719 S.E.2d 394
W. Va.2011Background
- Grant Thornton sued Kutak Rock for fraud, negligent misrepresentation, and tortious interference related to Keystone audit.
- FDIC pursued claims against both Kutak Rock and Grant Thornton in related federal litigation arising from Keystone’s collapse.
- May 2003 FDIC settlement with Kutak Rock and Lambert released them from FDIC claims and barred future contribution claims against Kutak Rock.
- District Court in SDWV found Grant Thornton liable to the FDIC for accounting malpractice with about $25,080,777 in damages, crediting the FDIC-Kutak Rock settlement.
- The Fourth Circuit upheld the District Court’s credit and largely affirmed that Grant Thornton’s claims against Kutak Rock were contribution-based and barred by the settlement.
- Governing WV law (Zando framework) holds settlements with plaintiffs can bar contribution claims between joint tortfeasors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether GT's claims are barred as contribution due to the FDIC settlement | GT seeks direct claims despite joint tortfeasor status | Kutak Rock's settlement with the FDIC extinguishes GT's contribution claim | Yes; claims barred as contribution due to good faith settlement |
| Whether GT's direct claims can survive as independent claims | GT asserts direct misrepresentation/fraud separate from contribution | Claims arise from same facts as FDIC verdict and are not independent | No; not independent claims; barred by settlement and overlap in damages |
| Whether the collateral legal fees/expenses survive | Fees and expenses are separable from damages | Fees relate to the same joint loss and are barred | No; collateral fees barred as part of barred contribution framework |
Key Cases Cited
- Board of Education of McDowell County v. Zando, Martin & Milstead, Inc., 182 W.Va. 597 (1990) (good faith settlement bars contribution; sets verdict credits)
- Pennington v. Bluefield Orthopedics, 187 W.Va. 344 (1992) (verdict credits for settlements with plaintiff by joint tortfeasors)
- Jennings v. Farmers Mutual Insurance Company, 224 W.Va. 636 (2009) (good faith settlement can extinguish contribution; per curiam discussed limits)
- Dunn v. Kanawha County Board of Education, 194 W.Va. 40 (1995) (implied indemnity/fault considerations; relevance to fault allocation)
- Sydenstricker v. Unipunch Products, Inc., 169 W.Va. 440 (1982) (indemnity/contribution principles; equity considerations)
- Sanders v. Roselawn Memorial Gardens, 152 W.Va. 91 (1968) (settlement policy favors compromise to resolve disputes)