The preservation of rights to contribution and/or indemnity from a non-settling tortfeasor is an important issue for vessel owners to consider when drafting a release which is intended to be used to bind settlement between them and a plaintiff.
The principles have previously been established in the case of McDermott, Inc. v AmClyde and were again commented on in the recent case of Savchenko v Icicle Seafoods, Inc., 2013 U.S. Dist. LEXIS 156946 (W.D. WA 2013).
By way of background , in September 2010, and while employed by Icicle Seafoods, the plaintiff, Paul Aaron Savchenko, was injured when a board covering a storage hold broke causing him to fall some eight feet to the floor of the hold.
Subsequently, in 2012, the injury the plaintiff suffered flared up but at that time he was no longer employed by Icicle Seafoods. Savchenko pursued a claim for damages against Icicle who ultimately agreed to settle the plaintiff’s claim for $450,000. Crucially, Savchenko’s subsequent employer (Kari Marie) was not a party to the global settlement and release of all claims.
Having settled the claim of Savchenko, Icicle then proceeded to file suit against Kari Marie for contribution and indemnity. The court dismissed the claim.
The reasoning behind the court’s decision was due to Icicle failing to obtain a full release from the plaintiff Savchenko, who had not released his claims against any other potential tortfeasors. Accordingly, Savchenko could still sue Kari Marie who, as a consequence, would be exposed to a risk of liability to both Savchenko and Icicle Seafoods.
Previously the Supreme Court had ruled that, in the maritime context, where a party settles with a plaintiff that plaintiff can still sue another tortfeasor for additional damages. Any additional damages recovered would though be reduced by the settling defendant’s proportionate share of fault.
So, by way of example, the first defendant may agree to settle with the claimant at $250,000 but the second defendant will not settle and (i) subsequently liability is split equally between the two defendants, and (ii) damages are assessed at $5 million. The non-settling defendant is only liable to pay $2.5 million to the claimant while the first defendant has no additional exposure having already settled at $250,000. Of course things can go the other way and, had the judgement been for $100,000, the first defendant will not be entitled to recover the $250,000 that they had previously agreed to pay and the claimant would still receive $50,000 from the non-settling defendant.
Multiple circuits in the United States have held that a settling defendant may not sue a non-settling defendant for contribution and indemnity if they have not obtained a release of all claims by the plaintiff against that non-settling defendant. In the Icicle case it was held that because Kari Marie were not included in the release then all that Icicle had achieved via the settlement was to extinguish only its own proportionate share of the claim.
This case serves as a very useful reminder to ship-owners that they should always take care when considering what parties to include within a release. A further significant factor will also be the jurisdiction in which any such claim for an indemnity or contribution is to be pursued.
