senate Bill S3766

2011-2012 Legislative Session

Provides, in tort cases where one defendant has settled, that remaining defendants must elect prior to trial as to reduction in liability; repealer

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 04, 2012 referred to judiciary
Jun 24, 2011 committed to rules
Jun 06, 2011 advanced to third reading
Jun 02, 2011 2nd report cal.
Jun 01, 2011 1st report cal.912
Mar 03, 2011 referred to judiciary

Votes

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Jun 1, 2011 - Judiciary committee Vote

S3766
14
1
committee
14
Aye
1
Nay
7
Aye with Reservations
0
Absent
1
Excused
0
Abstained
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Co-Sponsors

S3766 - Bill Details

See Assembly Version of this Bill:
A625
Current Committee:
Senate Judiciary
Law Section:
General Obligations Law
Laws Affected:
Rpld & add §15-108, Gen Ob L
Versions Introduced in 2009-2010 Legislative Session:
S2390, A2579A

S3766 - Bill Texts

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Provides, in tort cases where one defendant has settled, that remaining defendants must elect, prior to trial, whether to reduce liability by the amount of the settlement or by the amount of the equitable share of damages delegated to the settler in the verdict.

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BILL NUMBER:S3766

TITLE OF BILL:
An act
to amend the general obligations law, in relation to settlements in tort
actions; and to repeal certain provisions of such law relating thereto

PURPOSE:
To amend Section 15-108 of the General Obligations Law to provide that
in tort cases, where one defendant has settled, remaining defendants
must elect prior to trial as to reduction in liability.

SUMMARY OF PROVISIONS:
Section One: Amends Section 15-108 of the General Obligations Law to
provide that in tort cases when a settlement is reached with one of
two or more persons who are liable in tort for the same injury or
wrongful death it does not discharge any other tortfeasor from
liability unless its terms expressly provide. However, each of the
remaining tortfeasors may choose to reduce his or her liability to
the plaintiff by the stated settlement amount, the consideration
actually paid or the settling tortfeasor's equitable share of the
damages under Article 14 of the CPLR. This choice must be made in
open court or in writing prior to the first opening statement of the
trial, unless the party making the election only later becomes aware
of the settlement.

Section Two: Provides that this Act shall take effect on the first of
January next succeeding the date on which it shall have become a law,
and shall be applicable to any action commenced on or after such
effective date.

JUSTIFICATION:
Section 15-108 of the General Obligations Law sets forth what happens
when a personal injury or wrongful death plaintiff releases from
liability one or more, but fewer than all, of the alleged
tortfeasors. Although the statute was enacted to encourage
settlements, most commentators have concluded that it generally
rewards nonsettlors at the expense of settlors and that, by doing so,
it actually discourages settlement.

The key feature of the statute, and the feature most criticized by the
statute's detractors, is that it rewards defendants who do not settle
and can penalize plaintiffs and defendants who do. It does this by
allowing the non-settlor to reduce its liability to the plaintiff by
the greatest of: (1) the amount that plaintiff received in
settlement, (2) the amount that plaintiff was stipulated to receive
in settlement, and (3) the settling tort feasor's "equitable share"
of the damages. The first two alternatives are almost always
equivalent, usually leaving the non-settlor with the choice of an
"amount paid" reduction or an "equitable share" reduction.

This benefits the non-settlor in two ways. First, in those instances
in which the settling tortfeasor's payment turns out to exceed what
the trier of fact later determines to be the settlor's equitable
share of the damages, the non-settlor benefits by the difference
between those two sums. The second benefit accorded to the
non-settlor is that the risk of settlor's solvency, formerly borne by
the non-settlor, is now eliminated. The non-settlor is able to deduct
settlor's equitable share whether or not settlor actually could have
paid such sum. By virtue of these features, the non-settlor often
obtains windfall reductions of liability usually, albeit not always,
at the plaintiffs expense.

In 1986, the Law Revision Commission proposed that the non-settling
tortfeasor obtain a reduction of only the "amount" paid by a
settling tortfeasor, unless the settlement was itself made in "bad
faith." Such plan was modeled upon section 4 of the 1955 Uniform
Contribution Amongst Tortfeasors Act. This proposal goes too far in
the other direction and treats non-settlors unfairly. The
non-settlor's liability would be effectively increased by virtue of a
settlement to which the non-settlor did not accede and which the
non-settlor was powerless to prevent More-over, this proposal would
inevitably spawn litigation over whether particular settlements Were
made in good faith.

This bill would allow the non-settlor the same alternatives as
currently exist, but require that the choice be made
BEFORE, rather
than after, trial. The non-settlor still would get to choose whether
it will reduce its liability to plaintiff by the amount of the
settlor's payment to plaintiff or by the amount of the settlor's
equitable share of the damages. The difference is that because the
non-settlor would have to make the choice before the verdict was
rendered, there Would be an added incentive to a defendant to settle,
rather than to sit back and choose the "best of both worlds."

So as to avoid disputes, selection would be effective only if made in
writing or on the record in open Court. If the non-settlor failed
timely to make an election and thus "defaulted", he or she thereby
would be presumed to have elected an "equitable share" credit.

The statute is vague as to which agreements will trigger its
operation. Currently, it requires a formal release to be exchanged.
The courts, however, have ignored this requirement. Under this
proposal, the statute would be triggered by the occurrence of a
"settlement", thus codifying the case law.

The current statute also is ambiguous as to the manner in which the
non-settlors' liability is calculated in those instances in which the
plaintiff reaches settlement with more than one tortleasor. This
proposal, consistent with recent Court of Appeals decisions, adopts
the "aggregate," rather than "pick and choose," method of calculation.

Neither GOL § 15-108 nor CPLR Article 16 (the "limited liability"
law, which partially abrogates the general rule of joint and several
liability) specifies the interrelationship between those provisions.
There are a number of logically tenable methods in which the statute
could be applied to a given fact pattern; selection of one such
method rather than another could conceivably make hundreds of
thousands of dollars' difference to the parties.
The instant measure precisely delineates the manner in which the two
statutes would operate, essentially codifying the approach adopted in
IN RE BROOKLYN NAVY YARD ASBESTOS, 971 F.2d 831
(2nd Cir. 1992).

The statute has been construed by the courts to render the settling
defendant immune from contribution claims but not from indemnity
claims. Because, as a practical matter, it often is difficult to
distinguish a contribution claim from a claim for common law
indemnity, it is not uncommon for a defendant who thinks that he or
she has "bought peace" to be rudely surprised with a successful
indemnity claim. This serves as yet another disincentive to settle.
This bill would apply the statute to common law indemnification, but
not to contractual indemnification. Public employees could, however,
seek common law indemnification. But, while rendering the settlor
immune from common law indemnity claims, this measure would not
otherwise displace the rule set forth in RIVI-ELLO V.
WALDRON, 47 N.Y.2d 297 (1979).

RIVIELLO held that a non-settlor who stands vicariously
liable for a
settling defendant's wrong is entitled to an "amount paid" credit but
cannot claim an "equitable share" credit. An "equitable share"
apportionment in such a case would result in a total elimination of
the non-settlor's liability, thereby defeating the purpose of vicarious
liability.

This bill would allow a tortfeasor, upon settlement with the
plaintiff, also to "buy" the plaintiffs claims against one or more
other tortfeasors. There are many cases in which this option would
streamline the litigation and induce quicker settlements. The current
statute is silent as to the manner in which a structured settlement
should be valued for its purposes. This measure would require
structured settlements to be valued in terms of their cost.

Finally, we note that the instant measure has been modified slightly
from past versions. A new provision has been added (see: proposed
15-108(a)(4)), which would precisely specify the manner in which a
settlement would be credited towards and reduce a non-settlor's
liability in actions governed by Article 50-A or 50-B of the Civil
Practice Law and Rules in which the future damages are paid
periodically. This is a matter not currently addressed by any
statute, and it has caused confusion, To resolve that confusion,
this measure would require the settlement credit to be apportioned
pro rata between past and future damages.

LEGISLATIVE HISTORY:
S.2390 of 2009 Referred to Senate Judiciary Committee
S.7482 of 2008 Referred to Senate Rules Committee

FISCAL IMPLICATIONS:
None.

LOCAL FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
January 31st next succeeding the date on which it shall have become a
law and apply only to actions and proceedings commenced on or after
such effective date.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  3766

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                              March 3, 2011
                               ___________

Introduced  by  Sens.  BONACIC,  DeFRANCISCO  --  read twice and ordered
  printed, and when printed to be committed to the Committee on  Judici-
  ary

AN  ACT to amend the general obligations law, in relation to settlements
  in tort actions; and to repeal certain provisions of such law relating
  thereto

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Section 15-108 of the general obligations law is REPEALED
and a new section 15-108 is added to read as follows:
  S 15-108. SETTLEMENTS IN TORT ACTIONS. (A) EFFECT OF SETTLEMENT. (1) A
SETTLEMENT REACHED WITH ONE OF TWO OR MORE PERSONS  WHO  ARE  LIABLE  OR
CLAIMED  TO BE LIABLE IN TORT FOR THE SAME INJURY OR WRONGFUL DEATH DOES
NOT DISCHARGE ANY OTHER  TORTFEASOR  FROM  LIABILITY  UNLESS  ITS  TERMS
EXPRESSLY  SO PROVIDE, EXCEPT THAT EACH OF THE REMAINING TORTFEASORS MAY
CHOOSE TO REDUCE HIS OR HER LIABILITY TO THE PLAINTIFF  OR  CLAIMANT  BY
THE  STATED  SETTLEMENT  AMOUNT, THE CONSIDERATION ACTUALLY PAID, OR THE
SETTLING TORTFEASOR'S EQUITABLE SHARE OF THE DAMAGES AS DETERMINED UNDER
ARTICLE FOURTEEN OF THE CIVIL PRACTICE LAW AND RULES.
  (2) WHEN MORE THAN ONE PERSON SETTLES WITH A  PLAINTIFF  OR  CLAIMANT,
EACH  OF  THE  REMAINING  TORTFEASORS  MAY  CHOOSE  TO REDUCE HIS OR HER
LIABILITY TO THE PLAINTIFF OR  CLAIMANT  BY  THE  TOTAL  OF  ALL  STATED
SETTLEMENT AMOUNTS, THE TOTAL CONSIDERATION ACTUALLY PAID FOR ALL OF THE
SETTLEMENTS,  OR THE TOTAL OF THE SETTLING TORTFEASORS' EQUITABLE SHARES
OF THE DAMAGES AS DETERMINED UNDER ARTICLE FOURTEEN OF THE  CIVIL  PRAC-
TICE LAW AND RULES.
  (3)  THE  CHOICE  AUTHORIZED BY THIS SUBDIVISION SHALL BE MADE IN OPEN
COURT OR IN A WRITING SUBSCRIBED ON BEHALF OF THE PARTY SEEKING TO LIMIT
LIABILITY, AND SHALL BE MADE PRIOR TO THE FIRST OPENING STATEMENT OF THE
TRIAL UNLESS THE PARTY MAKING THE ELECTION ONLY LATER BECOMES AWARE THAT
A SETTLEMENT HAS OCCURRED. IN THE LATTER EVENT, THE  ELECTION  SHALL  BE

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03086-01-1

S. 3766                             2

MADE  AS  SOON  AS  REASONABLY  PRACTICABLE  AFTER  THE PARTY MAKING THE
ELECTION IS APPRISED OF THE SETTLEMENT OR SETTLEMENTS IN ISSUE, AND,  IF
FEASIBLE,  PRIOR  TO THE RETURN OF A VERDICT. IN THE ABSENCE OF SPECIFIC
AND TIMELY ELECTION OTHERWISE, A PARTY LIMITING LIABILITY WILL BE DEEMED
TO  HAVE ELECTED REDUCTION IN THE TOTAL AMOUNT OF THE EQUITABLE SHARE OR
SHARES OF ALL SETTLING TORTFEASORS.
  (4) FOR PURPOSES OF CALCULATING THE REDUCTION OF LIABILITY UNDER  THIS
SUBDIVISION IN A CASE WHERE A REMAINING TORTFEASOR IS SUBJECT TO A PERI-
ODIC  PAYMENT JUDGMENT PURSUANT TO ARTICLE FIFTY-A OR ARTICLE FIFTY-B OF
THE CIVIL PRACTICE LAW AND RULES, THE MANNER IN WHICH SUCH REDUCTION  IS
EFFECTED  SHALL  DEPEND  ON  THE  TYPE OF CREDIT CHOSEN BY THE REMAINING
TORTFEASORS.
  (A) IN THOSE INSTANCES IN WHICH THE REMAINING TORTFEASOR  HAS  ELECTED
PURSUANT TO PARAGRAPH ONE OF THIS SUBDIVISION TO RECEIVE A CREDIT EQUIV-
ALENT  TO THE AMOUNT OR AMOUNTS WHICH THE PLAINTIFF OR CLAIMANT RECEIVED
IN SETTLEMENT, THE CREDIT PROVIDED BY THIS SUBDIVISION SHALL BE  RATABLY
APPORTIONED  BETWEEN  THE  PAST  DAMAGES OF THE PLAINTIFF AND THE FUTURE
DAMAGES. THIS SHALL  BE  DONE  BY  DETERMINING  THE  RATIO  BETWEEN  THE
PLAINTIFF'S  PAST  DAMAGES  AND  THE PLAINTIFF'S TOTAL DAMAGES, AND THEN
APPORTIONING THAT SAME PERCENTAGE OF THE SETTLEMENT TOWARDS  PAYMENT  OF
THE  PLAINTIFF'S  PAST  DAMAGES.  THE REMAINDER OF THE SETTLEMENT CREDIT
WOULD BE CREDITED TOWARDS, AND WOULD THUS REDUCE, THE PLAINTIFF'S FUTURE
DAMAGES.
  FOR PURPOSES OF THE APPORTIONMENT OF  THE  SETTLEMENT  CREDIT  BETWEEN
PAST  AND  FUTURE  DAMAGES,  THE  RATIO  BETWEEN  PAST DAMAGES AND TOTAL
DAMAGES WILL BE PREMISED UPON THE AMOUNTS  OF  DAMAGES  AWARDED  BY  THE
TRIER  OF FACT AFTER ADJUSTMENT HAS ALREADY BEEN MADE FOR ALL OTHER SET-
OFFS, CREDITS AND REDUCTIONS OTHERWISE DICTATED BY  SUBDIVISION  (A)  OF
SECTION  FIVE  THOUSAND  THIRTY-ONE,  OR SUBDIVISION (A) OF SECTION FIVE
THOUSAND FORTY-ONE OF THE CIVIL  PRACTICE  LAW  AND  RULES,  AND  BEFORE
CONSIDERATION  OF  ANY  OF THE CALCULATIONS DICTATED BY SUBDIVISION (B),
(C), (D) OR (E) OF SUCH SECTIONS.
  (B) IN THOSE INSTANCES IN WHICH THE REMAINING TORTFEASOR  HAS  ELECTED
PURSUANT  TO  PARAGRAPH  ONE OF THIS SUBDIVISION TO RECEIVE AN EQUITABLE
SHARE CREDIT, EACH OF THE PLAINTIFF'S AWARDS FOR PAST  DAMAGES  AND  FOR
FUTURE   DAMAGES  AS  REMAIN  AFTER  ALL  OTHER  SET-OFFS,  CREDITS  AND
REDUCTIONS OTHERWISE DICTATED BY SUBDIVISION (A) OF SECTION  FIVE  THOU-
SAND THIRTY-ONE OR SUBDIVISION (A) OF SECTION FIVE THOUSAND FORTY-ONE OF
THE CIVIL PRACTICE LAW AND RULES SHALL BE REDUCED BY THE SETTLOR'S EQUI-
TABLE SHARE OF THE TOTAL CULPABILITY.
  (B)  LIABILITY OF SETTLING TORTFEASOR. EXCEPT AS OTHERWISE PROVIDED IN
SUBDIVISION (F) OF THIS SECTION, A SETTLEMENT BETWEEN THE  PLAINTIFF  OR
CLAIMANT AND A TORTFEASOR RELIEVES SUCH TORTFEASOR FROM LIABILITY TO ANY
OTHER PERSON FOR CONTRIBUTION OR INDEMNIFICATION.
  (C)  WAIVER  OF  CONTRIBUTION AND INDEMNIFICATION. EXCEPT AS OTHERWISE
PROVIDED IN SUBDIVISIONS (D) AND (F) OF THIS SECTION, A  TORTFEASOR  WHO
HAS  SETTLED  WITH  THE  PLAINTIFF  OR CLAIMANT SHALL NOT BE ENTITLED TO
CONTRIBUTION OR INDEMNIFICATION FROM ANY OTHER PERSON.
  (D) SETTLING TORTFEASOR'S LIMITED RIGHT TO CONTRIBUTION OR  INDEMNIFI-
CATION.  NOTWITHSTANDING  THE  PROVISIONS  OF  SUBDIVISION  (C)  OF THIS
SECTION, A TORTFEASOR WHO HAS ENTERED INTO A SETTLEMENT WITH A PLAINTIFF
OR CLAIMANT MAY SEEK CONTRIBUTION  OR  INDEMNIFICATION  FROM  ANY  OTHER
TORTFEASOR  IF,  IN  CONSIDERATION FOR SUCH SETTLEMENT, THE PLAINTIFF OR
CLAIMANT HAS RELEASED FROM LIABILITY THE PERSON  OR  PERSONS  FROM  WHOM
CONTRIBUTION  OR INDEMNIFICATION IS SOUGHT. CONTRIBUTION OR INDEMNIFICA-
TION SHALL BE AVAILABLE PURSUANT  TO  THIS  SUBDIVISION  EXCEPT  TO  THE

S. 3766                             3

EXTENT THAT IT IS ESTABLISHED BY THE PARTY OR PARTIES FROM WHOM CONTRIB-
UTION  OR  INDEMNIFICATION  IS SOUGHT THAT THE AMOUNT PAID IN SETTLEMENT
WAS NOT REASONABLE.
  (E)  RELATIONSHIP  WITH  ARTICLE SIXTEEN OF THE CIVIL PRACTICE LAW AND
RULES. IF A PERSON SEEKS TO LIMIT LIABILITY PURSUANT TO BOTH SUBDIVISION
(A) OF THIS SECTION AND ARTICLE SIXTEEN OF THE CIVIL  PRACTICE  LAW  AND
RULES,  THE  LIMITATION SHALL BE MADE BY DETERMINING THE PERCENTAGE THAT
THE PLAINTIFF'S OR CLAIMANT'S NON-ECONOMIC LOSS BEARS TO  SUCH  PERSON'S
TOTAL  LOSS,  AND  THEN  APPLYING  THE SAME PERCENTAGE OF THE SETTLEMENT
CREDIT TO THE PLAINTIFF'S OR  CLAIMANT'S  NON-ECONOMIC  LOSS.  A  PERSON
WHOSE  LIABILITY  IS  REDUCED UNDER THIS SECTION SHALL BE ENTITLED TO AN
ADDITIONAL REDUCTION OF LIABILITY PURSUANT TO  ARTICLE  SIXTEEN  OF  THE
CIVIL  PRACTICE LAW AND RULES, BUT ONLY TO THE EXTENT THAT SUCH PERSON'S
REMAINING LIABILITY FOR NON-ECONOMIC  LOSS  EXCEEDS  THE  LIMITATION  OF
LIABILITY, IF ANY, ESTABLISHED BY SUCH ARTICLE.
  (F)  EXEMPTIONS.  NOTHING CONTAINED IN THIS SECTION SHALL BE CONSTRUED
TO AFFECT OR IMPAIR:
  (1) ANY CLAIM FOR INDEMNIFICATION IF, PRIOR TO THE ACCIDENT OR  OCCUR-
RENCE ON WHICH THE CLAIM IS BASED, THE PARTY SEEKING INDEMNIFICATION AND
THE PARTY FROM WHOM INDEMNIFICATION IS SOUGHT HAD ENTERED INTO A WRITTEN
CONTRACT  IN  WHICH  THE  LATTER  HAD  EXPRESSLY AGREED TO INDEMNIFY THE
FORMER FOR THE TYPE OF LOSS SUFFERED; OR
  (2) A CLAIM FOR INDEMNIFICATION BY A PUBLIC EMPLOYEE, INCLUDING INDEM-
NIFICATION PURSUANT TO SECTION FIFTY-K OF THE GENERAL MUNICIPAL  LAW  OR
SECTION SEVENTEEN OR SECTION EIGHTEEN OF THE PUBLIC OFFICERS LAW.
  (G) SETTLEMENTS WITHIN THE SCOPE OF THIS SECTION. AN AGREEMENT BETWEEN
A  PLAINTIFF  OR  CLAIMANT  AND  A PERSON WHO IS LIABLE OR CLAIMED TO BE
LIABLE IN TORT SHALL BE DEEMED A SETTLEMENT FOR  THE  PURPOSES  OF  THIS
SECTION ONLY IF:
  (1)  THE  AGREEMENT COMPLETELY OR SUBSTANTIALLY TERMINATES THE DISPUTE
BETWEEN THOSE PARTIES;
  (2) THE PLAINTIFF OR CLAIMANT RECEIVES,  AS  PART  OF  THE  AGREEMENT,
MONETARY CONSIDERATION GREATER THAN ONE DOLLAR; AND
  (3) SUCH SETTLEMENT OCCURS PRIOR TO ENTRY OF A JUDGMENT.
  (H)  VALUATION OF STRUCTURED SETTLEMENTS. WHERE THE MONETARY CONSIDER-
ATION FOR A SETTLEMENT INCLUDES ONE OR MORE PAYMENTS  WHICH  ARE  TO  BE
MADE  MORE  THAN ONE YEAR AFTER THE DATE OF THE SETTLEMENT, THE VALUE OF
SUCH FUTURE PAYMENTS SHALL, FOR PURPOSES  OF  SUBDIVISION  (A)  OF  THIS
SECTION,  BE  DEEMED  TO  BE THE SETTLING TORTFEASOR'S COST IN PROVIDING
SUCH PAYMENTS.
  S 2. This act shall take effect on the thirty-first  of  January  next
succeeding  the  date  on which it shall have become a law, and shall be
applicable to any action commenced on or after such effective date.

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