Carter v. Tom's Truck Repair, Inc.

857 S.W.2d 172, 1993 WL 229396
CourtSupreme Court of Missouri
DecidedJune 29, 1993
Docket75128
StatusPublished
Cited by23 cases

This text of 857 S.W.2d 172 (Carter v. Tom's Truck Repair, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Carter v. Tom's Truck Repair, Inc., 857 S.W.2d 172, 1993 WL 229396 (Mo. 1993).

Opinion

LIMBAUGH, Judge.

We granted transfer from the Court of Appeals, Eastern District, to consider important questions concerning the disclosure and validity of partial settlements executed in multiparty lawsuits, settlements known in the vernacular as “Mary Carter” agreements. We affirm the judgment of the trial court, entered in accordance with a jury verdict for $775,000 in favor of plaintiff, Mansel Carter.

On July 3, 1986, Mansel Carter, while stopped in his vehicle at a red light, was struck from behind by a Consolidated Freightways truck (Consolidated) driven by Johnny Bauer. At trial, Bauer testified that his brakes failed and that he was unable to stop. Prior to this accident, Tom’s Truck Repair (Tom’s) had repaired and maintained Consolidated’s fleet of trucks, including the truck driven by Bauer.

Carter initially sued Consolidated and Bauer and later joined Tom’s as a party defendant. Both Consolidated and Tom’s filed cross-claims against each other for apportionment of fault, if any. During the trial, both Carter and Consolidated claimed that Tom’s was negligent in inspecting, testing and repairing the truck brakes.

Several months before trial, on May 23, 1989, Carter and Consolidated entered into a “Mary Carter” settlement agreement in which Consolidated paid Carter $125,000 on execution of the agreement and guaranteed another $125,000 to be paid at final judgment. In return, Consolidated agreed to remain as a defendant and to not pursue an appeal of any judgment. Additionally, any judgment against Tom’s Truck Repair or settlement paid in favor of Carter would reduce dollar for dollar Consolidated’s settlement obligation. In essence, Consolidated’s maximum total liability for plaintiff’s damages as well as Tom’s cross-claim was $250,000, and if judgment against Tom’s exceeded $250,000, Consolidated would pay nothing. Carter also agreed that he would not settle with Tom’s without the prior written consent of Consolidated and that he would not disclose the terms of the agreement absent a court order.

Under the usual course of discovery, Tom’s was promptly notified of the existence of the agreement between Carter and Consolidated. Moreover, sixty days before trial, as ordered by the trial court, Tom’s was given a copy of the agreement, although the amount was redacted. The settlement amount itself was disclosed to Tom’s on the first day of trial, also by court order.

Because of Consolidated’s status as a settling defendant and its questionable participation in the case, all parties, Tom’s included, entered into a written stipulation, separate from the settlement agreement, in which they agreed, inter alia, that the jury would be required to assess the comparative fault of all parties. 1 The stipulation was contingent on the ability of Consolidated to fend off Tom’s repeated motions to dismiss and to remain in the case as an active party.

The trial court disallowed any reference to the Mary Carter agreement during voir dire and opening statements. Thereafter, the court refused Tom’s request to admit the agreement, even though the amount of the settlement was redacted. However, during the cross-examination of Consolidated’s witnesses, the court read an “instruction” that advised the jury of the existence of the agreement and its basic terms, again with the amount of the settlement omitted.

In arriving at its verdict, the jury spared plaintiff of any blame and apportioned all fault equally between Consolidated and *175 Tom’s so that each defendant would be liable for $387,500, one-half of the damage award. Following entry of judgment, Tom’s appealed, Consolidated did not. The appellate court reversed, holding that the settlement agreement was neither timely nor adequately disclosed to the jury. Although we, too, have serious concerns about the propriety of Mary Carter settlement agreements and the efficacy of the limited protections provided by the trial court, we affirm, finding no prejudice to the appellant.

Tom’s raises the following issues, all related to the Mary Carter agreement:

1) whether Mary Carter agreements should be void as a matter of public policy;

2) whether the trial court erred in denying Tom’s motion to dismiss Consolidated or to realign Consolidated as a party plaintiff;

3) whether the trial court erred in allocating one of defendants’ peremptory strikes to Consolidated;

4) whether the trial court erred in a) granting Carter’s and Consolidated’s motion in limine preventing the disclosure to the jury of the terms of the Mary Carter agreement in voir dire and opening statement, and b) in refusing to permit Tom’s to introduce the agreement in evidence; and

5) whether the trial court erred in denying Tom’s request for a mistrial or to reopen the evidence after Consolidated discussed in closing argument its motivation for entering the settlement agreement.

MARY CARTER AGREEMENTS AND PUBLIC POLICY

Mary Carter agreements occur in multiparty litigation when fewer than all defendants settle with the plaintiffs. 2 The term encompasses a wide variety of settlement arrangements that are “limited only by the ingenuity of counsel and the willingness of the parties to sign.” Maule Indus., Inc. v. Rountree, 264 So.2d 445, 447 (Fla.App.1972), modified, 284 So.2d 389, 390 (Fla.1973). 3 A typical Mary Carter agreement has the following features:

1) The liability of the settling defendant is limited, and the plaintiff is guaranteed a minimum recovery;
2) The settling defendant remains a party to the pending action without disclosing the full agreement to the non-settling parties and/or the judge and jury, absent court order; and
3) If judgment against the non-settling defendant is for more than the amount of settlement, any money collected will first offset the settlement so that the settling defendant may ultimately pay nothing.

See Hackman v. Dandamudi, 733 S.W.2d 452, 455 (Mo.App.1986).

We first address Tom’s concern that all Mary Carter agreements are contrary to public policy and invalid as a matter of law because they distort the adversary process and undermine the fair apportionment of damages under our system of comparative fault.

The propriety of Mary Carter agreements have been roundly criticized in recent years. 4 Courts and commentators have been particularly troubled by the secretive nature of the agreement and by the settling defendant’s direct financial interest in the amount recovered against any non-settling defendant. We believe that these *176 distinctive features do, indeed, distort the adversarial process and potentially undermine the right to a fair trial. As the Florida Supreme Court noted in Ward v. Ochoa, 284 So.2d 385, 387 (Fla.1973):

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Bluebook (online)
857 S.W.2d 172, 1993 WL 229396, Counsel Stack Legal Research, https://law.counselstack.com/opinion/carter-v-toms-truck-repair-inc-mo-1993.