Suzanne BAKER, Administratrix of the Estate of Albert J. Baker, and wife of Albert J. Baker, Appellee v. ACANDS; Amchem Products, Inc.; American Energy Products, Inc.; Anchor Packing Co.; Armstrong World Industries, Inc.; Asbestos Products Mfg. Corporation; Atlas Turner, Ltd.; Basic Incorporated; Carey Canada; Celotex Corporation; Dana Corporation; DI Distributors, Inc., f/k/a Delaware Insulation Co.; Eagle Picher Industries, Inc.; Fibreboard Corporation; Foster Wheeler Corporation; GAF Corporation; Garlock, Incorporated; Georgia-Pacific Corporation; H & A Construction, Inc.; a/k/a Crane Packing Co.; Keene Corporation; National Gypsum; Owens-Corning Fiberglass; Owens-Illinois, Inc.; Pfizer, Inc.; Pittsburgh Corning Corporation; Raymark Industries, Inc.; Rock Wool Manufacturing Co.; Smith & Kanzler; Southern Textile Corporation; Spray-Craft Corp.; Sprayon Research Corporation; T & N PLC.; U.S. Mineral Products; United States Gypsum Co.; W. & R. Grace Co. Appeal of ACandS, Inc.
Supreme Court of Pennsylvania
June 26, 2000
Rehearing Denied Aug. 7, 2000
755 A.2d 664
Argued Feb. 1, 2000.
R. Bruce McElhone, for Suzanne Baker.
Edward J. Wilbraham, Philadelphia, for Amicus-Claims Res. Member.
Jonathan W. Miller, Boiling Springs, Martin Greitzer, Philadelphia, for Amicus-Abestos Clients.
Eilihu Inselbuch, for Amicus-Mansville Trust.
Robert N. Spinelli, Philadelphia, for Amicus-Owens-Corning.
Theodore Goldberg, for Amicus-Pa. Trial Lawyers Assoc.
Before FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE, NIGRO, NEWMAN and SAYLOR, JJ.
CAPPY, Justice.
OPINION
The question at issue concerns which method of set-off applies in this strict liability matter: pro tanto or pro rata set-off. For the following reasons, we find that pro tanto methodology of set-off is warranted. Accordingly, we now affirm the order of the Superior Court.
Albert and Suzanne Baker filed a civil action against several manufacturers and/or sellers of asbestos-containing products, seeking damages resulting from Mr. Baker‘s exposure to asbestos and Mrs. Baker‘s loss of consortium. This first complaint was dismissed without prejudice on January 13, 1994 as Mr. Baker had not manifested any symptoms, impairment, or disability due tо his exposure to asbestos.
Mr. Baker subsequently developed malignant mesothelioma. The Bakers amended their complaint and reactivated their case on March 31, 1995. The trial was reverse-bifurcated, with the medical causation and damages phase being tried before a jury. On June 2, 1995, the jury entered an award of $2,000,000.00 in favor of Mr. Baker and $200,000.00 for Mrs. Baker‘s loss of consortium claim.
Prior to the start of the liability phase, several defendants were dismissed from the case on motions for summary judgment. Additionally, the Bakers settled with four of the remaining defendants. The joint tortfeasor settlement agreements the Bakers executed with Owens-Corning Fiberglass Corporation (“Owens-Corning“), Pfizer, Inc. (“Pfizer“), and Asbestos Claims Management Corporation (“ACME“) (formerly known as National
The Bakers also settled with the Manville Personal Injury Settlement Trust (“the Manville Trust“) pursuant to a joint tortfeasor release. As stated by the Superior Court below, the Manville Trust was created in 1988 “to pay all health claims brought against the Johns-Manville Corporation (‘Manville‘) as a result of asbestos exposure.” Super. Ct. slip op. at 6. The settlement agreement the Bakers and the Manville Trust executed specified that the release was a pro tanto release, for which the Manville Trust paid $30,000 in consideration.2
Prior to the commencement of the liability phase, Mr. Baker died. Mrs. Baker, as administratrix of Mr. Baker‘s estate, was thereafter substituted as a party for Mr. Baker. At the liability phase of the trial, the only remaining defendant was ACandS, against whom Mrs. Baker proceeded on a strict liability theory only. The trial court, sitting without a jury, found ACandS, Owens Corning, Pfizer, ACME, and the Manville Trust jointly liable. The trial court proceeded to apportion the damages among each of these defendants, determining that each was responsible for an equal, one-fifth share of the award, or $440,000.00.
The trial court then turned to the question of which set-off method should apply in determining how much of the Manville Trust‘s portion of the verdict ACandS could set-off. The trial court rejected Mrs. Baker‘s contention that the pro tanto method applied, and instead applied the pro rata method, thereby setting off the Manville Trust‘s entire $440,000.00 share of the verdict. Thus, it entered judgment against ACandS (the only non-settling, remaining defendant) in the amount of $440,000.00.3
Both Mrs. Baker and ACandS appealed to the Superior Court. Mrs. Baker claimed that the terms of the pro tanto release between her and the Manville Trust should be enforced. The effect of enforcing the terms of the release would be that ACandS would be liable for the $410,000.00 shortfall between the consideration the Manville Trust paid in settlement (i.e., $30,000.00) and the Manville Trust‘s allocated share of the damages awarded to the plaintiff (i.e., $440,000.00). ACandS appealed to the Superior Court on the basis that the evidence was insufficient to show that it was liable.
The procedural history of this matter before the Superior Court is rather involved. Initially, a three-judge panel of the Superior Court filed an opinion on May 18, 1998; this opinion was withdrawn by order of the court on June 1, 1998. On June 2, 1998, another opinion was filed in this matter which affirmed the order of the trial court. Subsequently, on July 30,
The majority of the Superior Court, however, found that the trial court erred when it did not enforce the terms of the pro tanto release, and therefore reversed the trial court‘s denial of Mrs. Baker‘s request to mold the verdict pursuant to the pro tanto release. Thus, the Superior Court directed that Mrs. Baker could recover from ACandS the shortfall between the consideration she received from the Manville Trust in the settlement and the amount of the Manville Trust‘s share of the damages.
ACandS subsequently filed a petition for allowance of appeal. ACandS abandoned its sufficiency of the evidence claim in its request that this court hear its appeal, and instead presented the sole issue of whether the Superior Court‘s determination of the set-off issue was correct. We granted allocatur.4
At the outset of our review, we note that the parties agree that they are bound by the terms of the TDP. The TDP, in turn, contains a rather involved mechanism for determining how set-off is to be calculated. TDP § H.3. Mrs. Baker and ACandS disagree about which particular subsection of TDP § H.3 applies to this matter. These arguments are fairly complicated. Yеt, it is not necessary for us to resolve the rather thorny issue of which of these particular subsections of the TDP applies as both of these subsections declare that the method for performing the set-off calculation is to be made with reference to state law. See TDP H.3.(c) and (f). Thus, we can now turn to the crux of this dispute, which is whether state law mandates that ACandS should receive a pro tanto or pro rata set-off.
To answer this question, we turn to the Uniform Contribution Among Tort-feasors Act,
does not discharge the other tort-feasors unless the release so provides, but reduces the claim against the other tort-feasors in the amount of the consideration paid for the release or in any amount or proportion by which the release provides that the total claim shall be reduced if greater than the consideration paid.
Thus, in Pennsylvania, the UCATA contemplates three separate set-off scenarios. First, if the settlement agreement is silent, the set-off mechanism defaults to a pro tanto set-off and the nonsettling defendant is entitled to have the verdict reduced by the amount of consideration paid by the settling tortfeasor. In the second scenario, wherе the settlement agreement specifically provides for a pro tanto set-off, the UCATA envisions that such a specific election will always control.
The third scenario is where the settlement agreement specifies a form of set-off other than a pro tanto set-off. As stated above, § 8326 provides that the settling parties may opt for another set-off “in any amount or proportion by which the release
Yet, the UCATA does place restrictions on when a specific pro rata election will be allowed to operate. Section 8326 specifies that such a choice will become operative only if such a pro rata set-off would yield a set-off figure which is higher than thе consideration paid by the settling tortfeasor. To employ the same example used supra, if the consideration actually paid for the settlement was $60,000.00, the pro rata election would not become operative because the pro rata share of $50,000.00 is less than the amount paid in settlement. In such a scenario, the pro tanto set-off figure would apply.
Application of
ACandS, however, argues that the only form of set-off allowed in this matter is pro rata. It presents several arguments in support of this point. Its first such argument is that the UCATA, which would compel a pro tanto set-off under the facts of this case, applies only in negligence cases, and has no application to strict liability matters. In support of this argument, ACandS relies on the Superior Court‘s decision in Ball v. Johns-Manville Corp., 425 Pa.Super. 369, 625 A.2d 650, 658 (1993).
We reject ACandS’ argument for several reasons. First, our own reading of Ball leads us to conclude that the Superior Court in that matter did not hold that the UCATA applies only to negligence, rather than strict liability, actions.
Second, to the extent that Ball can be read for the proposition that the UCATA has no application in strict liability actions, it was wrongly decided. This court has never interpreted the UCATA as applying only to negligence actions. The portion of Ball which ACandS claims stands for the proposition that UCATA does not apply in strict liability actions is nothing more than a direct quote from Mr. Justice Papadakos’ concurring opinion in Walton v. Avco Corp., 530 Pa. 568, 610 A.2d 454 (Pa.1992). Again, we find nothing in that concurring opinion in Walton which would stand for the proposition that UCATA is inapplicable in strict liability actions. Furthermore, even if we assume arguendo that the concurring opinion did stand for such a proposition, such a conclusion would be of no moment. That concurring opinion was not joined by any other justice, and thus clearly is of no precedential value.
Finally, we can find no support in the UCATA itself for the proposition that it applies only in negligence actions. The language of the UCATA is very broad and clearly applies to all types of actions. If we were to adopt ACandS’ analysis, and
Next, ACandS contends regardless of what the UCATA provides, set-off in strict liability actions can only be pro rata. In support of this conclusion, ACandS asserts that joint tortfeasors in a strict liability action are liable only for their respective, equally apportioned shares of the verdict; they cannot be compelled to pay more than their equally apportioned shares and have no right to contribution. As a corollary, ACandS claims that “settlement by one joint tortfeasor reduces the liability of a non-settling defendant by the settling defendant‘s pro rata share and not the consideration paid for a release.” ACandS’ Brief at 21. In support of its argument, ACandS relies heavily on this court‘s decisions in Walton, supra, and Charles v. Giant Eagle, 513 Pa. 474, 522 A.2d 1 (1987).
This analysis is faulty for several reasons. First, ACandS misapprehends the interaction between apportionment of liability for the injury and the principle that one joint tortfeasor may be compelled to satisfy the entire money judgment pursuant to the doctrine of joint and several liability. In strict liability actions, liability is indeed apportioned equally among joint tortfeasors. Walton, supra. In a strict liability action, apportionment based upon fault is impermissible as this tort theory does not contain an element of fault. This is in contrast to negligence actions where liability is allocated among joint tortfeasors according to percentages of comparative fault.
Yet, the declaration that liability is to be apportioned equally in a strict liability matter is not synonymous with the proposition that a tortfeasor may be compelled to pay only its share of the judgment and no more. In Pennsylvania, joint tortfeasors, including those in strict liability actions, are jointly and severally liable. See Incollingo v. Ewing, 474 Pa. 527, 379 A.2d 79, 85 (1977). Thus, the plaintiff may recover the entire damages award from only one of the joint tortfeasors. That joint tortfeasor‘s recourse for paying more than its proportionate share of the verdict is to sue the nonpaying joint tortfeasors in contribution. See
Second, ACandS is incorrect in its conclusion that joint tortfeasors in a strict liability matter have no right to seek contribution from each other. ACandS draws this conclusion from this court‘s decision in Walton, supra. In that matter, Glenda Walton sued Avco Corporation (“Avco“) and Hughes Helicopter, Inc. (“Hughes“) on a theory of strict liability. Avco settled with Walton prior to trial for $922,355.00. The settlement agreement between Avco and Walton stated, inter alia, that Avco preserved its right to recover against Hughes in contribution; the settlement agreement executed by the Walton and Avco release did not, however, release Hughes from liability to Walton.
The matter went to trial against Hughes alone; the jury returned a verdict in favor of Walton in the amount of $891,203.00. Avco then sought contribution from Hughes; the trial court granted this request, and awarded contribution to Avco against Hughes in the amount of fifty percent of the jury‘s award in the Walton case.
On appeal to this court, the question presented was whether Avco could recover in contribution against Hughes, or whether Hughes owed its share of the verdict to Walton. This court found that Avco had no right of contribution against Hughes. Although recognizing that the Walton-Avco settlement agreement purported to preserve Avco‘s right of contribution against Hughes, we found this portion of the settlement unenforceable because Avco could not “reserve a right to contribution that it did not have in the first placе.” Walton, 610 A.2d at 461. ACandS focuses
ACandS is incorrect. This passage in Walton was not focusing on the fact that the action sounded in strict liability. Rather, we stated that Avco was barred from instituting a contribution action because Avco‘s settlement agreement with Walton had not released Hughes from liability as well. We stated that unless a settlement agreement releases the nonsettling as well as the settling joint tortfeasor, the settling joint tortfeasor may not pursue a contribution action against the joint tortfeasor who chose to encounter the uncertainties of litigation. Id.5 We in no fashion, however, stated that an action in contribution cannot be maintained in the context of a strict liability lawsuit.
ACandS’ citation to Charles, supra, is similarly unavailing. In Charles, Giant Eagle Markets (“Giant Eagle“) and Stanley Magic Door (“Stanley“) were sued by George Charles (“Charles“). Giant Eagle settled prior to trial for $22,500.00; in that release, the settling parties stated that any verdict Charles obtained would be set-off by Giant Eagle‘s pro rata share.
The matter then proceeded to trial against Stanley alone. The jury returned a verdict in which it set the damages at $31,000.00 and found Giant Eagle sixty percent negligent and Stanley forty percent negligent. Thus, Giant Eagle‘s proportionate share of the verdict was $18,600.00, $3,900.00 less than what it had paid in settlement. This presented a situation where either Charles or Stanley would receive a windfall: if Charles recovered Stanley‘s $12,400.00 share of the verdict from Stanley, Charles would have received $3,900.00 more for his injury than the amount at which the jury had valuеd it; on the other hand, if Stanley were given a pro tanto set-off representing the amount of consideration paid in settlement by Giant Eagle, Stanley would pay $3,900.00 less than its share of liability as found by the jury.
We determined that in windfall situations such as that presented by Charles, the plaintiff rather than the nonsettling tortfeasor should benefit. We stated that the maximum that a nonsettling tortfeasor‘s liability may be set-off is the portion of the verdict apportioned to the settling tortfeasor. In other words, the nonsettling tortfeasor may not enjoy a set-off which would lower its out-of-pocket expense below its own allocated share of the liability. We thus opted for the pro rata set-off method, and required Stanley to pay its full share of the verdict.
Charles, however, does not command that ACandS is entitled to a pro rata set-off. First, the rationale of Charles would actually allow the choice of pro tanto set-off specified in the Bakers-Manville Trust settlement agreement to be operative. We stated in Charles that the settling parties could opt for a set-off method so long as the portion of the verdict apportioned to the settling tortfeasor exceeded the consideration paid for the release. Id. at 4. As the Manville Trust‘s $440,000.00 share of the verdict clearly exceeds the $30,000.00 it paid in the settlement agreement with the Bakers, the pro tanto choice of set-off is operative pursuant to Charles.
Furthermore, Charles is not directly on point with the matter sub judice. The driving force behind the Charles decision was that we were dealing with a windfall situation. The matter sub judice, however, is not a windfall situаtion. We are not being asked to choose between results where either Mrs. Baker would recover more than the jury‘s verdict or ACandS
Finally, ACandS contends that even if this court agrees with the Superior Court that the set-off method here is pro tanto, the Superior Court nonetheless erred in its computation of the set-off. ACandS contends that the Superior Court concluded that after the pro tanto set-off was effectuated, ACandS would be liable for its $440,000.00 share of the verdict plus the $410,000.00 shortfall between the Manville Trust‘s share of the verdict and the consideration that the Manville Trust paid to the Bakers in settlement. ACandS claims this is an erroneous way to calculate the pro tanto set-off. Rather, it contends that the proper method to calculate the pro tanto set-off would be first to reduce the entire $2,200,000.00 verdict by $30,000.00. Only at that juncture, ACandS posits, should the court apportion shares of liability. ACandS proposes that in apportioning these shares, the $2,170,000.00 should be divided four ways, with ACandS, Owens Corning, Pfizer, and ACME each being accorded an equal share. ACandS does not, however, propose allocating а share of the liability to the Manville Trust in its computation. If ACandS’ proposed calculations were utilized, the proportionate share of the verdict for ACandS, Owens Corning, Pfizer, and ACME would be $542,500.00. As Owens Corning, Pfizer, and ACME executed pro rata releases, ACandS would be liable for only its $542,500.00 share of the verdict.
We find that ACandS’ method of computing the set-off to be erroneous. The primary flaw that we perceive with ACandS’ method is that the Manville Trust is on one hand considered a responsible tortfeasor, and thus ACandS is allowed to take a set-off which takes into account the Bakers-Manville Trust settlement agreement, and yet on the other hand, the Manville Trust is not apportioned an equal share of the liability. These two principles seem irreconcilable. The UCATA provides that a non-settling defendant is not entitled to a set-off in light of the settling defendant‘s release unless the settling and non-settling defendants are both deemed to be joint tortfeasors.
We realize that it could be argued that by reducing the $2,200,000.00 verdict by the $30,000.00 the Manville Trust paid in settlement, the Manville Trust‘s share of the liability has been accounted for and there is no avoidance of apportioning liability to all joint tortfeasors. Yet, this is also problematic. If we were to deem that the consideration paid by the Manville Trust effectively satisfies the entirety of the Manville Trust‘s share of liability, we would in essence be stating that the set-off allowed here is pro rata in nature as the Manville Trust‘s apportioned share of liability would be reduced to zero. That, of course, runs counter to our analysis conducted supra wherein we concluded that ACandS is entitled to a pro tanto set-off.
We therefore find that the proper method in calculating set-off is first to apportion shares of liability. In the matter sub judice, the trial court correctly determined that in this strict liability action, the verdict was to be apportioned equally among ACandS and the four settling defendants. See Walton, supra. Thus, each defendant‘s share of the liability is $440,000.00.
The next step in this process is to determine which set-off method applies with regard to each individual settling tortfeasor. As the settlement agreements between Mrs. Baker and Owens Corning, Pfizer, and ACME each provided for a pro rata set-off, ACandS will be allowed to set-off each of these defendants’ apportioned shares of the verdict, or an aggregate of $1,320,000.00. As to the Manville Trust‘s share, ACandS is entitled to a pro tanto settlement in the amount of $30,000.00.7 Thus, ACandS is jointly and severally liable for both its share of the verdict as well as the shortfall between the Manville
Trust‘s share and the $30,000.00 it paid in settlement, or for $850,000.00.8
For the foregoing reasons, we affirm the order of the Superior Court.
Justice SAYLOR files a concurring opinion in which Justice ZAPPALA and Justice NEWMAN join.
SAYLOR, Justice, concurring.
I join in the majority‘s disposition and in its assessment of the general application of Pennsylvania jurisprudence with respect to written releases. I write, however, because, in light of the binding class action
Preliminarily, I note that the lead and dissenting opinions from the en banc Superior Court panel present careful examinations of a series of threshold questions pertinent to the present appeal; therefore, a close review of those expressions provides essential context. Judge Schiller, writing for the Superior Court majority, initially framed the primary issue as “whether in the context of a strict liability action pursuant to the provisions of the Uniform Contribution Among Tortfeasors Act ..., and applicable case law, a pro tanto release executed by the plaintiffs in favor of the Manville Trust should be enforced according to its express terms to reduce the plaintiffs’ recovery against the non-settling tortfeasor.” Baker v. AC&S, Inc., 729 A.2d 1140, 1144 (Pa.Super.1999).1 The majority then reviewed the historical background of the Manville Trust; the broad-scale settlements among the Trust, asbestos health claimants, Manville codefendants in asbestos-related actions, and distributors of Manville products; and the resulting Manville Trust Disposition Process (the “TDP“), the operative document by which the parties agreed that their rights and remedies should be governed. In summary, in response to the assertion of massive claims, Johns-Manville Corporation, manufacturer and distributor of asbestos products, filed a bankruptcy petition, and the Trust was established to succeed to Johns-Manville‘s massive asbestos-related liabilities. The Trust was subsequently restructured in light of the fact that the value of Trust assets (no more than $2.5 million) was dwarfed by projected claims (between $21 and $25 billion). In connection with such restructuring, the district court certified a mandatory, non-opt-out class of asbestos health claimants, codefendants, distributors and certain others as beneficiaries. Sеe In re Joint Eastern and Southern Districts Asbestos
Litigation, 878 F.Supp. 473, 579 (E.D.N.Y. & S.D.N.Y.1996), aff‘d in pertinent part, 78 F.3d 764 (2d Cir.1996). The purpose of the settlement was to distribute equivalent shares of claims’ values (scheduled at some ten-percent of the claims), and to maximize the finite assets available to Trust beneficiaries by significantly reducing the Trust‘s operating and litigation expenses. See id. All Trust beneficiaries became bound by the terms of a settlement stipulation requiring abidance by the terms of the TDP, “designed to remove the Trust from the tort system and equitably distribute limited Trust assets among its beneficiaries.” Baker, 729 A.2d at 1156 (Eakin, J., dissenting)(citing Joint Asbestos Litig., 878 F.Supp. at 491-95).
Judge Schiller‘s preliminary discussion constituted an acknowledgment of the centrality of the TDP to resolution of this action, as the parties to this appeal are Trust beneficiaries whose rights and remedies are governed by the TDP, Baker, 729 A.2d at 1145; accordingly, he proceeded with an overview of the document. The TDP allows a claimant, upon meeting certain threshold requirements, to treat the Trust as a “legally responsible tortfeasor” without introduction of further proof; deems the Trust to be a settled joint tortfeasor; limits the rights of co-defendants to obtain contribution against the Trust to a narrow set of circumstances; and, in some instances, permits co-defendants to obtain a reduction of a verdict in respect to the Trust, whether or not the claimant‘s direct claim against the Trust has been resolved. See generally In re Joint Asbestos Litig., 78 F.3d at 770-71. While the setoff is ultimately measured by reference to applicable local law of contribution and verdict reduction or settlement credit, see TDP § H.3, the TDP initially imposes a different framework of rules for each of the following five categories of states: 1) pro tanto states, defined as those in which any judgment against a non-settling defendant is reduced by the amount paid or agreed to be paid by a released party, TDP § H.3.(b); 2) pro rata states, or states in which total liability is divided equally among all defendants found by the fact finder (or agreed by the parties) to be legally responsible tortfeasors including released parties, and judgments against nonsettling defendants are reduced by either the pro rata share attributable to the released parties or the amount paid or agreed to be paid by the released parties, TDP § H.3.(c); (3) apportionment states, or states in which the amount of any judgment is reduced with reference to the apportioned share of released or absent parties, TDP § H.3(d); (4) states where the law provides for several liability with respect to all or part of a cause of action, TDP § H.3(e); and (5) states with multiple setoff rules, defined as states in which different setoff rules govern different causes of action or parts thereof or elements of damage, TDP § H.3(f).2 The TDP also provides:
Except as described below, in order to preserve the Trust‘s assets for payment of claims asserted by asbestos health claimants and to limit transaction costs of all parties, set-off credit shall be the preferred method of satisfying Co-defendant claims, regardless of whether the Trust and claimant have liquidated the underlying claim.
TDP § H.2(a).
As the parties’ arguments focused upon the “pro rata” and “multiple setoff rules” categories, Judge Schiller reviewed the applicablе TDP provisions. With respect to pro rata states, the specific term of the TDP addressing calculation of the amount of the setoff is as follows:
Solely for the purpose of obtaining a set-off in a pro rata state pursuant to this subsection 3(c), regardless of whether the Trust has been given a release, or the wording of any such release, claimants in pro rata states shall be deemed to have given the Trust a joint tortfeasor release and indemnified the Trust against contribution and indemnity claims by Co-Defendants against the Trust arising from a judgment obtained by such claimants.
(i) Liquidated claims. Where the underlying claim has been liquidated, the set-off amount shall be either (a) the Liquidated Trust Payment,3 or (b) the
(ii) Unliquidated claims. Where the underlying claim has not been liquidated, the set-off amount shall be either (a) the Unliquidated Trust Payment, or (b) the Trust‘s pro rata share of the judgment, as provided by applicable law.
TDP § H.3.(c). With respect to states with multiple setoff rules, the TDP provides that “applicable law shall govern which set-off rules apply to each cause of action or part thereof and element of damages.” TDP § H.3.(f). The Superior Court majority recognized that the TDP requires, in the first instance, an assessment of applicable state law to determine the pertinent Section H.3 category establishing the setoff rules in relation to the Trust‘s proportionate share of damages. In performing this assessment, it reviewed the concept of joint and several liability and the Uniform Contribution Among Tortfeasors Act,4 and in particular, Section 8326 of the enactment, which provides, inter alia, that:
[a] release by the injured person of one joint tort-feasor, whether before or after judgment, does not discharge the other tort-feasors unless the release so provides, but reduces the claim against the other tort-feasors in the amount of the consideration paid for the release or in any amount or proportion by which the release provides that the total claim shall be reduced if greater than the consideration paid.
a party who signs a general release waiving all claims and discharging all parties will be precluded from thereafter suing a party who did not contribute consideration toward the release. However, if a plaintiff wants to settle with one joint tortfeasor but preserve the right to sue others, he or she can sign a pro tanto or a pro rata release. If the plaintiff settles pursuant to a pro tanto release, the plaintiff reduces his or her recovery against a non-settling joint tortfeasor by the amount of consideration paid for the release. By contrast, if a plaintiff settles pursuant to a pro rata release, the plaintiff reduces his or her recovery against the non-settling joint tortfeasor by that tortfeasor‘s allocated share of the total liability. Therefore, except in limited circumstances discussed infra, the parties to a release have the option to determine the amount or proportion by which the total verdict shall be reduced against the non-settling tortfeasors to reflect the settling tortfeasor‘s share.
Baker, 729 A.2d at 1148 (citations omitted).
With this background, Judge Schiller undertook to categorize Pennsylvania jurisprudence within the framework of Section H.3 of the TDP. Because, under Pennsylvania law, liability is allocated differently depending upon the underlying cause of action,5 and damages allocable to
The majority then turned to Pennsylvania law to determine setoff, performing an analysis of Walton v. Avco Corp., 530 Pa. 568, 610 A.2d 454 (1992), Ball v. Johns-Manville Corp., 425 Pa.Super. 369, 625 A.2d 650 (1993), and Charles v. Giant Eagle, 513 Pa. 474, 522 A.2d 1 (1987). Judge Schiller determined that these cases did not, as found by the trial court, require that liability of defendants in all strict liability actions be limited to their pro rata share of a verdict. See Baker, 729 A.2d at 1149 (stating that “[w]e do not read Walton or Ball so broadly; neither case suggests that joint and several liability should be abolished in strict liability cases“). Nor did he accept ACandS‘s argument that such authorities require a pro rata setoff of a settling tortfeasor‘s full proportionate share of damages, regardless of the terms of the written release. Rather, Judge Schiller read Ball to stand only for the general proposition that, in a strict liability action, the parties’ joint and several liability is to be allocated among the joint tortfeasors found liable for the plaintiff‘s injuries on an equal percentage basis, solely for purposes of applying the UCATA‘s setoff and contribution provisions. See Baker, 729 A.2d at 1150. With regard to Walton and Giant Eagle, the opinion noted that such cases concern the obligations of a non-settling tortfeasor where the settling tortfeasor paid in excess of its share of allocated liability. See id. at 1151 (stating that “[n]either Walton nor Giant Eagle addressed the issue before this Court,
This interpretation serves the policies emphasized in Walton and Giant Eagle in favor of encouraging settlements and of respecting their finality. This interpretation also furthers the policies reinforced in Walton and Giant Eagle that the plaintiff should be fully compensated for his injuries, and that a non-settling joint tortfeasor should not benefit from the windfall of a settling tortfeasor paying more than his or her share of allocated liability. By extension, a non-settling joint tortfeasor should not receive a windfall in the form of a release of its joint and several liability to the plaintiff simply because another joint tortfeasor settled for less than his or her allocated share of liability. To hold otherwise would be to eradicate the principles of joint and several liability, and effectively to repeal the provisions of the UCATA. Moreover, such a result would discourage settlement because plaintiffs would not have the option of negotiating a pro tanto release.
The Superior Court majority acknowledged that ACandS was not likely to obtain remuneration from the Trust for payments made in excess of its allocated share of the verdict. It found, however, that this resulted as a consequence of the quid pro quo established by the Manville settlement and effectuated through the TDP. See id. at 1152 (stating that “AC & S was in the class of co-defendants which negotiated for and received valuable concessions in exchange for agreeing not to seek contribution from the Trust; these concessions included being able to treat the Trust as a joint tortfeasor without the introduction of further proof, and receiving a set-off for the Trust‘s share of liability“). Judge Schiller also viewed the result of enforcing the terms of the pro rata release in this case as supported by thе established policies of favoring full and fair compensation to injured victims, as well as settle-ments. Id. Thus, the Superior Court reversed, finding that the trial court had erred in failing to enforce the terms of the pro tanto release, and remanded, in effect, for the trial court to increase the principal amount of the verdict from $440,000 to $850,000, to account for the balance of the Trust‘s proportionate share.
Judge Eakin filed a dissenting opinion, joined by President Judge McEwen and Judge Joyce. Like the majority, the dissent discussed the background for and context of the Manville settlement and TDP, emphasizing the binding nature of the TDP upon all Trust beneficiaries, including the parties to the present appeal, and thus, again, the centrality of the TDP to resolution of the setoff issue presented. Judge Eakin also reviewed the pertinent
I see no basis for a rule that pro rata/pro tanto allocation depends on the ultimate ratio of settlement to verdict, as the majority‘s result suggests. Can the applicable princi-ples of law change with the specific mathematics of the verdict? Does the law apply one standard when settlement exceeds that pro rata share, and another standard when it does not? I find neither logic nor fairness in such a dichotomous approach.
Baker, 729 A.2d at 1159 (Eakin, J., dissenting).
Moreover, while acknowledging that “[m]assive litigation spawned this issue, which essentially pits its unique complexity against fundamentals of Pennsylvania law on set-off and contribution,” Judge Eakin concluded that “the TDP trumps the Baker/Trust release.” Id. at 1155, 1159. In this regard, the dissent emphasized that the TDP provides that setoff is the preferred method of satisfying codefendant claims. See TDP § H.2.(a). It also concluded that the requirement of a pro rata setoff flowed not only from application of principles embodied in this Court‘s decisional law but also from a direct application of the terms of the TDP; that such application had been determined to be the product of extensive negotiation and a full and fair compromise among the Trust, asbestos health claimants and codefendants; that the settlement assurеd qualified asbestos health claimants some measure of recovery commensurate with the finite amount of funds available to the Trust; and that the TDP also provided a corresponding measure of protection to codefendants in the form of ensuring a pro rata release with respect to the Trust‘s proportionate share of damages. See id. at 1159-60; see also id. at 1155 (Eakin, J., dissenting) (“[i]n such cases, the pro rata approach is preferable because ... it reflects the reality of the Trust‘s limited fund status, gives effect to the terms of the TDP, and follows the guidance of cases most relevant to this issue“). The dissent stated:
There is no reason to disregard the hard-fought negotiations of the parties in [In re Joint Asbestos Litig.], and the resulting balancing of interests, to give effect to a side agreement between two of the parties, especially where doing so would require a remaining party to pay almost twice the share otherwise required under the TDP and Pennsylvania law.
Baker, 729 A.2d at 1160 (Eakin, J., dissenting). Having concluded that, although the Bakers provided the Trust with a pro tanto release, such release should be accorded the effect of a pro rata one, the dissent expressed its belief that Sections 8326 and 8327 of the UCATA did not require a different result, as it determined that such provisions were not applicable to an action in strict liability. See id. Thus, the dissent
In the present appeal, the arguments presented by the Bakers and ACandS adopt, in large part, or reflect variations upon, the positions articulated by Judges Schiller and Eakin, respectively. Of particular significance to my analysis, however, in their briefs, ACandS and its amicus curiae, Owens Corning, also developed a refinement of Judge Eakin‘s view concerning the consequence of the determination that Pennsylvania is a state with multiple setoff rules. They contend that such classification does not permit a court to proceed directly to an application of state law principles of setoff to the terms of the written release at issue, as the Superior Court majority did (and as does this Court‘s majority). Rather, ACandS and Owens Corning argue that the direction in Section H.3.(f) that “applicable law shall govern which set-off rules apply to each cause of action or party thereof and each element of damages”
simply means that the claim must be characterized under the TDP (i.e., pro rata, pro tanto or apportionment) according to the law which the state applies to that particular claim. Thus, if (as here) the claim would be subject to a pro rata set-off, then that claim falls within the TDP‘s pro rata category for purposes of calculation of the set-off. Again, “applicable law” is merely a directive as to which section of the TDP applies—not an invitation to ignore the TDP altogether.
It bears repeating that the TDP is the negotiated settlement of a national class action, in which the parties were forced to group and classify the widely divergent liability/apportionment rules of dozens of different jurisdictions. The TDP was designed to cover, by way of example, states like California, which imposes several liability with respect to eсonomic damages but joint and several liability apportionment with regard to non-economic loss. In such states, a claim is classified under the TDP as several liability for economic claims and joint liability/apportionment for non-economic damages. Likewise, in Pennsylvania, strict liability claims are apportioned on a pro rata basis and such claims are thus classified under the TDP‘s “Pro Rata” category.
Any other conclusion would be absurd. It cannot be seriously contended that where the parties painstakingly negotiated the TDP‘s set-off provisions, they nonetheless agreed to effectively erase the TDP in states with multiple set-off rules. Yet, this is precisely what the Superior Court majority did, and exactly the reason that this Court must reverse. Brief of Amicus Curiae Owens Corning, at 17-18 (emphasis in original). This argument supports Judge Eakin‘s view that construction and application of Section H.3.(c) of the TDP is essential to the resolution of this appeal. Based upon the asserted applicability of Section H.3.(c), ACandS offers its central contention that such provision engrafts a pro rata release upon any and all settlements with the Trust covered by the provision. See Brief of Appellant ACandS, Inc., at 18-19 (stating that “the actual pro tanto language in the Baker‘s (sic) release with the Manville Trust is irrelevant to the set-off for the Manville Trust‘s share of the verdict because the Bakers are deemed to have given the Manville Trust a release which indemnifies it against cross-claims—that is a pro rata release“). Alternatively, ACandS argues that the verdict should be reduced by the pro tanto settlement figure, then divided equally among itself and the non-settling tortfeasors with the exception of the Trust.9
1) The centrality of the TDP to the resolution of the present appeal
As noted, both the lead and dissenting Superior Court opinions reflect the contractual nature and scale of the class action settlement undertaking that resulted in the TDP and, correspondingly, the importance of adherence to the negotiated terms. It is undisputed in the present appeal that the TDP governs the parties’ respective rights and remedies with regard to any setoff attributable to the Trust‘s proportionate share of the verdict.
2-3) The initial TDP category assessment
The majority chooses not to resolve the parties’ dispute concerning whether Pennsylvania falls within the H.3.(f) category (states with multiple setoff rules) or the H.3.(c) category (pro rata states). It deems such distinction inconsequential based upon the conclusion that the provisions of Section H.3.(f) are concurrent with those of Section H.3.(c) in compelling the application of state law to determine the pertinent setoff; thus, it is able to disassociate the remainder of its analysis from the TDP and procеed to what it characterizes as the crux of the dispute, namely, whether state law mandates a pro rata or pro tanto setoff. This assessment, however, overlooks the fact that Section H.3.(c) contains specific rules that engraft additional terms upon any settlement and release (discussed further below) prior to the ultimate application of state law. Such rules are not found in Section H.3.(f); therefore, although both sections may ultimately lead to the same result (the application of state law), the terms of the contractual arrangement of rights and interests which must be assessed
With regard to initial TDP categorization, I agree with the Superior Court majority that Pennsylvania should be deemed to be a state with multiple setoff rules under Section H.3.(f) of the TDP, see Baker, 729 A.2d at 1146-47, since our jurisprudence applies differing rules allocating liability among joint tortfeasors in relation to different causes of action and, correspondingly, different setoff rules in connection with the settlement of such causes.
4) The separate issue of categorization for purposes of a strict liability action
Although I conclude that Pennsylvania is, in the first instance, a state with multiple setoff rules for purposes of the TDP, I differ with the Superior Court majority‘s interpretation of Section H.3.(f) as a directive to proceеd directly to apply Pennsylvania law to the written pro tanto release under consideration. Rather, I would also consider and adopt the portion of ACandS‘s argument positing that Section H.3.(f)‘s directive that “applicable law shall govern which set-off rules apply to each cause of action or party thereof and each element of damages” requires a separate threshold assessment categorizing the segment of state law governing the pertinent cause of action (or element of damages) within the four remaining categories enumerated under Section H.3.(c) of the TDP (pro tanto, pro rata, apportionment, or several liability). I believe that this procedure is an appropriate interpretation of the written terms of Section H.3.(f) of the TDP, and effectuates the likely shared intentions of the parties to the TDP and the courts that approved it to provide some degree of standardization in the treatment of similar claims. The approach taken by the Superior Court majority results in the application of different principles governing setoff depending upon whether the jurisdiction treats all forms of tort claims on a pro rata basis (in which case Section H.3.(c) of the TDP clearly governs), or only the ones at issue in the case (in which case the Superior Court majority would apply state law without reference to Section H.3.(c)).10
5-6) Governance of the setoff attributable to the Manville Trust in strict liability actions in Pennsylvania, in the first instance, by Section H.3.(c) of the TDP
Following from the above, it is next necessary to determinе which category under Section H.3 of the TDP applies to a Pennsylvania strict liability action. In this regard, preliminarily, and as further discussed below, for the reasons stated by this Court‘s majority, I would not adopt the view of the Superior Court dissent that Pennsylvania jurisprudence converts any form of release in a strict liability action into a pro rata one. See Baker, 729 A.2d at 1159 (Eakin, J., dissenting). Such a conclusion, however, is not a prerequisite to categorizing strict liability actions within the H.3.(c) pro rata category. States (and causes of action) falling within the pro rata category are those in which “total
7-8) Section H.3.(c) works a modification of the release provided by an asbestos claimant to the Manville Trust
As previously noted, Section H.3.(с) effectuates the following modification of a release given by a plaintiff to the Trust: “regardless of whether the Trust has been given a release, or the wording of any such release, claimants in pro rata states shall be deemed to have given the Trust a joint tortfeasor release and indemnified the Trust against contribution and indemnity claims by Co-Defendants.” ACandS‘s arguments equate this language with a pro rata release.
While I agree with ACandS that Section H.3.(c) is relevant, I do not agree that it confers the sought-after relief. To so find would render the language of Section H.3.(c) internally inconsistent, since the provision expressly allows for effectuation of a pro tanto setoff in states in which the applicable law would permit it. See TDP H.3.(c)(i) (providing that the setoff amount may be the Liquidated Trust Payment, i.e., the pro tanto settlement figure, where applicable state law so provides). Moreover, under Pennsylvania law, in order for a release to relieve the settling tortfeasor from making contribution to a non-settling defendant, it must provide for a reduction of the verdict against the non-settling tortfeasors to the extent of the settling tortfeasor‘s pro rata share of damages. See generally
ACandS and Owens Corning suggest that the asbestos defense bar would never have agreed to provide the Trust with the insulation from liability that it receives under the TDP absent the conferral of a pro rata release from asbestos health claimants. It is significant, however, that the complained-of exposure is not a consequence of the TDP, but results instead from the application in Pennsylvania of the principle of joint and several liability, which substantially advantages plaintiffs over solvent codefendants in a situation involving one insolvent defendant.14 The TDP simply does not relieve Pennsylvania strict liability codefendants from this effect. In addition to entering the class action settlement with this burden, the Manville codefendants must have appreciated the protections afforded to Johns-Manville under the federal Bankruptcy Code; the finite assets possessed by the Trust created to resolve the flood of asbestos-related claims; their relative position in relation to the asbestos health сlaimants in terms of priority; and the corresponding likelihood that they would be foreclosed from achieving substantial contribution from Johns-Manville or any entity succeeding to its liabilities. Thus, it is not surprising that they would have compromised their rights against the Trust substantially in furtherance of the Trust‘s objective to achieve a fair overall distribution and their own desire to attain some degree of contribution and/or setoff in relation to their claims. This appears to be the purpose and effect of the TDP—a balanced division of Trust funds consistent with the existing rights and interests of the parties, with overlaying terms providing additional protection for the Trust corpus. There does not, however, appear to have been an incentive for the asbestos health claimants to effectuate a wholesale restructuring of their core rights and remedies vis-à-vis the Trust‘s codefendants. Indeed, neither ACandS nor its amicus has identified any valuable consideration tendered (or right surrendered) to asbestos health claimants in connection with the class action settlement commensurate with the highly valuable right of the claimants to pursue full recovery under a theory of joint and several liability under applicable law.15
As noted, I agree with the majority that, regardless of the continued vitality of Walton and Giant Eagle, the UCATA applies to strict liability actions. Accordingly, independent of the TDP, Pennsylvania law does not impose a pro rata release in the present situation.
11) ACandS‘s alternative argument advocating removal of the Trust from the allocation calculation
As noted by the majority, in In re Joint Asbestos Litig., 919 F.Supp. 1 (E.D.N.Y. & S.D.N.Y.1996), upon assessing the TDP in connection with the application of Maryland law, Judge Weinstein found that judicial modificatiоn of the terms of the class settlement was necessary to achieve a balanced result. The selected modification was to lessen the effect of joint and several liability by spreading the bulk of the Trust‘s proportionate share of liability among the other codefendants’ shares. See id. at 8-9. Judge Weinstein reasoned that departure from the terms of the TDP and relief from the effect of Maryland law was appropriate, since “the Trust confounds the underlying assumption of Maryland law that a joint tortfeasor can be made to pay a pro rata share, irrespective of whether it pays to the plaintiff or to a co-defendant.” Id. at 8.
I would defer to Judge Weinstein‘s assessment of Maryland law, as it is not directly pertinent to this case. As previously noted, however, in Pennsylvania jurisprudence, the impact to which he refers results, not from the terms of the TDP, but from an ordinary application of the doctrine of joint and several liability, as the same confounding effect is presented by a settling codefendant who becomes insolvent or insulates his assets from judgment. The policy of favoring the injured plaintiff in such circumstances is the very reason that joint and several liability exists and is reflected in the provisions of the UCATA delineating the contribution interests of joint tortfeasors. Thus, I view ACandS‘s alternative argument not as implicating any failing on the part of TDP, but as an attempt to engraft new terms upon the TDP to correct perceived unfairness that arises wholly independently. While I recognize the substantial difficulties facing Trust codefendants in complex mass asbestos tort litigation,16 and the arguments among courts and commentators concerning the overall fairness of the application of joint and several liability generally and in such circumstances,17 this case was not argued or taken to evaluate a widescale restructuring of our tort law as it applies to mass tort cases, but rather, to ensure that the parties’ class action settlement
In summary, in conformance with the majority‘s holding concerning the effect of Pennsylvania law in relation to written releases, ACandS could obtain a full setoff in relation to the Trust‘s share of the verdict only if the release provided by the Bakers, or the provisions of the TDP, contained an express agreement to surrender the interest in pursuing full recovery from the Trust‘s codefendants pursuant to the doctrine of joint and several liability, thereby constituting a full pro rata release. The release that the Bakers provided was pro tanto, and, although the terms of the TDP insulate the Trust from substantial exposure to a contribution claim by ACandS, they simply do not reflect a commitment on the part of the Bakers to surrender their interest in pursuing full recovery against the Trust‘s codefendants, including ACandS. Thus it is that I come to join Mr. Justice Cappy in affirming the order of the Superior Court.
Justice ZAPPALA and Justice NEWMAN join this concurring opinion.
OFFICE OF DISCIPLINARY COUNSEL, Petitioner,
v.
Robert Chase CHEEK, Jr., Respondent.
No. 501 Disciplinary Docket No. 3.
Supreme Court of Pennsylvania.
June 26, 2000.
ORDER
PER CURIAM:
AND NOW, this 26th day of June, 2000, upon consideration of the Report and Recommendations of the Disciplinary Board dated May 2, 2000, it is hereby
ORDERED that Robert Chase Cheek, Jr., be and he is suspended from the Bar of this Commonwealth for a period of two years to run consecutive to the suspension previously imposed by this Court on March 13, 2000, at No. 460 Disciplinary Docket No. 3, and he shall comply with all the provisions of Rule 217, Pa.R.D.E. It is further ORDERED that respondent shall pay costs to the Disciplinary Board pursuant to Rule 208(g), Pa.R.D.E.
Notes
In Pennsylvania, liability among joint tortfeasors is allocated differently in a negligence action than it is in a strict liability action. In a negligence action, liability is allocated among responsible tortfeasors according to percentages of comparative fault. Thus, a “pro rata” set-off is calculated based on the settling party‘s percentage of negligence as determined by the factfinder. However, in strict liability cases, as in the case sub judice, liability is allocated equally among responsible tortfeasors, without regard to fault. Thus, a “pro rata” setoff is calculated based upon the total liability divided by the number of defendants.
Baker, 729 A.2d at 1148 (citations omitted). Judge Schiller also noted that, in certain circumstances, Pennsylvania law allows for the imposition of several liability. See id. at 1148 n. 22 (citing Glomb v. Glomb, 366 Pa.Super. 206, 211-13, 530 A.2d 1362, 1365 (1987)(en banc), appeal denied, 517 Pa. 623, 538 A.2d 876 (1988)).In both cases, relying upon policies in favor of promoting settlements, and avoiding a windfall to the non-settling tortfeasor, the Court required the non-settling tortfeasor to pay its full share of allocated liability in spite of the fact that the total payments to the plaintiff exceeded the amount of the jury verdict. The Court reasoned that, “[t]here is no basis for concluding that the jury verdict must serve as a cap on the total recovery that a plaintiff may receive.”
Baker, 729 A.2d at 1150.Owens Corning emphasizes that the settlement was on a national scale, therefore suggesting that balancing of rights must be viewed on a broader basis. Owens Corning does not, however, provide any discrete examples of the interests exchanged in this broader field. Moreover, the structure of the TDP retains, in substantial part, the governance of applicable local tort principles, thus seeking to strike its balance of the parties’ interests vis-à-vis the Trust within the context of individual claims. Indeed, it would be highly unlikely that a court would approve a settlement that sacrifices substantial interests of claimants in one jurisdiction in favor of the conferral of enhanced entitlements upon claimants within another.