Hosley v. Armstrong Cork Co.

364 N.W.2d 813

• Court: Court of Appeals of Minnesota
• Decided: May 31, 1985
• Docket: C6-84-1209
• Status: Published

Opinions

OPINION

FOLEY, Judge.

The only non-settling defendant in a mul-ti-defendant products liability case appeals from an order denying its motion for new trial. A judgment required it to pay a portion of the damages attributed by the jury to a bankrupt defendant severed from the case. Appellant contends that the plaintiffs settlement with some defendants through Pierringer releases destroyed joint liability between the defendants. Alternatively, defendant argues that if it is liable it is entitled to statutory reallocation or common law contribution against the settling defendants, which the plaintiff must satisfy pursuant to the indemnity provisions of the Pierringer releases. We reverse and remand.

FACTS

Patrick Hosley brought a products liability action against 13 manufacturers of asbestos products to which he was exposed during his 30 years as an insulator. He claimed that exposure to each of the manufacturers’ products caused him to contract asbestosis.

Johns-Manville Corp. (Manville) and Un-arco Industries, Inc., two of the defendants, filed petitions for reorganization under Chapter 11 of the Bankruptcy Reform Act of 1978. The Hennepin County District Court stayed indefinitely proceedings in cases involving the bankrupts. Hosley moved to lift the stay with regard to the other defendants. Over Pittsburgh Corning Corp.’s (Pittsburgh) objections the trial court severed all claims against Manville and Unarco and all claims asserted by them against third-parties.

Hosley settled with all of the remaining defendants except Pittsburgh through Pier-ringer releases as approved by Frey v. Snelgrove, 269 N.W.2d 918 (Minn.1978). At trial, the judge permitted the jury to consider the fault of all of the parties who contributed to Hosley’s injury. The special verdict form instructed the jury to allocate fault between nine parties, including Hos-ley. The jury awarded Hosley $350,000 and allocated fault as follows:

Plaintiff Patrick Hosley 7%

Celotex Corporation 5%

Eagle-Picher Industries, Inc. 9%

Fibreboard Corporation 15%

Forty-Eight Insulation, Inc. 5%

Johns-Manville Sales Corporation 25%

MacArthur Corporation 9%

Owens-Corning Fiberglas Corporation 15%

Pittsburgh Corning Corporation 10%

100%

The trial court reduced the award by $227,500, the percentage of the damages attributable to the fault of the settling defendants and Hosley. The court found that Pittsburgh and Manville were jointly and severally liable for the remaining $122,500. The court entered judgment against Pittsburgh for that amount. However, the court stayed the judgment by $8,166.67, the maximum amount that it calculated could be statutorily reallocated against Hosley should the 25% of the verdict ($87,500) allocated to Manville prove uncollectible.

ISSUES

1. Does plaintiff’s settlement with some defendants through Pierringer releases waive joint liability between all defendants?

2. Should Minn.Stat. § 604.02, subd. 2 (1982), be applied to reallocate a severed bankrupt’s equitable share of the judgment?

3. If the reallocation statute is inapplicable, what equitable rights of contribution does the non-settling defendant have?

•ANALYSIS

I.

In general, parties whose negligence concurs to cause an indivisible injury are jointly and severally liable. Maday v. Yellow Taxi Co., 311 N.W.2d 849 (Minn.1981).

When two or more persons are jointly liable, contributions to awards shall be in proportion to the percentage of fault attributable to each, except that each is jointly and severally liable for the whole award.

Minn.Stat. § 604.02, subd. 1 (1982).

Pittsburgh urges this court to adopt the North Dakota view that statutory joint liability is for the benefit of the injured party and is waived by Pierringer settlement with one or more defendants. Bartels v. City of Williston, 276 N.W.2d 113, 122 (N.D.1979). The North Dakota rule protects non-settling defendants from the potential prejudice of Pierringer settlement by requiring the plaintiff to bear the full risk of insolvency of defendants. We believe this approach unfairly penalizes plaintiffs and discourages settlements.

Although the Minnesota Supreme Court has not directly ruled on the issue, its language in Lange v. Schweitzer, 295 N.W.2d 387 (Minn.1980), convinces us that the court would take a more equitable approach. In Lange, the court upheld the right of non-settling defendants paying more than the amount proportionate to their fault to seek contribution from settling defendants. However, the court noted that the indemnity provisions of the Pierringer agreement obligated the plaintiffs, rather than the settling defendants, to satisfy the contribution claims. Id. at 390. Since joint liability is a prerequisite for contribution, Lange implicitly rejects the notion that use of a Pierringer agreement waives joint liability.

In keeping with Lange, we find that Pierringer releases do not eliminate joint liability. Their indemnification provisions merely shift to the plaintiff financial responsibility for the settling defendants’ liability. This interpretation will encourage settlement and, without requiring plaintiffs to bear the full risk of insolvency, protect non-settling defendants from being forced to pay an unfair share of judgments.

II.

Since we find that Pittsburgh is jointly and severally liable for the judgment, we must next determine whether the company is entitled to statutory reallocation. The reallocation statute provides:

Upon motion made not later than one year after judgment is entered, the court shall determine whether all or part of a party’s equitable share of the obligation is uncollectible from that party and shall reallocate any uncollectible amount among the other parties, including a claimant at fault, according to their respective percentages of fault. A party whose liability is reallocated is nonetheless subject to contribution and to any continuing liability to the claimant on the judgment.

Minn.Stat. § 604.02, subd. 2 (1982).

If Manville had been a party to the action, once the procedural prerequisites for determining uncollectibility were met, Pittsburgh would have been entitled to statutory reallocation of the $87,500 apportioned to Manville. Hosley would have had to satisfy the reallocation shares of the settling defendants because of his indemnification agreements with them.

However, the statute, by its terms, is limited to reallocation of the uncollectible portion of a party’s share of the obligation. Since Mansville was formally severed from the proceeding and was not a party to the lawsuit the statute is inapplicable.

Pittsburgh’s contention that the legislature intended “party” to refer to “parties to the transaction” rather than “parties to the suit” is unpersuasive in light of the distinction which the legislature makes between “persons” and “parties” within the statute. Minn.Stat. § 604.02 has three subdivisions. The first, which deals with joint and several liability, and the third, which deals with reallocation of uncollecti-ble amounts among those in the chain of manufacture and distribution, use the term “person.” Only the second subdivision, the one at issue here, uses the term party. Language distinctions must be presumed intentional and must be given effect. Transport Leasing Corp. v. State, 294 Minn. 134, 199 N.W.2d 817 (1972).

III.

Finally, we must determine what common law contribution rights Pittsburgh has against Manville, Hosley and the settling defendants. There are two prerequisites for contribution in Minnesota. First, the co-tortfeasors must be under a common liability to the injured party. Second, the co-tortfeasor claiming contribution must have paid a disproportionate share of the judgment. Jones v. Fisher, 309 N.W.2d 726, 728 (Minn.1981) (quoting from Note, Contribution & Indemnity-An Examination of the Upheaval in Minnesota Tort Loss Allocation Concepts, 5 Wm. Mitchell L.Rev. 109, 125 (1979)).

Pittsburgh only has contribution claims against Manville and the settling defendants more-at-fault than Hosley because those are the only co-tortfeasors with whom Pittsburgh has common liability. Under Minnesota’s comparative fault system, defendants less-at-fault than the plaintiff are not liable to the plaintiff. Therefore they have no common liability with defendants more-at-fault than plaintiff, and are not subject to contribution claims. Horton v. Orbeth, 342 N.W.2d 112, 114 (Minn.1984).

The dissenters, citing Jack Frost, Inc. v. Engineered Building Components Co. Inc., 304 N.W.2d 346 (Minn.1981), argue that public policy requires that contribution be limited whenever it would result in reduction of a plaintiffs recovery. They contend that Pittsburgh should be limited to seeking contribution from Manville because the practical effect of allowing contribution against the settling defendants would be to reduce Hosley’s recovery. The dissenters’ approach would burden Pittsburgh with the full risk of recovering from Manville if and when the bankruptcy stay is lifted.

We read Frost as a confirmation of the rule that defendants less-at-fault than plaintiffs are not subject to contribution claims, rather than as a general limitation on contribution. The case did not deal with Pierringer releases. It was a product liability action in which the plaintiff and two defendants were found at fault. Because one defendant was less at fault than the plaintiff, the Minnesota Supreme Court held the other defendant liable for all those damages attributable to both defendants. The one defendant was forced to pay the entire judgment, less that portion attributable to the plaintiff, not because contribution would reduce the plaintiff’s recovery, but because there was no one from whom the defendant could seek contribution.

In this case there are numerous settling defendants from whom Pittsburgh could seek contribution for the 25% of the verdict allocated to Manville. It would be inequitable to deny the company contribution against the settling defendants more-at-fault than Hosley merely because Hos-ley would ultimately pay the contribution claims. That is precisely what Hosley contracted to do. It is an expected consequence of the Pierringer settlements. See Lange.

Furthermore, the problem arises because Hosley elected, over the objections of Pittsburgh, to sever Manville and proceed against the other defendants. A plaintiff has the right to control his own lawsuit. But, if he elects piecemeal litigation he should bear the risk created by that approach. Hart v. Cessna Aircraft Co., 276 N.W.2d 166, 169 (Minn.1979). Therefore, it is appropriate to require Hosley to stand in the shoes of the settling defendants with respect to Pittsburgh’s contribution claims.

Eventually whoever pays the 25% of the verdict apportioned by the jury to Manville may be able to recover that amount from Manville. However, the bankruptcy stay places claims against Manville in indefinite limbo. So we are faced with the equitable dilemma of allocating through contribution the risk of recovering from Manville.

Because equitable contribution is a flexible concept there is no standard rule or formula to be universally applied. Relief is to be fashioned in light of the equitable dilemma presented. We believe the fairest and most equitable approach in this case would be to divide the $87,500 at issue between Pittsburgh and the settling defendants- more-at-fault than Hosley in proportion to their fault. This would result in Pittsburgh paying 10/58 ($15,086.21) of the figure. Hosley’s judgment would be reduced by the remaining 48/58 ($72,413.79) because of his indemnification agreements with the settling defendants.

This formula requires Hosley to accept the risks created by piecemeal litigation, and protects Pittsburgh from having to pay more than its fair share of the outstanding $87,500. It applies the equitable principle that emanates from Hart, while conceding that the factual situations of the cases are different. Pittsburgh is also liable for its 10% share of the verdict returned by the jury.

DECISION

We reverse and remand with instructions to enter judgment in favor of Hosley against Pittsburgh for the sum of $50,-086.21, reserving to Hosley and Pittsburgh cross claims against Manville.

Reversed and remanded.

POPOVICH, C.J., and NIERENGAR-TEN, J., concur in part and dissent in part.

CRIPPEN, J., dissents.