Amendment To General Obligations Law Section 15-108 Encourages Plaintiffs To Voluntarily Discontinue Against Ostensibly Blameless Defendants, But At What Cost To The Remaind Defendants
October, 2007
New York General Obligations Law § 15-108 is an important statute to defense counsel practicing personal injury litigation in New York, because it establishes rules for apportionment of damages and contribution claims among joint tortfeasors in situations where one defendant in a multiple defendant lawsuit is released prior to trial.
Specifically, the Statute is important because it provides the released defendant with a shield from contribution claims from other tortfeasors, pursuant to GOL § 15-108 (b). Further, it provides the remaining defendants with a set-off in the amount stipulated in the release, given as consideration for the release or the percentage of fault assigned to the released defendant at trial, whichever is greater, pursuant to GOL § 15-108 (a). However, effective July 4, 2007, the New York State Legislature amended this Statute to exclude certain releases from its scope. The Amendment, which adds subsection (d) to GOL § 15-108, excludes from the Statute’s scope: (1) releases and covenants for less than one dollar; (2) releases and covenants that fail to “completely or substantially” terminate the dispute; and (3) such releases or covenants provided subsequent to the entry of judgment. Or stated positively, the Statute now applies only to prejudgment releases of all claims for which the plaintiff receives monetary consideration greater than one dollar.
The legislative purpose in amending the Statute, according to the Advisory Committee, was to encourage plaintiffs to voluntarily release those defendants who appear not to bear any liability, which in turn will reduce the litigation costs of those ostensibly blameless defendants. The Amendment will also make many summary judgment motions unnecessary, and thus reduce the burden on the court system.
To promote its purpose, the Legislature removed a voluntarily discontinuance provided by plaintiff without any monetary consideration from the scope of the Statute. The reason for this change was that prior to this Amendment, experienced plaintiff’s counsel would be loathe to voluntarily discontinue against an ostensibly blameless defendant knowing that if new facts and theories pointed to the released defendant it could conceivably reduce the plaintiff’s award by a considerable amount due to the set-off provision of GOL § 15-108. As such, plaintiff’s attorneys would force blameless defendants to move for summary judgment so to prevent the remaining defendants from trying the “empty chair” and risking a reduced award at trial.
Therefore, by excluding a voluntarily discontinuance without consideration from GOL § 15-108, the Legislature has effectively removed the risk as well as burden of recovering money judgments from the plaintiff and promotes the release of an ostensibly blameless defendant from the lawsuit. But since there are no guarantees that a jury will also find no liability on behalf of the released defendant, the remaining defendants are forced to consider and properly assert claims for contribution otherwise be faced with the possibility of paying for the liability of another party at the time of trial. Accordingly, the amendment merely shifts the risk to the remaining defendants and places the burden on them to commence contribution claims to safeguard against paying more than their fair share at trial.
Another impact of the Amendment is that plaintiffs may voluntarily discontinue against a minimally liable defendant for no consideration, especially when that defendant is insolvent or uninsured. Naturally, litigating against this type of defendant will be more trouble than its worth, and proceeding against the more culpable defendants guarantees the plaintiff the ability to collect the full amount of damages from the remaining parties.
Moreover, another impact of the Amendment is that it provides only cold comfort to the released defendant who pays no money because the released defendant still has exposure to contribution claims. As such, this will likely create a shift in current case law, especially cases that hold a stipulation of discontinuance not conforming to CPLR § 3217 is a release within the meaning of GOL § 15-108 and bars any claim for contribution by the non-signing defendant. Hanna v. Ford Motor Co., 252 A.D.2d 478, 479, 675 N.Y.S.2d 125, 127 (2nd Dept. 1998); and Dembitzer v. Broadwall Management Corp. v. Glidden Company, 6 Misc.3d 1035A; 2005 N.Y. Misc. LEXIS 420 (NY Civil Court 2005).
In Dembitzer, a personal injury case involving a plaintiff that was allegedly injured by her apartment manager’s employees after using an adhesive glue on her radiator, the Court granted summary judgment on behalf of the third-party defendant glue manufacturer even though the defendant management company maintained cross-claims for contribution and indemnification, and refused to sign the stipulation of discontinuance. 6 Misc.3d 1035A; 2005 N.Y. Misc. LEXIS 420 (N.Y. Civil Court 2005). The Court explained that for whatever reasons, plaintiff discontinued with prejudice against the third-party glue manufacturer; and, this discontinuance acted as a release, even if not signed by defendants and the releaser received no consideration. Id. The Court continued that the release would be of cold comfort to the third-party glue manufacturer if the defendant management company could still sue even though the statute says it cannot. Moreover, the Court pointed out that the defendant management company reaped an enormous benefit of trying a case against an empty chair and of reducing its own liability by the percentage of the empty chair’s fault. Id.
Therefore, since GOL § 15-108 no longer provides the released defendant who paid no money any protection from contribution claims from the remaining defendants, the released defendant may be better served moving for summary judgment as opposed to waiting to be served with a third-party action for contribution. Hence, the amendment may not have obtained the intended goal of reducing motion practice in the courts.
Learning Points: In a multiple defendant lawsuit, defense counsel are best served by diligently researching the culpability of every defendant and properly asserting cross-claims and third-party actions, as soon as possible. Moreover, if you are a defendant who is voluntarily discontinued from a pending litigation, ensure that the release is for all claims and pay the two dollars to safeguard against future contribution claims by the remaining defendants.
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