chosen is exclusively a decision to be made by the non-settling Defendant.[2]
More often than not, the remaining Defendant elects to tell the jury about the settlement. The thinking is that doing so enables the remaining Defendant to argue that the settling Defendant was the culpable party and that the amount paid fully compensated the Plaintiff. The remaining Defendant supports its argument by proving all the incriminating liability facts that the Plaintiff originally established in discovery against the settling Defendant. The remaining Defendant then argues it had no liability.
Recognizing this likelihood, Plaintiff’s attorney will probably not enter into a pro tanto settlement unless the amount paid is what the Plaintiff attorney views as the value of the case. Thus, any additional recovery against the remaining Defendant is icing on the cake. A settlement for the full value of the case bolsters the remaining Defendant’s argument that the settlement by the culpable party compensated the plaintiff for his injuries, as it should have.
However, this path is not without its own hazards. The negligence of joint tortfeasors can combine to injure the Plaintiff.[3] Thus, once the defense attorney opens pandora’s box by proving the settlement, Plaintiff’s attorney can argue that all Defendants were negligent and that the amount paid by the settling Defendant is simply a guidepost that the jury should use in determining the damages that the remaining liable Defendant should also be required to pay.
For these reasons, one should not dismiss the less popular option allowing the judge to apply the credit to any verdict. If the remaining Defendant elects this option, neither the parties nor the Court can mention the settlement to the jury at any time. The case is simply tried against the remaining Defendant with the jury knowing nothing about the settlement. If a Plaintiff’s verdict is returned, the Court then applies the settlement as a credit against that verdict.
The remaining Defendant can still offer evidence of the settling Defendant’s liability. The remaining Defendant does not waive its ability to do that, nor is it a waiver of the option to allow the judge to apply for the credit. Doing so is nothing more than pointing to an empty chair. However, one should also consider simply trying the case on the liability of the remaining Defendant and the Plaintiff’s injuries and damages. The goal is not necessarily a defense verdict. The goal is a verdict less than the Pro Tanto Settlement amount (which would certainly include a defense verdict).
This option is not as unappealing as it might seem. If you again operate under the assumption that the Plaintiff has settled with the most culpable Defendant(s) for essentially the value of the case, then the remaining Defendant is the one with less liability exposure. If the damages are horrendous, but the liability thin, one would expect a verdict for the plaintiff, but not a nuclear one.[4]
That being the case, the amount returned would be less likely to exceed the value of the case (that is, the amount paid). If the verdict does exceed the amount paid, it likely would not do so by much. Even more appealing is the chance that the jury returns a verdict for the Defendant because the liability is thin. I have personally seen this happen in both a Wrongful Death case and a significant injury case. Any of these scenarios would be a victory for the defendant.
Clearly, the non-settling defense attorney must weigh the options based on the particular facts of the case. There is no single answer that covers every scenario. However, the option of allowing the judge to apply the credit should be given careful consideration. It can work.
[1] Alabama does not allow contributions among joint tortfeasors. Anderson v. Kemp, 279 Ala. 321 (1966)(“… it is well settled in our state that in actions against joint tortfeasors a single verdict is required and the jury cannot apportion damages between them.”); Consolidated Pipe v. Stockham Valves and Fittings, Inc., 365 So.2d 968 (Ala. 1978). Additionally, Alabama imposes joint and several liabilities among joint tortfeasors as to compensatory damages. See, Nelson Bros., Inc. v. Busby, 513 So.2d 1015 (Ala. 1987)(“A tortfeasor whose negligent act or acts proximately contribute to causing an injury may be held liable for the entire resulting loss.”). Lastly, by statute (except as to Wrongful Death actions), punitive damages are apportioned among tortfeasors based on the wrongfulness of each tortfeasor’s conduct. Ala. Code 6-11-21(e); Ala. Code 6-11-29. Only punitive damages are recoverable under Alabama’s Wrongful Death Act and so cannot be apportioned. Campbell v Williams, 638 So.2d 804 (Ala. 1994).
[2] Morris v. Laster, 821 So.2d 923 (Ala. 2001); Anderson v. Kemp, 279 Ala. 321 (1966).
[3] Bush v Alabama Power Co., 457 So.2d 350 (Ala. 1984); Beloit Corp. v. Harrell, 339 So.2d 992 (Ala. 1976)(“a tortfeasor whose act or acts contributes in causing an injury may be held liable for the entire result of the loss.”); McGough v Wilson, 273 Ala. 179 (1962)(“it is well settled that if damage has resulted from concurrent, wrongful acts of two or more tortfeasors, they may be sued jointly or severally and the act of each may be counted on as the proximate cause of the injury.”; Brooks v. City of Birmingham, 239 Ala. 172 (1940)(“when a tort is committed by two or more persons, the claim against them is joint and several. And suits may be prosecuted against them separately to judgment, though there can be but one satisfaction.”.
[4] If the plaintiff settled with the less culpable Defendant(s) for an amount less than the full value of the case, the need to prove the settlement is stronger. Plaintiff has set the per-defendant value of the case. The undersigned believes that is why the plaintiff’s attorney is unlikely to settle the case for less than its full value
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