Friday. August 24, 2012
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High Court Discards Release Rule on Tort Settlements
By KENNETH OFGANG, Staff Writer
The common law rule that the release of one tortfeasor releases all is no longer good law in California, the state Supreme Court ruled yesterday.
Just as the Legislature sought to ameliorate “the harshness and the inequity” of the rule when it enacted Code of Civil Procedure Sec. 877, a different approach is required for cases in which that section does not apply because the trial court has not made a finding of good-faith settlement, Justice Joyce L. Kennard wrote for a unanimous court.
Henceforth, Kennard explained, the rule in such cases will be “when a settlement with a tortfeasor has judicially been determined not to have been made in good faith…nonsettling joint tortfeasors remain jointly and severally liable, the amount paid in settlement is credited against any damages awarded against the nonsettling tortfeasors, and the nonsettling tortfeasors are entitled to contribution from the settling tortfeasor for amounts paid in excess of their equitable shares of liability.”
The ruling reverses the judgment of the Court of Appeal in a suit by the family of Aidan Leung against Verdugo Hills Hospital, sending the case back for resolution of remaining issues.
A jury awarded more than $15 million, figuring in the present value of periodic payments, in 2007.
Suit was brought through a guardian ad litem alleging the hospital and Dr. Steven Nishibayashi failed to provide Aidan’s parents sufficient warnings and information, and to diagnose and treat his condition, when he exhibited signs of neonatal jaundice shortly after his birth in 2003, resulting in severe brain damage and motor impairment.
The claim against the doctor was settled before trial for insurance limits of $1 million. The parties agreed to proceed with the settlement regardless of Los Angeles Superior Court Judge Laura Matz’s ruling that the settlement was “grossly disproportionate to the amount a reasonable person would estimate” the pediatrician’s share of liability would be, and thus not in good faith under Secs. 877 and 877.6.
Had the judge ruled the settlement in good faith, the doctor would have been free of potential contribution claims and the release rule would not have applied.
The case proceeded to jury trial against the hospital alone. Following the verdict, which found the hospital 55 percent, the doctor 40 percent, and the parents 5 percent responsible, the hospital sought to set the verdict aside under the release rule.
Matz denied the motion. The Court of Appeal reversed, however, agreeing that the release rule should be abrogated but saying that only the Supreme Court could do that.
The case was argued by Robert A. Olson of Greines, Martin, Stein & Richland for the hospitaland Stuart B. Esner of Esner, Chang & Ellis for the plaintiff.
The case is Leung v. Verdugo Hills Hospital, 12 S.O.S. 4291.
Copyright 2012, Metropolitan News Company