Hill v. Wallach, No. ED 110232, 2022 WL 1144701, at *1 (Mo. Ct. App. Apr. 19, 2022), reh’g and/or transfer denied (May 31, 2022)
Many claims involve your insureds and one or more other joint tortfeasors, where it’s claimed all are responsible for the injury, in equal or different degree of fault. In 1978, The Missouri Supreme Court recognized a cause of action for contribution between joint tortfeasors. In 1983, The Missouri Legislature codified the right in RSMo. §537.060. Claims handlers must to be aware of the procedural and substantive aspects of §537.060 or risk being caught on the hook for a greater percentage of damages than may be warranted.
§537.060 allows one of more defendants to settle in good faith with the plaintiff and allows the plaintiff to continue on against non-settling tort-feasors. For example, say defendants A and B drive negligently and cause injury to the plaintiff. Assume damages are $500,000.00 and your insured, defendant A, is 75 percent at fault, with defendant B 25 percent at fault. You have the option of settling and discharging all liability for any reasonable sum as long as you act in good faith, an element that is rarely challenged.
Once you make that settlement with the plaintiff, lets say for $50,000.00, any claim for contribution defendant B may have against your insured, even if there is a pending crossclaim or third party claim, is barred. Moreover, a settling tortfeasor’s fault is not assessed on the verdict form. If the verdict is returned for $500,000 against defendant B, they are responsible for $500,000.00 minus the $50,000 you paid, for a net judgment of $450,000.00, or quite a bit more than the $125,000.00 they are equitably responsible for. However, §537.060 leaves Defendant B without any recourse to recoup any sums from defendant A. So, in a clear liability case, where your insured bears the brunt of the fault, don’t overlook this tool which can significantly lower exposure and allow you to close the file.
If you insure the non-settling tortfeasor, as illustrated above, you do have the statutory right to “set-off” the settlement amount against the verdict before final judgment is entered. The Hill Court points out that this right to “set-off”, as it’s uniformly described by all practitioners, is actually the “Affirmative Defense of Reduction,” set forth in §537.060. While this pronouncement by the Court appears to elevate form over substance, legally the Court is correct. “Set-off” is not an affirmative defense and it arises from an independent action a defendant might have against a plaintiff. So, the better practice is to start pleading and proving this statutory defense, rather than mislabeling it as a set-off.
Caveat: §537.060 does not apply to claims for contractual indemnity or claims pleading vicarious liability.