As often happens, we are asked in this case to creatively interpret the clear language of a statute to avoid an obvious, but arguably unfair, result. We cannot do this. Under the Michigan Constitution and its division of power between the Legislature and the judiciary, we are only authorized to implement statutes, not change them in response to policy arguments, regardless of how persuasive.
Defendant-appellant Otto-Dufty Architects, P.C., brought a cross-complaint against defendant-appellee Riverwood Recreation Center, Inc., seeking contribution. Both Otto-Dufty and Riverwood had been sued in the underlying lawsuit by plaintiffs Mary and Kenneth Miller, not parties to this appeal, who alleged defendants were responsible for Mary Miller’s slip and fall accident. The accident occurred at a golf course owned and operated by Riverwood that had been renovated in a project in which Otto-Dufty was architecturally involved. The jury awarded plaintiffs a $328,500 verdict against Riverwood and Otto-Dufty, jointly and severally. The jury also determined that Riverwood was seventy percent liable for Mary Miller’s injuries and Otto-Dufty thirty percent liable.
Following the verdict, but before an order of judgment was entered, Riverwood suggested that Otto-Dufty and Riverwood should jointly try to settle the case with plaintiffs and that Riverwood would be willing to pay $25,000 in settlement. Otto-Dufty declined that offer and Riverwood went forward with settlement, agreeing with plaintiffs to pay $25,000. As a result, an order of judgment was entered making Otto-Dufty liable for the en *564 tire jury verdict reduced only by the $25,000 amount paid in settlement by Riverwood, pursuant to Michigan’s contribution statute, MCL 600.2925d(b); MSA 27A.2925(4)(b). Otto-Dufty contested that result in a motion for contribution that was denied pursuant to the statute.
This appeal centers mainly on the judgment order entered and the related denial of Otto-Dufty’s motion for contribution. In addition, OttoDufty argues that sanctions should not have been imposed against it for attempting to mislead the court regarding the proper procedure to be used in attempting to enforce its alleged contribution right against Riverwood. We affirm.
The right to contribution in Michigan is controlled entirely by statute because there was no right to contribution at common law.
Reurink Bros Star Silo, Inc v Clinton Co Road Comm’rs,
At issue here is the application of MCL 600.2925d; MSA 27A.2925(4):
*565 When a release or a covenant not to sue or not to enforce judgment is given in good faith to 1 of 2 or more persons liable in tort for the same injury or the same wrongful death:
(a) It does not discharge any of the other tortfeasors from liability for the injury or wrongful death unless its terms so provide.
(b) It reduces the claim against the other tortfeasors to the extent of any amount stipulated by the release or the covenant or to the extent of the amount of the consideration paid for it, whichever amount is the greater.
(c) It discharges the tort-feasor to whom it is given from all liability for contribution to any other tort-feasor.
Otto-Dufty contends that the settlement between Riverwood and plaintiffs was not "in good faith” and, thus, this statute does not discharge River-wood from its liability for contribution to OttoDufty.
Otto-Dufty argues that we should consider the settlement not in good faith because of its result, i.e., because Otto-Dufty must pay far more than its pro-rata share of plaintiffs’ damages. Hypothetically, under the jury finding that Riverwood was seventy percent liable for plaintiffs’ damages, Riverwood would have paid more than $200,000 to plaintiffs. Otto-Dufty would have paid less than $100,000 as a result of its thirty percent liability. However, as a result of the settlement and the trial court’s application of the statute, the judgment against Otto-Dufty was nearly a quarter of a million dollars, 1 Riverwood must pay plaintiffs only $25,000, and Otto-Dufty has no right against Riverwood for contribution. Because this result is *566 so disproportionate in light of the jury’s finding of fact regarding Otto-Dufty’s relatively limited liability for Mary Miller’s injuries, Otto-Dufty argues that the settlement agreement should not be considered to be "in good faith” under the statute.
In the absence of any compelling Michigan authority regarding the statutory meaning of good faith,
2
Otto-Dufty relies heavily on the majority opinion in Tech-Bilt,
Inc v Woodward-Clyde & Associates,
38 Cal 3d 488; 213 Cal Rptr 256;
The Tech-Bilt majority came to its conclusion because of legislative action that occurred after *567 judicial decisions adopting a proportionate-liability test of good faith. For the majority, this constituted legislative affirmation of that interpretation. Id. at 495-497, 498-499. The court also noted that its understanding of good faith was consistent with comments to the Uniform Contribution Among Tortfeasors Act, 12 ULA 63 (1955 rev), upon which the California statute was modeled. Id. at 494, n 4.
In dissent, Chief Justice Rose E. Bird persuasively reasoned that the 1955 revisions of the Uniform Contribution Among Tortfeasors Act "represented a policy decision to encourage settlement [which] . . . abandoned as unworkable [the] earlier attempt to protect nonsettling parties from inequity other than that caused by collusive conduct.” Id. at 504. Chief Justice Bird criticized the majority’s conclusion that the legislature had adopted a judicial interpretation of good faith requiring proportionality because the judicial interpretation purportedly relied upon was "mere dictum.” Id. at 503. Chief Justice Bird adopted a much more limited view of good faith: "[A] settlement satisfies the good faith requirement if it is free of corrupt intent, i.e., free of intent to injure the interests of the nonsettling tortfeasors. A settlement is made in bad faith only if it is collusive, fraudulent, dishonest, or involves tortious conduct.” Id. at 502.
While the
Tech-Bilt
majority’s reasoning regarding the meaning of "good faith” in the California statute may or may not be correct, it is not persuasive with regard to the Michigan statute. OttoDufty can point to no Michigan legislative history suggesting any intent to adopt a judicial interpretation of "good faith” that would require that a settlement agreement must reflect proportional liability. As in California, the Uniform Contribution Among Tortfeasors Act was the basis of the
*568
Michigan contribution statute.
Theophelis v Lansing General Hosp,
Beyond that, as in California, the Michigan contribution statute seeks to advance two goals, the equitable sharing of liability and the settlement of lawsuits. Id. at 410. However, it appears that the Legislature intended that the first goal should be subservient to the second in situations where they conflict. As previously noted, §§ 2925a and 2925b, which provide the right to contribution and advance the equitable sharing goal, are both limited by an “except as otherwise provided” clause. The act otherwise provides, in § 2925d, a strong incentive to settle: a settling tortfeasor is protected from contribution claims made by other tortfeasors.
This primary goal of inducing settlements would be undermined by the broad interpretation of “good faith” that Otto-Dufty promotes. “As the cases and commentators note, settlement is depen *569 dent upon the degree to which the settling defendant can be assured of the settlement’s finality.” Tech-Bilt, supra at 506-507. A joint tortfeasor has an incentive to settle a case only if the amount agreed upon represents the final and total liability that will have to be paid for the matter to any party. Adopting a "good faith” definition that would allow a court to impose further liability under contribution principles would reduce that incentive. "It will be difficult for a settling defendant to predict whether the trial court will find his settlement to be in good faith. The imprecise nature of the test also produces the added risk that despite the deference paid to the trial court, a favorable good faith determination will be reversed by the appellate court.” Id. at 507. This definition would make it "impossible for one tortfeasor alone to take a release and close the file.” Id. at 504.
Otto-Dufty’s definition of "good faith” might, in effect, completely eviscerate the settlement incentive that § 2925d clearly seeks to provide. In essence, Otto-Dufty’s argument is that a settlement is not in good faith unless a settling defendant pays approximately its proportionate share of damages. But, in that situation, another defendant has no right to contribution from the settling defendant. MCL 600.2925a(2); MSA 27A.2925(1)(2). In other words, Otto-Dufty would have us interpret "good faith” in a fashion that makes § 2925d’s protection against contribution claims available only where there is nothing to be protected against. We will not adopt this nugatory interpretation of this section.
Altman v Meridian Twp,
In sum, we disagree with the
Tech-Bilt
majority and believe that its treatment of "good faith” will
*570
severely undermine the settlement goal of the Michigan statute. With similar reasoning, courts in other states have also rejected the
Tech-Bilt
majority approach.
Stubbs v Copper Mountain, Inc,
Instead of concentrating on whether the settlement amount is reasonably related to the settling defendant’s proportional liability as compared to other tortfeasors, we conclude that "good faith” should be analyzed with respect to the settling parties’ negotiations and intent. This is the usual way in which the "good faith” of agreements is analyzed. See, e.g.,
People v Downes,
"Good faith” has been defined as a standard measuring the state of mind, perceptions, honest beliefs, and intentions of the parties.
Shaffner, supra.
In the commercial law context, the Uniform Commercial Code defines "good faith” as "honesty in fact in the conduct or transaction concerned.” MCL 440.1201(19); MSA 19.1201(19);
Downes, su
*571
pra.
In addition, Black’s Law Dictionary (6th ed), p 693, defines "good faith,” in part, as "an honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable advantage.” In contrast, "bad faith,” in the insurance context, has been defined as "arbitrary, reckless, indifferent, or intentional disregard of the interests of the person owed a duty.”
Commercial Union Ins Co v Liberty Mutual Ins Co,
Otto-Dufty argues that Riverwood falsely represented its financial situation to plaintiffs to induce the settlement agreement. Specifically, Otto-Dufty contends that Riverwood threatened to seek bankruptcy protection unless plaintiffs would accept a relatively small amount in settlement, but, in fact, Riverwood was financially secure. Even if this were the case, representations of this sort are commonly made in settlement negotiations and plaintiffs were free to demand whatever financial information they wanted from Riverwood in weighing this factor. Moreover, plaintiffs contended, at a hearing before the trial court, that their settlement with Riverwood was largely entered into to avoid a Riverwood appeal of the jury verdict. 4 Again, this is a common inducement for settlement, and Otto-Dufty has not come forward *572 with any evidence of "bad faith” in the sense that Riverwood’s actions were "arbitrary,” "reckless,” dishonest, and made with concealment. Id. at 136-137.
We fully understand Otto-Dufty’s basic complaint, that it is unfair to require it to pay most of plaintiffs’ damages when the jury found it minimally liable. That result is, however, required by the statute, and Otto-Dufty’s arguments should be addressed to the Legislature. 5
Finally, Otto-Dufty argues that sanctions should not have been awarded against it because it did not intend to mislead the trial court in arguing that a motion for contribution was appropriate under MCL 600.2925c(2); MSA 27A.2925(3)(2). We review the trial court’s findings of fact relating to the imposition of a sanction to determine whether they are clearly erroneous, meaning that we are left with a definite and firm conviction that a mistake has been made.
In re Stafford,
We affirm.
Notes
The trial court’s computations in the order of judgment resulted from applying interest and present value principles to the jury award under MCL 600.6013; MSA 27A.6013 and MCL 600.6306; MSA 27A.6306. These computations have not been challenged on appeal.
Both parties rely upon
Shaffner v Riverview,
Otto-Dufty also relies on cases deciding whether federal law bankruptcy filings were in "good faith,” precedents we find wholly inapposite.
Otto-Dufty makes much of the fact that the settlement agreement in this case was entered after a jury verdict, in contrast to, for example, Shaffner, where the panel noted that it could not "determine with accuracy the fault of the settling parties.” Id. at 518. However, while the jury verdict provides some determination of relative fault, that determination is tentative in a case like this where, absent a settlement, an appeal is likely.
Otto-Dufty’s predicament stems from the fact that it is jointly and severally liable for all of plaintiffs’ damages. We note that the Legislature has recently enacted a law, inapplicable to this case, that significantly changes joint and several liability principles.