Mendenhall v. SKINNER AND BROADBENT CO.

аddress respondent’s last known state the in the records of the Clerk.

as reflected

All concur. Justices and Tina

Dennis MENDENHALL

Mendenhall, Appellants

(Plaintiffs Below),

v. CO., AND BROADBENT

SKINNER (Defendant Appellee

INC.

Below).

No. 49S04-9811-CV-740. of Indiana.

Supreme Court

May Farrell, Herod, India- Angela

Kevin P. Indiana, Attorney Appellant. napolis, Johnson, D. Rudolph, Ross E. James Evansville, Indiana, Attorney for Amicus Indiana. Curiae, Trial Defense Counsel Indiana, ment, Brown, $5,000 in Bloomington, Darla medical expenses S. Stewart trial, Attorney Appellee. paid for had the Mendenhalls before and $5,000 in expenses medical Skinner had Doehrman, Indianapolis, Thomas paid the Mendenhalls before trial.1 This Indiana, Curiae, Amicus Attorney for reduced the judgment against Skinner Lawyers Indiana Trial Association. $40,000 $15,000. PETITION TO TRANSFER ON The appealed Mendenhalls this amend ment of the judgment. Ap The Court of SHEPARD, Justice. Chief peals affirmed. Mendenhall v. Skinner & in The defendant this tort case suffered ‍‌​​‌​​‌‌‌‌​‌​​‌​‌​​​‌​‌‌‌​​​‌‌​​‌​‌​​​‌‌‌‌‌​​‌‌‌‍Co., (Ind.Ct. Broadbent 698 N.E.2d 611 mon- judgment sought and then credit for App.1998). had ey paid by settling co-defendant who I. Our Common Law Rule not been added back under the provisions Comparative of the Fault Act. Indiana traditionally courts have fol- circum- Is credit available under these satisfaction, lowed the one principle. By it stances? We hold is not. this we have meant that courts should take History agreements

Facts and Procedural account of settlement and by credit the funds received injuries This case arose out of Dennis tanto, through agreements, such pro to- slipped he Mendenhall suffered when and judgment against ward the a co-defen- parking fell lot. Skinner and Broad- principle dants. The behind this credit is Co., lot, parking bent Inc. owned the al- injured оnly is entitled to though patrons was used of Stewart one a single injury satisfaction for and the Tire The Co. Mendenhalls filed suit joint payment one tortfeasor inures to against both Stewart Tire and Skinner. the benefit of all. Sanders v. Cole Mun. trial, morning On the first Stewart Tire Fin., (Ind.Ct.App.1986). 489 N.E.2d 117 $15,000, settled with the Mendenhalls for articulated, course, policy This was long and was Stewart dismissed from suit. Comparative before enactment of the orally Counsel for Skinner moved to credit Fault Act. today The issue before us amount of against any the settlement impression, thus one of first potential damages following jury ver- changes Act necessitates this common dict. practice. law jury In a trial between Mendenhalls Skinner, plain- found for the argue The Mendenhalls that credits tiffs and in the amount assessed set-offs, settlement, amounts received Comparative Pursuant to the Comparative did not survive the Fault Act. Fault, Act, it found Dennis Mendenhall was They that the' Act the non- contend makes 50% at fault and Skinner was 50% at fault. party defense the defendant’s sole method Accordingly, a verdict of rendered reducing liability where another $40,000 against Skinner and Broadbent. Conversely, settles. Skinner and Broad- off the final ver- Skinner moved to set bent maintains credits did and should asserting, dict the amount of Stewart’s settlement. survive the Act. so law, The trial granted language, court the motion relies on Act’s case judgment, crediting public policy. argu amended the it with We examine these $15,000 the Mendenhalls received in settle- ments turn.2 prеsent important dispute 1. The do not the trial case Mendenhalls does question Comparative allied Fault Act of whether the court's to credit verdict with decision the final way in which affects traditional $5,000 expense payments. the two medical gives our common law credits for settlement 3-4; 5.) (Appellant's Br. at R. at settling defendant has amounts when the been added as a by nonparty.” full or in on Comparative part Relying The Act II. Fault nature, permissive statute’s Act, Comparative Fаult Ind. argues required that it was not to assert 34-51-2-1,3 applies § Code generally Act nonparty defense under the sole as the that ac damages actions based seeking liability. method of to reduce 1, January crued on or after 1985. The Act primary objective modify of the was to examining a statutory pro When contributory negli the law rule of common vision, we look at the statute a whole gence a under which was barred give ordinary meaning common and to he was recovеry only slightly where ‍‌​​‌​​‌‌‌‌​‌​​‌​‌​​​‌​‌‌‌​​​‌‌​​‌​‌​​​‌‌‌‌‌​​‌‌‌‍employed. the Robinson words v. Wrob negligent. Indianapolis Power Brad v. lewski, (Ind.1998). 467 704 N.E.2d Inc., (Ind. 578 Snodgrass, N.E.2d 669 in “may” generally term a statute indicates 1991). to The Act seeks achieve this result a permissive condition. Haltom v. Bruner fault, allocation through proportional of en Meis, Inc., & 680 N.E.2d 6 (Ind.Ct.App. person suring that each whose fault con 1997). injury her tributed to cause bears his or proportionate share of total fault con obviously correct that tributing injury. to the See v. Bowles statute to defеndants the leaves discretion (Ind.1989). Tatom, 546 N.E.2d 1188 hand, nonparties. to add On the other provides while the Act defendants with comparative Under Indiana’s fault choice, scheme, says nothing by way may a named defendant of creat- assert defense, or seeking precluding credits. “nonparty” to attribute fault nonparty to a rather than to the Dispositive III. The Case Law is Not § Ann. defendant. Ind.Code 34-51-2-14 that Skinner also contends case law di (West aWhen Supp.1999).4 defendant as- rects the conclusion credits are not defense, court serts this instructs the precluded the Act where the non- percentage to determine the of fault In party not named at trial. so assert “any person of each who is a ing, Skinner relies on Manns v. State § Ann. nonparty.” Ind.Code 34-51-2- (Ind. Dept. Highways, 541 N.E.2d 929 of 7(b)(1) (West A Supp.1999).5 nonparty is: 1989). person “a or who caused contributed to death, alleged injury, damage cause the or Manns, we considered evidentia- joined has not in property but who been ry use partiаl agreements. settlement action as defendant.” Ind.Code Ann. Plaintiff injured Manns was an automo- (West § Supp.1999).6 A 34-6-2-88 defen- bile accident and sued two defendants: affirmatively plead dant nonparty must vehicle, Hintz, driver of the other defense, and the defendant carries the bur- Department State of Indiana of Highways. den on the proof defense. Ind.Code Id. at 931. Hintz was dismissed before (West §Ann. 34-51-2-15 Supp.1999). trial after Manns executed not covenant to sue exchange Hintz in Id. notes that Skinner first the Act makes trial, At permissive permitted the court adding Depart- and not Indeed, § ment of mandatory. Highways Ind.Code 34-51-2- to inform fault, Hintz; 14 says: agreement “In an action based on settlement however, may defendant assert defense that the it would not allow place Manns to damages of the claimant were caused the covenant not to sue in evidence. Id. " 3. § Formerly person 'Nonparty’ Ind.Code 34—4-33-1. means a read: who is, be, part liable the claimant in 4. Formerly § Ind.Code 34-4-33-10. in whole for the claimed claimant. A shall include § 5. Formerly Ind.Code 34-4-33-5. employer of the claimant.” Prior to amendment under Ind. 34-4-33-2, § defining Code the statute non- any eating contended that the trial to them. appeal, On Manns Bowles, permitting Department court erred 546 N.E.2d at 1189-90. The Ko- agreement, and mention the settlement ziol a logical question court answered fol received, when he was not the amount Bowles, holding lowing remaining de agreement introduce ‍‌​​‌​​‌‌‌‌​‌​​‌​‌​​​‌​‌‌‌​​​‌‌​​‌​‌​​​‌‌‌‌‌​​‌‌‌‍the into allowed to fendants in tort original cases could nаme evidence. Id. as nonparties defendants even where those defendants had dismissed held that the admission was error

We Koziol, pursuant case to settlement. the existence and and observed N.E.2d at 989. normally amount of a settlement should jury. presented not be Policy? IV. What is the Best subtract the amount of judge trial should statutory In the absence of a or directive jury the Id. the settlement from verdict. law, controlling case our decision rests at 934.7 heavily the of policy on sort considerations or set- determining whether credits always that have a part of the devel- Act, Comparative Fault offs survive the opment of common law. Both urge sides Al- particularly helpful. not Manns differing public in policy concerns our de- 1989, though we decided Manns the termination of whether credits survive the 1984, before the accident there occurred Comparative Fault Act.8 Comparative enactment of the Fault Act not under and the case was decided the Thе basis of and Broadbent’s Skinner Act. See id. policy argument is the one satisfaction County v. Monroe The case Huffman principle. argues, non-settling Skinner Corp., 1264 Community School 588 N.E.2d credits, plaintiffs defendants do not receive (Ind.1992), Compara- arise did unjustly enriched will where defen Act, opinion tive Fault but our did not responsible dant is for an entire verdict directly address credits set-offs. plaintiffs already although have received Rather, explored whether Huffman recovery full partial settling or co- law rule on abrogated Act the common 10.) 3, (Appellee’s defendants. Br. at judge’s releases. We discussed the trial principle Appeals This is the our Court of power only to credit settlement amounts disposition articulated in its of this case. dicta, language relied on the Mendenhall, (pur 693 N.E.2d at 612 See stating judges Manns in that trial had the prevent of credit recov pose is to double duty jury to reduce verdicts power ery injury) (citing for the same Riehle v. amounts received in settlement. Huff- Moore, 365, (Ind.Ct.App. 601 N.E.2d 371 man, at 1267. 588 N.E.2d 1992)). part, For the Mendenhalls cite their Partly response, the Mendenhalls as- Bowles, 1188, 546 N.E.2d and Koziol v. sert that we should consider the risks that Vojvoda, (Ind.Ct.App. 662 N.E.2d 985 settling. plaintiff Depend- incurs when 1996), proposition for the that a ing accuracy plaintiffs predic- on the of a sole method defense is Skinner’s of reduc damages jury tions the amount of about cases, however, liability. do These not find, may or the fault support proposition. Bowles jury assign settling will to the defen- that a defendant’s failure to established dant, penalty plaintiff suffer object to the of co-defendants or dismissal Eilbacher, E. gain a windfall. Leonard to name dismissed co-defendants as non- Comparative Nonparty trial allo- Fault and the parties precluded the court from ruling are also briefs 7. We affirmed the trial court's because 8. We aided amicus curiae prior precedent, from the Trial Counsel of Indiana it was made under which Defense Lawyers Triаl Association. allowed the admission of such evidence. and the Indiana they Tortfeasor, L.Rev. had and those where Ind. 910-11 some not. (1984). settling nonparty think the did situations, In the of these two ‍‌​​‌​​‌‌‌‌​‌​​‌​‌​​​‌​‌‌‌​​​‌‌​​‌​‌​​​‌‌‌‌‌​​‌‌‌‍first comparative system, fault Under our expected can be nonsettling defendant recovery may occur where the double amake calculated economic decision based settles, plaintiff then more than receives on an of how much the settle- assessment calculated at trial.9 amount the liability ment was and an estimate of adjust the court to ability of for such might settlor. jury against find This is straightforward when overcompensation plain- not decision unlike the economic settling defendant added as a non- deciding tiff makes settle party. nonparty, the addition of the With one more defendants. necessarily provides the court There in which are also cases the re- among with a visible allocation maining concludes the set- defendant defendant, аnd plaintiff, had is the liability. position tlor no It is possible then ascertain whether says occupies. it overcompensated by was the set- tling defendant. When argues requiring plead defendant, added cannot a nonparty inap- defense to obtain credit is provide an allocation of fault that to did propriate because Skinner not have and any by effort the court calculate a to to reason believe that Stewart Tire inwas speculative. jury any way injuriеs. for credit is more What the liable Mendenhall’s Indeed, instance, all, that has in this after maintains it would provided have been add “unethical” to Stewart Tire an of such it thinks indication as no nonparty as a where there was evidence proximately by have been caused the liti- tending liability Stewart Tire’s defendant, to establish presumably no gating right in this matter. Skinner to be more. concerned about the ethics of such a deci- ability of imple- We think the courts to sion, and surely pressure therе will be to policy ment the common law of credit dur- identify for legitimate grounds claiming age litigation under the Compar- an Still, if nonparty the defense. is no there ative Fault Act is best served a rule liability, evidence of Stewart’s then the that to the set- obliges defendants name fact that Tire was not as a Stewart added nonparty they if are to for tling seek credit just If nonparty leads to a result. Stewart the We reach this conclusion settlement. culpable, merely Tire was not settled but for that follow here. reasons to avoid the cost of or for some nonparty potent defense is a for reason, The tool other loses to nothing A likely ap- defendant defendants. which it rightfully entitled. It either proaches question the add a whether to no prevails judgment, at trial and suffers at settling nonparty possi- two least or it at trial and incurs loses for starting points: injury ble cases where the defen- the shown by value of the settling nonparty likely responsibility.10 dant believes the evidence its sole to be Assume, example, plaintiff colleague 9. 10. Our Boehm sues Justice notes in his defendants, $65,- many there are concurrence that other rea- whom two one of settles for why might sons a defendant name a litigating defendant adds set- 000. doing suggests He decide to foreswear so. trial, tling nonparty. defendant as At litigate case-by-case we basis on a $100,000 damages, allocates no finds strategic the lawyers made various choices defense assigns plaintiff, and fault to the fault to 50% should result in credit no credit the defendant and to 50% after that this trial. We think would neces- instance, overcompensated sarily complicated moving target and be a $115,000, plaintiff will an because the receive approach lawyers that a is to let sounder larger damages. amount than awarded they make the can best choices with knowl- edge predictable consequences. about future information,

Finally, possible suming perfect we сonsider the the Menden- today’s ruling likely on settlement deci halls are to settle effect of less under the generally $15,000 is to policy (they sions. The law one rule satisfaction receive encourage it), discourage litigation negoti likely under while Skinner is also less (it disputes. Lafay ation and settlement of to settle under the one satisfaction rule Club, it). $15,000 ette Tennis Inc. v. C.W. Ellison pays less under At least on (Ind.Ct. Inc., Builders, N.E.2d 1211 case,'we today’s facts believe that App.1980). our holding makes settlement mоre likely than is under the one satisfaction rule— this decision will not We surmise plaintiffs losing do not risk of a value discourage settling. a defendant from Un- portion of their settlement and defendants comparative system, der our encouraged go are not to trial in an is asked to determine the fault of each of attempt liability by reduce their nonparties giving parties without amount of another’s settlement. Therefore, consideration to settlement. allocation, purposes for the of fault it does We conclude that the one satisfaction defendant litigating not matter rule and the benefits of settlement are or for what whether a settlement occurred affording best litigating advanced to defen- actively amounN-the defendant will still thorough dants credit where a allocation seek to shift a of fault to the of damages jury provides the court and the See settling plaintiff. tortfeasor with a respectable upon basis which to Eilbacher, Likewise, supra, at defen- adjust a judgment to avoid double credit. considering dants settlement are not dis- Thus, credit, request litigating because, couraged settling even settling defendant must add the defendant they nonparties, they are no are named Comparative financially at longer risk. The benefits of here, presented Fault Act. Under the facts finality they through seek to achieve therefore, Skinner should not entitled be seem unaffected. settlement a to receive credit fоr amount of the Further, this resolution does not dis- Mendenhall’s settlement. courage settling. Plaintiffs plaintiffs Conclusion making still assume the same risks Thus, in grant- the trial court here erred decision to settle and must still consider judgment motion to amend Skinner’s light is settlement beneficial to credit the verdict with the amount Skin- anticipat- their estimations of and ner in settlement. paid Mendenhalls Thus, savings . this ed costs. We reverse and remand with instructions discourages pe- rule neither settlement nor adjust judgment accordingly. to defendant, plaintiff or any party, nalizes having in court. day his DICKSON, SULLIVAN, and Finally, the rule we announce to- while RUCKER, JJ., concur. settlement, day discourage does not we BOEHM, J., opin- in result with concurs that, at least in a case such as this believe ion. one, rule the one satisfaction does dis- courage settlement. Under the one satis- BOEHM, Justice, concurring in result. rule, the effect on the

faction economic holds, it, majority in this case is I understand parties as follows: As $40,000; agree, party and I a settles аnd Mendenhalls receive Stewart $20,000; $20,000. get in order- credit pays pays nonparty, and Skinner becomes a remaining adopt today, the rule we the eco- for the settlement amounts the Under ‍‌​​‌​​‌‌‌‌​‌​​‌​‌​​​‌​‌‌‌​​​‌‌​​‌​‌​​​‌‌‌‌‌​​‌‌‌‍nonparty defense parties effect on the is as follows: defendants must assert a noipic $55,000; potential settling based on the defendant’s the Mendenhalls receive Stewart $20,000; pays liability. As- pays however, risking majority, asserting the deadline waiv- does limit nonparty er of a to the situation before court defense.

itself a where named defendant has settled and case, In this and Broadbent majority becomes a says it took that Stewart had no view any general a rule that defen- announces liability and therefore Skinner could not credit seeking dant for another’s settle- ethically nonparty assert defense. This a must a non- payments ment have asserted certainly a position is defensible party defense. This broader rule seems to Responsibility. Rules of Professional It problems some fairly complex me to raise poor policy seems to me to a force be day. left that are better for another in conflicts between the client’s financial and the lawyer’s professional terest obli the situation where the third Consider position gations by requiring D to assert (TP) party has not named as defen- which it in order disagrees pre with (D) dant at the time named defendant right to From the serve its setoff. client’s obligated any nonparty de- assert view, point attorney’s ethical con D fense. must assess whether there are prohibit a nonparty cerns the assertion of and any potential other then defendants in giving away defense result whether to de- decide assert money if client’s later a third settles it, likely If D does conse- fense. assert and thereis no under the rule setoff of this quence by plain- is that TP will be named Asserting case. defense in the (P) tiff an defendant and become P already context where sued TP has antagоnistic co-defendant who will consid- problematic. less D at least has P’s word erably complicate perhaps the case and for it that there for a basis claim prejudice D. a successful defense On TP. against hand, if D the other does not assert defense, any short, D forfeits TP contribution I think the net result against liability. a credit It majority’s D’s seems ruling broad mul- more likely that under rule some defen- tiparty litigation. goal is not a to be dants, their attorneys, will be intimidat- today’s holding fostered. I restrict wоuld being judged hindsight ed fear of TP to situations where has been dismissed will a third assert defense even prejudice, perhaps with also D where they are though not inclined to do so. charged knowledge TP has given a can release. We resolve this expect angles I there are more this. litigation issue other contexts as arises minimum, very already At a unless TP has with and we deal real sets of facts. D settled at the time must a non- assert defense, the party tactical I also do not the сlaim that considerations understand point from the defense’s of view are not this rule fosters P settlement between usually majority, remaining majority those identified defendant. The 143-45, says at an of P is more for likely 728 N.E.2d as assessment to settle a net likely $65,000 attribution of to TP. than net pre- many princi- sumably equal defendants will focus true claim is of P’s value pally on an of assessment of the risk TP’s under each scenario. But that is not an becoming adversary poten- applies versus case. The “onе satisfaction” rule exposure. judgments parties tial of Of- dividing benefit where the have not agreement, agreed ten D must make an this choice without reached not to set- knowing why parties the reasons TP is not a tlements. have to Where the reach many. These agreement, they defendant. could be One of an will do so on the basis may already the fact TP present them be that has of their relative dollar valuations may litigation suit D claim settled before was filed. or of the аfter costs of .and any able to allow. may not be learn whether has after setoffs the law will In the much, future, every and if so set live happened, litigants for how before of will does not for regime that either does or settle the same reason that in- against judgment litigation a setoff creased costs of raise produce that incen- from TP. D for received against tive. amounts legal of that issue affects the Resolution Thus, although majority’s rule does against D and the

value of P’s claim P, recovery to the net may add of ánd Assume, exposure. amount of D’s net TP, encourage P 'to settle with not it is does, D P have majority that goal simpli- without a cost to the overall of and value the total perfect information litigation. fying It does not seem to me gives at If law D a claim setoff $X. parallel that there ais effect on TP’s will- TP, received from then P’s remain- $Y ingness to settle with P. TP Unless has not, If it ing claim is worth minus $Y. $X indemnity recoupment some unusual way, will parties is worth Either both $X. both, with D P or it agreement will be a bargain assumption. know that and on that matter of indifference to TP whether or P no incentive to settle a has reduced D gets not a setoff for the amounts P claim might claim for less because the be receives from TP. rule. legal worth more under different bigger This rule does result in a net Similarly, pay D has no incentive to more to P if transfer no third defense is the claim be worth if the law than would way asserted. Another say the same result, resolution of were different. As D thing penalizеs it for not assert- me to a null factor this issue seems to be a third defense. For the reasons fostering of resolutions terms agreedi stated, I significant believe there is a risk P and D. between it unfairly that will do so circum- some majority rule the announces be of foregoing, great stances. All and a the initial set- promoting of some value majority opinion, ultimately deal of the TP, P and P will tlement between because turns on as to speculation parties how will to retain that amount and not bе able in settings vary behave that will with the any judgment may P suffer reduction of parties, amount expo- number of the way D. This another later obtain from each, of the procedural posture sure can saying multiparty litigation case, whom, against who has asserted what produce parts a sum of the result for P undoubtedly other factors. I would greater than the It that is whole. case-by- leave these to resolved on a policy goal obvious that this is they case basis as arise. enсourages should be furthered because fringe parties marginal ulti- adding

mate Parties see their exposure. who major portion

costs of exposure

their ultimate are often more This, turn, pro-

inclined to settle. adds Ricky JACKSON, Appellant Lee portionally more to the costs transactional (Defendant Below), resolving litigation it does to than payments wrongdoers transfer of v. n injured parties. P’s incremental incen- Indiana, Appellee STATE of TP tive settle with is also counterba- (Plaintiff Below). to D lanced the fact that the total cost No. 83S00-9812-CR-770. losing to trial if the going higher apply. “one satisfaction” rule does not As Supreme Court of Indiana. general proposition, the effect of this will May that the is a cost smaller of D’s total and also a percentage exposure potential

smaller of P’s net re-

covery. That reduces the incentive of both

Case Details

Case Name: Mendenhall v. SKINNER AND BROADBENT CO.

Court Name: Indiana Supreme Court

Date Published: May 17, 2000

Citation: 728 N.E.2d 140

Docket Number: 49S04-9811-CV-740

Court Abbreviation: Ind.