By Christopher Ziegler and Michael J. Rust
Prior to 2005, the law in Georgia allowed a plaintiff to recover all of his damages against any joint-tortfeasor. Thus, if a joint-tortfeasor was only 1% negligent, the plaintiff could recover the entire judgment against that minimally-liable defendant. The 1% at-fault defendant could then pursue contribution against the other joint-tortfeasor defendant(s).
The law as it existed was great for plaintiffs who were injured by tortfeasors who had little or no insurance or assets. As long as the plaintiff could somehow make an argument that a different defendant with deep pockets was at least slightly at fault, then the plaintiff could recover his entire verdict against the deep pocket defendant. Although that defendant could pursue a right of contribution against the other defendants, often the other defendants had little or no insurance or assets, meaning the 1% defendant in our example took the hit for the entire verdict.
In 2005, Georgia’s general assembly enacted certain tort reforms, including reform of the above joint tortfeasor system. With the enactment of O.C.G.A. §51-12-33, defendants are now responsible for only their own proportionate share of liability. The apportionment statute effectively did away with the old rules of joint-tortfeasor liability. Thus, the 1% at-fault defendant is now responsible to pay only his 1% fair share.
In the 2012 case of McReynolds v. Krebs, 290 Ga. 850 (2012), the Georgia Supreme Court held that a defendant has no right of contribution against his other co-defendants under the new apportionment law. The court in Krebs recognized that the apportionment statute itself “flatly states that apportioned damages shall not be subject to any right of contribution.” At first glance, this case and the apportionment statute would seem to do away with a defendant’s right of contribution against a co-defendant. However, as we have just learned, apportionment is still alive in certain circumstances according to a case released on March 28, 2013.
In Zurich American Ins. Co. v. Heard, — S.E.2d —-, 2013 WL 1245359 (2013), the Georgia Court of Appeals held that the right of contribution is extinguished only where the “trier of fact” apportions the damages, meaning that parties who settle before trial are still subject to a claim for contribution. When parties settle, there is no “trier of fact”, i.e. a jury, to apportion damages. In the Zurich case, John Heard was an architect whose firm, JHA, provided certain design services relating to construction of a hotel. During and after construction, mold and mildew were discovered in the hotel. The general contractor settled with the hotel owners for several million dollars. Months later, Heard and his firm JHA settled with the owners for $100,000.
Thereafter, the insurers for the general contractor brought suit against Heard, JHA and other entities asserting several claims, including claims for indemnity and contribution. Heard and JHA argued that the claims for contribution and indemnity fail because “joint tortfeasors can no longer assert these claims following the enactment of the apportionment statute….” The Court of Appeals framed the issue as follows: “We first consider whether claims for contribution between joint tortfeasors who have settled with the plaintiff still exist following the enactment of the apportionment statute…”
The Court recognized that the apportionment statute states as follows:
Damages apportioned by the trier of fact as provided in this Code section shall be the liability of each person against whom they are awarded, shall not be a joint liability among the persons liable, and shall not be subject to any right of contribution. (emphasis added).
Based on the literal language of the statute, the Court of Appeals was quick to find that the right of contribution is extinguished under the apportionment statute only where the trier of fact apportions damages. Typically, the trier of fact is the jury. Thus, where parties settle voluntarily, the trier of fact (jury) does not apportion damages, and accordingly, the right of contribution still exists. Thus, the Court of Appeals held,
Based upon the plain language of this statute, the right of contribution between joint tortfeasors has not been completely abolished by the Legislature’s enactment of OCGA § 51–12–33(b), and the trial court erred by holding otherwise.
This case offers an important lesson to defendants in multi-party cases. A defendant who settles a claim with the plaintiff continues to face potential claims for contribution from co-defendants, and the settlement with the plaintiff does not necessarily end the case for the settling defendant. The only way to ensure an absolute end to litigation in a multi-defendant case would be to obtain non-contribution agreements with all co-defendants and an agreement from the plaintiff that he will not sue other parties at a later time.
If you would like a copy of the Zurich case please let us know and we will be happy to send it to you.