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.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A1085
SPONSOR: Weinstein (MS)
 
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
 
JUSTIFICATION:
Section 15-108 of the General Obligations Law sets forth what happens
when a personal injury or wrongful death plaintiff releases from liabil-
ity one or more, but fewer than all, of the alleged tortfeasors
Although the statute was enacted to encourage settlements, most commen-
tators have concluded that it generally rewards non-seniors at the
expense of seniors 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-senior 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 tortfeasor'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 torrfeasor's payment turns out to exceed what the
trier of fact later determines to be the senior's equitable share of the
damages, the non-settlor benefits by the difference between those two
sums. The second benefit accorded to the non-settler is that the risk of
settlor's solvency, formerly borne by the non-settlor, is now elimi-
nated. The non-settlor is able to deduct settlor's equitable share
whether or not settler 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 mongst
Tortfeasors Act. This proposal goes too far in the other direction and
treats non-settlors unfairly. The non-senior's liability would be effec-
tively increased by virtue of a settlement to which the non-settlor did
not accede and which the non-settlor was powerless to prevent. Moreover,
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 senior's payment to
plaintiff or by the amount of the senior'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, a 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-settlers' liability is calculated in those instances in which the
plaintiff reaches settlement with more than one tortfeasor. 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 liabil-
ity) 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 codifying the approach adopted in In Re Brooklyn Navy
Yard Asbestos, 971F.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 senior immune from common law indemnity claims, this
measure would not otherwise displace the rule set forth in Riviello v.
Wale/ron, 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" cred-
it. 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 tortfea-
sors. 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 settle-
ment 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 ram between past and future
damages.
This measure, which would have no fiscal impact on the Staid, would 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.
 
LEGISLATIVE HISTORY:
2012; A.625/S.3766- A. Judi/S. Judi 2011; A.625/S.3766 - A. Cal/S. Cal
2010: A.2579-A -A. Judi 2009; A.25796.2390- A. Cal/S.Judi 2008:
A.9157/S.7482 - A.Cal/S.Rules 2007; A.9157/ 5.7482 -PA/S.Rules 2003-04:
A.78311 S.2829 PA/S.Rules 2001-02;A.734615.3975 - PA/S,Judi 1999-00;
A.7160/S.3395 PA/S.Judi 1997-98;A:1037/S.2786-A PA/S.Cal 1995-96;
A.7742/S.4517 - A.Judi/S.Judi 1993-94; A.11334/S.3175-A - A.
Judi/S.Rules
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None.
 
EFFECTIVE DATE: January 1st next succeeding the date on which it
shall have become a law and apply only to actions and proceedings
commenced on or after such date.
STATE OF NEW YORK
________________________________________________________________________
1085
2013-2014 Regular Sessions
IN ASSEMBLY(Prefiled)
January 9, 2013
___________
Introduced by M. of A. WEINSTEIN, ABINANTI -- Multi-Sponsored by -- M.
of A. GOTTFRIED -- read once and referred 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:
1 Section 1. Section 15-108 of the general obligations law is REPEALED
2 and a new section 15-108 is added to read as follows:
3 § 15-108. Settlements in tort actions. (a) Effect of settlement. (1) A
4 settlement reached with one of two or more persons who are liable or
5 claimed to be liable in tort for the same injury or wrongful death does
6 not discharge any other tortfeasor from liability unless its terms
7 expressly so provide, except that each of the remaining tortfeasors may
8 choose to reduce his or her liability to the plaintiff or claimant by
9 the stated settlement amount, the consideration actually paid, or the
10 settling tortfeasor's equitable share of the damages as determined under
11 article fourteen of the civil practice law and rules.
12 (2) When more than one person settles with a plaintiff or claimant,
13 each of the remaining tortfeasors may choose to reduce his or her
14 liability to the plaintiff or claimant by the total of all stated
15 settlement amounts, the total consideration actually paid for all of the
16 settlements, or the total of the settling tortfeasors' equitable shares
17 of the damages as determined under article fourteen of the civil prac-
18 tice law and rules.
19 (3) The choice authorized by this subdivision shall be made in open
20 court or in a writing subscribed on behalf of the party seeking to limit
21 liability, and shall be made prior to the first opening statement of the
22 trial unless the party making the election only later becomes aware that
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03217-01-3
A. 1085 2
1 a settlement has occurred. In the latter event, the election shall be
2 made as soon as reasonably practicable after the party making the
3 election is apprised of the settlement or settlements in issue, and, if
4 feasible, prior to the return of a verdict. In the absence of specific
5 and timely election otherwise, a party limiting liability will be deemed
6 to have elected reduction in the total amount of the equitable share or
7 shares of all settling tortfeasors.
8 (4) For purposes of calculating the reduction of liability under this
9 subdivision in a case where a remaining tortfeasor is subject to a peri-
10 odic payment judgment pursuant to article fifty-A or article fifty-B of
11 the civil practice law and rules, the manner in which such reduction is
12 effected shall depend on the type of credit chosen by the remaining
13 tortfeasors.
14 (A) In those instances in which the remaining tortfeasor has elected
15 pursuant to paragraph one of this subdivision to receive a credit equiv-
16 alent to the amount or amounts which the plaintiff or claimant received
17 in settlement, the credit provided by this subdivision shall be ratably
18 apportioned between the past damages of the plaintiff and the future
19 damages. This shall be done by determining the ratio between the
20 plaintiff's past damages and the plaintiff's total damages, and then
21 apportioning that same percentage of the settlement towards payment of
22 the plaintiff's past damages. The remainder of the settlement credit
23 would be credited towards, and would thus reduce, the plaintiff's future
24 damages.
25 For purposes of the apportionment of the settlement credit between
26 past and future damages, the ratio between past damages and total
27 damages will be premised upon the amounts of damages awarded by the
28 trier of fact after adjustment has already been made for all other set-
29 offs, credits and reductions otherwise dictated by subdivision (a) of
30 section five thousand thirty-one, or subdivision (a) of section five
31 thousand forty-one of the civil practice law and rules, and before
32 consideration of any of the calculations dictated by subdivision (b),
33 (c), (d) or (e) of such sections.
34 (B) In those instances in which the remaining tortfeasor has elected
35 pursuant to paragraph one of this subdivision to receive an equitable
36 share credit, each of the plaintiff's awards for past damages and for
37 future damages as remain after all other set-offs, credits and
38 reductions otherwise dictated by subdivision (a) of section five thou-
39 sand thirty-one or subdivision (a) of section five thousand forty-one of
40 the civil practice law and rules shall be reduced by the settlor's equi-
41 table share of the total culpability.
42 (b) Liability of settling tortfeasor. Except as otherwise provided in
43 subdivision (f) of this section, a settlement between the plaintiff or
44 claimant and a tortfeasor relieves such tortfeasor from liability to any
45 other person for contribution or indemnification.
46 (c) Waiver of contribution and indemnification. Except as otherwise
47 provided in subdivisions (d) and (f) of this section, a tortfeasor who
48 has settled with the plaintiff or claimant shall not be entitled to
49 contribution or indemnification from any other person.
50 (d) Settling tortfeasor's limited right to contribution or indemnifi-
51 cation. Notwithstanding the provisions of subdivision (c) of this
52 section, a tortfeasor who has entered into a settlement with a plaintiff
53 or claimant may seek contribution or indemnification from any other
54 tortfeasor if, in consideration for such settlement, the plaintiff or
55 claimant has released from liability the person or persons from whom
56 contribution or indemnification is sought. Contribution or indemnifica-
A. 1085 3
1 tion shall be available pursuant to this subdivision except to the
2 extent that it is established by the party or parties from whom contrib-
3 ution or indemnification is sought that the amount paid in settlement
4 was not reasonable.
5 (e) Relationship with article sixteen of the civil practice law and
6 rules. If a person seeks to limit liability pursuant to both subdivision
7 (a) of this section and article sixteen of the civil practice law and
8 rules, the limitation shall be made by determining the percentage that
9 the plaintiff's or claimant's non-economic loss bears to such person's
10 total loss, and then applying the same percentage of the settlement
11 credit to the plaintiff's or claimant's non-economic loss. A person
12 whose liability is reduced under this section shall be entitled to an
13 additional reduction of liability pursuant to article sixteen of the
14 civil practice law and rules, but only to the extent that such person's
15 remaining liability for non-economic loss exceeds the limitation of
16 liability, if any, established by such article.
17 (f) Exemptions. Nothing contained in this section shall be construed
18 to affect or impair:
19 (1) any claim for indemnification if, prior to the accident or occur-
20 rence on which the claim is based, the party seeking indemnification and
21 the party from whom indemnification is sought had entered into a written
22 contract in which the latter had expressly agreed to indemnify the
23 former for the type of loss suffered; or
24 (2) a claim for indemnification by a public employee, including indem-
25 nification pursuant to section fifty-k of the general municipal law or
26 section seventeen or section eighteen of the public officers law.
27 (g) Settlements within the scope of this section. An agreement between
28 a plaintiff or claimant and a person who is liable or claimed to be
29 liable in tort shall be deemed a settlement for the purposes of this
30 section only if:
31 (1) the agreement completely or substantially terminates the dispute
32 between those parties;
33 (2) the plaintiff or claimant receives, as part of the agreement,
34 monetary consideration greater than one dollar; and
35 (3) such settlement occurs prior to entry of a judgment.
36 (h) Valuation of structured settlements. Where the monetary consider-
37 ation for a settlement includes one or more payments which are to be
38 made more than one year after the date of the settlement, the value of
39 such future payments shall, for purposes of subdivision (a) of this
40 section, be deemed to be the settling tortfeasor's cost in providing
41 such payments.
42 § 2. This act shall take effect on the thirty-first of January next
43 succeeding the date on which it shall have become a law, and shall be
44 applicable to any action commenced on or after such effective date.