J. Julien BAGET, Plaintiff and Respondent, v. Joseph D. SHEPARD and Evelyn B. Baget, Defendants and Appellant.
Evelyn BAGET, Cross-Complainant and Appellant, v. Joseph D. SHEPARD, Cross-Defendant and Respondent.
In the tumultuous wake of Li v. Yellow Cab Co., 13 Cal.3d 804, 119 Cal.Rptr. 858, 532 P.2d 1226, only slightly calmed by American Motorcycle Assn. v. Superior Ct., 20 Cal.3d 578, 146 Cal.Rptr. 182, 578 P.2d 899, we see the defendant here to have been unfairly victimized by the trial court's application of section 877 of the Code of Civil Procedure in purported obedience to a dictum in the latter. To be more exact, defendant Joseph D. Shepard, found to have been only 20 percent at fault by a jury in a routine auto collision action, was perceived by the trial court as required to pay plaintiff the $19,700 verdict less only the $4,000 plaintiff received as a result of settlement of his claim against a joint tortfeasor later found by the jury to have been 80 percent at fault. Adding insult to injury, as it turns out, plaintiff is the husband of the settling joint tortfeasor, and so will share with her the recovery from defendant Shepard who has no recourse for equitable indemnity from the wife, otherwise available under American Motorcycle, because of the immunity to such liability afforded her under section 877.
We recall the prophetic observation of the Supreme Court in Li that “Problems of contribution and indemnity among joint tortfeasors lurk in the background.” (Li v. Yellow Cab Co., supra, 13 Cal.3d 804, 823, 119 Cal.Rptr. 858, 532 P.2d 1226.) Well, what was lurking then now squarely confronts the defendant Shepard in this case, and so we must deal with the result in the trial court which shocks post-Li concepts of fairness and justice and surely flies in the face of what was stated in Li to be the underlying basis for the doctrine of comparative negligence, i.e., “the primal concept ․ in a system in which liability is based on fault [is that] the extent of fault should govern the extent of liability․” (Id. at p. 811, 119 Cal.Rptr. 858, 532 P.2d 1226.)
The facts are not in dispute. About eight years ago, Mrs. Evelyn Baget was driving the family Pontiac along a surface street in Garden Grove. Her husband Julien, the plaintiff, was a passenger riding in the front seat. Evelyn made a left turn in front of the defendant John D. Shepard who was driving his El Camino pick-up in the opposite direction. In the resulting collision Julien was the only one injured.
Several months after the collision, to recover for his personal injuries, Julien filed a complaint against both his wife and Shepard based on their alleged negligence as joint tortfeasors.
At the time of the collision, Allstate Insurance Company (Allstate) had written a policy of automobile liability coverage on the Bagets and their car. However, Allstate, relying on the terms of the policy, particularly certain exclusions, took the position that its policy did not provide liability coverage for Evelyn with respect to any claim against her by her husband. Even so, Allstate did undertake to furnish a defense for Evelyn as against the husband's complaint.
When Julien learned of Allstate's position that certain policy provisions arguably excluded any coverage as to Evelyn, he filed an uninsured motorist claim with Allstate and made a demand for arbitration.
Consistent with the Allstate position noted, it filed its own declaratory relief action against Shepard and the Bagets which sought a declaration from the court that Allstate had no obligation to pay for Julien's injuries caused by his wife's negligence, this because of a “family exclusion” clause 1 in the policy. Julien filed an answer in the declaratory relief action together with a cross-complaint which asserted, if the Allstate policy did not provide coverage for Evelyn, that he was therefore entitled to the benefits of the uninsured motorist coverage afforded by the policy.
Protracted proceedings and negotiations followed between Julien and Allstate over a period of almost three years, and finally Julien changed attorneys after his original counsel had incurred Julien's displeasure by recommending settlement with Allstate as to Evelyn. Without going into the lengthy procedural details which are of little significance to the main issue here, is it enough to recite, after he had employed new counsel, that Julien eventually decided to settle as to Evelyn for a figure of $4,000, and she was thereby released from all liability to her husband.
When Shepard learned of this settlement, he filed in the main action a cross-complaint for contribution and indemnity from Evelyn 2 alleging that the settlement should be disregarded either because it was not made on behalf of Evelyn or because it was not made in “good faith.”
After a two-week trial of the main action, the jury returned a general verdict of $3,940 for Julien and against Shepard. By special verdict, the jury fixed Julien's total damages at $19,700, found Evelyn's share of fault to have been 80 percent, and Shepard's 20 percent. The trial court thereupon “corrected” the general verdict to read $19,700. After further proceedings before the court, sitting without a jury, it found the settlement between Evelyn and Allstate to have been made in good faith, deducted pro tanto the $4,000 settlement from the $19,700 in damages found to have been suffered by Julien, and ordered Shepard to pay Julien the difference of $15,700, instead of the $3,940 specified by the jury and representing Shepard's 20 percent causal responsibility in fact for such total damages. Otherwise, the judgment ruled that Shepard take nothing on his cross-complaint against Evelyn.
In sum, what started out as a routine “fender bender,” involving only modest damages, had become virtually a Jarndyce v. Jarndyce.3 Of more immediate import, as noted at the outset, the person only 20 percent at fault, the defendant Shepard, must pay about 80 percent of the damages. Moreover, in the view of the trial court, it was precisely because plaintiff had taken it upon himself to work out a settlement with the party four fifths at fault that the party one fifth at fault is now faced with having to pay a substantial part of the damages while yet, because of the operation of section 877 of the Code of Civil Procedure, having no recourse by way of a right of equitable indemnity against Evelyn, the party four fifths at fault. Furthermore, as already noted, by a strange quirk of circumstance, the plaintiff's wife, Shepard's joint tortfeasor, found to have been 80 percent responsible for the collision will enjoy a full community property interest in the $15,700 to be received by her husband 4 under the judgment as it now stands.
In passing, we note, before the case went to trial, that Evelyn cross-complained against Shepard, alleging her own personal injuries. The cross-complaint was filed more than one year after the collision, and, on the basis of the statute of limitations, the trial court granted Shepard's motion for judgment on the pleadings. That ruling was free of error. (Code Civ.Proc., § 340, subd. (3).)
We recite the foregoing by way of disclosing the perceived grievance underlying Evelyn's appeal. The appeal about which this opinion is principally concerned, however, is that of the defendant Shepard. For the reasons hereafter discussed, the judgment as to Shepard is reversed with directions that judgment be entered against him for only $3,940. The judgment as to Evelyn is affirmed, both as to her cross-complaint against Shepard and as to Shepard's cross-complaint against her.
In his notice of appeal, the defendant Shepard recites that he appeals from the judgment as it reflects both the ruling in favor of plaintiff on the complaint and the ruling in favor of Evelyn on Shepard's cross-complaint.
However, as indicated by their content, Shepard's assignments of error are directed solely at issues raised by his cross-complaint seeking equitable indemnity from Evelyn. Because such contentions represented only a partial airing of the true nature and importance of the significant issues presented by the case, after initial oral argument we vacated submission and invited additional briefing and oral argument. We have had the benefit of this further advocacy including that from amici curiae, which, we are pleased to observe, has been outstanding on both sides of the question. Because of the result we reach on the defendant Shepard's appeal as it involves plaintiff's complaint and the jury's verdict, it will be unnecessary to address the former's assignments of error relative to his cross-complaint against Evelyn for equitable indemnity.
Turning then to the critical issue which has been the subject of the extensive additional briefing, we see it to be whether, under a system of so-called pure comparative negligence, a plaintiff, who changes the mix before trial by electing to settle with one or more of several alleged joint tortfeasors, may yet enjoy the benefits of the rule of joint and several liability, which burdens the non-settling tortfeasors, diminished only pro tanto by amounts received from the settling tortfeasor(s). In our view, he should not.5
To state at the beginning the rationale upon which we predicate our decision, it is that the “fairness” principle, stated to underlie both Li and American Motorcycle, together with the equitable objectives recited in section 875 of the Code of Civil Procedure, logically dictate that plaintiff's recovery against a non-settling joint tortfeasor be reduced not by the dollar amount received from the released tortfeasor, but by the latter's proportionate share of the loss.
To accomplish this result requires only a perceptive interpretation of section 877, subdivision (a) of the Code of Civil Procedure. In pertinent part it reads: “Where a release, dismissal with or without prejudice, or a covenant not to sue ․ is given in good faith before verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the same tort—(a) it shall not discharge any other such tortfeasor from liability unless its terms so provide, but it shall reduce the claims against the others in the amount stipulated by the release․” The key word is “amount.” The word “amount” is not defined in the statute, and in serving the ends of fairness it can well be read as meaning a reduction of plaintiff's recovery by the percentage amount of responsibility attributable to the settling tortfeasor's tortious conduct, with the exact percentage of such fault, if any, to be later determined by the jury.
Such an interpretation would provide a genuine finality to the settlement process, assure “fairness” to both settling parties in the Li tradition, discourage collusive settlements, to the prejudice of low-fault defendants, and introduce at last a real balance to both sides of the settlement equation. For too long that equation has been weighted unfairly in favor of plaintiffs in cases with multiple tortfeasors.
We turn now to an exposition of the reasons which have led us to our conclusion that section 877 should be so interpreted.
The linch pin of our analysis is found in the reasoning and perspective announced in Li v. Yellow Cab Co., supra, 13 Cal.3d 804, 119 Cal.Rptr. 858, 532 P.2d 1226. Li abolished the harsh “all-or-nothing” rule involving contributory negligence and replaced it with a rule of “pure” comparative negligence.6 In doing so, the Li court declared, as earlier noted, that “in a system in which liability is based on fault, the extent of fault should govern the extent of liability․” (Id. at p. 811, 119 Cal.Rptr. 858, 532 P.2d 1226.) Reinforcing this view, the court observed, “[t]he basic objection to the doctrine [of equating liability to fault] ․ remains irresistible to reason and all intelligent notions of fairness.” (Id.)
In deciding Li, it did not seem to bother the court that the statute it found declarative of the common law principle of comparative negligence, Civil Code section 1714, had been interpreted for over a century as codifying the defense of contributory negligence. Indeed, the court disposed of the argument that it should defer to the Legislature in making such a change in a well established rule of law by declaring that the statute “was not intended to and does not preclude present judicial action in furtherance of the purposes underlying it.” (Id. at p. 823, 119 Cal.Rptr. 858, 532 P.2d 1226.)
Where justice indeed demands it, as was true in Li, we are necessarily guided here by this enlightened approach to the task of decision making, and can do no less than emulate this leadership of the California Supreme Court and invoke the “fairness” principle relied upon in Li by interpreting section 877 in such a way as to reach the result we have reached here.
The “fairness” principle having been relied upon in Li to strike down the harsh all-or-nothing rule of contributory negligence, it logically followed that the court was well prepared to extend a “fairness” salient into the area of the all-or-nothing rule of equitable indemnity. This brings us to American Motorcycle Assn. v. Superior Court, supra, 20 Cal.3d 578, 146 Cal.Rptr. 182, 578 P.2d 899. There the court said, “․ the question remains whether the broad principles underlying Li warrant any modification of this state's common law rules governing the allocation of loss among joint tortfeasors. As we shall explain, the existing California common law equitable indemnity doctrine—while ameliorating inequity and injustice in some extreme cases—suffers from the same basic ‘all-or-nothing’ deficiency as the discarded contributory negligence doctrine and falls considerably short of fulfilling Li' s goal of ‘a system under which liability for damage will be borne by those whose negligence caused it in direct proportion to their respective fault.’ (13 Cal.3d at p. 813, 119 Cal.Rptr. 858, 532 P.2d 1226.) Taking our cue from a recent decision of the highest court of one of our sister states,7 we conclude—in line with Li's objectives—that the California common law equitable indemnity doctrine should be modified to permit a concurrent tortfeasor to obtain partial indemnity from other concurrent tortfeasors on a comparative fault basis.” (Id. at p. 591, 146 Cal.Rptr. 182, 578 P.2d 899.)
The foregoing modification of the equitable indemnity rule as it then existed operated to cause a clash directly with the California contribution statutes, sections 875–878 of the Code of Civil Procedure, which expressly provide for a pro rata sharing of liability without regard to equitable sharing based on relative fault.
Even so, quoting from the State Bar's explanation accompanying the contribution statutes, the court emphasized that the purpose of the new enactment “was simply ‘to lessen the harshness' of the then prevailing common law no contribution rule․ [Accordingly,] we see no reason to interpret the legislation as establishing a bar to judicial innovation.” (American Motorcycle Assn. v. Superior Court, supra, 20 Cal.3d 578, 601, 146 Cal.Rptr. 182, 578 P.2d 899.) The court reinforced the foregoing conclusion by pointing to that part of the statute which requires that the “right of contribution shall be administered in accordance with the principles of equity.” (Code Civ.Proc., § 875, subd. (b).) Thus, in the court's view, “[b]y emphasizing that the statutory contribution right is to be administered in accordance with the ‘principles of equity,’ principles which the Legislature obviously intended the judiciary to elaborate, the act itself refutes the argument that the Legislature intended to curtail judicial discretion in apportioning damages among multiple tortfeasors.” (Id. at p. 603, 146 Cal.Rptr. 182, 578 P.2d 899.)
This perspective of the judicial function led the court to conclude that the contribution statutes “do not preclude the development of new common law principles in this area, and ․ that under the common law of this state a concurrent tortfeasor may [therefore] seek partial indemnity from another concurrent tortfeasor on a comparative fault basis.” (Id. at p. 604, 146 Cal.Rptr. 182, 578 P.2d 899.) As noted earlier, this conclusion was reached notwithstanding clear statutory language to the contrary, again suggesting that we must deal with the consequences of section 877 in the spirit of Li and, where justice compels it, to be undeterred by the limitations of literal language in resolving conflicts as to which the Legislature never “intended to curtail judicial discretion ․” (Id. at p. 603, 146 Cal.Rptr. 182, 578 P.2d 899.)
In the face of what appeared to be formidable statutory obstacles, these bold, innovative and needed remedial steps taken by the Supreme Court in Li and American Motorcycle to install comparative negligence and equitable indemnity among multiple joint tortfeasors likewise based on comparative fault, doing so by invoking the “fairness” principle, what then are we to make of language in American Motorcycle which appeared to the trial court to require the result reached in this case? In that language, the court said, “[to] preserve the incentive to settle which section 877 provides to injured plaintiffs, we conclude that a plaintiff's recovery from nonsettling tortfeasors should be diminished only by the amount that the plaintiff has actually recovered in good faith settlement, rather than by an amount measured by the settling tortfeasor's proportionate responsibility for the injury.” (American Motorcycle Assn. v. Superior Court, supra, 20 Cal.3d 578, 604, 146 Cal.Rptr. 182, 578 P.2d 899.)
Significantly, and of direct interest to us in developing our analysis here, the court in American Motorcycle cited as authority for its conclusion involving section 877 quoted above: “Fleming, Foreword: Comparative Negligence at Last—By Judicial Choice (1976) 64 Cal.L.Rev. 239, 258–259.” A fair reading of Professor Fleming's comments on the pages cited reveals that he was there only stating his understanding of what was required by the 1955 version of the Uniform Contribution Act, adopted in principle by California in 1957 (Code of Civ.Proc., § 875), and not his endorsement of the proposition.
More broadly, and in terms of the proscription in Auto Equity Sales,8 we respectfully note that the quoted assertion by the Supreme Court in American Motorcycle was not addressed to an issue before it for decision. As we understand the record, the cited portion of the decision was written in response to an argument made by amici opposed to modification of the equitable indemnity doctrine out of perceived fears of the deterrent effects that any such modification might have on settlements. Again, based on the record, it can be accurately stated that the reference to section 877 was not necessary to a resolution of the partial indemnity issue before the court; there had been no settlement with or release of any of the defendants.
To amplify the foregoing, and especially because the dissent forthrightly and strenuously takes us to task for departing from the doctrine of stare decisis, some commentary on that doctrine as it relates to the portion of American Motorcycle just noted is in order. Invoking Witkin, “The doctrine of stare decisis expresses a fundamental policy of common law jurisdictions, that a rule once declared in an appellate decision constitutes a precedent which should normally be followed by certain other courts in cases involving the same problem.” (6 Witkin, Cal. Procedure (2d ed. 1971) Appeal, § 653, p. 4570.)
The doctrine as it affects the decisions of the intermediate appellate and trial courts of California has been formalized in Auto Equity Sales, Inc. v. Superior Court, supra, 57 Cal.2d 450, 20 Cal.Rptr. 321, 369 P.2d 937. There the Supreme Court stated bluntly, “The decisions of this court are binding upon and must be followed by all the state courts of California.” (Id. at p. 455, 20 Cal.Rptr. 321, 369 P.2d 937.) Actually, failure of a lower court to follow a decision of the Supreme Court of California now represents an action in excess of its jurisdiction and makes any such judgment susceptible to restraint by a writ of prohibition or annulment after review on certiorari. (Auto Equity Sales, Inc. v. Superior Court, supra, 57 Cal.2d 450, 456, 20 Cal.Rptr. 321, 369 P.2d 937.)
Essential to any application of the foregoing rule requires first a determination of just what a given case which must be followed has actually decided. In other words, if the decision of the Supreme Court must be followed, we need to know what the nature and extent of that decision is.
Turning again to Witkin, “The ratio decidendi is the principle or rule which constitutes the ground of the decision, and it is this principle or rule which has the effect of precedent. It is therefore necessary to read the language of an opinion in light of its facts and the issues raised, to determine (1) which statements of law were necessary to the decision, and therefore binding precedents, and (2) which were arguments and general observations, unnecessary to the decision, i.e., dicta, with no force as precedents.” (6 Witkin, Cal. Procedure (2nd ed. 1971) Appeal, § 676, p. 4589.)
As noted by the Supreme Court itself in Ginns v. Savage, 61 Cal.2d 520, 39 Cal.Rptr. 377, 393 P.2d 689, “Language used in any opinion is of course to be understood in the light of the facts and the issue then before the court, and an opinion is not authority for a proposition not therein considered. [Citing McDowell & Craig v. City of Santa Fe Springs, 54 Cal.2d 33, 38, 4 Cal.Rptr. 176, 351 P.2d 344.]” (Id. at p. 524, fn. 2, 39 Cal.Rptr. 377, 393 P.2d 689.)
As more recently observed in People v. Moreno, 67 Cal.App.3d 962, 134 Cal.Rptr. 322, “The state's high court has consistently advised lower tribunals that its ‘Incidental statements or conclusions not necessary to the decision are not to be regarded as authority’ (Simmons v. Superior Court (1959) 52 Cal.2d 373, 378, 341 P.2d 13 ․), and that the ‘discussion or determination of a point not necessary to the disposition of a question that is decisive of the appeal is generally regarded as obiter dictum’ (Stockton Theaters, Inc. v. Palermo (1956) 47 Cal.2d 469, 474, 304 P.2d 7 ․)” (Id. at pp. 967–968, 134 Cal.Rptr. 322.)
To reiterate, the issue now before us was not before the Supreme Court in American Motorcycle. There had been no settlement with or release of any of the defendants, and so no application let alone construction of section 877 was necessary to the decision there. We therefore address the issue as one which has not yet been decided in California by our Supreme Court. As to those decisions from the several Courts of Appeal cited in the dissent which have followed the dictum in American Motorcycle, we respectfully disagree.
Whether to follow the pro tanto reduction formula or adopt the equitable reduction rule in applying section 877 is of course a policy decision, just as were the decisions in Li and American Motorcycle. When faced with the task of making such choices, the courts have often turned to the legal scholars who from unbiased positions, have studied the possible choices and then arrived at conclusions based solely on what they have seen to be most efficacious in serving the dispute-resolving function of the judicial process.
In our view, turning to such aid here is well advised, for the issue with which we are dealing has been under scrutiny by the scholars for a long time, and such scrutiny has steadily evolved to a point where it now reflects a history of both careful and substantial deliberation. The reference in American Motorcycle to Professor Fleming's article, as earlier noted, led us to find that he had later authored a Report to the Joint Committee of the California Legislature on Tort Liability on the Problems Associated with American Motorcycle Association v. Superior Court, published with permission of the Committee in 30 Hastings Law Journal, page 1464. In this report, Professor Fleming made a number of recommendations which, as germane here, included: “A release entered into by the plaintiff and a tortfeasor shall discharge the latter from all liability for contribution, but the plaintiff's claim against the remaining tortfeasors shall be reduced by the amount of the released tortfeasor's share of the loss.” (Id. at p. 1498.) In legal effect, this precisely mirrors the language of the Uniform Act earlier noted. Of further interest, Professor Fleming in the Report did not say whether this recommendation (No. 7) should be implemented by judicial interpretation or await legislative enactment. However, his earlier article, cited by American Motorcycle, strongly suggested a preference for reaching such result by judicial interpretation. (See 64 Cal.L.Rev., supra, 239, 279–281.)
The section of Professor Fleming's Report which leads up to and supports his Recommendation 7, above noted, is highly instructive, and crediting him with his both cogent and trenchant treatment of the subject, we shall set forth a condensation of that part of the Report appearing at 30 Hastings Law Journal, pages 1494–1498, with footnotes and paragraph numbers omitted.
“The original version of the Uniform Contribution Among Tortfeasors Act (1939) espoused the principle of equality among tortfeasors by providing that the settling tortfeasor (S) remained liable for contribution in the amount by which his share exceeded the dollar value of the settlement. The settlement could be made final only by stipulating for a reduction of the remaining tortfeasors' liability by the amount of S's pro rata share. Only three states adopted this version of the Act, a common explanation being that it discouraged settlements by providing little incentive to either S or P to settle.
“Under Dean Prosser's direction, the second version of the Uniform Act (1955) therefore abandoned this approach and provided for (1) finality of a good faith settlement vis-a-vis any other tortfeasor (D) as well as P, and (2) reduction of D's liability only by the amount stipulated in such settlement or actually paid, whichever was the larger. This version was adopted by a greater number of states, including California, but it is far from clear whether it was this feature rather than an increasing disenchantment with the common law rule of no-contribution which was the primary motive. The plaintiffs' bar has been the principal advocate of this solution, because an under-value settlement in good faith does not prejudice the plaintiff. On the other hand, it is clearly incompatible with the Li principle of each party bearing his own proportionate share of the loss and thereby unfairly disadvantages the nonsettling tortfeasors by a transaction to which they are not a party and in which they have no voice. Besides, while there is an undoubted public benefit in settlement, that benefit accrues only where all claims relating to the loss are included. Such, however, is not accomplished by the 1955 version because P is free to litigate with the remaining tortfeasors․
“Accordingly, there has been a swing of the pendulum to the more moderate view that, while the settlor (S) should be free from claims for contribution, the plaintiff's recovery from the other tortfeasors should be reduced by S's full share of fault. This formula, long advocated by scholars, has by now acquired a large following in legislation as well as independent judicial decisions; it has also been adopted by the Uniform Comparative Fault Act (1977) but not by drafts bills endorsed by the plaintiffs' bar. It is clearly more compatible with the Li rationale than the ‘pro tanto’ reduction rule in that it limits the nonsettling tortfeasors' liability to their own proportionate shares, unaffected by the settlement to which they were not privy and in which they had no voice․
“The alternative solution of reducing the plaintiff's recovery by the full amount of the settlor's full share does, however, raise the question why the plaintiff should in this instance bear the whole burden of any deficiency (regardless indeed of whether he was himself contributorily negligent), when in situations not involving a settlement the burden would either be shared with the remaining defendants or placed entirely on the latter (depending on whether the plaintiff was contributorily negligent or not).
“There are several reasons for drawing this distinction. The plaintiff remains of course the sole arbiter whether to settle and, if so, for how much. If he does not wish to assume the risk that the settlement is subsequently determined to be under-value, he need not settle at all. On the other hand, he is given a strong incentive to drive the hardest bargain with the settlor and not to prejudice the remaining tortfeasors by a settlement that is either collusive, deliberately discriminatory or unintentionally inadequate. This self-regulatory incentive is clearly more effective than the requirement of ‘good faith’ under the current California statute and the Uniform Contribution Act from which it is derived. (Emphasis added.)
“Actually, there has been little occasion for clarifying the meaning of ‘good faith’ in this context. Clearly the burden of proving lack of good faith is in practice a heavy one as long as courts are persuaded that settlements should be encouraged in pursuit of the statutory policy underlying the ‘pro tanto’ rule. If the consideration for the settlement approximates the plaintiff's best estimate of the settlor's share of liability, the requirement is obviously satisfied. But it seems also to be common ground that a settlement up to the settlor's insurance cover will pass muster, even though it falls far short of the settlor's share. Why should a plaintiff bear the whole deficiency in such a case, when he would only have to bear a proportionate share if he declined to settle? Evidently, a plaintiff who did so must have reason for thinking that it would still be advantageous for him to do so: perhaps because it guarantees him a partial recovery and cushions him against the risk of loss from an unfavorable judgment in subsequent litigation; perhaps because he thinks it worth his while to eliminate prejudicial testimony or even to induce the settlor to give testimony slanted in the plaintiff's favor against the remaining defendants. Most important, however, is that the plaintiff is under no pressure whatever to enter such an under-value settlement, if he does not wish to assume the financial risk of the deficiency. (Emphasis added.)
“Finally, the plaintiff should be rewarded by being allowed to keep the whole of any over-value settlement even if he would in the end thereby receive more than a simple satisfaction of his loss. Any other rule would create a no-win situation which would tend to diminish his incentive to settle. Nor does the windfall aspect present a serious argument to the contrary. The purpose of the one-satisfaction rule is to prevent the plaintiff from unjustly enriching himself at the expense of the defendants, but here that principle is not violated: The nonsettling defendants will still not be required to pay any more than their apportioned shares and the settlor has bought his peace.” We view the logic of Professor Fleming's recitation unassailable if the Li principle of fairness is kept uppermost as a touchstone of decision in this kind of case.
Turning to a marshalling of precedents which have actually addressed the issue, we note Gomes v. Brodhurst, (3d Cir. 1967) 394 F.2d 465. In a negligence case with multiple tortfeasors originating in the United States District Court in the Virgin Islands, the court squarely addressed the issue of what formula in a comparative fault jurisdiction would best determine the amount owed a successful plaintiff by a nonsettling defendant joint tortfeasor. (Id. at p. 468.) In resolving this issue the court candidly admitted, “our interest in a system which provides for the equitable distribution of liability for joint fault and yet encourages out-of-court settlements [recognizes] that a rule which maximizes one of these goals must to some extent work against the other.” (Id.)
One proposed formula considered by the Gomes court would “subtract from the verdict an amount representing the settlement figure and allow plaintiff the difference, ․” (id.) as was done by the trial court in the case here. However, the Gomes court rejected this solution because it leaves “the field of settlement very much open to collusive arrangement between a plaintiff and a favored joint tortfeasor. This is especially so where [as in California] no right of contribution exists against settling tortfeasors. [Fn. omitted.]” (Id.) The Gomes court concluded that “a system which taxes non-settling tortfeasors to the extent of their negligence, and no further, is the more equitable.” (Gomes v. Brodhurst, supra, 394 F.2d 465, 468; see also Conkright v. Ballantyne of Omaha, Inc., (W.D.Mich.1980) 496 F.Supp. 147, 152–153.)
In Wisconsin the principle of equitable reduction is followed. (Pierringer v. Hoger, (1963) 21 Wis.2d 182, 183, 124 N.W.2d 106.) In Pierringer, in giving directions to be followed on further trial of a casualty case involving multiple tortfeasors arising from an explosion at a concrete mixing plant, the court said, “․ the judgment, if any, against the non-settling defendant should only be for that percentage of negligence allocated to him by the findings or the verdict.” (Id. 124 N.W.2d at p. 112.)
Interestingly, the very case which seemingly influenced the California Supreme Court in American Motorcycle, i.e., Dole v. Dow Chemical Co., supra, 30 N.Y.2d 143, 331 N.Y.S.2d 382, 282 N.E.2d 288, likewise failed to permit percentage reductions after adopting comparative indemnification. It took the New York Legislature just two years after Dole to amend their contribution statute so as to recognize settlements “in the amount of the released tortfeasor's equitable share of the damages.” (N.Y.Gen.Oblig.Law, § 15–108.)
Other states which by statute have adopted the equitable reduction rule are Arkansas, Hawaii, Rhode Island, South Dakota, Texas, Utah, and Wyoming.
Precedents from other jurisdictions aside, as an a priori matter, what other policy considerations militate in favor of an interpretation of section 877 of the Code of Civil Procedure as we have proposed? A very good case can be made for the proposition that a rule which operates to reduce the plaintiff's ultimate award by the settling tortfeasor's proportionate share of liability will be more likely to encourage complete settlements and yet afford fair compensation to plaintiffs than the pro tanto reduction rule applied here by the trial court.
Turning again to American Motorcycle Assn. v. Superior Court, supra, 20 Cal.3d 578, 146 Cal.Rptr. 182, 578 P.2d 899, the court recognized that there is a “strong public policy in favor of encouraging settlement of litigation embodied in section 877 of the Code of Civil Procedure, one of the provisions of the current statutory contribution scheme.” (Id. at p. 603, 146 Cal.Rptr. 182, 578 P.2d 899.)
However, contrary to the dictum in American Motorcycle, it is our view that the rule to which we subscribe, i.e., equating the release to an equitable share of the loss rather than a pro tanto effect, will better promote the broad settlement goal. Indeed, we are persuaded that adoption of a proportionate liability credit for settlement as contrasted to the dollar amount of the release will not only foster settlements, but will also minimize unnecessary and increasingly expensive transactional costs in civil litigation.
We are so persuaded by observations in Fisher v. Superior Court, 103 Cal.App.3d 434, 163 Cal.Rptr. 47. In that automobile collision case involving multiple tortfeasors where plaintiff had settled with one of them, those still “in” the case moved before trial for an order to try the issue of good faith of plaintiff's settlement. The trial court denied the motion and the propriety of the order was tested by a petition for prerogative writ. In the course of its opinion holding that the issue of the good faith settlement between plaintiff and the settling tortfeasor should be tried separately and in advance of the trial of the main action, the court said, “Ever since [American Motorcycle] was decided by the California Supreme Court, the superior courts of our state have been deluged with cross-complaints for comparative (equitable) indemnity between alleged tortfeasors.” (Id. at p. 440, 163 Cal.Rptr. 47.)
This was certainly to be expected. Moreover, as discussed extensively in Fisher, the settlement objectives of section 877 have been severely undermined by the efforts of non-settling joint tortfeasors to test the good faith of those who have settled. (Id. at pp. 442–444, 163 Cal.Rptr. 47.) This too was to be expected in view of the pro tanto interpretation placed on section 877 by American Motorcycle. Faced with this insulation against indemnity by the settling tortfeasors, the only recourse the non-settlors now have is to challenge in additional court proceedings the good faith of those whom they think have been bought out too cheaply.
While the result reached in Fisher tends better to assure those settling that they have bought a measure of peace, even under that result they can never be entirely relieved of having to face a challenge to their good faith.
The rule we propose would eliminate even this aggravation. If each joint tortfeasor were faced, in the spirit of Li, with having to bear only his equitable share of plaintiff's damages, not only would settlement negotiations be conducted less in a chauvinistic atmosphere, but those with whom settlements were reached would, even as a practical matter, have bought their peace immediately. This would be the result, for the non-settlors would no longer have any reason to pursue the settlors on the good faith issue.
Nevertheless, an argument can be made that a plaintiff, unable to know with any certainty before verdict the extent of his recovery, would be reluctant to discharge one or more of several tortfeasors from liability. We find this circumstance of no greater weight under an equitable reduction system than under a pro rata reduction rule. In each case a plaintiff negotiates settlement largely on the basis of an estimated gross recovery and the negotiating tortfeasor's legal liability. Thus, in a pro rata reduction jurisdiction, a plaintiff will bargain high or low depending upon what he considers to be the likelihood of a jury finding of negligence on the part of the alleged tortfeasor, and the effect of such a finding will have in reducing the amount plaintiff may realize on the verdict from non-settling tortfeasors. In an equitable reduction jurisdiction, a plaintiff will bargain high or low depending solely upon what he considers to be the extent of the alleged tortfeasor's negligence. Each system presupposes an element of chance, and, depending on a given set of facts, will speed settlement or make it more difficult to achieve.
Admittedly, if a proportionate liability reduction is favored over a pro tanto one, as admonished against in the American Motorcycle dictum, the plaintiff will find under-valued settlements less appealing. Picking off for settlement the more culpable but less solvent defendants, one at a time, in order to surround the remaining “deep pocket” defendant minimally at fault, would, under a proportionate reduction rule, present a certain new and risky reality to the plaintiff. A proportionate treatment of settlements would require plaintiff to guess more realistically as to both the percentage of responsibility and the probable amount of damages in reaching settlements with selected joint tortfeasors. This “new math” should not constitute an unsurmountable barrier; the trial bar has been making such informed guesses for years and regularly conducts seminars to educate its members about the techniques required to be effective in estimating the settlement value of particular cases.
To those who object to this shifting of the risk from its present posture of unfairness to defendants, the answer is that it is not the goal of the law to make settlement risk free for one party to the litigation, a circumstance now enjoyed by plaintiffs who selectively settle with less than all joint tortfeasors; it is enough that the goal be to encourage settlement in a climate attractive to both sides of a lawsuit on the basis of a realistic assessment of the actual fault of each tortfeasor. For example, if the plaintiff here had realistically held out for the uninsured motorist limits of $15,000, he would have received almost all of his damages under an equitable reduction rule which would have required payment of only $3,940 by Shepard.
Beyond the reasons already discussed which favor an equitable reduction rule over the pro tanto rule, a good argument can be made that application of the latter rule can yield essentially inconsistent verdicts and can violate the spirit of the necessary party rule.
The right of indemnity among joint tortfeasors is to be administered in accordance with equitable considerations. (American Motorcycle Assn. v. Superior Court, supra, 20 Cal.3d 578, 602, 146 Cal.Rptr. 182, 578 P.2d 899) With this proposition an integral part of our jurisprudence, what equitable principles are offended by a settlement process which gives a pro tanto effect only to the release of one or more joint tortfeasors regardless of their relative degree of fault? Amicus, The Association for California Tort Reform, answers, “One fundamental principle is the rule against inconsistent verdicts, and its corollary, the necessary party rule.”
One consequence of the contribution statutes is to import the settlement process into the actual legal proceedings. The addition in 1977 of section 877.5 of the Code of Civil Procedure, dealing with sliding scale recovery or “Mary Carter” agreements, makes clear just how intertwined the settlement process has become with the legal proceedings themselves.9 Yet while settlements may have become part of the legal proceedings, in our view, settlements could never have been reasonably intended to fulfill the function of overruling jury verdicts; yet that is precisely what happened in the trial court here. The coincidental circumstances which led the jury to inscribe Shepard's liability of $3,940 on the verdict form served to demonstrate just exactly what we have described, for the trial court “corrected” the verdict to read $15,700 instead of $3,940 which represented the jury finding of Shepard's proportionate share of fault.
The effect on Shepard was just the same as if he had gone through two proceedings, one finding him 20 percent at fault and another finding him 79.7 percent at fault ($15,700 divided by $19,700 yields 79.7 percent). No amount of sophistry can obscure this fundamental fact, a fact resulting solely from plaintiff's decision before trial to settle with his wife for a figure substantially less than her share of the fault.
This inconsistency with the “fairness” principle relied upon in Li and American Motorcycle arising from the pro tanto construction of section 877, adopted by the trial court, permits the plaintiff to pick and choose among potential defendants and to decide, in his unreviewable discretion,10 which shall enjoy the privilege of participating in the first phase of the statutory proceedings, i.e., settlement. In other words, under the trial court's interpretation of section 877, to permit only a pro tanto reduction of plaintiff's verdict, a plaintiff may select potential settling defendants for the most inequitable of reasons. Indeed, it is commonly and somewhat cynically assumed that a plaintiff's lawyer who picks defendants with whom to settle on the “merits” instead of the “whipsaw” principle is not serving the best interests of his client.11
The most obvious way for a plaintiff to develop favorable, inconsistent verdicts in a concurrent tort action against multiple defendants is to pick them off one at a time. While it is an obvious dodge, it is one which is not easily controlled. The solution which thwarts such tactics originated in equity about the same time Chancery matured from an administrative to a judicial tribunal. Chancery decreed a fundamental rule of procedure to cure the inequity, namely: the necessary party rule. (See e.g., Hazard Jr., Indispensable Party: The Historical Origin of a Procedural Phantom (1961) 61 Colum.L.Rev. 1254, 1256–1262.)
The “necessary” party rule declares that any defendant who will be affected by the proceedings must be a participant if the consequences of excluding him means “the defendant will be in danger to account twice ․” (Woodcock v. Mayne, 73 Seld.Soc'y 314 (No. 451) (Ch. 1676); Bank of California v. Superior Court, 16 Cal.2d 516, 523, 106 P.2d 879.)
This is precisely what happened to Shepard. He was found by the jury to have been 20 percent responsible for Julien's damages; however, because of the settlement to which he was not privy and in which he had no voice, he was made to account a second time for 79.7 percent of such damages. This inconsistency of verdict violates a fundamental rule of equity and should not be suffered by the courts of this state to continue.
Amicus for plaintiff rightly observes, in terms of policy, that we are here involved with a conflict and interplay of specific policy objectives, i.e., fully compensating the injured person, encouraging settlements, and apportioning liability equitably among multiple tortfeasors. The American Motorcycle dictum clearly exalts the first over the third and concludes further that the second is better served by such an allocation of priorities.
The experience in the courts since American Motorcycle was decided has massively refuted the supposed proposition that settlements are encouraged under this set of priorities. (Fisher v. Superior Court, supra, 103 Cal.App.3d 434, 442–444, 163 Cal.Rptr. 47.) As a consequence, the time has come to adjust those priorities and bring them in line with Li.
No general assault on joint and several liability is involved. Only in those cases where the plaintiff himself undertakes to change the relationships by pretrial settlements with less than all tortfeasors will he face the risk of recovering less than his total damages. To minimize this risk will lead him to settle with all or be more realistic in settling with less than all. This is nothing less than a particular application of the fairness doctrine introduced by Li, and such application is sorely needed for the obvious reasons already discussed at length in this opinion.
Returning to Li, “It remains ․ to determine the extent to which the rule here announced shall have application to cases other than those which are commenced in the future. It is the rule of this state that determinations of this nature turn upon consideration of fairness and public policy.” (Li v. Yellow Cab. Co., supra, 13 Cal.3d 804, 829, 119 Cal.Rptr. 858, 532 P.2d 1226.)
Following this principle, we hold that the rule of equitable reduction in applying section 877 of the Code of Civil Procedure shall be invoked in all cases in which a settlement has not been effected before the date this decision becomes final, and the new rule shall not be available in any case in which a settlement shall have been reached before that date.
However, in the case now before us, the defendant Shepard shall have the benefit of the new rule. This treatment was followed in Li “so as to provide incentive in future cases for parties who may have occasion to raise ‘issues involving renovation of unsound or outmoded legal doctrines.’ (See Mushkin, Foreward, The Supreme Court 1964 Term (1965) 79 Harv.L.Rev. 56, 60–62).” (Li v. Yellow Cab Co., supra, 13 Cal.3d 804, 830, 119 Cal.Rptr. 858, 532 P.2d 1226.)
The judgment on the complaint is reversed with directions that judgment be entered in favor of the plaintiff and against the defendant Shepard for $3,940. In all other respects the judgment is affirmed. Each party shall bear its own costs on appeal.
I respectfully dissent. As an intermediate appellate court we are subject to the doctrine of stare decisis and, more specifically, to the constraints of Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 20 Cal.Rptr. 321, 369 P.2d 937. It is our sworn obligation to “accept the law declared by courts of superior jurisdiction”; “[i]t is not [our] function to attempt to overrule decisions of a higher court.” (Id., at p. 455, 20 Cal.Rptr. 321, 369 P.2d 937.)
In American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, 146 Cal.Rptr. 182, 578 P.2d 899, our Supreme Court declared that the strong public policy in favor of settlements reflected in Code of Civil Procedure section 877, must be preserved as an integral part of the partial comparative indemnity doctrine fashioned by the court. Accordingly the court held that a tortfeasor who has entered into a “good faith” settlement must be discharged from any claim for partial comparative indemnity by a nonsettling concurrent tortfeasor. “Moreover,” the court added, “to preserve the incentive to settle which section 877 provides to injured plaintiffs, we conclude that a plaintiff's recovery from nonsettling tortfeasors should be diminished only by the amount that the plaintiff has actually recovered in a good faith settlement, rather than by an amount measured by the settling tortfeasor's proportionate responsibility for the injury. (See Fleming, Foreword: Comparative Negligence At Last—By Judicial Choice (1976) 64 Cal.L.Rev. 239, 258–259.)” (Id., at p. 604, 146 Cal.Rptr. 182, 578 P.2d 899; emphasis supplied.)
The foregoing declaration of law by our high court has been respected and consistently followed by the Courts of Appeal, including Division One of this court. (McGee v. Cessna Aircraft Co. (4th Dist., Div. 1, 1978) 82 Cal.App.3d 1005, 1022, 147 Cal.Rptr. 694; Jaramillo v. State of California (3d Dist., 1978) 81 Cal.App.3d 968, 971, 146 Cal.Rptr. 823. See Giouzelis v. McDonald (1st Dist., Div. 1, 1981) 119 Cal.App.3d 436, 441, 174 Cal.Rptr. 58; Knox v. County of Los Angeles (2d Dist., Div. 3., 1980) 109 Cal.App.3d 825, 833–834, 167 Cal.Rptr. 463; Lemos v. Eichel (5th Dist., 1978) 83 Cal.App.3d 110, 120, 147 Cal.Rptr. 603.)
Furthermore, attempts to persuade the Legislature to amend the contribution statute to incorporate the position adopted by the majority in this case have thus far been consistently rebuffed: AB 1783, introduced April 9, 1979 (1979–1980 reg. sess.); AB 3344, introduced March 13, 1980 (1979–1980 reg. sess.); AB 85, introduced December 3, 1980 (1981–1982 reg. sess.). Significantly, each of those bills was prefaced by a legislative counsel's digest which stated in pertinent part: “Under existing law relative to multiple tortfeasors, where one defendant settles, the plaintiff's recovery from the remaining defendants is reduced by the amount the plaintiff recovers from the settling defendant. [¶] This bill would provide that the plaintiff's recovery from the remaining defendants is reduced by the settling defendant's equitable share of the obligation.” Failure of the Legislature to enact the measure indicates legislative approval of the judicial decisions interpreting the contribution statute. (See 6 Witkin, Cal. Procedure (2d ed. 1971) Appeal, § 6831, pp. 4598–4599.)
In the face of the judicial precedents and the Legislature's tacit approval of the rule enunciated in them, I find it difficult to comprehend how the majority can properly treat the issue “as one which has not yet been decided in California.” By the expedient characterization of our high court's pronouncement in American Motorcycle as dictum and by a tortured interpretation of the word “amount” in Code of Civil Procedure section 877, subdivision (a), the majority produces a product which the insurance companies have been unable to sell to the Supreme Court, the Courts of Appeal or to the Legislature.
I happen to believe that the Supreme Court's declaration in American Motorcycle concerning the credit to be given the nonsettling tortfeasors was an integral part of the court's decision to adopt the principle of partial comparative indemnity and was intended for the future guidance of all inferior courts. But it is unnecessary to quibble over whether the high court's pronouncement was a holding, a judicial dictum, or some other brand of dictum. (See Comment, Dictum Revisited (1952) 4 Stan.L.Rev. 509, 513.) Whatever we call it, the statement is a clear, deliberate, judicial declaration of the law by this state's highest court and as such should be respected. As Presiding Justice Puglia said for a unanimous court in Jaramillo, acceptance of the characterization of the language in American Motorcycle as dicta does not mean that its plain meaning may be avoided. As he explained: “Impeded by the inherent unsuitability of the judicial process to promulgate forthwith comprehensive changes in the law, the Supreme Court must make do with those vehicles which fortuitously present themselves in order to accomplish the task. (In addition to American Motorcycle, supra, 20 Cal.3d 578, 146 Cal.Rptr. 182, 578 P.2d 899, see Daly v. General Motors Corp. (1978) 20 Cal.3d 725, 144 Cal.Rptr. 380, 575 P.2d 1162; Safeway Stores, Inc. v. Nest-Kart (1978) 21 Cal.3d 322, 146 Cal.Rptr. 550, 579 P.2d 441.) Accordingly, we do not view the American Motorcycle dicta as inadvertent, ill-considered or a matter lightly to be disregarded.” (Jaramillo v. State of California, supra, 81 Cal.App.3d 968, 971, 146 Cal.Rptr. 823.)
The majority seeks to achieve their desired result by interpreting the word “amount” in Code of Civil Procedure section 877, subdivision (a), to mean the “percentage amount” of responsibility attributable to the settling tortfeasor. From the terms of the entire section, it is apparent that the word “amount” was intended to mean the monetary amount of the settlement. This is confirmed by the fact the section refers to “the amount stipulated,” not just the word “amount.” To say that the “amount stipulated” by the release, dismissal or other instrument of settlement may be construed to mean the percentage of liability flies in the face of reason. The parties have stipulated to a dollar amount. Section 877 by its terms applies to settlement before verdict or judgment; i.e., before the trier of fact has assigned any percentage of liability. Although the settling parties could specifically agree that the dollar amount stipulated be deemed to represent the percentage of liability later assigned by the trier of fact, that was not done here. The interpretation of section 877 urged by the majority would in effect imply such an agreement into every settlement, regardless of the intent of the parties. The objective sought to be achieved by the majority must be accomplished by legislation, not interpretation.
The other reasons marshalled by the majority in support of the proposition that the liability of the nonsettling tortfeasors should be reduced by the settling tortfeasor's proportionate responsibility simply echo the views expressed by Justice Clark in his dissent in American Motorcycle. I shall not extend this dissent by a lengthy response to the various arguments advanced by amici curiae in support of the defendant which arguments have been adopted by the majority. Instead, in response to those arguments as well as to the majority opinion as a whole, I borrow an expression immortalized by the late Justice Marshall McComb: I dissent for all of the reasons stated by Justice Tobriner of the California Supreme Court in American Motorcycle.
I would affirm the judgment in its entirety.
1. A similar clause was the subject of litigation in Farmers Ins. Exchange v. Cocking, 29 Cal.3d 383, 173 Cal.Rptr. 846, 628 P.2d 1, wherein the Supreme Court ruled that such an exclusion was enforceable because expressly sanctioned by statute, holding further that section 11580.1, subdivision (c)(5) of the Insurance Code on which such exclusions are based is constitutional.
2. The $4,000 settlement was reached well before American Motorcycle was handed down on February 9, 1978. Interestingly, the findings recite, “Allstate would not have made any settlement had it known of, or foreseen, the indemnity action (cross-complaint) later filed by [Shepard].”
3. “Jarndyce and Jarndyce drones on. This scarecrow of a suit has, in the course of time, become so complicated, that no man alive knows what it means. The parties to it understand it least; but it has been observed that no two ․ lawyers can talk about it for five minutes without coming to a total disagreement as to all the premises ․ Jarndyce and Jarndyce has passed into a joke. That is the only good that has ever come of it.” (Dickens, Bleak House in the Law in Literature, (London edit. 1960) Vol. 1, p. 43.)
4. Reflecting the anguished ambivalence of the trial court over the result it reached, the court stated, “it distresses me to think that this award becomes the community property of Mrs. Baget when she has a 50 percent interest in something (for) which she's 80 percent (at fault). It doesn't seem equitable.”
5. Our view is shared by the Commissioners on Uniform State Laws. Section 6 of the Uniform Comparative Fault Act (1977) reads: “A release, covenant not to sue, or similar agreement entered into by a claimant and a person liable discharges that person from all liability for contribution, but it does not discharge any other persons liable on the same claim unless it so provides. However, the claim of the releasing person against other persons is reduced by the amount of the released person's equitable share of the obligation, determined in accordance with the provisions of Section 2.” (Emphasis added.)
6. “Pure” comparative negligence permits a plaintiff to recover however great his proportion of fault compared with the defendant's. A “mixed,” or “Wisconsin type,” comparative negligence rule permits a plaintiff to recover only if his negligence is less than the defendant's or, under another variant, no greater than the defendant's. (See generally Schwartz, Comparative Negligence (1974), § 3.5, pp. 73–82.) The “Wisconsin rule” is in most statutory enactments, while all judicial adoptions of comparative negligence have opted for the “pure” version. (See Fleming, Report to the Joint Committee of the California Legislature on Tort Liability on the Problems Association with American Motorcycle Association v. Superior Court (1979) 30 Hastings L.J. 1464, 1469.)
7. (Dole v. Dow Chemical Company (1972) 30 N.Y.2d 143, 331 N.Y.S.2d 382, 282 N.E.2d 288.) Dole modified New York's traditional all-or-nothing indemnity doctrine to permit a tortfeasor to obtain partial indemnification from another on the basis of comparative fault.
8. Auto Equity Sales, Inc. v. Superior Court, 57 Cal.2d 450, 20 Cal.Rptr. 321, 369 P.2d 937.
9. In pertinent part section 877.5 of the Code of Civil Procedure reads: “(a) Where (such) an agreement ․ is made ․ between one or more, but not all, alleged defendant tortfeasors and the plaintiff ․ (1) The parties entering into any such agreement ․ shall promptly inform the court in which the action is pending of the existence of the agreement ․ and its terms and provisions․”
10. Non-settling defendants apparently have little opportunity to discover information about a settling defendant's financial condition in order to challenge the “good faith” nature of the settlement. (See, e.g., Dompeling v. Superior Court, 117 Cal.App.3d 798, 809, 173 Cal.Rptr. 38.)
11. “Tactically then, [the] American Motorcycle [dictum] has put a great weapon in the plaintiff's arsenal. One can readily conceive of a plaintiff who willingly settles for a very low sum with a relatively poor defendant whose potential fault is quite high, while refusing to do the same with a corporate or insurance company defendant who the plaintiff knows will remain liable for the balance of the judgment. Again, faced with this result, the corporate defendant may be forced to settle for a figure that proportionately is well in excess of its share of the fault.” (Note, Contribution and Indemnity Collide with Comparative Negligence—the New Doctrine of Equitable Indemnity (1978) 18 Santa Clara L.Rev. 779, 805–806.)
McDANIEL, Acting Presiding Justice.
GARDNER,* J., concurs.