Amerada Hess Corporation; American Trading Transportation Company, Inc.; ARCO Marine, Inc.; Bermuth Lembcke Company, Inc.; Chevron U.S.A., Inc.; Chiquita *369 Brands International, Inc.; Isbrandtsen Company, Inc.; Keystone Shipping Company; Marine Transport Lines; Marine Transport Management Company, Inc.; National Bulk Carriers; PACO Tankers, Inc.; Red Hills Corporation; United Brands Company; Unocal; and Warren Petroleum Company (all hereinafter referred to as the "shipowners") are defendants and third-party plaintiffs in an action by former seamen alleging asbestos injuries. The shipowners appeal from summary judgments in favor of Owens-Corning Fiberglass Corporation ("OCF") on their third-party claims seeking indemnity or contribution from OCF, whose asbestos products, it is alleged, were aboard the shipowners' vessels and injured the seamen. We affirm.
This case represents another installment in the ongoing maritime asbestos litigation addressed previously by this Court in Foster Wheeler USA Corp. v. Owens-Illinois, Inc.,
Subsequently, OCF obtained agreements with the plaintiffs settling their claims against OCF and purporting to release OCF from any further liability arising out of the plaintiffs' claims. OCF then moved for summary judgments in the Mobile County Circuit Court, contending that the settlements with the plaintiffs barred the shipowners' claims against OCF for indemnity or contribution. In February 1991, the trial court entered summary judgments in favor of OCF in both cases. These judgments were subsequently certified as final judgments, pursuant to Ala.R.Civ.P. 54(b). The shipowners appealed. On July 15, 1992, this Court granted the shipowners' motions to consolidate the appeals of the summary judgments for briefing and oral argument. On August 12, 1992, the trial court granted motions filed by the shipowners to dismiss the plaintiffs' claims against them on the basis of the actions pending in Texas. In Shepherd v. Maritime Overseas Corp.
On these appeals of the summary judgments in favor of OCF, the shipowners contend that they are entitled to recover from OCF their attorney fees or damages in the event of a damages award, under (1) an indemnity theory or (2) a rule allowing contribution from a joint tort-feasor notwithstanding that tort-feasor's settlement with, and release by, the plaintiff.
Preliminarily, we note that the procedural posture of the shipowners in this case renders their claims for indemnity particularly unpersuasive. Specifically, the shipowners arenonsettling, third-party plaintiffs seeking indemnity from third-party defendant OCF, following OCF's settlement with the plaintiffs.
"The basis for indemnity is restitution, and the concept that one person is unjustly enriched at the expense of another when the other discharges liability that it should be his responsibility to pay." Restatement (Second) of Torts § 886B (1977), comment c. "The unexpressed premise has been that indemnity should be granted in any factual situation in which, as between the parties themselves, it is just and fair that the indemnitor should bear the total responsibility, rather than to leave it on the indemnitee. . . ." Id.
At this stage, the shipowners have satisfied no obligation. Nor has OCF, which was impleaded by the shipowners, been unjustly enriched by the shipowners' litigation. This case thus involves none of the traditional elements necessary to trigger a right to indemnity. On a more general ground, however, recent developments in maritime law render misplaced an admiralty defendant's reliance on the active-passive fault doctrine.
In 1975, the United States Supreme Court abrogated the "divided damages" rule set forth in The Schooner Catharine v.Dickinson,
After Reliable Transfer, a number of admiralty courts concluded that maritime law no longer recognized a right to indemnity based on the active-passive fault distinction. Hardyv. Gulf Oil Corp.,
"The introduction of the rule of comparative fault to maritime torts requires reconsideration of the active-passive negligence doctrine. The common law courts were at first unwilling 'to make relative value judgments of degrees of culpability among wrongdoers.' The principle that an actively negligent tortfeasor should be required to indemnify a tortfeasor only passively negligent was developed to alleviate the harsh rule that prohibited apportionment among tortfeasors. In a sense, then, the indemnity rule was a precursor of modern systems of comparative fault because it attempted to transfer ultimate legal liability to the defendant truly in the wrong. Comparative fault seeks the same objective both more persuasively and more accurately. A comparative fault system not only eliminates the doctrine of contributory negligence but also apportions fault among joint tortfeasors in accordance with a precise determination, not merely equally or all-or-none.
"It is difficult to see the need for the active-passive indemnification rule in a comparative fault system. While the active-passive concept is more equitable than strict nonapportionment, there have never been satisfactory distinctions between the definition of 'active' and 'passive.' The district court in this case did not attempt to define these terms, but left it to the jury to define them from their everyday significance. As the district judge pointed out, however, it would have been difficult on the authority of decided cases to phrase a charge that would have been instructive and clear. There is, therefore, all the more reason to determine the degree of responsibility of each tortfeasor on the facts as presented at trial, and then to apportion damages among the tortfeasors on that basis. Leger [v. Drilling Well Control, Inc.,
(5th Cir. *371 1979),] has already extended the Reliable Transfer concept of proportionate fault to maritime personal injury cases. We reaffirm that extension and emphasize what other courts and commentators have said before us: the concepts of active and passive negligence have no place in a liability system that considers the facts of each case and assesses and apportions damages among joint tortfeasors according to the degree of responsibility of each party." 592 F.2d 1246
*372"The resolution of this issue is not without difficulty, as evidenced by the three approaches expressed in the Restatement (Second) of Torts § 886A, comment m:
" 'm. Release. There are three possible solutions for the situation in which one tortfeasor pays a sum to the injured party and takes a release or covenant not to sue that does not purport to be a full satisfaction of the claim. Each has its drawbacks and no one is satisfactory.
" '[Option I]. The money paid extinguishes any claim that the injured party has against the party released and the amount of his remaining claim against the other tortfeasor is reached by crediting the amount received; but the transaction does not affect a claim for contribution by another tortfeasor who has paid more than his equitable share of the obligation. This has been called the fairest solution, but it has proved to be very discouraging to settlements. A tortfeasor (and his insurance company) has no incentive to make an individual settlement if he is not at all sure that it will extinguish his liability and allow him to close his books on the subject. This works most decidedly to the detriment of the settling tortfeasor, and the insurance companies have been strongly opposed to it.
" '[Option II]. The money paid extinguished both any claims on the part of the injured party and any claim for contribution by another tortfeasor who has paid more than his equitable share of the obligation and seeks contribution. This solution favors the settling tortfeasor and his insurance company and is supported by them. But it can be very unfair to the other tortfeasors and provides a clear incentive to collusion between the settling parties. To avert this it may be necessary to impose a requirement of "good faith." But once there is an attempt to provide objective criteria for determining whether a transaction is in good faith, the finality of the release comes into question, books cannot be closed and the major advantage of the solution is dissipated.
" '[Option III]. The money paid extinguishes any claim that the injured party has against the released tortfeasor and also diminishes the claim that the injured party has against the other tortfeasors by the amount of the [pro rata] equitable share of the obligation of the released tortfeasor. This solution works strongly against the interest of the injured party and may have the effect of discouraging him from entering into a settlement. It may, for example, make it not desirable for him to accept the full amount of coverage in a minimum insurance policy if the equitable share of the obligation of the tortfeasor is likely to be substantially larger.
" 'Important policy reasons therefore weigh against each of the three solutions. Case authorities and statutes are also divided and there is no semblance of a consensus. The experience in drafting the uniform laws depicts the difficulties of the problem. The 1939 uniform act adopted the first solution; the 1955 act supplanting it adopted the second solution; and the 1977 act supplanting it adopted the third solution." 'The Institute leaves these issues to a caveat and takes no position.'
(Emphasis added [in Foster Wheeler USA].)"
At the outset of our discussion of this issue, we note that "attorney's fees and legal costs incurred by the defending tortfeasor [are] not recoverable in contribution from the other negligent parties." ODD Bergs Tankrederi A/S v. S/T Gulfspray,
Federal courts sitting in admiralty have reached no consensus on this issue. The Fifth Circuit Court of Appeals currently allocates damages among the tort-feasors on a pro rata basis consistent with Option III, as applied in Leger v. DrillingWell Control, Inc.,
Although these courts have expressed considerable divergence of opinion, they were virtually unanimous in declining to apply Option I until the Eleventh Circuit refused to recognize a settlement bar to contribution in Great Lakes Dredge Dock Co.v. Tanker Robert Watt Miller,
In Leger, the plaintiff sued his employer, Drilling Well Control, Inc. ("DWC"), Dresser Offshore Services, Inc. ("Dresser"), and Continental Oil Company ("Continental") because of injuries he sustained while working on a barge owned by Dresser at the site of an offshore oil well owned by Continental. Id. Before trial, DWC and Continental settled with Leger for $82,331.05 and $100,000, respectively. Damages were awarded Leger in the amount of $284,090 and fault was allocated according to the following percentages: (1) Leger, 35%, (2) Dresser, 45%, (3) Continental, 20%, and (4) DWC, 0%. The district court entered a judgment against Dresser in the amount of $127,840, which "reflect[ed] the total damages of $284,090.00 reduced by $99,430.17 representing the 35% contributory negligence of the plaintiff and by $56,817.24 representing the 20% negligence attributed to Continental. No reduction in the judgment was made for DWC's settlement since DWC was found not to be negligent."* Id. at 1248. This procedure imposed upon Dresser, the nonsettling tort-feasor, liability for damages based solely on its pro rata share of the fault.
On appeal, Dresser contended that the trial court erred in refusing to calculate the judgment based on a pro tanto reduction of the total judgment by $182,331.05, the amount of the plaintiff's settlement with DWC and Continental. It contended, moreover, that the damages recoverable under the court's pro rata method represented a windfall to Leger. The Court of Appeals for the Fifth Circuit rejected these contentions and affirmed the judgment. It explained:
Leger,"In accord with its ground rules, the trial court rendered judgment against Dresser for $127,840.00, representing Dresser's percentage of negligence (45%) multiplied by Leger's damages as found by the jury ($284,090.00). Although Leger nominally received $310,171.05 by virtue of the settlement and the judgment, we do not consider this a double recovery. Leger merely obtained a favorable settlement. By releasing DWC and Continental in exchange for $182,331.05, Leger 'sold' or relinquished any claims which he had against them. See Rose v. Associated Anesthesiologists,
163 U.S.App.D.C. 246 ,(1974) (characterizing a settlement as a pro rata sale of the plaintiff's claim). At the time of the settlement negotiations, no one knew how a jury would apportion fault or in what amount it would find damages. By settling with Continental and DWC, Leger took the risk that he was foregoing a larger amount possibly to be obtained at trial. Likewise, Continental and DWC must have considered the amount for which they settled to be less than their exposure at trial would have been. Dresser made a different assessment. By going to trial it took the risk that the jury would find substantial damages and a high degree of negligence on its part. With the benefit of hindsight it is clear that only Leger correctly charted his course. However, according to the rules which we adopt today, Leger could have lost a great deal. For example, if he had settled with DWC and Continental for $182,331.05 and if the jury had found $1,000,000 in total damages, but that Dresser was only 5% negligent, Leger would have been left with the $182,331.05 in settlement with DWC and Continental and $50,000 in judgment against Dresser (5% of $1,000,000). He would have released a claim subsequently found to be worth $950,000 in exchange for $182,331.05. *374 He could not then complain that he made a poor settlement and that he should receive more based on the jury's assessment of his total damages at $1,000,000. Whether the plaintiff obtains a favorable or unfavorable settlement, he may only recover once for each wrongdoer's percentage of fault." 501 F.2d 806
As pointed out above, only one of the two nonsettling tort-feasors, Dresser, had been found negligent. Because of the procedural posture of the parties as the result of this finding, Leger focused primarily on only one issue necessarily implicated by Option III, that is, the method of allocating damages among the nonsettling tort-feasors. Thus, the court was not squarely confronted with two other issues inherent in the application of that procedure — the question of joint liability among the nonsettling tort-feasors and the issue presented in this case, that is, the efficacy of a settlement as a bar to a nonsettling tort-feasor's right of contribution. As a corollary, however, the reduction of the plaintiff's claim by the amount of the settling tort-feasor's pro rata share of fault obviated the necessity of contribution from a settling tort-feasor — none of the nonsettling tort-feasors could be charged any amount representing the settling tort-feasor's share of fault. T. Schoenbaum, Admiralty and Maritime Law § 4-15, at 26 (Supp. 1992). The following remarks from Leger are also relevant in this connection:
Id. at 1250-51."The encouragement of settlements is the final factor which must be considered in this case. Whether the plaintiff or any of the defendants are ultimately found to have made a favorable settlement, we will 'respect the aleatory nature of the settlement process. . . .' Doyle v. United States,
, 441 F. Supp. 701 711 n. (D.S.C. 1977). If Dresser were allowed to reduce Leger's recovery against it by the dollar value of Leger's settlement, Dresser would be left to pay a small portion ($284,090.00 total damages minus $182,331.05 settlement minus $99,400 for plaintiff's contributory negligence equals $2,358.95) of the total damages even though its negligence was the main contributing factor in causing them. Thus, Dresser would benefit substantially from its intransigence or miscalculation in refusing to settle the case. We refuse to adopt an approach which would reward a defendant for refusing to settle. If a party decides to try a case, it must be prepared to accept whatever benefits or burdens flow from its decision."
The presence in Leger of only one negligent nonsettling tort-feasor also occasioned Leger's most conspicuous unanswered question, that is, whether liability among remaining nonsettling tort-feasors remained joint. That Leger could be read as adopting a modified form of joint liability apparently caused some courts to reject that approach — most significantly, the Eleventh Circuit, which in a trilogy of decisions rejected the Leger approach and applied Option I.2
The litigation precipitating the Eleventh Circuit's application of Option I involved three successive appeals, beginning with Ebanks v. Great Lakes Dredge Dock Co.,
At trial, the jury, pursuant to special interrogatories on which it was to determine the relative percentages of fault of all entities involved in the accident, attributed 100% of the fault to Chevron, a nonparty. Consequently, it assessed no damages.
The issue in Ebanks, the first appeal, concerned only the proper method of apportioning fault.3 Great Lakes contended that the method of allocation was consistent with, and required by,Leger. The court distinguished Leger on the ground that Chevron, unlike the settling defendants in Leger, had never been subject to the plaintiffs' claims. Ebanks,
The amendment at issue in Edmonds prevented a negligent shipowner from recouping from a longshoreman's employer, whose negligence concurred with that of the shipowner to injure the longshoreman, any damages for which the shipowner might be liable. The United States Supreme Court held that the amendment did not abrogate the rule of joint liability long recognized in maritime torts in favor of a proportionate fault rule.4
Ebanks concluded that because maritime law, as reaffirmed byEdmonds, provided for recovery "against either of several tortfeasors, without regard to the percentage of fault, it was error for the trial court to distract the [jury's] attention by requiring it to allocate the degree of fault between the defendant and a non-party."
After remand by Ebanks, Great Lakes settled with all the plaintiffs except Vivian Self, the widow of a former seaman employed by Great Lakes. In the second trial of that case, the trial judge (1) apportioned the fault of Chevron and Great Lakes vis-à-vis each other but reserved to a subsequent trial an adjudication of their damages, (2) determined the liability of Great Lakes to Self, (3) and awarded damages to Self. Self explained the findings of the trial court as follows:
Self,"The court found that Self's total damages amounted to $661,354.00 and that Chevron bore 70% of the fault for the accident while Great Lakes bore 30%. Because Self had already settled with Chevron [for $315,000], and because the trial court was of the view that this court's opinion in Leger v. Drilling Well Control, Inc.,
(5th Cir. 1979), required an apportionment of damages, the court awarded Self a judgment of $198,406.20 against Great Lakes, which represents 30% of Self's total damages." 592 F.2d 1246
A panel of the Eleventh Circuit reversed that portion of the judgment awarding damages on the basis of Great Lakes' pro rata *376 share of fault. It held that the plaintiff's damages from the nonsettling tort-feasor should be calculated on a pro tanto basis, that is, a reduction by the amount of her settlement with Chevron, the settling tort-feasor. Id. at 1548.
Focusing once again on the perceived tension betweenLeger and Edmonds, the court construed Leger as standing for the proposition that "it is the plaintiff who bears the loss or obtains the gain." Self, at 1546 (emphasis added). Concluding that such a rule was inconsistent with Edmonds, which, according to Self, required the maritime defendant to bear "any inequity which results from the implementation of a seaman's damage award," id., the court went further than it had in Ebanks, declaring, in effect, that Leger could not "withstand the more recent Edmonds opinion." Self, at 1546 (citing Joia v. Jo-Ja Service Corp.,
After Self, Great Lakes settled with Self's estate for $2,050,000 and, contending that it had paid more than its equitable share of the damages, subsequently sought contribution from Chevron. Great Lakes Dredge Dock Co. v.Tanker Robert Watt Miller,
In Great Lakes Dredge, the third and latest appeal in that litigation, the court framed the issue as "[w]hether, given thepro tanto method adopted in Self, a joint tortfeasor who is forced to bear more than its fair share of an injured party's damages is prohibited by a settlement bar rule from seeking contribution from a settling joint tortfeasor." Id. at 1580. That the Great Lakes Dredge court was not writing on a clean slate is obvious from the terms in which the court framed the issue. Indeed, the court expressly concluded that Self had "overruled Leger and rejected the proportionate distribution of liability."
Considering itself bound by stare decisis, id. at 1580 n. 4, to reject one of the two options that bars contribution from a settling tort-feasor, the court next compared the relative advantages and disadvantages of Options I and II. Observing that a nonsettling tort-feasor could, under the pro tanto
approach adopted in Self, "be forced to pay for more than [its] proportionate share of damages," the court concluded that on balance, an equitable distribution of damages among nonsettling tort-feasors through the right of contribution outweighed the policies favoring settlements.
We might be inclined to agree with the approach thus adopted by the Eleventh Circuit if its analysis of Leger and, therefore, Option III were sound. We conclude, however, that the opposite is true. The court's analysis proceeded upon the premise that Option III as applied in Leger abrogated or modified joint liability among nonsettling tort-feasors. Such an approach would relieve nonsettling tort-feasors not only of the liability represented by the pro rata share of settling
tort-feasors, but also of liability represented by the pro rata
shares of the nonsettling tort-feasors, thus requiring theplaintiff to bear the risk, for example, of a nonsettling tort-feasor's insolvency. Such an approach would, indeed, contravene the policy of maritime law, which has traditionally provided "special protection" for injured seamen. Self v. GreatLakes Dredge Dock Co.,
Nothing in the text of the Restatement, however, or, for that matter, Leger, requires this result.5 Significantly, the Fifth Circuit has recently declared expressly that *377 Leger did not "eliminate the well established maritime rule of joint liability." Simeon v. T. Smith Son, Inc.,
Because this Court's understanding of Option III andLeger differs fundamentally from the construction offered by the Eleventh Circuit, we see no tension between Option III and maritime law such as was expressed in the Ebanks-Self-GreatLakes trilogy. On the contrary, this approach appears to represent the most efficient method of accommodating the policies of federal and maritime law. As discussed above, the reduction in a plaintiff's claim by the pro rata method of Option III is as likely to inure to the plaintiff's benefit as a pro tanto reduction, which obtains pursuant to Options I and II, and it does not seem unreasonable to require the plaintiff to forgo that portion of his claim represented by the pro rata fault of the tort-feasor with which he voluntarily settled. Apro rata reduction in the plaintiff's total claim also prevents unfairness to the nonsettling tort-feasors that can occur under Option II's pro tanto reduction, which "allows the plaintiff, in effect, to 'repudiate' his bargain since he can be made whole out of the pockets of the non-settling tortfeasors." T. Schoenbaum, Admiralty and Maritime Law § 4-15, at 26 (Supp. 1992). Indeed, allocation of damages based on the settling tort-feasor's pro rata share of fault obviates the need for contribution to nonsettling tort-feasors. Id.
The application of Option III, which, unlike Option I, recognizes the finality of a settlement, also accommodates the policy of the federal courts favoring settlements. See Fed.R.Civ.P.
Moreover, allowing contribution from settling tort-feasors could subject plaintiffs to liability for damages and expenses recovered by nonsettling defendants from settling defendants. For example, the settlement agreements involved in this case contained the following provision:
"In consideration for the payment of the aforesaid sum, the Plaintiffs . . . agree to and do hereby indemnify and hold harmless OCF from any and all liability for the payment of damages by reason of any claim asserted by any person, firm, corporation or entity against OCF for indemnity or contribution as a result of any claim, demand, settlement, judgment or payment made to the Plaintiffs or their representatives, heirs or assigns, arising out of any injuries, disease, damages or death to decedent or loss of consortium or other damages to Plaintiffs."
(Emphasis added.) Based on this indemnity provision, OCF has stated its intention to pursue its rights and remedies against the plaintiffs in the event the shipowners' claims against it are successful.
These considerations compel us to conclude that Option III affords the appropriate method for the disposition of maritime cases filed in Alabama state courts. The shipowners are, therefore, precluded by OCF's settlements from seeking contribution from OCF for attorney fees or damages.
The shipowners further contend that even under Option III a settling defendant must remain in the suit to litigate the issue of its own percentage of fault. They suggest that the alternative, that is, requiring the plaintiff to minimize at trial the settling tort-feasor's percentage of fault is unworkable and unfair to the plaintiff. Thus, they contend *378 that the trial court erred in granting OCF's motions for summary judgment.
We agree that Option III requires the trier of fact to determine the percentage of the settler's fault. Stanley v.Bertram-Trojan, Inc.,
In sum, the shipowners have failed to demonstrate in what respects this procedure is unworkable, and we disagree with their contentions that it is unfair. We conclude, therefore, that the summary judgments in favor of OCF were proper; those judgments are affirmed.
1911251 — AFFIRMED.
1911252 — AFFIRMED.
HORNSBY, C.J., and MADDOX, ALMON, SHORES, HOUSTON and STEAGALL, JJ., concur.