Neil v. Kavena

Citations: 859 P.2d 203; 176 Ariz. 93; 146 Ariz. Adv. Rep. 69; 1993 Ariz. App. LEXIS 183Docket: 1 CA-CV 91-326

Court: Court of Appeals of Arizona; August 31, 1993; Arizona; State Appellate Court

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The Arizona Court of Appeals addressed the issue of whether a non-settling defendant in a medical malpractice case, who is severally liable, is entitled to a credit for a settlement received by the plaintiffs from other defendants. The case involved Catherine and Alex Neil, who initially settled with Dr. Vander Veer and CIGNA for $175,000 after undergoing gallbladder surgery performed by Dr. Kavena. When the Neils later pursued a malpractice claim against Dr. Kavena and Good Samaritan Hospital for the same surgery, a dispute arose regarding a potential credit for the prior settlement.

The trial court ruled that Good Samaritan was entitled to a $175,000 credit, leading to the conclusion that the Neils were not entitled to additional damages. On appeal, the Neils contended that the trial court erred, arguing that the statute cited by the defendants did not apply because their claim arose after the abrogation of joint and several liability. The appellate court agreed with the Neils, emphasizing that Arizona's Uniform Contribution Among Tortfeasors Act aimed to enhance fairness and promote settlements in multi-party litigation, and therefore, the statute in question did not entitle the non-settling defendant to a credit in this context. The court ultimately reversed the trial court's decision.

A.R.S. 12-2504 stipulates that releasing one tortfeasor does not discharge other non-settling tortfeasors, but the claim against them is reduced by the settlement amount. In 1987, A.R.S. 12-2506 abolished joint and several liability, except in specific cases (e.g., hazardous waste), establishing that each defendant is liable only for damages proportionate to their fault. Consequently, contribution among defendants is largely unnecessary, promoting liability apportionment based on responsibility. Despite this, A.R.S. 12-2504 remains unchanged, likely due to its continued relevance in certain situations.

In Roland v. Bernstein, a non-settling defendant found severally liable was not entitled to a credit for settlement amounts paid by other defendants, as the action commenced post-abrogation of joint and several liability. The ruling emphasized that the plaintiff's recovery should reflect the negotiated settlements, not exceed the jury's determined damages. In the current case, also brought after the abolition of joint and several liability, Good Samaritan cannot claim a credit against its liability for settlement amounts received by other defendants. The measure of damages against Good Samaritan is determined solely by its share of liability under A.R.S. 12-2506, without considering settlements, which are seen as estimates of liability rather than direct measures of damages. This interpretation clarifies that a jury's verdict does not limit the total recovery from settlements, allowing plaintiffs to potentially recover more than jury-assessed damages.

Courts and legal commentators have expressed concerns about non-settling defendants benefiting from settlements made by co-defendants, which may unfairly burden plaintiffs and discourage settlements. It is argued that holding non-settling tortfeasors responsible for their full share of damages, without reducing the amount from settled claims, promotes settlement, even if it may lead to plaintiffs receiving more than their proven damages. Good Samaritan claims that Arizona’s "single-recovery rule," under A.R.S. 12-2504, allows for a deduction of settlements from its liability, suggesting that Neil's prior suit against CIGNA and Dr. Vander Veer assumed they were covering all damages. However, this settlement did not absolve Good Samaritan or Dr. Kavena of liability. Furthermore, A.R.S. 12-2501(D) indicates that CIGNA and Dr. Vander Veer had no right to seek contribution after settling, implying they settled for their respective shares of liability. Good Samaritan also references Shelby v. Action Scaffolding, asserting it supports their credit for the settlement amount against liability. However, Shelby pertains to cases before the repeal of joint and several liability and thus does not apply to cases initiated after A.R.S. 12-2506 was enacted.

Roland distinguishes the Shelby case, noting its relevance to joint and several liability. Good Samaritan argues that Neil's interpretation of A.R.S. 12-2506 retroactively infringes upon its constitutional rights under A.R.S. 12-2504, claiming that A.R.S. 12-2506 impliedly repealed A.R.S. 12-2504. Although Good Samaritan acknowledges that A.R.S. 12-2506 applies to lawsuits filed post-December 31, 1987, it contends that denying a credit for Neil's settlement violates constitutional principles by retroactively applying a tort-reform statute. The court finds that applying A.R.S. 12-2506 in this case is constitutional, as Good Samaritan lacks a constitutional right to joint and several liability. The legislature intended A.R.S. 12-2506 to apply to cases filed after its effective date, regardless of when the cause of action arose. Consequently, Good Samaritan is not entitled to credit for the $175,000 settlement from CIGNA and Dr. Vander Veer, and its liability is determined solely by A.R.S. 12-2506 without reduction under A.R.S. 12-2504. The trial court's judgment is reversed, and the case is remanded for further proceedings consistent with this ruling.

In personal injury, property damage, or wrongful death actions, defendants are liable for damages solely based on their individual percentage of fault, as stipulated in the statute. Each defendant's liability is not joint, and separate judgments are entered for each defendant corresponding to their fault percentage. The trier of fact calculates the judgment against each defendant by multiplying the total recoverable damages by their respective fault percentage. Furthermore, when assessing fault, the trier considers all contributing parties, including nonparties, unless they could not be named in the suit. Nonparty fault can be included if there is a settlement with that nonparty or if the defending party provides notice of the nonparty's fault before trial. However, assessing fault against nonparties does not impose liability on them nor can it be used as evidence in other actions.

In this case, the jury did not determine Neil's damages or those attributable to Good Samaritan. Had the trial occurred, Good Samaritan could have argued for the apportionment of negligence to Dr. Vander Veer and CIGNA, with its liability limited to its determined fault percentage. Good Samaritan contends it should receive a settlement reduction based on payments made by Dr. Vander Veer and CIGNA, asserting that the single-recovery rule is applicable. However, it is noted that joint and several liability can still apply, indicating that A.R.S. 12-2504 remains relevant in cases involving settlements with joint tortfeasors, thereby validating Neil's arguments and the court’s stance in Roland.