Elness Swenson Graham Architects, Inc.// RLJ II-C Austin Air, LP RLJ II-C Austin Air Lessee, LP And RLJ Lodging Fund II Acquisitions, LLC v. RLJ II-C Austin Air, LP RLJ II-C Austin Air Lessee, LP And RLJ Lodging Fund II Acquisitions, LLC// Elness Swenson Graham Architects, Inc.
03-14-00738-CV
Tex. App.Jul 16, 2015Background
- RLJ sued multiple defendants (including an architect and other contractors/engineers) for damages arising from a construction project; some defendants settled with RLJ before trial.
- At trial RLJ obtained a verdict against the architect for breach of contract; post-trial the architect sought a "one-satisfaction" credit for the amounts paid by the settling defendants.
- RLJ (cross-appellants) argued the architect was not entitled to any settlement credit because (a) there was no potential joint and several contractual liability among defendants and (b) the one-satisfaction settlement credit applies only to joint tort liability, not contractual liability.
- The architect argued indivisible injury and general pleading language (a prayer for judgment "jointly and severally") supported entitlement to a settlement credit and that the one-satisfaction rule applies regardless of the theory of recovery.
- The cross-appellants contend (1) the pleadings and evidence showed distinct, non-common contractual duties (so no potential joint and several contractual liability), (2) the architect never affirmatively pleaded a one-satisfaction settlement credit (it pleaded only Chapter 33 contribution), and (3) Texas precedent limits the one-satisfaction settlement credit to joint tortfeasors.
Issues
| Issue | RLJ's Argument | Architect's Argument | Held |
|---|---|---|---|
| Whether a one-satisfaction settlement credit requires potential joint and several liability | Credit requires potential joint and several liability; no such potential existed here because contractual duties were distinct | Indivisible injury or a general prayer for "jointly and severally" is sufficient to obtain credit | The court requires potential joint and several liability before applying the one-satisfaction settlement credit; mere prayer language or indivisible-injury assertion alone is insufficient |
| Whether the architect properly preserved/pleaded entitlement to a one-satisfaction settlement credit | Architect did not plead a one-satisfaction settlement credit (only Chapter 33 tort contribution) and gave no notice to RLJ to allocate damages | The architect argues its answer and prayer gave sufficient notice and that RLJ could have sought allocation | Pleading must affirmatively present the defense; limiting to Chapter 33 precludes invoking a non-pled one-satisfaction settlement credit; lack of notice defeats allocation requirements |
| Whether an indivisible injury (or jury damage finding) converts separate contract liabilities into joint and several liability for credit purposes | Indivisibility alone does not convert distinct contractual breaches into joint contractual liability or trigger the settlement-credit rule | Architect: indivisible injury means the one-satisfaction rule should apply (regardless of contract vs tort) | Indivisible injury does not, by itself, establish joint contractual liability or entitlement to a one-satisfaction settlement credit; the credit must be for the same damages paid by settlors and for which joint liability existed |
| Whether the one-satisfaction settlement credit applies to contractual liability (breach of contract) | One-satisfaction settlement credit, as developed post-article 2212 and in modern cases, applies only to joint tort liability, not to contract claims | One-satisfaction rule is a general doctrine that should apply regardless of cause of action; some authorities support application beyond tort | The credit is limited to joint tort liability; courts (including this Court in CTTI) have refused to extend it to pure contract liabilities; conflicting appellate language does not overrule CTTI |
Key Cases Cited
- Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378 (Tex. 2000) (one-satisfaction settlement credit tied to joint tort liability)
- First Title Co. of Waco v. Garrett, 860 S.W.2d 74 (Tex. 1993) (recognizing limits on settlement-credit application)
- Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1 (Tex. 1992) (doctrine developed in response to statutory contribution scheme)
- CTTI Priesmeyer, Inc. v. K&O Ltd. P'ship, 164 S.W.3d 675 (Tex. App.—Austin 2005) (refusing one-satisfaction settlement credit for breach-of-contract claims)
- GE Capital Commercial Inc. v. Worthington Nat'l Bank, 754 F.3d 297 (5th Cir. 2014) (applying Texas law: one-satisfaction credit requires allegation of joint and several liability)
- Landers v. East Texas Salt Water Disposal Co., 248 S.W.2d 731 (Tex. 1952) (indivisible injury doctrine in torts)
- Galle, Inc. v. Pool, 262 S.W.3d 564 (Tex. App.—Austin 2008) (discussion of one-satisfaction language and issues of theory-of-recovery)